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The wild ride continues.  CNBC reported today that Bitcoin is off 50% from its all-time high...that was made last month!

https://www.cnbc.com/2018/01/17/cryptocurrency-sell-off-continues-as-bitcoin-ethereum-sink.html


Quick question for anyone out there reading this: With these types of price fluctuations, how can Bitcoin (or any other cryptocurrency) be considered a viable currency?

Nice decision tree by Connor Leonard, Public Securities Manager at Investors Management Corporation.

https://twitter.com/Connor_Leonard/status/760824678734782465

The following articles by Connor explain the distinctions between Legacy Moats, Reinvestment Moats, and Capital Light Compounders.

http://basehitinvesting.com/importance-of-roic-reinvestment-vs-legacy-moats/
http://basehitinvesting.com/reinvestment-moat-follow-up-capital-light-compounders/

Read this timely article about Snapchat yesterday and found it interesting.  Wanted to share.

http://adventuresincapitalism.com/post/2017/07/09/SNAPageddon.aspx

SNAP is down ~8% today after lead underwriter Morgan Stanley downgraded the stock and slashed its price target by $12 to $16/share.

https://www.reuters.com/article/us-snap-morganstanley-downgrade-idUSKBN19W1HA

Those who short SNAP with puts may well wind up happy -- even after today's price decline. 

Disclosure: No position in SNAP.

An important reminder regarding network effects and competitive advantage.

https://www.nytimes.com/2017/04/19/technology/facebook-snapchat-instagram-innovation.html?_r=0

A good helping of worldly wisdom was served at this year's annual meeting. Enjoy!
https://www.youtube.com/watch?v=BLctqhNClqY

And here's the unofficial after-party:
https://www.youtube.com/watch?v=5YR_5el2IuM&index=1&list=PL4vpPkFFra2tjDtIJ69Ju4SnwQyNvSmIG

Just finished reading this insightful article:

http://observer.com/2016/11/want-to-really-make-america-great-again-stop-reading-the-news/

Couldn't agree more.  Seems like we are constantly caught up in the thick of thin things.  We consume huge amounts of news and social media, but actually do less real work. 

I believe that this author's solution is right: Be selective about what media and content we take in, and don't watch everything develop in real-time.  Maybe then we can get a portion of our sanity back, and start focusing on more important matters.

Here's a pretty amazing article on how Ray Dalio's Bridgewater Associates is seeking to construct an algorithm that will automate managerial decision-making at the firm.

http://www.wsj.com/articles/the-worlds-largest-hedge-fund-is-building-an-algorithmic-model-of-its-founders-brain-1482423694

As I was reading this article, I kept wondering: Could the human decision-making process be mostly/fully automated?  How adaptable is the Bridgewater software (i.e., what happens when it receives unexpected inputs)?  Could this software really predict the outcomes of meetings before they were completed?  Could this technology one day make the middle managers of the world obsolete?

These are big questions ... with unclear answers.  Intelligently programmed software can obviously do amazing things, but what are it's limits? 

Definitely something to think about.
 

Fascinating article in the NY Times about how a wealthy businessman went to extreme lengths to hide assets and evade taxes.

http://www.nytimes.com/2016/11/30/magazine/how-to-hide-400-million.html?_r=0

Some excellent commentary here on investment edge from John Huber (portfolio manager at Saber Capital Management, LLC).

http://basehitinvesting.com/what-is-your-edge/

Found the following book notes to be interesting.  Thought I'd share with the community.

http://sanjaymeena.io/books/book_notes_how_to_be_lucky/

Interesting read.

http://www.bankrate.com/finance/politics/president-trump-your-wallet-1.aspx?ic_id=Top_Financial%20News%20Center_link_1

This topic has been in the news recently, and I think it merits some discussion.

Since 2005, net flows of U.S. stock mutual and exchange-traded funds have been positive for passively managed funds and negative for actively managed funds.  The WSJ has some interest charts on why investors are choosing to go passive versus active.

http://www.wsj.com/graphics/passive-investing-five-charts/

Essentially, this article argues that: 1) over the last 25 years the majority of U.S. large-company mutual funds have underperformed the Vanguard 500 Index Fund, 2) annual fees for actively managed U.S. stock mutual funds are almost 7 times higher than those for passively managed funds, 3) of the 20 best actively managed U.S. stock funds for 10-year returns as of 2005, only 7 were better than the average over the next 10 years, and 4) Morningstar Domestic Stock Fund Managers of the Year generally don't perform as well relative to the average in subsequent years.

All of this adds up to money flowing into passively managed funds.

This is an interesting dynamic, as passive investment is becoming a larger part of day to day investment flows.

Here's one interesting article about the shift from active to passive investment: https://www.bloomberg.com/view/articles/2016-10-28/shift-from-active-to-passive-investing-isn-t-what-it-seems

In this article, Bill Miller claims that many active managers are really just "high-priced closet indexers."  Miller believes that about 70 percent of all active managers are closet indexers -- i.e., their funds own many of the same stocks as the index (to avoid too much deviation from the index), but they charge higher fees for their active management 'skills.'  This is a toxic combination that leads to underperformance. 

Given the incentives of most investment managers (job preservation & maintaining AUM to keep collecting fees), it wouldn't surprise me if a large percentage of active managers really were just closet indexers. 

So, to some degree, it makes sense that we would see a shift from closet indexer "active managers" to passively managed funds. 

However, I think there could also be a performance chasing aspect associated with this shift.  More on this later....

Read this Q&A today with securities analyst Bluegrass Capital and wanted to share it with the group.

https://drive.google.com/file/d/0B5AhopgMAgqubFlmLTBOZWRXRjQ/view

Thought I should start a topic on Punch Card Investing.  This method of investment resonates with me.  In fact, I wrote an article on the topic here:
http://capitalalligator.com/invest/punch-card-investing/

In the past couple of days, a couple more articles have been written on the punch card approach.
http://brontecapital.blogspot.com/2016/09/comments-on-investment-philosophy-part.html
http://basehitinvesting.com/practicing-a-punch-card-approach-to-investing/

Feel free to share any thoughts you have on punch card investing or the above articles.

Ran across this presentation the other day and wanted to share it with the community.  I think there's some real truth to what Scott Adams is saying.  Enjoy.

http://www.businessinsider.com/scott-adams-on-goals-and-passion-2015-2?op=1