Fishing for Value

By | 2017-07-17T12:21:23+00:00 April 11th, 2017|Global Market Update|

Is investing like fishing? Photo: João Pacheco. Source: Picjumbo In 1653 Izaak Walton published “The Compleat Angler,” a short treatise on fishing. In this little book he explains that fishing is a pursuit that can never be truly mastered. When you go fishing, there’s always a new lure or a new location or some other shiny new toy to try out. “But he that hopes to be a good angler,” Walton continues, “must not only bring an inquiring, searching, observing wit, but he must [...]

Price, Quality, and Value

By | 2017-07-17T12:21:23+00:00 April 5th, 2017|Global Market Update|

Which is more important: price or quality? Photo: Victor Hanacek. Source: Picjumbo Ideally, you’d like to have both. But there’s an old saying in business: quality is remembered long after the price is forgotten. This quote is frequently attributed to Aldo Gucci, the founder of the Italian fashion company, but it had been a marketplace maxim long before he was around. It presents a bit of business common sense: people often forget how much they paid, but how a product performs is in their [...]

Health Care Values

By | 2017-07-17T12:21:28+00:00 March 7th, 2017|Global Market Update|

What makes health care a good (or bad) investment? Photo: Clever Cupcakes. Source: Wikimedia Commons Lots of people are looking at health care stocks. Since the end of 2015, their performance has been fairly modest, rising by less than 6%, while the rest of the market has returned almost 18%. Health care is among the cheaper sectors, with a forward P/E ratio of only 16.4x, vs the market’s 18.4x. Only telecom, which has falling revenues, is cheaper. So they are intriguing to value investors. [...]

Fishing for Value

By | 2017-07-17T12:22:41+00:00 August 4th, 2015|Global Market Update|

Finding valuable investments is a lot like finding a good place to fish. Photo: Volker Lekes. Source: Pixabay In both cases, you need to keep working at it. On its face, fishing is pretty simple: cast your lure out where the fish are biting and reel them in. In the same way, value investing is simple as well: find companies selling at a discount to their intrinsic value and buy them. A company selling below its intrinsic value offers investors a margin of safety. [...]

The Two (Investment) Cultures

By | 2017-07-17T12:22:46+00:00 June 1st, 2015|Global Market Update|

Can’t we all just get along? Teamsters wildcat strike, Minneapolis, 1934. Source: Wikipedia Fifty-five years ago scientist and novelist C.P. Snow gave a lecture on “The Two Cultures,” bemoaning the gap of understanding between literary intellectuals and scientists—between the humanities and science. At the time, policy-makers worried that many scientists had never read Dickens, and that the Atomic Age would establish a technocratic tyranny, a “Brave New World.” To these people Snow asked, “Can you describe the Second Law of Thermodynamics? Or what is [...]

The Consolation of Markets

By | 2017-07-17T12:22:46+00:00 May 29th, 2015|Global Market Update|

Where do we find financial value? Lady Fortune with the Wheel of Fortune. Source: Wikipedia In sixth century Rome, the philosopher Boethius was awaiting trial—and eventual execution—on a trumped up charge of conspiracy. While in prison, he wrote The Consolation of Philosophy, an immensely influential work that outlines how to be content in a world beset by treachery and evil. The key, he explains, is to look beyond our outward circumstances to the “one true good” we find within. Current conditions are always in [...]

The Competitive Edge (Part 2)

By | 2014-02-18T11:46:40+00:00 February 18th, 2014|Global Market Update|

How do you pick winning stocks? That’s the question that many ask. Security selection is a key way to add value to a portfolio, one of the three approaches mentioned yesterday. Critical to finding winning securities is having a way to identify them. One common approach is the value method. This looks at a company’s financial statements and compares them with its market value. If the company is cheap enough, it’s a buy. An example is the A&P chain store. After going public in [...]

Mr. Market Miscalculates

By | 2017-07-17T12:34:55+00:00 March 13th, 2012|Global Market Update, Investing|

How else can you find winning stocks?I mentioned one approach yesterday—finding a winning management team and growing with that team. Another approach has to do with the temperamental nature of the market. Benjamin Graham put it best 50-odd years ago:Imagine you have a business partner named Mr. Market. […]