Q&A: Financial Analysis and Valuation Books

Someone who reads the blog emailed me this question:

Hi HurricaneCap!

I’ve been following your Twitter handle and blog for quite some time now, and have to say, it’s an amazing repository of knowledge. Thanks for that!

I was wondering if you could help me out a bit with regards to book recos for financial analysis and valuation specifically. There are ample quality books on the psychology behind investing, biographies of great businessmen and investors, but when it comes to financial analysis and valuation, I can’t seem to find a good starting point. Could you lead me to that?

I look forward to hearing from you soon!

Many thanks,

XYZ

Thanks for writing. Good question there. I have a few books I can recommend and I have put together a list containing a few of the books that I think could be of great help to you.

If you want to read one book, read the first one in the list below. If you want to read two, take the first to, etc. You get it. Or, just pick one book that you find interesting. I’m not saying you should, or even need to, read all of the books included in the list. I don’t recommend books that I haven’t read myself. So yes, I have read all of them myself. Some of the books more than once, but that’s not the important part here. Remember, it’s not a competition where the person who reads the most books wins in the end. Reading the first one, and being able to use the framework presented in that book will take you far. If you go on and read all of the books you will also see that a lot of things are the same. Still, a few things differ and reading different books is also a great way to reflect upon the ideas presented in each book, and also about what differentiates one book from another. It’s also a great way for yourself to collect different parts from different books that you find to be of greatest use and by doing so putting together your own toolkit, your own framework for business analysis and valuation.

  1. Financial Statement Analysis and Security Valuation, 5th Edition, by Stephen Penman
  2. Competition Demystified: A Radically Simplified Approach to Business Strategy, by Greenwald and Kahn
  3. Valuation: Measuring and Managing the Value of Companies, 6th Edition, by Koller, Goedhart, and Wessels
  4. Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, 3rd Edition, by Howard Schilit
  5. Quality of Earnings by Thornton L. O’Glove
  6. Accounting for Value by Stephen Penman
  7. Business Analysis & Valuation: Text and Cases (IFRS edition), 3rd Edition, by Palepu, Healy, and Peek
  8. The Interpretation of Financial Statements by Benjamin Graham
  9. What’s Behind the Numbers?: A Guide to Exposing Financial Chicanery and Avoiding Huge Losses in Your Portfolio by Del Vecchio and Jacobs
  10. From Graham to Buffett and Beyond by Greenwald, Kahn, Sonkin and van Biema

Remember, this is my list. I’m sure there are lots of other great books out there, you just have to find them. If you do, feel free to share your insights.

Hope it helps.

 

#WeeklyInvestorReader | wk. 2-3

Note to readers: #WeeklyInvestorReader contains a few of the articles I read during the week. Visit my Twitter @HurriCap for any other articles that may not have been included. 

To survive in an increasingly unpredictable world, we need to train our brains to embrace uncertainty – Quartz, January 9, 2017 | We don’t like experts to express uncertainty. Imagine a politician running for president who promises “I’ll try to make good decisions most of the time. Our policies will probably improve the economy.” Would you vote for them? Probably not. We also want doctors devoid of any doubt over treatments and scientists with perfect foresight about climate change variables. That’s because we believe that leaders and authorities are supposed to know and tell us exactly what’s going to happen, thereby absorbing our uncertainty. But life is rife with risks. Misperceiving and underestimating these risks can lead to vital mistakes. Therefore, to make well-informed decisions, we need to become comfortable with uncertainty.

Inside Sears’ death spiral: How a billionaire who was ‘the next Warren Buffet’ drove an iconic American brand to the brink of bankruptcy – Business Insider, January 8, 2017 | Lampert, a former Wall Street prodigy, took control of Sears more than a decade ago and became its CEO in 2013. But he’s rarely seen in the office, typically visiting about once a year for the shareholder meeting and projecting into videoconference rooms at Sears’ Hoffman Estates, Illinois headquarters the rest of the time, according to interviews with employees. He prefers to stay on Indian Creek Island off the coast of Miami, behind a desk dressed up with the Sears logo. The island has been dubbed the “billionaire bunker,” partly because of a private police force that protects the island’s 86 residents.

Lessons from the Strategy Crisis at Netflix – strategy+business, September 6, 2016 | Netflix would seem to be on a roll. The world’s largest online entertainment distribution business has seen its streaming revenues grow from US$1.2 billion in 2007 to $6.8 billion today.

How to Analyze a Company – Science of Hitting, January 10, 2017 | A fellow GuruFocus reader recently sent me an email with the following question: “Which books would you recommend if I want to start investing in individual companies?”

Poker Is the Latest Game to Fold Against Artificial Intelligence – Technology Review, January 11, 2017 | Two research groups have developed poker-playing AI programs that show how computers can out-hustle the best humans.

SoundCloud Vows Growth In 2017, But Time Is Running Out – Fast Company, January 6, 2017 | At a crossroads, the company is desperate to turn its massive music platform into a real business.

