“A relative-performance-oriented investor is generally unwilling or unable to tolerate long periods of underperformance and therefore invests in whatever is currently popular.” – Seth Klarman
Feast or Famine in the Fairholme Fund
It was a tough couple of days for star portfolio manager Bruce Berkowitz’s Fairholme Fund (FAIRX) last week. The fund lost nearly 10% on the week, with much of that loss coming on a single day. Over the past month it’s down more than 13% even though the S&P 500 is down less than 2%.
Global Diversification: Accepting Good Enough to Avoid Terrible
The U.S. stock market is once again trouncing the broader international markets this year. Through the end of September, the total U.S. stock market, as measured by the Vanguard Total Stock Market Fund, is up nearly 7% while the Vanguard Total International Fund is basically flat on the year. Since the beginning of 2013, the…
Fat Tails and Hyperinflationary Fears
“Stocks, although suffering from inflation in the short term, protect against it in the long term.” – William Bernstein
The Psychology of Lower Returns
“Building a plan around the phrase ‘sometimes you get lucky’ is not a plan.” – Cliff Asness Bloomberg aired a great sit-down interview with John Bogle and Cliff Asness last week. They covered a wide range of topics, but the one I thought was the most important for investors was that both agreed we will…
The Post-2008 Investment Conference Line-Up
The severity and depth of the financial crisis caused a shift in attitude for many in the financial world. Many things changed for investors following the crash, but especially the way we think about risk. It was a scary time and for many the fear never went away. The intellectual case for fear has always…
Will Rising Rates Hurt REIT Performance?
The prevailing wisdom on real estate investment trusts (REITs) is that they’ll be doomed once interest rates start to rise. Because of the way REITs are structured for tax purposes they have to pay out at least 90% of their taxable income in the form of dividends. The thinking goes that higher interest rates will…
Did Bill Gross Tip The Pop Machine Over?
Thousands of investment professionals gathered at McCormick Place in Chicago earlier this summer for the annual Morningstar Conference. The room had a definitive buzz to it at lunchtime. Bill Gross was the keynote lunch speaker and everyone was patiently waiting to see what he would have to say after stories, rumors and gossip swirled from…
Why Investment Advice Can Be So Confusing
It’s not simply the news or the data itself that makes things interesting when following the markets, but the discussion and reaction that they bring about from investors. Interpretation and perception become the most important element, especially since information is so easy to come by these days.
When Exotic Devices Create Exotic Problems
Vanity Fair has a fascinating article in the latest issue on airplane safety and how it affects pilot error. To make planes safer these days, engineers have designed automated systems that basically allow the planes to fly themselves.