Friday, September 28, 2012

Nassim Taleb quote

“The problem here is the notion of “better,” this focus on skills as leading to success. Random outcomes, or an arbitrary situation, can also explain success, and provide the initial push that leads to a winner-take-all result. A person can get slightly ahead for entirely random reasons; because we like to imitate one another, we will flock to him. The world of contagion is so underestimated!” –Nassim Taleb, The Black Swan

How to Get to Mars


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Related link: Roving Mars: Exploration of the Red Planet

Curiosity goes to the flow


African spiny mice can regrow lost skin

Found via Naked Capitalism.

Chris Anderson on CNBC


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Related book: Makers: The New Industrial Revolution

Thursday, September 27, 2012

The "dividend tax" cliff approaches: Implications for stocks – By Aswath Damodaran

Excerpts from Charles de Vaulx Interview

Below are excerpts from an interview that Charles de Vaulx  gave to the team at Value Conferences and The Manual of Ideas. Charles de Vaulx is one of the keynote speakers at the European Investing Summit 2012, which I’m very much looking forward to.

Charles de Vaulx joined International Value Advisers in May 2008 as a partner and portfolio manager, and serves as chief investment officer, partner, and portfolio manager. Until March 2007, Charles was portfolio manager of the First Eagle Global, Overseas, U.S. Value, Gold and Variable Funds, together with a number of separately managed institutional accounts.

To secure your spot at European Investing Summit 2012, go HERE. The current 40% special discount expires Friday, September 28th.

Excerpts -- Charles de Vaulx:

Q: You describe your investing approach as cautious and opportunistic. How is that reflected in security selection and overall portfolio construction?

A: Well, I think I’ll try to answer your question in a sense of how that cautious and optimistic approach is reflected today, as we speak, in the overall portfolio construction of our funds and the way we pick stocks.

I think that our portfolio today is truly eclectic and multi-cap. Of course, if you look at the top ten holdings you’ll find mid-cap or larger cap stocks.  But if you look at our holdings in Asia, where statistically today the small cap stocks are much cheaper than the large cap stocks, you will find a wide array of stocks. We also hold some mega-cap stocks: Total [TOT], I don’t know if Berkshire Hathaway [BRK] qualifies as one (probably) as well as tiny, little stocks in Japan, Korea or Switzerland. We own a billboard advertising company in Switzerland called Affichage [Swiss: AFFN], and it’s quite small.

You also see our cautious and opportunistic approach reflected in the fact that we own some bonds. In the IVA Worldwide Fund here in the U.S., we have a little less than 9% in high-yield corporate bonds, mostly a residual from a lot of bonds we were buying late ’08-’09. So, as a result, many of these bonds will be maturing shortly in the next year or two or three or four. So it’s short-duration, high-yield corporates. The yield is not huge. Today, we’re talking about 4%, but these are what we deem extremely safe instruments and because the duration is short, there’s no interest rate risk there.

You also will notice the eclectic nature by the fact that we have some sovereign debt, and it’s approximately 5.1% of the portfolio. It’s mostly short-dated government debt from Singapore. The coupons, the yields, are de minimis. Here the attempt on our part is to hopefully get an equity-type return out of the underlying currency. The hope is that the Singapore dollar will keep appreciating over time and, of course, in two years from now when those bonds mature the idea is to just roll them over and buy new similar short-dated bonds and to remain exposed to the Singapore dollar. Because that country doesn’t have much of a fiscal deficit, there’s not much of a long-dated government bond market to begin with.

You’ll see the eclectic nature by the fact that we hold some gold in the portfolio, both bullion and gold-mining shares. I am happy to have convinced Jean-Marie Eveillard in late 2001 that gold-mining shares were so obscenely expensive, overpriced, that if we wanted exposure to gold we had to modify our prospectus to give ourselves the right to hold gold bullion. It’s been a great move!  We own a few gold mining shares, but it’s really de minimis and only in our U.S. registered mutual funds.  Our preference remains, by far, towards holding gold bullion.

