or More random items about what this blog is about than you really wanted to know This is a reworked article that I posted back when Chroma first started, but no one read it, so it is new information to anyone hanging out now. What is this Value Investing Blog about anyway? Since you are […]
New Chroma Investing Feature I promised that I was going to be adding more value investing features to this website. One of them is going to be a weekly list of companies that pass a few of my custom value investing stock screeners. Each week I will highlight a different custom Value Investing screen I […]
In Value Investing we do not use only one set of criteria, clap our hands and say Eureka, I have it! We have several metrics that we can use in our Value Investing toolkit, sometimes in conjunction with each other to evaluate a company and discover if it is a bargain. What is Low Price […]
The Value Investing Congress is being held in New York on October 17 & 18th. It is a great value investing conference to learn from experienced investors with different approaches some general philosophical and some actionable. My readers are entitled to a $1900 discount if you purchase your pass by July 29th. I am very […]
I have decided to set up another real money portfolio to test out my ideas of 80-20 Investing, which I have previously discussed. For 20% of the effort I believe it is possible to get 80% of the investing result. The idea is fairly simple. Set up some investing criteria, and when a stock passes […]
Burry was the guru behind Scion Capital. He was a great stock picker and later made $100 million buying credit default swaps, investing against the housing bubble.
I am not going to recount the article. Read it if you are interested in what great investors do. It is a great read. I am just going to share with you the what I take away from the article.
This is really another in the Value Investing Series, but also an 80/20 Investing idea. To reiterate 80/20 investing is my value investing concept that attempts to get 80% of a solid return with 20% of the work. Not sure if it is really viable, although I am thinking of starting a test portfolio. But it is also the result of finding the website I mentioned in yesterdays blog about Empirical Finance Research.
I am a fan of empirical evidence that supports investing strategies. This sounds like an obvious statement, but many people don’t care, or at least that is how seems if you view their actions. I have previously highlighted evidence that could potentially enhance returns like Low price to book, and help protect against loss like the Altman Z score.
In surveying some of my favorite blogs recently, I have come upon something that hadn’t previously occurred to me, but could potentially alter how I invest. That is the problem with back testing Investing Strategies. Greenbackd posted an interesting starter piece on this subject called Walking the Walk, that led me back to the original blog from Aswath Damodaran called Transaction Costs and beating the Market. I have often thought there were practical problems with back testing, but I had not tried to articulate them until I read these posts. Both are excellent and worth reading. Damodaran, who is a Finance professor at NYU, and an author of Investment Fables (which I own), writes about the many ways to beat the market in general terms and then goes on to say, “Most of these beat-the-market approaches, and especially the well researched ones, are backed up by evidence from back testing, where the approach is tried on historical data and found to deliver “excess returns”.
I found this idea in Tweedy Browne’s What Has Worked in Investing. And after a little more research I have included it in my Value Investing Series. In a “Test of Ben Graham’s Stock selection Criteria,” Henry Oppenheimer studied whether or not a set of Ben Graham’s investing criteria actually worked. Toward the end of Graham’s life he espoused a different, although related criteria to what he espoused in his master works Security Analysis and the Intelligent Investor.keep looking »