Category Archives: investing

What they Used to Teach You at Stanford Business School

Chris Wyser-Pratte, who got his MBA from Stanford in 1972 and then spent the next 23 years as an investment banker, sent me the following note last night. I’m reprinting it here with his permission: I learned exactly seven things … Continue reading

Posted in banking, education, investing | 3 Comments

10 Questions to Ask Your Fund-of-Funds Manager

If you were a client of Access International Advisors, which lost a lot of money with Bernie Madoff, then you would have been told that they "conducted thorough due diligence when selecting outsider fund managers". Which might have been reassuring, … Continue reading

Posted in hedge funds, investing | 1 Comment

Quants: What Are They Doing These Days?

I was talking about quant funds this afternoon, and got to wondering what on earth they’re doing these days, given that their m.o., up until say the summer of 2007, was to find trading ideas, backtest them, try them out … Continue reading

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The Problem of Regaining Trust

Eric Falkenstein sums up 2008 through a ratings-agency lens: I think 2008’s problem was mainly because after the rating agencies were exposed as making an error on their AAA and AA ratings, all investors viewed such securities skeptically. What was … Continue reading

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A Weird Argument for Index Funds

Daniel Solin has a column at BloggingStocks extolling the virtues of index funds, which is all well and good. But the argument he uses to get there is odd: All information about listed companies is public. It is widely and … Continue reading

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When Mutual Funds Reopen for Business

Barbara Kiviat has a piece today on how ordinary schlubs like you and me now have a Rare Opportunity to buy mutual funds which until recently were closed to new investors: It’s been years since anyone without an existing account … Continue reading

Posted in investing | 1 Comment

Great Moments in Punditry, Felix Salmon Edition

Me, in July 2007, on the subject of the IPO of Kingdom Holdings, Prince Alwaleed bin Talal’s investment vehicle: Fancy investing in an extremely successful hedge fund without paying 2-and-20? … Kingdom could be the next Berkshire Hathaway (maybe it … Continue reading

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Yes, Fund Managers Really Do Underperform

Last summer, Baruch, Zubin, and I got into a discussion about the oft-cited statistic that 75% of fund managers underperform their benchmark. Is it true? Baruch concluded that no one really knows where it came from: "it seems the 75% … Continue reading

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Contrarian Investing

Baruch has a corker of a post over at Ultimi Barbarorum on hedge funds, and why it is that they’ve unravelled so spectacularly this year despite largely escaping the bursting of the dot-com bubble unscathed. Go read the whole thing, … Continue reading

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What’s Happened to the Equity Risk Premium?

Jasper asks, in the comments: Can you comment generally on how much less risky it is to invest in the stock market now than it was 3 months ago? In other words, now is obviously a better time to invest … Continue reading

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When Colleges Speculate, Part 2

David Turner reports on a deal structured by Clare College, Cambridge: One of Cambridge’s oldest colleges has borrowed money for the first time in its 700-year history in a "sensational deal" devised to take advantage of the investment opportunities presented … Continue reading

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Will Retail Investors Continue to Buy and Hold Stocks?

It’s still too early to tell whether the stock-market crash of the past couple of months has done any lasting damage to the conventional wisdom that a buy-and-hold strategy applied to a diversified stock portfolio is generally a very good … Continue reading

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Where Buyers Should be Looking

There was an interesting exchange just now on the deals panel, between Jim Casella, of Case Interactive Media, and Michael Wolff. If you have cash right now, said Casella, it’s a great time to be a buyer. This has been … Continue reading

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Stocks: A Bear Case

If stocks fall, that means they’re cheaper than they were. And if they’ve gotten cheaper, they must be a better investment, right? That’s the gist of a blog entry from Jim Surowiecki today. But that’s not necessarily how this is … Continue reading

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Ken Heebner, Former High Flier

Jim Surowiecki is wondering whether it would make sense to put money into CGM Focus, the formerly high-flying mutual fund run by Ken Heebner, which has managed to lose half its value in less than four months. The answer, I … Continue reading

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Questions for Value Investors

Here’s a contest for you — since y’all did so badly on the last one — can anybody find me a value investor who isn’t saying that there’s loads of cheap stocks out there and that they’re pretty bullish over … Continue reading

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How to Survive the Crisis: Sleep, Get High

Andrew Lahde isn’t running money any more, and boy is he glad to be out of the game. His final letter to investors is a true classic, and even ends with a paean to marijuana: I will no longer manage … Continue reading

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Learning From Japan

Has there been a more demoralizing and disappointing major stock market, over the course of the past 20 years, than Japan’s? It reached its nominal all-time high of 38,957 in December 1989; it closed today at 8,693, just 800 points … Continue reading

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Beware Small ETFs

When I said this morning that "we’re only at the very beginning of the global sovereign (as opposed to financial) crisis" and that "there will be more government debt scares before this is all over", I was evidently thinking along … Continue reading

Posted in investing | 1 Comment

Five Investment Principles

There’s no rush. If an asset is cheap today, it’ll be cheap tomorrow. Think before you act. If an investment causes worry or stress, don’t make that investment. You should be happy with your investments. Your gut is a good … Continue reading

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Zero-Baseline Datapoint of the Day

The $9.3 billion Short Term Fund, offered as a place for schools and colleges to park their cash and get "returns slightly above U.S. Treasury bills", has now been frozen by its trustee, the stub of Wachovia which wasn’t taken … Continue reading

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How Risk Aversion is Evolving

The good news: you just managed to sell your house, you got a decent price for it, and you’re sensibly renting for the time being. The bad news: so now what are you meant to do with your money? It’s … Continue reading

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Beware ETNs, Part 2

Exchange-traded notes come with a monstrous amount of counterparty risk, as investors in Lehman’s ETNs are now discovering: Holders of Lehman Brothers’ structured products “have the same standing as other Lehman holding company senior, unsecured debt, which is trading at … Continue reading

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Beware ETNs

The Chinese renminbi is one of the most stable currencies in the world. Its value against the dollar is severely constrained by the Chinese government, and it never moves very far in any given day. But, it’s hard for foreigners … Continue reading

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Index Funds Aren’t Speculators

One of the first rules of headline writing is that you shouldn’t go with anything which just sounds stupid. Like, say, this: Speculative Bets by Index Funds Didn’t Push Oil Prices Up, Report Says Of course, the whole point of … Continue reading

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