The Stingy News Weekly (01/01/2012)
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Value stock scarcity
"Over the past several decades, the value breakpoint has averaged 0.72 Ė stocks that have a P/B below 0.72 have fallen into the value group those with a P/B above this level have not. As it happens, thatís quite close to an old value investing rule of thumb that suggests investors buy stocks only when they trade below 66 per cent of their book value. Unfortunately, there arenít many stocks that pass such a stringent test this year. Indeed, the value breakpoint now sits at a P/B of 1. Thatís not the highest itís been in recent times but it is well above average, which suggests that value investors should be cautious."
Natural gas bear market
"U.S. natural gas prices fell to their lowest point in more than two years, underscoring how the nation's booming energy business is becoming a victim of its own success."
A year without fear
"My danger-avoidance lifestyle worked, and I enjoyed a long string of injury-free years. But I always had a nagging feeling that I was missing out. How can you know if the chance you didn't take was the one that would have enriched your life versus, for example, something that would have ended up with you chewing your own arm off to escape? Enrichment and arm-gnawing look roughly the same when viewed from the start."
A market that even a skeptic can like
"One of Canada's pickiest and most careful money managers has been on a buying spree lately. Early in July, Vito Maida had the maximum 25-per-cent cash he's permitted to hold in running the Horizons North American Value ETF. Today, while many individual investors are paralyzed with indecision about where to put their money, he's fully invested. 'I would say that this is the first time in a long time that we've been able to construct a portfolio of high-quality companies at very attractive valuations,' Mr. Maida said. Translation for non-hardcore investors: There are some good companies available right now at attractively low prices."
Third Avenue's Q4 2011 letter
"In the main body of this letter I discuss, after re-reading Graham and Doddís writings on Value Investing, how the various Third Avenue Fund managers are followers of Graham and Dodd, and how these managers are different. Before doing that, there is one macro point in which I believe strongly, and of which you should be aware. There is no way that I can see that those countries involved with the Euro can be made credit-worthy unless all European Sovereign Debt is assumed, or guaranteed, by each member country including, especially, Germany. Such an amalgamation would make Euro Sovereign Debt more comparable to U.S. Treasuries than is now the case. I do not know how the forthcoming European upheavals will work out. But cash rich economies with a plethora of investable funds ought to do okay, provided they are opportunistic. It is comforting to know that so much of Third Avenue Managementís common stock investments are in companies operating in Hong Kong, mainland China, South Korea, Canada, Brazil, Australia and Sweden."
When reinforcement fails
"In many situations, such reinforcement learning is an essential strategy, allowing people to optimize behavior to fit a constantly changing situation. However, the Israeli scientists discovered that it was a terrible approach in basketball, as learning and performance are ďanticorrelated.Ē In other words, players who have just made a three-point shot are much more likely to take another one, but much less likely to make it"
How to make a fortune after 50
"At an age when others might ready for pre-retirement, some folks pass age 50 determined to start a new life in the business world - and succeed beyond their rosiest business plan projections."
Cutting buffett helps sequoia fund
"Ruane ran an unconventional fund, closing Sequoia to new investors in 1982 because he didnít want its size to limit what the fund could buy. It opened again in 2008, three years after Ruaneís death. Ruane also held a concentrated portfolio. In 2003, Sequoia had 75 percent of its money in its top six holdings, according to a regulatory filing."
106-year-old stockbroker talks shop
"Irving Kahn has been following the swings of the market since before the Great Depression...and he still does."
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