rukawa

To me its more straightforward to bet on Asian devaluation then European devaluation. The problem with Europe is that the countries are pulling in different directions. Germany is competitive and other European countries are not. I think the Germans will strongly resist devaluation of the Euro so its not going to go very far. But the Asians situation is the exact opposite. They will probably be competitive devaluations in China and Japan. For instance, Angela Merkel is already saying in today's FT that "One must prevent...ECB from easing the pressure for improvements in competitiveness".

I completely agree. Humans are geared for fairness and so I think we tend to measure things more in terms of input than output. The person who works the hardest, is most technically proficient etc we judge as being he most deserving. And we feel if someone found any easy way to get something without being technically superior or working hard at it then they are somehow not deserving. Its a ridiculously evil flaw in humans that has resulted in incredible destruction and misery (socialism, national socialism, the ridiculous Japanese work culture). But often its not about any of that. Einstein for instance was very clever in choosing exactly the areas of science where he knew there were big problems with existing theory. There are many others who are orders of magnitude more technically proficient than Einstein and vastly more hard working. Einstein was more opportunistic in his choice of problems and very clever in his mode of attack.

[amazonsearch]Capitalism, Socialism and Democracy[/amazonsearch] A work of pure genius. This book is a critique of democracy and a critique of marxism. Its basic thesis is that the world is inevitably heading toward socialism though not for the reasons Marx came up with. I don't agree with the prediction but what stands out for me is the way Schumpeter argues and analyzes situations. In addition his analysis of democracy is pure genius. The book itself made me realize how poor my own analytic skills are and gave me a strong desire to improve them. It definitely makes you a better thinker.

I went to public school and I never learned any social skills. My personality is introverted and I did not pay insufficient attention to what other people think so I never fit in. I only really started to become more "normal" after my education ended. I have zero friends from elementary school and almost no friends from high school. Most of my friends I have made in the last few years. I would be willing to make a strong bet that there are home-school kids who have far better social skills than I ever will. A lot of this comes from personality and inclination.

I always felt like Klarman invested in NovaGold not because it really made obvious sense but more because it was a out-of-the-money option in case gold prices sky-rocketed in the case of hyperinflation. Klarman has always had a strong skepticism of QE's and believed something bad would happen. I never really believed his thesis of inflation. The same as I have never believed in Prem's deflation thesis. But my impression was that Novagold is basically an out of the money option on gold since the Donlin mine isn't economic at current gold prices.

This is basically deflation caused by debt repayment. Exactly what caused deflation during the Great Depression except this is confined to only one sector. There is however one difference...shale drillers cannot keep drilling without acquiring more debt and decline rates are high for tight oil in the first year. So the dynamics are interesting. Shale oil producers have to keep pumping oil to repay debt but cannot increase production without raising more debt. Thus production will decline probably substantially after the first year and then level out. If oil prices go down many marginal shale drillers will stop producing.

I have heard this many times but I don't know what exactly this statement means for small investors. IB claims that their execution is better than other brokers. For a large trader this is probably important. But how does a small investor benefit. Is it in small stocks?

In Canada, we have funds called HISA's. High interest saving accounts. They are liquid, have CIDC protection and pay a interest rate similar to a high interest savings account. That is what I do in my investment accounts to get interest. I would say they are basically cash.

Commissions are already so low among discount brokers that they are no longer a deciding factor. As far as I am concerned, less than 10 dollar commission per trade which is the norm among discount brokers is essentially the same as free. My more important concerns are FX fees and breath of markets that I can access. Interactive Brokers is great in both these areas. Focusing on trade commissions in deciding brokers is penny wise but pound foolish.

The better question is ten years from now what will you regret not having done over the next ten years. Now obviously if one knew the answer to that question you would change things. So then the question is how can you get this information before hand. Some suggestions: 1) you look at what people regret when they are 10 years older than you 2) you talk to people who are somewhat older than you to gain some perspective. 3) You remain fully aware of the opportunities around you. Some possible regrets: 1) the person you marry or don't marry 2) not starting a business 3) not switching a bad job soon enough 4) not being aware of the opportunities around you.

It may be difficult to predict future cashflows but implicitly aren't we doing exactly that when we say stocks are cheap? You could proceed in the opposite direction and start with a stock that is cheap and ask yourself whether the cashflows needed to support the price you think it should be are reasonably attainable.

