Fooled by swans
CXO Blog finds that rare outlier trading days - the best and worst days in the stockmarket - have:
…A massive impact on long-term stock returns, and attempting to forecast which days is a fool’s errand.
Black swans are rare events of enormous magnitude - major moves in stock market terms - that are difficult to predict. [...]
The lessons of subprime turmoil
In the first of four essays exploring the subprime turmoil Professor Stephen Cecchetti, former director of research at the Federal Reserve Bank of New York, says financial crises are not going away.
It’s human nature to push the boundaries of regulation in search of profit - which is why bankers seek to reduce the amount of [...]
A hiding to (Con)naught
A cursory look at Connaught (CNT) last week was enough to write it off as a momentum play. Its chart resembles the trajectory of a rocket approaching escape velocity and it’s a fair bet, that it might continue for err… some time.
Not being a momentum investor, I can’t offer an informed view on how long [...]
10/10 for Rogue Analyst
I’ve been following Rogue Analyst for a while now. He’s a blogging investor who talks about his own share holdings.
It’s a brave thing to do, honestly. For one thing, no investor has a 100% track-record. For another, there must be a temptation to put a positive gloss on events when they go against you.
Here’s Rogue [...]
Never listen to an investor
Evidence, if any were needed, that buying shares in undervalued companies doesn’t protect the investor from losing money in a bear market. Between 1929 and 1932 funds run by Benjamin Graham, the father of value investing, lost 70% of their value:
“We were convinced,” Graham explains, “that all of our long securities were intrinsically worth their [...]
Car crash companies set for recovery
According to Dr Keith Anderson’s Naked PE ratio, the cheapest six companies listed on the stockmarket include two companies in the auto industry. All six look like they’ve been in a crash.
Every three months I bring you the cheapest six stocks on the market fresh from the spreadsheets of Dr Keith Anderson, a lecturer at [...]
One thing you need to be a great investor
Apparently great investors have seven identifiable traits, but it’s a skill-set ordinary investors can’t learn. Don’t you believe it.
This speech is doing the rounds. Edmond sent it to me, and it’s sparked a bout of naval-gazing on the Motley Fool.
Mark Sellers, a hedge fund manager, ticks off the seven traits of great investors. Investors, that [...]
The finance book nobody wants
The world is awash with finance books. Do we really need one about Black Swans?
I received a book in the post today. It’s from Robin, a reader of this blog, who also contributes by way of the comments he leaves.
More interesting than the book, perhaps, is the reason it’s ended up on my desk, [...]
Investors behaving badly
Some views from around the Internet:
Although I’ve yet to start reading his book, instinctively I’m a fan of James Montier. He’s a behavioural investing expert who enjoys trashing conventional investment theory. Perhaps that’s because it’s a mathematical construct which tends to overlook the human factor.
Back in the real world everyone knows psychology drives markets.
Recently Mr [...]
Measuring your return (again)
There’s more than one way to crack a nut. And deciding the right method of performance measurement is proving a hard nut to crack.
Graeme’s shared a spreadsheet showing how he calculates time-weighted performance.
If you’re new to this discussion, it follows Monday’s post, How are you doing? In which I explained the money-weighted method I [...]
