The Stingy News Weekly (09/14/2014)
New from StingyInvestor
There's no shame in migrating to index funds
"There is no shame in admitting that you're not the next Warren Buffett. The vast majority of investors aren't. Those who figure it out are likely to improve their returns dramatically by following simple low-cost mechanical methods such as investing in low-fee index funds."
The durable low volatility effect
"One of the basic tenets of finance is that investors are compensated for taking risk. For equity markets, that means that high volatility stocks are expected to outperform low volatility stocks. But that hasn't happened. Low-risk stocks have historically outperformed high-risk stocks." [Markets]
A few cheap stocks
"The reason that value works is that it is a proxy for expectations. Cheap valuations = lower expectations for the future--but these bleak forecasts often turn out to be too grim. This alternative way of looking at value can help investors identify stocks that are both cheap today, but also have had falling expectations over time. To paraphrase Templeton, the key isn't to find stocks for whom the outlook is good, but to find stocks for whom the outlook it is miserable." [Value Investing]
A fireside chat with Charlie Munger
"You have to strike the right balance between competency or knowledge on the one hand and gumption on the other. Too much competency and no gumption is no good. And if you don't know your circle of competence, then too much gumption will get you killed. But the more you know the limits to your knowledge, the more valuable gumption is." [Munger]
A good case of amnesia
"I am fascinated by an anecdote related recently by James O'Shaughnessy of O'Shaughnessy Asset Management. An employee who recently joined his firm told him that Fidelity had studied which customer investing accounts performed the best: They were the ones held by people who had forgotten they even had Fidelity accounts, and so did no buying or selling from them." [Behaviour]
Charles Munger: Secrets of Buffett's Success
"Why did nearly 250 investors converge on Los Angeles this past week to listen to a 90-year-old man address the annual meeting of a tiny legal-publishing and software company? To hear Charles T. Munger - better known as Warren Buffett's right-hand man - expound on one of his least-known holdings and just about everything else." [Munger]
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