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Edge Is Everything

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October 17, 2017

I have been meaning to read Ed Thorp’s new book A Man for All Markets. Short on time in recent weeks, I settled instead for a succinct interview with Thorp in Jack Schwager’s book Hedge Fund Market Wizards. Below are highlights in which Thorp shares his thoughts on position sizing and risk management. Key takeaways: (1) […]

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Michael Mauboussin – Part 4

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September 20, 2017

Below are excerpts (Part 4 of 4) from Thirty Years: Reflections on the Ten Attributes of Great Investors by Michael Mauboussin. Psychology, Intrinsic Value, Expected Return What riots & bubbles have in common: “…investing is an inherently social exercise…prices can go from being a source of information to a source of influence. Imagine 100 potential rioters milling […]

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Michael Mauboussin – Part 3

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August 31, 2017

Below are excerpts (Part 3 of 4) from Thirty Years: Reflections on the Ten Attributes of Great Investors by Michael Mauboussin. Portfolio Management, Sizing, Psychology “Position sizing and portfolio construction still do not get the attention they warrant.” Preach! “Puggy Pearson was a cigar-chomping gambling legend who won the World Series of Poker and was one […]

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Mauboussin on Investor Psychology – Part 2

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August 16, 2017

Below are excerpts (Part 2 of 4) from Thirty Years: Reflections on the Ten Attributes of Great Investors by Michael Mauboussin, which contains lots of insightful commentary on how behavioral psychology can greatly impact one’s likelihood of investment success. Creativity  “I believe…that diverse input combined with rigor can lead to insight. This is all very consistent […]

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Mauboussin on Investor Psychology – Part 1

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August 2, 2017

There seems to be a fair amount of behavioral investing tidbits originating from Columbia Business School affiliated sources these days. We previously posted excerpts from a Kingstown Capital interview (Columbia Business School alums) in which they discuss how they’ve woven behavioral psychology into their investment and team management process. Below are excerpts (Part 1 of […]

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Columbia Interview with Kingstown – Part 2

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July 18, 2017

Below is Part 2 of excerpts from an interview with Kingstown Capital Management (Michael Blitzer and Guy Shanon) conducted by the Columbia Business School Graham & Doddsville newsletter publication. Patience, Volatility, Clients “The longer we do this, duration of capital and time horizon has actually become more and more of a competitive edge. We’ve always […]

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Columbia Interview with Kingstown – Part 1

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July 3, 2017

Greetings! It has been a very long time since our last PM Jar article. In 2015-2016, a variety of opportunities emerged in the marketplace, and I was busy actively investing and implementing PM Jar concepts at Marram Investment Management. If you are curious about this implementation process and its outcome, here’s a link to Marram’s […]

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More Ray Dalio Wisdom

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May 23, 2016

Additional excerpts from Ray Dalio’s Principles. By presenting thoughts along similar veins by other investors, I do not wish to imply that Dalio’s thoughts are unoriginal. Instead, I am merely attempting to highlight psychological and behavioral commonalities between these investors. Random coincidence that these overlaps exist? Perhaps. But it’s much more fun to contemplate other contributing […]

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Ray Dalio on Mistakes

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April 6, 2016

A long time ago, I stumbled upon this gem/manifesto by Ray Dalio, the billionaire founder of hedge fund giant Bridgewater ($154Bn AUM). It doesn’t contain his investment principles or Bridgewater’s secret sauce (which is likely constantly evolving anyway, powered by talented and creative minds). Instead, it offers a wealth of general advice on life, collected […]

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Soros’ Alchemy – Chapter 4

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March 30, 2016

Seth Klarman of Baupost wrote in a 1996 Letter that one should always be cognizant of whether seemingly different investments are actually the same bet in order to avoid risk of concentrated exposures. In other words, the task of risk management involves identifying (and if necessary, neutralizing) common risks underlying different portfolio holdings. One such […]

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BlueCrest’s Michael Platt

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December 19, 2015

Michael Platt and BlueCrest Capital have been in the headlines recently as the latest hedge fund billionaire to return external capital and morph into a private partnership / family office. Below are portfolio management tidbits from Platt’s interview with Jack Schwager in Hedge Fund Market Wizards. Capital Preservation, Risk, Team Management “I have no appetite […]

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Soros’ Alchemy – Chapter 1, Part 3

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November 20, 2015

Continuation in our series of portfolio management highlights from George Soros’ Alchemy of Finance – Chapter 1, Part 3: Soros introduces the theoretical foundations of reflexivity. Psychology, Intrinsic Value “What makes the participants’ understanding imperfect is that their thinking affects the situation to which it relates…Although there is no reality independent of the participants’ perception, there […]

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Soros’ Alchemy – Chapter 1, Part 2

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November 10, 2015

Continuation in our series of portfolio management highlights from George Soros’ Alchemy of Finance – Chapter 1, Part 2: Soros discusses the flaws of human psychology, how it complicates the task of investing in a marketplace of other thinking participants, why historical performance is not indicative of future results. He also explains why the term […]

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Soros’ Alchemy – Chapter 1, Part 1

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November 7, 2015

Portfolio management highlights from George Soros’ Alchemy of Finance – Chapter 1: The Theory of Reflexivity. In part 1, Soros discusses the concept of price equilibrium, supply and demand, and why market prices fluctuate. Intrinsic Value “The concept of an equilibrium is very useful. It allows us to focus on the final outcome rather than on […]

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Soros’ Alchemy – Preface & Intro

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September 30, 2015

Dear Readers, apologies for the length of time since our last article. It’s been a busy year – got married, growing the business, grappling with a large position ruining otherwise healthy year-to-date performance – you know, all the usual life items. We have all experienced situations when the fundamentals of a business are moving in […]

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My New Crush: Stanley Druckenmiller

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July 1, 2015

I have a new (intellectual) crush: Stanley Druckenmiller. If you don’t share my feelings, you will after you read his Jan 2015 speech at the Lost Tree Club. Portfolio management related excerpts below: Diversification, Sizing “I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept…And if […]

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Klarman 1991 Interview with Barron’s

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June 15, 2015

This 1991 Barron’s interview with Seth Klarman offers some intriguing insights into how Baupost got its start, and the nature of Klarman’s initial client base and business structure. Baupost currently manages ~$32 Billion AUM (per latest firm ADV), whereas ~24 years ago that figure stood at $400mm, and ~33 years ago only $27mm. Time + compounding […]

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The Sugar Cookie

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April 23, 2015

Many moons ago, we shared with you this matrix highlighting the importance of focusing on process over outcome.   In every investor’s lifetime, there will inevitably be one or more instances of “bad breaks” – when the investment process was solid, but the outcome was nonetheless bad. If that has ever happened to you, then […]

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Whitebox on Risk & Risk Management

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March 21, 2015

There must be something in the Whitebox water supply: it’s producing an army of investment math nerds with acute self-awareness and sensibilities, led by their fearless leader Andy Redleaf. Those of you who have not yet seen Whitebox’s “10 Enduring Principles To Interpret Constant Market Change” are missing out — it is absolutely worth three […]

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Cross-Pollination: Volatility & Options

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February 1, 2015

In our continual search for differentiation in this fiercely competitive investment biosphere, we remain intrigued by the idea of cross-pollination between investment strategies. After all, regardless of strategy, all investors share a common goal: capital compounding through the creation of return asymmetry over time. Fundamental investors often shy away from options and volatility, labeling them […]

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