The concept of “a margin of safety” has deep roots in the history of finance, going back at least to Benjamin Graham’s Security Analysis, first published in 1934. The idea is that an investor should never be too confident in any analysis and should leave the door open to the possibility that the [...]
Ukraine: Three questions
I really wish there were a topic to discuss today other than the grotesque war being perpetrated against Ukraine. But unfortunately, there isn’t. This situation has prompted numerous questions from investors. Below are the three questions I’ve heard most over the past week. What is the financial [...]
Awaiting the all-clear signal
Earlier this week, someone asked me about a popular and frequently-cited market statistic. It goes like this: The U.S. stock market has historically delivered a return of 10%, on average, per year. However, if an investor had missed just the five best days over the past 30 years, that return would [...]
Dogma
In 1954, Harry Markowitz was a graduate student in economics at the University of Chicago and had just finished defending his thesis. Most of the committee accepted his work. But Milton Friedman, an economist with a national reputation, and easily the most influential member of the economics [...]
The Top 10
Just hours into the new year, I received an email from a concerned investor. His worry: the state of the market—the S&P 500, in particular. With hundreds of constituent companies, the S&P index has the veneer of being well diversified. But scratch the surface, and it seems to carry more risk [...]
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