Industry Ranks February 2012
I’m working on my quarterly reshaping — where I choose new companies to enter my portfolio. The first part of this is industry analysis. My main industry model is illustrated in the graphic. Green industries are cold. Red industries are hot. If you like to play momentum, look at the red zone, and ask the...
On Corporate Cash
In human terms, we are most often best off with the via media, that is, the middle way. So it is with corporate cash. The first article I wrote on the internet (in 2003) argued for the value of excess cash in the hands of intelligent management teams. But there is a limit to that,...
On Corporate Cash
In human terms, we are most often best off with the via media, that is, the middle way. So it is with corporate cash. The first article I wrote on the internet (in 2003) argued for the value of excess cash in the hands of intelligent management teams. But there is a limit to that,...
Ten word investment philosophies
Every writer knows that trying to express an idea in the fewest number of words is one of the hardest tasks. That is, in part, [...]
On Junk Bonds
If someone were to ask me my opinion on Junk Bonds at present, fool that he would be to ask me because I know real experts elsewhere, I would say this: They are good for a speculative trade, but dumb money has arrived. Be ready to sell when the momentum fails. High yield ETFs sell...
Against Simple Valuation Metrics
There have been a lot of articles dealing with use of corporate free cash flow lately: Dividends — get them, are they sustainable? Buybacks — do they add value or not? Acquisitions — are they overpaying? What are the synergies? But you never hear about the last one — internal investment for organic growth. There...
The Rules, Part XXVIII
Rebalancing of any sort in investing presumes an underlying stability to the economic system, and thus, market returns. Rebalancing will not protect against socialism, war, or an overleveraged position. The concept of rebalancing requires the idea of reversion to mean. It will not protect you when profound shifts are happening, where the market are moving...
Stock Idea Series
Every now and then an idea strikes me, and I wonder if it would be worth trying. Here’s one: much of the stuff that passes for analysis of stocks on the web leaves me cold. It feels like a computer spit out a few ratios, with standard verbiage. What if I chose some stocks at...
Industry Ranks January 2012
I’m working on my quarterly reshaping — where I choose new companies to enter my portfolio. The first part of this is industry analysis. My main industry model is illustrated in the graphic. Green industries are cold. Red industries are hot. If you like to play momentum, look at the red zone, and ask the...
Permanent Asset Allocation
Short run Intermediate Long Run Nominal Real Nominal Real Nominal Real Stocks + - + small - big + 0 Bonds - 0 0 0 + 0 Cash + - + - + - Gold 0 - + small - + - Short run Intermediate Long Run Inflation Real Inflation Real Inflation Real Stocks +...
Resilient portfolios in the face of structural breaks
Today is a great example of why it is so difficult to be an investor. Even when the data says one thing one can easily [...]
Stock Prices versus Implied Inflation
Eddy Elfenbein wrote a good post recently on the stock market versus inflation expectations. When I read it, I said to myself, “Wait, is the relationship between nominal and real rates really 1:1, or is it more complex?” Though it is not certain, the regressions that I ran indicated that 1:1 was not falsified by...
