By Tom Bradley

I admit to doing less reading over the last few weeks (which is criminal for an investment professional) due to a minor sporting event being held in Vancouver. But between the spectating, TV viewing and partying, I did manage to catch up on some of my old favourites on the weekend. Here are some odds and sods that I found interesting.

In the Letter to Shareholders from the U.S.-based Longleaf Partners Funds, Mason Hawkins and Staley Cates talk about the lessons learned from 2009. The first is that bottom-up, fundamental analysis “matters quite a bit.” They make the point because (1) they are bottom-up, value investors and have been very successful at it and (2) after 2008, the consensus was that “every investor should try to monitor the global banking system and engage in macroeconomic prognosticating.” In their view, too many top-downers sat on the sidelines in 2009 due to concerns about the banking system and economy.

Last year also reminded Mason and Cates that “comfort comes at a very high cost. Buying or even holding stocks in early 2009 was very uncomfortable.”

The latter point is a good segue into a piece by Tim Price, the Director of Investment at PFP Wealth Management in the U.K. He opens his February 9th missive with quotes from Warren Buffett (“...approval is not the goal of investing”) and Benjamin Graham (“Individuals who cannot master their emotions are ill-suited to profit from the investment process.”).

He goes on to talk about the challenges of being a patient, long-term investor. “We are drowning in [short-term] information but starved for knowledge.”

Mr. Price also passes along an amusing story from a UBS portfolio manager who said, “Isn’t it funny when you walk into an investment firm, and see all of the financial advisors watching CNBC – that gives me the same feeling of confidence I would have if I walked into the Mayo clinic or Sloan-Kettering and all the medical doctors were watching General Hospital.”

Turning to another favorite of mine, Oaktree’s Howard Marks reviews the things that he finds most worrisome in his latest piece. He covers a lot of ground including reliance on government stimulus, artificially low interest rates, debt-laden consumers, commercial real estate debt, state and local government deficits, reliance on China, and much more. Toward the end he nicely sums up his view:

“The proper response [to the uncertainties discussed above] should be to discount asset prices, allowing a substantial margin for error. Forecasts should be conservative, yield spreads should incorporate ample risk premiums, valuation parameters should be below the long-term norms, and investor behavior should be prudent.”

I couldn’t have said it better myself.