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What We’re Reading in the Media
Markets & Investing
- Our Systematic Value Philosophy (Flirting with Models)
My favorite article this week. It looks at different value factors as well as uncompensated risks value investors face like industry concentration and timing and tries to construct a portfolio that’s neutral to all that noise. You’re unlikely to implement their strategy, but there’s a lot to learn that you can apply in your own investing process, I think.
- Precious Metals Investing: GLD vs GDX (Fat Tailed and Happy)
“Precious metals investing in GLD would have received nearly a 100% return on investment from 2006. Miners, despite this strong rally, have fared poorly, losing nearly 50% of their value. Returns in GDX have generally lagged those of GLD, particularly when gold prices fall.”
- Trouble in Hong Kong – part 2 (PDF)
I didn’t wake up this week worrying about Hong Kong’s USD reserve adequacy. I like to read this kind of stuff both to learn more about the world but also to remind myself to stick with what I know. And on that note…
- Think Before You Fish for Bargains in Chinese Stocks (WSJ)
“One component of return swamped all others in predicting returns: whether the total supply of shares was contracting or expanding.”
- Liquidity of a Plasma Market (PDF)
“Financial risk models often remove the most extreme statistical outliers to create mathematically tidy and statistically convenient representations of risk arising from movements in asset prices. “
- Yesterday’s strategies from investment gurus (Oddball Stocks)
“The gurus of today were nobodies of yesterday. Of the tens of thousands or even millions of investors trying to make a buck the current gurus were the ones who were successful. There are hordes of very smart investors who after making mistakes have ensured that will never become well known, they’ve been lost to the sands of time.”
- Joel Greenblatt Interview – Value Investing Will Never Go Out of Favor (Yahoo)
Company & Strategy Analysis
- When Financial Models Fail: How Financial Models Subsidize Poor Valuation Work (TSLA & Ark Invest) (The Market Plunger)
“Further investigation uncovered that the model was mixing Gross and Net PPE when analyzing comparable companies. For example, the model used Ford’s (F) net PPE of $35B instead of the actual $56B figure.”
- How Aldi, a brutally efficient grocery chain, is beating Walmart on low prices (CNN)
“There’s no secret to how Aldi keeps its prices so low: The company strips down the shopping experience in an unapologetically and brutally efficient way.”
- Meet The Billionaire Who Defied Amazon And Built Wish, The World’s Most-Downloaded E-Commerce App (Forbes)
I’m guessing a lot of you probably haven’t heard of Wish. You’re probably not its target market. But it’s growing — fast. We thought about them a lot when I was at zulily.
Quote of the Week
Video of the Week
Investing In Overpriced Markets (w/ Howard Marks) | Interview | Real Vision™ [9:51 minutes]
Legendary investor Howard Marks, co-founder and co-chairman of Oaktree Capital Management, explains how he invests successfully, fully aware that nothing is a sure bet.
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