Hottest links for Saturday-Sunday, February 1st-2nd, the weekend edition (see Firday’s edition here). Get our free daily newsletter (which HAS BEEN RECENTLY UPDATED) 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. For the weekend, we’ve got some great stories, including a plea to care less about the stock market, a great think piece on balancing risk and return, why you should not blindly follow ‘gurus’, a hedge fund is betting big money on who will win the superbowl (but that is not the feature for today’s ‘Not the Onion’), who is to blame for the EM selloff? the 100 biggest banks in the world, More Herbalife Ltd. (NYSE:HLF) drama (John Hempton is a smart guy, you do not want to be on his bad list), and much more great articles in the Sunday edition of hottest links.
Hottest Links: Stories
Gurus Achieve An Astounding 47.4% Accuracy!
Reputed short-seller Spruce Point Capital Management released its latest short report this week. The firm is shorting Canadian dairy and grocery manufacturer Saputo. Spruce Point chief Ben Axler believes the company is entering a phase of declining growth and highlights the financial stress and growing challenges he sees it facing, not only in Canada but Read More
The results are in and they are bad. After tracking 68 experts and 6,582 market forecasts, CXO Advisory Group has concluded that the average market prediction offered by experts has been below 50% accuracy. [Rick Ferri]
Balancing risk vs return, income vs growth and quality vs value
Investing is all about risk and return. In order to get higher returns you usually need to take more risk, so there is a balance to be struck between what rate of return you would like and what level of risk you can live with. [John Kingham, UK Value Investor]
Mutual Fund Observer February Edition
Jeremy Grantham often speaks of “career risk” as one of the great impediments to investment success. The fact that managers know they’re apt to be fired for doing the right thing at the wrong time is a powerful deterrent to them. [The Mutual Fund Observer]
Taking money off the table to diversify emotionally
Some form of this quote about controlling risk by cutting losses short is at this point a cliche in the trading literature and blogosphere. To maintain any sort of investment success traders need to recognize as well as the fact that you cannot sell winners at the first sign of a profit. [Tadas Viskanta, Abnormal Returns]
Wisdom From James Montier
I have a confession to make: I have a huge crush on James Montier. [PM Jar]
Jason Zweig has one possible answer for how much to save for retirement and it’s a simple concept. The problem is, while the idea may be easy, executing it will not be for most. Because it requires discipline – like almost everything else worth accomplishing in life… [Josh Brown, TRB]
The Not-So-Big Picture on Financial Models
Rarely do i disagree with fellow investor and financial blogger Barry Ritholtz, but the time has finally come. Last week Barry wrote a column for Bloomberg View called “Why ‘Peak-Earnings Models’ Are Nonsense.” [Vitaliy Katsenelson, Institutional Investor]
Although Nintendo missed its sales targets for the Nintendo 3DS platform, they still sold enough of the systems and its games to give credence to the argument that Nintendo’s business model…. [ValuePrax]
A metadata summary: the Herbalife letters
There were three letters sent by Senator Markey about Herbalife Ltd. (NYSE:HLF). One went to the SEC, one went to the FTC and one went to Herbalife. [John Hempton, Bronte Capital]
Do Yourself A Favor: Care Less About the Stock Market
If you’re reading this you probably own stocks. Most readers of this financial publication do, directly or indirectly— usually through a brokerage account or through a pension or retirement account such as a 401(k). [David Weidner, MoneyBeat]
Finance Mythbuster: Is Economic Growth Good for Investors?
When measured over long periods of time, the correlation of countries’ inflation-adjusted per capita GDP growth and stock returns is negative. This result holds for both developed countries (for which the correlation coefficient is –0.39 using data from 1900–2011) and emerging markets (the correlation is –0.41 over the period 1988–2011). [Wesley R. Gray, Turnkey Analyst]
What do you do when your trading system goes wrong?
If you are an experienced researcher, you can employ various statistical tests, determining whether or not the actual results are plausible. Most actual traders have much less patience! [Jeff Miller, A Dash of Insight]
Kimball Wizard! Kimball International Will Turn One Into Two With Spinoff Of Its Electronics Group
Apparently, this diverse lineup was just too much for investors to handle, so Kimball International Inc (NASDAQ:KBALB) announced that it would break itself up and pursue a spinoff of Kimball Electronics. [Spin Doctor, Stock Spinoffs]
Echoes of 1997? If So Blame, the Fed, Then China
The Federal Reserve’s ultra-loose monetary policy has driven capital into emerging markets. But the Fed doesn’t view itself as central bank to the world. [Brendan Conway, Focus on Funds]
The 100 biggest banks in the world
The folks at SNL Financial just released their first-ever scorecard of the 100 biggest banks in the world. Beijing-based Industrial and Commercial Bank of China (SHA:601398) (HKG:1398) IDCBY came in No. 1, followed by a U.K. bank, two French banks and a Japanese bank. [Christina Rexrode and Sarah Squire, The Tell]
The market is not sticking with the 2013 playbook. We have gap-down opens and the Vix is back in the mix. Market participants are actually paying attention to overseas news – and not just the good news, the bad news too. [Joshua M Brown, The Reformed Broker]
Bloomberg Speculates On 3D Printing Co. Buyouts
Stratasys, Ltd. (NASDAQ:SSYS) offers Hewlett-Packard Company (NYSE:HPQ) and Seiko Epson Corporation (TYO:6724) the chance to move beyond paper-and-ink printers by acquiring a leader in the technology that’s used to replicate nuts, bolts and even football cleats. [Climateer Investing]
Hedge Fund Bets Broncos Will Be Champions Sunday
A well-worn sporting trope warns that contests aren’t decided on sheets of statistics—they are decided on the field. Analytic Investors may not disagree with that cliché, but it is willing to bet—literally—that it knows in advance who will win Sunday’s Super Bowl. [FINalternatives]
Hottest Links: Not The Onion
Japanese police officers ‘forced to eat 15 burgers at a time’
A police sergeant in Japan has resigned his post after he was reprimanded for forcing subordinates to binge on 15 hamburgers at a time to “toughen them up”. [New Straits Times]