Why I don’t use watch lists – Oddball Stocks, January, 2017 | I remember as a kid sitting in a chair near our kitchen with my grandfather two chairs away.  I was leafing through a toy catalog.  The catalog’s pages were worn and I knew the items and their prices by heart.  Suddenly my grandfather looked at me and said “What are you doing?  Looking at all the things you can’t buy but wish you could?”  I was stung by the criticism, but he was right.  I had almost no ability to purchase any of the items.  I was just envying items I couldn’t have.  As I reflected on this story recently it reminded me of why I don’t keep a stock watch list or research stocks that I wish I can buy someday.

No More Moats in Self-Storage Stocks – Morningstar, January 13, 2017 | After taking a deeper dive into the self-storage industry, focusing on how the efficient scale moat source applies to competitive dynamics, we have downgraded  Public Storage’s (PSA) economic moat rating to none from narrow. Peer  Extra Space Storage (EXR) already has a no-moat rating. The main reasons for Public Storage’s rating change were (1) moaty qualities related to intangible assets were identified in only 25% of the portfolio, while switching costs were determined to be too small to retain tenants; (2) new supply can easily challenge the company’s presence in less densely populated areas; and (3) occupancy is decreasing as competition pressures market share. Our fair value estimates stand at $229 per share for Public Storage and $85 per share for Extra Space.

Three ‘Uninvestable’ Industries for 2017 – Scott Fearon, January 13, 2017 | Today, three industries (and others I have yet to identify) are facing severe disruptions.

How to Read a 10-K Annual Report Efficiently – Rational Walk, January 8, 2017 | Effective techniques for reading books have been well documented for years but the same isn’t really true for S.E.C. filings.  S.E.C. filings are legal documents that a company is required to file on a periodic basis and the consequences for making mistakes can be significant.  Depending on the nature of the company, risks and disclaimers of a legal nature can vary in length.  Nearly all companies include information that is, in some regards, repetitive or unenlightening due to the need for legal cover.  While all information in a filing should be read prior to making an actual investment decision, trying to read filings sequentially on a page-by-page basis when just getting to know a company is not the best approach.

Importance of Knowing Your Investment Boundaries (Sears Mini-Case Study) – Base Hit Investing, January 12, 2017 | A week ago I read an article in Business Insider that referenced a Q&A from 2005 where Buffett was talking to a group of students from the University of Kansas and he was asked about the chances of success of the Sears/Kmart merger (which had just recently occurred at that time).

Lifelong learning is becoming an economic imperative – The Economist, January 14, 2017 | Technological change demands stronger and more continuous connections between education and employment, says Andrew Palmer. The faint outlines of such a system are now emerging.

Amazon is Eating the Retail World – Ben Carlson, January 18, 2017 | Amazon is the first place I look to price check just about anything I buy these days.

Amazon Stock’s Exceptional Price History Meets Value Investing – The Conservative Income Investor, January 14, 2017 | Revenues have grown from $10 billion to $134 billion in the past twelve years. The market cap has increased from $10 billion to something approaching $400 billion. And yet, Amazon’s profits are below $3 billion. That is 133x earnings for one of the ten largest corporations in the United States. History shows you tend to get into trouble when you pay much more than 25x earnings for even an excellent, fast-growing company.

How streaming saved the music industry – Financial Times, January 16, 2017 | Spotify and Apple are making money for the big labels but technology is likely to change the equation again.

Economics is messy – Seth Godin, January 17, 2017 | We still teach a lot of myths in the intro to economics course, myths that spill over to conventional wisdom.

The 10 Cheapest Stocks in the Wide Moat Focus Index – Morningstar, January 19, 2017 | In December, the Morningstar Wide Moat Focus Index swapped out 11 stock positions.

Netflix Stock Still Has A Profit Problem – The Conservative Income Investor, January 19, 2017 | When you see the price of Netflix stock climb to $143 per share in after-hours trading, the $60 billion valuation for the streaming giant at first sounds reasonable. But the reality is more complicated than that. Netflix is distinguishable from firms like Pepsi, Colgate, or Johnson & Johnson because its fixed costs are enormous. It has to pay obscene-sounding licensing fees to have access to the content it streams to its consumers. And, the more appealing the content, the higher the fees.

Netflix Ends 2016 on High Note; Margin Improvement Expected to Be Steady, Not a Hockey Stick – Morningstar, January 19, 2017 | Netflix ended 2016 on a high note with stronger international subscriber growth (5.12 million net adds, versus guidance of 3.75 million) and U.S. growth (1.93 million net adds, versus guidance of 1.45 million). Despite the impressive fourth quarter and better-than-expected guidance for next quarter, the most important information from the conference call may have been management’s admission that the operating margin will improve modestly on a yearly basis, as opposed to a “hockey stick manner.” Our long-term model for the company still projects that the operating margin for the international segment will improve slowly but will remain well below that of the U.S. segment over the next five years. We retain our narrow moat rating and are modestly increasing our fair value estimate to $73 from $69 to account for the time value of money from rolling our model forward and an additional year of margin expansion for the international segment. With shares trading well above our new fair value estimate, we advise investors to steer clear of this very high uncertainty company.

