By Jack Forehand (@practicalquant) — There are many disconnects in the asset management industry between what sells and what succeeds. Often, what is the most effective for obtaining clients is the exact opposite of what actually produces the best investment returns. Every investor is subject to a series of behavioral biases that they probably don’t even recognize. Good financial planners use those biases for good by trying to make clients aware of them and helping to… Read More
By Justin J. Carbonneau (@jjcarbonneau) — At Berkshire’s Hathaway’s annual meeting, Warren Buffett announced he had purchased approximately 75 million additional shares of Apple. Apple is already Berkshire’s largest holding, and the purchase will make Buffett an owner of roughly 5% of the company. With a current market cap of $940 billion, this makes Berkshire’s stake in Apple worth close to $45 billion. His massive stake in the company shows he strongly believes in the… Read More
John Waggoner of Investment News recently spoke with Dan Fuss, a bond expert and 42-year veteran of Loomis Sayles, about new risks facing investors. Here are some highlights: Fuss expects the Fed to implement another two to three rate hikes this year. On corporate spending and wage increases, Fuss says he believes some of the big industrials (citing Caterpillar and Deere as examples) are incorporating contingencies in their spending plans: “If the trade barriers start,… Read More
A recent Bloomberg article warns that, while active fund managers are tempted by the thought that a market downturn would allow them to showcase their talents to investors—that a “human hand” is better than the ‘dumb’ passive funds that investors have favored—”it would actually be the worst possible situation for them and likely result in a messy and hurried consolidation of the entire industry like nothing we’ve seen before.” The article asserts that the such… Read More
A recent Barron’s article shares an interview with Evercore Wealth Management’s chief investment officer John Apruzzese, who believes that the market is reasonably valued. He bases his view on the market’s real earnings yield—trailing 12-month inflation-adjusted earnings divided by price—instead of the more widely used price-earnings ratio. According to Ed Yardeni of Yardeni Associates, Apruzzese’s use of real earnings yield makes sense and “has a good track record.” Barron’s talked to Apruzzese about the implications… Read More
A recent article in Institutional Investor discusses the plight of short-sellers in the now nine-year bull market which, the article says, “is punishing these defiant minority investors to the point where it’s become hard to stay relevant as a group.” While a bullish market can provide short-sellers with “glaring opportunities for profit,” the article argues that they are also “battling animal spirits and the prevailing optimistic views of the companies they’re betting against.” They can… Read More
The Omaha World-Herald recently published an excerpt from “The Warren Buffett Shareholder: Stories From Inside the Berkshire Hathaway Annual Meeting,” an account by Georgetown University Finance Professor Prem Jain of lessons learned from attending the annual Omaha events: “The first important hint came to me when an MBA student asked Mr. Buffett’s advice on the type of job to pursue after graduation. Buffett’s suggestion was to pursue one’s passion, not referencing any specific job.” Jain… Read More
A recent Bloomberg article reports that Egyptian billionaire Naguib Sawiris has channeled half of his $5.7 billion net worth into gold and has said he believes the precious metal will rally further, “reaching $1,800 per ounce from just above $1,300 now, while ‘overvalued’ stock markets crash.” In an interview with Bloomberg, Sawiris said, “In the end you have China and they will not stop consuming. And people also tend to go to gold during crises… Read More
A recent Barron’s article offers highlights from an interview with John Doerr in which the Silicon Valley startup veteran investor shares his views on what he sees as the leadership crisis in America and the challenges ahead for venture-capital investing. Here are some highlights: Doerr said his new book, Measure What Matters— was inspired by his belief that our country is at a “particularly relevant moment when a lot of our leaders and great institutions… Read More
On the subject of long-term investing, a recent Economist article outlines six precepts every investor should keep in mind: You can’t start too early—compounding is a compelling reason to start saving when you’re young, the article argues. Risk and reward are related, but don’t think the latter is guaranteed.Risk, the article explains, is not about volatility but rather about loss of capital. “That is why investors should always have some money in cash or government… Read More
Below are links to our most popular posts for this week on Validea’s Guru Investor blog. [1] Industries Concentrate and Investors Profit [2] Small College Endowment Outperforms Harvard by Indexing [3] Bond Laddering Pros and Cons [4] Beware of Expert Forecasts ——- Photo: Copyright: arcady31 / 123RF Stock Photo