Long On Value

Munger Says `Thank God' U.S. Opted for Bailouts Over Handouts

2010-09-26T09:47:00.000-04:00

(Bloomberg.com) Charles Munger, the billionaire vice chairman of Berkshire Hathaway Inc., defended the U.S. financial-company rescues of 2008 and told students that people in economic distress should “suck it in and cope.” Click here for the rest of the story

Warren, which is it? Perhaps he is on TV a little too much?

2010-09-26T09:34:00.004-04:00

(bloomberg.com)Buffett Rules Out Double-Dip Recession Amid Growth (September 13, 2010)

(cnbc.com)Buffett: Recession continues, by his definition (September 23, 2010)

Bill Gross' Latest Newsletter

2010-03-02T06:58:00.002-05:00

(pimco.com)

Don't Care

I haven’t gone to a cocktail party in over 10 years. Granted, perpetually watching Seinfeld reruns on Friday and Saturday nights makes for a dull boy, but the alternative is excruciating. Uh, which would I prefer – solitary confinement or water boarding? I lean strongly in the direction of a warm bed and peace as opposed to a glass full of tinkling ice cubes and a room resonating with high-decibel blather. I suppose the parties wouldn’t be so bad if there was something original to be said, or if “you” had a genuine interest in “me” as opposed to “you,” but let’s face it folks, no one does. The only reason any of us really cares about cocktail conversations is to quickly redirect someone else’s stories into autobiographies that we assume to be instant bestsellers if only in print. If not, if the doe-eyed listener seems simply fascinated by what you’re saying, you can bet there’s a requested personal favor coming when you finally shut up. “Say Bill, I was wondering if you knew somebody at…that could…” Yeah right! But, as my chart shows, 90 seconds into a typical conversation, no one gives a damn about you and your problems – maybe those shoes and that dreadful eye shadow you’re wearing, but not anything audible coming out of your mouth.

Read the entire letter

Read Warren Buffett's Letter to Shareholders

2010-02-28T08:38:00.001-05:00

(berkshirehathaway.com)

To read the annual letter go here.

Warren Buffett: "When It's Raining Gold, Reach For a Bucket"

2010-02-28T08:36:00.000-05:00

(CNBC.com) Warren Buffett has a new nugget of pithy advice for investors in his new letter to Berkshire shareholders: "When it's raining gold, reach for a bucket, not a thimble."

Buffett recalls that last year's letter called corporate and municipal bonds "ridiculously cheap" compared to U.S. Treasuries. And we says Berkshire did "back" that view by making some purchases, but "I should have done far more. Big opportunities come infrequently."

Read the entire article

Grantham’s ‘Horrifically Early’ Calls Challenge GMO

2010-02-28T08:34:00.001-05:00

(Bloomberg) Jeremy Grantham warned in January 2000 that U.S. equities were “more overpriced than at any time in the last 70 years due to the massive overpricing of technology and especially dot-com stocks.”

By the end of 2002, the Standard & Poor’s 500 Index had fallen 40 percent and technology shares were down 73 percent. The forecast didn’t help his firm, Grantham Mayo Van Otterloo Co., because he’d been bearish since 1997. Assets declined 45 percent in the late 1990s as customers sought out better- performing mutual funds that liked the technology stocks Grantham disdained

Read the entire article

A Parable by Charles Munger

2010-02-21T07:54:00.001-05:00

(slate.com) In the early 1700s, Europeans discovered in the Pacific Ocean a large, unpopulated island with a temperate climate, rich in all nature's bounty except coal, oil, and natural gas. Reflecting its lack of civilization, they named this island "Basicland."

The Europeans rapidly repopulated Basicland, creating a new nation. They installed a system of government like that of the early United States. There was much encouragement of trade, and no internal tariff or other impediment to such trade. Property rights were greatly respected and strongly enforced. The banking system was simple. It adapted to a national ethos that sought to provide a sound currency, efficient trade, and ample loans for credit-worthy businesses while strongly discouraging loans to the incompetent or for ordinary daily purchases.

Read Munger's entire piece here

Investment Outlook--Winter 2010

2010-01-26T08:46:00.001-05:00

Read our Investment Outlook--Winter 2010 here

Jeremy Grantham's Latest Letter

2010-01-26T08:44:00.001-05:00

(www.gmo.com)

Read "Stop the Presses! (January 21, 2010) here

Buffett & Gates--Keeeping America Great

2009-11-13T06:07:00.001-05:00

(www.cnbc.com)From Columbia University

ANNOUNCER: The embodiment of the American dream, Warren Buffett and Bill Gates, self-made billionaires whose values run as deep as their wealth. One redefined an industry, the other the modern investor. But both put their stock in America, and by investing in business and humanity, reaped the rewards of this great country's capitalist tradition. Today that tradition is under siege, our way of life questioned. And with America at an inflection point, a future generation looks for guidance from the world's two greatest capitalists. Now, they are going back to school, not to learn, but to teach. Showing the next generation of business leaders that wealth is not about the money you amass, but the number of lives you enrich. Tonight in a CNBC town hall event, Warren Buffett and Bill Gates share their secrets to keeping America great.

