Seth Klarman’s Bleak Warning Chills Davos

In his 22-page annual letter to investors, Baupost Group’s Seth Klarman warned that increasing political and social tensions around the globe may end in an economic disaster. This according an article in The New York Times that describes the letter as a “warning shot.” “It can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions,” Klarman wrote in the letter, which was reportedly shared during the annual meeting of the World… Read More

Jack Bogle’s Legacy: The Cost Matters Hypothesis

A recent article in Forbes describes the late John Bogle as “dogmatic and rigid” and a “sanctimonious scold.” But, it adds, “he was right.” Referring to Bogle as the “titan of low-cost investing,” the article offers an overview of his long and fascinating career and his consistent preaching that investing costs matter, more than past performance. Bogle’s thesis—that if you hire a money manager to beat the market (paying fees whether or not they do)—eventually… Read More

Joel Greenblatt Likes Companies That Gush Cash

In a Bloomberg interview with host Erik Schatzker, Gotham Asset Management co-chief investment officer Joel Greenblatt talked about his value investing approach. Greenblatt explained that his firm doesn’t focus on price-earnings ratio but rather on a company’s cash flow—and that they evaluate all S&P 500 companies “bottoms up” using data going back to 1990. He said, “we can actually contextualize where we stand today, according to how we value companies” (using absolute and relative value… Read More

Zweig on Investing and Socializing

Wall Street Journal columnist Jason Zweig reported that newly released data from Riskalyze (a California-based firm) reveals state-by-state patterns in investor risk tolerance—using responses from more than 458,000 clients of about 22,000 financial advisers (responses were scored on a scale of 20 to 90, with 20 representing the lowest tolerance). “Perhaps unsurprisingly,” wrote Zweig, “New Yorkers scored near the top, at 85,” topped only by Nebraskans (90), with residents of New Jersey, Florida, and New… Read More

Tudor Jones: Fed Won’t Raise Rates in 2019

An article in CNBC.com reports that hedge fund Paul Tudor Jones says the Fed will stop hiking rates in the coming year. “The one thing I would say is there’s a high probability that this hike…will be the last one for a long time,” Jones told CNBC after the Fed’s rate hike in December.  He also said he expects increased volatility in the market, with swings of up to 15 percent in both directions going… Read More

The Best Fund Managers of 2018

The Wall Street Journal published its Winner’s Circle list of the top stock-fund managers for last year, noting that despite the S&P 500 having the worst December since 1931 and U.S. stock funds averaging a loss of 7.73% for the year, “a handful of managers emerged as big winners, posting double-digit gains for the year.” To name the winners, the Journal identifies the most successful actively managed U.S. stock funds with at least $50 million… Read More

The Case Against Value Stocks

By Jack Forehand (@practicalquant) —   Confirmation bias is one of the biggest problems in investing. We all have a set of core beliefs, and we tend to surround ourselves with people who also believe them and focus on information that validates them. For me, one of those things is that value stocks will beat the market over time. There is no shortage of data to support value. The academic research shows that is has worked historically.… Read More

2019 Predictions Will Miss the Mark, or Worse

A Bloomberg article by columnist Barry Ritholtz notes that this is the time of year when prognostications surface from strategists and analysts but asserts that they are, “for the most part, exercises in futility.” “The problem with forecasts goes beyond their mere lack of accuracy,” he declares, adding, “My critique is with the underlying cognitive and philosophical failing that are associated with the entire forecasting industry: a lack of humility, the assumption of a skill… Read More

Private Equity Returns More Illusion than Reality

A CFA Institute article offers analysis of private equity returns in the U.S. (using data from Cambridge Associates). Using the data, the Institute created a U.S. Private Equity Index the compare the industry’s performance against the S&P 500: But while the data shows outperformance, the article notes that the trend is “more illusion than reality. After all,” it says, “private equity portfolio companies are typically valued on a quarterly basis so lack a daily time… 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] Some Thoughts on Multi-Factor Investing [2] The O’Shaughnessy Approach: Guarding Against Narrative-Loving Humans [3] John Bogle: Passing of an Investing Icon [4] Marko Kolanovic Says Quant Investing Has Limits ——- Photo: Copyright: arcady31 / 123RF Stock Photo