market folly

Boyar Value Group recently started doing a podcast entitled The World According to Boyar.  In it, they'll conversations with top investors, authors, and businesspeople.  Their first guest was Chris Mayer, author of How Do You Know as well as the investing book: 100 Baggers.  He is the Chief Investment Strategist of Bonner & Partners.  Here's some notes from the podcast as well as the full podcast audio embedded below:


Chris Mayer Interview on Boyar Podcast

- On 100 Baggers, it's basically taking the concept of a 10x return on a stock from Peter Lynch and adding a zero to it, to find the cream of the crop in terms of investment returns.  Mayer looked at all stocks that returned 100x from 1962 to 2014 to find common characteristics.  It returned 365 stocks and the best performing stock of all was Berkshire Hathaway.

- His biggest takeaway was that: return on invested capital is the most important factor.  If you compound at 25% a year for 25 years, that's a 100 bagger.  But that's also an extremely large feat.

-  The returns can often be back-end loaded so patience is one of the most important factors.  The psychology of watching prices head higher and higher and being tempted to sell often keeps people from holding on.  On the other side of the equation, the other problem is during those 100 baggers, you have to often survive multiple big drawdowns.  So psychology plays a big part in being able to withstand the swings.

- Coffee Can Portfolio:  Idea from Journal of Portfolio Management.  Investor just bought a small portfolio of stocks and just didn't touch them for 10 years and performed extremely well, much better than someone who bought the same stocks but actively sold positions.  Mayer named Howard Hughes (HHC) as a stock that could be an example today.  He bought it in 2011 and hasn't sold any shares since.  Another he likes is Fairfax Financial in Canada.

- How Do You Know: A Guide to Clear Thinking About Wall Street, Investing & Life is his new book that's not necessarily a traditional investing book but it's about how you know what you know.  You shouldn't try to know or explain every single little move a stock makes.

Embedded below is the full podcast of Boyar's interview with Chris Mayer:



We also recently posted up some complimentary equity research from Boyar if you missed it.  They've analyzed three stocks they feel have high upside and those reports are available for free: CHTR, BEN, STKL.