Best investment adviser Richard Losch's blog

Rydex Ursa Fund

Rydex Ursa Fund tracks the S&P 500 index in reverse.

The Warren Buffett Premium

We have been hearing so long about this Warren Buffett premium and the universal assumption has always been that there will be stock decline when he leaves. I, as investment manager, would like to suggest, just for the sake of being argumentative, the possibility of a Warren Buffett discount and propose a scenario where the stock price will increase in his absence.

Private Equity, Hedge Funds, Value Investing

There is one thing I have learned through 38 years of investing: the market will always do what it has to do to prove the majority wrong. Or as Warren Buffett says, you pay a high price for a cheery consensus. This is not because the market is perverse, but because the market is a zero-sum game and frictional costs mean that there will always be more losers than winners.

Building a Latticework of Mental Models

Charlie Munger that Uses the Best Models Wins. A transcript of a speech given by Charlie Munger in 1994. It is in my, as investment manager, opinion a masterpiece of simple logic as developed by a very complex intellect. The basic premise is that a person's ability to deal successfully with life is based the investment models that they use to interpret events.

Warren Buffett's Lackluster Performance

In just the last two years Warren Buffett has realized gains of $8.2 billion in his bond and FOREX trading. Add in another $1.9 billion of unrealized gains in the junk bonds he still holds and maybe $200 to $300 million per year in interest income, and it is apparent that the chairman has enriched shareholders by about $10.5 billion with his trading skills in two years. This definitely does not meet my, as investment manager, definition of "lackluster performance".

2004 Investment year results

Losch Investment Management Company's basic market strategy evolves a large position in Berkshire Hathaway because Berkshire Hathaway is reasonably priced at present levels and with very solid long-term prospects. But more than this, it offers a hedge against a substantial market decline. With its huge cash positions and with Warren Buffett to make the investment decisions, Berkshire Hathaway is one stock that will get more valuable if the market declines.

Professor Smith's Second Bubble

After a bubble appeared in a trading series there would be a correction and then after the first correction, the bubble would usually reappear. The bubble starts to re-inflate, but this time the participants, burned by their previous experience are more cautious and the values do not become as extreme.

Hedging a Currency Disaster

More remarkable still is the fact that this is the latest in a series of large macro bets: the purchase of S&P puts, junk bonds purchases, and fixed-income sales; actions so wonderfully out of character for the world's greatest value investor as to suggest that by some mysterious process Kiewit Plaza had been magically transported to Lower Manhattan and George Soros has taken possession of the Oracle's body.

Some Thoughts on Investment Risk

There is no such thing as a risk free investment all investments carry some risk ... A good investment is one minimizes the risk that the investor faces, and that pays you well for taking the risk. All investments decisions should start with measuring risk.

Too Many Bears

The excesses of our recent tech bubble were so extreme that one three-year bear market is simply not enough to cleanse Mr. Market's Soul of his predilection to party on.

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