“Leaked Documents From Startup Maple Show the Brutal Economics of Food Delivery” – Climateer Invest, January 8, 2017 | On average, the restaurant-in-an-app lost money on each meal in 2015.

A Century of Opinions: Companies with auditor tenure over 100 years – XXX, January 20, 2017 | There are 13 companies that have engaged the same auditor for at least a century. The Big Four auditors account for all of these engagements.

BOOK REVIEW: “THE ART OF THE DEAL” – DONALD J. TRUMP (WITH TONY SCHWARTZ) – Value and Opportunity, January 20, 2017 | As with stock analysis, I am a big fan of “Primary resources” and so I decided that I should at least read one book co-authored by “his Trumpness” himself. There are many Donald Trump books out there but the first one from 1987 is “the Art of the deal”. I thought that maybe the first one is also the most authentic one.

It’s Time to Shake Up the Legal Industry – Craig Shapiro, January 6, 2017 | Close your eyes and picture the dream industry waiting to be disrupted. What’s it look like? Probably: It’s massively important to the functioning of society but doesn’t work for most people. It’s dominated by old incumbents that enjoy huge profit margins. Those incumbents don’t have much, if any, consumer brand recognition. But this isn’t a dream. This is the law industry, and it desperately needs to be shaken up.

Retailing In America: Brick & Torture – Danielle DiMartino, January 18, 2017 | Outright bankruptcies, nonetheless, are not where the pain is most acute. That preserve is on reserve for a different kind of demise, an appreciably slower descent into irrelevance. At first, the disruptive power of E-Commerce appeared to apply only to things that could be read or viewed on a screen. More recently, though, any product that’s quantifiable at any level is fair game whether it be Jimmy Choo’s, a trip to Katmandu or Vintage Scooby Doo. Hence the frantic game of catch-up so many retailers are playing to raise their online visibility. The problem is catch-up can be costly. Just ask any retailer closing stores, one not-quite-lethal cut at a time, and they’ll set you straight.

Mohnish Pabrai’s Approach To Beating The Market – Forbes, January 16, 2017 | Since inception, Mohnish Pabrai has beat the stock market by triple digit returns. What was the key to his success?

Are H&M store sales cannibalising online growth? – Just-Style, May 16, 2016 | Swedish retailer Hennes & Mauritz (H&M) risks cannibalising store sales through the growth of its e-commerce business, analysts believe, adding that this could be detrimental to margins.

Cassandra’s Song – John P. Hussman, January 16, 2017 | While valuations are extremely informative about full-cycle returns and potential risks, returns over shorter segments of the market cycle are primarily driven by the inclination of investors toward risk-seeking or risk-aversion, which is best inferred from market action. The challenge in the recent half-cycle had to do with Fed-induced yield-seeking, which disrupted the historical tendency for deteriorating internals to accompany or quickly follow extreme “overvalued, overbought, overbullish” syndromes as they had in other cycles across history. In the face of zero interest rates, one had to wait for market internals to deteriorate explicitly before taking a hard-negative outlook.

Harnessing automation for a future that works – McKinsey Global Institute, January 17, 2017 | Automation is happening, and it will bring substantial benefits to businesses and economies worldwide, but it won’t arrive overnight. A new McKinsey Global Institute report finds realizing automation’s full potential requires people and technology to work hand in hand.

BlackRock Continues to Impress – Morningstar, January 20, 2017 | We continue to be impressed by  BlackRock’s (BLK) ability to generate solid organic growth, especially considering the size of its operations. With $5.148 trillion in total assets under management at the end of 2016, BlackRock is the largest asset manager in the world. Unlike many of its peers, BlackRock is generating organic growth in its operations with its iShares platform, which is the leading domestic and global provider of exchange-traded funds, riding a secular trend toward passively managed products that began more than two decades ago. We recently increased our fair value estimate to $410 per share from $385 to reflect changes in our assumptions about AUM, revenue, and profitability since our last update.

Think savvy business owners make savvy public investors? Not necessarily – The Globe & Mail, January 19, 2017 | Having talked to dozens of successful private business owners in this country over the years, I have found they generally display a few consistent cognitive characteristics when talking about the operation of their business. Yet, when they invest in the stock market, it is almost as if they have completely lost their senses. As owners they are rational, logical and business-like; as investors they are ruled by emotion and irrationality. So while they have succeeded as private owners, many have failed as public investors. My conclusion after being in the investment business for so long: Public and private owners are not just different; they are opposites. Armed with this foreknowledge, I believe there is opportunity. Let me explain further.

