Money Is Boring

The highly successful growth investor Peter Lynch once advised investors to “buy what you know.” Another way to interpret this is to buy what you understand. Lynch isn’t the only successful investor that has recommend the principle of sticking to companies you understand. Warren Buffett, Charlie Munger, Seth Klarman and Mohnish Pabrai have all stated that this one of the essential principles in the world of finance. Warren Buffett calls his sphere of understanding his circle of competence. He will…

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Professor Russell Napier spends most of his time studying financial markets. Author of The Solid Ground investment report for institutional investors and co-founder of the investment research portal ERIC, Russell has been writing global macro strategy for institutional investors since 1995. He’s also a student of financial mistakes. He set up the not-for-profit Library of Mistakes in 2014, a library dedicated to avoiding mistakes. The professor set the Libary up with the simple goal of educating the financial world about…

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Warren Buffett was taught how to invest by Benjamin Graham, who is considered to be the Godfather of value investing. In the early years of his career, Buffett followed Graham’s style of investing closely. He concentrated his efforts on finding so-called “cigar-butts,” stocks trading at bargain-basement valuations due to structural issues.  Here’s Buffett explaining the approach in his 1989 letter to Berkshire Hathaway shareholders:  “If you buy a stock at a sufficiently low price, there will usually be some hiccup…

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Many business owners and managers believe that growth is the single most crucial factor in defining a company’s success. Nowhere is this trend more evident than the tech sector. Companies like Uber and WeWork have filled the past few years spending tens of billions of investors’ capital growing their top lines without any prospect of a positive return on this investment. These are not the only companies spending billions without any visible return. Companies of all shapes and sizes regular…

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I recently re-read one of Charlie Munger speeches from 1986 to students of the Harvard Westlake business school. In the speech, Munger laid out his rules for living a miserable life, in an attempt to warn students away from these actions.  The full speech is published in Munger’s unofficial biography, Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger. It is well worth seeking out if you’re interested.  After reading Munger’s words, I’ve been inspired to create my…

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A few weeks ago I wrote an article for GuruFocus outlining one of Warren Buffett’s biggest mistakes of all time; selling Disney.  Buffett first noticed Disney back in 1966. The company at the time was selling for $80 million in the market with a debt-free balance sheet, significantly below what Buffett’s estimate of intrinsic value for the business. Smelling a bargain, Buffett invested $4 million of his partners’ money to buy a 5% stake. A year later, he sold this…

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