I now know the next book I am reading…
Listen to this speech from Columbia Business School. It is amazing stuff. Hat Tip Reader Aaron.
Avner Mandelman
We have been talking more than a little bit lately in the subscriber section about the need to operate “different” than the market if we want to achieve returns in excess of it. Avner Mandelman speaks to that very thought. In the talk he mentions how competitive advantage is lost for an investor the more widespread any particular investing method is used. The gains from it shrink as the pricing spreads are diminished due to the extra participants entering.
Because of that he says great returns require doing something different than what everyone else is doing. I agree.
A valid point is made based on Warren Buffett’s statement made years ago, (paraphrase) “my secretary and I do the same thing when investing yet I am far more successful than she”. The point is that there are really only a few forms of investing, value, momentum & technical. It is what you do withing your style of investing that matters. Do you simply take a look at an earnings statement and then make an investing decision or do you did far deeper? Speaking to the value people (since I don’t do the other metheods, speaking to them would be foolish), if you are going to limit your “value” to the typical large cap value names everyone is currently investing in, do you really expect returns in excess of anyone? Mathematically it is almost impossible, how can you have a “value” stock everyone is invested in? Correct?
The very premise of value is that there is a large pricing dislocations between the current price of an issue and its true value. In a functioning market that can only occur if there are more sellers than buyers OR simply no buyers interested at all.
Remember geometry and the “if, then” rules. If the above paragraph is true then can Pfizer (PFE, Financial), for example, really be a large “value” when we read about it everywhere and a multitude of value managers own it? If it then remains at a price those would claim “undervalued” then isn’t it more accurate to say that it is not a “good company with good management selling at a discounted price” but “a shitty company with lousy management selling at a accurate price”?
The point is you need to be the first one at the party and you can’t do that doing the same thing everyone else is doing and investing in the same names they are. In order to find them first you need your process to be different. Running the same stock screens as everyone else will turn up the same names for everyone and diminish your potential returns. Mandelman advocates ways to do different things to get better results.
Now, I have never mentioned a book here before w/o reading it but am going to say that after listening to the author for over an hour talk about it, I think we can safely say we have good idea what is inside it and its conclusions. Perhaps reading the book will be anticlimactic but, we’ll do it anyway and make it the next one on the list.
From Amazon:
Listen to this speech from Columbia Business School. It is amazing stuff. Hat Tip Reader Aaron.
Avner Mandelman
We have been talking more than a little bit lately in the subscriber section about the need to operate “different” than the market if we want to achieve returns in excess of it. Avner Mandelman speaks to that very thought. In the talk he mentions how competitive advantage is lost for an investor the more widespread any particular investing method is used. The gains from it shrink as the pricing spreads are diminished due to the extra participants entering.
Because of that he says great returns require doing something different than what everyone else is doing. I agree.
A valid point is made based on Warren Buffett’s statement made years ago, (paraphrase) “my secretary and I do the same thing when investing yet I am far more successful than she”. The point is that there are really only a few forms of investing, value, momentum & technical. It is what you do withing your style of investing that matters. Do you simply take a look at an earnings statement and then make an investing decision or do you did far deeper? Speaking to the value people (since I don’t do the other metheods, speaking to them would be foolish), if you are going to limit your “value” to the typical large cap value names everyone is currently investing in, do you really expect returns in excess of anyone? Mathematically it is almost impossible, how can you have a “value” stock everyone is invested in? Correct?
The very premise of value is that there is a large pricing dislocations between the current price of an issue and its true value. In a functioning market that can only occur if there are more sellers than buyers OR simply no buyers interested at all.
Remember geometry and the “if, then” rules. If the above paragraph is true then can Pfizer (PFE, Financial), for example, really be a large “value” when we read about it everywhere and a multitude of value managers own it? If it then remains at a price those would claim “undervalued” then isn’t it more accurate to say that it is not a “good company with good management selling at a discounted price” but “a shitty company with lousy management selling at a accurate price”?
The point is you need to be the first one at the party and you can’t do that doing the same thing everyone else is doing and investing in the same names they are. In order to find them first you need your process to be different. Running the same stock screens as everyone else will turn up the same names for everyone and diminish your potential returns. Mandelman advocates ways to do different things to get better results.
Now, I have never mentioned a book here before w/o reading it but am going to say that after listening to the author for over an hour talk about it, I think we can safely say we have good idea what is inside it and its conclusions. Perhaps reading the book will be anticlimactic but, we’ll do it anyway and make it the next one on the list.
From Amazon:
It’s not enough to rely on SEC files, annual reports, and press releases. To uncover the most lucrative investments, you must dig beneath the printed surface of public information and sleuth for physical evidence. This is the only way to reveal the actual truth about a company’s real value-and its future.
Investing expert Avner Mandelman honed this highly effective, money-sleuthing approach at his investment firm, Giraffe Capital Corporation. Now, in The Sleuth Investor, he shares his proven intelligence-gathering methods for obtaining exclusive information even before industry insiders do-and using it to gain a decisive edge in buying and selling stock.
Through step-by-step guidance and illustrative examples, Mandelman demonstrates how you can track the four physical elements of a company: People (employees, customers, suppliers), Product (inventory, the product’s physical movement, competing products), Plant (production facilities, offices), and Periphery (physical surroundings, community, the economic eco-chain). Obtaining physical clues gives you the ability to anticipate key company developments, such as imminent high growth, a coming disaster you can short profitably, and new product launches.
Using Mandelman’s strategies and techniques, you’ll learn how to:
- Follow the physical movement of a product, either directly or indirectly, and connect it to financial results
- Obtain exclusive information from low-level employees to make nearly sure bets
- Collect information from a company’s clients and suppliers-and use it to make lucrative investments
- Integrate legal precautions into your sleuthing
The book:
Todd Sullivan
http://www.valueplays.net/
