Old School Value Nugget Fest (August 8th Edition)
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The markets continue to be volatile and policy unpredictable. I liked Michael Batnick’s advice this week: be aware of what’s going on, compartmentalize it, and don’t take action on it.
The Graham Two Factor Model Still Provides Great Returns Today (The Acquirer’s Multiple)
“There’s nothing exciting about any of the stocks in this portfolio, just dividend paying stocks at less than 12 times earnings, if I recall was the cut off that was used. You just rebalance that once a year. It’s kind of a set it and forget it investment strategy.”
Markets & Investing
Risk and Premium: A Tale of Value (GMO)
“Given our findings, we are loath to say that nothing has changed for value over the last decade; there is some evidence that, going forward, the value premium might not be as pronounced as it has been in the past. That said, value’s current discount is wide. Though there are rational explanations for value to trade at a greater discount today than it does usually, we believe that cheap stocks are somewhat undervalued and therefore poised to deliver decent excess returns going forward.”
The Problem With Inflation: It Often Doesn’t Exist (WSJ)
“Without a single macroeconomic phenomenon driving all prices, trying to gauge whether an economy is running too hot or too cold based on a weighted average of these measures seems pointless.”
David Swensen Is Great for Yale. Is He Horrible for Investing? (Institutional Investor)
“He concluded with the three final ingredients in Yale’s extraordinary outcomes: David Swensen, David Swensen, David Swensen.”
Yuan Redux (The Irrelevant Investor)
“Investors are constantly told to tune out the noise, which is a good idea in theory, but an unrealistic one in practice. It’s ignorant to say this is noise, but it’s naive to think you can find the signal.”
FAQs on Share Buybacks for Lawmakers, Journalists, and Investors (Meb Faber)
Some good resources and info, from AQR to Buffett to Damodaran.
Company & Strategy Analysis
Why We Sold This Controversial Stock (Intrinsic Investing)
“In recent quarters, however, we grew concerned about Trupanion’s ability to communicate its value to pet owners and win market share.”
A Robot Might Take His Job — And That’s Good News (NPR)
“When protesters call for an end to the profession, they add another demand: retrain the workers. It’s difficult for manual scavengers to break away from this line of work. One reason is India’s ancient caste system, which has traditionally dictated a person’s occupation. The vast majority of manual scavengers are from the lower castes, which used to be known as ‘untouchables.’