Yes just in the wrong country. Prem's thesis is right for China not the US. A consumer credit bubble does not produce deflation because you can't fire your wife or your children. A business/financial credit bubble produces deflation. United States bailed out the banks and the businesses never had a lot of debt so no deflation. Chinese businesses and banks have a lot of debt right now and this will result in deflation. Over the last 20 years Chinese businesses hollowed out a large part of American industry. The remaining businesses are ones where the Chinese don't have a competitive advantage since if they did the businesses would already be gone. So Chinese can lower labour costs all they want and American workers and companies will be largely unaffected. I would argue that Chinese deflation will in fact be good for the United States since business will have even fatter profit margins due to a cheaper Chinese supply chain. The basic fact is that the world has been experiencing the deflationary impact of China for the last 20 years. We are already good at coping with it.

Interesting article on what is going on in Germany with coal and renewables: http://wattsupwiththat.com/2014/12/10/the-unsinkable-german-anti-co2-titanic-just-found-its-iceberg/

I had this problem for 4 years and I recently solved it. My solution was to develop a habit. The key to creating a habit is consistency. Initially it doesn't matter what you, all that matters is that you are consistent. Initially my habit was to spend 1 hour a day on investing. I found this too difficult so I dropped it to 15 minutes. I maintained that for 60 days without exceptions. I used the Seinfeld calendar to keep track of progress. After this I upped my time to 1 hour and maintained this for 2 weeks. Then 1 hour 15 minutes and maintained this for another 2 weeks. Now I am at 1 hour 30 minutes a day. My eventual goal is 3 hours a day (about the amount of time Berry spent when he was a surgeon) but I am delaying any increases until I deal with other areas of my life that need attention. In addition I spend 2 hours a day commuting during which I read WSJ, Financial Times and occasional business magazines. This habit was much easier to develop because there was a discrete and well-defined trigger for the habit (getting on the bus).

I don't really believe that speed reading is beneficial. I prefer this approach: http://www.amazon.com/How-Read-Book-Intelligent-Touchstone/dp/0671212095/ref=sr_1_1?ie=UTF8&qid=1418089895&sr=8-1&keywords=how+to+read+a+book

I think Montier confuses correlation with causation. He looks at the focus on shareholder value as the cause of declining returns. I think its the other way around.

I never had to make a decision like this but to the extent that I have made these decisions my calculus is usually the same: I maximize the minimum. I try to optimize for the reasonably probable worst case (lets say >15% probability of occurring). I don't make optimistic assumptions. I make reasonably pessimistic assumptions. Here is how I would approach your situation: Move to city - I will lose wife's family support, I will lose the great childcare, I will probably hate my job because a job is a job is a job and my wife may resent me if things don't work out. In addition there is a high probability my wife will hate her new job. Stay - I will hate my job but everything else will be intact. I would choose option 1 based on this analysis. It is not clear to me that your worst case in moving is better than your worst case in staying put. And because of this I would not make the move.

Good question. I guess I was thinking about servicers throughout the supply chain which was probably lazy on my part. Macro services pipelines so they are less directly effected by oil price drops but they are still impacted. The companies that I would expect to be hit hardest are the upstream servicers. Especially the ones servicing shale companies.

The oil servicers will be future multibaggers. They will get completely demolished as oil companies cut back on investing and they will probably increase by something like 3x or more when investment returns as oil prices rise and multiple oil companies are trying to book orders in a future consolidated service industry at the same time. The servicers are the most leveraged bets I know of. I would look for the whole think to play out on the order of (1 yr my expectation x 3) = 3 yrs. Right now companies like Macro Enterprises are already tempting me. But I will procrastinate.

Pzena is investing in Gazprom: http://imarketreports.com/the-long-and-short-of-sohn-london-barrons.html http://www.pzena.com/uploads/documents/Pzena_Investment_Management_Newsletter/PzenaNews4Q13.pdf

Excellent article!

He tends to remind me and others of Malone in his style of operation.

Coal miners currently being shorted by hedge funds http://online.wsj.com/articles/hedge-funds-bet-on-coal-mining-failures-1416790137

I heartily agree!!

Excellent. Thanks.