Investing
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Mature technology companies are establishing regular quarterly dividends. Is this a positive or negative development for shareholders? ...
A list of fifteen recent articles including detailed coverage of Berkshire Hathaway's 2023 annual report and Warren Buffett's shareholder letter ...
The Rational Walk no longer offers paid subscriptions and all paywalls have been removed. This article explains the reasons behind the decision ...
The Securities and Exchange Commission could improve disclosure and transparency by implementing three simple proposals ...
There's no reason for anyone to care what I think about inflation, but readers should pay close attention to Warren Buffett's statements and actions ...
Buying real estate can be intimidating and complicated. This article describes two experiences with realtors, one positive and one negative ...
The S&P 500 is dominated by the "magnificent seven" which creates significant concentration risk. The S&P 500 equal weight index offers a possible alternative ...
This article looks back at Warren Buffett's warning about elevated stock valuations in 1999 and considers the potential application of his ideas to valuations today ...
The Rational Walk will make all paywalled articles free six months after publication. Today, paywalls have been removed from twenty-one articles ...
Managing our emotions is a prerequisite for intelligent investing ...
A report on growth in 2023, top articles for the year, an update on free and paid content, and plans for The Rational Walk in 2024 and beyond ...
Many Berkshire Hathaway shareholders have a very large percentage of their net worth invested in the company. What are the risks of concentrated investments in general and Berkshire in particular? ...
A few observations based on recent 13F filings, with a focus on Berkshire Hathaway, Dollar General, Markel, and Semper Augustus ...
A company that is in the process of selling shares to the public for the first time must navigate a minefield of competing interests ...
Enduring business models in competitive industries exist for good reasons. Dollar stores provide an important option for customers chronically short on cash ...
Writing down the rationale for investment decisions is a prerequisite for success. This articles explores lessons I learned dating back to 2009 ...
Sharing ideas can have benefits but there are also psychological risks. This article applies lessons from Charlie Munger's psychology of human misjudgment to investing ...
The ability to accurately estimate loss reserves is a core competency for any well-run insurance company. Progressive provides a useful case study in loss reserving practices ...
Sometimes an investing approach that is not necessarily "rational" from an economic perspective can produce superior results when one accounts for human nature ...
Apple's entry into the augmented reality market continues the company's longtime obsession with melding liberal arts and technology ...
Inflation is like kryptonite for bond investors. This article describes two fixed income investments that provide some inflation protection ...
The ocean of debt needed to fund the federal government is likely to be monetized by the Federal Reserve resulting in a high structural level of inflation for decades to come ...
Many investors are occasionally tempted to speculate. It is important to avoid confusing speculation with investment operations ...
The FDIC is taking an estimated $13 billion hit after seizing First Republic and selling most of the bank to JPMorgan ...
Large related party transactions reported by the Wall Street Journal were disclosed in the company's 145 page proxy statement, available for all to see for nearly a year ...
The current banking crisis has led to calls for the government to insure all bank deposits, but doing so has significant long term implications ...
Apologists for crony capitalism are telling the American people that shareholders and executives of failed banks will be wiped out. The reality is more complex ...
The FDIC will provide unlimited deposit insurance for Silicon Valley Bank and Signature Bank and the Fed will accept depreciated securities at par value from banks seeking emergency funding ...
Silicon Valley Bank's shareholders and creditors cannot be bailed out without introducing massive moral hazard antithetical to capitalism ...
A classic run on the bank exposes harsh realities hiding in plain sight. How will regulators and policymakers react to fears of contagion? ...
A recent high profile derailment has negative implications for the railroad industry. Berkshire Hathaway's ownership of BNSF could represent a political advantage ...
13F filings can be a minefield. It is tempting to emulate investors who we admire but it is unwise to blindly follow any investor into a stock ...
Daily Journal Corporation’s 2023 annual meeting of shareholders will take place on February 15. I submitted three questions to Becky Quick for consideration ...
Overpaying for an investment is undesirable but time can heal many wounds if the underlying business continues to perform well ...
