2018 Year-End Letter to Investors
Our annual review of performance, recent changes to our portfolio, and comments on the outlook for equities in the years ahead.
Long-Term Investing: The Costs of Myopic Thinking
Adhering to long investment time horizons is easily said but more difficult to do. Emotions and behavioral biases work to erode the otherwise attractive returns offered by equity markets when evaluated over multi-year periods. Properly framing comparisons between equities and other assets—like bonds—can help investors avoid the risk of falling short of return objectives.
FAANG Valuations: A Mismatch of Old Metrics and New Companies
The group of stocks known as the FAANGs (Facebook, Apple, Amazon, Netflix, and Alphabet) have garnered significant attention from investors and market pundits—often painted as a homogeneous, overvalued set of stocks. We provide our view of the stocks.
Risk: Fundamentals Over Price Volatility
Investors should consider investment risk as defined by an investment’s fundamental stability, level of indebtedness, and valuation, rather than simply its short-term price volatility.
Behavioral Biases: Exploiting Systematic Mispricings
Deeply rooted behavioral biases can offer exploitable opportunities for a thoughtfully designed, systematic investment approach.
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