Author Archives: Devesh Shah

About Devesh Shah

Hi, I’m Devesh Shah and I’m pleased to meet you. As a professional, I was a co-inventor of the CBOE VIX Volatility Index, an equities and derivatives trader, and Partner at Goldman Sachs. My passions now mostly involve writing, teaching about investments, practicing yoga, playing the piano, and volunteering with a non-profit, Sponsors for Educational Opportunities (SEO), that opens up career and college pathways for underprivileged students of color. I am an alum of SEO. My hope for the months ahead is that I might share a few things I have learnt about investing.

Short Term Performance of Long-term Recommendations

By Devesh Shah

The eternal flaw of investment gurus, both on the web and elsewhere, is that they’re never held accountable for their bravado and bold recommendations. It is in the nature of the beast that one right guess lives on forever while an infinite number of horrendous recommendations vanish from the public mind. I think of Elaine Garzarelli, who made her fame from one right call – an impending market crash a week before the actual “Black Monday” crash in 1987 which saw the Dow drop 22% (7300 points in today’s terms) in a day – but somehow dodges rebuke for her Continue reading →

Artisan Developing World Fund interview

By Devesh Shah

An interview with Lewis Kaufman, founding portfolio manager of the Artisan Developing World Fund

My primary investment biases are two-fold. First, in general, I invest in public markets through low-cost, low-turnover passive vehicles. Second, in general, I invest in US equities. Both of those biases were arrived at through a combination of (painful) experience and careful research. That said, none of us benefit from being held hostage by our beliefs. In many ways, humility and self-doubt, curiosity, and the determination to keep learning are the hallmarks of our wisest citizens. And I aspire to learn from them. In consequence, I’ve spent a huge amount of time over the past six months talking with a cadre of the industry’s best emerging markets managers.

Home Bias

Investors worldwide have a powerful bias Continue reading →

Interview with Amit Wadhwaney: Co-Founder and Portfolio Manager, Moerus Capital Management

By Devesh Shah

Recently, I had a long chat with Amit Wadhwaney, the founder of Moerus Capital Management and the adviser to Moerus Worldwide Value Fund. He is a very thoughtful and seasoned investor. Here are some of his thoughts on his fund and his stock-picking style. I’ve presented a summary of my notes rather than an actual Q&A, but the flavor of their investing style will hopefully come through. Continue reading →

Just short of two cheers for active, international investing

By Devesh Shah

Readers know that I long ago concluded that active management rarely adds value to an investor’s portfolio. There are too many managers fighting over the same stocks. Very few of them have a meaningful Edge over the others. Most of those who add some value rarely add enough to overcome the drag imposed by their expenses and higher tax burden. Some few add serious value, but they are almost impossible to reliably identify in advance.

That said, I am about to commit two heresies in one column: I will suggest that you consider Continue reading →

In Defense of Taking Risk

By Devesh Shah

The S&P 500 Index peaked at 4800 in December 2021. Thirteen months later, at the end of January 2023, the Index is down 16%, at a level of 4076. Suppose you did a Rip Van Winkle and woke up just in time for the New Year 2024 celebration… and found the S&P 500 index trading at 2400, putting the index 50% below its all-time peak. Would you buy the market, perhaps doze off again, or would you sell? The record is clear: Continue reading →

Long-dated TIPS bonds: A margin of safety

By Devesh Shah

Happy New Year to everyone. May there be peace in your home, on the planet, in the stars, and in all living beings. I am very glad to share that I have recently published a book of children’s stage plays.

Growing up in Mumbai, India, I studied at a school where theatre and drama were an important part of our education. Many of our school plays were then drawn from English literature. A few years ago, I was asked to take on a project to translate nine plays written in Gujarati, my first language, to English. Acclaimed playwright Prakash Lala wanted to make his stories available to young children everywhere. The average 10-12-year-old child in India has a different upbringing than the American kid. Family, grandparents, household help, and even neighbors play a much larger role in raising the kid than we see in society here. I’ve enjoyed translating the plays, working with my own kids on editing, and recently publishing the book on Amazon. Look for the title “Nine Children’s Plays.” I hope you will Continue reading →

What Really Matters…is that we are American investors

By Devesh Shah

We are approaching the end of an extraordinary year, one that has left many of us – citizens, investors, employers, workers, and parents – feeling whipsawed, anxious and confused. Much of that comes from the sense that we can’t figure out what’s behind this year, so we don’t have much hope about managing, much less thriving in, the year ahead.

I entirely agree with your feelings, but I’m here to suggest that you take a deep, cleansing breath. We’re doing better than you know, and if we keep our wits about us, we’re going to do okay. Continue reading →

Kinetics Mutual Funds: Five Star funds with a Lone Star Risk

By Devesh Shah

The great charm of traditional index funds is that they offer broad market exposure at a low cost. Critics deride their diversification as “diworsification,” where a portfolio automatically contains too little of the really great stuff and too much of the really poor stuff. Bold and confident managers have staked their careers – or at least their investors’ fortunes – on their ability to find one or two great (and greatly misunderstood) companies and then pour resources into them.

At its peak, the legendary Continue reading →

Rebalancing, Portfolio Restructuring, Tax Loss Harvesting

By Devesh Shah

Down years in the financial markets are a heavy burden on asset holders. (We presume you’re noticed.) Holding assets through down years is the price we pay for earning long-term risk premia embedded in assets. Years like this are particularly challenging because the current downswing feels so very abnormal: it’s a correction in the financial markets (normal but painful) in which both investment grade bonds and speculative tech stocks are falling sharply and simultaneously (utterly abnormal and still painful), and the trajectory of the decline Continue reading →