“The only way a man can remain consistent amid changing circumstances is to change with them while preserving the same dominating purpose.” Winston S. Churchill, “Consistency in Politics,” Nash’s Pall Mall, July 1927, reprinted in Churchill’s Thoughts and Adventures (1932)
“A democracy is a government in the hands of men of low birth, no property, and vulgar employments.” Aristotle
One of the more interesting exercises in the consumer brands space in recent years has been the efforts of companies to update brands to be more Continue reading →
“Men become civilized, not in proportion to their willingness to believe, but in proportion to their readiness to doubt.”
H.L. Mencken, “What I Believe,” The Forum 84 (September 1930), p. 136
Is it different this time? We have made it to the end of August. Many investors have endured roller coaster rides in their portfolios. The year-to-date return for the S&P 500 Index, according to Bloomberg, is 16.74% through the end of August. The total return for the Vanguard Admiral Shares – S&P 500, charging just 4 basis points, is 18.33%. Many active-managed Continue reading →
“Dogs look up to you, cats look down on you. Give me a pig. He just looks you in the eye and treats you as an equal.”
Winston S. Churchill
I thought I might follow David’s call for a high summer issue that offers our readers “a bit of a breather.” After due consideration, I decided to write a bit about candy and common sense, wine and changing tastes, and the struggle of value investors to deal with changing tastes, changing markets and Continue reading →
“In wartime, truth is so precious that she should always be attended by a bodyguard of lies.” Winston S. Churchill to Josef Stalin, concerning plans for coordinated deception, at a party celebrating Churchill’s 69th birthday, 30 November 1943
The second quarter of the year has provided investors with a variety of results, as well as a variety of Continue reading →
“Bureaucracy is a giant mechanism operated by pygmies.”
Honoré de Balzac, Epigrams (trans. Jacques Leclercq, 1959)
When last our heroes met at the end of April, the market had been on a tear pretty much since the beginning of the year. Many domestic funds were showing total returns in the high teens. International funds were likewise showing total returns in the vicinity of twenty percent at April 30th. Active fund managers, to the background music of “Happy Days are Continue reading →
“If more than ten percent of the population likes a painting it should be burned, for it must be bad.” George Bernard Shaw
Where are we with one third of the year gone? Many domestic and international funds are showing year-to-date positive total return performance ranging from the low teens to just into the twenty percent range. The more instructive number is the total return performance looking back over one year. There many funds are still showing negative numbers, not having Continue reading →
The Romans had a maxim, “Shorten your weapons and lengthen your frontiers.” But our maxim seems to be, “Diminish your weapons and increase your obligations.” Aye, and diminish the weapons of your friends.
Winston S. Churchill, speech to the House of Commons, 14 March 1934
There has been a lot of discussion in recent months about the Kraft Heinz Continue reading →
The typical American of today has lost all the love of liberty that his forefathers had, and all their disgust of emotion, and pride in self-reliance. He is led no longer by Davy Crocketts; he is led by cheer leaders, press agents, word-mongers, uplifters.
H.L. Mencken, “On Being an American” (1922)
As we move forward, now more than half-way through the first Continue reading →
“Life is a predicament which precedes death.”
After a year in which most investors saw unrealized losses in their fund investments due to a very volatile December, probably half of those unrealized losses have been made up through the end of January 2019. This reinforces again the value of being a long-term investor, when you are comfortable with the investment philosophy, strategy, and personnel implementing same at a fund.
But do you Continue reading →
“Human life is punishment.” Seneca
“Vīta hūmāna est supplicium,” Lucius Annaeus Seneca
Looking at the detritus of the year just passed and its effect on investment portfolios, the question that will be asked ad nauseam over the next four or five weeks will be some variant on “How did this happen?” The answer is rather short and simple. You, your mutual fund portfolio manager, and the asset management firm that the fund is part of, all were too greedy.
How so? Continue reading →
Snow on the pines
Thus breaks the power
That splits mountains.
Otaka Gengo Tadeo (one of the forty-seven samurai).
So, another month of volatility come and gone. I think back to about this time almost a year ago, when one of my dinner companions at an event in New York was Byron Wien. Byron had just released his famous annual predictions, one of which was that Continue reading →
“In three words I can tell you everything I have learned about life. It goes on.”
Golden Stacks Again
One of the more entertaining stories of September, reflecting just how far we have fallen, was to be found in the Business Section of the New York Times on Continue reading →
“The danger is not that a particular class is unfit to govern. Every class is unfit to govern.”
John Emerich Edward Dalberg Acton, aka Lord Acton, “Letter to Mary Gladstone” (24 April 1881)
The continued shrinking of liquidity has been a continued concern of mine. We are at a point where the danger signals are again blinking, except the danger will come not from the direction Continue reading →
“A smooth sea never made a skilled sailor.”
English proverb sometimes attributed to FDR
There is a tendency among investors, especially younger ones, to extrapolate their assumptions about investments far off into the future, beyond just a normal year or two. Once something has started working – growth rates, earnings increases, share price growth – expectations become unrealistic AND unsustainable. We have seen that in the last few years about the Continue reading →
“If you attack stupidity you attack an entrenched interest with friends in government and every walk of public life, and you will make small progress against it.”
Those of us who were value investors and running money back at the beginning of 2000, remember what a horrible time it was. For some years value had been lagging growth in performance. We were routinely told, either in emails or other communications from our investors, that our style of investing was never coming back, that we were dinosaurs who hadn’t recognized that we were extinct, and that technology stocks were the place to be as they represented the Continue reading →
“Twenty years from now you will be more disappointed by the things that you didn’t do than by the things you did do, so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails. Explore, Dream, Discover.” Mark Twain
With June, we have had the coming of another Morningstar Conference. Repeatedly I studied the agenda. I could not see anything I thought worth hearing. Rather than presenting many of the leading investment professionals of the mutual fund world, this year the key seemed to be Continue reading →
The surest way to corrupt a youth is to instruct him to hold in higher esteem those who think alike than those who think differently.
Some years back my colleague Clyde McGregor and I used to have philosophical discussions about the market positioning of our fund, the Oakmark Equity and Income Fund (OAKBX), vis-à-vis our competitors. And while some of our focus was on fees, most of the Continue reading →
“To succeed in the world, it is not enough to be stupid, you must also be well-mannered.”
There is a show on Showtime cable that purports to give a pretty good reading of the world of hedge funds and their masters, called “Billions.” It is now into its third season. A scene in the third episode of this season resonated with me regarding some of the issues and problems that active managers face today. The main character, Bobby Axelrod of Axe Capital, has surrendered his rights to trade as a hedge fund manager/chief investment officer in return for having his personal capital unfrozen and thus accessible. His successor as Chief Investment Officer at the firm, Taylor Mason, has begun a search to find some quantitative managers that can be brought into the firm, hoping they will be additive to the Continue reading →
“We live in an age of great events and little men.”
Winston S. Churchill
We have made it through another month, and another quarter. It was not quite so painless for either investors or money managers, as year to date the S&P 500 has now dropped into negative territory. Volatility is clearly back. And while active managers made a valiant effort during the last week of the quarter to move the averages back up into positive territory, it was not to be.
What comes next? Stocks are Continue reading →