THERE’S A MASSIVE RESTAURANT INDUSTRY BUBBLE, AND IT’S ABOUT TO BURST – Thrillist, December 30, 2016 | Semmelhack is not the only restaurateur looking to duck and cover. The American restaurant business is a bubble, and that bubble is bursting.

Articles in Swedish

Catena Media en tillväxtmaskin – Swedbank, January 17, 2017 | Catena media är ett snabbväxande företag med globala tillväxtambitioner inom en ganska okänd, men betydelsefull nisch av spelsektorn. Swedbank anser att vinsten per aktie kan öka med 150 procent fram till 2019 och tar upp aktien till bevakning med rekommendationen Starkt Köp.

Larmet: Tiotusentals jobb på väg bort – Dagens Industri, 20 januari 2017 | Nästan 42.000 svenska butiksjobb riskerar att försvinna inom mindre än tio år. Den dystra profetian kommer från Svensk Handel, som också varnar för lägre lönsamhet och färre aktörer. ”Tre handelsföretag om dagen går i konkurs”, säger vd:n Karin Johansson.

Uppgifter: Analytiker tvingas ge positiva omdömen – Dagens Industri, 20 januari 2017 | En ny intressekonflikt inom finansbranschen har kommit i fokus i spåren av de krympande courtageintäkterna: att analytiker känner sig tvingade att ge positiva aktierekommendationer för få tillgång till bolagens högsta beslutsfattare, för egen eller för sina kunders del.

Axelssons i konkurs – Dagens Industri, 16 januari 2017 |Modevaruhuset Axelssons har gått i konkurs, rapporterar Katrineholms-Kuriren.

Arctic Securities sänker Fingerprint – Affärsvärlden, 10 januari 2017 | Fingerprint Cards besked till marknaden om sänkt intäktsprognos 2016 vid kapitalmarknadsdagen var nedslående, men risk föreligger för att även prognosen för 2017 kan behöva sänkas.

#WeeklyInvestorReader | wk. 1

Note to readers: #WeeklyInvestorReader contains a few of the articles I read during the week. Visit my Twitter @HurriCap for any other articles that may not have been included. 

The 5 Operating Principles Behind Berkshire Hathaway’s Uniquely Profitable Reinsurance Business – The Motley Fool, January 8, 2017 | In his 2015 letter, Warren Buffett warned Berkshire Hathaway shareholders that prospects for the reinsurance industry had dimmed. However, as this week’s $1.5 billion deal with The Hartford illustrates, five operating principles will enable Berkshire’s reinsurance activity to beat competitors and remain comfortably profitable.

Amazon 2004 Shareholder Letter – Jim Bezos, April 2005 | Jeff Bezos discusses the concept of free cash flow.

Sweden’s new business king takes the long-term view – Financial Times, January 5, 2017 | Fredrik Lundberg is seeking to move Industrivarden on from a business jet scandal.

Week in Review – Financial Times, January 6, 2017 | Christmas blues for retailers, Apple’s App boost, Airbnb, Alibaba and Moutai.

How Amazon innovates in ways that Google and Apple can’t – Vox, December 28, 2016 | In short, Amazon has shown a remarkable ability to succeed in a wide variety of different product categories. That’s a contrast to most other high-profile tech companies that are really good in one area — Google’s dominant online services or Apple’s extraordinarily profitable hardware — but struggle when the quest for growth pushes them outside their zone of core competency.

Hennes & Mauritz: Where Did My Operating Margin Go? – Larsson Group, September 16, 2016 | An investment analysis of H&M.

The TSC Streetside Chat: Robert Wilson – The Street, April 16, 2000 | Despite being wrong about the popularity of gambling in Atlantic City, Wilson made a mint. Today, he tells us how.

Alexa: Amazon’s Operating System – Stratechery, January 4, 2017 | The concept of an operating system is pretty straightforward: it is a piece of software that manages a computer, making said computer’s hardware resources accessible to software through a consistent set of interfaces.

Alphabet, Citigroup, and Other Secret Value Stocks – Barron’s, January 3, 2017 | The Oakmark fund’s Bill Nygren, who beat the market handily in 2016, shares some of his favorite picks.

Disney’s Not Just a Mickey Mouse Investment – Morningstar, January 4, 2017 | Disney’s economic moat is wide. Its media networks segment and collection of Disney-branded businesses have demonstrated strong pricing power in the past few years.

New Mauboussin Report: Looking for Easy Games – How Passive Investing Shapes Active Management

Looking for Easy Games – How Passive Investing Shapes Active Management

“As they say in poker, ‘If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.’” –Warren E. Buffett

  • Investors are rapidly shifting their investment allocations from active to passive management. This trend has accelerated in recent years.
  • The investors leaving active managers are likely less informed than those who remain. This is equivalent to the weak players leaving the poker table. Since the winners need losers, this can make the market even more efficient, and hence less attractive, for those who remain.
  • Active management provides price discovery and liquidity, valuable social goods. However, the fees are higher for active managers than passive ones, identifying skill ahead of time is not easy, and there is a cost to assessing skill.
  • Passive management has lower costs and hence higher returns per dollar invested than active management does in the aggregate. But passive management introduces the possibility of market distortions.
  • Active managers have to constantly ask, “Who is on the other side?” The unrelenting objective is to find easy games, where differential skill pays off.

