Before I start this evening, I want to comment on what posts were popular while I was gone. Here they are, in declining order of popularity:The US is not Japan, but there are some SimilaritiesThe Venn Diagram Method for Greatest Common Factors and Least Common MultiplesContact MeThe Permanent PortfolioWhat Caused the Financial Crisis?Annotated “In Hoc Anno Domini”On the Structure of Berkshire HathawayThe first thing that fascinates me is how different these articles are. Second, the first two articles are old — 2011 and 2008 respectively. There are a few math pedagogy articles at my blog, but not many. It is something near to my heart as math was my favorite subject as a boy, followed by science and the social sciences.It also highlights the peculiarity of … [Read More...]
The Balance: On Private Activity Bonds
Photo Credit: Thomas Hawk=================For about two months, I wondered when I would write this. Now I know… I’m writing it now. To all my readers, I am letting you know that Aleph Blog is not ending, but it is changing. I accepted a writing assignment with The Balance. I am going to write 4-5 articles for them per month, and correct some old articles as well. I will publish links to them here. Like Aleph Blog, The Balance is free, so you don’t have to do anything more than click on the article link here to read it.Why did I do this? I felt I was getting stale in my writing. I was a little bored; that’s why I wasn’t writing so much. … [Read More...]
The Best of the Aleph Blog, Part 39
Photo Credit: michel D’anastasio====================In my view, these were my best posts written between August 2016 and October 2016:What to do when Ethics are DiscouragedEight ways to promote ethics where it is not popular.On Pricing Grids, Part 1On Pricing Grids, Part 1aOn how to price illiquid bonds, and why GAAP accounting does not matter for financial stock prices.The Cash Will Prove ItselfOn Donald Trump, during a time in 1990, when he said in the midst of a personal business financial crisis said:“What I want to do is go and bargain hunt,” he said. “I want to be king of cash.”I even get to draw analogies to Warren Buffett, Elon Musk, and nifty finance poem that is less known today.Dead as a Severed Horse’s … [Read More...]
The Best of the Aleph Blog, Part 40
Photo Credit: michel D’anastasio======================In my view, these were my best posts written between November 2016 and January 2017:When I was a Boy…Can lessons from the distant past illumine the future? I think so.On Long-Term Corporate InvestmentsThis is timely. Are US firms too short-term in their orientation? No. To be more controversial, if companies in the rest of the world imitate the US, they will be better off. They don’t push the present hard enough, and the great long-term returns don’t materialize as a result.How do you Manage a Company when the Stock is Considerably Overvalued?This was a fun piece to write. It is a high quality problem (usually), but the rules are the opposite for firms with undervalued stock, … [Read More...]
Dissent on Triple-S Management
Dear Friends,After a year off, it’s time for me to get back in the saddle and blog again. I’m going to restart in a way similar to the way that I began — writing shorter posts, and being light on graphics. I’ll go into what I did during my time off bit-by-bit as I go on. But for now, here is today’s post:===========================================Yesterday there was an article published on Triple-S Management which I found to be poorly done in some ways. That said, GTS has its share of negatives:There are a lot of claims outstanding from Hurricane Maria on GTS, though there may be some good reasons why the claim settlement is slow. That said, in my … [Read More...]
The Best of the Aleph Blog, Part 41
Photo Credit: Renaud Camus=========================In my view, these were my best posts written between February 2017 and April 2017:Problems with Constant Compound Interest (6)It is very difficult to get a high real rate of return over a long time. This article peels apart the math, and brings out the quantitative factors that play a role in the analysis.Yield = Poison (3)When the yield premiums for taking most forms of additional risk are too low, it’s time to take much less risk, and reduce yield considerably.Streaking Into the Record Books?Remember the streak of days where the market did not go down by 1% or more? It ended and did not set a record, but it was a top 10 long streak.We Get New Highs … [Read More...]
The Best of the Aleph Blog, Part 42
Photo Credit: michel D’anastasio=========================In my view, these were my best posts written between May 2017 and July 2017:The Biggest Problems For Investors TodayThe “two-minute question” with a half hour response.Perceived Versus Real Risk ToleranceWhy questions about objective measures of risk tolerance need to be asked before querying someone about their subjective risk tolerance.Overvaluation is NOT Due to Passive InvestingActive managers as a group are very similar to the index. That shares move from active to passive managers does not affect their valuation, just as one active manager selling to another does not.Goes Down Double-Speed (Update 4)Why the current bull market, the second longest on record, is both amazing and boring at the same time.The Doubling RuleThe Doubling Rule, ReduxSlightly more … [Read More...]
The Balance: Considering Event-Driven Investing
Photo credit: miltarymark2007===========================I published another article at The Balance: Considering Event-Driven Investing. This is one place where writing in the third person leaves a lot out. I’ve done a lot with some types of event-driven investing.Speculating on hurricanes — I did that successfully at the hedge fund 2004, 2005 and 2006. 2006 because I thought the risk of another strong hurricane year was overplayed. 2004 and 2005 because I had a good idea of who was underreporting claims after disasters. That was the only time in my life that I went from long a company to short without stopping, and I covered on the day the CEO resigned, and caught the bottom tick.Bond deal arbitrage — well, sort of. I would buy target company bonds and sell … [Read More...]
The Balance: Are You a Speculator or an Investor?
Photo Credit: Bernard Spragg. NZ || Ah, Hong Kong. Home to speculation and Investment.==========================One thing to do at The Balance is fix old articles. This article compares speculators and investors. What I brought to this article was the following:Change the phrasing from trading to speculating to be more pointed.Add more and better criteria to what an investor does.Added the entire section “What To Do”Added a picture and more links. Corrected grammar in a few spots and tightened up some language.The main reason to edit this article as I did was to give readers more disciplined ideas with respect to buying and selling, and encourage them have rules, and keep a journal of decisions, together with why they bought, and at … [Read More...]
The Balance: Short Selling Stocks- Not for the Faint Hearted
Photo Credit: Heather Wizell || Ah, Wallstrip with Lindsay Campbell (look at the microphone…)===========================================Here’s another article that I edited at The Balance: Short Selling Stocks- Not for the Faint Hearted. The original author started out conservative on the topic, and I took it up another notch.For this article, I:added the information about changes to the uptick rule (which did not reflect anything post-2006),corrected a small math error,made the example more realistic as to how margin works in this situation,added almost all of the section on riskstotally rewrote the section on picking shorts (if you dare to do it), and,added the famous comment by Daniel Drew.I have shorted stock in my life at the hedge fund I worked … [Read More...]
What Caused the Financial Crisis?
Photo Credit: Alane Golden || Sad but true — the crisis was all about bad monetary policy, a housing bubble, and poor bank risk management======================There are a lot of opinions being trotted around ten years after the financial crisis. A lot of them are self-serving, to deflect blame from areas that they want to protect. What you are going to read here are my opinions. You can fault me for this: I will defend my opinions here, which haven’t changed much since the financial crisis. That said, I will simplify my opinions down to a few categories to make it simpler to remember, because there were a LOT of causes for the crisis.Thus, here are the causes:1) The Federal Reserve and the People’s Bank … [Read More...]