When it comes to financial decisions, there are, I think, two answers to every question: what the calculator says, and how you feel about it. There’s a fly in the ointment, though: Calculator answers might appear to be based in logic, but they’re still imperfect. Why? Ian Wilson, a former executive [...]
The Less-efficient Market Hypothesis
Benjamin Graham was Warren Buffett’s teacher and mentor. He also ran an investment fund which specialized in uncovering undervalued stocks. One day in 1926, Graham was at his desk, reading through a government report on railroads, when he noticed a potentially valuable footnote. It referenced [...]
Navigating an Investment Minefield
Investors Raj Rajaratnam and Joel Greenblatt share a number of similarities. They’re almost exactly the same age. They both received business degrees from the University of Pennsylvania, and they both started well known hedge funds. But the differences may end there. During the 10 years that [...]
Chesterton’s Fence
In his 1929 book The Thing, British philosopher G.K. Chesterton introduced an idea that is now known as “Chesterton’s fence.” Here’s how he explained it. Imagine two people walking along a road when they discover a fence blocking the way for no apparent reason. As Chesterton tells it, the first [...]
What the Data Says
In the investment world, there’s no shortage of data. But how useful is it? To help get to an answer, let’s consider these four questions: When the economy is strong, is that good for stocks? The simple answer is yes. According to textbook finance, the value of any company should represent the [...]
