Old School Value Nugget Fest (June 27th Edition)
To get this kind of information and other exclusive articles before regular readers, get on the VIP Mailing List today.
What We’re Reading in the Media
- A Google Drive full of PDF primers on different investment and financial topics (Google Drive folder via /r/SecurityAnalysis/)
- Here’s how Third Point dissects a company. This is a long PDF document about SONY. The whole SONY company (PDF)
Markets & Investing
- U.S. Stocks/Market Mid-Year Outlook: Battle Symphony (Charles Schwab)
I read the WSJ market update each day, and you start to sweat the small stuff. It’s nice to take a step back and read a higher-level perspective of the markets from time to time. This was a good one. (H/t to Jeff Partlow, one of our Insiders.)
- Can investors learn from finance article headlines from the past? (A Wealth of Common Sense)
“Sometimes the headlines tell us all we need to know about market sentiment. Other times they give us false positives. And other times all the tell us is the financial news organization that put them out had to fulfill their quota for the day.”
- The overuse of mathematics in economics (fee.org)
Quantifying the unmeasurable: “How can an equation tell me when I am no longer satisfied with a certain good? Mathematically speaking, it is when marginal utility becomes negative. This may be true. However, the problem is how to determine how much chocolate will give me a stomach ache—mathematically speaking, what amount will produce negative marginal utility.”
Company & Strategy Analysis
- ProfG Coin — Scorpio (Scott Galloway – No Mercy / No Malice)
“Facebook’s arrogance has made them blind to the key component of every currency — trust. The good and bad news is, Libra will likely inspire another stablecoin from an entity of similar scale (few of them) but holding more trust. Just as Facebook has outsourced their product development to Snap, and now WeChat, several other firms will likely draft off the futile genius of Libra. Look for Amazon, Walmart (do you hear me, Doug?), Apple, or a European bank to launch a coin. In a man-bites-dog scenario, we’re about to see Facebook have its pocket picked.”
- Buy and hold decisions are only easy in retrospect (Safal Niveshak)
On holding stock: “it’s important to understand that the action of not doing anything over such a long period of time involves hundreds of decisions over months and years that lead to such inaction.”.
- The Oracle Of Apopka: Meet Eddie Brown, One Of Wall Street’s Greatest Untold Stories (Forbes)
Not the typical Florida man in the news: “I wish I could sit here and tell you that we have all these incredible algorithms and a very sophisticated way,” Keith Lee (Brown Capital President) says. “It really is fundamental research.”
- Companies that disclose SEC investigations have significantly lower returns than those that do not, research has shown. (Institutional Investor)
So much for openness and honesty.
Podcast of the week
- Jesse Livermore interview (The Investor’s Field Guide)
The interview is about Livermore’s problem-solving methods and whether or not we should opt for simplicity in the investment process.
Image of the Week
Interesting charts & graphs about investor emotions (Monevator)
A fun but caustic look at how investor emotions move in cycles. There are a few graphs to illustrate the point.
Video of the Week
Tom Russo of Wealthtrack talks about Berkshire & Buffett (YouTube)
Berkshire has not had a double-digit advantage since 2002. In recent years it has underperformed the market in 3 10 year spans. Is Buffett right in saying that the company’s glory days of outperformance is over?
Quote of the Week
“Graham figured that always using the margin of safety principle when deciding whether to purchase shares of a business from a crazy partner like Mr. Market was the secret to making safe and reliable investment profits.”
― Joel Greenblatt, The Little Book That Still Beats the Market