Learning from the Hierarchy of Investor Needs

By Justin J. Carbonneau (@jjcarbonneau) —  The original “hierarchy of needs” model was developed by Abraham Maslow in 1943. Maslow proposed the hierarchy as a way to understand human motivation and later extended it to human curiosity. The hierarchy can be viewed as a pyramid with layers, which included things like “physiological,” “safety,” “belonging and love,” “esteem,” and “self-actualization”. Each part builds off the one below, and before one could move up the pyramid the… Read More

The Benefits of Base Rates

By Jack Forehand (@practicalquant) —   Wall Street prediction season is upon us. It is the time of year when all the major investment banks and market pundits will issue their 2019 market outlooks. They will tell you what they think will happen in the next year and will even by nice enough to give you exact price targets they think the S&P 500 will reach by year end. Unfortunately for all of us, those predictions won’t… Read More

Most Read on Validea’s Guru Investor

Below are links to our most popular posts for this week on Validea’s Guru Investor blog.- [1] The Benefits of Base Rates [2] Ian Cassel: Investing is Hard [3] Biology Key to Surviving Adaptive Markets, Says Lo [4] Grantham on Why the S&P Melt-Up to 3,600 Didn’t Happen ——- Photo: Copyright: arcady31 / 123RF Stock Photo  

Buffett and Cooperman Agree Luck is Key to Investing Success

“Whatever success I’ve achieved, I think I’ve achieved it because I’ve been very lucky,” said founder and CEO of Omega Advisors Leon Cooperman in an October interview on CNBC. Cooperman echoes sentiment of Berkshire Hathaway CEO Warren Buffett, who has often said he was born with advantages that helped him along the way—which he refers to as winning the “ovarian lottery.”. In 2013, Buffett said, “The womb from which you emerge determines your fate to… Read More

Quants Searching for Alpha in Exotic Corners of Market

“The search for elusive alpha is sending a handful of computer-driven hedge funds trawling the remotest corners of financial markets,” according to an article in Bloomberg. A subset of these so-called commodity trading advisers (CTAs) are use a niche strategy to look for “uncorrelated returns and a little extra alpha in anything from cheese and Turkish scrap steel to obscure chemicals or eggs in China,” the article says, but warns that in the past such an… Read More

Buffett Repurchases Over $900 Million in Berkshire Stock

An article in The Wall Street Journal reports that Berkshire Hathaway repurchased $928 million in stock in the third quarter of 2018, calling it a rare move that indicated Chairman Warren Buffett sees a dearth of appealing investment options for his company’s large cash balances. This is the first repurchase since 2012, the article says, reflecting the “the scarcity of attractively priced projects and deals that can satiate yield-hungry investors and firms more than nine… Read More

Grantham on Why the S&P Melt-Up to 3,600 Didn’t Happen

In a memo in January of this year, GMO founder Jeremy Grantham suggested to clients that they “brace themselves for a near-term melt-up in stock prices that might take the S&P 500 to the 3,600 area,” according to an article in Financial Advisor. Citing a research paper published by Harvard University entitled, “Bubbles for Fama,” Grantham highlighted price acceleration as a strong indicator of bubble activity. For the three weeks following his memo, the article says,… Read More

Ian Cassel: Investing is Hard

At the Smallcap Discoveries Private Investor Conference in October, Ian Cassel presented a talk entitled, “Investing is Hard.” He opened his talk with several interesting case studies, featuring companies such as Amazon, Valent Pharmaceuticals, Apple and Monster Beverage. He then listed several lessons he has learned during his career: “Successful investing is counterintuitive to our human nature. It’s a lifelong process of retraining our minds to think different and better.” Whether an investor is successful… Read More

Jeremy Siegel Says Stock Market Slips are not Cause for Panic

In a podcast  on the Knowledge@Wharton radio show, finance professor Jeremy Siegel shared insights on the markets and the key drivers for change in sentiment. On a macro level, Siegel recommended that long-term investors “not panic at the stock market’s recent dips,” and predicted that equities would be “either flat or up by as much as 10% for all of 2018.” Here are some highlights: Siegel sees recent corrections as normal, adding, “I thought the… Read More

Biology Key to Surviving Adaptive Markets, Says Lo

MIT finance professor Andrew Lo believes that there are factors that influence market movements in addition to those outlined in the efficient market hypothesis, according to an article in CFA Institute. In a presentation at this year’s CFA Institute Fixed-Income Management 2018 Conference, Lo explained that, while the traditional investment framework is not wrong, it doesn’t take everything into account. “Markets behave much more like biological ecosystems rather than physical devices,” adding, “In a stable… Read More

Oaktree’s Marks: Recession Isn’t Imminent

Although he sees no signs of an impending U.S. recession, Oaktree Capital co-founder Howard Marks believes it’s time to “adopt a cautious investment strategy,” according to an article in Bloomberg. The economy is still doing well, Marks told Bloomberg TV in Sydney, adding that despite the dearth of bargains in many markets, “strategies should still focus on remaining invested and position defensively, without piling into cash.” Marks said he doesn’t believe a recession is coming… Read More