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Thoughts on Macro vs. Stock Picking, Correlations, and Market Dynamics

The dominant theme for 2010 was how much “the Macro” dominated vs. individual security selection. The biggest manifestation of this was the parabolic rise in correlations into the 4th quarter of 2010....

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Book Review: The Bed of Procrustes by Nassim Taleb

Taleb’s book of Philosophical and Practical Aphorisms is annoyingly brilliant. I am aware of no other intellect who can offer truisms in such an offensive, condescending, righteous, and elitist manner...

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Comfort is Rarely Rewarded; Maverick Risk & False Benchmarks

“The loser is the trend chasing, comfort seeking investor. The market doesn’t reward comfort. It rewards discomfort.” - Rob Arnott In Rob Arnott’s November 2010 piece, “The Glad Game” he asks investors...

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Modern Portfolio Theory IS Harming Your Portfolio

Thoughtful minds are reading Scott Vincent’s recent paper, “Is Portfolio Theory Harming Your Portfolio” (HT: @jasonbremer) In the paper Vincent argues that the flawed foundation of Modern Portfolio...

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Run, Don’t Walk, Away From Forward P/Es

One of the most consistent messages I’ve heard throughout my career is that the market is inexpensive or at least “fairly valued” based on next years earnings. We hear it at heights of euphoria and the...

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Denominators Matter! What the Price of Gold Tells Us About the Value of Other...

Investors know that denominators matter when determining the value of an asset. If we relied on price alone we’d be fooled into thinking that the S&P 500 at 1340 in November of 1999 has the same...

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The Handicap of Experienced Investors

The new Buffetts, ex-ante I recently came across a Fortune Magazine article from 1989 titled “Are These The New Warren Buffetts”? The article attempted to identify which of the then-current cadre of...

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On Market Timing and Whiskey

My friends, I had not intended to discuss this controversial subject at this particular time. However, I want you to know that I do not shun controversy. On the contrary, I will take a stand on any...

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The Quality Conundrum

We are witnessing the end of a remarkable and confounding era for stocks, best described by the “quality conundrum” investors faced for much of the last two years. During that time, the combined...

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Where Are the Bears? Evidence vs. Anecdotes in Assessing Market Sentiment...

Imagine the stock market as a national park with just three kinds of animals: bulls, bears, and pigs. The saying “bulls make money, bears make money, pigs get slaughtered” conveys the idea that one can...

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