I share some excerpts from an interview with Warren Buffett, Shane Oliver discusses some bad investing habits to avoid, Craig Young compares Aussie supermarkets to the UK, and Chris Prunty shares some small cap ideas. Here are four things you should read this weekend.
Interview with Buffett: Investing $47 billion in a day
In a recent interview with David Rubenstein from Bloomberg, Warren Buffet offered some fascinating insights into his decision-making process. It came as a surprise to me to see how quickly Buffett made such a massive investment with zero reliance on financial models or complicated review processes. Professional investors and finance writers stress the importance of process and in-depth analysis, which I fully support. However, it’s interesting to see Buffett’s throwback to a simpler time when stocks pickers identified great investments, rather than bury themselves in spreadsheets. Excerpts from the transcript below, with links to the full transcript and interview at the bottom. (VIEW LINK)
The 9 (bad) habits of highly ineffective investors
It’s always been a curiosity to me that intelligent, hardworking investors often fail to achieve desirable returns in the stock market. Thankfully, in recent years, psychology and economics have come together, and we now have a much better understand of the behavioural biases that cause us to be our own worst enemy. Shane Oliver, Chief Economist at AMP Capital, has shared some common mistakes investors make; the first step to avoiding a mistake is being aware. Number eight on this list is a very common one amongst Millennials – what are the common mistakes you see with investors you know? We'd love to hear your thoughts in the comments below. (VIEW LINK)
The Supermarket War: Countering the rise of Aldi
It’s been a tough few years for Woolworths. Aldi, and to a lesser extent, Costco, have taken market share and pressured margins. Meanwhile, Coles is a stronger competitor than it was five years ago. So, can anything stop the Aldi juggernaut from taking over the Australian supermarket landscape? Yes, is the clear message from Craig Young at Nikko AM following his trip to the UK. His observations indicate that Aldi’s market share growth should continue to slow from here, and there’s an opportunity for the supermarkets to differentiate themselves. Read his research note here: (VIEW LINK)
Five emerging small cap opportunities
In what was one of our most popular articles this week, Chris Prunty from Ausbil shares some stock ideas following the recent pull-back in small caps. While he acknowledges that macro trends like the expectation of higher rates could hurt bond proxy stocks and growth stocks in the short-term, good old-fashion stock picking should prevail in the long-term. Opportunities to buy high-quality names at reduced prices don’t come along often, so have a look while they’re cheap. (VIEW LINK)
Chart of the week
US stocks scale new heights
On Monday, the Russell 2000, the S&P 500, the Dow Jones, and the Nasdaq Composite all closed at new record highs. It's the first time this has happened this century - last time was December 1999.
Image source: FactSet, Livewire
Patrick was one of Livewire’s first employees, joining in 2015 after nearly a decade working in insurance, superannuation, and retail banking. He is passionate about investing, with a particular interest in Australian small-caps.