Great articles to read on the web


(Abhishek Basumallick) #85

Good reading - Markel is a setup very similar to Berkshire and run by a very good set of value investors -
Tom Gayner and Steve Markel -


(libran) #86

Rules for the Road
Absolute rules of thumb are dangerous (and lazy): The investing world is full of rules of thumb for finding bargains. Companies that trade at less than book value are cheap, as are companies that trade at less than six times EBITDA or have PEG ratios less than one. Many of these rules have their roots in a different age, when data was difficult to access and there were no ready tools for analyzing them, other than abacuses and ledger sheets. In Ben Graham’s day, the very fact that you had collected the data to run his “cheap stock” screens was your competitive advantage. In today’s market, where you can download the entire market with the click of a button and tailor your Excel spreadsheet to compute and screen, it strikes me as odd that screens still remain based on absolute values. If you want to find cheap companies based upon EV to EBITDA, why not just compute the number for every company (as I have in my histogram) and then use the first quartile (25th percentile) as your cut off for cheap. By my calculations, a company with an EV/EBITDA of 7.70 would be cheap in the United States but you would need an EV to EBITDA less than 4.67 to be cheap in Japan, at least in January 2017.

Most stocks that look cheap deserve to be cheap: If your investment strategy is buying stocks that trade at low multiples of earnings and book value and waiting for them to recover, you are playing a game of mean reversion. It may work for you, but there is little that you are bringing to the investing table, and there is little that I would expect you to take away. If you want to price a stock, you have to bring in not just how cheap it is but also look at measures of value that may explain why the stock is cheap.

If you are paying a price, you are “estimating” the future: When I do an intrinsic valuation (as I did a couple of weeks ago with Snap), I am often taken to task by some readers for playing God, i.e., forecasting revenue growth, margins and risk for a company with a very uncertain future. I accept that critique but I don’t see an alternative. If your view is that using a multiple lets you evade this responsibility, it is because you have chosen not to look under the hood, If you pay 50 times revenues for a company, which is what you might be with Snap, you are making assumptions about revenue growth and margins, whether you like it or not. The only difference between us seems to be that I am being explicit about my assumptions, whereas your assumptions are implicit. In fact, they may be so implicit that you don’t even know what they are, a decidedly dangerous place to be in investing.


(Abhishek Basumallick) #87

Something not directly related to investing, but this is Bill Gates’ letter that he has written in response to Warren Buffett’s request to reflect on what impact his donation to the Gates Foundation has had on the world.


(Alphin) #88

http://www.gurufocus.com/news/495551/19-questions-with-gautam-baid-portfolio-manager-global-equities

Great recommendations of books and skills required to be a good investor.


#89

A massive disruption that is about to happen in Automobile and Power Industry. Worth a look https://www.youtube.com/watch?v=Kxryv2XrnqM


(saikathalder) #90

Hello seniors,

Please provide your views on “coffee can portflio”

I read the ambit’s CCP, available in google search.
Found the criteria mentioned very logical.
has any senior member of this group, tried this in last 5/10 years?


(Abhishek Basumallick) #91

Nice article on RKD.


(Bheeshma Sanghani) #92

Another great piece by Mr Taleb


(Ankchandak) #93

Data on Loan book growth of Indian banks


(Amit) #94

(Rajeev M. Parashar) #95

The Arrival of Artificial Intelligence
https://stratechery.com/2017/the-arrival-of-artificial-intelligence/

What is kind of amusing — and telling — is that as John McCarthy, who invented the name “Artificial Intelligence”, noted, the definition of specialized AI is changing all of the time. Specifically, once a task formerly thought to characterize artificial intelligence becomes routine — like the aforementioned chess-playing, or Go, or a myriad of other taken-for-granted computer abilities — we no longer call it artificial intelligence.

At BlackRock, Machines Are Rising Over Managers to Pick Stocks

“The democratization of information has made it much harder for active management,” Mr. Fink said in an interview. “We have to change the ecosystem — that means relying more on big data, artificial intelligence, factors and models within quant and traditional investment strategies.”

H/T Value Investing World


(ashit) #96

Howard mark presentation in CFA society of India

Thanks
Ashit


#97

India has built the world’s first national digital infra, leaping at least two generations of financial technologies
http://worldoutofwhack.com/2017/03/30/raoul-pal-on-next-big-macro-idea-india/


(Ajith) #98

A warning bell about how automation will slowly and probably result in mass unemployment.


(Amit) #99

This is b Aswath Damodran…In Porinju text “Chor bane Mor”

Explaining a Paradox: Why Good (Bad) Companies can be Bad (Good) Investments!


(Amit) #100

The Best of Charlie Munger: 1994-2011
A collection of speeches, essays, and Wesco annual meeting notes

http://www.valueplays.net/wp-content/uploads/The-Best-of-Charlie-Munger-1994-2011.pdf


(Bheeshma Sanghani) #101

Narayana Murthys last letter to shareholders in the 2011 AR is one the best. It is frank honest and contains a lot of business wisdom. He encourages people to think in per capita FCF terms. I would put Mr Murthy right up there in terms of clarity of thought and a sense of purpose. Read this 2011 AR as he passes on the baton

http://www.bseindia.com/bseplus/annualreport/500209/5002090311.pdf


(Bheeshma Sanghani) #102

a passage from the article - explains the enormous success of many companies even under extreme competition. Also a reminder about the importance of the Matthew effect ( winners take all mental model )

The 1 Percent Rule states that over time the majority of the rewards in a given field will accumulate to the people, teams, and organizations that maintain a 1 percent advantage over the alternatives. You don’t need to be twice as good to get twice the results. You just need to be slightly better.


(Bheeshma Sanghani) #103

Well, this is not an article to read on the web. Its a video clip from the 2014 movie “The Gambler”. Prof Bakshi is fond of showing clips from movies to demonstrate a point and i thought i should take a leaf out of his book.

Jim Bennett (Mark Wahlberg) is a Los Angeles literature professor with a severe gambling addiction caused by his view of the world as either having it all or having nothing

Bennett ends up owing $240,000 to a proprietor of an underground gambling ring, and another $50,000 to a loan shark. Bennett seven days to pay off his debts or be murdered.

Bennett goes to Frank ( a third person), who advises him to adopt a “f**k you” attitude towards life by getting enough money to be completely free. Frank lends him $260,000 to pay his debt to Lee, but also threatens to kill everyone in Bennett’s personal life if he is not repaid.

The following passage is Frank advising Bennett and I found it very pertinent & worth a looksee


(Rajeev M. Parashar) #104