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The Doubling Rule

June 21, 2017 Comments (0)

Picture Credit: Vincent Brown || Einstein never said this, either…=======================If you are famous and dead, many people will attribute clever sayings to you that you never said.  As Yogi Berra said: I really didn’t say everything I said.Except that Yogi did say that.  Now, if Einstein didn’t do enough for us, he supposedly made many statements praising compound interest, but the articles I have seen haven’t been able to trace it back to an original source....

Redacted Version of the June 2017 FOMC Statement

June 14, 2017 Comments (0)

Photo Credit: Craig Hatfield May 2017June 2017CommentsInformation received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen even as growth in economic activity slowed.Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year.Shades GDP upJob gains were solid, on average, in recent...

Why Social Security Should not be Invested in the Stock Market

June 13, 2017 Comments (0)

Photo Credit: Cameron Daigle======================================Stocks always return more than Treasury Bonds.  So why doesn’t Social Security invest the trust funds in stocks rather than Treasury bonds?The first reason is simple.  The government wanted Social Security to be free from accusations of favoritism.  Why should public businesses have access to government capital, when private capital doesn’t have that same advantage?  The second reason is also simple: do we want the...

Estimating Future Stock Returns, March 2017 Update

June 11, 2017 Comments (0)

26 paths, and all of them wrong========================I lost this post once already, hopefully it will be better-written this time.  I’ve been playing around with the stock market prediction model in order to give some idea of how the actual results could vary from the forecasts.Look at the graph above.  it shows potential price returns that vary from -1.51%/year to 4.84%/year, with a most likely value of 2.79%, placing the S&P 500 at 3200 in March 2027.  Add onto this a 2% dividend...

The Biggest Problems For Investors Today

June 10, 2017 Comments (0)

What could be more à propos to investing than a bubble spinner? A letter from a “reader” that looked like he sent it to a lot of people:Hello my name is XXX, After looking through your website I have really been enjoying your content. I am also involved in the investing space and wanted to ask a quick question. I was curious as to what you think the biggest problems are for investors today? For example do they not have enough investment choices? Do they just not have enough...

Goes Down Double-Speed (Update 4)

June 9, 2017 Comments (0)

Photo Credit: eric lynchMarkets always find a new way to make a fool out of you.  Sometimes that is when the market has done exceptionally well, and you have been too cautious.   That tends to be my error as well.  I’m too cautious in bull markets, but on the good side, I don’t panic in bear markets, even the most severe of them.The bull market keeps hitting new highs.  It’s the second longest bull market in the last eighty years, and the third largest in terms of cumulative...

Operating vs Financial Cash Flows

April 27, 2017 Comments (0)

Photo Credit: Daniel Broche || To the victor goes the spoils, or, does a victory get spoiled?====================================I was at a CFA Baltimore board meeting, and we were talking before the meeting.  Most of us work for value investors, or, growth-at-a-reasonable-price investors.  One fellow who has a business model somewhat like mine, commented that all the money was flowing into ETFs which were buying things like Facebook, Amazon and Google, which was distorting the market.  I made...

The Best of the Aleph Blog, Part 30

April 20, 2017 Comments (0)

Photo Credit: Philipp Messner || Every culture should learn their alphabet =========================================In my view, these were my best posts written between May and July 2014:Look to the Liabilities to Understand the AssetsWhy do new asset classes work very well for a time and then fail?I Have My DoubtsLearning to live with uncertainty and thrive amid it.Asset Value IllusionPeople don’t need assets as much as they need streams of income derived from the assets (dividends,...

Arconic Arguments

April 4, 2017 Comments (0)

There’s a lot of bits and bytes spilled in the war between Elliott Associates (and those that favor their position) and the current board of Arconic.  I want to point out a few things, having held Alcoa since prior to the breakup, and added to my positions in both new Alcoa and Arconic post-breakup.Profitability will likely improve more if Elliott’s nominees are elected to the board, and Larry Lawson is CEO.The existing management team does not deserve credit for the recent rise in...

The Best of the Aleph Blog, Part 29

April 4, 2017 Comments (0)

Photo Credit: Hanan Cohen || Anyone need a copy?===============================In my view, these were my best posts written between February and April 2014:On the Structure of Berkshire HathawayOn the Structure of Berkshire Hathaway, Part 2, the Harney Investment TrustThis set of posts is unique in going through how the insurance entities of Berkshire Hathaway allow Buffett to hold as much as he does of his stocks/businesses through his insurance companies.  It also explains as much as can be...