Novel Investor

Compounding investing wisdom...

Joel Greenblatt on Value Investing

by Jon

Greenblatt-defines-value-investing
Earlier this year Wharton released a video where Howard Marks interviewed Joel Greenblatt. It was a short interview packed with wisdom from the two value investors.

Greenblatt first came across value investing after reading Ben Graham, which offered him a new perspective on investing. He defines value investing perfectly:

Figure out what something is worth, pay a lot less, leaving a large margin of safety.

He repeated this definition several times during the interview. Most people never get past the first part, but he offers two guarantees to those that do the work. Continue Reading…

Happy Hour: Index We Trust

by Jon

The benefits of index funds are obvious – you’re guaranteed to match the returns of the index (i.e. the market), minus fees. Of course, that comes with one rarely discussed caveat: market risk.

As easy as it is to say invest passively or buy and hold, you still must sit through the risk, to earn the return. Investors still have trouble in that area. And rightly so. Not everyone is equipped to handle the risk despite the benefits.

But what we’re now seeing is that the line between investment and benchmark is blurring. What once was a yardstick is now a target. Continue Reading…

Tom Russo on Short Term Pain

by Jon

Tom Russo gave a presentation on finding companies with the best chance for long-term success. The primary thing he looks for is the “capacity to suffer” in the short term in order to grow the business over time. I covered some of his points below.

Before I get to it, I want to make a rather obvious point. To invest in companies with a “capacity to suffer”, you must be able to suffer along with it. In other words, you need a high tolerance for short-term pain. Continue Reading…

Happy Hour: Broken Record

by Jon

We’re a few weeks removed from Brexit and I think it’s safe to say the sky hasn’t fallen…yet.

I don’t have an opinion on the vote or the potential impact it might have either, but Jeremy Seigel did a podcast explaining much of it if you’re into that sort of thing.

The response to Brexit was a reminder to something that’s been playing out like a broken record since 2008 (since forever really). Continue Reading…

Asset Class, Sector, & Country Returns for 1H ’16

by Jon

Midway through the year, I update the different asset tables with first-half returns. It’s July, so time for an update.

Before I begin, here’s a quick reminder. The tables are meant to offer basic lessons on diversification, market cycles, and mean reversion.

The only other constant beyond that is the lack of consistency from one year to the next. In time, best performers become worst performers – expensive becomes cheap – and vice versa. And the benefit of middling is apparent. A diversified portfolio forsakes the best returns in order to avoid the worst. Continue Reading…

Happy Hour: Halfway

by Jon

I’m going to keep this brief because it’s a holiday weekend.

Thursday ended the first half of 2016. It wasn’t the greatest first half to a year, but they can’t all be greatest either. The S&P 500 traveled a lot, yet went nowhere the past six months. All that bouncing around to get nothing can be frustrating. Continue Reading…

Learning

Return Tables

Connect