Here is how I am positioning my firm’s portfolio for the risk – the possibility, not the certainty – of long-term inflation.
Don’t ask for my advice on which number to put your chips on when you play roulette in Vegas; cryptocurrencies fall into the same category.
In the long term a true inflationary risk comes from growing government borrowing and budget deficits, which will bring higher interest rates and a weaker dollar with them, which will only make inflation worse and will deflate away assets.
I had a deep, existential, meaning-of-life type of conversation with a friend of mine, another value investor. I asked him, do you want Warren Buffett’s success?
I have a problem with both growth and value demagogues.
Over the last six months, my firm has skewed its portfolio towards defense companies. We have done this intentionally. The world is less safe today than at any time since the Berlin Wall came down.
The coronavirus has compressed years of changes into months. It may be the straw that broke an aging, overconfident camel’s back.
Value stocks are going down today because they are sold to buy stocks that go up because they go up.
Tesla’s market capitalization just crossed $300 billion. It’s the largest car maker in the world. Tesla’s market cap implies that its production will go up from the 400,000 cars a year it produces today...
Buffett changed his mind and bought a 10% stake in all four of the largest U.S. airlines. For a few years it seemed that he was finally right about the airlines.
Just as any propaganda needs a certain germ of truth to grow from, so do bubbles. The FANGAM are incredible companies (germ of truth), and they function better in the virus-infested world (another germ of truth). But at the core, their existence is grounded in the world that is built of atoms, not bytes.
There is a parallel between today’s stock market and Fischer random chess.
Though I loved working from home, I now realize that it came at a cost – in March and April I destroyed most of the good habits I had worked very hard to build over the last few years.
Below is a letter we recently sent to clients about how we are responding to the recent market selloff.
This article will tackle the big news. Saudi Arabia announced that it will increase oil production from 9.7 million barrels a day to 10 million and then to 12 million if needed. This news alone sent the oil price down 20% – and the whole stock market with it.
We are given the rare opportunity to prioritize what is most important to us without guilt. The material world is on pause, at least for a few weeks.
In terms of excitement, investing usually rivals watching paint dry. That has not been the case lately.
I am going to divide this letter into three sections: health and human impact (sometimes a tragic one), economic impact and investment strategy.
In 2018 I hit a midlife crisis. Some people get a red convertible; I started to pay attention to my health.
Can Tesla become as successful as Apple, and can Tesla cars turn into an iPhone-like franchise, taking EV market share from nothing to 10% to 30% of the ICE car market?
My wife loves driving the Tesla Model 3, not for all the selfish reasons I like to drive it (it is fast and quite the iPad on wheels) but because she feels she helps the environment. Is she right?
Can traditional automobile companies successfully transition to making electric vehicles?
In investing, tribalism is outright dangerous to your wealth. When you allow tribalism to impact your thinking, you lose the ability to think independently.
Neither my company nor I are long or short Tesla shares. Why don’t we own it?
I was so exhausted that I was not self-aware enough to recognize I had a problem.
The engine is the most complex and important part of the internal combustion car, but it is one of the least complex parts of the electric vehicle and, surprisingly, the least important one.
I’ve owned the car for a bit over two months, and so far it is the best car I’ve ever had.
Today I am going to write about a topic I have never written about before: personal finance.
The more “exciting” an IPO’s first-day moves, the less the company has to celebrate.
Wall Street glorifies companies that beat quarterly estimates by arguing that the long term comprises a lot of short terms. But beating earnings estimates for a few consecutive quarters doesn’t necessarily lead to long-term greatness.
Fear is not your friend. Being a successful investor requires emotional balance.
Making money on marijuana will be very difficult.
The opioid crisis in the U.S. is a true tragedy, but drug distributors are not responsible for it – an important point to remember when you read another heartbreaking article.
We’re in a low-rate-fueled bubble – just look at the venture capital market. When high-flying, Ponzi-like, VC-funded firms fail, Amazon, Google and Facebook will suffer with them.
What is happening in Ukraine, a country of 45 million people, has lately been very interesting, because there is a sliver of hope that one idealistic leader can change the course of the country.
We have learned from experience that educational background, prior experience, and even working toward the CFA designation had very little predictive power as to whether a person would end up as a great investor. There was only one factor that really mattered to me this time…
What can we do, as investors, to move toward maximum rationality? Here’s one piece of advice…
If you own the S&P 500 (or long-term bonds), you implicitly think one of several things is true…
One of the most important qualities I’d be looking for in a money manager is this…
Despite negative headlines, we own drug distributors. Here is why.
Corporate acquisitions fail for one simple reason.
I completely understand the dividend cult: Investors who used to rely on bonds for a constant flow of income are now forced to resort to dividend-paying companies. The problem is that this cult creates the wrong incentives for leaders of publicly traded companies.
What I am about to share with you is somewhat random drivel about a topic that has been very important to me in 2018 – time. I am anything but an expert on it; and in fact, as you’ll see, this is something I fail in and am trying to fail less.
The Roman philosopher Seneca wasn’t talking about the stock market when he wrote, “Time discovers truth,” but he could have been. In the long run a stock price will reflect a company’s intrinsic value. In the short run pricing is random. Here are two real-life examples.
Here are the key reasons why we sold our entire Apple stake just last week.
My firm is having little success finding solid companies at attractive valuations. Don’t just take my word for it. Take a look at several charts, below, that show the magnitude of the stock market’s overvaluation and, more importantly, put it into historical context.
As much as you might like to, you cannot control the world; but you can control how you react to it. Here’s how I learned to do just that.
My partner, Mike, and I have been reading Skin in the Game by one of our favorite authors, Nassim Taleb. The point of the book can be summed up in one sentence: You want to associate with people who will share not only upsides with you but also downsides. When someone is getting paid to sell you a product but captures no downside in the transaction (this describes the bulk of Wall Street transactions), that person doesn’t have skin in the game, and his/her advice may or may not be in your best interest.
I don’t trust the fundamentals of the global economy. The system is built on quicksand.
I wrote the following as an intro to an article about markets that I was about to share with you. But when I had finished writing about Mia Sarah, the article suddenly seemed trivial in comparison.