Smead Capital Management: Energy in the Icahn-ic Green Room

 Link:

David Dreman’s book, Contrarian Investment Strategies, was gospel to investors when it was first published in 1979. Investors had been decimated by markets going nowhere over the prior 10 years. Stock investors were ready for something new. Dreman had produced a lot of success as an investor and wanted to share his gospel of contrarian value investing.

The perfect picture of Dreman’s gospel comes from his opening chapter. He refers to the stock market as a casino with a green wing and a red wing. Looking into the green wing, “the atmosphere is unhurried, the blackjack tables are sparsely attended, and every player sits behind a mound of green and black chips.” As he points out, everything is so mundane that “you think you’ve come to the wrong place.” The next thing you notice is the players in the room, “they’re all winning.”

Bob Farrell: Learn a lesson -- before you get one

 Link:

Ten rules to remember about investing in the stock market

1. Markets tend to return to the mean over time

2. Excesses in one direction will lead to an opposite excess in the other direction

3. There are no new eras -- excesses are never permanent

4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways

5. The public buys the most at the top and the least at the bottom

6. Fear and greed are stronger than long-term resolve

7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names

8. Bear markets have three stages -- sharp down, reflexive rebound and a drawn-out fundamental downtrend

9. When all the experts and forecasts agree -- something else is going to happen

10. Bull markets are more fun than bear markets

Charlie Munger: On the Value of Patience

 Link:

Patience is widely seen as a virtue, and for good reason. But it can also be profitable, according to Munger. Indeed, he has claimed publicly that Berkshire's market-beating success can be attributed in large part to his and Buffett's supremely patient approach.

"If you took our top fifteen decisions out, we'd have a pretty average record. It wasn't hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor."

In other words, a few key investment decisions – made over the course of several decades –made the difference between an average performer and a titanic success. By remaining patient and keeping a cool head, an investor is able to both avoid making bad decisions and be ready when rare moments of opportunity emerge.

Seth Klarman: The Value of Not Being Sure

Link:

A key psychological barrier that prevents most people from seizing the day when prices are low is the fear that the turmoil of today will continue forever. In actuality, bear markets are typically much shorter than bull markets. As the saying goes, markets take the stairs up and the elevator down:

"It is easy for the volatility of one's thinking to match the volatility of prevailing conditions. Time horizons have shortened even more than usual, to the point where the market's 4:00 p.m. close seems to many like a long-term commitment. To maintain a truly long-term view, investors must be willing to experience significant short-term losses; without the possibility of near-term pain, there can be no long-term gain."

Paul Tudor Jones says he likes bitcoin even more now, rally still in the ‘first inning’

 Link:

Billionaire hedge fund manager Paul Tudor Jones has turned more bullish on bitcoin, calling it the best inflation hedge.

“I like bitcoin even more now than I did then. I think we are in the first inning of bitcoin and it’s got a long way to go,” Jones said on CNBC’s “Squawk Box” on Thursday. He first revealed his bitcoin investment in May and he said Thursday he holds a “small single-digit investment” in the cryptocurrency.

MacroVoices #242 Stephanie Kelton on Modern Monetary Theory

 Link:

Erik Townsend and Patrick Ceresna welcome Stephanie Kelton to MacroVoices. Erik and Stephanie discuss:

Why using taxes to pay for government spending is a myth

If the government can print money, why are taxes still necessary?

What measures does MMT use to overcome inflation risk?

Debunking the myth that the future generation will have to pay for the current national debt

Risk of dilution in value of dollars due to government money printing

Constraints of MMT

Chris Mayer: Reflections on 100 Baggers

 Link:

“What is the key ingredient to a 100 bagger?”

Ah well, always the big question. In my view, the key ingredient is return on capital. That’s the gin. And the ability to reinvest is the vermouth. 

Now, return on capital is a vague term. And this is an area I am still refining. But broadly considered, the key ratios to consider include “return on invested capital,” or “return on capital employed” or “return on assets” or “return on equity” or… 

And since the road to 100 baggerdom is a long and twisty road with lots of hills and valleys, you can’t just do it one year. You want a business that can crank out those high returns year after year. That means you have to think about a lot of other things as well, like competition and growth potential and the ability to withstand economic cycles, etc.