It is common for investors to read the latest shareholder letters from investment gurus to understand their latest positions and opinions. However, it is often that the real wit and wisdom of the investment gurus are found in old classic shareholder letters.
This is one of many in a series of articles where I will extract relevant portions of classic guru shareholder letters and share with readers my views.
I present to you the Investment Manager's Report from the annual reports of the Tweedy Browne American Value and Tweedy Browne Global Value Fund in March 1994.
Extracts:
(1) "...Investing in lots of bargains, hundreds of them, has worked well for us over the years. We never know which particular stocks will work well or when, but lots of bargains have produced favorable overall results for our entire portfolio..."
(2) "...More often than not, the higher growth rate is already reflÂ…ected in the stock price; i.e., the stock market has already discounted the future growth in earnings thereby increasing investor risk if the company is unable to achieve the investment community's expectations. This has happened on numerous occasions in the past. Few, if any, businesses grow forever. By this we mean companies that can sustain high growth rates over long periods of time. While certain businesses can grow rapidly in their early stages, the task of compounding an ever larger sales and earnings base eventually leads to a slower growth rate..."
(3) "...Market timing would help if only it were humanly possible. In an industry with hundreds if not thousands of pundits making predictions about stocks, indices, interest rates, etc., someone will always be right at some point in time. However, to win in the investment business you need to be right more than 50% of the time. Personally, we have never placed much faith in investment oracles..."
Comments:
(1) Tweedy Brown continues to speak up for huge diversification of stocks.
(2) Share prices embed expectations and few high growth stocks outrun the expectations treadmill.
(3) "Someone will always be right at some point in time." Start believing in your own research and analysis, instead of market gurus who have "predicted nine out of the last five bear markets."
You can read the complete reports here:
http://www.tweedy.com/resources/library_docs/reports/AAN03311994.pdf
http://www.tweedy.com/resources/library_docs/reports/GAN03311994.pdf
This is one of many in a series of articles where I will extract relevant portions of classic guru shareholder letters and share with readers my views.
I present to you the Investment Manager's Report from the annual reports of the Tweedy Browne American Value and Tweedy Browne Global Value Fund in March 1994.
Extracts:
(1) "...Investing in lots of bargains, hundreds of them, has worked well for us over the years. We never know which particular stocks will work well or when, but lots of bargains have produced favorable overall results for our entire portfolio..."
(2) "...More often than not, the higher growth rate is already reflÂ…ected in the stock price; i.e., the stock market has already discounted the future growth in earnings thereby increasing investor risk if the company is unable to achieve the investment community's expectations. This has happened on numerous occasions in the past. Few, if any, businesses grow forever. By this we mean companies that can sustain high growth rates over long periods of time. While certain businesses can grow rapidly in their early stages, the task of compounding an ever larger sales and earnings base eventually leads to a slower growth rate..."
(3) "...Market timing would help if only it were humanly possible. In an industry with hundreds if not thousands of pundits making predictions about stocks, indices, interest rates, etc., someone will always be right at some point in time. However, to win in the investment business you need to be right more than 50% of the time. Personally, we have never placed much faith in investment oracles..."
Comments:
(1) Tweedy Brown continues to speak up for huge diversification of stocks.
(2) Share prices embed expectations and few high growth stocks outrun the expectations treadmill.
(3) "Someone will always be right at some point in time." Start believing in your own research and analysis, instead of market gurus who have "predicted nine out of the last five bear markets."
You can read the complete reports here:
http://www.tweedy.com/resources/library_docs/reports/AAN03311994.pdf
http://www.tweedy.com/resources/library_docs/reports/GAN03311994.pdf
