giofranchi

Now I really have to leave the office for a match at my tennis club! ;D ;D But I will answer your questions with much pleasure tomorrow morning! Cheers, Gio PS What does GL! mean?!

Well, Mr. Carraro is Principal of Horo Capital (www.horocapital.it) and is well known in Italy, with a lot of connections in the business. Moreover, he already enjoys a relatively wide readers base, publishing the translation of both “Thoughts From The Frontline” by Mr. Mauldin and “The Absolute Return Letter” by Mr. Jensen. This of course is no certainty at all… But I hope it is not starting from scratch either! Thank you tombgrt! :) giofranchi

Thank you, shalab! With the exception of Lancashire, North America is where my stock market investments are… Yet, who knows? As my circle of competence grows, also the geographical scope of the newsletter might follow suit! Time will tell! :) Cheers, giofranchi

Yes! Italy is clearly much, much smaller! It won’t be easy, but the market is growing… And a few thousand subscribers will certainly be worth the effort! ;) Ah! What can I say? Mr. Carraro is a generous soul! ;D Thank you! giofranchi

Guess I will be forced to post with less assiduity on the board… ;D ;D ;D No, seriously: I understand what you mean, and that is the biggest risk I see too. Anyway, it has already been 6 months that I am working on it, writing about those businesses in Italian, and I hope by now I have at least some perspective on the true effort the project will require. Let’s hope I am not completely mistaken! Thank you! giofranchi

Mr. Ruggero Carraro is a friend of mine and the Italian partner of Mr. John Mauldin and Mr. Niels Jensen. I know a lot of you on the board are skeptical about the usefulness of investment newsletters, but I think you cannot really imagine how many people in Italy are wealthy, yet still don’t know English well… and therefore cannot invest in the North American markets by themselves! :o Mr. Carraro thought about and implemented an investment online platform for the Italian public, the content of which will be written and presented in Italian. That platform will be inaugurated here: http://www.borsaitaliana.it/trading-online-expo-2013/homepage/home.htm And will begin functioning next week. Mr. Carraro asked me to be a contributor, putting together an index of 50-60 North American owner-operators, and then managing a real portfolio. Though I actually cannot say what’s the Italian market for investment newsletters (you wouldn’t believe it, but the sector here is still in its infancy: very small, yet growing fast!), some elements made me accept his offer: 1) I don’t have to contribute with any capital of mine, so my risk is very limited. 2) It is an activity that I will manage by myself, I don’t need to pay any collaborator. My sole cost will be the use of my own time. 3) And here is what I like the best: besides translating ideas and concepts in Italian, there won’t be much additional work for me to do. Because basically the job is the same that is already required to manage my firm’s portfolio! 4) 20% of all revenues will be for me to keep (a new source of cash which I think is not bad at all!). You all are business savvy. So, I thought it would be wise to ask for your generous feedback. What do you think about this new venture of mine? Do you think it could be somehow successful, or you think it will turn out to be only a poor waste of time? Any ideas and suggestions would be very much appreciated! :) Thank you all, giofranchi

Paraphrasing Mr. Buffett, accounting is the language of business. giofranchi

--Russell Sage giofranchi

Thank you very much for posting this article! :) giofranchi

No, wait! I can agree with Packer that the bull market might go on for yet another while… but don’t tell me it has just started… please, look at the chart! It is 5 years now the market has gone nowhere but up… Isn’t that a good enough definition of a bull market? ;) giofranchi Well, you don’t want to make things too complicated, do you? … What you have written is what happens during “secular bear markets” … But do you really want to talk about that? If you do and care (but I am not sure!), 2009 as the end of the "secular bear market" is simply inconsistent with history, meaning what can be observed about “secular bear markets” of the past: 1) Inconsistent with the mean duration of “secular bear markets”: 9 years instead of 17 years. 2) Inconsistent with market valuations: in 2009 market valuations were still much higher than they were at other “secular bear market” bottoms. 3) Inconsistent with logic: in 2000 valuations were the highest ever reached, and the secular bull market just ending was one of the longest lived. Why then should we expect a shorter and a more benign “secular bear market”, instead of a longer and a tougher one? giofranchi