Read the transcript here

New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers

2009-10-28T12:08:00.000-04:00

(bloomberg.com) In the months leading up to the September 2008 collapse of giant insurer American International Group Inc., Elias Habayeb and his colleagues worked nights and weekends negotiating with banks that had bought $62 billion of credit-default swaps from AIG, according to a person who has worked with Habayeb.

Habayeb, 37, was chief financial officer for the AIG division that oversaw AIG Financial Products, the unit that had sold the swaps to the banks. One of his goals was to persuade the banks to accept discounts of as much as 40 cents on the dollar, according to people familiar with the matter.

Read the entire article

Pimco's Gross calls top of rally in risky assets

2009-10-27T13:25:00.000-04:00

(marketwatch.com) The six-month rally in risk assets -- while still continuously supported by Fed and Treasury policymakers -- is likely at its pinnacle," Gross wrote in his monthly market commentary.

The U.S. economy and most other developed economies became too reliant on rising asset prices, rather than the production of goods and services, in recent decades. When the financial crisis hit, governments and policymakers had to slash interest rates and take other more dramatic action to prevent asset values plunging, Gross explained.

Read the enitre article

Charlie Munger: Boom and bust is normal

2009-10-27T11:14:00.001-04:00

(bbc.co.uk) Charlie Munger is Warren Buffett's long-time business partner, and the Vice-Chairman of Berkshire Hathaway.

Like Buffett, he was born in Omaha, but became a lawyer in Los Angeles before meeting Buffett, and becoming a fellow investor. The two spent many hours on the phone together, discussing business, and evolving the approach to investing that has paid off so spectacularly for them both.

View the video here

U.S. Equities Will ‘Drop Painfully,’ Grantham Says

2009-10-27T07:30:00.000-04:00

(bloomberg.com) U.S. stocks will “drop painfully from current levels” in the coming year amid disappointing economic data and shrinking profit margins, according to investor Jeremy Grantham.

The so-called fair value for the Standard & Poor’s 500 Index is at the 860 level, the chief investment strategist at Boston-based Grantham Mayo Van Otterloo & Co., which oversees about $89 billion, wrote in a quarterly report. The gauge fell 1.2 percent yesterday to 1,066.95. It has rallied 58 percent from a 12-year low on March 9 on rising confidence a U.S. economic recovery will boost corporate earnings.

Read the entire article

Too Big to Fail by Andrew Ross Sorkin

2009-10-09T17:45:00.001-04:00

(vanityfair.com)

Day One
Wednesday, September 17, 2008: After Lehman and A.I.G.
When Tim Geithner, president of the Federal Reserve Bank of New York, began his run that morning along the southern tip of Manhattan and up the East River just after six, the sun had yet to come up. He was tired and stressed, having slept only several hours in one of the three tiny, grubby bedrooms in the New York Fed’s headquarters.

Read the entire article

David Winters and Whitney Tilson Interviews

2009-10-07T09:13:00.001-04:00

(www.wealthtrack.com) Excellent interview by Consuelo Mack

Read the transcipt here

Warren Buffett to CNBC: No Regrets From Crisis Weekend One Year Ago

2009-09-16T06:12:00.001-04:00

(cnbc.com) Warren Buffett tells CNBC he has no regrets about any of the decisions he made over the weekend one year ago in September, 2008, when the financial crisis was at its worst.

In a taped interview with Squawk Box's Becky Quick airing tonight, Buffett says he "looked hard" at a telephoned offer that Friday night to buy AIG's property casualty operation in the range of $20 billion to $25 billion, but decided against it.

He recalls telling AIG CEO Bob Willumstad that night, "Unfortunately, I can't do this deal. And don't waste your time with me, so go someplace else."

Read the entire story

Transcript: Jean-Marie Eveillard

2009-09-14T16:17:00.001-04:00

(forbes.com) Jean-Marie Eveillard is senior adviser of First Eagle Funds.

Steve Forbes: Jean-Marie, thank you very much for joining us.

Jean-Marie Eveillard: My pleasure, Steve.

Forbes: You have been called a value investor. Can you define what you mean by value investing?

Eveillard: Well, value investing, it, as you know, it's Ben Graham, who in the '30s, found the value school--founded the value school. And it's the idea that you look at businesses, you try to figure out what they're worth. Not in terms of the next quarterly earnings, but what, if you have the cash, what kind of price you'd be willing to pay for it today, for the entire business.

