Mohnish Pabrai’s Ten Commandments of Investment Management

In a presentation to Boston College’s Carroll School of Management last month, Pabrai Investments Funds founder Mohnish Pabrai outlines his Ten Commandments of Investment Management: Thou shall not skim off the top: Investment managers should never take fees off the top, Pabrai argues, echoing the shared view of Warren Buffett and Charlie Munger. Thou shall not have an investment team: Investment analysis, which Pabrai describes as “the fun part of the job” is best done… Read More

Zweig and Grant on the Pressure to Go Passive

On a recent episode of WealthTrack, Consuelo Mack interviewed financial journalists Jason Zweig and James Grant regarding the lagging performance of value stocks and the pressure to move to passive investing. Here are some highlights: According to Zweig, “The real utility of a value investing framework is that it helps modulate your emotions as a value investor.” Grant argues that the current cycle is likely to end badly due to: (1) the corruption of accounting… Read More

How This Emerging Market Selloff is Different

A recent article in The Wall Street Journal addresses the current selloff in emerging markets stocks and how it differs from past routs. “The deepening selloff in emerging markets this year,” the article reports, “is one of the biggest of the past decade—and differs in ways that highlight how the developing world has changed.” The current environment, it says, was triggered by rising interest rates and trade tensions along with other shifts, including the emergence… Read More

Learning from the Mistakes of Legendary Investors

In a recent issue of the AAII Journal, author Michael Batnick highlights missteps made by investing legends as outlined in his book Big Mistakes: The Best Investors and Their Worst Investments (Bloomberg Press, 2018). Investors tend to expect the future to look like the recent past. “We believe that the object in motion will stay in motion,” Batnick writes. “Successful investing is about finding the balance between being prepared for the good times to last… Read More

Contrary to Pew Findings, Pension Funds Should Have Alternative Investments

An article in Bloomberg refutes the claims by a Pew Charitable Trust report that was subtitled, “Substantial investments in complex and risky assets exposes fund to market volatility and high fees.” The article states, “There are two independent assertions here, both misleading:” The first argument refers to the statement that investment in risky assets exposes pension funds to market volatility: “True enough,” the article states, “but the report documents that the amount allocated toward stocks… Read More

Is “Quantamental” Stock Picking the Next Frontier?

According to a recent article in MarketWatch, quantitative analysts and fundamental stock pickers are “increasingly putting their heads together to produce better results for investors.” The blend of these two styles, it says, may soon make the term “quantamental” common among investors, but the jury is still out on the results. Fundamental investors (i.e. Warren Buffett) track corporate earnings, balance sheets, industry trends, the economy and other data to make their investment decisions. Quantitative analysis,… Read More

Most Read Posts on Validea’s Guru Investor

Below are links to our most popular posts for this week on Validea’s Guru Investor blog.- [1] When Your Experience Fails You [2] Withdrawal Strategy Suggested by Stanford for Affluent Boomers [3] Zweig: “Smart” Money is Bailing on U.S. Stocks [4] Businesses are Guiding Down Earnings Estimates ——- Photo: Copyright: arcady31 / 123RF Stock Photo  

IPO Market Accepting Money-Losing Firms

“Stock investors are welcoming money-losing companies into public markets this year with open arms,” according to an article in The Wall Street Journal. Citing data compiled by University of Florida finance professor Jay Ritter, the article reports that about 83% of U.S. listed IPOs in the first three quarters of 2018 involved companies that “lost money in the 12 months leading up to their debut,” which the professor says is the highest percentage on record.… Read More

Withdrawal Strategy Suggested by Stanford for Affluent Boomers

An article posted last month in Financial Advisor magazine suggests that financial advisors consider a withdrawal strategy recommended by the Stanford Center on Longevity to “help clients have enough money for the rest of their lives.” In a presentation to the Financial Planning Association’s annual conference in Chicago last month, Steve Vernon (author and consulting research scholar for the Center) said, “I can state with confidence that the vast majority of older workers today in… Read More

Zweig: “Smart” Money is Bailing on U.S. Stocks

Wall Street Journal columnist Jason Zweig writes that while data shows how the S&P 500 has outperformed international stocks for years, the numbers can “play tricks on you. It still makes sense to add international stocks to a U.S. portfolio, probably more so than ever.” Zweig notes that while the numbers show that the U.S. market has dominated over the long run, it’s only because stocks have done so well in the recent past. “Lofted… Read More