The Stingy News Weekly (04/04/2015)
New from StingyInvestor
Dogs ready for a rebound
"Long-term reversal is just the sort of momentum effect that value investors love. After all, if a company can resolve the troubles that sent it tumbling in the first place, its stock may bounce back to its former highs."
Value picks from Francis Chou
"He says, in part, 'In 1981, I felt the economic conditions were such that you were set up for a huge success. You just needed the courage to load up the truck and buy everything in sight. By contrast current conditions make me feel that investors are being set up for a heartbreaking disappointment, especially for the unwary.'"
Buffett can't find cheap stocks to buy
"Legendary investor Warren Buffett is not ready to say stocks are in bubble territory, but he also thinks there are 'very few' cheap stocks out there." [Buffett]
How to combine value and momentum
"The evidence suggests that we keep highly active exposures to value and momentum in their purest forms (assuming we are doing high-conviction non-watered down versions of the anomalies). Blending the strategy dilutes the benefit of value and momentum portfolios." [Value Investing]
Howard Marks talks at Google
Howard Marks talks about investing with people at Google. [video] [Value Investing]
How I was almost suckered into a pyramid scheme
"This got me thinking. What makes people like this so effective? How is it that smart people routinely lose their life savings to hucksters? How can we identify their strategies in advance so that we don't fall into these traps? While I don't have all the answers, the presenter at this event used many classic emotional-manipulation techniques discussed by Robert Cialdini in his book, Influence" [Crime]
The power of share repurchases
"Each incremental refinement to investing in the U.S. large cap stocks has led to significant improvement in returns. After controlling for nefarious or misguided motivations, a strategy based on both dividends and buybacks has delivered outsized returns since 1982. Further qualifying the strategy by insisting on attractive valuations and high quality earnings creates a strategy that has been formidable in what arguably should be the most efficient area of the global stock market." [Value Investing]
How Chicago used financial engineering
"Unsurprisingly, some of Chicago's bonds are already trading at junk levels. That said, the rating agencies and most other market participants still appear to be light years away from understanding the true scope of Chicago's financial problems. The city has a very - well, let's just call it unconventional - approach to borrowing money and probably should not be considered investment grade." [Government]
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