Given the mentally strenuous demands of investing, and the finite nature of time and mental capacity, effective time and mental capacity allocation is subject on which I’m constantly seeking wisdom and improvement. A book called Deep Work by Cal Newport, recommended by David Giroux of T. Rowe Price in an interview with Consuelo Mack offered some extremely […]
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 […]
A few months ago, a friend sent me this gem of an article titled Some Thoughts On Becoming An Independent Fund Manager. Perfect light reading (and reflection) for Labor Day Weekend – grab an alcoholic beverage and enjoy!
A very smart friend and I were trading emails recently (comparing notes on a particularly hairy investment) and our conversation veered toward the issue of selectivity in an increasingly expensive and upward moving market. We reminisced about the good ol’ days (2008-2010) when fairly good businesses would trade at 5x FCF, or banks with clean […]
Return asymmetry is a topic that emerges over and over again on PM Jar. It’s a topic that spans across investments strategies and philosophies (see the end of this article for links to previous PM Jar articles on return asymmetry). This is no coincidence – creating (positive) return asymmetry over time is the hallmark of […]
The following anecdote comes from WkndNotes by Eric Peters (a treasure trove of humor and investment insight) and touches upon Tesla. Our readers know that PM Jar does not discuss ideas, and we have no intention of jumping into the Tesla debate or to declare ourselves Musk-lovers. The reason why we are showcasing this excerpt is because […]
Investing is hard on the psyche. Events don’t always make sense, yet external pressures often demand that you make sense of everything seemingly random. This can lead to frustration stemming from cognitive dissonance — the discomfort experienced when simultaneously holding two or more conflicting ideas, beliefs, values or emotional reactions. Perhaps this is why I enjoyed reading […]
I’ve always found it curious why talent turns over so frequently at investment firms (at least in hedge fund land). Investing is a judgment-oriented business, and team turnover can be highly disruptive to the investment process. To retain talent, most people throw money at the problem. The video below will show you why that doesn’t […]
The following video perfectly explains why (the perception of) fairness matters, and the degree to which fairness is built into our DNAs. Given the reaction of the monkey (compensated unfairly for task performed), this concept is pretty relevant to team management.
In the competitive world of investing, each of us should constantly be seeking out competitive advantages. Personally, I believe that a certain degree of competitive advantage can be found in the cross-pollination of different schools of investment thought. Many in the value school often deride trading strategies, but they cannot deny the existence of those […]
I recently found an old letter sitting at the bottom of an unread pile of papers. A friend had passed it along with a note commenting “pretty cool…quant/technical work that makes intuitive sense.” Feeling guilty for having forgotten about this for so long, I read through the old letter, and thought the following observation on […]
A friend sent me a fund letter a few months ago, and I ruminated over whether to post the following excerpt. Ultimately, I felt compelled to share it with our Readers given its beautifully written and reflective thoughts. It indirectly illustrates the competitive nature of this business. The author of this article (and many more […]
I recently read an interview in Inc. Magazine on leadership and people management with Bob Sutton, a Stanford professor. Sutton’s audience is mainly corporations and other businesses, but his comments are directly applicable to the investment management business. After all, whether we like it or not, the investment management business is still a business that […]
In the April 14th edition of the Economist, there’s an article titled Gavea Investments: A Shore Thing, about a $7Bn Brazilian Macro hedge fund run by Arminio Fraga. The following passage grabbed my attention especially after the recent post on Seth Klarman and the topic of a proper benchmark given the increasingly global implications of […]
Many thanks to Adam Bain of CommonWealth Opportunity Capital for tipping PM Jar about this chapter in Steve Drobny’s Invisible Hands. “The Pensioner” interviewed “runs a major portfolio for one of the largest pension funds in the world.” He seems to define risk (for the most part) as volatility. Regardless of whether you agree with […]
A recent discussion led me to remember a WSJ article I read a few months ago on Bill Miller’s incredible trackrecord of beating the S&P 500 for 15 consecutive years. The author of the article pointed out the following: “Mr. Miller’s long spell of winning years was to some degree a quirk of calendars. Over […]
A few weeks ago, the WSJ featured an article titled “A Class Move for an Office” about Bank of America donating an office building in Wilmington, Delaware to a local charter school. “Wilmington’s central business district’s fourth-quarter office vacancy rate stood at 20%…The four-quarter national average was 17.3%. Bank of America weighted a number of […]
A Reader recently forwarded to me the marketing documents of an open-end investment fund based in London. The fund had an interesting incentive fee arrangement equal to 20% * (Value at Redemption – Value at Subscription), subject to an annual hurdle rate of XYZ Benchmark + 300 basis points. The incentive fee is deferred until the […]