Hottest links for Wednesday, March 5th, 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. Today, we’ve got Klarman on bubbles, Buffett on rules of thumb, and Christians giving up short-selling for Lent.
Hottest Links: Stories
The “Hot Hand” Exists, but Does it Matter?
Over the last 40 years Daniel Kahneman and Amos Tversky have put a good deal of doubt in this idea of the “hot hand”. [Cullen Roche, Pragmatic Capitalism] Related: In the zone. In a groove. En fuego. Sports broadcasters—and fans—have coined any number of terrible clichés to describe an athlete, especially a basketball or a baseball player, on a hot streak. [Climateer Investing]
Warren Buffett’s 90-10 Rule of Thumb for Retirement Investing
Legendary investor Warren Buffett endured a marathon appearance on CNBC’s Squawk Box on Monday. The good news for those of us who missed it, or didn’t have the time to sit through the entire “Ask Warren” show, is that there is an unofficial transcript of all three hours. [Lauren Foster, CFA Institute]
Letting Qantas go bankrupt would be good for Australia
When I was in my twenties I worked for the Government of Australia and I watched the privatisation of Qantas fairly closely. In those days the Finance Department swallowed the Qantas lobbying totally. What was good for Qantas was good for Australia. [John Hempton, Bronte Capital]
What Is Complexity?
In The Black Swan: The Impact of the Highly Improbable Fragility, Nassim Taleb writes: “I will simplify here with a functional definition of complexity—among many more complete ones. A complex domain is characterized by the following:” [Shane Parrish, Farnam Street]
Klarman On Tesla Motors Inc, Netflix: Bubbles, Bubbles, Everywhere
After a sizzling 2013, Tesla Motors Inc (NASDAQ:TSLA) and Netflix, Inc. (NASDAQ:NFLX) remain Wall Street darlings, but Baupost President and CEO Seth Klarman thinks this is merely a byproduct of an extremely bullish market. [Michelle Jones, ValueWalk]
Should good Christian investors give up shorts for Lent?
Lent starts on Wednesday (Ash Wednesday), marking the beginning of a 40-day period that ends at Easter. It’s also apparently a fine time to buy stocks. [Wallace Witkowski, The Tell]
The Pitiful Incomes of Hedge Fund Managers: Ritholtz Chart
When it comes to the top 0.01 percent of earners, it is extremely challenging to describe the differences in terms of income. Words often fail to convey the massive range. [Barry Ritholtz, BloombergView]
Retail Investors Slowly Stepping Back into Stocks
The latest AAII asset allocation survey showed a continued upward crawl in retail investor stock bullishness. [Cullen Roche, Pragmatic Capital]
Marks & Gundlach: Beware Junk Bonds
High yield bond issuance hit a record high in 2013 and as a percentage of total corporate issuance, is high by historical standards. And that means the structure of the corporate bond market is likely on a weaker foundation than we’re used to. [Cullen Roche, Pragmatic Capitalism]
Slim Pickings for the Tech-Inclined Value Investor– Especially in Europe
Across all three regions in the MSCI World developed index, Information Technology stands out as the sector with the largest proportion of stocks trading at greater than 25x P/E. [GaveKal Capital]
Internet Hedge Fund Exploits Shift To Mobile Devices
Tom Wyman believes his Global Internet Fund—which focuses on public companies in the mobile internet industry—is the only one of its kind, and he thinks that’s odd. [FINalternatives]
TransGlobe Energy Gears Up For First Dividend: How Big Will It Be?
TransGlobe Energy Corporation (TSE:TGL) (NASDAQ:TGA) is a $550 million upstream oil and gas company headquartered in Canada, but with the vast majority of its operations located in Egypt. [Value Stock Guide]
How The Dow Jones Could Be Almost Three Times Higher Than It Is Today
International Business Machines Corp. (NYSE:IBM) was originally added to the Dow Jones Industrials on March 26, 1932 in a reshuffle involving eight stocks including The Coca-Cola Company (NYSE:KO), Nash Motors (later American Motors) and The Procter & Gamble Company (NYSE:PG). [Bryan Taylor, Business Insider]
No, Market Highs Are Not a Bad Sign
With the reduction of tensions on the Black Sea, global markets rallied yesterday to multi-year highs. In the U.S., the S&P 500 (INDEXSP:.INX) closed at an all time high of 1873.91. [Barry Ritholtz, BloombergView]
Some Brief Updates
Nothing has been posted on this blog for a while. While I have found quite a few interesting stock ideas, I have yet had the time to write something about them. [Stevenoops, Value Venture]
A Lesson In Position Sizing
Let’s assume that at any single time you hold 50 high-beta positions with relatively equal capital allocation of about 2%. [Ivaylo Ivanhoff, Ivanhoff Capital]
Is An FTC Retweet An Endorsement? Herbalife Shareholders Are Dying To Know
Retweets are not endorsements… but they really usually are. Which is the reason some are wondering just why did the FTC show a specific appreciation of this particular tweet sent out yesterday by a user who appears to have a bone to pick with Herbalife Ltd. (NYSE:HLF), Nu Skin Enterprises, Inc. (NYSE:NUS) and other alleged pyramid schemes: [Tyler Durden ZeroHedge]
The Relentless Bid, Explained
The dips have become shallower and the buyers have rushed in more quickly each time. Sell-offs took months to play out during 2011 – think of the April-October peak-to-trough 21% decline for the S&P. [Joshua M Brown, The Reformed Broker]
How—and How Not—to Start an Asset Management Firm
Institutions’ ever-increasing share of the managed capital pool has made the asset management industry tougher than ever for start-up operations. [Leanna Orr, aiCIO]
Hottest Links: Not The Onion
Russia’s President Vladimir Putin nominated for Nobel Peace Prize
Russia’s President Vladimir Putin has been nominated for Nobel Peace Prize, Director of the Norwegian Nobel Institute Geir Lundestad has reported Wednesday. This year, a record number of nominees will contend for the Nobel Peace Prize. In the list, there are 278 politicians, public activists and organizations, including Edward Snowden and Pope Francis. [The Voice of Russia]