Myth465

Mr Grant is quite this busy man. http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/16_James_Grant_files/Jim%20Grant%204%3A16%3A2011.mp3 http://www.gurufocus.com/news/129130/jim-grant-interview-on-world-king-news

I have looked at MSFT leaps on and off for about a year. It seems like an ok place to park cash but whats the catalyst (primarily related to leaps not common). Regarding common, I agree its better than cash. TWA - you tend to move alot, but are always in interesting investments. omagh - thanks for the Hoisington link. He is always interesting to read. He either has been early or wrong. Based on the quality of people who read / listen I would guess early. What you wrote seems interesting and counter intuitive. I plan on reading it tonight. ---- I said about 6 months ago that I hated the market, but love my portfolio. I still like my portfolio though a bit less, but still hate the market. It should be interesting. I wont be selling, but this new cash pile wont slip through my hands as easily.

I think everyone is Sokoled out, he is starting to dominate the board like Biglari.

Can you give me the one paragraph summary on why you like ROIC? As of 12/31 they owned 17 properties and a bunch of cash. Why do you find that compelling? Prune here is my thesis. http://cornerofberkshireandfairfax.ca/forum/index.php?topic=3831.0

I agree. If I were Bernanke and didnt have control of Congress, I would go with inflation thinking probably incorrectly I can put that genie in the bottle when the time comes fairly easily. Bets the hell out of deflation. Its why I hold oil. The other thing though is China, that scares the hell out of me.

If you like commercial realty ROIC seems like a safe place.

True but if you are wrong you are 100% wrong. It seems like you have placed your bets and so far its worked out beautifully. What about a slow down in China / fall in commodities?

I tend to ignore my own and others macro predictions, I mean what the hell do I know lol. I am a classic worry wart, so I focus on Parsad and others advice of buy cheap / sell dear. I like ok businesses at 5x FCF and turnarounds. Perhaps thats too much to ask for in a no risk free return world. The huge kicker for me is the lack of no brainers / places to put my capital. I review every VIC idea (3 months late), and most value ideas on many blogs / gurufocus. I also do a bit of screener (very light), and look for cheap sectors (like energy during Horizon). The only thing of interest right now are the packer style stocks. High cash flows and high leverage. Value goes up, as debt goes down. I like them but cant / wont build a portfolio around them. I have 2-3 of them (FTR) and am looking at CKEC and RDI as well to add. I also own (SSW, WDC) and am looking at leaps on the bond insurers from that list Packer gave. CSC - Looks interesting, tech seems to feature. High cash, low / no net debt, high cash flows across the board, must be some unwritten rule in the tech space. Uccmal - The election year bet has gotten me pretty far. I just dont know how long they can walk the tightrope. If the fed sees inflation where they dont want it I think they will be forced to react? I like what I own alot, but dont see much value going forward in new ideas. PEs arent cheap at 15x, and margins are at all time highs. Something has to give at some point (I am sure this post was made in 1995 - 1997). You are probably right, it will happen after 2012. broxburnboy - I agree which is why I have been mostly fully invested. That and a surplus of places to put cash. Energy was deeply undervalued but has really run. I may not sell, but thats the last real sector to run. Now we have retail and banking. I dont like either. Cash would be temporary until things go on sell, but that could be a long wait. Who knows.

