As 2007 comes to a close, many investors prepare to enter 2008 with some trepidation regarding the outlook on the economy.Economists are widely quoted in the media predicting recession. Today's online Wall Street Journal features a video clip with the Chief Economist of Nomura Securities saying the economic activity in the first half of 2008 will...
Friday, December 28, 2007
It's time for year-end charitable contributions
It's the time of year for posting any contributions to charities and organizations working towards causes you care about. Typically, those donations must be received by the charity by December 31st in order to count towards your tax year for 2007.However, as Steven Malanga details in this article in the most recent edition of City Journal, many charitable...
Friday, December 21, 2007
Holiday Wishes
This giant sequoia (sequoiadendron giganteum) is the General Grant Tree, in Sequoia and Kings Canyon National Park. Discovered in 1862, it was named the General Grant in 1867.In 1926, President Calvin Coolidge designated it the Nation's Christmas Tree and each year since park rangers have held a ceremony at the tree on the second Sunday of December.In...
Wednesday, December 19, 2007
Anatomy of "style drift"
Previously, such as in this post, we have discussed the problem that is common to "mass-managed money" which is the fact that as they grow larger and larger, they are forced to own more and more securities -- and if they invest in equities, they are forced to own shares in larger and larger corporations.The fact is that most investors in the United...
Tuesday, December 18, 2007
A portfolio manager's perspective on Fed critiques
As we have explained several times in various posts (such as the first one on this blog), our investment philosophy is based upon the long-term health of successful businesses (choosing good companies), rather than upon the shaky foundation of attempting to time market cycles or predict fluctuations of currencies, commodities, or interest rates --...
Wednesday, December 12, 2007
What is the future of search?
Here is a link to an interesting story by Dean Takahashi of the San Jose Mercury discussing an internet start-up called Mahalo (named for the Hawaiian word meaning "Thank You").The article reports that "Mahalo is a search engine that is powered by human judgment, known in Web 2.0 circles as 'curation.' Curation uses human expertise to weed out all...
Tuesday, December 11, 2007
Deworsification
In yesterday's post, we discussed some of the drawbacks caused by portfolio size. As "mass-managed money" pools grow larger, they are forced to own more and more portfolio holdings and those holdings typically need to be in larger and larger companies as well.Some of the largest mutual funds have well over two hundred names -- one fund mentioned as...
Monday, December 10, 2007
The further you are from owning individual companies . . .
The further you are from owning individual companies, the more your investment
management tends to be rooted in the performance of
markets (or sectors of the market)
rather than rooted in the performance of businesses.
In a mutual fund, you don't actually own the stocks of businesses. The mutual fund owns -- in
a giant pool -- those...
Friday, December 07, 2007
Don't isolate your forces
Deploying your capital has some parallels to deploying forces on the battlefield.
In both cases, for instance, you don't have unlimited resources to accomplish everything you want to do. You can't put troops on every single hill -- you have to weigh the costs and the risks and decide where you are going to deploy your forces....
Tuesday, December 04, 2007
Stick that in your pipe and smoke it
Here is a link to a video presentation of a talk given by Professor Noah Robinson of the Oregon Institute of Science and Medicine at the annual Gilder Telecosm event in October, 2007.Of course, a fairly large segment of the population does not permit any discussion of this side of the global warming argument to be so much as whispered. Simply uttering...
Friday, November 30, 2007
Become aware of IPTV
Remember what television was like in the 1970s? There were no DVD players, not even VHS players yet -- you watched what was on when it was broadcast. If a movie came to television, it was over a broadcast network (no Netflix). For much of the 1970s, there wasn't even cable television, so you were stuck with a handful of VHF broadcast stations and...
Thursday, November 29, 2007
Don't fear the current recession drumbeat
Recently, the "recession drumbeat" of those warning of the growing risk of a recession has been growing louder and louder.Yesterday, for example, the stock market rallied strongly on negative comments from Fed Vice Chairman Donald Kohn, which market participants took as signaling a probable rate cut in the upcoming Fed meeting on December 11.Today's...
Monday, November 26, 2007
Would you prefer options linked to your company or to the S&P 500?
In December 2006, this article appeared in the San Francisco Chronicle Magazine typifying the kind of journalism that surrounds the "active versus passive" debate.The article recounts the education of "hundreds of impetuous young multimillionaires" at Google who were given lectures on the superiority of index investing from Bill Sharpe, Burton Malkiel,...
Wednesday, November 21, 2007
Happy Thanksgiving to all
As we head into Thanksgiving, many of the economic commentaries you hear on the radio or on the financial news media will be focusing on "Black Friday" (so named because retailers supposedly spend the entire year up to Thanksgiving "in the red," and then go "in the black" in a rush of post-Thanksgiving shopping).Accompanying all this talk of Black...
Tuesday, November 20, 2007
Malpass hits nail on head
In his most recent Forbes opinion, Bear Stearns Chief Economist David Malpass hits the nail on the head.He points to "the uncertainty in U.S. tax rates and the scheduled tax rate increases" as underlying explanations of what ails U.S. markets here in the last months of 2007.We agree, and point out that we sounded the same note last week in a blog...
Monday, November 19, 2007
A word about insurance
Late last evening I received terrible news about the medical prognosis of a friend.
I don't talk about life insurance with my friends, but I know a lot about life insurance. Life insurance is not something you really discuss with your friends, even if you are in the habit of discussing the markets or specific investments with them...
Friday, November 16, 2007
Gambling, Speculation, and Investment
We draw a very important distinction between gambling, speculation, and investment.Today, many prospective investors do not understand this distinction, largely because the term "investment" is often misapplied to activities which should more properly be identified as speculation, or even as gambling, as we explained in a Taylor Frigon commentary...
