4th October 2012: David Einhorn @ Value Investing Congress

David Einhorn (ValueWalk)

 

Reformed Broker Josh Brown has notes posted from David Einhorn‘s speech to the Value Investing Congress.

 

ValueWalk also has an analysis of Einhorn’s speech and observes that sell-side analysts now follow the hedge fund manager’s thinking.

 

I’ve followed Einhorn since his book Fooling Some of the People All of the Time revealed his analytical research approach to value investing.

 

Einhorn’s list of long and short stocks is an interesting read. You sense Greenlight Capital‘s research and valuation processes: the significant factors (management view, company, industry, market, macroeconomic and causal) that shape companies, and the Bayesian inferential view of investor beliefs about them; how this analysis then translates to a market forecast; and how Einhorn intends to capitalise on these dynamics. The estimate assessment of multivariate factors shape investor beliefs and decisions. The market action which occurs from this creates opportunities using behavioural finance and market microstructure models (with a nod to technical analysis and high-frequency data analysis of transaction flows and volatility). It’s like reading Michael Mauboussin about how to think about investment ideas; or Peter Schwartz about trend forecasts and scenarios; or Robert Jervis and Gregory Treverton on strategic intelligence.

19th June 2012: “How Do You Have So Much Time To Blog?”

Investment broker Joshua Brown on why he blogs:

 

Reading is only part of the equation, though.  It is in the writing that I discover what I actually think.  It is in the writing and the communicating of ideas and concepts that they truly become mine.  This is a cognitive learning thing that is very widely understood in the education world.  When I’m blogging there are two things that are happening – you, the reader, are being exposed to something I think might be important and I, the writer, am crystallizing my own beliefs and understanding of the topic at hand.

 

Brown’s insight applies to academic blogging: it’s the cognitive training that matters rather than if the work is read by others. “Blogging is not a side gig, it is the method by which I’m becoming what I want to become for myself and for those I’m responsible to,” Brown notes.  Blogging forces Brown to be across daily events, global macro moves, and to understand different asset classes. It focuses his investment advice to clients and idea generation process. Importantly, blogging has enabled Brown to stop doing many activities. Follow Brown on Twitter and read about his social media use.

 

In contrast to Brown, I know academics who can go months without writing a journal article or doing research. They might be more productive if they embraced Brown’s blogging approach and his daily writing regimen.