Psychological and social factors serve as complications for investors seeking to invest in declining companies, often referred to as "cigar butts" ...
All paywalls on The Rational Walk have been removed. This article is a listing of twelve recent comprehensive company write-ups available for download ...
“If you rise high in a corporation or elsewhere in life, you have a duty to be an exemplar. You have a duty to take less than you deserve, to set an example.” — Charlie Munger ...
Ben Graham’s investing style was not one dimensional. In addition to bargain issues and special situations, Graham suggested relatively unpopular large companies as a source of ideas ...
Sol Price founded FedMart in 1954 and pioneered the concepts that still drive the business model of membership-based discount warehouses such as Costco to this day ...
The United States has experienced a rapid acceleration of inflation recently. This article examines the automobile industry, a sector experiencing higher than average inflation ...
Without a certain level of trust, our modern civilization would soon disintegrate into total chaos. This article takes a brief look at the role of trust in three acquisitions ...
Timeframe arbitrage is arguably the last major source of potential advantage for individual investors. If this is true, how can individuals best structure their research process? ...
This article provides a description of the title insurance industry. Most homebuyers must purchase title insurance but the product is not well understood ...
Consumer behavior can often seem crazy. But if a successful company is built around "irrational" behavior, chances are that you might be missing something important ...
We can learn a great deal about business and capital allocation by studying Tom Murphy’s long and successful career in broadcasting ...
“With the price advantage GEICO’s low costs allow, it’s not surprising that several years ago the company seized the number two spot in auto insurance from Allstate. GEICO is also gaining ground on State Farm, though it is still far ...
Trading bans for members of Congress and other government officials risk sending the wrong message about the capitalist system. Sunlight is a far better disinfectant ...
Inflation can be a self-perpetuating affliction. If consumers come to expect that the dollars in their bank account will purchase materially less in the coming months and years, there will be a natural inclination to trade depreciating currency for material ...
"The market is like a large movie theater with a small door." -- Nassim Nicholas Taleb, Skin in the Game There is an old saying that experiencing a bull market is similar to riding up an escalator while living through ...
Financial markets have finally come to the realization that Coronavirus is a story that is not going away anytime soon. As long as the virus was confined mostly to China and other cases could be readily explained, markets in the ...
It was Thanksgiving weekend twenty years ago. I had been watching the stock for a couple of months. It was pummeled on soft results in September and seemed cheap to me. On Sunday night, I looked at the Value Line ...
"Success makes people think they're smart. That's fine as far as it goes, but there can also be negative ramifications." -- Howard Marks The investing profession tends to attract individuals who, to put it politely, have a healthy sense of ...
"Don't tax you, don't tax me, tax that fellow behind the tree!" -- Senator Russell B. Long "No one should see how laws or sausages are made. To retain respect for sausages and laws, one must not watch them in ...
"Good investment ideas are rare, valuable and subject to competitive appropriation just as good product or business acquisition ideas are. Therefore we normally will not talk about our investment ideas." -- Warren Buffett, Berkshire Hathaway Owner's Manual One of the ...
The process that is required to get to know a company is relatively straight forward. Every investor is going to have a slightly different approach, but good investors typically begin with primary source material such as S.E.C. filings, news releases, ...
"The compensation committee relies on its own good judgment in carrying out its duties and does not waste shareholder money on compensation consultants." -- Daily Journal Corporation 2017 Proxy Statement Reading primary sources of information remains the single most important ...
“We read a lot. I don’t know anyone who’s wise who doesn’t read a lot. But that’s not enough: You have to have a temperament to grab ideas and do sensible things. Most people don’t grab the right ideas or ...
As we approach the end of the year, many professional investors are focusing their attention on performance metrics that will determine part of their annual compensation. Hedge funds have typically aimed to operate on a "two and twenty" fee structure ...
You can choose a ready guide in some celestial voice If you choose not to decide, you still have made a choice You can choose from phantom fears and kindness that can kill I will choose a path that's clear ...
