Can Turtles Fly?

The game of investing is a process of discovering: who you are, what you’re interested in, what you’re good at, what you love to do, then magnifying that until you gain a sizable edge over all the other people. -- Li Lu, Graham & Doddsville newsletter , Spring 2013 When I first encountered him many years ago, I didn't know how good of an investor Li Lu was. Now, it seems like he is one of the top ones. I don't consider him a superinvestor (yet) but that's partly because his record and his stockpicking is unclear to me. In any case, Charlie Munger is a big fan of him so Li Lu is definitely in the top 25% of the investing world. I ran across a very good interview with him in the Spring 2013 Graham & Doddsville newsletter (Columbia Business School). Some of you may have seen it already but it was the first time I read it--I was away from investing the last few years around the time of this report--and it is an excellent interview. If you haven't read it bef...

I hate losing articles and such was the case with one I was typing up earlier this week grr :( One area I have been researching lately is the historical behaviour of large-cap and mega-cap stocks. Some of you may have noticed it but I find it very bizarre that the market is pricing large-cap and mega-cap American stocks at relatively low valuations. In fact, depending on the measure you use, the market is pricing them lower than small-caps and mid-caps even. As an example, consider the P/E ratios of the following (I'm not recommending any; just picked some random big ones): Microsoft has a forward P/E of 9.7 and a trailing P/E 12.3. Intel (cyclical) has a forward P/E of 9.7 and a trailing P/E of 12.3. IBM has a forward P/E of 10.4 and trailing P/E of 12.1. ExxonMobil (cyclical) has a forward P/E of 8.8 and trailing of 13.4. JP Morgan (vulernable to dervatives implosion) has a forward P/E of 8.8 and trailing of 11.9. Pfizer (potential value trap) has a forward P/E of 6.7 an...

Lately the value investing world has been speculating that Li Lu, an up-and-coming investor, may end up as one of the portfolio managers at Berkshire Hathaway. At one time, the replacement for Warren Buffett, at least on the portfolio management side, mattered a great deal for Berkshire Hathaway. Now, I don't think it really matters very much. Warren Buffett has basically "used up" all his free cash with his Burlington Northern Santa Fe acquisition. My guess has always been that Buffett lost faith in his investment manager picks and decided to safely tuck away all the money into BNSF. Even for Berkshire Hathaway shareholders the future portfolio managers aren't a big issue, compared to 3 or 4 years ago when Berkshire had a big chunk of its net worth in cash. Having said all that, Li Lu looks like an interesting fellow. He definitely thinks like a value investor and appears to be talented. His track record, from what little I have seen, is good but it's too early...