Money and Finance
Mohnish Pabrai, Guy Spier, and Michael Shearn on Investment Checklists [H/T ValueWalk... This is the video and transcript from their Value Conferences appearance early in 2014.] (LINK)
Guy Spier joins The Investors Podcast to discuss his book, The Education of a Value Investor (LINK)
Porsche: The Hedge Fund that Also Made Cars [H/T Whopper Investments] (LINK)
The Paradox of Choice, 10 Years Later [H/T Abnormal Returns] (LINK) [The audiobook MP3 CD version is currently only $8.06 as well.]
Hussman Weekly Market Comment: The Line Between Rational Speculation and Market Collapse (LINK)
A couple of book recommendations from Twitter:
Via @Sanjay__Bakshi: Recasting India: How Entrepreneurship is Revolutionizing the World's Largest Democracy
Via @PlanMaestro: City of Fortune: How Venice Won and Lost a Naval Empire
- Links
Phil DeMuth's Daily Journal Annual Meeting Notes, Part 3 (LINK) Stan Druckenmiller's interview with Bloomberg (video) [H/T Market Folly] (LINK) Measuring the Moat – Part 1 (LINK) [The tour de force on this topic is Mauboussin and Callahan's Measuring...
- Links
Q&A with Guy Spier about his book, The Education of a Value Investor (LINK) Buffett’s Private Analysis of Geico in 1976: ‘Extraordinary’ But ‘Mismanaged’ [H/T Lincoln] (LINK) Aswath Damodaran on corporate break-ups, using EBay and PayPal...
- Hussman Weekly Market Comment: Increasing Concerns And Systemic Instability
Link to: Increasing Concerns and Systemic Instability With the S&P 500 just 3% below its all-time high, there’s very little change our views here. Last week’s mild retreat only looks something other than mild when viewed in the context of a late-stage...
- Hussman Weekly Market Comment: Short Horizon, Long Horizon
Over history, and including the past decade, properly normalized valuations have remained a powerful guidepost for full-cycle and long-term returns, particularly on the horizon of 7-10 years. On that front, the current price/revenue multiple of the S&P...
- Hussman Weekly Market Comment: Sitting Ducks
The present market context is this: from a valuation standpoint, virtually every reliable measure of market valuation we observe is now within the highest 1% of historical observations prior to the late-1990’s bubble. “Reliable” in this context...
Money and Finance
Links
Mohnish Pabrai, Guy Spier, and Michael Shearn on Investment Checklists [H/T ValueWalk... This is the video and transcript from their Value Conferences appearance early in 2014.] (LINK)
Related book: The Investment ChecklistRichard Muller's Physics for Future Presidents lectures (LINK)
Related book: Physics for Future PresidentsThe Best (and Worst) Investments They Ever Made: Luminaries in Finance and Other Fields Reveal Their Greatest Hits—and Biggest Misses [H/T ValueWalk] (LINK)
Guy Spier joins The Investors Podcast to discuss his book, The Education of a Value Investor (LINK)
Porsche: The Hedge Fund that Also Made Cars [H/T Whopper Investments] (LINK)
The Paradox of Choice, 10 Years Later [H/T Abnormal Returns] (LINK) [The audiobook MP3 CD version is currently only $8.06 as well.]
Hussman Weekly Market Comment: The Line Between Rational Speculation and Market Collapse (LINK)
The Shiller P/E (S&P 500 divided by the 10-year average of inflation-adjusted earnings) is now 27, versus a long-term historical norm of 15 prior to the late-1990’s bubble. Importantly, the profit margin embedded into the Shiller P/E is currently 6.7% versus a historical norm of just 5.4%. The implied margin is simply the denominator of the Shiller P/E divided by current S&P 500 revenues (the ratio of trailing 12-month earnings to revenues is even higher at 8.9%). As I showed in Margins, Multiples and the Iron Law of Valuation, taking this embedded margin into account significantly improves the usefulness and correlation of the Shiller P/E in explaining actual subsequent market returns. With this adjustment, the margin-adjusted Shiller P/E is now nearly 34, easily more than double its historical norm.
This fact is important, because the Shiller P/E averaged 40 during the first 9 months of 2000 as the tech bubble was peaking. But that Shiller P/E was associated with an embedded profit margin of only 5.0%. Adjusting for that embedded margin brings the margin-adjusted Shiller P/E at the 2000 peak to 37.
...
On other measures that have an even stronger historical correlation with actual subsequent market returns than either the Shiller P/E or the S&P 500 price/operating earnings ratio, the ratio of stock market capitalization to GDP is now about 1.33, compared to a pre-bubble norm of 0.55. The S&P 500 price/revenue multiple is now about 1.80, versus a historical norm of 0.80. On the measures we find most reliably associated with actual subsequent 10-year market returns (with a correlation of about 90%), the S&P 500 is not just double, but about 120-140% above historical norms. On a broader set of reliable but more varied measures, the elevation averages about 116%.
Via @Sanjay__Bakshi: Recasting India: How Entrepreneurship is Revolutionizing the World's Largest Democracy
Via @PlanMaestro: City of Fortune: How Venice Won and Lost a Naval Empire
- Links
Phil DeMuth's Daily Journal Annual Meeting Notes, Part 3 (LINK) Stan Druckenmiller's interview with Bloomberg (video) [H/T Market Folly] (LINK) Measuring the Moat – Part 1 (LINK) [The tour de force on this topic is Mauboussin and Callahan's Measuring...
- Links
Q&A with Guy Spier about his book, The Education of a Value Investor (LINK) Buffett’s Private Analysis of Geico in 1976: ‘Extraordinary’ But ‘Mismanaged’ [H/T Lincoln] (LINK) Aswath Damodaran on corporate break-ups, using EBay and PayPal...
- Hussman Weekly Market Comment: Increasing Concerns And Systemic Instability
Link to: Increasing Concerns and Systemic Instability With the S&P 500 just 3% below its all-time high, there’s very little change our views here. Last week’s mild retreat only looks something other than mild when viewed in the context of a late-stage...
- Hussman Weekly Market Comment: Short Horizon, Long Horizon
Over history, and including the past decade, properly normalized valuations have remained a powerful guidepost for full-cycle and long-term returns, particularly on the horizon of 7-10 years. On that front, the current price/revenue multiple of the S&P...
- Hussman Weekly Market Comment: Sitting Ducks
The present market context is this: from a valuation standpoint, virtually every reliable measure of market valuation we observe is now within the highest 1% of historical observations prior to the late-1990’s bubble. “Reliable” in this context...