Hottest links for Tuesday, March 4th, the late edition. Get our free daily newsletter and never miss a single linkfest. Also, now if you sign up you will get our new e-book on value investing.
Top stories for today are included below. We’ve got Berkshire Hathaway’s annual report, hedge funds not sold on hedge funds, and some very smart people giving some very pointed warnings as more and more money flows into junk loans.
Hottest Links: Stories
Value Investing
The Final Relaxo Lecture – by Sanjay Bakshi
My BFBV course @ MDI got over in January 2014. One of the highlights of the course was a live case on Relaxo Footwears Limited (NSE:RELAXO) (BOM:530517), a company in which I am invested. The case was initiated at the beginning of the course. [Joe Koster, Value Investing World]
Charlie Munger’s Talk
Today, I am going to use some of the key ideas from one of Charlie Munger’s most interesting talks titled “Practical Thought on Practical Thought”. [Fundoo Professor]
Winter finance book round-up
The fact is that I turn down most offers for review copies of books and those that I do get I most likely will not get around to reviewing in any meaningful way. However of late I have received a handful of books worth noting.* The following are short discussions and not full-blown reviews for the following books. John F. Wasik – Keynes’ Way to Wealth: Timeless Lessons from the Great Economist, Lars Kroijer – Investing Demystified: How to Invest Without Speculation and Sleepless Nights, Megan McArdle – The Up Side of Down: Why Failing Well is the Key to Success and more. [Tadas Viskanta, Abnormal Returns]
Research trumps emotions when it comes to investing
Canadians are 10 times more likely to classify themselves as research focused (71%), than emotional (7%) investors, finds BMO’s Psychology of Investing Report. [Advisor.ca]
How bias affects investment decisions
Imagine what it would be like if you woke up every day and had to learn all physical and mental tasks from scratch. It’s impossible to even imagine such a situation. Thanks to the human brain, we don’t have to bother about most tasks every single day. [Equitymaster.com, Business Line]
That’s So Random
For at least the course of my lifetime, we Americans – all of whom are said to be “created equal” – have held to a straightforward construct of the American Dream, where it’s always morning in America. [Above The Market]
Funds
Seth Klarman: Investors Downplaying Risk “Never Turns Out Well”
In his letter to investors, Seth Klarman noted that “most” investors are downplaying risk and this “never turns out well,” noting that most people are not prepared for anything bad to happen. [Mark Melin, ValueWalk]
Oaktree’s Marks Urges Caution as Money Flows Into Junk Loans
“When things are rollicking and the market is permitting low-quality issuers to issue debt, that’s when you need a lot of caution,” Howard Marks, the founder and chairman of Oaktree Capital Group LLC (NYSE:OAK), said in a telephone interview. “You have to apply a lot of discernment.” [Sridhar Natarajan, Bloomberg]
Berkshire Hathaway Annual Report 2013
So, Buffett’s annual letter to shareholders came out. What can I say? Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) is an incredible money making machine. They grew book 18.2% after some meaningless charges. [KK, Brooklyn Investor] Furthermore, though Buffett doesn’t specifically talk about this in his annual letter to shareholders, these results capped a five-year period, year-end 2008 to year-end 2013, in which the S&P 500 beat Berkshire’s gain in book value per share — the first such period in Berkshire’s history. [Wesley R. Gray, Turnkey Analyst]
Nonsense Forecasts
I was on TV the other day next to a guy who goes, totally matter-of-factly: “We should get 8 percent earnings growth for the S&P 500 in 2014 and earnings drive stock market returns so I expect to see an 8ish percent return for the market this year.” [Joshua M Brown, The Reformed Broker] Every year Barron’s reports on the Penta asset-allocation survey of 40 leading wealth management firms (such as Barclays PLC (NYSE:BCS) (LON:BARC), Fidelity National Financial Inc (NYSE:FNF), Goldman Sachs Group Inc (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and the like), which outlines in broad terms what those firms’ base recommended portfolios look like. [Robert Seawright, Pragmatic Capitalism]
Forbes Continues To Insult, Slander Prince Alwaleed
In spite of (or because of?) his protestations last year, Forbes continues to insist that His Royal Highness is worth 50% less than the prince insists he is, thereby denying him his rightful place alongside (and preferably ahead of) Mark Zuckerberg (#21 with $28.5 billion). [Jon Shazar, DealBreaker]
Performance review February 2014 – Comment “Is small still beautiful ?”
In February, the portfolio performed +2,7%, which is -2,5% lower than the Benchmark (25% Eurostoxx 50, 25% Eurostoxx small, 30% DAX and 20% MDAX). YTD, the portfolio is up +6,5% vs. 3,2% for the Benchmark. [Memyselfandi007, Value And Oppurtunity]
Hedge-Fund Genius Isn’t Really Sold on Hedge Funds
Here you can read 10 internet pages about the efficient markets hypothesis by Cliff Asness, who runs the quant hedge fund AQR Capital Management, and John Liew, another founding principal of AQR. [Matt Levine, Bloomberg]
How Stocks Became the 2014 Underdog Trade
ConvergEx looks at year-to-date ETF inflows and outflows and picks up on something rather interesting – after an incredible year in 2013, investors are now shuffling their portfolio assets back toward bond ETFs and away from stock ETFs. [Joshua M Brown, The Reformed Broker]
Russian Oil, Gas Won’t Be Hurt By Current Situation In Ukraine
As the Ukrainian crisis deepens we favor Russian oil companies, especially Surgutneftegaz OAO (MCX:SNGS) prefs, over Russian gas companies. Oil companies have very limited operational exposure to Ukraine, and even benefit materially from a weaker rouble. [ValueWalk]
Why investors should be wary of discounted funds
On the face of it, Hargreaves now hosts the cheapest trackers on the market. From UK equity to emerging markets you could easily put together a diversified portfolio using its range. [The Accumulator, Monevator]
My Hate Affair With RadioShack
After seeing RadioShack Corporation (NYSE:RSH)’s horrific fourth quarter results, including a challenged balance sheet and its last-ditch and latest survival plan, which includes shutting 1,100 stores, it dawned on me. [Herb Greenberg, Herb On TheStreet]
Hottest Links: Not The Onion
Oscars: Chinese Fans Mourn Lack of ‘Little Golden Man’ for Leonardo DiCaprio
Chinese viewers watched avidly as the “Little Golden Man,” as the Oscar is called here, was handed out to various celebrities in Los Angeles Sunday night. But the focus was mostly on Leonardo DiCaprio’s failure to win a statuette. [Clifford Coonan, The Hollywood Reporter]
