Best investment adviser Richard Losch's blog

Warren Buffett vs Wall Street

For Wall Street and a large segment of academia, The bible On investment management is a discipline called “Modern Portfolio Theory”or MPT for short. It is a set of rules first developed by academia in the 1960's and 1970's, and is based on the premise that broad diversification across many assets classes reduces portfolio risk, this school of thought defines risk by measuring volatility. With risk defined in this manner, Modern Portfolio Theory recommends that an investor approaching retirement should hold a portfolio heavily weighted to fixed income with equity investments widely diversified.

First Quarter Letter: Globalism, 1982 to 2000 Bull Market, Global Middle-Class Growth

First Quarter Letter: Globalism, 1982 to 2000 Bull Market, Global Middle-Class Growth, Focus on the present.

Third Quarter Letter: Volatility Underlying a Calm Market, Middle Class Growth 2015-2030, Brookings Institution’s Estimates, LKQ Corporation

Third Quarter Letter: Volatility Underlying a Calm Market, Middle Class Growth 2015-2030, Brookings Institution’s Estimates, LKQ Corporation.

What’s new with CBI?

With much chatter over the last six months anticipating an ambiguous or unfavorable Delaware Supreme Court ruling, CBI’s share price plummeted more than 60%. After years of contention, the hotly debated, anxiously awaited decision regarding the $2 billion Westinghouse lawsuit, the Court appears to hand CBI victory in dramatic fashion ...

The market responded emphatically, as well, with CBI’s share price jumping 50% in two days.

Passive Investing

The trend to passive investing (investing in an index funds or ETFs based on an index such as the S&P 500) has accelerated in the last to few years to the point where we have to wonder how much longer this trend can go on. Last year, American investors plowed a record $504.8 billion into passive funds, while pulling $264 billion out of actively managed funds focusing on US companies.

First Quarter Letter: Economic Cycles, Hindsight Bias, Effect of Tax CUT on Berkshire

Successful investing is about the long term. In the market, patience trumps genius. The best investment philosophy understands the cyclical nature of our economy, using these cycles rather than getting used by them.

Current Market Comment

The FED indicates it might raise interest rates three time in 2017 and Mr. Market gets upset. Eventually the market will decline (it always has), but when, and from what point?

Global Plastics Summit Highlights

The Global Plastics Summit was produced by IHS and presented in Chicago at the Radisson Blue from September 27 to September 30, 2016. After declining for the last thirty years, the domestic petrochemical industry is experiencing new life thanks to the shale revolution. This turn-around is in its early innings - low gas prices and long-term recovery of crude oil will put this country in a very strong competitive position relative to Asia and Europe in many basic chemicals.

Value Investing vs Index Investing

The real value of a company today is measured by its potential for further cash flows, and the task of the value investor is to make as intelligent an estimate as possible of those future cash flows.

Index Investing is not always a bad idea, but while following the crowd can yield positive short term results, it will almost always lead to poor long term results.

How to Play an Index Bubble

With the S&P 500 trading at 17.2 times forward earning and the CAPE (Shiller PE ratio) over 27 times earnings the market is clearly overvalued by historical standards.

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