Money and Finance
Found via Market Folly.
- Asking More Valuable Questions...
From Capital Returns (the excerpt below was from a Marathon letter in March 2003):While the case for long-term investment has tended to centre around simple mathematical advantages such as reduced (frictional) costs and fewer decisions leading (hopefully)...
- Charlie Munger And Seth Klarman Quotes
In the most recent Boyles letter, we included this quote from Charlie Munger, which we described as a quote that probably best summarizes our investing focus:Two markets are inefficient: very small ones (which are not much use to Berkshire, with its $120...
- East Coast Asset Management's Q2 Letter
Found via Market Folly. In our Q2 letter you will find an update on our portfolio and general market observations. Each quarter we highlight one component of our investment process - this quarter we discuss the “compounder” category, and specifically...
- Seth Klarman Quote On Silos
From The Most Important Thing Illuminated (book to be released April 17th....Kindle edition HERE): “Silos are a double-edged sword. A narrow focus leads to potentially superior knowledge. But concentration of effort within rigid boundaries leaves a...
- Todd Wenning On Finding Differentiated Dividend Ideas
One of the good things about dividend investing is also a challenge. Dividend investing forces you to screen out many stocks, because they do not pay a dividend at all. And really, for most dividend investors, you are going to want at least a 2 or 3%...
Money and Finance
East Coast Asset Management's Q1 Letter
Found via Market Folly.
We believe there are two general kinds of mispricings - structural and psychological.
Structural mispricings exist when an event occurs that forces a large population of owners to sell without any change in the investment’s intrinsic value. Examples of structurally induced selling would include: when an investment is deselected from an index, when a company is spun off from a larger parent company, or perhaps when a company’s credit rating is reduced. These scenarios are just a few examples that produce a good flow of ideas into our workout category which we can then use to apply an appropriate lens.
Psychological mispricings are driven from collective investor psychology which induces broad selling or a lack of buying in an investment, asset class or group of securities. Psychological mispricings have produced some of our most compelling compounding opportunities. The study of how human beings perceive the world is a helpful tool to understand the psychological biases that produce mispricings.
More than half of our brain is used for processing sensory information with the majority of that processing being vision. Evolutionary psychologists have said that animals from fiddler crabs to humans use eyesight for collision avoidance, suggesting that vision is for directing action not providing knowledge. We want to focus and apply a lens in the direction where there is a gap between the directed action of the marketplace and that of knowledge (truth).
Two universal visual impairments are myopia and hyperopia. Individuals, who suffer from myopia, or myopes, have difficulty seeing distant objects; hyperopes have difficulty focusing on near objects. These impairments can be used to describe the optical challenges that affect investors.
- Asking More Valuable Questions...
From Capital Returns (the excerpt below was from a Marathon letter in March 2003):While the case for long-term investment has tended to centre around simple mathematical advantages such as reduced (frictional) costs and fewer decisions leading (hopefully)...
- Charlie Munger And Seth Klarman Quotes
In the most recent Boyles letter, we included this quote from Charlie Munger, which we described as a quote that probably best summarizes our investing focus:Two markets are inefficient: very small ones (which are not much use to Berkshire, with its $120...
- East Coast Asset Management's Q2 Letter
Found via Market Folly. In our Q2 letter you will find an update on our portfolio and general market observations. Each quarter we highlight one component of our investment process - this quarter we discuss the “compounder” category, and specifically...
- Seth Klarman Quote On Silos
From The Most Important Thing Illuminated (book to be released April 17th....Kindle edition HERE): “Silos are a double-edged sword. A narrow focus leads to potentially superior knowledge. But concentration of effort within rigid boundaries leaves a...
- Todd Wenning On Finding Differentiated Dividend Ideas
One of the good things about dividend investing is also a challenge. Dividend investing forces you to screen out many stocks, because they do not pay a dividend at all. And really, for most dividend investors, you are going to want at least a 2 or 3%...