You’ll notice that at the end of June [2012] we had 12.4% in cash. In some ways you may want to view those short-dated, Singapore dollar bonds as quasi cash in Singapore dollars. The fact that we’re not fully invested tells you that we are worried that we think that, by and large, stocks are not dirt cheap enough to be fully invested.

If you look at the kinds of names we own in stocks or at least if you look at the top-ten holdings, you’ll notice that the balance sheets of the companies we own are very strong. We are very fond of the expression Marty Whitman coined a while back, which is that it’s not enough for a stock to be cheap, it also has to be safe – “safe and cheap”.  Safety starts with the balance sheet.

The cautiousness of the portfolio is expressed by the fact that we are making some negative bets. We have virtually no financials except for a few insurance brokers, except for – and we may talk about it later – some tiny positions in Goldman Sachs [GS], UBS [UBS]. Financials in the U.S. are slightly too expensive and in Europe we think that most banks remain grossly undercapitalized.

Another negative bet you’ll notice is that, other than a few stocks in South Korea, we have virtually no exposure to emerging markets.  We have no direct exposure to the BRICs – Brazil, Russia, India and China – because even though these stocks have come down a lot last year and some of them this year, we believe that these stocks are dead. We are cautious and worried about what’s going on in China. We believe that a soft landing is in the cards, and hopefully that will not become a hard landing.  Any sharp slowdown in China will have major consequences for commodity prices, which in turn will hurt many emerging countries.

Some specific countries like India have obvious issues with inflation and current account deficits, not to mention problems with their electricity. We’ve seen in Brazil over the past year-and-a-half how government intervention has had the ability to hurt investors.
Investors in Petrobras [Sao Paolo: PETR] have seen President Rousseff, basically ask the company to think more about what’s good for Brazil Inc. as opposed to doing what’s right for the company’s shareholders.

Also, we worry about what’s going on in Europe. We’re not sure what the outcome will be. It’s a big unknown and the way we express our skepticism towards what’s happening in Europe is by being 65% hedged on the euro.  We are willing to hold quite a few European stocks because we believe that many of them are multinational and not necessarily that Euro-centric.

Conversely, let’s not forget that quite a few American companies have a lot of their revenues in Europe.  Also, even in the instances when some of our European stocks are quite Euro-centric in terms of where their business is conducted, we think that some of these businesses may not be as cyclical as others, or if they are, the price of the stock may already reflect that it’s going to be a difficult economic environment for a long time in Europe. So, in other words, there are many stocks in Europe where we think the bleakness of what’s going on has already been priced in.

Q: You state that you seek investments in companies of any size that typically have one or more of the following characteristics – financial strength, temporarily depressed earnings, or entrenched franchises. What are some examples of these temporary challenges, temporary depressed earnings for otherwise financially strong and entrenched businesses?

A: I’ll give you an example from the past and a more recent example. I remember in the late ‘90s we bought McDonald’s [MCD], the fast food company. Why? Because we were impressed by how global they were, much more global than some of their competitors. We also, early on, understood what Bill Ackman saw a few years later, which is the real estate angle, the fact that they own so much real estate, a lot of it they rent out to franchisees.  Addressing your question of temporary challenges, the reason why that stock became so cheap back then is that the company was suffering because the food had become very bad — much worse than the competitors. And the service — there were many complaints about the quality of the service.

We felt that those two issues were fixable. Once those issues were recognized by top management, they were eventually able to fix them and the stock over time has gone up extensively. A more recent example would be was last summer, News Corp. [NWSA], Murdoch’s media company. They had the scandal associated with their tabloids in the UK. The stock came down and, yet, we were comfortable building a decent-sized position. The company had a very strong balance sheet, so we thought that they could suffer having to pay some fines.  With hindsight, the balance sheet was so strong that, in fact, the company has been very aggressive buying back their own shares since then. On a sum of the parts basis, a year ago, the stock fell as low as $15 or $16. We had, on a sum of the parts basis, a value of around $30.