Read the entire transcript

Live Blog: Jim Rogers on the Crisis, Banks, Investment

2009-09-14T05:41:00.000-04:00

(cnbc.com) Abolish the Federal Reserve and let AIG go bankrupt for the world economy to emerge cleaner from the financial meltdown, legendary investor Jim Rogers told CNBC a year ago.

But governments around the world have rushed to bail out banks and pumped trillions of dollars in their economies to avert an economic disaster. A year after Lehman Brothers collapsed, here is what Jim Rogers tells CNBC (most recent quotes at the bottom):

Read the entire article

Closely Watched Buffett Recalculating His Bets

2009-09-08T08:35:00.001-04:00

(nytimes.com) Warren E. Buffett has two cardinal rules of investing. Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.

Well, a lot of old rules got trashed when the financial crisis struck — even for the Oracle of Omaha.

At 79, Mr. Buffett is coming off the worst year of his long, storied career. On paper, he personally lost an estimated $25 billion in the financial panic of 2008, enough to cost him his title as the world’s richest man. (His friend and sometime bridge partner, Bill Gates, now holds that honor, according to Forbes.)

Read the entire article

On the “Course” to a New Normal

2009-09-01T19:58:00.001-04:00

(www.pimco.com) Analyzing why people play golf is like exploring the intricacies of string theory – there are so many permutations lacking scientific observation that physicists or golfers can pretty darn well say anything they like and the explanation might stick. When it comes to whacking that little white ball, the possibilities are nearly endless: People play to relax, to be with friends, to get close to Mother Nature, to enhance business connections, to compete and excel. Gosh, I don’t know, the Zen explanation for why we play golf could even resemble the old saw about climbing a mountain: People golf because it’s there. Whatever the reason, it is the most frustrating, damnable game ever conceived – alternately elevating and depressing you within the span of mere minutes. I love golf. No, I hate it.

Personally, the reason that golf draws me to its intricate web of psychological entrapment is epitomized by a simple six-inch trophy: a chartreuse ball resting on top of its ebony base, preening on a bookshelf in the family room at our desert home. Its inscription reads, “Hole in one, March 15th, 1990, 14th hole Desert Course, 155 yards.” Well and good, I suppose – the ace of my life – except it wasn’t. It was the ace of my wife. Above the inscription rests the name Sue – not Bill – Gross. It was a great shot but it wasn’t my shot, and I guess therein lies the explanation for why I continue to tee it up.

Read Bill Gross' letter here

Raft of Deals for Failed Banks Puts U.S. on Hook for Billions

2009-08-31T11:36:00.000-04:00

(wsj.com) The biggest spur to deal-making among banks isn't private-equity cash or foreign investors. It is the federal government.

To encourage banks to pick through the wreckage of their collapsed competitors, the Federal Deposit Insurance Corp. has agreed to assume most of the risk on $80 billion in loans and other assets. The agency expects it will eventually have to cover $14 billion in future losses on deals cut so far. The initiative amounts to a subsidy for dozens of hand-picked banks.

Read the entire article

Bond Market To Stock Investors: You People Are A Bunch Of Morons

2009-08-31T07:57:00.000-04:00

(www.businessinsider.com) Stock investors are giddy about the impending v-shaped recovery (which, at this point, seems required to drive the stock market higher).

Bond investors, meanwhile, are looking forward and seeing nothing but crap. Despite trillions of proto-inflationary reserves being pumped into the global economic system, bonds are rallying and rates are dropping.

Read the entire story

Too Bigger to Fail

2009-08-30T16:17:00.001-04:00

(paul.kedrosky.com) The banks that were mostly too big to fail are now bigger. Maybe if they get bigger yet we can redefine “big” and call them “small” again, thus starting over.

Read the entire story

The Trashiest Stocks Are On Fire (FNM, FRE, AIG)

2009-08-24T20:25:00.000-04:00

(businessinsider.com) Since the market hit its lows in early March, the trashiest, most beaten-down stocks have been the big winners. Some are arguing that the trash stocks have to slow down soon. But in the meantime, it looks like investors are reaching for the trashiest of the trash. Check out the crazy runs in Fannie Mae (FNM), Freddie Mac (FRE).

See the charts here

Grant's Summer Break Issue

2009-08-22T08:31:00.001-04:00

To the readers of Grant’s: This compilation of recent articles, the first annual Grant’s Beachhead issue, is for you. And it’s for your friends, co-workers, clients, classmates, shipmates, brothers-in-law and maids-of-honor, too. Please pass it along, with our thanks, to any and all prospective members of the greater Grant’s family.

