Grantham's Big Call(Forbes.com)
Steve Forbes: Well thank you, Jeremy, for joining us today. First, since you have bragging rights in this situation, what made you a bear, [a] great skeptic? Between 1999 until about a couple of months ago, you were saying, "Stay out."
Jeremy Grantham Well, really very simple. Not rocket science. We take a long-term view, which makes life, in our opinion, much easier.
Steve Forbes: Well everyone says it, but you certainly practiced it.
Jeremy Grantham We actually do it. Well, we tried the short-term stuff and it was so hard; we thought we'd better do the long-term. We just assume that at the end, in those days, of 10 years, profit margins will be normal and price-earnings ratios will be normal. And that will create a normal, fair price. And more recently, we've moved to seven years, because we've found in our research that financial series tend to mean revert a little bit faster than 10 years--actually about six-and-a-half years. So we rounded to seven.
Read the entire transcript
Saturday, January 31, 2009
Thursday, January 29, 2009
Merrill Bonus Scandal Heats Up, Cuomo May Demand Repayment
(Clusterstock.com) New York Attorney General Andrew Cuomo is stepping up the investigation into Merrill's $4 billion bailout-for-bonuses scandal. He is also reportedly considering demanding that the bonuses be paid back:
Susanne Craig, WSJ: New York Attorney General Andrew Cuomo is expanding the scope of his investigation into bonuses paid by Merrill Lynch, with the inquiry now likely to include whether directors and shareholders were misled about giant losses at the Wall Street firm, a person familiar with the situation said.
Read the entire article
Susanne Craig, WSJ: New York Attorney General Andrew Cuomo is expanding the scope of his investigation into bonuses paid by Merrill Lynch, with the inquiry now likely to include whether directors and shareholders were misled about giant losses at the Wall Street firm, a person familiar with the situation said.
Read the entire article
Obama Calls Wall Street Bonuses ‘Shameful’
(NY Times) President Obama fired a warning shot at Wall Street on Thursday, branding bankers “shameful” for giving themselves $18.4 billion in bonuses as the economy was spinning out of control and the government was spending billions to bail out many of the nation’s most prominent financial firms.
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Read the entire article
Saturday, January 24, 2009
Thursday, January 22, 2009
NBR interview with Warren Buffett
(www.pbs.org) SUSIE GHARIB, ANCHOR, NIGHTLY BUSINESS REPORT: Are we overly optimistic about what President Obama can do?
WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY: Well I think if you think that he can turn things around in a month or three months or six months and there’s going to be some magical transformation since he took office on the 20th that can’t happen and wouldn’t happen. So you don’t want to get into Superman-type expectations. On the other hand, I don’t think there’s anybody better than you could have had; have in the presidency than Barack Obama at this time. He understands economics. He’s a very smart guy. He’s a cool rational-type thinker. He will work with the right kind of people. So you’ve got the right person in the operating room, but it doesn’t mean the patient is going to leave the hospital tomorrow.
SG: Mr. Buffett, I know that you’re close to President Obama, what are you advising him?
WB: Well I’m not advising him really, but if I were I wouldn’t be able to talk about it. I am available any time. But he’s got all kinds of talent right back there with him in Washington. Plus he’s a talent himself so if I never contributed anything for him, fine.
Read the entire transcript here
WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY: Well I think if you think that he can turn things around in a month or three months or six months and there’s going to be some magical transformation since he took office on the 20th that can’t happen and wouldn’t happen. So you don’t want to get into Superman-type expectations. On the other hand, I don’t think there’s anybody better than you could have had; have in the presidency than Barack Obama at this time. He understands economics. He’s a very smart guy. He’s a cool rational-type thinker. He will work with the right kind of people. So you’ve got the right person in the operating room, but it doesn’t mean the patient is going to leave the hospital tomorrow.
SG: Mr. Buffett, I know that you’re close to President Obama, what are you advising him?
