High Yield Reads - 8/10/14

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. 

• I have a new post Does Caterpillar or Deere Build the Better Dividend Paying Machine?