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Hottest Links: Biased Algorithms, Keynes’s Portfolio, And Consensus

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Hottest links for Wednesday, February 12th, 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 a bunch of great links for the middle of the work week, including some musings on the Harvard endowment, an analyst who loves Amazon but won’t buy the stock, and a look at John Maynard Keynes’s stock portfolio.

Hottest Links: Stories

Value Investing

What I Learned From Ray Dalio

I try to learn from the best. Ray Dalio is one of them. He founded Bridgewater Associates, one of the biggest hedge funds in the world. Many retail investors have not heard of him, probably because his funds are open only to big institutions. [Samuel Lee, Morningstar]

Beware Consensus: When to Ignore the Investment Experts

Consensus has been consistently wrong; indeed, it seems that any time there is an agreement of sorts on just about any issue, the opposite has happened. [Barry Ritholtz, The Big Picture]

The Checklist Manifesto: How to Get Things Right

It’s no secret that I’m a huge fan of Atul Gawande. A reader recently pointed out that I hadn’t covered his most recent book, The Checklist Manifesto: How to Get Things Right. I had only covered an interesting subset of the book—why we fail. [Shane Parrish, Farnam Street]

The pros and cons of building an investment story

So you’ve crunched the numbers on a particular company and they’re looking good.  It has a long history of profitable dividend growth, and that growth has been faster and more consistent than average. [John Kingham, UK Value Investor]

How I Multiplied My Income 2.5x, Savings 5x, and Happiness 20x (After Quitting My Job)

On 1st January 2011, when most people around me were making resolutions to lose weight and eat better, I was making up my mind to do something else. I finally did it on 4th January. I told my boss – “I quit!” [Vishal Khandelwal, Safal Niveshak]

Woefully Neglected Evidence on Systematic Decision Making

Our aim in this paper is to bring the woefully neglected literature on predictive modeling to bear on some central questions in the philosophy of science. The lesson of this literature is straightforward: For a very wide range of prediction problems, statistical prediction rules (SPRs), often rules that are very easy to implement, make predictions than are as reliable as, and typically more reliable than, human experts. [Wesley R. Gray, Turnkey Analyst]

John Maynard Keynes’s Own Portfolio Not Too Dismal

When it comes to John Maynard Keynes and his economic theories, the economist has long been a lightning rod as tall as the Empire State Building. Yet examining his investment success is another matter, and far less prickly.  [John F. Wasik, The New York Times]

JEMTEC: A Canadian Hidden Champion Trading at a 40% Discount to Net Cash

Jemtec Inc. (CVE:JTC) is a provider of offender monitoring equipment and services to provincial and federal corrections agencies in Canada. Since pioneering this emerging field two decades ago, JEMTEC has risen to hidden champion status by having started all electronic monitoring programs operational today in Canada. [Mackie, Moatology]

Why I love Amazon.com, Inc. (NASDAQ:AMZN) but Won’t Buy Its Stock

For the past year, since we got Amazon Prime, I’ve been hooked on shopping on Amazon.com. I have bought things there that I never thought I would. [Vitaliy Katsenelson, Insititutional Investors]

Notes on The Art of Short Selling

“For the last week I’ve been carrying “The Art of Short Selling” around with me just about everywhere. Every time I get a break, I just open to a chapter. Doesn’t matter if I’ve already read it. I just read it again.” Michael Burry, from SiliconInvestor.com [Joshua Wallis, Wallrus Value]


Bias Algorithms? How Ironic!

We find activity in both variables spikes by about 20% at regular intervals of 5 or 10 minutes throughout the trading day. We argue that this activity is the result of algorithmic trading influenced by human traders/programmers’ behavioral bias to transact on round time marks. [Wesley R. Gray, Turnkey Analyst]

Harvard’s Endowment: Wise or Foolish?

Warren Buffett says, “What the wise man does in the beginning, the fool does in the end.” In a Barron’s feature over the weekend, writer Andrew Bary dug into the portfolio of Harvard’s Endowment through an interview with their CIO, Jane Mendillo. [Smead Capital Management]

Hottest Links

US Corporate Pension Funding Dips Back to 84.2% in 2014

January was a testing month for pension plans as funded status declined in correlation with drops in equity markets and interest rates, according to Russell Investments. [Sage Um, ai-CIO]

What if Multiples Hadn’t Expanded in 2013?

Last year the S&P 500 (INDEXSP:.INX) rose by 30% while earnings grew by 5.5%.  This year analysts expect earnings to grow by another 10%, meaning that they expect earnings to grow by 15.5% from 2012 through 2014. [Scott Krisiloff, Avondale, Asset Manager]

Stolper Is Stolpered Out: Goldman Sachs Group Inc (NYSE:GS)’s Chief FX Strategist Leaving The Firm

The one man who singlehandedly generated over 10,000 pips in FX profits for Zero Hedge readers who faded his each and every call over the past 5 years, is finally gone. [Tyler Durden, ZeroHedge]

Hottest Links: Not The Onion

Rutgers makes professor teach class he is clueless about, suspends him for telling students

Administrators on the main campus of Rutgers University in New Brunswick, N.J. have suspended a renowned anthropology professor because he told students that he knows nothing about the subject matter in a course school officials assigned him to teach. [Eric Owens, The Daily Caller]

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