25iq

My views on the market, tech, and everything else

A dozen things said by Jesse Livermore that apply to investing even though he was a speculator

1. “An investor looks for safety… The speculator looks for a quick profit.” Livermore is saying that what differentiated him and other speculators from investors was: (1) a willingness to make bets with short duration and (2) not seeking safety.  Anyone reading about Livermore must remember that he was not a person who often/always followed his own advice. He eventually shot himself leaving a suicide note which included the sentence: “I am a failure.” 2. […]

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A Dozen Things I’ve Learned from Bruce Berkowitz About Investing

1.  “We don’t predict. We price. Predictions are terrible.”  Value investors put predictions, especially macroeconomic predictions, in the “too hard” pile. Ben Graham and his disciples have developed a system which avoids doing things that are “too hard.”  Looking at data from today, rather than a prediction about tomorrow, the value investor “prices” the asset and makes the investing decision. The key question is simple: what would a private buyer pay […]

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Two Dozen Things I’ve Learned from Bill Miller and Mohnish Pabrai about Investing

Pairing a post about Bill Miller with a post about Mohnish Pabrai is useful since it contrasts the investment thesis of Miller with someone else who is a self-professed “cloner” of Warren Buffett and Charlie Munger.  In other words, how Bill Miller’s investing thesis differs from the value investing orthodoxy is useful to consider. Bill Miller: 1. “In the complex adaptive system that is the stock market … there will be dominant narratives that most everyone agrees with and that […]

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A Dozen Things I’ve Learned from Jeremy Grantham About Investing

1. “It is simple to see what is necessary, but not easy to be willing or able to do it.”  Howard Marks’ wife has said that his annual letters “are all pretty much the same.” Jason Zweig similarly wrote once that his job was to write the same column about investing over and over again in new ways.  In this series you have heard the great investors repeatedly say that investing is mostly about […]

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A Dozen Investors Talk about the Folly of Macroeconomic Forecasting and the Importance on Focusing on Valuation/Margin of Safety Today

1.  “Charlie and I don’t pay attention to macro forecasts.” Warren Buffett.  A genuine “value investor” determines “intrinsic value” based on “owner’s earnings” which will reflect what a private buyer would pay for the same share of the specific business.  Treating a share of stock as a share in a business is fundamental to value investing.  Yes, macro exists; no, it will not be a source of alpha for you. 2.  “I don’t read […]

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A Dozen Things I’ve Learned from Philip Fisher and Walter Schloss About Investing

1. “I had made what I believe was one of the more valuable decisions of my business life. This was to confine all efforts solely to making major gains in the long-run…. There are two fundamental approaches to  investment.  There’s the approach Ben Graham pioneered, which is to find  something intrinsically so cheap that there is little chance of it having a big  decline. He’s got financial safeguards to that. […]

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A Dozen Things I’ve Learned from Michael Price abut Investing

1. “Of course, the macro questions are the hardest ones to figure out.  I am not trained to be an economist, and I don’t think economists get it anyway.   I am left with the bottoms-up, 10Q by 10Q analysis, and hope I have enough sense of where we are in the cycle…”  Michael Price is another successful investor who ignores macro forecasts in favor of a bottoms-up analysis. 2. “Never, never […]

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Ten Investors Who Prove Fama Is Suffering from Confirmation Bias

1. A Dozen Things I’ve Learned From Seth Klarman  http://25iq.com/2013/07/15/a-dozen-things-ive-learned-from-seth-klarman/ 2. A Dozen Things I’ve Learned from Bill Ruane about Investing http://25iq.com/2013/10/06/a-dozen-things-ive-learned-from-bill-ruane-about-investing-2/ 3. A Dozen Things I’ve Learned About Investing from Howard Marks  http://25iq.com/2013/07/30/a-dozen-things-ive-learned-about-investing-from-howard-marks/ 4. A Dozen Things About Investing I’ve Learned from George Soros  http://25iq.com/2013/07/30/a-dozen-things-about-investing-ive-learned-from-george-soros/ 5.  A Dozen Sentences Explaining what I’ve Learned from Warren Buffett about Investing http://25iq.com/2013/09/15/a-dozen-sentences-explaining-what-ive-learned-from-warren-buffett-about-investing/ 6. A Dozen Things I’ve Learned from John Templeton about Investing http://25iq.com/2013/09/11/a-dozen-things-i-learned-from-john-templeton-about-investing/ 7. A Dozen Things I’ve Learned About Investing […]

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A Dozen Things I’ve Learned from Nassim Taleb about Optionality/Investing

1. “Optionality is the property of asymmetric upside (preferably unlimited) with correspondingly limited downside (preferably tiny).”  Venture capital, when practiced properly by a top tier firm, is a classic example of a business that benefits from optionality. All you can lose financially in venture capital is what you invest and your upside can be more than 1000X of what you invested.  Another example of optionality is cash held by a disciplined patient […]

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A Dozen Things I’ve Learned from Ray Dalio about Investing

1.  “The economy is like a machine.” The bottoms-up way Ray Dalio approaches the economy is analogous to value investing.  You start with the simplest possible system since that is the easiest system to understand. For a value investor that relatively simple system is an individual company. Dalio starts instead with the simplest part of the economy which is the transaction and then build his models bottoms-up. To do the […]

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