Money and Finance
- What Distinguishes A First-class Business From An Ordinary Business?
From Deep Value: In a cruel irony, most good businesses earning high returns on invested capital can’t absorb much incremental capital without reducing those high returns, while most bad businesses earning low returns on invested capital require all...
- Focusing On Expected Returns Instead Of Intrinsic Value…
Just tying a few related comments together from some recent things… From Sanjay Bakshi:I think it’s important for investors to think in terms of expected returns instead of fuzzy concepts like intrinsic value even though they may be functionally equivalent. There...
- A Fine Line Between Patience And Laziness
"Perhaps the strongest feature in his character was prudence, never acting until every circumstance, every consideration was maturely weighed; refraining if he saw a doubt, but, when once decided, going through with his purpose, whatever obstacles opposed."...
- Investing Lessons From David Einhorn
I recently finished reading David Einhorn's Fooling Some of the People All of the Time, which is primarily focused on his hedge fund's (Greenlight Capital) take down of Allied Capital. The Allied Capital case study is a must-read in itself, as...
- 5 Ways To Avoid Permanent Losses
Earlier this week on Twitter, Carl Richards (+Behavior Gap) -- who you really should be following if you're not already -- started an interesting conversation about investing and risk: As Homer Simpson would say: "It's funny 'cause...
Money and Finance
An Investment Framework by Peter Lindmark
Investors should develop an investment framework which they make their decisions around. They should have tenets by which they abide in order to avoid permanent impairment of capital, while generating above average returns. Below are ideas from various others frameworks that are useful.
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When does an investor sell securities? Eddie Lampert was asked that question in a Washington Post article in 1995: "The reality is that when I find something I really like, I don't normally sell it. That said, there are three possible reasons to sell. One is if the facts have changed adversely -- if the economics of the business have deteriorated, if the people running the business have left or are no longer doing a good job. Second is if the price just gets to a point that the valuation is so high we think it is unsupportable and exposes us to the risk of a permanent loss of capital. Third is if there is a better alternative investment, but the burden of proof is always on the new idea."
- What Distinguishes A First-class Business From An Ordinary Business?
From Deep Value: In a cruel irony, most good businesses earning high returns on invested capital can’t absorb much incremental capital without reducing those high returns, while most bad businesses earning low returns on invested capital require all...
- Focusing On Expected Returns Instead Of Intrinsic Value…
Just tying a few related comments together from some recent things… From Sanjay Bakshi:I think it’s important for investors to think in terms of expected returns instead of fuzzy concepts like intrinsic value even though they may be functionally equivalent. There...
- A Fine Line Between Patience And Laziness
"Perhaps the strongest feature in his character was prudence, never acting until every circumstance, every consideration was maturely weighed; refraining if he saw a doubt, but, when once decided, going through with his purpose, whatever obstacles opposed."...
- Investing Lessons From David Einhorn
I recently finished reading David Einhorn's Fooling Some of the People All of the Time, which is primarily focused on his hedge fund's (Greenlight Capital) take down of Allied Capital. The Allied Capital case study is a must-read in itself, as...
- 5 Ways To Avoid Permanent Losses
Earlier this week on Twitter, Carl Richards (+Behavior Gap) -- who you really should be following if you're not already -- started an interesting conversation about investing and risk: As Homer Simpson would say: "It's funny 'cause...