In this series, we suggest worthwhile reading material on a variety of topics, not all of which are directly related to investing.
Is Value Investing Broken? – Gannon on Investing, November 9, 2016. Geoff Gannon argues that value investing is not dead. There’s always a tendency for investors to view the world as uniquely different and unlike any prior age, but this is mostly incorrect. Life was not necessarily simpler in the past which was, in many ways, more perilous than today from an investor’s standpoint. There is much to be said for the argument that the value investing principles of Benjamin Graham and Warren Buffett are timeless in terms of their applicability.
The Quest for 10-100 Baggers – The Compounders, November 9, 2016. This is actually a video of a talk given by Mohnish Pabrai at Peking University (rather than reading material) but it is quite interesting given the subject matter. Many readers will want to subscribe to The Compounders in order to follow Mohnish Pabrai’s thoughts on investing. Also, readers may want to follow his portfolio activity on dataroma which provides an easy way to keep up with 13-F filings.
The David Rubenstein Show: Warren Buffett – Bloomberg, November 4, 2016. This is a video of David Rubenstein interviewing Warren Buffett at Gorat’s Steakhouse in Omaha. While there were no groundbreaking revelations in this conversation, it was interesting to hear Warren Buffett describe his use of computers. In the past, he described his use of computers as primarily a tool for playing online bridge. Apparently he is now using a computer quite extensively for research purposes.
FreightCar America – Barel Karsan – Value Investing, November 9, 2016. At the time this post was published, FreightCar America was apparently a “net-net” although the stock price is up quite a bit over the past few days. Net-nets were a favorite hunting ground for Benjamin Graham as well as for Warren Buffett during his early years, and even made a few appearances during and after the 2008-09 bear market. However, net-nets have been more rare recently so it is interesting to see an article discussing a current example.
Steve Ballmer Says Smartphones Strained His Relationship With Bill Gates – Bloomberg, November 4, 2016. (Article and video). Steve Ballmer discusses his working relationship with Bill Gates, his tenure as CEO, as well as the circumstances that led Microsoft to miss the smartphone revolution. He does admit some mistakes related to his initial reaction to the iPhone which apparently did not factor in the possibility of carrier subsidies to defray the high sticker price of smartphones in the $500+ range.
Afraid of What Comes Next for the Markets and Economy? Read This – The Wall Street Journal, November 9, 2016. Jason Zweig argues that a time of political shock is not the right time to make major changes in an investment program. Indeed, the events of the past week prove this point with stocks initially rising early last week in anticipation of a Hillary Clinton victory, then falling precipitously in the futures market when Donald Trump’s victory appeared certain, and then rallying strongly in the days that followed when nearly everyone expected a market crash in the event of a Trump win.
How to Invest When You Only Have an Hour a Day to Do It – Gannon on Investing, November 10, 2016. Geoff Gannon receives a reader question regarding the strategies open to someone who has five to ten hours per week to devote to investing a portfolio under $1 million. He argues for spending a very focused hour every day on security selection with an emphasis on stocks that can be held indefinitely so that there is no need to devote much thought to the selling decision. The majority of investors with such a limited amount of time to devote to the endeavor should either delegate the task or purchase a market index but those who want to pursue an active strategy will find this advice interesting.
Becoming an Expert: The Elements of Success – Farnam Street, November 7, 2016. This article is a discussion of the factors that underpin success. Is success driven by luck, innate talent, or hard work? Or a combination of several factors? The article refers to Malcolm Gladwell’s “10,000 hour” theory of deliberate and focused practice for those learning a skill. Ultimately, those who want to develop world class ability in any field must not only attain but maintain a skill. And in order to grow a skill, it is necessary to constantly strain to achieve a target just out of reach. This seems intuitively true and applicable in broad areas of human endeavor.