Memorandum #151
Jeff and Ron discuss the state of the economy, inflation, the bond and stock markets, and they outline, in broad terms, their current investments. Read their insights and outlook in their Quarterly Letter. Tony Muhlenkamp writes “Letter to My Daughters: On Financial Freedom” where he offers his fundamental principles that point you in the direction towards financial independence. Link to full PDF: Memorandum #151, April 2024
Letter to My Daughters: On Financial Freedom
Your Grandpa and your Uncle Jeff have written a LOT about how to work, save, and invest. So you should read Grandpa’s book[1] and Uncle Jeff’s article because I’m not going to repeat what they have already written. Instead, I want to talk about some fundamental principles that I think are the core for being free financially. If you really own these ideas everything else will fall into place. 1. Be a profit center. Before you can save a nickel (or a dime, or better yet a quarter) you have to make a dollar. And at your age, that’s probably [...]
The Language of Investing
So much of our conversation assumes that each word has only one meaning, no matter who uses it. But my experience is that different people have different definitions for the same words–which is one reason I think there is so much confusion surrounding investing today, and why I think it is useful to look at the multiple definitions that exist for some common investment terms. I want to start with what most people might think are statements of investment fact, but that I think are statements of investment opinion: Statement 1: Stocks are riskier than bonds. Statement 2: You [...]
How to Choose a Money Manager
Warren Buffet has said people should be limited to 3 investment decisions in their lifetime. Well, hiring a money manager would certainly count as one of those three, and you wouldn’t want to waste it. Link to the full PDF: How to Choose a Money Manager by Tony Muhlenkamp
Thoughts On: Active and Passive Investing
I had the opportunity to talk with students in the Finance Department at Duquesne University about Active and Passive Investing. We covered a LOT of ground in a short period of time and ran into the problem of trying to drink from a fire hose. So, I’m writing on the topic in the hope of a more coherent presentation. The topic of Active and Passive Investing suffers from a severe bootstrap problem because each term has multiple definitions, the concepts have changed over time, and you keep having to go one level deeper to make sense of things. It’s fascinating, [...]
Letter to My Daughters: On What Grandpa Taught me
Girls, you know how I can get sentimental about family sometimes. This is one of those times. As you continue to make your way in the world, I think about how much Grandpa has tried to teach me over the years, and how important it is to me to pass those ideas along to you. Here are my “Top 10”: 90% of life is mental. This includes work, school, sports, happiness, everything. Your body, heart and soul will follow your mind. Decide you are a hard worker, decide you are happy, and you will find that you are IN FACT those [...]
Memorandum #150
In their Quarterly Letter, Jeff and Ron Muhlenkamp explain why they are still watching for signs of a recession due to the inverted yield curve but also think that there is a possibility of an inflationary boom. Tony Muhlenkamp shares two articles with us this quarter: “View from the Front Office: Maxims” and “Letter to My Daughters: What Grandpa Taught Me.” Link to full PDF: Memorandum #150, April 2024
Our Investment Process
Owning Good Companies We are only interested in owning good companies, but we can turn a good company into a bad investment if we pay too much for it. We use a business-like evaluation of each company designed to identify what a company is worth as a business. Return on Equity and Price per Earnings Since World War II the average return on corporate shareholder equity has been about 14%. We like better than average companies, so we look for companies with ROE over 14%. In a climate of 2 1/2% inflation and 4-5% interest rates we need to see [...]
Thoughts On: How to Structure a Trust
I have conversations with clients about estate planning, and the topic of Trusts invariably comes up. Trusts can be good solutions to specific problems, but they can be expensive and complicated solutions to problems that have easy, inexpensive solutions. Trusts are used to leave money to people you do not trust—right now—to take care of your hard-earned assets. To know whether a Trust is the solution to your problem, we start by defining the problem (or problems) the Trust is intended to solve through a series of questions. Are you worried about what the heirs will do with an inheritance? [...]
Letter to My Daughters: On How to Get Started
Tony Muhlenkamp provides advice regarding careers and investing. He writes these letters to his three daughters to share wisdom he’s learned over his many years in the industry as well as knowledge acquired from authors mentioned in his letter. Link to the full PDF: Letter to My Daughters on How to Get Started The opinions expressed are those of Muhlenkamp and Company and are not intended to forecast future events, guarantee future results, or offer investment advice.