Trovena Weblog

Trovena is featured in The Beach Reporter, a paper covering the Los Angeles communities of Manhattan Beach, Hermosa Beach, Redondo Beach and El Segundo.

Business Profile - Trovena by Jennifer Evans (Updated: Thursday, December 17, 2009 10:25 AM PST)

Scott Leonard, co-founder/owner of Trovena in Redondo Beach. (photo by Anita Manriquez) Since his high school days Scott Leonard, co-founder/owner of Trovena has been described as an entrepreneur. The Southern California native first started his own firm 12 years ago at the age of 28, but soon realized that in order to take his business to the next level and offer more comprehensive services, he needed to turn his individual firm into a business. Read the full TBR article "Business Profile - Trovena"

Buffett vs The Market: Which Worked Better During the Crisis?

I was reading the Journal this morning and while reading the article below, I had some thoughts. It's so fun to be able to look backward now at the 2008-9 crisis and see how various investment strategies performed. One such strategy is Warren Buffet-style active management where a "wizard" is chosen by the investor to use his powers of prognostication to "outwit" that dopey old market. The recent meltdown was a perfect chance for these wizards of active management and especially the king, Warren Buffett, to show his skills. The Journal takes a look at how he did starting at the beginning of 2008 through this week.

Unfortunately, they compare Berkshire Hathaway's performance to the Dow Jones Industrial Average which is an inappropriate benchmark. It's actually a bit unfair to Buffett in some ways. For example, he only took 62% of the market risk that an owner of the Dow took. Warren holds cash and bonds sometimes. Still, investors who simply held the Dow outperformed Warren by about 8% over this period.

A fairer comparison would be a broadly diversified passive portfolio that took about the same market risk such as DFA's Global 60/40 fund of funds mutual fund. (DGSIX) This passive (passive means no attempt is made to jump in and out of the market or individual stocks/bonds) mutual fund, which simply trusts the market to accurately price risk and adjust accordingly, trounced Mr. Buffet over this period by a total return of 18% while taking 60% market risk like Buffett. (The other 40% is in high quality bonds)

So why isn't the Journal writing about passive investment performance instead of this laggard? My guess is that it's pretty boring. Imagine the title:  "Market's Work Again, Investors Win." It's like saying there will be traffic in Los Angeles. Duh? This article is an interesting read because it's about a man's life. I think I'll trust markets and enjoy reading about Mr. Buffett's life separately.

-Christopher

In Year of Investing Dangerously, Buffett Looked 'Into the Abyss'

By SCOTT PATTERSON

Warren Buffett believes his best deals during the economy's biggest belly flop since the Crash of 1929 may well turn out to be the ones he didn't do.

Mr. Buffett slammed the door on one opportunity after another during the most harrowing stretch of his storied career. That impulse, he says, left him with the financial firepower he needed last month to strike the biggest deal he has ever done -- Berkshire Hathaway Inc.'s $26.3 billion purchase of railroad Burlington Northern Santa Fe Corp.

Read the full WSJ article "In Year of Investing Dangerously" »