News Corp. is a very different company than it was 20 years ago. News Corp. almost went bankrupt in the early ‘90s and at the time it was mostly newspapers, magazines, but today’s businesses, BSkyB, Fox, there’s very little print, in the sense of being threatened by the Internet. These are very powerful businesses— one of the businesses is 20th Century Fox, which is a decent business, so pretty un-cyclical businesses with no major immediate sort of threat to their businesses – high margin businesses, a very strong balance sheet.

The way we interpreted the scandal is, we thought it had a silver lining because via some super-voting structure, Murdoch controls the company. We thought that the scandal – because it’s such a public business– he would be forced to improve corporate governance, which I think he has. We felt the Chief Executive Officer, Mr. Carey, was very competent as was the predecessor, Mr. Chernin. We realized that the super-voting control allowed him to make some mistakes in the past, but small mistakes.

He lost a lot of money when he overpaid for Dow Jones, the publisher of The Wall Street Journal. He overpaid for MySpace, but in the grand scheme of things these were small deals and, conversely, to his credit as a media guy, he saw the changes that were happening in the newspaper industry and moved away from that over the years. Today, the stock is at over $24. I think that was a good example of what we thought was a temporary challenge and one that was limited to just one part of their empire.

One stock that we’ve bought over the past six, nine months is a French-based company called Teleperformance [Paris: RCF]. They run corporate call centers, and that’s a case where all of the earnings pretty much come from the United States. They’re very powerful in the U.S. In fact, for all practical purposes, the company should be headquartered and listed here. It’s sort of an accident that it is listed in France. The French founder happens to live in Miami, and it’s an interesting case where the French operations are losing a lot of money.

It’s much harder in France than in the U.S. to fire people and so they are not able to stop the bleeding right away in France, and I think we feel that we can quantify what those losses will be. Worst case, the company can hopefully shut down the business over time, and I think those losses in France mask the quality of their earnings in the U.S.

Historically, there have been many instances where we have dabbled a lot in what we call high quality, yet, cyclical businesses.

If you think about temporary staffing companies – Randstad, Manpower; if you think about the freight forwarding companies –  Kuehne + Nagel, Panalpina, Expeditors International… If you think about the advertising companies, billboard advertising, they are good businesses in the Warren Buffett sense of return on invested capital — service businesses, high returns on capital, high free cash flow. They are cyclical because, oftentimes, other investors have a shorter-term horizon than we do. Whenever the economy goes south, in the world or in the country, these stocks go down, sometimes excessively so, so that the stocks implicitly forget that there’s a prospect that it’s just a cyclical downturn, not a secular change in the business. So we’ve often been doing some of this in the past.

Q: When it comes to Europe, most of your investments there are in companies headquartered in France and Switzerland. Why not more in Germany or peripheral European countries?

A: Again, great question. Let me start with Germany. In the past, we have had quite a few investments in Germany. We used to own in the early 2000s, late 1990s-2000s, Buderus [formerly Frankfurt: BUD]. It was our largest holding. Buderus is a boiler manufacturer. We’ve owned shares such as Vossloh [XETRA: VOS], Axel Springer [XETRA: SPR], Hornbach [XETRA: HBH3], the DIY retailer and so forth, but the reality is that most companies in Germany are not listed. If you think about industry, industrial companies in Germany, they are not listed because they belong to what the Germans call the mittelstand. The mittelstand are those thousands and thousands of basically small and mid-size companies, many of which are family-owned, and these companies are not listed. All those great German industrial companies basically are not available in the stock market.

Now, among the companies in the stock market, many have been recognized as good companies and so the stocks are no longer cheap — if you think about some of the auto manufacturers like Volkswagen. So for the time being, we don’t have much in Germany, although we did buy, a month ago, a large industrial German company.

Switzerland is an interesting country where there are many quality companies. Even though we’re value-oriented, we start our process with trying to identify not so much cheap-looking stocks, but quality businesses. We like quality and then we hope and pray that somehow, one way or the other, we can get it for cheap.

