Hottest links for Thursday 5th December, the late edition (see Wednesday’s edition of hottest links). 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. Today, we’ve got a somewhat concerning look (well, not if you’re a business owner) at how US wages as a percentage of corporate profits are at their lowest point since World War II, an essay on the inefficiency of gift-giving just in time for the holiday season, and an excellent Ben Graham piece on why sometimes size does matter.
Hottest Links: Stories
Value Investing
Very Rare Interview: Peter Lynch On Charlie Rose (12/513)
Peter Lynch authored three books on investment along with John Rothchild. These books ‘One Up On Wall Street’, ‘Beating the Street’ and ‘Learn to Earn’; the first two books were phenomenal pieces of work, and best sellers. [ValueWalk]
The Economic Inefficiency of Gift Giving
From Michael Sandel’s What Money Can’t Buy: The Moral Limits of Markets. Joel Waldfogel, an economist at the University of Pennsylvania, has taken up the economic inefficiency of gift giving as a personal cause. By “inefficiency,” he means the gap between the value to you (maybe very little) of the $120 argyle sweater your aunt gave you for your birthday, and the value of what you would have bought (an iPod, say) had she given you the cash. [Shane Parrish, Farnam Street]
Not All Buy Backs are Equal
I first read about share buybacks when plowing through one of Peter Lynch’s classic books. Since then, share buybacks has always been one of the top things I look for when assessing the investment merits of a stock. [Jae Jun, Old School Value, Valuewalk]
Wells Fargo vs. Small Community Banks
Charlie Munger once said that he compares every possible investment to Wells Fargo & Co (NYSE:WFC)… Why buy company X if it’s not as good/cheap as WFC? [John Huber, ValueWalk]
Ben Graham Cigar Butt Hunting–Size Matters
The Ben Graham net current asset value rule provides excellent excess returns according to traditional performance measures. [Wesley R. Gray, Turnkey Analyst]
Funds
CAPE Country Returns YTD, the Ball Don’t Lie!
I’ve been publishing CAPE updates for countries quarterly on The Idea Farm, and below I highlight a blurb from our upcoming year end outlook. [Mebane Faber]
Wages Lowest Since WWII
Wages as a percent of US corporate profits lowest since WWII. [Jesse, Jesse’s Crossroads cafe]
Bears Don’t Have Much Time Here – Jeff Saut
The Dow Jones Industrial Average (INDEXDJX:.DJI) is looking at its fourth straight losing session, and possibly its second straight 100-point decline. But this brief burst of daylight for the bears isn’t likely to last, Raymond James’s chief investment strategist Jeffrey Saut said this morning on the MoneyBeat show. [Paul Vigna, MoneyBeat]
Tax avoidance curbs aim to raise £9bn
Hedge funds and other partnerships are expected to pay nearly £2bn more in tax over the next five years, as part of a £9b.. [Vanessa Houlder, FT]
Gross’ Game Plan for Tackling Vanguard
As the PIMCO Total Return Fund lost its title as the world’s largest bond fund to Vanguard last month, its Founder and co-CIO Bill Gross stated he has a plan for a comeback. [Sage Um, aiCIO]
Misc
The Future of OPEC: Saudi, Iran, Iraq
The prospect of revitalized oil production in Iraq and Iran may add to tensions between those two countries and Saudi Arabia over export quotas. [Stratfor, ValueWalk]
Intuitive Surgical Recall: More Bark than Bite?
The FDA defines Class 2 recall as “a situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.” [Herb Greenberg, The Street]
Banks’ Views of Loan Risk Rarely Off by More Than 100 Percent
The answer for U.S. regulation is more or less “bankers, with some oversight by regulators”: Big banks will be able to use what is called the “Advanced Internal Ratings-Based approach” to assess how risky their loans are, and that assessment feeds into how much capital they need to hold against their loans. [Matt Levine, Bloomberg]
Second Circuit Increases Auditors’ Litigation Risk
For a recent decision of the Second Circuit has allowed investors to proceed in their direct securities fraud lawsuit against PricewaterhouseCoopers, the auditor of hedge fund Lipper Convertibles. In this context, a direct lawsuit is one that is not derivative, and this decision could amount to a significant expansion of the litigation exposure of auditors. [Christopher Faille, AllAboutAlpha.com]
Hottest Links: Not The Onion
‘Stupidity ran deep’ during ‘stab-proof’ vest demonstration
A young Edmonton man who grievously wounded his friend while testing a supposedly “stab-proof” vest was sentenced to six months in jail Tuesday. [Ryan Cormier, EdmontonJournal]
