‘Capital Ideas’ Or ‘CRAP’?

Introduction Today I am pleased to present to you an exceptionally interesting article for this week's Outside the Box. But before I do, let me say that it is roughly double in length as normal, so please read it at your leisure. Before I give my 2 cents on it, I would like to both acknowledge and thank Kathryn Welling for her permission to provide you with this. Kathryn is a partner of Welling@Weeden, a service provider of independent, timely and incisive news, research and analysis, to institutional investors. More info can be found on their site: http://welling.weedenco.com.

Her article "Capital Ideas or CRAP?" is an interview between her, Peter Bernstein and James Montier where they discuss an earlier piece written by Montier, which was featured as an Outside the Box. (You can view Montier's original article here.) In the interview, Bernstein takes on the criticism of the CAPM and, in the process, provides a wealth of insights and information. Montier also contributes to the dialogue by expounding upon his previous paper, in addition to sharing some intelligent remarks in reference to Bernstein's comments.

Again, despite the length, I urge you to take the time to read this conversation as the ideas discussed are paramount to gaining a more thorough understanding of the problems we face when making investment decisions. How do you invest in a world with so much competition for capital and ideas? This is one of those extremely insightful pieces you will want to read again and again.

I trust that you will find today's Outside the Box to be a superbly insightful teaching from some great investment thinkers.