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Amazing article in Bloomberg on Gundlach


Josh4580
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http://www.bloomberg.com/news/2012-11-30/bond-investor-gundlach-buys-stocks-sees-kaboom-ahead.html

 

"Bond Investor Gundlach Buys Stocks, Sees 'Kaboom' Ahead"

 

Covers so many topics and great quotes inside

 

The following is on his stolen artwork:

 

Hands-off, though, isn’t normally the first description that comes to mind when discussing Gundlach. In mid-September, thieves robbed the money manager’s Santa Monica home in a quiet residential neighborhood, taking more than $10 million in artworks as well as his red 2010 Porsche Carrera 4S, wine and watches. The robbers also snatched two works by Gundlach’s late grandmother, Helen Fuchs, who was an amateur painter.

The money manager first offered $200,000 for tips leading to the recovery of his art and days later boosted the reward to $1.7 million. Santa Monica Police Department Sergeant Richard Lewis says the large sum of money was key to cracking the case, which the Federal Bureau of Investigation assisted on.

In late September, two suspects were arrested and all of the stolen art was recovered.

The cerebral Gundlach also gave investigators a tip for solving the crime. He says that while he was at home in his family room, it dawned on him that thieves would do a Google search using his grandmother’s name to find out more about the paintings and how much they might be worth.

Gundlach told the authorities that they should check the Internet to see who might have googled the name Helen Fuchs. He says exactly two such searches were executed: one by him and one by the thieves.

Gundlach says his Internet idea impressed investigators.

“The FBI,” he says, “thought it was brilliant.”

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Gundlach told the authorities that they should check the Internet to see who might have googled the name Helen Fuchs. He says exactly two such searches were executed: one by him and one by the thieves.

Gundlach says his Internet idea impressed investigators.

“The FBI,” he says, “thought it was brilliant.”

 

Smart, but isn't it a little alarming that the FBI can access Google search terms? 

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Gundlach told the authorities that they should check the Internet to see who might have googled the name Helen Fuchs. He says exactly two such searches were executed: one by him and one by the thieves.

Gundlach says his Internet idea impressed investigators.

“The FBI,” he says, “thought it was brilliant.”

 

Smart, but isn't it a little alarming that the FBI can access Google search terms?

 

Not these days post-Patriot Act.

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Gundlach told the authorities that they should check the Internet to see who might have googled the name Helen Fuchs. He says exactly two such searches were executed: one by him and one by the thieves.

Gundlach says his Internet idea impressed investigators.

“The FBI,” he says, “thought it was brilliant.”

 

Smart, but isn't it a little alarming that the FBI can access Google search terms?

 

The FBI accessing google's data is one way. However that is not the only way to find this information. If you search for "Helen Fuchs Art", the first site that comes up is in google is a page on askart.com, when you click on the search result it sends a "header" along with your request that tells the askart.com's owner where the browser came from (google) and what search term they used to find it. You could directly contact the websites on the first page of results and ask them if would be willing to provide information for vistors who were directed to their site searching for the artists name. That is what I would do if I were looking for this information. Chances are when you explain you case to the website owners they would probably be willing to help.

 

 

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I agree with him. I see a Kaboom ahead as well... but timing is of course he issue. My idea is to wait it out while not going broke: I am shooting for 10% annual returns instead of my regular 20% (just managing my own money), and staying hedged (while buying the odd call option; eg OSTK and RIMM at their lows, BRK-B stock at near book, etc - simple stuff).

 

Trying to find cheap hedges with convexity if I can find them. Maybe a good pairing (deflation / inflation respectively) that fits this description would be:

- very long term put options on JGBs with

- very long term calls on silver

 

One thing for sure though, don't stop value investing for the long-term. Whether or not those value positions should be fully hedged with stock market hedges, or partially, and/or coupled with a convexity pairing as above is something to consider based on personal preference, etc. I tend to hedge a lot and take a lot of pain for years 'till I get my 50-100% gain from the hedges. Its very hard to do.

 

I certain don't like this environment and agree with Gundlach that long-term the pressure just keeps building. I am not clear, however, whether its pressure or whether it should be described as the lever the authorities will eventually use just keeps getting longer and longer due to stimulus such that, even assuming they do try to withdraw stimulus at some point (big assumption) they have no real way of doing it in a controlled manner - ie the system has become so dependent and fragile while at the same time their lever so long . I think in that process, we have the Kaboom moment.

