Portfolio management highlights extracted from Ruane Cunniff Goldfarb’s Sequoia Fund 2012 Annual Letter. These letters always make for pleasant reading, with candid and insightful commentary on portfolio positions and overall market conditions. Risk Free Rate, Discount Rate “Valuations for stocks are heavily influenced by interest rates, and particularly by the risk-free rate of return on […]
We all have egos in the psychological sense – defined as “a person’s sense of self-esteem or self-importance.” It’s the degree that denotes the positive or negative association that’s often attached to the term “ego.” There are two passages below, one from Howard Marks and the other from Warren Buffett, that share a common denominator: […]
Readers know that I’m a fan of Ted Lucas of Lattice Strategies. He recently wrote a piece (Applied Risk Strategy 1-21-13 – Humble Confidence and Creativity) discussing the impact of overconfidence on performance, as well as why a good risk management process should involve anticipating how assets behave in certain environments (in other words, predicting […]
Continuation of our series on portfolio management and the Buffett Partnership Letters, please see our previous articles for more details. Creativity, Trackrecord “…although I consider myself to be primarily in the quantitative school…the really sensational ideas I have had over the years have been heavily weighted toward the qualitative side where I have had a ‘high-probability insight.’ […]
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 […]
Many have read about Cornwall Capital (I wrote about them awhile back), a firm that successfully profited from shorting subprime CDS. Those who enjoyed the Cornwall Capital piece are in for a treat. Below are highlights extracted from an Eurekahedge interview with Richard Hollington of 36South, a hedge fund that also specializes in profiting from volatility […]
Continuation of our series on portfolio management and the Buffett Partnership Letters, please see our previous articles for more details. Conservatism, Volatility “Proponents of institutional investing frequently cite its conservative nature. If ‘conservatism’ is interpreted to mean ‘productive of results varying only slightly from average experience,’ I believe the characterization is proper…However, I believe that conservatism is […]
Here is an interesting piece from Ted Lucas of Lattice Strategies (2010 Q4 The Oracle of…Risk Management) on the complementary relationship between compounding and capital preservation, plus a few other insightful topics of discussion. Compounding, Capital Preservation “Losses are linear, but the appreciation required to recover from losses scales exponentially as they deepen. Thought experiment: Imagine a […]
Continuation of our series on portfolio management and the Buffett Partnership Letters, please see our previous articles for more details. Control, Volatility “When such a controlling interest is acquired, the assets and earnings power of the business become the immediate predominant factors in value. When a small minority interest in a company is held, earning power and […]
Continuation of our series on portfolio management and the Buffett Partnership Letters, please see our previous articles for more details. Trackrecord, Compounding, Duration, Special Situations, Time Management “A disadvantage of this business is that it does not possess momentum to any significant degree. If General Motors accounts for 54% of domestic new car registrations in 1965, it […]
Continuation of our series on portfolio management and the Buffett Partnership Letters, please see our previous articles for more details. The 1965 letter is a treasure trove of insightful portfolio management commentary from Warren Buffett. This is the Buffett for purists – the bright, candid young investor, encountering intellectual dilemmas, thinking aloud about creative solutions, and putting […]
Here is Part 3 of portfolio management highlights extracted from an interview with Stanley Druckenmmiller in Jack D. Schwager’s book The New Market Wizards. Be sure to check out the juicy bits from Part 1 and Part 2. Druckenmiller is a legendary investor, and protégé of George Soros, who compounded capital ~30% annualized since 1986 before announcing in 2010 […]
The following portfolio management related excerpts are extracted from Superinvestors of Graham-and-Doddsville, an article based on a speech Warren Buffett gave at Columbia Business School on May 17, 1984 Risk, Expected Return. Volatility “Sometimes risk and reward are correlated in a positive fashion. If someone were to say to me, ‘I have here a […]
Continuation of portfolio management highlights from Howard Marks’ book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor, Chapter 5 “The Most Important Thing Is…Understanding Risk” This is the first of three chapters to which Howard Marks dedicates to the topic of Risk. For those interested in Marks’ thoughts on risk, these chapters are […]
Continuation of content extracted from an interview with Steve Romick of First Pacific Advisors (Newsletter Fall 2010) published by Columbia Business School. Please see Part 1 for more details on this series. Creativity, Team Management “G&D: We also noticed that you recently hired Elizabeth Douglass, a former business journalist with the LA Times, which we found interesting […]
Ted Lucas of Lattice Strategies produces many worthwhile reads (conveniently, they’re all archived on Lattice’s website). The man is so well-read I wonder when he finds time to sleep. In this article, he references Antti Ilmanen’s new book Expected Returns, producing a wonderfully succinct piece highlighting the dangers of “conventional price history-based risk measures,” such […]
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. Topics covered include: Benchmark, Hurdle Rate, Expected Return, Volatility, & Team Management. Benchmark, Hurdle Rate “At plus 14% versus plus 10% for the Dow, this six months has been a less satisfactory period than […]
Here is the first installment of a 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 for this series. When To […]
This is a continuation in a series on portfolio management and the Buffett Partnership Letters. Please see our previous articles for more details. Slightly off tangent random fact: in 1962, Buffett into new office space stocked with – hold on to your knickers – “an ample supply of Pepsi on hand.” Volatility “It should […]