• 27 Apr
    The S&P 500 Only Has Sentiment To Thank For The Gains In The Last 5 Years

    The S&P 500 Only Has Sentiment To Thank For The Gains In The Last 5 Years

    • Positive sentiment alone has added 950 points to the S&P 500 in the last 5 years.
    • The S&P 500 has returned 12% in the last 5 years, but only 4.5% in the last 10 years and just 2.7% in the last 17 years. Don’t let current positive sentiment lead you to such terrible long term returns.
    • The opportunity cost might be significant, but the long term picture of not following the herd looks much better.

    Introduction

    I know that if I buy a stock with a price to earnings (P/E) ratio of 10 and stable future business prospects, my very long-term return should be around 10%, plus inflation and eventual growth. If I buy a stock at a P/E ratio of 5, my returns will be around 20%, while if I buy a stock with a P/E ratio of 20, my returns will be around 5%. It’s as simple as that, in the long term. More →

  • 26 Apr
    If You’re An Investor, Now’s The Time To Get Out Of The S&P 500, Index Funds, & ETFs

    If You’re An Investor, Now’s The Time To Get Out Of The S&P 500, Index Funds, & ETFs

    • If you only look at averages, passive investing will always outperform active due to lower fees, but you can only expect average returns.
    • The market is skewed and inefficient due to huge flows into passive funds, outflows from active funds which should be doing the thinking, and euphoric management doing large stock buybacks. This creates a highly risky situation.
    • Avoid owning index funds, ETFs, and stocks that are largely owned by passive funds.

    Introduction

    There are two investing worlds. One is the world of active investing where the fund manager you hired analyzes company after company and invests in those they think are the best. The passive manager simply disperses your funds over an index where you will perform exactly as the market performs. With passive investing, fundamentals, dividends, growth, sales, scandals, and business trends don’t matter at all. More →

  • 25 Apr
    Klarman’s View On Risk & Return

    Klarman’s View On Risk & Return

    • It’s essential to focus on risk, whether you are a trader, dividend investor, or value investor.
    • One of the biggest investment fallacies is that risk and return are positively correlated.
    • The market is inefficient because of extreme liquidity provided by central banks, passive investments, and share repurchases.
    • Volatility is low, but this doesn’t mean risks are low.
    • Klarman provides a simple and powerful definition of risk.
    • If you can’t tolerate price volatility, you shouldn’t invest in stocks. Own T-bills instead.
    • A declining stock price should increase your returns.

    Introduction

    Today I’ll continue summing up Klarman’s iconic investing book Margin of Safety.

    Every time I reread the book, I’m more astonished by the wisdom it contains. I hope to transfer as much value as possible to you as the book is extremely difficult to get (lowest price on Amazon is $1,000). Today’s topic is from Chapter 7, The Nature of Risk. More →

  • 24 Apr
    Global Growth Is Finally Getting Some Traction, Be Sure Your Money Follows

    Global Growth Is Finally Getting Some Traction, Be Sure Your Money Follows

    • Macroeconomic trends are extremely important for your investing or trading returns.
    • The IMF’s World Economic Outlook is a great starting point for understanding where the risks and opportunities lie.
    • Long term trends show emerging markets and commodities are the place to be.

    Introduction

    Investing is both difficult and easy. It’s difficult if you try to guess what the market’s sentiment will be next week or next month, while it’s easy if you simply look at slow moving structural macroeconomic trends. These trends are like little forces that shape the market, similar to the gravitational forces among planets in our solar system. More →

  • 23 Apr
    What Ever Happened To 3D Printing?

    What Ever Happened To 3D Printing?

    Have you ever read about or seen a new technology in action and thought to yourself “I’ve arrived in the future”?

    With the explosive rate at which technology has been moving in this century alone, I imagine the answer is a resounding “yes!”

    A few years ago, much of the hype about the future today was focused on 3D printers. Personal 3D printers were suddenly on the market for $1,000, and then $500, and then $300, and buyers of these printers imagined themselves not only designing and developing products of their own, but also printing and replacing broken parts, all in the comfort of their own homes. More →

  • 21 Apr
    Are We Already In A New Bear Market?

    Are We Already In A New Bear Market?

    • The biggest investor of them all just said that he will start cashing out. Hopefully, this won’t lead to a bear market, but it will certainly put the brakes on further growth.
    • Economic signals are mixed, the outlook is uncertain and as much as the low unemployment rate is positive, historically, that isn’t a good sign for the future.
    • As always, we’ll discuss what to do in this environment.

    Introduction

    It seems that the S&P 500 peaked on March 1, 2017. More →

  • 20 Apr
    On Ferraris & Investing

    On Ferraris & Investing

    • Investing in Ferrari is investing in sentiment. As long as there’s a kid dreaming of owning one, you’ll make money.
    • The trouble is that such dreams are usually crushed in recessions.
    • For investment returns, it’s much better for your financial professional to be driving a minivan. If he drives a Ferrari, find somebody else to manage your finances.

    Introduction

    For the rational human being, it’s difficult to understand the concept of luxury as the utility of such things is questionable. What’s even more difficult to understand is how investing in luxury can be logical or ever profitable, but this is exactly what investors in Ferrari N.V. (NYSE: RACE) have achieved. More →

    By Sven Carlin Ferrari Investiv Daily Luxury
  • 19 Apr
    The Next Bear Market Is Coming. Here’s Where It Will Start.

    The Next Bear Market Is Coming. Here’s Where It Will Start.

    • $2 billion a day flows into Vanguard to be mindlessly invested in the market through index funds.
    • When the only reason people invest is because staying on the sidelines means getting sore while others get rich, it usually spells trouble ahead.
    • When the investors plowing $2 billion per day understand what are they buying at extreme valuations, the next bear market will arrive and it will be terrible as the buying reverses to selling.

    Introduction

    A recent The New York Times article described how Vanguard, the $4.2 trillion mutual fund, is the fastest growing fund due to the attractiveness of passive investment vehicles and the average 0.12% fee the fund charges. The low fee is something I applaud as I strongly believe fees in the financial world should be minimal or performance related where nothing is paid if the manager doesn’t deliver. More →

  • 18 Apr
    What’s Better, Trading Or Investing?

    What’s Better, Trading Or Investing?

    • Both trading and investing can lead to satisfying returns, but the important thing is knowing which is best for you.
    • Psychological traits of both successful investors and traders are the same: patience, discipline, rationality, sticking to a well-defined, tested and working strategy, and risk reward calculations.

    Introduction

    I started off investing as a convinced value investor looking for, and investing in, bargains. My way has brought me extremely satisfying returns that, alongside lots of youthful exuberance, made me, quite often, enter into fierce discussions with traders. I would try to convince traders that trading is too risky and they would try to convince me that holding stocks for a long period of time is even riskier. More →

  • 17 Apr
    Forget About The Market & Focus On Absolute Performance

    Forget About The Market & Focus On Absolute Performance

    • Would you instantly sign up for a 15% yearly return for the next 10 years with inflation at 2%? The answer is probably yes.
    • Would you feel the same joy if the market could do 20% per year over the next ten years? Even if the answer is irrational, that is how we as humans are wired.
    • Chasing market performance is a self-reinforcing cycle that slowly builds up, but it takes less than two years for the house of cards to crash completely.

    Introduction

    Today I’ll continue with my analysis of the investing concepts discussed in Seth Klarman’s book Margin of Safety. Today’s topic is relative and absolute performance. More →

1 2 3 4 31