Ben Carlson

How a Single Investment Can Make or Break Your Reputation

“It takes 20 years to build a reputation and five minutes to ruin it.” – Warren Buffett One of the amazing things about the financial markets is that a single investment idea can either make or break your reputation for years to come. Take John Paulson for example. During the financial crisis Paulson made what…

Andy Grove on The Importance of an Outsider’s Perspective

One of the things that never made sense to me while attending business school was how to apply all of the theories and case studies we were learning to the real world. In most management books you read about successful companies and try to figure out their recipe for success. But the real world is complicated…

Smart Beta Crash Coming?

Rob Arnott from Research Affiliates caused a bit of a stir in the fund world a few weeks ago when he called for a potential crash in smart beta funds. Here were the main takeaways from his recent research paper: 1. Factor returns, net of changes in valuation levels, are much lower than recent performance suggests….

Some Things I Don’t Understand

A few things I’ve been pondering lately… Why has the average credit card rate remained at ~15%? Interest rates on mortgage, bonds and car loans have all fallen drastically since 2007. Why not credit card rates? I understand these rates need to be higher but why has the spread compared to other credit instruments not…

Would It Help?

I recently watched the movie Bridge of Spies with Tom Hanks. It was an excellent true story about a lawyer who was brokering deals for hostages with the Soviet Union during the Cold War in the 1950s. Hanks played the main character, James Donovan, who was tasked with the unenviable job of defending a Russian…

The Stock Market’s Secret Weapon

Elon Musk is one of those rare successful businessmen who has crossed over into pop culture because of his lifestyle and personality. Not only has the billionaire founder of Tesla and SpaceX been called the Thomas Edison of our day and age, but he has reached celebrity status as the inspiration for Robert Downey Jr.’s portrayal…

The Pitfalls of Benchmarking

The latest SPIVA numbers are out and once again it doesn’t look too pretty in terms of active management’s ability to outperform their benchmarks: The passive management revolution, the zero-sum nature of investing, the fact that markets are so competitive these days and the high cost of active management are the prime suspects for these…

Mythbusters: Financial Blogger Edition

In Thinking, Fast and Slow, Daniel Kahneman introduces the concept of what you see is all there is (WYSIATI). WYSIATI occurs when people jump to conclusions based on limited information. In many aspects of life, rules of thumb can be helpful. There are times when you need to jump to conclusions based on a small amount of information…

Why Investors In Alternatives Perform So Poorly

There was a story in Bloomberg today about the University of California’s endowment fund and their latest moves to shake up the portfolio: The University of California’s endowment, which manages $2 billion in hedge fund investments, plans to pull money from the worst-performing managers and redirect assets to top firms, the state system’s investing chief…

How To Be Wrong As An Investor

“I’m only rich because I know when I’m wrong. I basically have survived by recognizing my mistakes.” – George Soros One of the best and worst things about the financial markets is that they’re never going to be perfect. There will always be something to worry about because even stability can breed instability. This is…