Valueinvesting
Bill Miller himself once said: “This is a brutal business, success equals survival. If you have survived, you will have succeeded”. We have said it a little differently since 1988: to finish first, you must first finish. Mr. Miller, famous for his 15-year streak of beating the S&P 500, has announced that he will step down as co-manager of the Legg Mason Value Trust in April 2012. Is Mr. Miller’s rise and subsequent fall a matter of genius becoming overconfidence or simple probability theory playing out – as per Taleb? Not knowing the inside workings of Legg Mason, no one can really claim to know the answer. To help us think about it, we collect several links inside.
A few notes about Day One (Monday, Oct. 17th) in the 2011 Value Investing Congress. You can follow their own live updates on Facebook or Twitter. We start with David Einhorn – he wasn’t the first speaker of the day, but things started to get interesting when he came onto the stage. Having attended both, the Ira Sohn Investment Conference is a better event: shorter in length, better attended and with better speakers, more focused and, we dare say, with more committed speakers.
Our article in the August 2011 edition of the Valor Investe magazine, discussing the financial education of Warren Buffett. The entire section on Financial Education in this edition is worth the time and couldn’t be more vital today – with the mess in Europe, the US debt/ global banking system imbroglios and general volatility. In a country like Brazil, the lack of concern with financial education is even more worrying. Initiatives such as this one are very important.
Mr. Van Den Berg of Century Management has just given an interview to GuruFocus.com, an interesting source keeping track of big-name investors. We took the opportunity to link to several articles and interviews, but it’s nice to note that Century’s own website is filled with good material in their Library page.
New blogroll inductee is a value investing “classic” source: CAP@Columbia. Maintained by Michael Mauboussin and Paul Johnson, it’s a link-fest of relevant texts and articles on everything from portfolio/risk management to the psychology of investing. It’s a testimony to the multidisciplinary aspect of value investing, and to the ever-lasting need to improve one’s mental models/toolkits.
While we were searching for the Charlie Munger quotes for the Thursday post (“Aha! moments vs. strategy”), we found an interesting text by Li Lu, the chinese investor who had been shortlisted as a candidate for the CIO position at Berkshire post-Buffett. It’s the preface to the Chinese edition of the spectacular book Poor Charlie’s Almanac, where Li Lu writes a lenghty profile of Charlie Munger in a rare first-person account that even Warren Buffett hasn’t really provided yet.
In our latest quarterly report, we discuss the notion of “economic moat” in the second part of the Sand Castles, Concrete Walls text. In it we quote from a 1998 Warren Buffett talk to Florida University MBA students that is simply a must-see. It’s a very candid talk in which Mr. Buffett discusses not only the fundamental aspects of value investing in a bit more detail than we get nowadays, but also some sector and company-specific opinions that, again, he now seems more reluctant to share outside of the Berkshire letters to shareholders. We post the 10 videos inside and the link to a transcript of the entire session. Video number 10 alone is worth watching and sharing with friends, and not just those in the financial industry: he proposes a mental exercise about the “ovarian lottery” that’s really thought-provoking.
Read more about Investment classics: Buffett @ Florida, 1998
In a first of what we hope to be many article collections about investors we keep track of, this one is about Glenn Greenberg of Brave Warriors Capital. He’s better know as the co-founder of Chieftain Capital, but in the end of 2009 him and John Shapiro parted ways (Mr. Shapiro and two other partners left but retained the name Chieftain Capital). Being the first to be profiled in this series isn’t a matter of order of preference at all.
Buffett was particularly expansive regarding his processes and methods, and this alone makes this video worth the time (some 90 minutes). The fact that it was October 1998, a pivotal time in the dot-com boom and just after the LTCM imbroglio makes it even more interesting.
In the 1st Buysiders article inspired by a reader’s suggestion, we’d like to propose “anti-portfolios”. It’s a vital lesson in humility: our activity involves a certain degree of failure, of missed or simply wrong ideas. Recognizing that we are going to make mistakes over time is extremely important in order to mitigate risk as we define it (the permanent loss of capital). The objective here is to insist, once again, that price is the ultimate measure. (…) After you’ve done all the homework, you still have to demand a price that implies a large margin of safety – and keep analyzing the position everyday with the same skepticism you had before you bought it.
