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Notes on Article on U.S. Debt by Alan Greenspan

A summary of a WSJ article on U.S. debt here, by Alan Greenspan (18 June 2010): Federal debt to the public has surged from $5.5 trillion to $8.6 trillion in the past 18 months. This is a sign of fiscal excess, which typically shows up as inflation and high long-term interest rates, but have not. … Continue reading

Excellent Post on Li Lu

There is an excellent post on Li Lu here. Great read. Some key takeaways: Really solid due diligence that is done for investments. He plows through court documents, visited the community of the managers, goes to their Church, their Synagogue, talk to the people that they know, talk to their friends and neighbours, find out … Continue reading

Position Sizing

Just some notes on ways of position sizing for trading, not for value investing. Two ways of position sizing: Percent Risk –  Determine what percentage of your total portfolio you would risk on a trade (e.g. 1%). Number of shares to buy = Amount to risk (in $) / (Entry price – stop loss price). … Continue reading

Stocks will be Priced According to their Future Earnings

Just saw a video where Bruce Berkowitz of Fairholme Fund was interviewed by Consuelo Mack. One part of the interview is interesting and showed how he thought about investments. He is currently heavily bought into Financials (e.g. C, CIT, AIG, GS, BAC, RF, MBI, MS), and his view is that when their earnings return to … Continue reading

Gold is a Currency, Not an Inflation Hedge

Just read a WSJ article on Gold here. Thought that its pretty interesting. Main points: Gold is not a commodity, but is a currency. A commodity’s price is driven by inflation (e.g. silver, wheat, pork bellies). Gold’s correlation with inflation from 1978 is only 0.08. However, from 1973 onwards (when the dollar is no longer … Continue reading

Book Review on The Value Connection

Book: The Value Connection: A Four-Step Market Screening Method to Match Good Companies with Good Stocks (2003) by Marc H. Gerstein, Director of Investment Research at Multex. Review: This is a decent book. The main crux of this book is to focus on quantitative factors to the fullest extent, when choosing stocks. This minimizes the … Continue reading

Book Review: The Wall Street Waltz – 90 Visual Perspectives

Book: The Wall Street Waltz – 90 Visual Perspectives (Illustrated Lessons from Financial Cycles and Trends) by Ken Fisher Review: Quite a few interesting points. I always think that history is a very good teacher and one really need to look at history and learn what were the pitfalls so that you can avoid them. … Continue reading

Toyota Way

I just chanced upon a good article on Toyota. See here. Just want to capture a few wonderful points: The American idea of improvement would be to get a special engineering group, or some Six Sigma Black Belts to descend to a review and fix things as a one-off project. After which they would present … Continue reading

Thoughts on Macroeconomics

Some thoughts: How wealthy or economically strong a country is depends on the real output (goods and services) of the country. The real output is independent of the currency. Another way to think about how wealthy is a country is in terms of how much is consumed by the country in terms of real goods … Continue reading

Book Review: The Guru Investor

Book: The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies, by John P. Reese with Jack M. Forehand Review: Good book. It summarizes the principles of famous investors into quantified mathematical criteria that can be used for screening. Of course the screening criteria are not a complete substitute but they are … Continue reading

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