ebook essays pieces of the puzzle
Wednesday, July 14th, 2010
the goldman rorschach test

Since its 1999 IPO, Goldman Sachs (GS) has generated a return of over a hundred percent, although that only amounts to about 6.5% a year.  Still, that’s good in comparison to the S&P 500 — its total return over the period is just less than zero.  With the all-time high and all-time low in GS occurring within thirteen months of each other (and in the not-too-distant past), the Goldman chart is also something of a Rorschach test.  Do you look at it and see a missed opportunity to buy the bottom or to sell the top?  Were your attitudes molded by the mid-decade ramp that coincided with its dominance of the investment landscape or the recent bad publicity and fears of a change in the business model?  (Source:  Bloomberg terminal.)

charles kirk

From time to time, I will include in pix links to descriptions by investors about their craft.  There are many parts of the investment ecosystem and many roles to play, and understanding where others are coming from — and why (and how) they are making decisions as they do — is helpful in assessing markets and adapting your own methods if need be.  Charles Kirk’s perspectives on what it takes to be an independent trader and why he has chosen to be one is a good example of the analysis we all should do; often investors approach the market in ways that don’t fit who they really are.

demand for analysts picking up

If you are interested in the trends in investment research, you should follow the work of Integrity Research, which is devoted to the goings-on in the research arena.  A recent update from it recounts the improving financial trends at investment firms, and the positive implications for both sell-side and buy-side analysts.  My take is that you should be aware of those trends but watching for other developments as well.  The “playbook” of hiring in good times and firing in bad is out of date; firms should be looking for better ways to run their businesses or make investment decisions, not just adding and subtracting workers.  If you are looking for a firm to join or for one to hire to manage money or give you advice, try to find one not playing the “me too” game.

pick six

Mitch Joel at Six Pixels of Separation wrote that two friends and he “decided that every week or so the three of us are going to share one link for each other (for a total of six links) that each individual feels the other person ‘must see.’”  The list of links from one week is wonderfully diverse.  I like the idea because it’s infrequent and focused, and done between friends, so that they know where each other are coming from and what someone might be fascinated by — or maybe what someone might need to read to be challenged or inspired.  A good way to marshal online content to build relationships and spark creativity.

abnormal returns

If you want a daily update of the latest hot topics in the econoblogosphere, Abnormal Returns, the best market linkfest, is the place to go.  In addition to the “classic” site, AR Now provides updates with links throughout the day, and there is an ever-expanding array of themed newsletters, screencasts, and other items under the AR umbrella.  Plus, Tadas Viskanta has been increasing his output of thoughtful original postings.

words for investors (and others)

“To know oneself, is above all, to know what one lacks.  It is to measure oneself against the Truth, and not the other way around.” — Flannery O’Connor in the essay “The Fiction Writer and His Country.”

“To know oneself, is above all, to know what one lacks. It is to measure oneself against the Truth, and not the other way around.”