This is a continuation in our series of portfolio construction & management highlights extracted from Seth Klarman’s Margin of Safety. In Chapter 13 (Portfolio Management and Trading) – Part 3 below, Klarman shares his thoughts on a number of portfolio construction and management topics such as risk management, hedging, and correlation. Portfolio Management, Risk “The challenge of successfully managing an […]
This is a continuation in our series of portfolio construction & management highlights extracted from Seth Klarman’s Margin of Safety. In Chapter 13 (Portfolio Management and Trading) – Part 2 below, Klarman shares his thoughts on the illusory nature of liquidity, and the tricky task of knowing when to sell. Liquidity, Catalyst, When To Buy, When To […]
Many years ago, Seth Klarman wrote a book titled “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor.” It is now out of print, and copies sell for thousands on eBay, etc. This marks our first installment of portfolio construction & management highlights extracted from this book. We begin this series not with […]
Following up our recent article on selectivity standards in an upward moving market, below are some comforting words (and/or coping advice) from Mariko Gordon of Daruma Capital derived from her October 2013 Newsletter. “My ruminations on regret are of the bull market variety. Whereas bear markets make me regret owning every single stock in the […]
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 […]
Continuation of portfolio management highlights from Howard Marks’ book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor, Chapter 15 “The Most Important Thing Is…Having a Sense for Where We Stand.” Cash, Risk, Opportunity Cost “The period from 2004 through the middle of 2007 presented investors with one of the greatest opportunities to outperform […]
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 […]
Continuation in our series on portfolio management and Seth Klarman, with ideas extracted from old Baupost Group letters. Our Readers know that we generally provide excerpts along with commentary for each topic. However, at the request of Baupost, we will not be providing any excerpts, only our interpretive summaries, for this series. Sizing, Catalyst, Expected […]
Below are some portfolio management highlights from a recent interview (July 2013) with Bob Rodriguez and Dennis Bryan of First Pacific Advisors in Value Investor Insight. Especially intriguing is Bob’s description of his ongoing experiment related to the effects of diversification on portfolio returns. Diversification, Sizing, Volatility “Your portfolio today has fewer than 30 positions. […]
Continuation of portfolio management highlights from Howard Marks’ book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor, Chapter 14 “The Most Important Thing Is…Knowing What You Don’t Know” Mistakes, Sizing, Diversification, Leverage, Opportunity Cost “…the biggest problems tend to arise when investors forget about the difference between probability and outcome – that is, when […]
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 […]
People often remark that “AUM is the enemy of performance.” But is this truly always the case? Here’s another thought-provoking excerpt from Stephen Duneier of Bija Capital Management that explores the nuances of the AUM-Performance relationship. AUM, Expected Return, Sizing, Selectivity, Liquidity “Since becoming a portfolio manager more than ten years ago, I have managed […]
Summaries below are extracted from a speech Michael Price gave at the 2013 (June) London Value Investor Conference. If you have read our previous article based on an interview Peter J. Tanous conducted with Michael Price many years ago, you’ll find that Price’s portfolio management philosophy has not changed much since then. Many thanks to […]
There’s something in the Santa Barbara water (or wine) that produces some extremely thoughtful investors/writers. Some of you already know that I’m a fan of Eric Peters of Weekend Notes (who resides in Santa Barbara). A friend recently told me about Stephen Duneier of Bija Capital Management (another Santa Barbara resident) who also has been writing […]
Below is Part 5 of PM Jar’s interview with Howard Marks, the co-founder and chairman of Oaktree Capital Management, on portfolio management. Part 5: Creating Your Own Art “You can glean insights from many places and then assemble them into your own formula. You can’t copy somebody else. Well you can – but that’s not […]
Below is Part 4 of PM Jar’s interview with Howard Marks, the co-founder and chairman of Oaktree Capital Management, on portfolio management. Part 4: The Art of Transforming Symmetry into Asymmetry “If tactical decisions like concentration, diversification, and leverage are symmetrical two-way swords, then where does asymmetry come from? Asymmetry comes from alpha, from superior […]
Below is Part 3 of PM Jar’s interview with Howard Marks, the co-founder and chairman of Oaktree Capital Management, on portfolio management. Part 3: The Intertwining Debate of Diversification and Concentration “Diversification in itself does not add or subtract value, it only affects the probabilities.” PM Jar: During times when you are overwhelmed by opportunities, […]
Below is Part 2 of PM Jar’s interview with Howard Marks, the co-founder and chairman of Oaktree Capital Management. In the excerpts below, Marks discusses his approach to the art of investing: transforming symmetrical inputs into asymmetric returns. Be sure to read Part 1: An Idea of What Is Enough. Part 2: Real World Considerations “You shouldn’t […]
“Investing is an art form. Take the hundred greatest painters, their paintings look nothing alike. The definition of great is not uniform.” When asked about the art on the walls, he answers he is not a collector, merely an admirer. There’s no corner office with custom or museum-quality furniture. There’s no glaring display of power […]