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"Macro" Musings


giofranchi

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Guest hellsten

:D

 

Reminds me of this:

The authors examined 699 companies featured in 19 popular books on high performance and tested them to see how many were truly great. Of the companies that they were able to categorize, just 12 percent met their criteria.

 

In an earlier paper they wrote, “Our results show that it is easy to be fooled by randomness, and we suspect that a number of the firms that are identified as sustained superior performers based on 5-year or 10-year windows may be random walkers rather than the possessors of exceptional resources.

 

http://csinvesting.org/wp-content/uploads/2013/07/Measuring_the_Moat_July2013.pdf

 

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Southwest Securities' Mark J. Grant is building an ark this morning:

 

Diseased nature oftentimes breaks forth in strange eruptions."

 

-- William Shakespeare

 

It is an odd affair these days made odder by the political desires of those that control the switches. I speak only for myself and not anyone else when I tell you that my senses are heightened by the behavior of the governments across the planet these days. Before I was a skeptic. Now I am a non-believer.

 

"No hard feelings about that time in the Crucible when you mixed my salts and I was nearly blind for a day. No. No, really, drink up!"

 

-- Patrick Rothfuss, The Name of the Wind

 

The worst offender is China, followed by Europe and then it would be the United States in last position. Made up numbers, fantasy figures, smoothed out data are all the bread and butter of each region. Every third headline in the last twenty-four hours is that "Europe is out of recession, France is out of recession, Germany is out of recession, France and Germany are out of recession, Germany and France are out of recession" as the public relations army of Europe is in full tilt. Watch carefully because after the German elections there will be one coercive correction after another that will be buried in the small print.

 

"The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds."

 

-- John Maynard Keynes

 

It is the central banks that are running the world, it is the governments that are distorting events and we are left, like homeless children, to accept the succor that is provided. Because there is no choice I am stuck eating their food but I do not accept the fantasy on the package naming the ingredients. It is a collective attempt to Bamboozle!

 

It was on May 22 when the great and powerful Fed Chairman suggested tapering that I responded within five minutes, "Take money off the table." If you did not follow my advice and you left everything alone then you have lost 9.00% of your money or 9.00% of the value of your portfolio if you were invested in long Treasuries. Nine percent.

 

Poof!

 

Now where are we now? We have Hindenburg Omens flashing in clusters, very low volume in equities, yields for long bonds that have spiked as prices have been quashed, spreads that have widened, my "Drop Dead Day," the German elections a month away, leverage in the stock market at all-time highs, corporate earnings flat to down and a barrage of data out of China and Europe that I do not trust or believe. This is not God's country. Open your eyes; this is the Devil's playground.

 

Now there was a time before the Great Flood came when Noah built his Ark. First he built the boat and then he gathered all of the animals upon it so the story goes. One may only imagine the number of people that made fun of him and laughed at his endeavors. However, in the end, as we all know now, Noah had the last laugh.

 

Today you can make a choice. I am building my Ark. I rest upon the bedrock of "Preservation of Capital. Laugh all that you like. We will see just who floats in the end

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Do you guys have any idea what Edwards was saying in 2006-2007? I'm not rally familiar with the guy but that last article seems to indicate he's pretty out there. thanks for posting though dc.

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stahleyp,

 

He has been negative for a long time, here is a brief quote from something he wrote in December of 2007. "The global credit crunch has been advancing, prompting this week’s co-ordinated central bank action. Personally I believe it is too late. If the US is not in recession already, it is very close. This will get a lot, lot worse before it gets better. Only the national anthems have finished. The game has yet to start."

 

I would have to sift through his comments in late 2008 and 2009 to see if he ever said to buy some equities. 

 

 

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stahleyp,

 

I found these comments from the fall of 2009.

 

"Hence the explosive rally in the equity markets this year should not have come as a surprise to our readers. The cyclical indicators after all turned up around December time (for the ECRI and the Conference Board) and a touch later for the OECD leading  indicator (see chart below). But, having flagged up so strongly that one should tactically become a buyer of equities on the upturn of these indicators, I failed to follow my own advice! To be perfectly honest, as the market powered ahead, I, like so many others, waited for the pull-back that never arrived. Do I feel like a grade 1 moron? Yes, I most sincerely do. Should I be beaten mercilessly to within an inch of my miserable life? Definitely."

 

 

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Noted Indy.

 

Appreciate the document, I hope I did not come off as sounding rude. I know someone who got fired for leaking a letter which went viral so Im sensitive to this topic. Thanks for all the great commentary! Cheers.

 

PS I know someone very reliable, cheap, nice and quick who can remove watermarks if anyone is interested DM me.

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interesting dcollon. appreciate it.  :)

 

For what it's worth Pabrai, while not bearish, also has about 15-17% cash (from a Columbia presentation he made recently) and said he hasn't found anything for the past 9 months.

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Guest hellsten

Looks like it's time to have cash or cash-like stocks in your portfolio, unless you can still find cheap stocks or markets.

 

Italy looks cheap:

http://www.gurufocus.com/global-market-valuation.php?country=ITA  ;)

 

The stock market of Italy is expected to return 14.1% a year for the coming years. This is from the contribution of economic growth: 1.92%, Dividend Yield: 3.83% and valuation reverse to the mean 8.4%.

 

China and Russia also look cheap according to Gurufocus:

 

The stock market of China is expected to return 34.7% a year for the coming years. This is from the contribution of economic growth: 15.75%, Dividend Yield: 2.16% and valuation reverse to the mean 16.78%.

http://www.gurufocus.com/global-market-valuation.php?country=CHN

 

It would be interesting to see the following data in the Q-ratio graphs:

- price of BRK

- P/B of BRK

- cash level at BRK

- annual return on BRK's investment portfolio

 

I don't think BRK's or Wal-Mart's performance between, for example, 1975 and 1985 was flat.

gurufocus-projected-returns.png.7e0c2a5baa9c6f68c0e403f96c683f9c.png

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