Click here to read the full report.

See here for a collection of links to other Mauboussin papers.

#WeeklyInvestorReader | wk. 52

Note to readers: #WeeklyInvestorReader contains a few of the articles I read during the week. Visit my Twitter @HurriCap for any other articles that may not have been included. 

How Can I Hurt You? – MicroCapClub, December 27, 2016 | If a competitor had unlimited resources, how quickly could they duplicate the company’s competitive advantage? This is a simple question that I ask myself and management when I try to measure the moat of a microcap company. Microcap companies are small companies and often times vulnerable to larger competitors with more resources. Paraphrased, even further, How Can I Hurt You?, is very powerful.

The Competitive Advantage of Disney – The Conservative Income Investor, December 27, 2016 | In 2012, Disney made an acquisition of LucasFilms for “only” $4 billion. Because the Star Wars franchise has now generated $2 billion in profit in the four years since making the acquisition, many casual commenters are observing that Disney got a steal of a deal.

Alexa, What Should Investors Know About Amazon? – Morningstar, December 28, 2016 | On Dec. 27, Amazon noted that sales of its Alexa-enabled Echo devices increased more than 9 times over last year’s holiday sales, which could imply 4 million-5 million Alexa units sold to date, based on third-party estimates.

The Conjunction Fallacy Explains Why People Believe Fake News – Slate, December 19, 2016 | This fallacy warns that stories with more facts sound more believable, even though they’re actually less probable.

A Half-Dozen Ways to Look at the Unit Economics of a Business – Tren Griffin, December 31, 2016 | Amazon and Netflix are examples of the same value creation phenomenon as are many businesses that John Malone has created over the years. This post will try to help people understand why this is true.

Donald Trump’s market-moving tweets are a huge scandal waiting to happen – Los Angeles Times, December 23, 2016 | An undercurrent of amusement has been detectable in some of the news coverage of Donald Trump’s recent market-moving tweets, as though it serves big companies right to have a few billions stripped off their market values because the president-elect is holding them to account.

The Chevy Bolt Is the Ugly Car of the (Very Near) Future – Bloomberg, December 19, 2016 | With brilliant financial engineering, GM beats Tesla to the punch.

Surging Buybacks Say Stock Boom Isn’t Over – Wall Street Journal, December 26, 2016 | Stock repurchases have spiked in December on expectations of tax cuts, which could put more money in corporate coffers

Glenn Greenberg: the world’s greatest investors – MoneyWeek, December 23, 2016 | Glenn Greenberg was born in New York in 1947, the son of baseball player Hank Greenberg. After studying English at Yale and New York University, he set up Chieftain Capital Management with John Shapiro in 1984. In 2009 they split and he founded Brave Warrior Advisors, which manages nearly $3bn worth of assets.

HOW PHIL KNIGHT BUILT NIKE INTO A $100 BILLION GLOBAL EMPIRE – Maxim, September 29, 2016 | Find out Nike’s high-flying founder became the Sultan of Swoosh.

Are You Solving the Right Problems? – Harvard Business Review, September 29, 2016 | How good is your company at problem solving? Probably quite good, if your managers are like those at the companies I’ve studied. What they struggle with, it turns out, is not solving problems but figuring out what the problems are.

Biggest Billionaire Gainer Of 2016: Warren Buffett’s Fortune Surges More Than Anyone Else In America – Forbes, December 27, 2016 | Shares of Warren Buffett’s firm Berkshire Hathaway soared 20% in 2016, helping to boost Buffett’s personal fortune by $12.3 billion – more than any other billionaire in the United States. The Oracle of Omaha is now worth $74.2 billion, enough to make him the 2nd-richest person in the world (behind only Bill Gates, who is worth $84 billion), according to FORBES’ calculations.

Not Everyone Wants to Shop on Amazon – Wall Street Journal, December 29, 2016 | Roughly 22 million U.S. households didn’t use the retailer this year.

Make the Risk Premium Small Again – Antonio Fatas on the Global Economy, December 29, 2016 | In one my previous posts I looked at the stock market valuations in the US to conclude that they were in line with recent historical data. In fact the stock market looked cheap relative to most years since the mid 1980s. But that was before the US election! Since the election the stock market has gone up and interest rates have gone up as well. How do stock market valuations look like today?

