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To view this full letter with graphics, please download the PDF. Our pledge to investors includes the following statement “We will communicate with our clients about our investment performance in a manner that will allow them to properly assess whether...
In the Long Run
Investment Letters | December 31, 2005
At Diamond Hill, our core investment tenets encourage independent, businesslike, and long-term thinking. This piece discusses our thoughts on what constitutes the long-term and some of its practical effects on our investment approach.  The Eagles wrote a song about it....
Inverted Thinking Leads Us to Stock-Picking
Investment Letters | December 31, 2004
The efficient market theory suggests that while investors are not clairvoyant, they are rational, informed, and unbiased. Based on these conditions, one can expect that the current stock price is the best estimate of the true value for a security....
Of Models and Men
Investment Letters | June 30, 2004
Financial models are often used to quantify return and risk expectations. The purpose of these models is to capture complex realities in a form useful for decision-making. At Diamond Hill, the principal model we employ for evaluating equities was first...
The Times They Are A-Changin’
Investment Letters | March 1, 2004
"The line it is drawn the curse it is cast The slow one now will later be fast As the present now will later be past The order is rapidly fadin' And the first one now will later be last...
Stock Market Outlook – Forecasting the Next Decade
Investment Letters | December 31, 2003
“It is dangerous to apply to the future inductive arguments based on past experience, unless one can distinguish the broad reasons why past experience was what it was.” — John Maynard Keynes Applying Keynes statement to the S&P 500, the...
The Meaning of Risk
Investment Letters | June 30, 2003
Webster’s dictionary defines risk as the possibility of suffering harm or loss. While Webster’s is not infallible, we believe this definition is reasonably close to a common sense definition of the term. Thus, financial risk is the possibility the money...
History, Probability & Statistics, and the Financial Markets
Investment Letters | December 31, 2002
The philosopher George Santayana said, "Those who cannot remember the past are condemned to repeat it." Many investment "professionals" have taken this slogan to heart, spending an inordinate amount of time looking at the long ago past in an attempt...
5 Year Forecast & Our Investment Approach
Investment Letters | December 1, 2001
“Market commentators and investment managers who glibly refer to “growth” and “value” styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component – usually a plus, sometimes a minus – in the...
How Safe Is The S&P 500?
Investment Letters | August 1, 2001
September 11, 2001 – As the following newsletter goes to press, we mourn the tragedy of the terrorist attacks that took place earlier today. The devastation to humanity and freedom is immense and enduring. Our fiduciary responsibility requires us to contemplate the...
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