Switzerland has so many great businesses, whether it’s Kuehne & Nagel [Swiss: KNIN], which is an even better freight forwarding company than Expeditors International here in America. Nestle is a wonderful food company, better in my mind than Kraft [KFT]. Geberit [Swiss: GEBN] makes great plumbing products. Lindt & Sprüngli [Swiss: LISN], as I’m sure you know, makes delicious chocolates, and so it’s our bias to its quality that oftentimes has led us to Switzerland. Adecco [Swiss: ADEN] is a leading temporary staffing company, has much higher margins than Manpower [MAN], has higher margins than Randstad [Amsterdam: RAND]. They just have top-notch companies in Switzerland, and sometimes we are lucky to get them cheaply.

France is an interesting country because even though France has had and today has those socialist tendencies, France has an amazing number of great businesses, which oftentimes are global leaders. Think of Pernod-Ricard [Paris: RI]. Pernod-Ricard started as a little family-controlled business in the south of France and through astute management and acquisitions they have become a leader in the sale of liquor competing very well against Diageo, which is best-in-class in that industry. Think about L’Oreal — what a wonderful, global consumer company.  And of course everyone knows that France is the home of stocks such as LVMH and Hermes, the luxury good companies.

In France, we own Sodexo [Paris: SW] a food catering company. They compete against Compass [London: CPG] in the UK. Sodexo is a very well-run, global company. They have a huge subsidiary here in America, Marriott Services, which they acquired a long time ago.

There’s a stock we don’t own now but we’ve owned in the past. It’s become somewhat of a darling, Essilor [Paris: EI]. They are, by far, the leading company worldwide that manufacturers lenses for glasses. 

We’ve owned in the past Bureau Veritas. It’s a little bit like ISS [Group] in Switzerland. It’s an inspection service company and they have big market shares in many specific niches. It’s a service business, non-capital intensive. 

France has companies such as Legrand [Paris: LR]. Legrand is the leader worldwide in electrical switches.

France does have those global companies that are very good at what they do and, at the same time, many of these companies are family-controlled. We at IVA believe that more often than not family-controlled businesses do better than other types of business and could not agree more with Tom Russo from Gardner Russo & Gardner on that topic.  One of his big themes is that he loves, for the same reason we do, family-controlled companies because they have a long term vision and often times do great things.

The final point I want to make about France, and it’s important from a protection of minority shareholders standpoint, is that France is a pretty good place to be a minority shareholder. When there are takeovers in places like Germany or Switzerland, not to mention Italy, you often, as a minority shareholder, can be abused.

In France, especially now, compared to 20 years ago, minority shareholders are well treated when there are squeeze-outs and takeovers. The protection of minority shareholders is pretty high in France. That’s important because it just so happens that quite a few of our companies, not by design, get taken over, and when that happens we want to be well protected.

If you look at places like Italy, there aren’t that many listed companies, sort of the same reason as Germany. All these companies, like industrial companies based in northern Italy, most of them are family-owned and not listed. So there’s not that much available in the stock market, and some of the other countries in Europe — Spain, Portugal, Austria — oftentimes the biggest stocks are just the big banks and insurance companies. Most of them are, especially on the banking side, grossly undercapitalized. They may look cheap, but they are certainly not safe. Again, not a lot of quality stocks are available in the Greek stock market, or the Portuguese or Spanish one.

European Investing Summit

Wednesday, September 26, 2012

Stupid Denials of Historical Recessions

Via The Big Picture:

Cold Exposure and Diabetes – By Art De Vany



WSJ Sheila Bair Interview (video)


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Tuesday, September 25, 2012

Mohamed El-Erian on CNBC


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Bob Rodriguez on CNBC


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Related previous post: Bob Rodriguez Commentary: ALL IN!

Jim Grant on Capital Account


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Jim Chanos on Short Selling, Hedge Funds, Election (video)

For Warren Buffett, the cash option is priceless


Monday, September 24, 2012

CEO Spotlight: Double Duty at DoubleLine

Found via The Big Picture.