I think those of us who decided not to fight the fed have done quite well over the last 6-9 months. With Fed support coming to an end and pretty much everyone (Gross, Grant, Watsa, etc.) I follow with the exception of Buffett cautious, perhaps its time to raise cash. Combine the above with the fact that - I dont see any great bargains, dont see any great sector plays outside of Banking / Finance, and I dont see any deep value outside of Japan. There are some great long term coin flip bets out there which may deserve some capital (LVLT, MBIA, a few in the oil in gas space), but no no brainers that I see. Everything is up. I even read an article which said that net-nets have pretty much gone away when I remember them being a good 15-20 consistently. I am going to hold what I have, but do you all think its time to raise cash. I have a good inflation hedge (ROIC and Oil and Gas), and what I think is a great deflation hedge (ROIC), a few nice growth stories (ATSG), and some other odds and ends (WDC, SSW Calls, and other stuff). I dont plan on selling too much, but I have a bit of cash coming in and I plan to try to hold onto it. I think summer will be interesting. The macro situation just looks pretty bleak from where I sit. I dont tend to invest based on macro, but what happens when inflation moves up, and rates go up to a reasonable level. What happens if we get deflation. I dont see this tightrope walk continuing. Eventually a gust of wind knocks you off and things get interesting.

LUK inmo is very exposed to a slow down in global growth, China, and or commodities. Great inflation hedge, not so great deflation hedge. I like it but missed the bought and never bought in large quantities.

All this just makes me want to raise / hold cash. I like his pair trade idea, and that is what I have done with my portfolio.

http://feedproxy.google.com/~r/trillianmedia/JVWE/~3/xzV48CpXoUg/james-grant

I am listening to Money Ball right now, its pretty good. I recommend Any Roger Lowenstien, Malcolm Gladwell (I would start with Outliers and What the Dog Saw), and any and every Michael Lewis book. Greenblatts the little book is also in audio format.

thanks for the link.

Packer you sound like Mike Burry or does he sound like you. http://valueinvestingworld.blogspot.com/2011/04/video-michael-burrys-vanderbilt-speech.html Very interesting. If you are pressed for time you can skipped to the last 8 minutes. I think he is right, but his suggestions are politically unobtainable. The next decade will be interesting. I am sure of 1 thing regarding economics, there is no free lunch.

Damn. That was worth its weight in gold. A very sobering analysis. His last line was priceless and I am sure the Canadians here will love it.

Thanks this is a nice little gift. :)

Are people really going back on margin so soon after 2009? Humm. The only thing really interesting today is oil, and im up to my eyeballs in that.

I actually agree with you but find it politically unworkable. I think this is the best solution for Europe. Default and restructure. I dont know how it would work for the US, but also see that we have a printing press, and politicians dont have to make hard decisions with that in place. Ireland would have been better off if they had followed Iceland and let the banking system go, vs. years of crushing debt repayment. John - Your analogy sucks because everyone (Buffett, pretty much all Economist, pretty much anyone involved) said we were facing depression 2.0. Its like if some guy with a screwed up mustache invaded Poland and was marching across Europe from Germany. Comparisons at that point would be fair. It was a very similar. The Great Depression is the only time the "liquidate cleanse the system" model has been tried and its results are well documented. I will use the comparison / historical reference because it works and is useful. Its like telling someone talking about genocide they cant use Hitler or Stalin in their discussion. Japan, Wiemar Germany, and the Great Depression will always be discussed / brought up in any economic conversation. Keynes, Friedman, and Hayek may also come up as well. --- Here is the UK which is trying painful cuts to appear serious. http://www.gurufocus.com/news.php?id=128657 U.K. Retail Sales Plunge By Largest Amount Since 95 As Austerity And Inflation Combine Forces --- Again I am not wedded to an idea, but when something doesnt appear to be working or didnt work in the past, then that says alot.

Not buying much today. Though its the day to buy.

Bronco I agree with 78.2% of those suggestions. That always kills me, we argue non stop, but I appear to be on the same page.