WB: Well I’m not advising him really, but if I were I wouldn’t be able to talk about it. I am available any time. But he’s got all kinds of talent right back there with him in Washington. Plus he’s a talent himself so if I never contributed anything for him, fine.
Read the entire transcript here
Wednesday, January 21, 2009
Monday, January 19, 2009
Ken Lewis, Failure
(Portfolio.com) .....Then in October, Ken Lewis told Lesley Stahl on 60 Minutes that he believed it was his patriotic duty to take the $25 billion in TARP money even though his bank didn't need it. With another $20 billion in cash and a whopping $118 billion in loan guarantees, Lewis must be draping himself with the American flag these days.
The bottom line is that Ken Lewis is a failure. Bank of America has now received more bailout money than the bank is worth. He believed he was doing everyone a favor when he agreed to buy Merrill Lynch with very little due diligence. But now we know he's nothing more than just another bank executive who refuses to read the writing on the wall about just how worthless the junk on the balance sheet really is.
Read the whole article
The bottom line is that Ken Lewis is a failure. Bank of America has now received more bailout money than the bank is worth. He believed he was doing everyone a favor when he agreed to buy Merrill Lynch with very little due diligence. But now we know he's nothing more than just another bank executive who refuses to read the writing on the wall about just how worthless the junk on the balance sheet really is.
Read the whole article
Jim Rogers Says Worried About Dollar, Favors China
(Bloomberg) Jim Rogers, chairman of Singapore- based Rogers Holdings, said investors should be “worried” about the U.S. dollar, and recommended selling government bonds and buying raw materials, China stocks and the yen.
“If I were you, I would be worried about the U.S. dollar,” said Rogers, 66, in a speech at the Asia Financial Forum in Hong Kong today. “The Americans are printing U.S. dollars. The Americans are going to do whatever they can to revive their economy, even if it means destroying the U.S. dollar.”
Read the entire story
“If I were you, I would be worried about the U.S. dollar,” said Rogers, 66, in a speech at the Asia Financial Forum in Hong Kong today. “The Americans are printing U.S. dollars. The Americans are going to do whatever they can to revive their economy, even if it means destroying the U.S. dollar.”
Read the entire story
Warren Buffett's Dateline Interview with NBC's Tom Brokaw: The Complete Transcript
(CNBC.com) TOM BROKAW, NBC NEWS:
Last fall, Warren a pollster told me that the election was between hope and fear. When it comes to the economy, who's winning, hope or fear?
WARREN BUFFETT:
Well, right now fear is. I mean, you're seeing it everyplace. You saw it at-- in the sales of almost every item at-- at Christmas. There's a lot of fear throughout the country. Even-- even with people whose jobs are fine, and who have money in the bank. But they-- they're worried.
Read the entire interview
Last fall, Warren a pollster told me that the election was between hope and fear. When it comes to the economy, who's winning, hope or fear?
WARREN BUFFETT:
Well, right now fear is. I mean, you're seeing it everyplace. You saw it at-- in the sales of almost every item at-- at Christmas. There's a lot of fear throughout the country. Even-- even with people whose jobs are fine, and who have money in the bank. But they-- they're worried.
Read the entire interview
Sunday, January 18, 2009
Watch out, world: Americans are saving again
(Globeandmail.com) In one of the biggest and most misunderstood changes in modern economic history, citizens of the largest economy in the world are suddenly doing something they haven't done in years: They're saving money. It is having myriad consequences, including a tsunami of money in one part of the world, and an air pocket in demand in other parts of the world, especially China.
Americans are suddenly spending less than they earn. While that might not sound heretical or surprising - how long can you go on spending more money than you earn? - it is an epochal moment for the free-spending United States. After saving an average of more than 7 per cent of disposable income until almost 1990, the United States went into a savings tailspin. Savings rates fell, in fits and starts, from 8 per cent, through 6 per cent in the early 1990s, to 2 per cent around 2000, to the ignominy of a negative savings rate by mid-2005.
