Novel Investor

People love a good story and the market is an endless supply of tragedy and possibilities. You just have to pick the right script.

Tales get told every day about why the market did what it did, why a stock went up or down, or how some bit of news affects markets going forward.

It’s just stories…tall tales…fairy tales…sometimes…that can help make sense of the information because a narrative is easier to digest than all the data. This works out well if the stories take an objective view, but that’s not always the case.

Instead, we often get cherry-picked data to create a good story or fit some preconceived conclusion. Or we string together a series of data to explain how and why something happened and how it impacts the future when really it was a series of random events (since random, luck, and chance don’t add a sense of certainty, we create a story instead).

Story stocks thrive on this: Continue Reading…

Only owning 30 stocks, in a world awash in index funds, probably sounds inadequate.

It’s not.

Ben Graham made the argument for owning 30 stocks in the last post. He also argued for owning an index. I say both are acceptable.

I could argue that 30 stocks are five or ten more than necessary. I once only owned five stocks, which was probably too few. Though, Charlie Munger seems to think five is adequate for him.

The point is that 30 isn’t an outrageously inadequate number. Also, what might be right for Charlie, may not be right for you or me. So don’t invest like him, if that’s the case.

But owning 30 stocks is enough because the math says so. Joel Greenblatt did the work for us in You Can Be A Stock Market Genius: Continue Reading…