The Best Investment Writing Volume 3: Selected Writing from Prominent Investors and Authors (Meb Faber, 2017)

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  • Indicators preferred for stocks: Hindenburg Omen, Death cross, VIX, Fibonacci
  • Price-to-sales ratio: a valuation ratio that compares a company’s stock price to its revenue
  • Price-to-book ratio: to compare a firm’s market to book value by dividing the price per share by book value per share (BVPS)
  • Enterprise Value (EV) to sales: valuation measure of a company to its annual sales
  • Free Cash Flow (FCF): cash left over after a company pays for its OPEX & CAPEX
  • CAPE: Cyclically-Adjusted P/E: for US market at a 10-year basis
  • Epitomizes: be a perfect example of
  • Bond convexity: bond price vs interest rates
  • Shortage of workers > higher employment cost > nationalisation > communism; if only automation can replace fast enough
  • Free lunch effect: managing a portfolio that is not yours always have an adverse effect
  • Three Body Problem: triangulate and predict the object 100 years from now
  • Fama and French Three Factor Model: an asset pricing model; Carhart four-factor model is its extension
  • RM-RF: market minus risk-free return; SMB: smell minus big; HML: high minus low; RMW: profitability factor; CMA: investment factor; UMD: winners minus losers
  • Waiting for the market to crash is a terrible strategy: holding of excess cash and you never know when is the lowest
  • The real diversification: Skis (winter) and bikes (summer)
  • Alpha strategy: carry, momentum, value, risk and volatility funds
  • Virulent: bitterly hostile; proponent: advocates theory, proposal, or course of action
  • Bitcoin: you can’t value it, you can only price it
  • Total return: capital gains (EPS growth + P/E change) + dividend yield. EPS growth is driven by economic growth; P/E change is driven by inflation rate; dividend yield is driven by level of P/E
  • Risks of the traditional investment approach: longer bond term and lower yield


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