Read the entire article
Americans are suddenly spending less than they earn. While that might not sound heretical or surprising - how long can you go on spending more money than you earn? - it is an epochal moment for the free-spending United States. After saving an average of more than 7 per cent of disposable income until almost 1990, the United States went into a savings tailspin. Savings rates fell, in fits and starts, from 8 per cent, through 6 per cent in the early 1990s, to 2 per cent around 2000, to the ignominy of a negative savings rate by mid-2005.
Read the entire article
Saturday, January 17, 2009
Drumbeat for Ken Lewis Resignation Builds
(ritholtz.com) Wednesday night, I suggested it was Time to Fire Ken Lewis of Bank of America. Since then, several other people have come out to echo those sentiments:
David Reilly, Bloomberg notes that the bad bet on Merrill follows a bad bet on China Construction Bank and an even worse bet on Countrywide:
Read the entire story
David Reilly, Bloomberg notes that the bad bet on Merrill follows a bad bet on China Construction Bank and an even worse bet on Countrywide:
Read the entire story
Legendary Investor Warren Buffett Upbeat for Longer-term
(www.voanews.com) The world's richest man, legendary investor Warren Buffett, tells VOA that despite a deep financial and economic crisis, he believes American stocks are cheap and he is optimistic about the longer-term future.
Read the entire article
Read the entire article
Treasury/Fed: All Goldman Sachs, All the Time
Don't quite understand the Government's obsession with Goldman Sachs, but here they go again.
(ritholtz.com) Yes, another Fed slot is soon to be filled, with another Goldman Sachs alum.
I never bought into the conspiracy that Goldman is taking over the financial world, but the lack of diversity of thought and the risk of groupthink is increasingly becoming a concern . . .
Read the entire story
(ritholtz.com) Yes, another Fed slot is soon to be filled, with another Goldman Sachs alum.
I never bought into the conspiracy that Goldman is taking over the financial world, but the lack of diversity of thought and the risk of groupthink is increasingly becoming a concern . . .
Read the entire story
Friday, January 16, 2009
Thursday, January 15, 2009
Today's Outrage: Bank of America's Secret Backroom Bailout (BAC)
(Clusterstock.com) In mid-December, the WSJ tells us, Bank of America (BAC) went to Hank Paulson and threatened that if he didn't give the firm another TARP bailout, they'd abandon the Merrill Lynch deal and cripple the financial system. Paulson then apparently spent more money he didn't have, promising that he would rescue BAC yet again. (This a month or so after an annoyed Ken Lewis said he didn't want or need the original TARP infusion).
There is only one word to describe this: Outrageous.
Read the entire article
There is only one word to describe this: Outrageous.
Read the entire article
The Usual Suspects
(Portfolio.com) Wall Street bankers who’ve spent any time in the business often find they suffer from “Goldman Sachs envy”—a bitter mix of resentment and begrudging admiration for the firm’s seemingly endless list of triumphs. It thrived while others struggled, and even if competitors were succeeding, Goldman always one-upped them. It sealed bigger deals, showered its executives with more money, and placed its powerful alumni in higher levels of government.
Now, with Goldman emerging from the financial crisis battered but still on top, the Street is seeing something more insidiously silly: a bona fide Goldman conspiracy. “A lot of people think that they must have gotten where they are because of some unfair advantage,” hedge fund manager Bill Fleckenstein says. “Nobody likes to think that someone flat out beat ’em.” (See a list of Goldman Sachs alumni and how they figure into the market turmoil of recent months.)
Read the entire article
Now, with Goldman emerging from the financial crisis battered but still on top, the Street is seeing something more insidiously silly: a bona fide Goldman conspiracy. “A lot of people think that they must have gotten where they are because of some unfair advantage,” hedge fund manager Bill Fleckenstein says. “Nobody likes to think that someone flat out beat ’em.” (See a list of Goldman Sachs alumni and how they figure into the market turmoil of recent months.)