Nearly 800 articles have been published on The Rational Walk since February 2009. The following articles are among those that have generated the most feedback or have been viewed the most by readers through early December 2016. The list is ...
The process of compounding wealth is best characterized by an interesting paradox: What is very exciting to observe, in retrospect, over long periods of time can appear to be relatively dreary and dull while actually living through the process. The ...
Are you merely average? If you are reading this article, chances are that you will instinctively recoil when asked this question. People do not like to think of themselves as merely average and this is even more true for individuals ...
One of the requirements for efficient capital markets involves the rapid dissemination of relevant information necessary to make investment decisions. Superior information can provide a material edge for investors and has traditionally been viewed as a competitive advantage for those ...
"The performance of investors who add value is asymmetrical. The percentage of the market's gain they capture is higher than the percentage of loss they suffer .... Only skill can be counted on to add more in propitious environments than ...
"In theory there is no difference between theory and practice. In practice there is." -- Yogi Berra Imagine that you are the founder of a highly successful small chain of restaurants. After immigrating to the United States from Italy as ...
The vast majority of individual investors would be well served to take Warren Buffett's advice and dollar cost average into one or more passive index funds. However, many individuals aspire to achieve better than average results. What is their most ...
There can be many situations that would lead an intelligent investor to sell a highly appreciated investment. Read this article for some of the reasons and potential pitfalls to avoid in the process ...
The Manual of Ideas recently interviewed Howard Marks and has provided a 27-page transcript of the discussion. Read this article for excerpts from the interview ...
Howard Marks is Chairman of Oaktree Capital Management and has made his memos to clients available to the public for many years. Oaktree, with $80 billion under management, specializes in less efficient markets with a focus on distressed debt investing ...
There is a healthy sense of skepticism among investors when faced with websites, blogs, newsletters, conferences and other sources of information that claim to offer investment ideas. After all, good investment ideas are valuable and rare. Why would anyone willingly ...
The start of a new year is an excellent time to take stock of past accomplishments and chart a course for success in the future. As value investors, we attempt to identify securities trading at a discount to intrinsic value ...
It is natural to reflect on the events of the current year as it draws to a close. As we wrap up activities at The Rational Walk for 2010, we present a brief update for readers regarding the status of ...
Much of what we do as investors involves studying businesses and critically evaluating the returns that are likely based on management's competitive strategy. The elusive search for true "moats" is often frustrated by quick technological change which can make yesterday's ...
After the events of the past few years, many investors have concluded that investing in banks is ultimately a speculative exercise. After all, a great deal of management discretion is involved in estimating loan loss reserves and the opportunities for ...
As we move into the height of third quarter earnings season, many investors may feel overwhelmed when it comes to staying on top of earnings announcements for portfolio companies and investment candidates. Without a solid system for keeping abreast of ...
Few examples in stock market history more clearly illustrate the risks of buying into "hopes and dreams" than the technology bubble of the late 1990s and early 2000s. Companies with no earnings and nonsensical business plans eventually ceased to exist ...
Michael Burry has been finding opportunities in farmland, gold, and small technology firms. Mr. Burry, who closed his Scion Capital hedge fund in 2008, is now managing his personal investments and looking for opportunities that are not correlated with moves ...
Bill Miller, Chairman and Chief Investment Officer of Legg Mason Capital Management, believes that investors who fail to purchase American large capitalization stocks may be missing a "bargain of a lifetime". In an article appearing in The Financial Times today, ...
On the lighter side, we present our readers with one of the most absurd examples of technical analysis seen in quite some time, courtesy of an article in a website called SmarTrend entitled "Watch for Shares of Berkshire Hathaway (BRK.A) ...
Throughout the 1990s, mutual funds were marketed to individual investors with stellar ten and fifteen year track records made possible by the record bull market of the 1980s and 1990s. While there were a few notable interruptions, with the 1987 ...
One of the most compelling investing systems developed in recent years is Joel Greenblatt’s ‘Magic Formula’ approach which is documented on the magicformulainvesting.com website as well as Mr. Greenblatt’s The Little Book That Beats the Market. The formula ranks stocks ...
