"There are two good times to be an investor: when valuations are low overall, and when dispersion is high." by @ByrneHobart
"There are times when the overall market is expensive, but the cheapest assets out there are really incredibly cheap."

"the heyday of value investing in the 50s and 60s, one of the things that stands out is that they were able to find tiny cheap companies with high-quality economics and good management teams. Not only was the market for stocks inefficient, but the market for talent was, too."

Vs. today
"the statement “this small, obscure company is in a good business, is well-run compared to its peers, and looks quite cheap” requires a lot of explaining, because so many forces conspire to ensure that sufficiently good companies remain neither small not cheap for long"

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Frederik Gieschen

@NeckarValue

28 Nov

@morganhousel

Fantastic by @morganhousel

"1973 was the first year where it became clear the economy was walking down a new path."

"A combination of lucky economic advantages and a culture hardened by the Depression and anchored in cooperation shifted when Baby Boomers began coming of age."

"Everything in finance is data within the context of expectations. One of the biggest shifts of the last century happened when the economic winds began blowing in a different, uneven direction, but people’s expectations were still rooted in a post-war culture of equality.

Not necessarily equality of income, although there was that. But equality in lifestyle and consumption expectations."

"Sharp inequality became a force over the last 35 years, and it happened when, culturally, Americans held onto two ideas rooted in the post-WW2 economy:

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Frederik Gieschen

@NeckarValue

27 Nov

Kirk Kerkorian is one of my favorite rags to riches stories. A high school dropout who built the largest casinos and nearly owned Chrysler. A shrewd and enthusiastic dealmaker with a chip on his shoulder.

“Life is a big craps game. I've got to tell you, it's all been fun.”

"When you're a self-made man you start very early in life. In my case it was at nine years old when I started bringing income into the family. You get a drive that's a little different, maybe a little stronger, than somebody who inherited."

Kerkorian was born in 1917 to Armenian immigrants in California. His father bought up ranches and became San Joaquin's 'raisin baron' before going bankrupt under a mountain of debt.

Kerkorian dropped out of school and worked odd jobs, he nearly became a professional boxer.

Read 25 tweets

Frederik Gieschen

@NeckarValue

26 Nov

Bill Gates on what he learned from Buffett in 1996

"When you are with Warren, you can tell how much he loves his work. When he explains stuff, it’s never “Hey, I’m smart about this, I’m going to impress you.” It’s more like “This is so interesting and it’s actually very simple..

I’ll just explain it to you and you’ll realize how dumb it was that it took me a long time to figure it out.”

And when he shares it with you, using his keen sense of humor to help make the point, it does seem simple."

"Whenever somebody says to me, “Meet so-and-so; he’s the smartest guy ever” my defenses go up. People overestimate the merit of that to which they’ve been exposed. So the fact that people called Warren Buffett unique didn’t impress me much.

Read 13 tweets

Frederik Gieschen

@NeckarValue

23 Nov

@mjmauboussin

Fantastic read by @mjmauboussin

"Al Rappaport spoke about 3 things that have become central to my work:

1: It’s all about cash — not accounting numbers.

2: Valuation and competitive strategy have to be considered together.

3: The market provides a useful signal for managers.

"Most investors act as if their task is to figure out a stock’s value and then to compare that value to the price. Our approach reverses this mindset. We start with the only thing we know for sure - the price - and then assess what must happen to realize an attractive return."

"Determine what expectations are currently priced in. How well do key value drivers have to perform?

Buy, sell, or hold based on the difference between the stock price and expected value. We develop a specific framework, which we call the “expectations infrastructure."

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