Read the entire article
Tuesday, January 13, 2009
Ben Bernanke: We're Bringing Back The Original TARP
No wonder the public has lost confidence...government cannot even decide how to implement or oversee the TARP.
(Clusterstock.com) In his speech this morning to the London School of Economics, Bernanke indicated that the Federal Reserve may resurrect the original concept of the Troubled Asset Relief Program--buying troubled assets.
The basic idea is the same as its always been: banks hold so many assets of unknown and unknowable values that their are perceived as extremely unstable. To put it more bluntly: outsiders fear banks are still mismarking assets way above their actual value, so they won't trust the balance sheets. "Well capitalized" is just read as "lying about our financial health."
Read the entire story
(Clusterstock.com) In his speech this morning to the London School of Economics, Bernanke indicated that the Federal Reserve may resurrect the original concept of the Troubled Asset Relief Program--buying troubled assets.
The basic idea is the same as its always been: banks hold so many assets of unknown and unknowable values that their are perceived as extremely unstable. To put it more bluntly: outsiders fear banks are still mismarking assets way above their actual value, so they won't trust the balance sheets. "Well capitalized" is just read as "lying about our financial health."
Read the entire story
Longleaf Partners 4th Quarter Update
(longleafpartners.com) Client communication dated 12/19/08 to clients of Longleaf Partners.
Read the update here
Read the update here
Bruce Berkowitz: “Prices today are as attractive
(Advisorperspectives.com) Bruce Berkowitz is the Founder and Managing Member of Fairholme Capital Management and the portfolio manager for the Fairholme Fund (FAIRX), a $6.7 billion fund that he started in 1997. The Fairholme Fund, which has consistently outperformed the S&P 500 since its inception, is one of the top 10 actively managed funds within the Most Popular Mutual Funds in the Advisor Perspectives universe.1 One of the most respected experts on value investing, Mr. Berkowitz is the author of an introduction to a chapter in the 6th edition of Securities Analysis, a textbook on value investing by Graham and Dodd. The chapter is devoted to Graham and Dodd’s concept of the dividend factor, which forms the basis for Mr. Berkowitz’ reliance on free cash flow yield as his key metric for valuation.
Read the entire article
Read the entire article
Signs Seen of Possible Plea Deal for Madoff
(NY Times/DealBook Blog) After a federal magistrate refused to revoke bail on Monday for Bernard L. Madoff, the financier accused of operating a $50 billion Ponzi scheme, signs emerged that his lawyer was actively negotiating a plea agreement that could conclude the baffling fraud case without a trial, The New York Times’s Diana B. Henriques reported.
Federal prosecutors acknowledged in a court order released Monday that Mr. Madoff’s lawyer, Ira Lee Sorkin, is “engaging in discussions concerning a possible disposition of this case.”
Read the entire column
Federal prosecutors acknowledged in a court order released Monday that Mr. Madoff’s lawyer, Ira Lee Sorkin, is “engaging in discussions concerning a possible disposition of this case.”
Read the entire column
Eveillard and Englander Shun Leverage, Beat Rivals
(Bloomberg) Jean-Marie Eveillard, who beat 99 percent of rival equity fund managers last year by hoarding cash instead of borrowing it, is loading up on Japanese insurers and Hong Kong developers.
“Leverage eliminates your staying power,” said Eveillard, whose $16.8 billion First Eagle Global Fund beat the Standard & Poor’s 500 Index every year this decade. “If things go well, you look even better, but if things go badly, you end up doing worse,” he said in an interview from his office at Arnhold & S. Bleichroeder Advisers LLC overlooking Central Park in New York. “You could blow up if big leverage is being used.”
