Part of 2 highlights and excerpts from a March 2015 Howard Marks memo on the topic of liquidity: Liquidity During Times of Crisis “‘In times of crisis all correlations go to one.’ The prices of everything move in unison during crises because investors are driven by mob psychology, not fundamentals. Thus – and for the […]
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 […]
Continuation of portfolio management highlights from Howard Marks’ book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor, Chapter 17 “The Most Important Thing Is…Investing Defensively” — a rather apt topic given today’s market environment. Psychology, Capital Preservation, Expected Return, Risk, Opportunity Cost “What’s more important to you: scoring points or keeping your opponent […]
Given his reputation and the title of the book, we would be remiss not to feature excerpts from David Swensen’s Pioneering Portfolio Management. Below are portfolio construction & management highlights from Chapter 6: Portfolio Management. The manager anecdotes in this chapter are fairly interesting too, providing readers a window into how an institution (Yale/Swensen) evaluates its […]
I have a confession to make: I have a huge crush on James Montier. I think the feeling might be mutual (see picture below, from a signed copy of his book Value Investing: Tools and Techniques for Intelligent Investment.) Jokes aside, below are some fantastic bits from his recent essay titled “No Silver Bullets.” […]
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 […]
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 […]
I’ve been noticing quite a few 2009-vintage long/short equity hedge funds (the 137% gross, 42% net exposure variety) with steadily expanding capital bases, via both portfolio compounding and capital inflows. The latter is understandable given the spectacular return trackrecords of these funds. Yet, ever the skeptic anytime I observe capital chasing performance, I’d like to […]
Below are my personal notes (portfolio management highlights) from Charlie Munger’s Q&A Session during the 2013 Daily Journal Shareholders Meeting this Wednesday in Los Angeles. Opportunity Cost After the meeting, I approached Munger to ask him about his thoughts on opportunity cost (a topic that he mentioned numerous times while answering questions, and in previous […]
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. Mandate, Trackrecord, Expected […]
Before my November vacation, I will leave you with a juicy Baupost piece compiled through various sources that shall remain confidential. Instead of the usual excerpts or quotes, below are summaries of ideas and concepts. Creativity, Making Mistakes False precision is dangerous. Klarman doesn’t believe that a computer can be programmed to invest the way […]
Recently, I was lamenting the lack of female representation in investment management. Then in conversation, a friend reminded me of this insightful interview with Lisa Rapuano, who worked with Bill Miller for many years, and currently runs Lane Five Capital Management. The interview touches upon a number of relevant portfolio management topics. Rapuano has obviously […]
Continuation of portfolio management highlights from Howard Marks’ book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor, Chapter 4 “The Most Important Thing Is…The Relationship Between Price and Value.” Topics covered: Volatility, Leverage, When To Buy, When To Sell Volatility “…most of the time a security’s price will be affected at least as […]
Continuation in a series on portfolio management and the Buffett Partnership Letters, please see our previous articles for more details. Clients, Leverage, Subscriptions, Redemptions “We accept advance payments from partners and prospective partners at 6% interest from date of receipt until the end of the year…Similarly, we allow partners to withdraw up to 20% of […]
This post is a continuation in a series on portfolio management and the Buffett Partnership Letters. Please refer to the initial post in this series for more details. For those interested in Warren Buffett’s portfolio management style, I highly recommend the reading of the second 1961 letter in its entirety, and to check out our […]
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 […]
Seth Klarman of Baupost is a great investor. Jason Zweig is a great writer. When combined, we get a great Klarman-Zweig Interview published Fall 2010 in the Financial Analyst Journal (Volume 66 Number 5) by the CFA Institute. Here is Part 1 of tidbits from that conversation. Part 2 is available here. Volatility Graham and Dodd’s […]
Here is Part 2 on the wonderfully insightful interview in Steve Drobny’s book The Invisible Hands with Jim Leitner, who runs Falcon Investment Management, and was previously a member of Yale Endowment’s Investment Committee. Leitner is an investor who has spent considerable time contemplating the science and art of investing, making money opportunistically across all asset classes, unconstrained, […]
PIMCO’s power brains often generate really interesting and unique analysis to common questions. The summary and thoughts below were derived from a recent presentation on asset allocation. Discount Rate Post US downgrade, and recent sovereign debt crisis, what are the implications for the actual figure of the risk-free rate? What about the equity risk premium? […]
The investment management industry has a nasty habit of ignoring the effect of taxes upon returns – mainly because the biggest and most important clients don’t care about pre- vs. after-tax returns (pensions, endowments, foundations, etc.) PM Jar does not agree with this common practice. As a result, our Readers will continue to find posts […]