 

 

 

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One thing for sure though, don't stop value investing for the long-term. Whether or not those value positions should be fully hedged with stock market hedges, or partially, and/or coupled with a convexity pairing as above is something to consider based on personal preference, etc. I tend to hedge a lot and take a lot of pain for years 'till I get my 50-100% gain from the hedges. Its very hard to do.

 

Thank you for this insight! It is very similar to what I am doing. And yes, it surely is quite hard!

 

giofranchi

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I agree with him. I see a Kaboom ahead as well... but timing is of course he issue. My idea is to wait it out while not going broke: I am shooting for 10% annual returns instead of my regular 20% (just managing my own money), and staying hedged (while buying the odd call option; eg OSTK and RIMM at their lows, BRK-B stock at near book, etc - simple stuff).

 

Trying to find cheap hedges with convexity if I can find them. Maybe a good pairing (deflation / inflation respectively) that fits this description would be:

- very long term put options on JGBs with

- very long term calls on silver

 

One thing for sure though, don't stop value investing for the long-term. Whether or not those value positions should be fully hedged with stock market hedges, or partially, and/or coupled with a convexity pairing as above is something to consider based on personal preference, etc. I tend to hedge a lot and take a lot of pain for years 'till I get my 50-100% gain from the hedges. Its very hard to do.

 

I certain don't like this environment and agree with Gundlach that long-term the pressure just keeps building. I am not clear, however, whether its pressure or whether it should be described as the lever the authorities will eventually use just keeps getting longer and longer due to stimulus such that, even assuming they do try to withdraw stimulus at some point (big assumption) they have no real way of doing it in a controlled manner - ie the system has become so dependent and fragile while at the same time their lever so long . I think in that process, we have the Kaboom moment.

 

Hi, Mungerville:

 

Could you kindly let us know how to buy "very long term put options on JGBs " ?

I was looking for a way to buy currency and long term  bond options but didn't find

Seems you have to be a very big player to have some customized products for you

 

Thanks!

 

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"The FBI,” he says, “thought it was brilliant.”

- Well, if the FBI hadn't thought about it, it's alarming - I mean it's their job to find "brilliant" ways of getting their man, no?

 

Wonder if the FBI helps any "ordinary" citizen that gets robbed or it depends on the valuables ($$$) lost in the process...

 

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Wonder if the FBI helps any "ordinary" citizen that gets robbed or it depends on the valuables ($$$) lost in the process...

 

That's exactly right.

 

In 2002 I had an Audi S4 parked in my driveway at my home in West Seattle.  I got up in the morning to go to work, and once I looked at my car it took me a second to figure out what didn't look quite right.  All four wheels were stolen and the car was on blocks.  That's cost over $2,000 to "fix".

 

I called the police and reported the crime.  They just made a report and that was all.  They never even sent anyone out to the home to investigate!

 

Now, if I instead had reported a $10 million worth of artwork stolen they might have shown more interest -- perhaps even sending an officer to the house to investigate.

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Gundlach told the authorities that they should check the Internet to see who might have googled the name Helen Fuchs. He says exactly two such searches were executed: one by him and one by the thieves.

Gundlach says his Internet idea impressed investigators.

“The FBI,” he says, “thought it was brilliant.”

 

Smart, but isn't it a little alarming that the FBI can access Google search terms?

 

The FBI accessing google's data is one way. However that is not the only way to find this information. If you search for "Helen Fuchs Art", the first site that comes up is in google is a page on askart.com, when you click on the search result it sends a "header" along with your request that tells the askart.com's owner where the browser came from (google) and what search term they used to find it. You could directly contact the websites on the first page of results and ask them if would be willing to provide information for vistors who were directed to their site searching for the artists name. That is what I would do if I were looking for this information. Chances are when you explain you case to the website owners they would probably be willing to help.

 

Didn't know Gundlach was posting on this forum… Glad you got your art back!

 

I remember reading an article about him a month or two back where he said his traders would buy FB shares whenever they fell 2% and sell when they rose 2%.  He said he was making more money on that trade than on the 10 year bond, putting it on those terms really gives perspective. 

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Wonder if the FBI helps any "ordinary" citizen that gets robbed or it depends on the valuables ($$$) lost in the process...

 

That's exactly right.

 

In 2002 I had an Audi S4 parked in my driveway at my home in West Seattle.  I got up in the morning to go to work, and once I looked at my car it took me a second to figure out what didn't look quite right.  All four wheels were stolen and the car was on blocks.  That's cost over $2,000 to "fix".

