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JEast

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    Virginia Value Investor Conference

    in General Discussion

    Posted

    I attended the Virginia Value Investor Conference at the Darden School of Business on October 28 & 29.  From my perspective, they had a very nice collection of presenters.

    http://conference.darden.virginia.edu/VIC2010/agenda.htm

     

    In Presentation Order:

    Marc Faber (Gloom, Doom, & Boom Report)

    James Grant (Grant’s Interest Rate Observer)

    J. Kyle Bass (Hyman Advisors)

    Richard Baker (Managed Funds Association)

    Stephen Roach (Morgan Stanley Asia)

    Christopher Whalen (Institutional Risk Analytics)

    Witney Tilson ( T2 Partners)

    Brian Rogers (Chairman T. Rowe Price)

     

    A few notes, in very brief form, as the presentations will most likely be out in time.

     

    Faber –

    With any debasing currency, if it gets bad, stock equities represent some opportunity.

    If Yen starts to depreciate, JGBs may become less popular and money moves into equities.

    Some parts of Southeast Asia look good.

     

    Grant –

    Very small thrifts are starting to demutualize.

    Office of Thrift is closing and new IPOs are coming.

     

    Bass –

    Of course very negative on JGBs.

    Pension funds in Japan are not rolling over and decreasing JGBs.

    Watch for the first industrialized country to default (maybe Ireland or Greece).

    With the strong Yen, trade surplus will start to decrease.

     

    Roach –

    Bullish on China but with caution as bumps will occur.

    Watch for the new 5 year plan as the government will be attempting to spur domestic consumption.

     

    Whalen –

    Institutional Risk Analytics is in the bank rating business.

    Bank business model is broken on risk-adjusted basis in low interest environment even with current spreads.

    Cautious on BAC and WFC.

    Mortgage insurance business is currently a ponzi scheme and all are in essence broke.

     

    Tilson –

    Still pushing BP.

    Shorting OpenTable, Netflix, Lululemon

     

    Rogers –

    Buying quality large caps with nice dividends.

    Likes Mattel, Vulcan Minerals, and Beckman Coulter

     

     

    Cheers

    JEast

     

    India P/C Business Now Enters Growth Phase

    in Fairfax Financial

    Posted

    Not necessarily a hard market, but the p/c business is growing.

     

    http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/Insurance-Non-life-business-now-enters-growth-phase/articleshow/6745302.cms

     

    More with respect to Fairfax is the when/if parliament increases FDI from 26% to 49% for potential increase in ICICI Lombard.  Some small progress on that front.

     

    http://www.livemint.com/2010/10/25232415/Sebi-clears-IPO-norms-for-insu.html?h=B

     

     

    Cheers

    JEast

    Google Price Index

    in General Discussion

    Posted

    I am sure most have known for sometime that the US CPI understates their computation of inflation and all would tend to agree with ShadowStats.  However, I believe the question on the table is, 'are we measuring the right things'?  That is we all have opportunity costs and can change our behavior.  Take the bus when gas gets to $4US, change to a cheaper brand, or go to Wal-mart versus Target. 

     

    Do we have agriculture inflation currently.  Sure, but is that a weather issue (i.e. Russia).  Plus, other inputs to agriculture are not inflating and now appear to be a wash when the final product hits the store.  I stopped by a Wal-mart super center as it recently opened.  Bananas were 0.49lb.  Teaser rate probably, but when you can ship bananas from Ecuador and include transportation, distribution, and the lot and still make a penny a pound - we live in a wonderful time.

     

     

    Cheers

    JEast

    Google Price Index

    in General Discussion

    Posted

    As many of us agree that the US 'CPI' is somewhat suspect, there is new competition coming soon.  The Google Price Index by Google's chief economist will be publishing their website data with which you can compare.  "Mr Varian said that the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas."  I guess the bond market already, or was, expecting this.

     

    http://www.cnbc.com/id/39626164

     

     

    Cheers

    JEast

    Does anyone here subscribe to OID?

    in General Discussion

    Posted

    I did not realize it but I went back to my old copies as saw that my first issue was back in '94. Wow, did not realize it had been that long.

     

    Your question is it worth it - Sure is from my viewpoint.

     

    After a spell of family health issues, the healing now appears to be progressing and Henry Emerson states it is good to be back in the saddle.

     

     

    Cheers

    JEast

    Sign of the times?

    in General Discussion

    Posted

    Fraud (or potential fraud) still continues to show its ugly head in the financial world.  This time an executive at a Connecticut based fund was arrested for having a pot farm inside their private residence.  Strange stuff, but funny as I guess the fees were not enough to cover expenses :)

    http://blogs.forbes.com/teribuhl/2010/09/03/executive-at-troubled-hedge-fund-arrested-for-running-%E2%80%9Ccomplex%E2%80%9D-pot-farm-in-her-house/

     

    Some background on New Stream from Hedge Fund Implode.

    http://hf-implode.com/article/newstream/

     

     

    Cheers

    JEast

    The US Ponzi Economy and Bernanke leading the masses right off a cliff

    in General Discussion

    Posted

    Debt reduction (i.e. Debt Deflation) is an issue to be worried about via the Great Depression and the Japan experience.  However, one must not only anchor on the Debt-to-GDP number, but also take into account the Asset-to-GDP number.  True, assets have fallen the past few years, but more assets are available and more 'options' are available to the average Joe these days than in the '30s.

