Invest Like Buffett

Larry Swedroe thought he was done writing books.  After having written a bunch of them, he was comfortable that he had said what he wanted to say.  Moreover, he still had his blog at CBS News MarketWatch as an outlet.  However, as he explained to me yesterday, he came to see that while he had pretty much said what he wanted to say, he hadn’t always been heard and hadn’t always said what he wanted to get across in such a way as to ensure a maximum hearing.  That realization led to the writing of his newest book, Think, Act, and Invest Like Warren Buffett: The Winning Strategy to Help You Achieve Your Financial and Life Goals.

Warren Buffett’s Investment Checklist

While I hold Warren Buffett in high esteem, I think that his general deification tends to be a bit much.  But even so, this list of his investment criteria is simple, more than a bit obvious, and terrific.  It’s a classic back to basics review.  I suggest you read it.  It even made The New Yorker‘s The Hundred Best Lists of All Time at #24.  It was behind the periodic table, the Bill of Rights and the Ten Commandments though.

Warren Buffett’s Investment Checklist

My Top Posts for 2012

The following dozen Above the Market posts were read, quoted and linked the most during 2012 and are listed below in order of popularity.  I think they provide a pretty good cross-section of this site and what I am about.  I trust that you will enjoy each of them again or enjoy them afresh if you may have missed them the first time around.  I am most appreciative of all the attention and support I have received.  Thank you all very much.

• Investors’ 10 Most Common Behavioral Biases
• My Investing Checklist
• CFA Conference: James Montier
• Leading Investment Indicators
• What Will 2030 Look Like?
• Reckoning with Risk
• Get a Good Pitch to Hit
• The Greatest Risk of All
• We Suck at Math
• Leverage
• Gaming the System
• The Long Cycle

My Fine Fifteen

I resist “best of” lists both because I have my own (better!) tastes and because I have my own needs, outlooks and preferences.  I also cannot claim to have read or seen anything like everything that might be relevant to the topic.  So instead of claiming that these are the best, the following are my fine fifteen – the financial websites and blogs I used the most and found the most indispensable during 2012.

Your mileage may vary. 

• The Monoliths. There are lots of (probably too many) huge and would-be comprehensive sites focusing on the financial world.  My favorites are AdvisorOne, which is geared toward retail advisors and other professionals and The Wall Street Journal’s MarketWatch, which is more focused on the markets.
• The Aggregators. Having reliable sources to sift through everything and point me to what I need to read is absolutely crucial to my day.  For my money, the best are Tadas Viskanta’s Abnormal Returns and Real Clear Markets.  Tadas focuses on the blogosphere and is especially good at finding terrific stuff I wouldn’t otherwise have seen, often from new and off-the-beaten-path voices.  Real Clear does some of that while providing must-reads from traditional journalistic sources.
• The Commentariate: Lots of people comment a lot on the markets and our industry.  In my view, three stand out above the crowd: Barry Ritholtz’s The Big Picture, Josh Brown’s The Reformed Broker and Cullen Roche’s Pragmatic Capitalism.  Each is prolific as well as insightful and each has a powerful and unique voice.  If you don’t read them every day already, what are you waiting for?
• The Specialists: Doug Short‘s market analysis and charts are invaluable.  For eclectic, data-based takes on politics and finance, Political Calculations is a must-read. Michael Kitces is the best financial planner I know and his blog is terrific. Tom Brakke is the best investment analyst I know and his blog (in three parts) is terrific.  For retirement planning, Wade Pfau’s Retirement Researcher Blog is unbeatable. Rick Ferri is my go-to on indexing.  Mark Buchanan’s The Physics of Finance is a brilliant look at economics and finance through the lens of physics.  Ed Yardeni’s Dr. Ed’s Blog is fabulous for investment strategy.

I have missed many excellent and valuable resources, of course.  I should particularly note StockTwits, which is my “home base” for dealing with the markets and seeing who’s who and what’s what.  I’d be happy for you to point out my errors and omissions, in excruciating detail if necessary.

Worth Reading

I commend some recent articles to your attention.

