Alleghany Annual Letter
Found via the Santangel's Review ‘Value Links’ email. If you would like to be added to that mailing list, please email Steve at [email protected].
Investors are faced with an unattractive array of investment options today, ranging from no return on short-term investments to a likely mid-single-digit long-term return on equities. Moreover, the equity markets have been characterized by unusually high correlations of returns for most stocks, with a handful of large companies producing double-digit returns to their shareholders. If the returns on these large companies are excluded from the S&P 500 total return in 2011, equity returns were negative.
If we are correct in projecting that equities will return only mid-single digits over the next 5-10 years, it is unlikely that “buy and hold” investing will produce satisfactory returns. Moreover, in today’s economy, there are very few companies whose securities are capable of producing 10+% returns for their shareholders on a sustained basis; either competitive pressure will erode returns, or the external environment will throw them a curve ball. Our approach in this environment is to be more willing to take short-term profits, especially if they appear to be largely macro-induced. In addition, we have an increasingly healthy respect for the option-value of cash.
- Investing In A High-quality Business...
From Capital Returns: Investing in a high-quality company can seem dull and unrewarding in the near-term. The lower risk which comes from investing in quality companies is only properly observed over the long-term. The fact that investors are often...
- Gmo's Q3 2014 Letter
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- Hussman Weekly Market Comment: Low And Expanding Risk Premiums Are The Root Of Abrupt Market Losses
Link to: Low and Expanding Risk Premiums are the Root of Abrupt Market Losses Through the recurrent bubbles and collapses of recent decades, I’ve often discussed what I call the Iron Law of Finance: Every long-term security is nothing more than a claim...
- Greenlight Capital Re's Earnings Call Transcript
Found via Santangel’s Review. The comments below are from David Einhorn. As the market retreated over the past few months, we added to a few of our existing long positions, found a few new investment opportunities primarily in the technology and auto...
- Portfolio Returns - Part I
I figured that we should take a look at portfolio returns so we can see exactly where we stand. If you don't know what you're actually returning then it's hard to tell if it's a good investment. While some people are focused on just...