In a recent paper titled “Buffett’s Alpha,” the authors were able to separate Buffett’s outstanding performance into three distinct buckets. First, Buffett, no surprise, is a good stock picker. Second, by using the premiums written by Berkshire Hathaway’s various insurance … Read more
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I believe, but cannot prove, that true alpha does not exist for individual investors. There are too many conflicts of interest and “frictions” in the system for an individual investor to enjoy market-beating results. I believe this is the case … Read more
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When I was asked, “What do you believe but can’t prove in investing?” the Donald Rumsfeld quote about knowns, known unknowns, and unknown unknowns came to mind. Where in that context do unprovable beliefs fit? My first thought is that they’re known unknowns. If we have an unprovable belief, then we have a strong opinion that could be wrong, which would seem to place us squarely in the known unknowns.
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Clients, critics, and financial media consumers want to understand how other professional investment managers and I select the securities that are found in their portfolios. For me, the starting points are the financial and emotional needs of the account. I … Read more
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