Meredith Whitney on CNBC


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Education Nation: Rural Arkansas Town Rethinks High School

Thanks to Matt for passing this along. It reminds me of something Mohnish Pabrai talked about at the Pabrai Funds Annual Meeting this past weekend. He mentioned that studies show that the brain is developing quickly between the ages of 12 and 19, and that this is a time when kids should be beginning to specialize in something and really start pursing their interests, and yet our education system is rarely set up this way. He mentioned Warren Buffett (among others) as an example of someone who had gotten an early start on his passion around those ages and went on to become successful as he learned valuable lessons and got that spark during those important times. In Buffett’s case, he was doing things like renting out pinball machines and a Rolls Royce, among other ventures.




Steve Keen: Behavioral Finance Lectures 2012


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Related book: Debunking Economics

We Are Sailing Deeper Into Uncharted Waters - By Richard Fisher

It will come as no surprise to those who know me that I did not argue in favor of additional monetary accommodation during our meetings last week. I have repeatedly made it clear, in internal FOMC deliberations and in public speeches, that I believe that with each program we undertake to venture further in that direction, we are sailing deeper into uncharted waters. We are blessed at the Fed with sophisticated econometric models and superb analysts. We can easily conjure up plausible theories as to what we will do when it comes to our next tack or eventually reversing course. The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course. And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before.

TED Talk - Daphne Koller: What we're learning from online education

Thanks to Will for passing this along.


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Related link: Coursera

John Mauldin: QE Infinity: Unintended Consequences

There is an intense debate going on in the first-class cabin of Economics Airlines about the direction in which our plane should be pointed. And while those of us back in the cheap seats don't get to help decide, knowing where we will land is of intense interest to all of us. This week we listen in on the debate, in the form of speeches and academic postings passed back from first class for the rest of us to read. This type of debate also occurred when Greenspan held rates down at an abnormally low level for a very long time. The unintended consequence of that move was a housing and debt/leverage bubble. Are there potential unintended consequences to Bernanke's current monetary policy, which some are calling Quantitative Easing Infinity? I suggest you put up your tray tables and fasten your seatbelts – the ride could get bumpy as we explore QE Infinity: Unintended Consequences.

Fairholme Presentation on MBIA

Thanks to Will for passing this along.

Hussman Weekly Market Comment: Eating the Future




Thursday, September 20, 2012

John Mauldin’s Outside The Box: 2012 – The Most Important Year Yet in Technology – by Alex Daley




CNBC on Morningstar's Ratings (i.e. DoubleLine)


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Seneca quote

"Be careful, however, lest this reading of many authors and books of every sort may tend to make you discursive and unsteady. You must linger among a limited number of master thinkers, and digest their works, if you would derive ideas which shall win firm hold in your mind. Everywhere means nowhere. When a person spends all his time in foreign travel, he ends by having many acquaintances, but no friends. And the same thing must hold true of men who seek intimate acquaintance with no single author, but visit them all in a hasty and hurried manner." -Seneca, Letters from a Stoic

Alan Simpson on Capital Account


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This Day in Failure: September 20

I hadn't heard of this fact before:

Jim Chanos 2003 Statement to SEC

From Santangel’s Review:

Jim Chanos on CNBC

Link to videos:

Wednesday, September 19, 2012

William B. Irvine: Older and Wiser: Ancient Advice on Aging Well

Professor Irvine comes on around the 7-minute mark. His new book, A Slap in the Face: Why Insults Hurt--And Why They Shouldn't, that was mentioned towards the end of the talk comes out in February.


William B. Irvine: Older and Wiser: Ancient Advice on Aging Well from Center for Values in Sci & Tech on Vimeo.

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Three New Instructors Announced for European Investing Summit

One of the new additions is John Gilbert, Chief Investment Officer of General Re-NEAM. As regular readers probably know, I frequently link to Mr. Gilbert’s monthly letters, which are some of the best (and are available HERE). Mr. Gilbert also gave a presentation last year that I highly recommend: "Asset Management Perspective: Financial Crises--Danger and Opportunity"

To learn more or to sign up for the European Investing Summit 2012, go HERE.

