The Stingy News Weekly (04/02/2017)
New from StingyInvestor
The permanent portfolio
"Investors rushed to rediscover the permanent portfolio after suffering from painful losses caused by the crash of 2008. It promises a soothing combination of relative safety and reasonably good returns." [$]
Bad behaviour or bad math?
"Wade D. Pfau, the professor of retirement income at The American College, recently fired a broadside at DALBAR's annual research study on the 'Quantitative Analysis of Investor Behavior.' The professor claims the study is deeply flawed."
Chou's Annual Letter
"Based on the information we now have, the average price we paid of less than seven times free cash flow is on the high side, but at less than two times free cash flow it is a totally different story. If these numbers hold, we believe that the intrinsic value is much higher than the current price of Valeant." [Chou]
A slippery idea
"Like many business ideas, short-termism fits the experience of some individual business people. But as a theory about how the economy works it is too nebulous to be much use." [Economics]
"Science is embattled in a raging replication crisis, in which researchers are unable to reproduce a number of key findings. On the front lines of this conflict is psychology. In a 2015 review of 98 original psychology papers, just 36 percent of attempted replications returned significant results, whereas 97 percent of the original studies did." [Science]
Einhorn rediscovers preferred stock
"Every four years or so, David Einhorn, the founder of Greenlight Capital LLC, rediscovers the concept of preferred stock and publishes a big presentation about it. I think it is about the most moving and beautiful recurring event in finance, like the migration of the Demoiselle cranes over the Himalayas, but for preferred stock." [Stocks]
Venezuela leaps towards dictatorship
"The regime is in desperate need of the money that such ventures bring. Although Venezuela has the world's largest proven reserves of oil, the socialists have mismanaged the economy so badly that people struggle to buy food and hospitals are bare of medicines." [World]
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