Are mergers good or bad for the economy? – CBS Money Watch, December 29, 2016 | This year sure was a busy one for mergers and acquisitions. In October alone, nearly $490 billion of deals were announced, including AT&T’s (T) purchase of Time Warner (TWX) for $85.4 billion. While that massive telecom-media combination got plenty of headlines, most people pay little attention to mergers between firms, or the acquisition of one firm by another.

The key takeaway from Bill Gates and Warren Buffett’s all-time favorite book – CNBC, December 24, 2016 | “There’s an essential human factor in every business endeavor. It doesn’t matter if you have a perfect product, production plan and marketing pitch; you’ll still need the right people to lead and implement those plans.”

Five industries under threat from technology – Financial Times, December 26, 2016 | Travel agents, manufacturers, insurers, advisers and car repair garages face strain.

Don’t Get Trumped in 2017 – Pragmatic Capitalism, December 26, 2016 | Anyhow, the big trend this year was clear – 2017 will be all about Trump. And as we’ve seen in the media in recent weeks, Trump is perceived as very bullish for the stock market. In fact, a few people even admitted that they’d sold all their bonds and loaded the boat with stocks following the election.

Article in Swedish

Jan Jörnmark: Subventioner orsaken till dysfunktionell bomarknad – Dagens Industri, December 26, 2016 | DEBATT DEL ETT. Under mellandagarna kommer Jan Jörnmark att skriva om bostadspolitiken och dess problem. Ursprunget till dagens situation finns i hyresregleringen från 1942, som också innefattade en kontroll av priserna på bostadsrätter och statligt belånade villor, skriver han i den första delen.

Jan Jörnmark: Sverige har ingen bostadsbubbla – Dagens Industri, December 27, 2016 | DEBATT DEL TVÅ. I del två i serien om den svenska bostadsmarknaden behandlas utvecklingen i storstäderna. Allvarligast är att det som egentligen är en massiv förändring av relativa priser på olika bostäder har kommit att tolkas som en bubbla, skriver Jan Jörnmark.

Jan Jörnmark: Bygglagen uppmuntrar inte bostadsproduktion – Dagens Industri, December 28, 2016 | DEBATT DEL TRE. I den tredje delen i serien om bostadsmarknaden har turen kommit till lagarna som reglerar bostadsproduktion. Följden av dem blir en fortsatt stadsutspridning, med de negativa miljömässiga och mänskliga konsekvenser som det har, skriver Jan Jörnmark.

Jan Jörnmark: Nya lagar vägen framåt för bostadsmarknaden – Dagens Industri, December 29, 2016 | DEBATT DEL FYRA. Den avslutande delen i artikelserien om den svenska bostadsmarknaden handlar om framtiden. Först måste vi erkänna att ”bostadsbristen” är ett efterfrågeöverskott på en viss typ av mycket lågt prissatta centrala lägenheter, skriver Jan Jörnmark.

 

#WeeklyInvestorReader | wk. 51

Note to readers: #WeeklyInvestorReader contains a few of the articles I read during the week. Visit my Twitter @HurriCap for any other articles that may not have been included. 

Move Over Small Dogs Of The Dow, Here Come The Uber Cannibals – Forbes, December 22, 2016 | About cash-rich, undervalued businesses that are consistently buying back shares, thereby generating tremendous value for shareholders.

What’s So Significant About Significance? – Farnam Street, August 11, 2016 | The phrase “statistically significant” is one of the more unfortunately misleading ones of our time. The word significant in the statistical sense — meaning distinguishable from random chance — does not carry the same meaning in common parlance, in which we mean distinguishable from something that does not matterWe’ll get to what that means.

Sweden Heads The Best Countries For Business For 2017 – Fortune, December 21, 2016 | One country headed in the opposite direction is Sweden, which moves up four spots to the top of the charts for the first time (Sweden ranked No. 17 in 2006). Over the past two decades the country has undergone a transformation built on deregulation and budget self-restraint with cuts to Sweden’s welfare state.

Your social media addiction is giving you depression – New York Post, December 22, 2016 | The study found that people who use anywhere from seven to 10 social-media platforms are three times more likely to be depressed or anxious, compared to those using no more than two. Those who reported such symptoms were overwhelmed by the multitasking needed to manage their profiles — and the more profiles they had, the more the pressure added up. Though it’s on the high end, maintaining seven social-media profiles is possible with the bevy of options available to users today.

What I learned about Exxon CEO Rex Tillerson after spending a week on jury duty with him – Dallas News, December 23, 2016 | One of our first tasks was to choose our jury foreman. Perhaps it was his business suit, his impressive stature, or his charisma, but almost everyone in that jury room suggested that this middle-aged man with graying hair was likely the most fit for the task. Thanks, but I decline. I’m not interested in the spotlight, he told us. I didn’t think anything of it.

Nike Stock Increasingly Becomes A Long-Term Buy – The Conservative Income Investor, December 19, 2016 | Rather than fixate on price, I recommend that investors actually look at what the business itself is doing. In the case of Nike, it is doing what it nearly always does. And that is, deliver double-digit annual per share earnings growth to shareholders. It made $1.85 per share in profits last year. It is going to make around $2.15 per share in profits this year. That is annual earnings per share growth of 16%.

