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Downhill Racing Meets Value Investing

in Analysis

I wrote this article in May 2015. Every time it was destined to be published in the pages of Institutional Investor, it got bumped by another, more timely one I had written. Finally, when a space opened in September, the market had taken a major dive, and what was supposed to be an “evergreen” article was suddenly out of touch with reality. Here is the irony: This piece addresses complacency,...

Investment Lessons Learned from the Poker Table

in Process

“I don’t know.” These three words don’t inspire a lot of confidence in the messenger and probably will not get me invited onto CNBC, but that is exactly what I think about the topic I am about to discuss. I received a few e-mails from people who had a problem with a phrase in one of my blog posts this fall. In that article I examined various risks that other investors...

Gilead Sciences’ Miracle Drug

in Analysis

It was 1986. I was a junior high school student in Soviet Russia. In political information (propaganda) class, the teacher told us that the HIV virus was killing millions of people in the U.S. Though she didn’t say it explicitly, she made it sound like HIV was a just punishment for the U.S.’s flawed economic and political system. When asked if this virus could be cured, she said that because...

Time for an All-Terrain Investment Portfolio

in Process

As investors today we feel something like a traveler preparing to drive across an unknown continent. A look in the rearview mirror tells us we should pick a race car, and if the road continues to be as it has been, then our trip may be fast and uneventful. But what if the road that lies ahead is rocky, full of holes and maybe even strewn with giant boulders? A sports...

For Investors, Discovering Truth Takes Time

in Process

The Roman philosopher, playwright, statesman and occasional satirist Lucius Annaeus Seneca wasn’t talking about the stock market when he wrote that “time discovers truth,” but he could have been. In the long run a stock price will reflect a company’s (true) intrinsic value. In the short run the pricing is basically random. Here are two real-life examples: Let’s say you had the smarts to buy Microsoft in November 1992. It would...

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