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The Best of the Aleph Blog, Part 35

Thu, 31 May 2018 23:47:02 GMT

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Photo Credit: Renaud Camus

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In my view, these were my best posts written between August 2015 and October 2015:

Learning from the Past, Part 6 [Hopefully Final, But It Won’t Be…]

The currently final episode on my investing errors, covering the last eight years.  Note that Valero has made me five times on my initial investment, though, and I still own it now.  This piece has more of the bright side of what I learned.

Musings on the Wealth Effect

“None of the ways I mentioned for getting more money for spending out of investments is likely to produce a lot of additional spending in aggregate across the economy.  As a result, I think that the Executive Branch, the Congress, and the Federal Reserve should be cautious of trying to make asset values rise, or encourage more borrowing against assets.  It will likely not have any significant effect to grow the economy over the intermediate -to-long term.”

The Surprise Dividend

A hypothetical piece for a company that wants to pay its shareholders more, but wants to do it in a more tax-efficient way.

Thinking About Pensions, Part 1

Thinking About Pensions, Part 2

This is a very realistic look at the issues surrounding retirement, and how to fund it.  it is very frank, and accurate in terms of what is possible.

Quarterly Financial Reporting is Needed, Productive, and Good

Why Companies SHOULD Offer Earnings Guidance

Quarterly earnings reporting is necessary for proper oversight.  If we did not have earnings guidance, a cottage industry would grow up to give it because investors want to know whether companies are performing adequately or not.

The Importance of Your Time Horizon

This is one of the most important concepts in financial planning.  When will you need the assets to provide spending money?

Buying The Next Hot Idea

This is an idea that rarely works.  Why do people fool themselves and chase fads?

When to Deploy Capital

A full answer to the question, “When do I invest cash balances?”  Hint: a middling solution is usually best.  Don’t be too bold or too timid.

When to Double Down

This is a tough question, but I give a clear answer:

Now, since I set up the eight rules, I have doubled down maybe 5-6 times over the last 15 years.  In other words, I haven’t done it often.  I turn a single-weight stock into a double-weight stock if I know:

  • The position is utterly safe, it can’t go broke
  • The valuation is stupid cheap
  • I have a distinct edge in understanding the company, and after significant review I conclude that I can’t lose

Plan and Act, Don’t React

In general, the best investing anticipates likely changes.  By the time a change is revealed, it is too late to make investment decisions.

Too Many Vultures, Too Little Carrion, Redux

I suggested at the time that there were too many investors buying distressed energy assets, many of which went broke.

The Incredible Chain of Lending

Why to be careful when the financial sector grows too large.

A Bigger Brick in the Wall of Worries

I suggest that nonfinancial corporates may be the next financial crisis.  This is looking more likely now.

Volume Is Usually Low At Turning Points

This is a less-known truth: you can’t catch the bottom or the top, particularly if you have a large portfolio to manage.

Modeling Financial Liquidity and Solvency

Why most bank cash flow testing stinks, and how to improve it.

Don’t Worry About Public Bond Market Illiquidity

Bonds are illiquid, aside from the cash that they regularly throw off.  That’s normal; get used to it.

How Much is that Asset in the Window?

How Much is that Asset in the Window? (II)

A theoretical discussion about what assets are worth, settling on the unhappy idea that it is utterly relative, and that changing macroeconomic situations can affect things markedly.

At Least Build A Small Buffer

Having a small cash hoard is better than no cash hoard

Commissions Matter

I disembowel the idea that it doesn’t matter how large the salesman’s commission is.

Long-term Relationships and Credit Scores

An interesting piece on marriage, and how to make things work out, even when there are economic disagreements.

One Dozen Thoughts on Dealing with Risk in Investing for Retirement

“The basic idea of retirement investing is how to convert present excess income into a robust income stream in retirement.  Managing a pile of assets for income to live off of is a challenge, and one that most people are not geared up for, because poor planning and emotional decisions lead to subpar results.”