Monday, October 13, 2014


A Dozen Things Learned From Guy Spier About Value Investing (LINK)
Related book: The Education of a Value Investor
Buffett rolls out the Berkshire Hathaway brand (LINK)

Atul Gawande talks with The Guardian about his new book, Being Mortal (LINK)

The Ants Go Marching On; So Do We - Edward O. Wilson Explains ‘The Meaning of Human Existence’(LINK)
Related book: The Meaning of Human Existence
Fear of Vaccines Goes Viral (LINK)

Tim Ferriss interviews Tony Robbins and Peter Diamandis  (LINK) [There are a number of books mentioned in this interview. One I hadn't read and bought was one of the ones Tony Robbins mentioned as a book he gifts the most, As a Man Thinketh by James Allen. If you go with the Audible version, be aware that there are a few different readings of it, one of which gets a bad narration review. The narration I went with was the one done by Brian Holsopple.]

The Brooklyn Investor reviews the book The Halo Effect (LINK)

The State of Investment Around the World (LINK)

David Webb's speech to the Hong Kong protesters (LINK)

Nikola Tesla Documentary (video) [H/T Crossing Wall Street] (LINK)

Hussman Weekly Market Comment: Air-Pockets, Free-Falls, and Crashes (LINK)
My view is that even passive buy-and-hold investors should primarily focus on ensuring that the effective duration of their portfolio is not significantly longer than the horizon over which they expect to spend the funds. In other words, the duration of the assets should be matched with the anticipated horizon of spending needs (or liabilities). The estimated duration of the S&P 500 Index is roughly 50 years, 10-year Treasury bonds presently carry a duration of about 9 years, and cash has zero duration, so a passive investor expecting the average date of spending to be about 15 years in the future might match that with an asset portfolio of similar duration. Examples would include a 20%-55%-25% mix of stocks, bonds, and cash, respectively, or perhaps a 24%-33%-43% mix, but in any case not more than about 30% in equities. 
The challenge here is that we associate each of those 15-year duration portfolio mixes with expected nominal total returns of less than 2% annually over the coming decade. Based on historically reliable valuation measures, we presently estimate prospective 10-year S&P 500 nominal total returns of just under 2% annually here, so increasing the equity portion does not improve the expected portfolio return. Investors should understand that “prices and valuations are high” is another way of saying “future returns have already been realized, leaving little to be gained for quite some time.” 
Fortunately, as valuations retreat, durations shorten. For example, at the 1982 low, the dividend yield of the S&P 500 reached 6.7%, bringing the duration of the index down to 15 years, so from a duration-matching standpoint, even an investor with an expected spending horizon averaging 15 years could have been comfortable with 100% of assets in equities. At the 2009 low, the yield was a more moderate 3.8%, but that still implied a 26-year duration, making a 60% equity allocation quite reasonable even for a passive investor expecting to spend the assets, on average, 15 years hence.