Read the entire article
“Leverage eliminates your staying power,” said Eveillard, whose $16.8 billion First Eagle Global Fund beat the Standard & Poor’s 500 Index every year this decade. “If things go well, you look even better, but if things go badly, you end up doing worse,” he said in an interview from his office at Arnhold & S. Bleichroeder Advisers LLC overlooking Central Park in New York. “You could blow up if big leverage is being used.”
Read the entire article
Saturday, January 10, 2009
Buffett’s Better Deal
No wonder Buffett doesn't like to hire investment bankers!
(Ritholtz.com) Earlier this morning, we discussed how badly the Treasury department, along with Congress, had bungled the bailout monies.
These two graphics show exactly what an awful deal the taxpayer got for our monies.
Read the entire story
(Ritholtz.com) Earlier this morning, we discussed how badly the Treasury department, along with Congress, had bungled the bailout monies.
These two graphics show exactly what an awful deal the taxpayer got for our monies.
Read the entire story
Thursday, January 8, 2009
Taxpayer financed signing bonuses....
(footnoted.org) While there’s been no shortgage of stories that question exactly what banks that receive money under the Treasury’s TARP program plan to do with that money, tracking down the details are a lot more difficult. In part, that’s because the Treasury department’s own website is an embarrassment that makes anyone trying to practice oversight, like my friends at bailoutsleuth.com, an exercise in extreme frustration. As the WSJ noted on Tuesday, Treasury’s most recent progress report on Tuesday didn’t even provide a running total on how much money has been handed out so far — a not-so-minor detail.
Read the entire article
Read the entire article
Paulson to Discover Fate of His $500 Million Fortune
(Bloomberg) Treasury Secretary Henry Paulson, a $500 million man when he entered office, said he’s about to discover how much of his fortune remains after two years of financial market turmoil.
“I’ve got to find out where my money has been invested,” Paulson, 62, said today after a speech, drawing laughter from the Washington Economic Club.
Read the entire story
“I’ve got to find out where my money has been invested,” Paulson, 62, said today after a speech, drawing laughter from the Washington Economic Club.
Read the entire story
Adult Entertainment Industry Wants a Bailout
Everybody wants a bailout, even the adult entertainment indusry! Not sure if this is a joke or not, but here is the story. Who knows, the way our government is throwing around money, they might get it.
(foxbusiness.com) With the financial industry, auto makers and more getting assistance from the federal government to stay afloat during the recession, the adult industry decided it would try to get something as well.
Girls Gone Wild CEO Joe Francis and “Hustler” magazine publisher Larry Flynt have said they will petition Congress for financial aid along the lines of what the Big Three auto makers are getting.
Read the entire article
(foxbusiness.com) With the financial industry, auto makers and more getting assistance from the federal government to stay afloat during the recession, the adult industry decided it would try to get something as well.
Girls Gone Wild CEO Joe Francis and “Hustler” magazine publisher Larry Flynt have said they will petition Congress for financial aid along the lines of what the Big Three auto makers are getting.
Read the entire article
Wednesday, January 7, 2009
10 investing basics from Buffett
(moneycentral.msn.com) Last year's market madness didn't just flush away $7 trillion in wealth.
It also washed away a lot of investors' confidence and left them stumped about the best position to take now. "Somewhere between cash and fetal," quips one pessimist.
In such downbeat times, let's consider a dose of optimism, wisdom and insight: the basics as taught by that perennial investing Yoda, Warren Buffett.
Read the entire story
It also washed away a lot of investors' confidence and left them stumped about the best position to take now. "Somewhere between cash and fetal," quips one pessimist.
In such downbeat times, let's consider a dose of optimism, wisdom and insight: the basics as taught by that perennial investing Yoda, Warren Buffett.
Read the entire story
Merrill’s Rosenberg: No Recovery In 2009
(Clusterstock.com) Merrill Lynch economist David Rosenberg has once again bucked the consensus among market commentators who appear to have agreed that the US economy will recover in the second half of 2009. Based on our entirely unscientific survey of people talking to financial news folks, it seems that many believe that a recovery will come sometime in the second half of the year and that the stock market will anticipate this recovery by rallying some nine months before the economy.
