Money and Finance
The Davis Dynasty is a different kind of investing book. Its part biography, part history of investing business, and part how to succeed as a long term investor.
The Davis Dynasty tells the story of three generations of investors - Shelby Davis, Shelby Cullom Davis and Chris Davis. The latter still actively engaged at the Davis Venture Fund.
One of the common threads that run through the three generation is a substantially longer term focus this side of anyone outside of Omaha. This pays off in the long run. All investors know the power of compounding, but long term focus means that you are positioned to improve with age- 1 to 2 is nice, 2 to 4 is better, and when you get to 4 to 8 that is really great.
The end of the book summarizes the Davis principles of investing:
1. "Avoid Cheap stocks"
2. "Avoid expensive stocks" - the combined effect of rule 1 and rule 2, means that the Davis' occupy a middle ground between classic growth and classic value. When I look at the holdings of the Davis Venture Fund - Wells Fargo, Costco, Google, Bank of NY Mellon, Amazon, Berkshire, CVS - I am left with the impression that its a quality at a reasonable price focus. Avoiding expensive stocks is obvious, but rule 1 is counterintuitive. I agree that most of the time stocks are cheap for a reason.
3. "Buy moderately priced stocks in companies that grow moderately fast"- look for companies that grow faster than the earnings multiple. That way you lock in a good chance for the Davis double play - higher earnings plus higher valuation. This takes time.
4. "Wait until the price is right" - as the Davis saying goes - "you make most of your money in bear markets, you just don't realize it at the time." Many investors from 2008 and beyond can relate to this. A corollary rule here is that you want to avoid losing most of your money in bull markets (not realizing you lost it until later).
5. "Don't fight progress" - seems obvious, but doubly important once you realize the time component. Progress can grind down your competitive advantages, to give the double play a chance to materialize you cannot swim against the tides for long periods.
6. "Invest in a theme"
7. "Let your winners ride"
8. "Bet on superior management"
9. "Ignore the rear view mirror'
10. " Stay the course"
Overall, its a very interesting read if you like market history. The book will not likely add new tactics to your investing toolset, but it does a good job of reinforcing long term investing principles and shows how these principles interact with real world markets through many decades of gyrations.
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- Selected American Shares: Stocking Up On Financials
When Chris Davis says he invests for the long term, he means it. The average holding period of stocks in Selected American Shares, a member of the Kiplinger 25, is ten years. Davis is the third generation of a family that has been investing in "durable,...
- Chris Davis On Wealthtrack
Chris Davis Video (1/18/08) on WealthTrack: http://www.wealthtrack.com/video_player.html-....................-Related Previous Post: The Davis Research Methodology-..........-Book: The Davis Dynasty: 50 Years of Successful Investing on Wall Street ...
- The Davis Research Methodology
A short history of Davis Advisors and our unique approach to building long-term wealth through investing in equities, including: what we look for in a company, how we arrive at an appropriate purchase price and the factors that may prompt us to sell a...
- Omaha Trip Report
The Berkshire Hathaway weekend is a lot of fun, its great to hang out with friends and talk and learn together. Every year there is something new. This year, I completed what I call the Omaha Triathlon part 1 - Berkshire Hathaway meeting, part 2- the...
Money and Finance
The Davis Dynasty Book Review
The Davis Dynasty tells the story of three generations of investors - Shelby Davis, Shelby Cullom Davis and Chris Davis. The latter still actively engaged at the Davis Venture Fund.
One of the common threads that run through the three generation is a substantially longer term focus this side of anyone outside of Omaha. This pays off in the long run. All investors know the power of compounding, but long term focus means that you are positioned to improve with age- 1 to 2 is nice, 2 to 4 is better, and when you get to 4 to 8 that is really great.
The end of the book summarizes the Davis principles of investing:
1. "Avoid Cheap stocks"
2. "Avoid expensive stocks" - the combined effect of rule 1 and rule 2, means that the Davis' occupy a middle ground between classic growth and classic value. When I look at the holdings of the Davis Venture Fund - Wells Fargo, Costco, Google, Bank of NY Mellon, Amazon, Berkshire, CVS - I am left with the impression that its a quality at a reasonable price focus. Avoiding expensive stocks is obvious, but rule 1 is counterintuitive. I agree that most of the time stocks are cheap for a reason.
3. "Buy moderately priced stocks in companies that grow moderately fast"- look for companies that grow faster than the earnings multiple. That way you lock in a good chance for the Davis double play - higher earnings plus higher valuation. This takes time.
4. "Wait until the price is right" - as the Davis saying goes - "you make most of your money in bear markets, you just don't realize it at the time." Many investors from 2008 and beyond can relate to this. A corollary rule here is that you want to avoid losing most of your money in bull markets (not realizing you lost it until later).
5. "Don't fight progress" - seems obvious, but doubly important once you realize the time component. Progress can grind down your competitive advantages, to give the double play a chance to materialize you cannot swim against the tides for long periods.
6. "Invest in a theme"
7. "Let your winners ride"
8. "Bet on superior management"
9. "Ignore the rear view mirror'
10. " Stay the course"
Overall, its a very interesting read if you like market history. The book will not likely add new tactics to your investing toolset, but it does a good job of reinforcing long term investing principles and shows how these principles interact with real world markets through many decades of gyrations.
- Positive Psychological Changes From Meditation Training Linked To Cellular Health
Found via Mark’s Daily Apple.Positive psychological changes that occur during meditation training are associated with greater telomerase activity, according to researchers at the University of California, Davis, and the University of California, San...
- Selected American Shares: Stocking Up On Financials
When Chris Davis says he invests for the long term, he means it. The average holding period of stocks in Selected American Shares, a member of the Kiplinger 25, is ten years. Davis is the third generation of a family that has been investing in "durable,...
- Chris Davis On Wealthtrack
Chris Davis Video (1/18/08) on WealthTrack: http://www.wealthtrack.com/video_player.html-....................-Related Previous Post: The Davis Research Methodology-..........-Book: The Davis Dynasty: 50 Years of Successful Investing on Wall Street ...
- The Davis Research Methodology
A short history of Davis Advisors and our unique approach to building long-term wealth through investing in equities, including: what we look for in a company, how we arrive at an appropriate purchase price and the factors that may prompt us to sell a...
- Omaha Trip Report
The Berkshire Hathaway weekend is a lot of fun, its great to hang out with friends and talk and learn together. Every year there is something new. This year, I completed what I call the Omaha Triathlon part 1 - Berkshire Hathaway meeting, part 2- the...