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Novel Investor
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Chicago, Illinois, United States
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SINK (Single Income, No Kids)
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Latest Blog Posts

Mean reversion is a powerful force. It drives market cycles, stock prices, profit margins, earnings, growth rates…you name it. Michael Mauboussin wrote a piece about it in 2007 based on ROIC. ROIC (Return on Invested Capital) measures the profitability of a company. Positive is good, high is better, persistently high is great. Here’s the gist […] The post Defying Reversion to the Mean appeared first on Novel Investor. ...
Posted: Oct 18 2019 @ 10:42 AM
Howard Marks’s latest book, Mastering the Market Cycle, is a compendium on the different cycles investors contend with. The book stands as a lesson on observation over prediction. It’s a solid addition to his classic The Most Important Thing. Since I just started on my notes on the book, I thought I’d leave market cycles […] The post Highlights from Howard Marks’s Mastering the Market Cycle appeared first on Novel Investor. ...
Posted: Oct 16 2019 @ 3:57 PM
Had you bought the S&P 500 on January 1st of any year since 1922, 68% of the time you’d have more money one year later. Using the Dow produces similar results — roughly 68%. Both those stats ignore dividends, by the way, which would help improve those odds. The idea behind it should set aside […] The post Sitting at a Loss appeared first on Novel Investor. ...
Posted: Oct 11 2019 @ 11:28 AM
Edgar Lawrence Smith concludes his classic book with the importance of “Investment Management.” I don’t know how original this concept was in 1924, but investment management is exactly like it sounds. Anyone who’s read a few investing books should recognize the principles Smith lays out since it fits the basic concepts of investment planning today. […] The post Early Principles of “Investment Management” appeared first on Novel Investor. ...
Posted: Oct 09 2019 @ 2:59 PM
It’s time for another reading update. Last quarter’s slump got fixed…I think, mostly diving into a couple of old books and digging up dirt on Henry Singleton. Here’s what I’ve been reading the past three months: The Art of Wise Investing – It’s the updated wise edition of The Art of Investing written by John […] The post Quarterly Reading – Fall ’19 appeared first on Novel Investor. ...
Posted: Oct 04 2019 @ 11:08 AM
It was considered common knowledge, prior to 1924, that stocks performed better than bonds during periods of inflation and bonds were better than stocks under deflation. As far as “truths” go, it’s not that outlandish. It almost makes sense. Only, nobody bothered to test the assumption until Edgar Lawrence came around. He tested it and […] The post The Baloney Detection Kit for Investors appeared first on Novel Investor. ...
Posted: Oct 02 2019 @ 5:23 PM
Michael Burry’s bet against the housing bubble began with WorldCom bonds. Had he never learned from his WorldCom bet, it’s unlikely his housing bubble bet pays off so big. Here’s the thing, Burry made money on WorldCom bonds. But he missed out on a lot more. So he asked why? I was onto WorldCom pretty […] The post How WorldCom Bonds Led to Michael Burry’s Housing Bet appeared first on Novel ...
Posted: Sep 27 2019 @ 9:57 AM
Stan Druckenmiller once said, “Every great money manager I’ve ever met, all they want to talk about is their mistakes. There’s a great humility there.” So what’s the benefit of constantly talking about their mistakes? For one, they embrace the inevitable. Investing is just a long series of decisions where some end in gains and […] The post Peter Bernstein: Embracing Mistakes appeared first on Novel Investor. ...
Posted: Sep 25 2019 @ 5:56 PM
Gerald Loeb’s classic might as well be called The Battle for Investment Survival and other writings. The original was published in 1935. Since then, it’s been revised so many times that it’s doubled in size. In the copy I read, the other writings made up half the book. The writings are a collection of articles and […] The post Wise Words from Gerald Loeb appeared first on Novel Investor. ...
Posted: Sep 20 2019 @ 10:56 AM
Investing is more art than science because psychology affects prices. That’s what makes investing difficult. Yet, the difficulty is what most investors underestimate at first. Gerald Loeb points out the difficulties of investing throughout his book, The Battle for Investment Survival, before finally summarizing it: The most important things any reader of these chapters can […] The post A Few Lessons from The Battle for Investment Survival appeared first on Novel ...
Posted: Sep 18 2019 @ 8:07 PM


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