Tuesday's column was about the undeniable value of information in investing -- and that, in order to be a truly successful investor, one has to constantly be a learning machine. Business is a dynamic, rapidly evolving discipline that truly requires a massive consumption of information.
Yet many people don't know where to begin -- or, even worse, they don't spend nearly enough time reading before they commit capital. It's so easy today to look at a company's presentation on its investor-relations website, and examine the three financial statements, and to feel that adequate due diligence has been done. The reality is that this is only the first step.
Fortunately for us investors, we don't need to get our information the old-fashioned way by driving to the library and making photocopies all day, or waiting for days before something arrives in the mail. We each have our own personal library via our ever-expanding database that is the Internet. In all, the tips I've offered in this two-part piece will grant you access to four free sources of immensely valuable investor information.
In addition to the two sources I delineated yesterday -- the monthly memos by Oaktree Capital's Howard Marks and the quarterly letters of Longleaf Partners -- following is another pair of invaluable sources.
First are the writings of Jeremy Grantham and other members of GMO, a global asset-management firm. Few organizations devote so much care and detail to area of risk management, capital preservation and asset allocation. For example, on the company's homepage you can currently find articles with titles like, "The 13th Labor of Hercules: Capital Preservation in the Age of Financial Repression" and "Profits for the Long Run."
Consider the following nugget from the GMO piece, "Reports on the Death of Equities Have Been Greatly Exaggerated." Namely -- and I bet most market players would be shocked to discover this -- real gross domestic product growth is not a prerequisite for equity returns. In fact, data between 1900 and 2000 actually reveal an opposite trend: Stock market returns have actually been better in countries with lower rates of GDP growth. During the 20th century, real GDP growth in the U.S. has approximated at 2% while the real market return has been at about 7% per annum. Japan's roughly 4% GDP growth has coincided with real annual returns near 5%. You can see the chart and read the reasons why in the report.
Second are Frank Martin's annual reports and commentary at Martin Capital Management. Frank is a brilliant investor who operates quietly out of Elkhart, Ind., a place not typically associated with finance -- but, then again, neither is Warren Buffett's headquarters in Omaha, Neb. Martin's site is private, but his annual reports can be found on the Internet. In fact, here's the link to the 2011 report (PDF). Martin is also the author of the exceptional book, A Decade of Delusions, which includes many of Martin's past writings.
Of course, another source is the one you're perusing right now: our team at Real Money. Where else can you easily find an array of independent, individualistic market commentary each and every day, delivered in a simple and easy-to-navigate platform?