Weekend Reads for Investors: Buffett’s Brain, Bubbles, and Uber
As we look to close out the first half of 2014, global equity markets are near all-time highs and continue to meet little resistance. And what’s not to like? Investor sentiment is overwhelmingly bullish, economic news, on the margin, has been positive, and central banks continue to prime the liquidity pump. Companies, meanwhile, are awash in cash and eager to reward shareholders with stock buybacks.
The geopolitical backdrop may be less than encouraging, with turmoil and escalating conflicts around the world, but markets have been largely indifferent. The complacency among investors is hard to miss and perhaps best reflected in the United States by the CBOE SPX Volatility Index (VIX), which recently dropped to a 7-year low. The VIX historically moves in the opposite direction of equities, and while investors may be inclined to see the current lack of volatility as an all-clear signal, contrarians should instead consider the depressed levels of Wall Street’s so-called “fear gauge” as a warning sign. BlackRock’s Russ Koesterich puts it best, noting, “Low volatility has a way of persisting, until it doesn’t.”
Below are some other stories and videos that caught my eye in recent weeks.
Strategic Thinking
- “Inside Buffett’s Brain” (Money)
- Jim Grant talks bubbles and bargains. (Forbes)
- Value investor Bruce Berkowitz goes against the flow. (Institutional Investor)
- Former US Treasury secretary Lawrence Summers believes House of Debt, by Atif Mian and Amir Sufi, “could be the most important book to come out of the 2008 financial crisis.” Sufi will be speaking at the Financial Analysts Seminar in Chicago next month. (Financial Times)
Valuation
- “Forecasting Stock Market Returns on the Basis of Valuation: Theory, Evidence, and Illusion” (Philosophical Economics)
- Valuation pro Aswath Damodaran considers Uber’s “disruption option” and thinks the “smart money” is wrong. (Musings on Markets)
- Andrew Ross Sorkin on why Uber might be worth $18 billion. (The New York Times)
Technology and Innovation
- We reached a milestone in artificial intelligence. (The Guardian)
- Taking advantage of smartphones and other consumer technologies, nanosatellites are changing the space business. (The Economist)
Wall Street
- William D. Cohan on the price paid by Wall Street whistleblowers. (Financial Times)
- The life and death of a master of the universe. (CNBC)
- In a conversation with Jeremy Siegel, Flash Boys author Michael Lewis talks about a rigged stock market and the heroes of Wall Street. (Knowledge@Wharton)
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.
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