No, wait! I can agree with Packer that the bull market might go on for yet another while… but don’t tell me it has just started… please, look at the chart! It is 5 years now the market has gone nowhere but up… Isn’t that a good enough definition of a bull market? ;) giofranchi

I agree, but when I see danger, I usually want to start proceeding with caution… rather than to make an attempt at timing the exact moment that danger will materialize. So I am invested right now, even heavily, but not fully. giofranchi

--Russell Sage giofranchi He ignores scarcity of capital and margin of safety. I advise to read the book. You will surely understand that almost nobody in history understood scarcity of capital and margin of safety as well as Mr. Sage did. :) giofranchi

Can I ask why? giofranchi

Well, by definition in a deleveraging debts must be contained and get gradually reduced… So, if still a lot of people are purchasing bonds, that is basically the reason why it will take another 5 years for this process to be over! Surely we cannot cure debt problems with more debt. The logical conclusion is there will be only one place left to park all those newly created funds: the stock market. If I am not wrong, this is also what Mr. Tepper, one of the greatest bull out there, has said many times. giofranchi

Very good opposing view. I think we cannot ask for “black or white” in this kind of market. Instead, we must learn to accept so many shades of gray… So, the most important thing, imo, is to constantly ask yourself: what if I am wrong? And make sure you have a strategy that will be profitable in that case too. Completely out of the market? Certainly not! Fully invested? Well, I don’t like that either. Where in between? It is up to each of us to decide. What I don’t like about the comparison with Sweden in the ‘30s follows: if we agree that QE induces people to buy stocks, because in a deleveraging banks flooded with liquidity, instead of lending out more funds, use those same funds to buy stocks, well then we also should agree that it is very different if Sweden alone is down this path, or if the whole developed world follows suit. If everyone is buying stocks, sooner or later prices will become completely out of whack with real and sustainable earnings. At that point deflation will be almost inevitable… giofranchi

+1! Cheers! +1 giofranchi

giofranchi

No no! We clearly are in uncharted waters! But that’s exactly the reason why I think prudence, or, let’s say it in a fashionable way, “anti-fragility”, might serve us well going forward. :) giofranchi

WhoIsWarren, you already know that I couldn't agree with you more! ;) giofranchi

I continue to think it is extremely dangerous to make the assumption that something that has worked in the past for Sweden (very very little), will also work today for the US + Europe + Japan (very very big)… They are just orders of magnitudes away! Someone can do something, if nobody else is following suit… But what happens when everybody in the developed world is trying to do the same thing at once? Well, that’s when bubbles are formed! And bubbles end badly. On the other hand, I agree with Packer that cheap stocks are cheap stocks, and you should always look for them! giofranchi

giofranchi

Time to take bets on Frexit and the French franc? http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100025783/time-to-take-bets-on-frexit-and-the-french-franc/ This is basically what Mr. Charles Gave has been saying for years... giofranchi

Critical, most important skill, that can and should be developed by anyone! :) giofranchi

I agree, if you are able to think about “trading the stock market” as “a business of its own”. As a trader, you are able to employ a basket approach to investing, let’s say that you are able to invest 1% of your capital in 100 different stocks. And I wouldn’t mind investing 1% of my firm’s capital in “a gas station run by a lazy manager and selling for 50% of book value or 4 x FCF”. I wouldn’t mind it at all! But entrepreneurs usually deal with only a few businesses at a time… And I would never invest in a “a gas station run by a lazy manager and selling for 50% of book value or 4 x FCF” 30% of my firm’s capital… What I still have a lot of trouble doing is putting on the hat of the entrepreneur at 7.00 am, switching to the hat of the trader at 11.00 am, becoming once again an entrepreneur at 2.00 pm, and ending my working day as a trader at 7.00 pm. That’s why I still have a lot of room to improve! For now, my firm’s equity is up 17.5% YTD… with a lot of cash and hedges… not really much to complain about that! :) giofranchi