I think the Japense are unique. You will have a hard time convincing the Corporate sector to spend money there. Its the biggest value trap known to man, because the executives just build cash. We wont have that problem with our consumers. Americans want to consume. Also Krugman and Stiglitz touched on the fact that we have similar benefits. During economic weakness, everyone wants Greenbacks at very low rates. I dont know how true this is and with QE its tough to sell. Should be interesting to see how those auctions go when the fed pulls back. It makes sense though. Currently we have excess capital available which is not being spent. Where else is it going to go? If they start spending it (as Bernanke is almost forcing folks to) then the Gov / Fed can pullback. --- My question for you, is what are the alternatives, which are viable? Its tough for guys like you and I to think like this. We dont get into truly awful situations (I am assuming here). Japan had what was one of the biggest bubbles in modern history and has done rather fine all things considered. Watch the video, Koo is quite convincing. A huge drop in RE, and a huge drop in Stock market value. China has copied them. The hand sucks, but you have to play it. What would you do? What makes sense? I am beginning to think Economics is managed chaos. There is no end goal, you go from crisis to crisis, unless you get it right from a long time ago like Canada, Australia, or Singapore. You have to look at all the alternatives and pick the least bad one. Shutting down the government and fighting over a 1.4 billion dollar deficit vs. a 1.5 billion dollar deficit is retarded, but thats what happens in Washington. I also dont think the deficit is really simulating anything (what are we getting out of it). I would run the same amount, but we would get massive infrastructure and other gains. I would put together a plan that ran a deficit until 2015, and then ran surpluses - there would be plenty of pain to go around ;D (health rationing for the poor, tax raises for the rich, severe military cuts, full entitlement changes, raising retirement ages). Suffice to say I would never get elected. --- I dont have all or really any answers. I just have thought about this alot based on info from the top economists from most persuasions. I think whats going on makes sense, given the shitty shitty hand. I dont worry about the Economists, I worry about the Politicians.

Well what every smart economist is saying - (I know thats a bad way to start a sentence), Is you put in solutions to long term deficits and debt issues, but you dont cut back now. Europe is cutting back and its not working, the UK has slowed. Martin Wolf (a great economist) and Sumners (I have little respect for him) discussed this in an interview. Basically putting together a plan which address our long term budget deficit and debt (Entitlement cuts, Military spending cuts (giving up our empire), tax raises, solving our long term health cost issues, or all of the above) and making it law would do the trick. That would put our fiscal house in order, while allowing us to continue supporting the economy now. Paul Ryan's plan is more geared towards cutting taxes for the wealthy and doesnt balance the budget till 2050. As far as I can tell Obama has no real plan though one will be released in a few days. Bronco is right Washington sucks, but Koo is on to something inmo. Packer his advice is the best of a bad lot. The alternatives are as follows from what I can see. liquidate, liquidate, liquidate - (Basically refer to the prior post) We all know how that went in the 30s. Its easy to sound logical as an Austrian Economist but it doesnt aspire much hope, and sounds just as bad as just printing money. Basically let everything fail, sounds great in theory, but I wouldnt want to be around when that ideological science experiment went down). Give me inflation anyday. Cut Spending to Balance the Budget - Being tried in the UK and Europe. So far not working, was tried in Japan. Tax revenues fail from economic weakness which required more cuts, and blah blah blah. The best advice is to avoid the problem, but we are here. Spend on value added problems, implement solutions to long term debt in whatever way makes sense, and hope she heals. Its what I would do. ---- If you watch the video you will see Koo makes sense. Not in a sound bite how do you solve a debt problem with more debt, or Americans are tightening up so we should too kinda way. But in a damn that guy is smart as hell and has a PHD kinda way. I would go with the PHD (specifically this PHD, not the Greenspan variety), vs the witty one liner when solving problems that involve trillions, but what the hell do I know.

Benhacker thats funny. I will right that down one day and use it lol. It sucks that he was right. Another I like is Munger's - You will come around and agree with me, because I am right and you are smart. Honestly though my goal is to avoid these sort of arguments. So little time in life and few people are open to learning or at least hearing a new idea out. I watched Inside Job last night, so I am a bit jaded (didnt realize how cop-able academia was). I do feel that Munger and Koo have a point, the Chinese just do what works, they arent wedded to an Ideology. I feel like its one of the few things that will bring America down one day.