Thursday, December 4, 2014


James Montier interview (LINK)
One shouldn’t dwell too much on the semantics of a bubble. We at GMO define bubbles as a two standard deviation move away from the long term trend. And we are not quite there yet. We’d need another 10 to 15%. But let’s say it in simple terms: For all purposes, this is a hideously expensive market. I don’t care if it’s a bubble or not. It’s too expensive, and I don’t need to own it. But because this is a central bank sponsored near bubble, it hurts to stay away. 
Be patient. Don’t take it from me, take it from Winnie the Pooh: Never underestimate the value of doing nothing. Never forget: You can’t know the future. Hold a lot of dry powder now. 50% of our portfolio today is in cash or some form of short term bond holdings. If we do get a dislocation in equity markets, we will have the ability and deploy that dry powder. That’s the time to buy.
Jason Zweig: Lessons From Oil's Black Friday (LINK)

The Absolute Return Letter, December 2014: A Brave New World (LINK)
Over the next decade, the investment world is likely to be quite different from anything we have seen over the last 30 years or so. Interest rates will stay low for much longer than nearly anyone is currently predicting, the dividend investor will return to glory, passive equity management will win substantial market share from active managers, fees will fall much further than they already have, and some investment strategies which are only alternative by name, will struggle to survive in their current form.
Farnam Street - Innovation: The Attacker’s Advantage (LINK)
Related book: Innovation: The Attacker's Advantage
Charles Brandes sees the value in sticking to his hunch (and Russia) [H/T ValueWalk] (LINK)
Related book: Brandes on Value: The Independent Investor
Matt Ridley: Ants, altruism and self sacrifice [H/T The Browser] (LINK)

Book of the day (which was recommended by Alan Watts in You're It!: On Hiding, Seeking, and Being Found): Memories, Dreams, Reflections - by C.G. Jung