The lesson of this would seem to be: buy stocks now! The Obama recovery is coming and you might miss the bottom.
Well, not so fast says Rosenberg.
Read the entire story
The lesson of this would seem to be: buy stocks now! The Obama recovery is coming and you might miss the bottom.
Well, not so fast says Rosenberg.
Read the entire story
Monday, January 5, 2009
Byron Wien: Stocks, Gold, Oil To Skyrocket In 2009
(Clusterstock.com) It's that time of year again: Time for strategists to take big, bold swings, cross their fingers, and hope that enough goes right that they can say "As we said in January" (Or, if not, that the predictions disappear unnoticed in the noise).
Today, Pequot's Byron Wien throws his annual hat in the ring. Byron's bottom line? Buy everything.
Read the entire article
Today, Pequot's Byron Wien throws his annual hat in the ring. Byron's bottom line? Buy everything.
Read the entire article
Ready for a rally?
(Economist.com/Buttonwood column) Markets could decouple from the economy in 2009—in a pleasant way for equity investors.
SOOTHSAYING is not a very respectable profession. Like Cassandra, those whose forecasts are correct tend not to be believed. Most people are drawn into extrapolating from current trends and are thus surprised when things change. That is one reason why economists are so hopeless at predicting recessions.
Read the entire story
SOOTHSAYING is not a very respectable profession. Like Cassandra, those whose forecasts are correct tend not to be believed. Most people are drawn into extrapolating from current trends and are thus surprised when things change. That is one reason why economists are so hopeless at predicting recessions.
Read the entire story
Saturday, January 3, 2009
By the Numbers — How 2008 Shakes Out
(MarketBeat Blog-Wall Street Journal)
Now that 2008 is finally history, it’s time to look back at the year in numbers — most of them pretty terrible.
-33.84% The percentage loss in the Dow industrials, worst since 1931, third-worst in history.
-38.49% The percentage loss in the S&P 500, worst since 1937.
-40.54% The percentage loss for the Nasdaq Composite Index, worst in history.
Read the entire story
Now that 2008 is finally history, it’s time to look back at the year in numbers — most of them pretty terrible.
-33.84% The percentage loss in the Dow industrials, worst since 1931, third-worst in history.
-38.49% The percentage loss in the S&P 500, worst since 1937.
-40.54% The percentage loss for the Nasdaq Composite Index, worst in history.
Read the entire story
Thursday, January 1, 2009
U.S. Stocks Post Steepest Yearly Decline Since Great Depression
(Bloomberg) U.S. stocks plunged the most in 2008 since the Great Depression as financial shares collapsed, energy and metal producers tumbled and the world’s biggest economy suffered a yearlong recession.
Citigroup Inc., Bank of America Corp. and Goldman Sachs Group Inc. retreated more than 60 percent as 80 out of the 84 financial institutions in the Standard & Poor’s 500 Index declined. Exxon Mobil Corp. and Freeport-McMoRan Copper & Gold Inc. fell as the Reuters/Jefferies CRB Index of 19 raw materials dropped a record 36 percent. Caterpillar Inc. sank 38 percent as the U.S., Europe and Japan experienced the first simultaneous contractions since World War II.
Read the entire article
Citigroup Inc., Bank of America Corp. and Goldman Sachs Group Inc. retreated more than 60 percent as 80 out of the 84 financial institutions in the Standard & Poor’s 500 Index declined. Exxon Mobil Corp. and Freeport-McMoRan Copper & Gold Inc. fell as the Reuters/Jefferies CRB Index of 19 raw materials dropped a record 36 percent. Caterpillar Inc. sank 38 percent as the U.S., Europe and Japan experienced the first simultaneous contractions since World War II.
Read the entire article
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