Value Line Investment Survey is one of the best ways to gain exposure to a large number of companies in an efficient manner. Value Line provides stock screening tools but the strength of the service is in the information packed ...
Few books have been able to withstand the test of time in better form than The Intelligent Investor. Written by Benjamin Graham in 1949 as a guide to investing principles designed to be accessible to the general public, The Intelligent ...
Value investors tend to be philosophical during market meltdowns. "Be greedy when others are fearful and fearful when others are greedy" is well understood as the intellectually sound attitude when markets go haywire. Nevertheless, most of us do not have ...
It is interesting to review Michael Burry’s letter to his investors written in November 2006. ‘A Primer on Scion Capital’s Subprime Mortgage Short’ is Dr. Burry’s attempt to explain his decision to take a bearish position in credit default swap ...
The Value Investing Congress took place in Pasadena, California last week. The Congress is a major event in the value investing community and featured many well known speakers including Paul Sonkin, Bruce Berkowitz, Mohnish Pabrai, Tom Russo, Whitney Tilson, and ...
The Financial Times published a special report today (also available as a pdf file) that attempts to quantify brand value for the top 100 global brands. The top global brand remains Google followed by IBM, Apple, and Microsoft. Coca Cola, ...
In an interview with The Financial Times, Jeremy Grantham discusses a study on various financial bubbles that his firm has recently completed. Mr. Grantham found 34 examples of bubbles that fit his definition as a “forty year event” statistically. Of ...
Joel Greenblatt outlined his “magic formula” for stock market investing in The Little Book That Beats the Market. Mr. Greenblatt’s formula ranks stocks based on two simple and easily calculated figures: earnings yield and return on capital. Rather than merely ...
Mohnish Pabrai provides some great insights on investing in an interview with Steve Forbes this week. Mr. Pabrai comments on a number of topics including the influence Warren Buffett has had on his investment style and the fee structure of ...
It has become relatively common to read annual reports of companies that previously engaged in regular share buybacks yet mysteriously decided to halt the practice during 2009 even as share prices hit multi-year lows. As The Economist has noted, share ...
In the world of purely efficient markets, economic actors behave in their own rational self interest by dispassionately weighing the evidence and making optimal decisions on investment matters. In the real world, emotions are often an investor’s worst enemy and ...
Attempting to understand the sequence of events that led to the downfall of Lehman Brothers is normally a mind numbing process, but occasionally an obvious outrage is discovered such as Lehman's use of "Repo 105" transactions. While we have not ...
Despite a snowstorm that caused the absence of several speakers, the Columbia Investment Management Conference in New York today included many interesting presentations and panel discussions. The highlight of the day was the conversation between Columbia Professor Bruce Greenwald and ...
It's in the bag: Stock prices will be up this year based on the Super Bowl indicator! Stock market legend has it that years in which a team from the original NFL wins the Super Bowl, stock prices will go ...
In recent weeks, Kraft's proposed acquisition of Cadbury has generated a great deal of interest. When an investor with Warren Buffett's reputation characterizes the transaction as making him "feel poorer", observers might wonder what could possibly motivate a CEO such ...
In a recently published letter to shareholders, the managers of Oak Value Fund explain their investment strategy, results for 2009, as well as the investment case for several current holdings. In addition, the managers comment on Berkshire Hathaway's proposed acquisition ...
The Wall Street Journal has reported that many corporate boards are attempting to reform their compensation practices by changing the nature of their relationship with compensation consultants. Many observers have noted for several years the inherent conflict of interest that ...
No one enjoys dwelling on past errors whether we are talking about investments, career choices, or poor decisions in personal relationships. It is far more pleasant to think about what has worked well in the past and to relegate unpleasant ...
At the end of next month, many investors will look back at a "lost decade" marked by multiple financial crises, poor overall stock market performance, and periodic revelations of serious incompetence reaching the highest levels of corporate America. Investors can ...