• Barry Ritholtz’s Rules of Investing and Debating Jeremy Siegal.
• The diversification value of managed futures.
• High frequency trading doesn’t offer the advertised advantages.
• Leigh Drogen on data and stories.
• John Hussman — still bearish (only more so).
• Roger Lowenstein (a real favorite of mine) on HFT.
• Vanguard, the leading provider of index funds, attracted more money in the first nine months of 2012 than it has in any full calendar year in its 38-year history.
• In-N-Out and PAC-12 football.
• Trying to make sense of the polls.
• Linsanity in Houston.
• You can’t improve your financial situation until you know where you stand.
• Read about Johnny Carson and the “birthday problem” here; my take is here.
• Geoff Considine’s five-part series on saving and investing for retirement is available here.
• The ‘Mother May I’ State.
• The case for the DFA “tilt.”
• IMF Chief: crisis will last a decade.
• Maybe the DALBAR study isn’t gospel.
• Clients want advisors who are experts in them.
• Stop Me Before I Do Something Stupid.
• James Surowiecki on Corporate Welfare Queens.
• Cognitive biases and NFL coaches.
• Great business idea: use loved one’s ashes to make ammo.

Worth Reading

I commend some recent articles to your attention.

• Wade Pfau has written a new research paper called An Efficient Frontier for Retirement Income (summary on Wade’s blog here).
• Can we fix the widespread misinformation that is so prevalent? 
• Looking at investment styles.
• Robert Samuelson says it’s time to retire the American Dream.
• Joe Duran on financial-life management.
• Here’s the best article I read this week.
• Idiot of the week; unless it’s this guy; or this woman.
• Don’t miss a visual presentation of the federal budget and the deficit problem — using charts and graphs – from Above the Market.
• As Barry Ritholtz points out, the bail-outs weren’t good investments at all; here he writes about QE3.
• The stupid, it burns.
• Nate Silver’s take on the state of the presidential campaign.
• Rob Arnott shows why target date funds need to be re-imagined.
• Eddy Elfenbein on the importance of extreme events.
• Are advisers worth their fee?
• An oral history of Cheers.

Worth Reading

I commend some recent articles to your attention.

• Discover magazine on the impact of aging.
• Josh Brown and Tadas Viskanta on ETF price wars.
• The best article I read this week.
• Wade Pfau on income annuities and systematic withdrawals.
• Risk matters.
• Geoff Considine on low beta/low vol.
• Ways to fight inflation.
• Michael Kitces on what makes an asset class alternative.
• An oldie-but-goodie and a recent take from Tom Brakke on active management.
• How to screw up a hedge fund pitch meeting.
• Solid interview with Michael Mauoussin.
• The NYT on The Road to Retirement.
• Meb Faber on managed futures.
• My debate with Josh Brown on math is available here.

Worth Reading

I commend some recent articles to your attention.

• The long-awaiting Michael Lewis profile of President Obama.
• Bob Woodward on the debt ceiling crisis: I don’t know which is more terrifying – that the Republicans were willing (even eager) to default or that the Administration had no Plan B.
• Every Howard Marks memo is worthwhile; here is his latest.
• Barry Ritholtz on the bailouts; Pro Publica looks at the numbers.
• We shouldn’t be surprised by underperformance; Felix Salmon charts it.
• Will Your Income Needs Trend Down as You Age?
• “Taxing the rich” (however defined) won’t solve the deficit problem — it doesn’t raise enough money.
• The Atlantic tries to lower debate expectations for the President.
• Monetary policy illustrated.
• My series on risk.
• My own Alternative Asset Replication in Traditional Vehicles: How Authentic Can It Be? (JFP)

Worth Reading

I commend some recent articles to your attention.

• The Value Perspective on compound interest.
• John Kay on the utility of checklists.
• I’m a little late to this, but video of Michael Burry’s UCLA commencement speech is here.
• Michael Kitces: What Makes Something An Alternative Asset Class, Anyway? (from JFP).
• The “golden rule” of investing from Portfolioist.
• A hedge fund trio: another bad year (Covestor); Canadian hedge funds actually hedge (All About Alpha); and an industry in trouble (FT).
• Meb Faber on PE10 globally.
• Bruce Bartlett prefers none of the above.
• Barry Ritholtz on the state of the middle class.
• My own Alternative Asset Replication in Traditional Vehicles: How Authentic Can It Be? (JFP)

Positively Terrifying

The Los Angeles Times published a fascinating (if a bit under-sourced) piece this week about how Baby Boomers who are worried about the lack of money in their 401(k)s and IRAs are day-trading within their retirement accounts.  The article as a whole is terrifying.  Here are some particularly scary quotes:

• “[S]ome aggressive investors have begun day trading their nest eggs — all in a bid to make up for lost time.”
• “As many as 40% of people trading options at the Motley Fool do so in retirement accounts, said Jeff Fischer, an options advisor at the investment website.”
• “Americans are a collective $6.6 trillion short of the amount they need to retire comfortably, according to a 2010 analysis by the Center for Retirement Research at Boston College.”

Read it and weep.