• 24 May
    As Credit Growth Slows, The First Recession Bell Tolls

    As Credit Growth Slows, The First Recession Bell Tolls

    • The economy can only grow as fast as productivity in the long term.
    • U.S. real GDP growth has been around 2% in the last 8 years while productivity growth has lingered at 0.5%.
    • Therefore, 75% of economic growth is under the influence of credit. Credit expansion is slowing down and turning negative.

    Introduction

    What do you do when your neighbor, that you know makes the same amount of money as you do, buys a Porsche, puts a big pool in their garden, remodels and refurnishes their house, and throws big parties to brag about it? More →

  • 23 May
    Portfolio Management & Trading – The Value Investing Way

    Portfolio Management & Trading – The Value Investing Way

    • A value investor should trade when a better bargain present itself.
    • Liquidity is a key component of an investment and of a portfolio.
    • Klarman’s advice is to stay in touch with the market to find opportunities, average down, and hold ten to fifteen stocks max for proper diversification.

    Introduction

    We’ll continue with the analysis of Seth Klarman’s book Margin of Safety. Today we’ll discuss chapter 13, Portfolio Management and Trading. More →

  • 22 May
    Don’t Let Information Avoidance Threaten Your Long Term Returns

    Don’t Let Information Avoidance Threaten Your Long Term Returns

    • There are lots of ways to present historical data to achieve different outcomes.
    • Information avoidance can be extremely harmful in investing and health. Just think about what obesity does to your health and a high price to earnings ratio does to your investment returns.
    • If you’re open to some contrarian information, Investiv Daily is the platform for you.

    Introduction

    A recent survey showed that global investors expect returns of 9.5% above inflation while advisors expect returns of 5.3% above inflation. Such expectations come from the fact that when you go to speak to the majority of advisors, they just show you the best possible data set they have in order to sell their products. More →

  • 21 May
    Sunday Edition: How The Other News This Week Makes For A Possible Buying Opportunity

    Sunday Edition: How The Other News This Week Makes For A Possible Buying Opportunity

    There was a story this week that was largely overshadowed by all the noise in Washington.

    An unprecedented cyber attack, the WannaCry ransomware attack, began infecting tens of thousands of computers all over the world on Friday, May 12.

    By Monday morning, there were reports that the attack had hit targets like Britain’s National Health Service, the Russian Interior Ministry, FedEx, French carmaker Renault, and Spanish telecommunications firm Telefónica. More →

  • 19 May
    What Three Chinese Companies Tell Us About The Risks You Need To Watch For In Emerging Markets

    What Three Chinese Companies Tell Us About The Risks You Need To Watch For In Emerging Markets

    • Proper due diligence is needed to separate low risk from high risk investments.
    • The fact is, nobody does their research anymore as ETFs and index funds have taken over the investment world.
    • I’ll describe a few Chinese investments that look amazing at first but can easily lead to a total loss.

    Introduction

    Yesterday we talked about how emerging markets are generally becoming attractive. Today we’ll discuss a few Chinese stocks that show some of the risks lying in such a market.

    As I see the S&P 500 climb to new highs, I understand that risk isn’t what investors think about, but my experience that spans a few market cycles keeps me focused on the risks while investing.

    By risk I don’t mean short term volatility coming from market sentiment. The S&P 500 hasn’t been volatile at all in the last 8 years as it has just gone up, but for every point that it goes up while corporate earnings remain flat, the risk investors are taking gets higher. More →

  • 18 May
    Emerging Markets Are Becoming More Attractive Day By Day

    Emerging Markets Are Becoming More Attractive Day By Day

    • Volatility is a given in emerging markets, but it’s also what creates amazing opportunities.
    • Economics, fundamentals, and currencies are all in favor of emerging markets.
    • China is just doing what the FED should have done 5 years ago: tighten after an expansion period.

    Introduction

    Emerging markets are a volatile beast, this is a given. However, the inherent volatility is mostly the result of our perception and not of actual structural changes in a country. As an example, last year a wonderful buying opportunity emerged in Cemig (NYSE: CIG), a Brazilian utility from the state of Minas Gerais. CIG’s stock price fell from double digits to $1.05 in just a few years. More →

  • 17 May
    Hunting For Bargains? Look For These Special Situations

    Hunting For Bargains? Look For These Special Situations

    • Apart from finding bargain investments, understanding the catalysts that will unlock value is even more important.
    • Complex securities, risk arbitrage, liquidations, and spinoffs are bargain hunting territory for the value investor.

    Introduction

    Today, we’ll look at Chapter 10 of Seth Klarman’s seminal work on value investing, Margin of Safety. Chapter 10 digs deeper into value investing and discusses complex situations.

    We would all love to just run a screen, find a few cheap stocks to buy, and then wait a year or two to enjoy triple digit returns. However, as the book value of the S&P 500 is just a third of its market value, value investors are in a difficult position and therefore are forced to look for bargains in all kinds of places, dig deeper, and comprehend complex situations.

    Unfortunately, if a value investment is simple to analyze, it’s also an obvious thing for other investors which limits the discount and potential returns. This leads value investors to do research into areas such as corporate liquidations, complex securities, risk arbitrage, and spinoffs. More →

  • 16 May
    When CEOs Become Delusional: The Case of Unilever’s Polman

    When CEOs Become Delusional: The Case of Unilever’s Polman

    • Unilever CEO Polman declared himself more competent than Buffet just because Unilever has outperformed Berkshire in the last 8 years. The funny thing is, Unilever outperformed thanks to Buffett.
    • Not only that, but Berkshire outperformed Unilever on revenue and earnings while at equal valuations, Berkshire would also largely outperform.
    • The 8-year bull market has clearly gotten into some CEOs’ heads. This creates a very dangerous situation for long term shareholder value creation.

    Introduction

    In an interview with Jim Cramer, I was thunderstruck to hear Unilever’s CEO (NYSE: UL), Paul Polman, tell the world that his returns have been better in the last 8 years than Buffett’s Berkshire Hathaway (NYSE: BRK.A, BRK.B). More →

  • 15 May
    Why You Shouldn’t Love Dividends

    Why You Shouldn’t Love Dividends

    • It’s human nature to like immediate compensation. When it comes in the form of a dividend, even better.
    • However, there are far more disadvantages than advantages. Dividends are another indication of how irrational markets are.
    • We can’t even imagine what Microsoft or Apple would look like if their cash had been reinvested and not used for repurchases or dividends.

    Introduction

    When a company announces increased buybacks or hikes its dividend, the market usually reacts very positively. However, there are some people that aren’t so enthusiastic about dividends and especially buybacks as they see the former as a poor allocation of the company’s cash and the later as a fast way to destroy shareholder value. In this article, we’ll analyze why dividends aren’t as good as they seem at first sight. More →

  • 14 May
    Sunday Edition: Why I’m Excited About The New Coach

    Sunday Edition: Why I’m Excited About The New Coach

    Coach (NYSE: COH) isn’t the brand I remember from a few years ago.

    The Coach I remember sold boring handbags that felt overpriced even when they were on sale at my local department store or outlet mall. I rarely gave them a second look.

    If I told my 22 year old self that I’d now even, gasp, buy and regularly carry a Coach handbag, I think she’d be shocked and confused. But as a self-professed “fashion girl,” the Coach I have been seeing for the last couple of years has had me excited. More →

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