     

    Pessimism is abundant these days and even if we only grow at 0-2% over the next few years, it will most surely feel like a depression in comparative terms as we have been conditioned to more.  Irrespective, I am in agreement with the debt reduction argument, but still open to and placing capital into the 'compounders' as I believe them to be.  

     

    One can say I am anchoring on financial history and Graham, but if folks are offering 50¢ dollars, I am committed to buying them knowing the could turn into 25¢ dollars over the short-term.

     

     

    Cheers

    JEast

    Will Bond Rally Cause Insurance Rates To Increases?

    in General Discussion

    Posted

    We have been in a soft market for at least 4 years now.  Not the longest soft market, but long enough for us insurance investors.  Many of us have commented strongly one way or the other about the ‘flation’ issues.  However, it would appear that the bond has answered that for us, at least over the next year, or so.

     

    So I guess the question now is will this bond rally cause an increase in insurance rates as insurance companies surely can not stay profitable with 2.7% 10-year or a 3.7% 30-year treasury rates.  My guess is that it bodes well for the workers comp lines as it is a longer-tail business.

     

     

    Cheers

    JEast

    Walter Schloss at Richard Ivey School of Business

    in General Discussion

    Posted

    Graham was not strictly a cigar-butt or a net-net investor only.  He was more nuanced than simply a statistically cheap asset guy, as he was not shy about arbitrage or good quality growth stocks.  From Toward a Science of Security Analysis, -  "A case can be made for putting all your growth eggs in the one best or a relatively few best baskets.”

     

    As for investing now, it would seem that large cap quality and small cap below book is the ticket in general. Of course, subject to change tomorrow.

     

     

    Cheers

    JEast

    Early Writings of Graham

    in General Discussion

    Posted

    Many are aware of the release of the sixth edition to Security Analysis, which I would comment is very good.  However, what may not be so widely know is of the recently released companion reader of a collection of shorter writings by Graham  -  Building a Profession: The Early Writings of the Father of Security Analysis.  The compilation covers the time frame of ’45-’77.

     

    http://www.amazon.com/Benjamin-Graham-Building-Profession-Writings/dp/007163326X/ref=wl_it_dp_o?ie=UTF8&coliid=I10867LETQQ8US&colid=16LT1UD01LG2

     

    Cheers

    JEast

     

    I just got canned

    in General Discussion

    Posted

    St. Petersburg is lacking in liveliness but has plenty of charm. On the flip side, just across the bridge is Tampa which has much of what anyone could want from sports, to entertainment, to the Florida lifestyle. Tampa is more like the Mid-west in culture (i.e. Chicago) versus like Miami (i.e. Jersey).

     

     

    Cheers

    JEast

    Gonna be a massive Cane season on the East Coast

    in Fairfax Financial

    Posted

    Norm,

     

    I read about your graph the other day on the activity/energy was approaching near 30-year lows.  I pick up really odd items sometimes on the unique website 'Watts Up With That'.

    http://wattsupwiththat.com/.  

     

    One recent item was that per NOAA's own data (see attachment), the temperature trend is down over the last 10-years, but their publications are indicating rising temperatures.

     

    http://www.ncdc.noaa.gov/oa/climate/research/cag3/na.html

     

     

    Cheers

    JEast

    Canadian Housing Bubble??

    in General Discussion

    Posted

    For my friends and northern neighbor, Grant's Interest Rate Observer had an interesting article about Canadian housing prices. Specifically reporting on the US equivalent to Freddie and Fannie, Canadian Mortgage and Housing Corporation (CMHC).  The headline comparison was that at the peak of the US housing crisis, Fannie had a 1.5% equity to exposure.  Currently CMHC is near 1.2% to equity exposure. 

     

    On the humor side for our BC residents, and maybe a comment on the housing market, try to determine if the photos depicted are either a mansion, or crack shack.

     

    http://www.crackshackormansion.com/

     

     

    Cheers

    JEast

    Treasury Yields at New Lows

    in General Discussion

    Posted

    think about the implications

     

    Always Invert.

    I have attempted to disprove it, but haven't yet.

    However and roughly, in the year 2000, the discount rate was 5%.

    For the next 10 years the S&P was down negative 0.95% p/year.

    Over that same 10 year span, the 90-Day T-Bill, if rolled over, is up significantly.

    This does not prove the comment, but it does not seem that wild in comparative context.

     

    Cheers

    JEast

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