Aswath Damodaran, a Professor of Finance at the Stern School of Business, has an interesting post on his blog Musings on Markets, Transaction costs and beating the market. Damodaran’s thesis is that transaction costs – broadly defined to include brokerage commissions, spread and the “price impact” of trading (which I believe is an important issue [...]
Archive for the ‘Contrarian investment’ Category
Walking the talk: Applying back-tested investment strategies in practice
Posted in About, Behavioral economics, Contrarian investment, Liquidation Value, Net Current Asset Value, Net Quick Stocks, Quantitative investment, Stocks, Value Investment, tagged Liquidation, Liquidation Value, NCAV, Net Current Asset Value, Net Net, Net Net Stock, Net Quick Value, Quantitative, Value Investment on February 17, 2010 | 8 Comments »
Three ghosts of bear markets past, redux
Posted in About, Behavioral economics, Contrarian investment, Greenbackd, Net Current Asset Value, Stocks, tagged Japan on February 16, 2010 | 2 Comments »
Speculating about the level of the market is a pastime for fools and knaves, as I have amply demonstrated in the past (or, as Edgar Allen Poe would have it, “I have great faith in fools — self-confidence my friends will call it.”). In April last year I ran a post, Three ghosts of bear markets [...]
Admiration a contrarian indicator
Posted in About, Contrarian investment, Stocks, tagged Contrarian investing on January 29, 2010 | Leave a Comment »
CXO Advisory Group has uncovered a superb paper Stocks of Admired Companies and Spurned Ones by Deniz Anginer and Meir Statman, which finds that the most admired companies on Fortune Magazine’s annual survey of list of “America’s Most Admired Companies” had lower returns, on average, than stocks of spurned companies from April 1983 through December 2007. [...]
Nassim Nicholas Taleb and An Apology for Raymond Sebond
Posted in About, Austrian Economics, Contrarian investment, Stocks, tagged Taleb, Value on January 20, 2010 | 3 Comments »
As I foreshadowed last week in The New World, I want to explore Nassim Nicholas Taleb’s Fooled by Randomness and The Black Swan in some depth. The books aren’t strictly about investing, which Taleb regards as a “less interesting, more limited –and rather boring –applications of [his] ideas,” but my interest is in investment, particularly deep [...]
Mean reversion in earnings
Posted in About, Contrarian investment, Stocks, tagged Contrarian investing, Mean reversion on January 15, 2010 | 9 Comments »
One of the most fascinating examples of the phenomenon of mean reversion was identified by Werner F.M. DeBondt and Richard H. Thaler in Further Evidence on Investor Overreaction and Stock Market Seasonality. DeBondt and Thaler examined the relative performance of quintiles of stocks on the NYSE and AMEX ranked according to book value. As an adjunct to the [...]
Contrarian investing or value investing disguised?
Posted in About, Contrarian investment, Stocks, Value Investment, tagged Contrarian investing, Value investing on January 13, 2010 | 5 Comments »
One of the themes that I want to explore in some depth is “pure” contrarian investing, which is investing relying solely on the phenomenon of reversion to the mean. I’m calling it “pure” contrarian investing to distinguish it from the contrarian investing that is value investing disguised as contrarian investing. The reason for making this distinction [...]
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