In this interview with the Graham & Doddsville Newsletter investing legend Julian Robertson provided some great insights into the best way to invest. Here’s an excerpt from the interview:
JR: I believe that the best way to manage money is to go long and short stocks.
My theory is that if the 50 best stocks you can come up with don’t outperform the 50 worst stocks you can come up with, you should be in another business. That being said, there are long periods of times where the 50 worst companies will outperform the 50 best.
Always of particular importance to me at any company is the quality of people at the company. Still, this is not an infallible way of looking at companies. I am reading the Steve Jobs biography right now and am at the point where he got fired from Apple. One takeaway I have is what a difficult person Steve Jobs was when he was a young guy. He seemed to have changed dramatically as he got older.
For my shorts, I look for a bad management team, and a wildly overvalued company in an industry that is declining or misunderstood. For instance I think REITs are jokes. People look at them for yield, which in a sense they provide. But, I think about this like I think about printing money. As long as people keep printing, things go alright until something blows up. The REITs are the worst because they pay high dividends and when they don’t earn enough to cover the dividend they issue stock.
You can read the entire interview here:
Julian Robertson – Graham & Doddsville Newsletter.
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