One of the most dangerous things you can do as an investor is to make money – because of what you might do next. And… has the world’s debt been put to good use? It doesn’t seem that way. Those are a few of the messages of legendary investor (and fellow Singapore resident) Jim Rogers,…
Category: invest
The Reality of Investing in Realty
There is a mandatory question that is oft asked at wealth seminars: “Which is the best Investment you have ever made?” I usually make it a point to invert that question and state that the worst ‘investments’ I have made are the funds I parked in realty, years ago, when I had no grey hair…
How The Super Wealthy Invest?
Think of the upper echelons of the money-management business, and the image that springs to mind is of fusty private banks in Geneva or London’s Mayfair, with marble lobbies and fake country-house meeting-rooms designed to make their super-rich clients feel at home. But that picture is out of date. A more accurate one would feature…
10 Most Important Lessons in Investing & Finance – Jim Grant
I’ve published over 800 issues of Grant’s Interest Rate Observer to date… That’s more than four million words of market analysis. I’ve made some good calls in that time (and, yes, some bad ones). I’ve even gained some fame – at least in certain circles – for my more accurate predictions. But, more importantly, I…
Why PE 10 Works Better In Some Markets Than Others
It is well-documented that starting valuations have been found to be highly predictive of subsequent returns, not just in the United States, but in many other equity markets around the world. One of the more popular valuation metrics for evaluating prospective returns in a given market is the ‘cyclically-adjusted price-to-earnings’ ratio, or ‘CAPE,’ developed by…
The Hidden Risk of Passive and Index Hugging
What is wrong with passive and index hugging? One problem is that these strategies often use ETFs. I wrote about the potential for ETF meltdown last October, with a follow-up shortly thereafter, so I won’t belabor that here. Another problem is that most passive portfolios follow a cap-weighted index. Recently I also wrote about the…
Can Machines Produce Better Earnings Forecasts Than Humans?
We received many good questions about Euclidean’s last letter, where we discussed how one can use the tools of deep learning to predict companies’ future earnings. The letter referenced a paper we published recently highlighting the opportunity to systematically make earnings predictions that may improve the performance of commercially applied investment strategies that currently rely…
Why You Should Read Those Boring 10-K Filings
What happens when publicly traded companies issue their annual 10-K reports? Empirical evidence suggests that the stock market pays immediate attention to the tables, but less to the text. Yet the information in the text eventually is reflected in stock prices. In other words, for a significant period of time, price-relevant information about public companies…
Stellar Earnings Not Enough to Take Stocks Higher
The stock market’s response to the reporting on first quarter earnings over the past few weeks shows that January was likely the moment of peak happiness for investors in this cycle. The earnings results so far have been exceptional, and Wall Street is running out of superlatives to describe them. Roughly 80% of S&P500 companies…
The Mental Habit That Helped Warren Buffett Become a Billionaire
Warren Buffett tends to bill himself as an ordinary guy who just happened to make a ton of money by being thoughtful, patient, and frugal. He’s also very smart, and puts a lot of time and effort into thoroughly understanding the market and his investments. But there’s one other quality Buffett has that the rest…
Financial Engineers Killed the Art of Investing
The first few explosions from the protests in front of the nearby Greek parliament building didn’t faze the patrons in the bar of Athens’s historic Hotel Grande Bretagne in Syntagma Square. Cullen Thompson, co-founder of Bienville Capital Management, a boutique investment firm, remained deep in conversation with his partner Ralph Reynolds, a reporter, and a…
The Father of Portfolio Theory Harry Markowitz Bets on Rebuilding
Harry Markowitz, a Nobel Prize winner and the father of modern portfolio theory, has invested 100% of his liquid assets in the stock market, betting that the destruction from last year’s hurricanes will bolster industries involved in the reconstruction. “It’s for the long run, but not the indefinite long run,” he says. “My thought process…
Alternate Investments 