Total Return Investor: High Yield Reads

Summary of recent stories of interest, sometimes enduring, to investors:

Eddy Elfenbein on a topic that's near and dear to many investors - what poolside investing is really all about. I agree with that watchlists trump screens, but I still like to run screens as a way to build the watchlist.

My original article related to Eddy Elfenbein's "poolside" tweet - Income Investing by the Poolside.

Todd Wenning says that mechanical, quant formulas are the opposite of real investing.

Tim McAleenan on how focusing on Yield on Cost to take the stupid out of investing. Tim uses the same example that originally got me interested in yield on cost - Buffett's Coke purchase which pays him $488M/year in dividends an rising, on an original $1.3 Billion purchase that is good for a 37% yield on cost. Every year. And growing. Its easy to see why academics dismiss yield on cost, if you ignore trading cost, opportunity cost, and assume a spherical cow of uniform density, err I mean perfect market timing, then YOC is irrelevant; however back in the real world its an excellent North Star for individuals, individual investors should embrace it as part of a long term strategy.

Morgan Housel - How to scare yourself stupid. Innumeracy plus biases make for irrational risk management.

John Kay - Why mean outcomes are often meaningless. There is no "right" answer when it comes to accounting for uncertainty.

A Wealth of Common Sense - There's no such thing as precision when it comes to investing. "the data doesn’t really mean anything unless it’s put into the correct context."

Forever Investor - AstraZeneca rejected Pfizer's buyout bid. It was fair to ask if AstraZeneca's management talk about the pipeline was more narrow self interest or more shareholder friendly. I tended to think the latter at the time, but we got an additional positive developments in that the management wasn't just talking, they were buying north of 3 million pounds of shares.

Total Return Investor