Financial systems are a continuous attempt to reshuffle assets towards the people who can manage them best or who are most tolerant of whatever their particular risk/reward payoff functions are, and that means constantly examining flows in order to determine their present value, and speculating about how that present value might change, or might be... See more

Briefly: a flow is any change over time, and a stock is the accumulation of flows. So your refrigerator's stock of food is fairly constant over time, but this consists of flows in when you shop, and flows out when you eat. The value of a business (the stock) is the value of existing assets plus future free cash flows.1 But wait! That value is mostl... See more

In investing, higher volatility usually equates to higher possible returns. In today’s world of online expression, we settle for lower expected value, market-level outcomes so as to not ruffle any feathers and not take any outsized risk. We’re basically hoping to allow people to know us enough so that they include us in their passive index of human... See more

One of the things I do around the edge of the portfolio is mess with the energy weight. Some of this is old habits — most of my option trading career was being active in oil and gas. But I also see energy as fundamental to the concept of inflation and inflation is the largest tax on investment returns. I actually see the core of our portfolio not a... See more