Buffett’s alpha: further explanations from a behavioral value investing perspective

Warren Buffett has had extraordinary success as an investor, but there is no agreement as to why. Some academic researchers attribute his performance to mere luck. Frazzini et al. (Financ Anal J 74(4):35–55, 2018), concluded that his alpha is due to leveraging safe, high-quality, and cheap stocks. However, there has been no analysis to date of Buffett’s performance from a behavioral perspective. We argue that Buffett’s success is partly due to qualitative and psychological factors, including tenacity, patience, avoidance of overconfidence, organizational culture, and the reputation effect. Using information from shareholder letters, writings, interviews, and speeches by Buffett and his colleague Charlie Munger, we demonstrate how such psychological factors, together with the quantitative findings of Frazzini et al., render a more complete and satisfying explanation of Buffett’s alpha.

     

Advancing heritage tourism in the central Karoo: The South African War Battlefields Route

ABSTRACT

Tourism and tourism development have the potential to make a positive impact on a region’s economic development and sustainability. In this sense, the central Karoo has a great deal to offer heritage tourists. As there are numerous battlefield sites associated with the South African War (1899–1902) (previously the Anglo-Boer War) the central Karoo offers a unique development opportunity to demarcate a designated battlefield route dedicated to the war. This study investigated the potential for the development of the proposed route by involving potential stakeholders (specifically product owners and government officials) on the route. The study was qualitative, and 33 interviews were conducted. Thematic content analysis was used to analyse the data. The main findings indicate a need for the development of the route and the establishment of a South African War Battlefields Route Destination Marketing Organisation (DMO).     

Underperformance of Actively Managed Portfolios: Some Behavioral Insights

Abstract

Two glaring anomalies in investment management are apparent: (1) after fees, active portfolio managers do worse than market indices, and (2) clients continue to pay for services they don’t receive. The purpose of this paper is to offer explanations of these anomalies from a behavioral perspective. We explore some of the cognitive biases that perpetuate active management and subsequent underperformance, including herding, disposition, and endowment effects, as well as conservatism and status quo biases, overconfidence, and agency problems. Investors’ continued use of active managers despite persistent disappointing returns is attributed to being victims of framing effect, hot-hand fallacy, lack of knowledge as well as intimidation or insecurity, and status quo bias. We propose some ways that portfolio managers and investors could improve their decision making.     

Ecotourism impacts in the Nicoya Peninsula,Costa Rica

Ecotourism promotes responsible travel to natural areas, environmental conservation and the well‐being of local communities. Eco‐lodges are an important component of ecotourism ventures but an infrequently researched component of this field. Considering their influence on the natural environment (design and operation) and local communities (employment practices and purchases), the success of ecotourism depends, in part, on the performance of eco‐lodges. This project studies the effects of the Punta Islita (PI) eco‐lodge on the Nicoya Peninsula, Costa Rica. An interdisciplinary nested‐scale analysis, combining guest and household interviews with multi‐temporal remote sensing analysis of forest cover change of the lodge and surrounding areas, is used to evaluate the environmental, economic and social impacts of ecotourism in the region. Our results show significant positive contributions of the PI eco‐lodge on forest cover, environmental conservation, and local economic incomes within the surrounding communities. For local livelihoods, the PI eco‐lodge was seen as having positive social, cultural and economic impacts for nearly all societal variables for both employees and their neighbours. The PI eco‐lodge was also perceived as reducing alcoholism, drug addiction and prostitution, where conventional tourism on the Peninsula was shown to increase these ‘societal ills’. Land value and product pricing were the few variables believed to have increased as a result of tourism on the Peninsula. For conservation, the PI eco‐lodge property had the highest rates of reforestation within the Nicoya Peninsula and remains the scale most reforested in both forest cover change and total forest cover. In fact, at the landscape scale, we find that the Pacific coast of the Nicoya, where the bulk of ecotourism occurs, has undergone reforestation, whereas forest interiors have been deforested. Historically, reforestation occurred as cattle ranching credit programs were halted by the government and households in the area left to find better job opportunities. The PI eco‐lodge, as a source of good employment, resulted in worker migration back to the surrounding area, resulting, in some cases, in increased deforestation. Overall, we feel that the PI eco‐lodge serves as an example of successful ecotourism. However, increasing development in the region, in particular by standard hotel operations and large condo developments, seeks to capitalise on the region's natural beauty and may reverse land cover trends if they are not accompanied by adequate forest conservation strategies and stresses the importance of monitoring and assessing the impacts of accommodations tied to nature‐based tourism operations. Copyright © 2010 John Wiley & Sons, Ltd.