A new industry has sprung up selling “indoor-location” services to retailers – The Economist, December 24, 2016 | There is money to be made in tracking shoppers’ paths inside stores.

The Pot-Belly of Ignorance – Farnam Street, October 4, 2016 | What you eat makes a huge difference in how optimally your body operates. And what you spend time reading and learning equally affects how effectively your mind operates. Increasingly, we’re filling our heads with soundbites, the mental equivalent of junk. Over a day or even a week, the changes, like those to our belly, are barely noticeable. However, if we extend the timeline to months and years, we face a worrying reality and may find ourselves looking down at the pot-belly of ignorance.

JACK BOGLE: ‘Main Street hasn’t been taking its fair share’ – Business Insider, December 21, 2016 | “Main Street hasn’t been taking its fair share.” That’s according to Jack Bogle, the founder of the $3.5 trillion fund behemoth Vanguard.

The World’s Largest Hedge Fund Is Building an Algorithmic Model From its Employees’ Brains – Wall Street Journal, December 22, 2016 | Bridgewater wants day-to-day management—hiring, firing, decision-making—to be guided by software that doles out instructions.

Jamie Dimon on Trump, Taxes, and a U.S. Renaissance – Bloomberg, December 14, 2016 | The CEO of JPMorgan Chase talks about Detroit’s revival and his views on the incoming administration.

Inside Amazon’s clickworker platform: How half a million people are being paid pennies to train AI – TechRepublic, December 14, 2016 | Internet platforms like Amazon Mechanical Turk let companies break jobs into smaller tasks and offer them to people across the globe. But, do they democratize work or exploit the disempowered?

The Most Informative Posts on Important Financial Topics – Fortune Financial, December 10, 2016 | The financial blogosphere has become a tremendous resource for anyone who has an interest in investing.  The information available is close to infinite, and much of it is free.  Being a beneficiary of this resource, I have long felt that the major improvement to be made would be an index of sorts, in which the best posts were categorized by topic.  Unfortunately, that is a herculean task, so I am going to attempt what i consider to be the next best thing:  a decent-sized selection of the posts from 2016 that I have found to be the most useful in both my practice as a financial advisor, and in my avocation as an investor.

Nate Silver Interviews Michael Lewis About His New Book, ‘The Undoing Project’ – Atlas Obscura, December 14, 2016 | This week on Sparks, FiveThirtyEight’s monthly science podcast that runs in the What’s The Point feed, our science roundtable discussed Michael Lewis’s new book “The Undoing Project,” about two Israeli psychologists who created the field of behavioral economics. After that discussion, FiveThirtyEight editor-in-chief Nate Silver spoke with Lewis about the book, what it has to say about the 2016 U.S. election and Lewis’s writing process. You can listen to that interview above, watch a segment of the interview below, or read an abridged, lightly edited transcript below the video.

Article in Swedish

Portföljarkeologi – Lundaluppen, 25 December, 2016 | Om man liksom jag tycker att Twitter är ett trevligt tidsfördriv så får man vara beredd på att skåda en flod av portföljrapporter med årlig avkastning på 50 % eller mer (långt mer) så här års. Individer med lägre avkastning än så skriver hellre blogginlägg så de kan komma med lite mer utförliga ursäkter… Om du, liksom jag, fått väsentligt lägre avkastning än dessa stjärnor och dessutom äger ett visst mått av självkritik så inställer sig förmodligen följande frågor: (1) vad håller jag på med? och (2) vad vet dessa människor som inte jag vet?

#WeeklyInvestorReader | wk. 50

Note to readers: #WeeklyInvestorReader contains a few of the articles I read during the week. Visit my Twitter @HurriCap for any other articles that may not have been included. 

How Autonomy Fooled Hewlett-Packard – Forbes, December 14, 2016 | This could happen to any company.

Why you should turn off push notifications right now – Wired, December 4, 2016 | The cost of being distracted is much higher than we realise.

Tesla’s First Real Competition Just Hit the Road – Barron’s Next, December 14, 2016 | Chevrolet delivered its first three Bolt vehicles on Wednesday. The $35,000 car is the first affordable electric vehicle with Tesla-like battery range.

Venture Capitalists, Cognitive Bias, And The Dangers Of Learning From The Past – Mattermark, November 17, 2016 | Venture capital is a tricky thing. Especially if you are lying to yourself.

Is the Bond Market Crashing? – Morningstar, November 17, 2016 | The Federal Reserve’s Federal Open Market Committee met on Dec. 13 and 14, with bond markets fully expecting the group to raise short-term interest rates by 0.25% to a targeted range of 0.50% to 0.75%, and that’s exactly what it did.

