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Straightforward Investing Since 1969

The investment advisory firm of O’Brien Greene & Co. provides independent investment management to a diverse clientele. Individuals, families, and corporate retirement plans make up the majority of clients, although longtime clients also include trusts, insurance companies, and charitable endowments. We seek the preservation and growth of capital through good and bad markets, and our investment strategy emphasizes several themes: simple, transparent, separate accounts; direct ownership of high-quality stocks and investment-grade bonds; diversification across the market; customized portfolios with a high degree of personal attention. The firm has more than $270 million under management and its offices are located in suburban Philadelphia in the borough of Media, Pennsylvania.

Review & Outlook

Our take on the investing, financial, & economic themes of the day

The Changing Structure of the Economy

24 March, 2015 by Ben O'Brien in Commentary
What makes the tech bubble debate that I wrote about in the last post particularly interesting is that despite the prevalence of what appear to be outlandish company valuations, there is of course as always another side to the story. Technology is undoubtedly changing the structure of business today.  Motley Fool columnist Morgan Housel, recently quoted a line that’s been going around on Twitter: In 2015 Uber, the world’s largest taxi company owns no vehicles, Facebook the world’s most popular media owner creates no content, Alibaba, the most valuable retailer has no inventory, and Airbnb, the world’s largest accommodation provider owns no real estate. All of these traditionally non-tech sectors, media, transportation and hotels, are now being transformed by technology companies. You could add many more industries to this list. The problem is that 1) a lot of copy-cat tech companies that are not innovative or ground breaking are trading at astronomical ... read more...

Bubbles and Dead Unicorns: A Technology Investing Update

20 March, 2015 by Ben O'Brien in Commentary
Last summer I wrote a series of posts on the debate about whether or not there is a bubble in technology stocks and start ups. Less than a year later the situation has escalated substantially, and one of the most vocal defenders of tech stocks from last year is now urging caution. My comments last year centered around the debate over the private taxi cab hailing service Uber. (Is Uber worth 17 billion? and Uber is Delivering Ice Cream? and Disrupting the Theory of Disruption). When it was valued at $17 billion in the spring of 2014, valuation expert Aswath Damodaran cried foul. He did his own valuation which came to a $6 billion price tag. Then in a much-watched confrontation that played out on Damodaran’s blog, venture capitalist and Uber investor Bill Gurley pointed out the flaws in Damadaran’s thinking. He said, among other things, that Uber was not simply trying to capture a share of the global taxi cab business but was actually expanding the whole market. Rather ... read more...

The Optimal Vehicle for Successful Long-term Investing

Clients of O’Brien Greene have the advantage of owning their investments through separately managed accounts, which may be the best way to invest over the long term.  Let me explain. In his 2011 letter to shareholders of Berkshire Hathaway, Warren Buffett defined “investing” as follows: the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power – after taxes have been paid on nominal gains – in the future. Buffett’s definition came to mind as I read John Authers’ recent column in the Financial Times (registration required), which reports on a recent study about the relative importance of diversification versus fees in investing for the long-term — from 1973 to 2013, that is.  The study, which was conducted by the well-regarded money manager Mebane Faber, shows that a variety of different asset allocation strategies have strikingly similar results.  Faber looked at a number of celebrated ... read more...

The Unappreciated Risks of Unconstrained Bond Funds

26 February, 2015 by Matthew O'Brien, Ph.D. in Commentary
I’ve looked over dozens and dozens of 401(k) plans lately (companies must file information about their 401(k) plan with the Department of Labor, which makes the information publicly available), and one commonality that stands out is the sheer number of plans that include one of the PIMCO bond funds formerly managed by investing guru Bill Gross.  In many of the plans I looked at, the PIMCO funds served as the core fixed-income investment option.  PIMCO is now net of Gross, as the Financial Times ‘Lex’ column wittily put it, since he was pushed out of the firm last year due to erratic behavior — both his own and his funds’.  But before the “Bond King” was deposed from the company he founded, institutional and individual investors alike herded like lemmings to Gross’s funds, especially PIMCO Total Return. I highlight PIMCO Total Return because its prominence is part of a trend that has seen the growth of so-called unconstrained bond ... read more...

What Drives Economic Growth?

20 February, 2015 by Ben O'Brien in Commentary
Bank of England chief economist Andrew Haldane recently gave a well-written and wide-ranging speech “Growing, Fast and Slow” on the sources of economic growth. Haldane observes that for most of history living standards were relatively fixed. The average person in Biblical times or even much earlier did not live that differently than the average person in the 18th century. Then around the year 1800 something changed, and ever since the standard of living has been rapidly increasing (see chart below). This growth of course hasn’t come all at once and is not uniform across countries. For instance Haldane illustrates the difference in growth between Italy and China: Consider two economies – China and Italy. As recently as 1990, the aggregate annual income of these two economies was roughly equal.2 Now let’s run these economies forward, with China growing at more than 10% per year, Italy by less than 1% per year. By 2014, what do we find? Due to the magic of compound ... read more...