I recently took up the game of bridge after several years of procrastination. I will admit that one of the main reasons that I developed an interest in the game is because Warren Buffett is well known for being addicted ...
The Wall Street Journal published a front page article this morning regarding how many companies are hoarding record high levels of cash. The tendency to hoard liquid assets can be viewed as a "survival instinct" in light of the turmoil ...
The blogosphere and bookshelves everywhere are full of prescriptions for how to succeed in various endeavors. When it comes to business and investing, there is much useful information available along with a fair amount of nonsense. Unfortunately, most guides for ...
Shortly after 8:30 am this morning, cable news networks and web sites quickly reported the government's initial estimate of 3.5% growth in Gross Domestic Product (GDP) for the third quarter of 2009. In terms of depth of reporting, most of ...
San Jose, California, September 24, 1998. Just another routine day at the office in a suburban office park in the Silicon Valley was interrupted by loud sounds of a celebration coming from the common hallway serving several companies in the ...
I am a newspaper junkie with three daily print subscriptions and many more visits to online editions on the internet. I have made it a habit to save the print edition of the Wall Street Journal on certain key dates ...
While the EMT is often ridiculed as being obviously false, academics have attempted to adjust the theory over the years and it is now very rare to encounter anyone who believes in the strong-form version of the theory. Most academics ...
Very few Americans have experienced an economic downturn as severe as the current recession. Although it is very possible that GDP will show a positive reading for the third quarter, hardly anyone expects the employment situation to improve significantly until ...
Santa Clara University Professor Meir Statman wrote an interesting story on behavioral finance for today's Wall Street Journal. The Mistakes We Make—and Why We Make Them focuses on eight key mistakes that investors typically make particularly when coming to terms ...
Legendary investor Philip A. Fisher was a great believer in the utility of the "business grapevine" when it comes to researching candidates for investment. In Common Stocks and Uncommon Profits, which was reviewed here in April, Mr. Fisher lays out ...
Jack Bogle, the Founder and former Chairman of The Vanguard Group, was interviewed on a number of subjects at the Morningstar Investment Conference last week. Bogle is perhaps most famous for creating the first index mutual fund that was easily ...
Everyone knows the old adage about selling in May and coming back on St. Leger's Day in mid September. This year, the chatter about selling out of stocks after the recent rally is particularly loud. Is this a bear market ...
Walter Schloss is one of the "Superinvestors of Graham-and-Doddsville" according to a well known talk given by Warren Buffett at Columbia University over two decades ago. An article adapted from that talk is included in recent editions of The Intelligent ...
The Bureau of the Public Debt has announced an earnings rate of 0% for Series I Bonds issued between May 1, 2009 and October 31, 2009. The fixed rate (also known as the real return) of new Series I Bonds ...
In recent weeks, I have written about a number of different investment approaches along with my attempt to leverage the best ideas that have already been put into practice. This is precisely what Berkshire Hathaway Vice Chairman Charlie Munger recommended ...
I have been reading the updated sixth edition of Security Analysis from cover to cover and on more than one occasion, I have stopped to consider the major advantages modern day investors have compared to Graham andDodd . Investors today ...
I have always believed that investors with an overly optimistic view of the world have an inherent disadvantage and can be predisposed to overpay for securities. While I do not advocate being a pessimist in general, there are advantages that ...
Benjamin Graham pioneered a technique that holds a great deal of promise in today's market. Graham's concept of identifying bargain issues, or Net-Current-Asset Value Stocks (NCAV), is as relevant today as when he wrote about it in The Intelligent Investor ...
In recent weeks, investors have witnessed a dramatic acceleration of greatest bear market meltdown since the Great Depression. The Standard & Poor's 500 closed at 683.38 today (March 6, 2009), more than 56% lower than the record closing high of ...
For many years, I have wondered why Dow Jones insists on retaining the antiquated price-weighted calculation for its most prominent index, the Dow Jones Industrial Average. Prior to the availability of computers, I can see why it would be attractive ...