7-Year Forecasts – Pension Partners, December 12, 2016 | Seven years ago, one of the largest and most respected investment managers, GMO, presented their widely-followed 7-year asset class return forecasts.

The Irrationality Within Us – American Scientific, December 12, 2016 | Why we are not as rational as we think, and why that matters.

Twelve Books Everyone in Finance Will Be Talking About in 2017 – bps and pieces, December 12, 2016 | 2016 brought us some awesome new additions to the libraries of investing and business book junkies.  Next year will be no different with what appear to be some early contenders for instant classic status.

Learning from Dr. Michael J. Burry’s Investment Philosophy – Panda Agriculture & Water Fund, December 15, 2016 | By watching this movie, not only did we, the Panda Agriculture & Water Fund team, rediscover the book, which we had read, it also prompted us to delve further into Dr. Burry’s investment philosophy. This document humbly seeks to be the most complete compilation of Dr. Michael J. Burry thoughts.

Brooks CEO shares the best business advice Warren Buffett ever gave him – Yahoo! Finance, December 13, 2016 | Brooks Running CEO Jim Weber has been reading Warren Buffett’s annual letters to Berkshire Hathaway shareholders since 1984. In 2006, the running shoe and apparel company became part of Berkshire Hathaway, when its then parent company, Russell Athletic, was sold to the Omaha-based holding company. In 2012, Berkshire made Brooks a separate business unit. Weber now reports directly to Buffett.

Thinking about thinking – The Economist, December 17, 2016 | Michael Lewis dissects the enduring friendship between Daniel Kahneman and Amos Tversky.

Wall Street’s Annual Stock Forecasts: Bullish, and Often Wrong – The New York Times, December 16, 2016 | Don’t expect Wall Street investment houses to predict a stock market decline in 2017. That’s just not what they usually do.

Half of people “remember” events that never happened – CBS News, December 9, 2016 | Ever find yourself caught up in a vivid memory of an event that, you later realize with confusion, didn’t really happen the way you thought? According to new research by psychologists at the University of Warwick in the U.K., you are far from alone. The study demonstrated that about half of individuals will come to believe a fictional event occurred if they are told about that event and then repeatedly imagine it happening.

The Inside Story of Apple’s $14 Billion Tax Bill  – Bloomberg Technology, December 16, 2016 | The iPhone came out in 2007. So why was Apple still paying taxes like it was 1990?

When Fees Destroy Diversification – Peter Lazaroff, December 12, 2016 | Diversification is said to be the only free lunch in investing, but that’s not entirely true because the extra fees associated with more exotic asset classes frequently offset the benefits of otherwise attractive diversifiers.

Forget AT&T. The Real Monopolies Are Google and Facebook – The New York TImes, December 13, 2016 | The proposed merger of AT&T and Time Warner has drawn censure from both sides of the political aisle, as well as a Senate hearing that looked into the potential for the combined company to become a monopoly. But if we are going to examine media monopolies, we should look first at Silicon Valley, not the fading phone business.

What we can learn from Phil Fisher – Forbes, October 19, 1987 | On turning 80 last month the eminent San Francisco investment counselor Philip Fisher was in a valedictory mood. Rarely interviewed, he sat for a long chat with FORBES. He is one of the seminal figures of modern investment thinking–one of the first, if not the first, to develop the thesis that growth stocks have identifiable characteristics that make them different from ordinary stocks.

Moody’s slashed its outlook for the global asset management industry – Business Insider, October 15, 2016 | The global asset management industry has been disrupted, according to a new report by Moody’s Investor Services. In the report, Moody’s downgraded the industry to negative.

Can $300 Billion Make Companies Behave? – Bloomberg Law, November 14, 2016 | Are U.S. authorities being overzealous in their efforts to extract money from corporate miscreants? Actually, the right question might be why, despite the advent of multi-billion-dollar penalties, companies keep breaking the law.

Let’s Be Honest: Are You an Investor or a Speculator? – Wall Street Journal, December 9, 2016 | With the stock market seemingly setting all-time highs every day even as bond prices crumple, this is a crucial time to clarify the difference between investing and speculating.

Articles in Swedish

Jan Wallander in memoriam – Ekonomisk debatt, nr 8 2016 | I september 2016 avled Jan Wallander vid en ålder av 96 år. Det markerar slutet på en lång och rik levnadsbana. Mycket har redan skrivits – och kommer även framdeles att skrivas – om Jan Wallanders banbrytande insatser inom svenskt bankväsende. Mindre allmänt känt är att Wallander hade en högst respektingivande bakgrund som akademiker innan han övergick till bankbanan.

Carlström mörkar Fingerprintaffär – Dagens Industri, 15 december 2016 | Den storpost i Fingerprint Cards, som är förvaltarregistrerad på Clearstream i Luxemburg har minskat kraftigt i november. Det är minst sagt anmärkningsvärt eftersom det gäller storägaren Johan Carlströms aktier.