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Baupost Q4 2017 letter


mhdousa

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Wow, does he always write so much about macro, market and political commentary stuff?

 

In the past he has. It's safe to say he hasn't been a huge fan of Trump, nor what Mitch has done in Senate appointing endless Judicial vacancies with conservative justices.

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"Seth Klarman Says Fed Is Infantilizing Investors in ‘Surreal’ Market"

 

https://www.bloomberg.com/news/articles/2020-07-30/klarman-says-fed-is-infantilizing-investors-in-surreal-market

 

He might be right eventually, but he sounds like a broken record:

 

https://www.businessinsider.com/seth-klarman-truman-show-2014-3

 

"But there is one fly in the ointment: in Bernanke’s production, all the Trumans – the economists, fund managers, traders, market pundits – know at some level that the environment in which they operate is not what it seems on the surface."

 

 

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Interesting point about mean reversion no longer operating the way it used to. I think that goes a long way towards explaining why value investing doesn't seem to work as well and also why the stock market has rebounded so strongly as investors realize the pandemic has strengthened the competitive positions of a lot of the biggest companies.

 

I disagree with the surreal stock market comment. The stock market is valuing a stream of earnings stretching 20-30 years while economic data reflects a deep but ultimately self-limiting recession that calls for extraordinary policy measures which are helping to limit the overall damage. So the seeming disconnect is to be expected. Especially as for a lot of the biggest companies that 20-30 year earnings outlook has actually improved as smaller competitors fall by the wayside and technological shifts have been brought forward.

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