Monday, February 27, 2006
Sunday, February 26, 2006
- Institional Shareholder Services is at it again. Patrick McGurn, whose firm, argued that Mr. Buffett had lost his independence as a director at Coke now argues that Berkshire Hathaway ought to increase its analyst coverage. Read for yourselves, here. In the same article, someone (who happens to run an investor relations firm) also argues that Berkshire Hathaway ought to ramp up its own IR department. Independent advice? I’m not so sure.
- Interesting article from this weekend’s NY Times on the declining equity risk premium. U of C professor John Heaton is quoted.
- Whitney Tilson has updated his Web site. Here are a number of links (here, here, and here) to quotes that ought to be placed on your whiteboard, and referred to before ever making a trade.
I came across a great quote from Phil Fisher which reminds me to read "Common Stocks and Uncommon Profits" again:
Investors have been so oversold on diversification that fear of having too many eggs in one basket has caused them to put far too little into companies they thoroughly know and far too much in others about which they know nothing at all. It never seems to occur to them that buying a company without having sufficient knowledge of it may be even more dangerous than having inadequate diversification.
Monday, February 13, 2006
Weekly letters and BRKA buys another company
One of the most difficult requirements of long-term investing is to keep an eye on a reliable “fixed point.” It's fairly easy to get caught up in the day-to-day earnings news and political developments, in a way that makes investors ignore reliable benchmarks of value and probable long-term returns. I've noted before that while valuations have relatively little to do with short-term investment returns, they are a very strong and reliable determinant of long-term returns. So valuations are that “fixed point” at the other end of the wire. Now, you can't ignore the short-term pressures that sway the wire one way or the other, but you'll lose balance if you focus only on those. In the end, the objective is to take account of both the “fixed point” – valuations – and the short-term sway of the wire – market action – and then align each step in a way that's consistent with the condition of those factors at each moment.And Berkshire Hathaway buys another company - Applied Underwriters.