European Investing Summit

McNamee: Apple Is Amazing, but Making Big Mistakes (video)

Thanks to Andrew for passing this along. The complete segment with McNamee, where he also discusses Facebook and Yahoo!, is available HERE.

Salman Rushdie on Charlie Rose


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Related book: Joseph Anton: A Memoir

Tuesday, September 18, 2012

Nassim Taleb quote (asymmetry)

“Put yourself in situations where favorable consequences are much larger than unfavorable ones…Indeed, the notion of asymmetric outcomes is the central idea of this book: I will never get to know the unknown since, by definition, it is unknown. However, I can always guess how it might affect me, and I should base my decisions around that.” –Nassim Taleb, The Black Swan

Conscience of a Gold Miner - Nolan Watson Interview

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Gina Kolata on Charlie Rose


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Related articles:

Human genomics: The new world of DNA

Bits of Mystery DNA, Far From ‘Junk,’ Play Crucial Role

Bill Gates: A Conversation with Steven Pinker: Has the World Become More or Less Violent over Time?


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Related previous post: Authors@Google: Steven Pinker

Bridgewater's Dalio on Europe, Economy, Strategy (video)


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Monday, September 17, 2012

A Tribute to Neil Armstrong – StarTalk Radio Cosmic Queries

Apple Share Price....

Apple Share Price at the end of September 2001-2011 and today:

Year    Share Price
2001    $7.72
2002    $7.22
2003    $10.32
2004    $19.29
2005    $53.38
2006    $76.65
2007    $152.81
2008    $113.17
2009    $184.56
2010    $282.54
2011    $379.69
Today  $699.78

Some interesting excerpts from the 2002 Annual Report (September Year-End):
  • The Company believes that personal computing has entered a new era in which the personal computer functions for both professionals and consumers as the digital hub for advanced new digital devices such as digital music players, personal digital assistants, cellular phones, digital still and movie cameras, CD and DVD players, and other electronic devices.
  • Introduced in October 2001, the original iPod portable digital music player utilized a 5GB hard disk drive allowing it to hold up to 1,000 CD- quality songs in a 6.5 ounce design…. In March 2002, the Company added a 10GB model to its iPod line, and in July 2002, the Company added a 20GB model and announced that all iPod models would be made available in Windows- compatible versions.
  • By the end of September 2002, the Company had 40 retail stores operating in the United States, 32 of which were opened during fiscal 2002. The Company has opened 11 additional stores during the first quarter of 2003. During 2002, approximately 39% of the Retail segment's net sales came from the sale of Apple- branded and third- party peripherals and software. This compares to 21% for the Company as a whole. With an average of 35 stores open, the Retail segment achieved average annualized revenue per store during the fourth quarter of approximately $12 million and had approximately 2.25 million visitors.
  • … the Company's Retail segment grew from 8 stores at the end of 2001 to 40 stores at the end of 2002. The Retail segment's net sales grew from $19 million in 2001 to $283 million in 2002.
Some interesting excerpts from the 2003 Annual Report (September Year-End):
  • The Retail segment's net sales grew to $621 million during 2003 from $283 million in 2002, an increase of 119%.
  • Net sales of peripherals and other hardware rose $384 million or 57% during 2003 compared 2002, which follows a $287 million or 74% increase in 2002 as compared to 2001. The current year increase was primarily driven by the $202 million, or 141%, year-over- year increase in iPod net sales to $345 million.
  • Although total Macintosh unit sales were down 3% in 2003, unit sales of the Company's portable systems were relatively strong primarily due to the 69% or 247,000 unit increase in PowerBook unit sales, slightly offset by a 4% or 30,000 unit decrease in iBook unit sales. The increase in PowerBook net sales of $468 million or 56% is due primarily to the success of the Company's new 12- inch, 15- inch and 17- inch models that were introduced during 2003.

Examining the Ubiquity of Private Equity

I just received a review copy of this book in the mail today. It looks pretty interesting.



