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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Professor Dave's Monthly Missive

MJG
edited February 2015 in Fund Discussions
Hi Professor Dave and Team,

Wow!!

Your monthly commentary is usually outstanding. The February edition is simply superb. Both you and your coauthors moved the reporting up yet another significant notch. Congratulations to the entire MFO team.

The various pieces were both informative and entertaining. They served duel purposes.

Indeed as you said, “Investing by aphorism is a tricky business.” Dueling aphorisms are everywhere, but I love them. And to be entirely honest, I do sometimes default to them when making decisions. They function as an effortless mechanism to buttress the decision logic, or lack thereof.

Given the recent Super Bowl success it’s easy to illustrate by quoting two famous dueling sport-oriented aphorisms. Grantland Rice wrote that “Its not whether you win or loss, its how you play the game”. Coach Vince Lombardi is credited with “Winning isn’t everything, it’s the only thing”. I’m sure the folks in Seattle and in Boston have disparate opinions with regard to these aphorisms.

There are many dueling aphorisms that are applicable to the investment process and to investment decision making. For example: Knowledge is power, but Ignorance is bliss, or, Money talks, but Talk is cheap, or, Look before you leap, but He who hesitates is lost, or finally, The more the merrier, but Two’s company and three’s a crowd.

I’m sure the MFO members can constructively add to these contradictory truisms.

Once again, many thanks for your actionable insights and your dedication. Great stuff.

Best Wishes.

Comments

  • edited February 2015
    David says: "My portfolio is designed to allow me to be stupid." False modesty no doubt ---
    I like it nonetheless. The longer I invest, the more I recognize the virtues of keeping hands-off. Tinkering almost always proves costly.

    Ed quotes Phillip Fisher speaking at Stanford Business school: "The last thing I want is a lot of good stocks. I want a very few outstanding ones.” Ed adds: "I think the same discipline should apply to mutual fund portfolios. You are not building an investment ark, where you need two of everything."

    Ed's analysis of global currency manipulation, the role of gold in all this and the motivations of various players is "penetrating" to say the least. I don't pretend to understand it fully. Definitely warrants a second reading.

    Thanks to all who contributed.

  • MJG
    edited February 2015
    Hi Hank,

    Many thanks for your fine posting that highlights very special parts of this month’s MFO Commentary section. This month’s edition does have its complex components that will require a reread for a fuller understanding. But it’s worth the effort. In my case I just might need several rereads.

    I agree that Ed’s observations about gold and currency exchange are particularly provocative. I’ve always been mostly perplexed by money exchange markets. Forex has been a Black Box to me.

    In the investment community, money is a necessary element that satisfies several purposes. Knowing its history will definitely serve an investor well. I posted a Link to an excellent video series that presents its history a year or so ago, but I believe it bears repeating now given the February Commentary. Here is a Link to Niall Ferguson’s recent 4-part video, The Ascent of Money, on the topic:



    Although it is a 4-hour time commitment, the Ferguson film is worthy of MFOer attention. Please give it a look-see.

    Best Wishes.
  • edited February 2015
    Another excellent source of information on this subject may be found in the MFO Header section: Resources: Books: (pg 2):

    The Power of Gold: The History of an Obsession by Peter L. Bernstein

    This is a fascinating read on the evolution of money from the very beginnings of barter until the current age, with emphasis of course on the use of gold and silver as mediums of exchange, and then the further evolution from there. Somewhat surprisingly, the use of gold as the international currency had it's own set of problems, also.

    A very nicely illustrated hard-cover version is available from Amazon, at a decent price. Be sure to use the MFO purchase link with Amazon.
  • Hi Old Joe,

    Thank you for the tip on Peter L. Bernstein’s “The Power of Gold” book. I fully trust your favorable endorsement.

    I’m embarrassed to admit that I’ve owned a paperback copy of the book for years, yet never opened its cover. I bought it as part of a 3-volume set that included his “Capital Ideas” and “Against the Gods” works. I did read these titles. Later, he wrote numerous other financial books; I have read several of them. All are engaging and all act as excellent teachers.

    Both referenced works are superb. I learned much about the financial world and investing from both of them. Today, I’m puzzled why I did not finish the trilogy. Perhaps I had no interest in gold at that time; not much has changed in the intervening years. But I accept your counsel and will put Bernstein’s Gold book on my reading list.

    Thanks for your recommendation, and your advice to other MFO participants. Bernstein was a treasure and his legacy lives in this outstanding three volume set. All investors miss his wisdom, his clarity, and his wit.

    Best Wishes.
  • Hello there, MJG- The first time that I read “The Power of Gold” was indeed a paperback, from the local public library. I liked it so much that I ordered a copy from Amazon, for reference purposes. To my surprise and pleasure the hardback version had a bit of expanded material, plus some very nice photography and graphics, and very decent paper.

    Regards- OJ
  • edited February 2015
    From Ed's Commentary: "The students of history among you will remember that at various points in time it has been illegal for U.S. citizens to own gold, and that on occasion a fixed price has been set when the U.S. government has called it in...."

    I suspected as much when we discussed the "supermarket" senerio last week. But wasn't sure until Ed raised the possibility. In addition to all the issues OJ raised (in humorous vein), one more to contemplate is a federal agent standing there at the supermarket checkout line ready to confiscate your gold!
  • FDR was the last President to ban gold from ownership by citizens. From what I understood through the stories of that generation, a lot of it went hiding to wait for the day when it became legal again as history had shown. Was the ban more of the intention to focus the backing of the dollar on other means?

    I remember Silver Certificates and Union notes. The family has some in possession as well as gold coins from the era before FDR. We also have some dollars that were single bank issues ( redeemable at one bank only). A lot of stuff happened during the Depression era.
  • Yes, we have a little bit of that. Very nice stuff!
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