 

I called the police and reported the crime.  They just made a report and that was all.  They never even sent anyone out to the home to investigate!

 

Now, if I instead had reported a $10 million worth of artwork stolen they might have shown more interest -- perhaps even sending an officer to the house to investigate.

 

On the one hand, the police can't be bothered with every petty theft.  On the other hand, all citizens deserve equal protection and a 'petty' theft may be more of a hit to the median citizen than a million dollar theft would be to a billionaire.

 

My idea on this: randomly pick a small number of minor crimes to investigate as if they were murders.  That is, if a random number generator at precinct spits out a "1" when Ericopoly calls, send out the forensic unit, dogs, and everything.  The goal is twofold: 1) you will start to actually catch some repeat offenders and shut down black market networks and; 2) you will create a vivid enforcement image, which will deter others.  (Since humans' risk heuristics are based on how dramatic something is, seeing a forensic unit investigating some missing tires would create an impression in the would-be thief that that heretofore-riskless activity is actually quite dicey).

 

In this system, police would never draw an imaginary line, below which something is not important enough to investigate.  They would simply adjust the probability of investigating it thoroughly.  I guess this is kind of a take on Giuliani/Bill Bratton's broken windows approach.

 

I am happy to consult for any police chiefs who happen to be reading the board.  ;)

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The problem with this issue in Vancouver, at least, isn't that the crime isn't worth investigating.  It's that the punishment for minor crimes is irrelevant.  Apparently, there are something like 30 people who are serial offenders, with something like 50 or 60 break and enter convictions.  According to the police, they can see the effects of these small number of people in the crime statistics.  If a large proportion of them  are out, the crime rate will go up significantly.  If they happen to be in jail, then the rate will fall.

 

Seems like you have to address that issue before expending more resources in fighting minor crime.

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Gundlach told the authorities that they should check the Internet to see who might have googled the name Helen Fuchs. He says exactly two such searches were executed: one by him and one by the thieves.

Gundlach says his Internet idea impressed investigators.

“The FBI,” he says, “thought it was brilliant.”

 

Smart, but isn't it a little alarming that the FBI can access Google search terms?

 

The FBI accessing google's data is one way. However that is not the only way to find this information. If you search for "Helen Fuchs Art", the first site that comes up is in google is a page on askart.com, when you click on the search result it sends a "header" along with your request that tells the askart.com's owner where the browser came from (google) and what search term they used to find it. You could directly contact the websites on the first page of results and ask them if would be willing to provide information for vistors who were directed to their site searching for the artists name. That is what I would do if I were looking for this information. Chances are when you explain you case to the website owners they would probably be willing to help.

 

Didn't know Gundlach was posting on this forum… Glad you got your art back!

 

I am not he. I couldn't stand to see that much capital tied up in art. But that is how I would approach the problem if in a similar situation.

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  • 1 year later...
  • 4 weeks later...

On the one hand, the police can't be bothered with every petty theft.  On the other hand, all citizens deserve equal protection and a 'petty' theft may be more of a hit to the median citizen than a million dollar theft would be to a billionaire.

 

My idea on this: randomly pick a small number of minor crimes to investigate as if they were murders.  That is, if a random number generator at precinct spits out a "1" when Ericopoly calls, send out the forensic unit, dogs, and everything.  The goal is twofold: 1) you will start to actually catch some repeat offenders and shut down black market networks and; 2) you will create a vivid enforcement image, which will deter others.  (Since humans' risk heuristics are based on how dramatic something is, seeing a forensic unit investigating some missing tires would create an impression in the would-be thief that that heretofore-riskless activity is actually quite dicey).

 

In this system, police would never draw an imaginary line, below which something is not important enough to investigate.  They would simply adjust the probability of investigating it thoroughly.  I guess this is kind of a take on Giuliani/Bill Bratton's broken windows approach.

 

I am happy to consult for any police chiefs who happen to be reading the board.  ;)

 

I quite like that idea. I find it very rational and appealing.

 

In the real world, though, it would probably be shut down because of the optics. You'd have the local news and Jay Leno doing a bit about the CSU unit dusting around where the garden gnome was stolen.

 

Maybe some very charismatic official could sell it well enough to the public ahead of implementation to preempt that, and then it could be possible to do with taxpayers' full back backing because they understand that this could save more money than it costs (studies showing that would certainly help sell the point).

 

Anyway, that was a good daydream. Thanks Omlsted! :)

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  • 5 months later...

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