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Howard Marks quotes

The quotes below are from the 27-page transcript of Marks’ Interview with Value Conferences and the team at The Manual of Ideas. The transcript is part of the 11 bonuses immediately available upon registering for the fully online European Investing Summit 2012. To learn more about the conference or sign up (great value for the money), go HERE.

Excerpts -- Howard Marks:

"The interesting thing about investing is what I call the perversity. The point is that it is so not intuitive. It is so not obvious — investing. A great example lies in the fact that, people think that to be a good investor, you have to understand companies. But the market has an understanding of companies, and if you understand the company the same as the market does, even if the market and you are right, you are not going to make any special profits."

"...when my son comes to me, who is a budding hedge fund investor, he gives me an idea, a stock, macro trend, or something like that, the first question I always ask is the same: Who doesn’t know that? That is really the question. When you think you know something, the question is whether the market knows it too. And if it does, then your idea has no relative superiority."

"...[investing] is really not a good business for people who don’t have some ego because you have to do the things that Dave Swensen describes as lonely and uncomfortable. I think it was [Jean-Marie] Eveillard who said it was warmer in the crowd, in the herd. But if you only hold popular positions, you can’t do better than average, by definition. And I think you will be very wrong at the extremes."

"The greatest example is this: If you went to the horse races, would you always bet on the favorite? The favorite, assuming the crowd is intelligent, which usually it is, is the horse with the highest probability of winning. That doesn’t mean that the favorite is always the best bet. You might have another horse that has a lower probability of winning but the odds are so much higher, that’s the smart bet..."

"[U.S. Treasuries] are a safe investment in the sense that the outcome is known and not really subject to variation. I think they are not a good investment because the known outcome is an unattractive one. Today you can buy the ten-year [Treasury] and with no risk, lock up the certainty of 1.9% return for ten years. Is that really a good thing to lock up?"

"What the investor has to do is weigh out on the one hand price and on the other hand reality. Everybody thinks very dire thoughts about Europe and the Euro, and I would be the last person in the world to argue against that position. Then the next question is, European assets are lower in price because of the macro conditions, but are the macro conditions being viewed too pessimistically?"

"Tenet number three of our investment philosophy says we are active in less efficient markets only. We probably wouldn’t do a hedge fund for large-cap New York Stock Exchange firms because the tendencies are that those would be more efficient than others. But emerging markets, yes. Japan, yes."

Q&A with Wilbur Ross



Paul Volcker on Greedy Bankers, the Ryan Plan, and the Fed

Found via The Big Picture.

Stocks Won't Repeat Lost Decade, Gundlach Says (video)

John Mauldin: The Direction of the Compromise


Hussman Weekly Market Comment: Low-Water Mark


Friday, September 14, 2012

Ray Dalio quotes

From THIS interview (After he also mentioned that he owns gold and thinks it is a good idea to own gold. He hinted that maybe a 10% position is a decent allocation, and that you should have a certain, limited amount in gold just like you have a certain, limited amount in cash, a certain amount in stocks, a certain amount in bonds, etc.).

“You should have a strategic asset allocation mix that assumes that you don’t know what the future is going to hold.”

“In every generation…there is a ruinous asset class [that] will destroy wealth. And you don’t know which one that’s going to be in your lifetime. So the best thing you can do is to have a portfolio that is immune, that is well diversified. That is what we call an all weather portfolio. That means that you don’t have a concentration in that asset class that is going to annihilate you.”

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Marc Faber on Capital Account

Faber was also on CNBC this morning (video clips 1, 2, 3, 4, 5).


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THE LITTLE BOOK OF TALENT by Daniel Coyle - Tip #21

I hadn't realized Daniel Coyle was out with a new book (The Little Book of Talent) until I saw an excerpt on Farnam Street. I very much enjoyed The Talent Code, and look forward to this, related book too.


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Related previous post: What it takes to be great

Bill Gates reviews “Moonwalking with Einstein”




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Related previous posts: