Thursday, August 11, 2016


1997 paper from Michael Mauboussin: "Thoughts on Valuation" [H/T @BrattleStCap] (LINK)
This underscores the important point that P/E multiples are not a determinant of value, but rather a function of value. On Wall Street, the typical valuation formula is EPS x P/E = value. We just talked about earnings and how they can be misleading. Now we go to this thing called the P/E multiple. We are asking the P/E multiple to reflect growth, capital intensity, risk, quality of management, and competitive advantage. We are heaping a lot of responsibility on one number and we argue that it is practically impossible to know what that right number is. So we try to break value down into components. We believe that value is determined by the present value of a stream of future cash flows, and the P/E falls out of that equation.
15 interviews to read this summer [H/T @FourFilters] (LINK)

This former EMC exec says Amazon ate his old business and it will never recover [H/T @chr1sa] (LINK)

The Brooklyn Investor blog: Scary Chart Part II (LINK)
Books recommended in post: 1) The Money Masters; 2) The New Money Masters
FPA Crescent Fund's Q2 Webcast (LINK)

Veteran Stockpicker Bill Miller Parts Ways With Legg Mason (LINK)
Veteran mutual-fund manager Bill Miller has reached a deal to buy out Legg Mason Inc.’s stake in the entity that houses his funds, formally severing ties with the firm where he built his fame and fortune. 
Mr. Miller is buying out Legg Mason’s 50% interest in LMM LLC, the entity that houses the funds he manages, including the Legg Mason Opportunity Trust and the Miller Income Opportunity Trust. Financial terms of the deal weren’t disclosed. Mr. Miller already owned the other 50% of LMM.
In praise of failure - by Benedict Evans (LINK)

Episode 09 of Malcolm Gladwell's Revisionist History podcast (LINK)

The Overview Effect - by Jonah Lehrer (LINK)

Why Self-Help Guru James Altucher Only Owns 15 Things [H/T Abnormal Returns] (LINK)