(www.grantspub.com)

Go here to read the Beachead Issue

Gartman Starts First Hedge Fund Betting on Stocks, Commodities

2009-08-20T14:38:00.001-04:00

Will Gartman be more successful than other's with CNBC ties?
(bloomberg.com) Dennis Gartman, an economist and the editor of the Gartman Letter, said he is creating his first hedge fund to speculate on assets including global equities and commodities.

The River Crescent Fund, created Aug. 17, seeks to raise $200 million over the first year, Gartman said today in an interview from Suffolk, Virginia. The fund already includes some “well-known hedge-fund managers,” he said, without identifying them. Gartman has managed guaranteed notes since 2007 and an exchange-traded fund since April in Canada.

Read the entire story

Pimco Says Dollar to Weaken as Reserve Status Erodes

2009-08-19T08:14:00.001-04:00

(www.bloomberg.com) Pacific Investment Management Co., which runs the world’s biggest bond fund, said the dollar will weaken as the U.S. pumps “massive” amounts of money into the economy.

The dollar will drop the most against emerging-market counterparts, Curtis A. Mewbourne, a Pimco portfolio manager, wrote in a report on the company’s Web site. The greenback is losing its status as the world’s reserve currency, he said.

Read the entire story

NY Times/Warren Buffett OP/ED

2009-08-19T07:39:00.001-04:00

(www.nytimes.com) IN nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions.

The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions.

Read the entire OP/ED here

PIMCO's El-Erian: Stocks Have Hit A Wall

2009-08-18T19:58:00.001-04:00

(www.businessinsider.com) Mohamed El-Erian has called the recent Wall Street rally a "sugar high." Now, he says U.S. stocks have hit a wall.

The chief executive of bond-king PIMCO said on Reuters TV that U.S. stocks had topped out because valuations have shot up too quickly.

Read the entire story here

“The White House, a Subsidiary of . . .”

2009-08-18T19:55:00.000-04:00

(www.ritholtz.com)

Go here for the answer!

Tudor Investment Calls Stock Gain a Bear-Market Rally

2009-08-09T13:00:00.001-04:00

(bloomberg.com) Tudor Investment Corp., the $10.8 billion hedge-fund firm run by Paul Tudor Jones, said equity markets could decline later this year, creating buying opportunities.

Slowing growth in China and the return of front-page stories on swine flu may be “further catalysts for global equity markets to pause in September,” the Greenwich, Connecticut-based firm said in an Aug. 3 client letter, a copy of which was obtained by Bloomberg News.

Read the entire story

You're An INVESTOR? How Quaint

2009-08-09T12:54:00.001-04:00

(businessinsider.com) James Montier (via John Mauldin) observes that the average holding period for New York Stock Exchange stocks is now down to six months.

We imagine this has something to do with the boom in high-frequency trading, in which stocks are sometimes held for all of six seconds. But week-to-week performance benchmarking of professional fund managers probably has a lot to do with it, too.

In any event, can we please stop pretending that what most fund managers are doing every day is "investing"? Holding stocks for six months isn't investing. It's trading. And because trading is a negative-sum game--one largely focused on trying to figure out what everyone else is doing--it is really speculating.

Read the entire story

Paulson’s Calls to Goldman Tested Ethics

2009-08-09T12:49:00.001-04:00

Just as we suspected......

(nytimes.com) Before he became President George W. Bush’s Treasury secretary in 2006, Henry M. Paulson Jr. agreed to hold himself to a higher ethical standard than his predecessors. He not only sold all his holdings in Goldman Sachs, the investment bank he had run, but also specifically said that he would avoid any substantive interaction with Goldman executives for his entire term unless he first obtained an ethics waiver from the government.

Read the entire article

Secular bear, cyclical bull

2009-07-30T18:16:00.000-04:00

(marketwatch.com) I'm referring, of course, to the debate over what kind of bull market began on March 9.

If that day represented a once-in-a-generation stock market low -- such as the kind seen in December 1974, for example -- then we're in a secular bull market that can be expected to last for many years and which will eventually take the stock market averages to a final top that is several times current levels.

Or did it mark a mere "cyclical" low, in which our expectations, both in terms of time as well as price, need to be far more modest?

For guidance I turn to Ned Davis, the eponymous head of institutional research firm Ned Davis Research.

Read the entire story

GMO Quarterly Letter (July 2009)

2009-07-27T18:45:00.002-04:00

Jeremy Grantham's latest letter!

Read it here

Please Stop With The "Bill Miller Is Back" Stories

2009-07-24T09:43:00.000-04:00

(clusterstock.com) Once a media darling, always a media darling, at least in the world of high-profile, money manager gurus.

Today the Journal comes back to Legg Mason manager Bill Miller: "Blindsided by Bear, Mr. Miller Sees Bull."

The subtitle should be: "Long-only, high-beta investor does well when the market goes up."

Read the entire article

Buffett’s Goldman Stake Pays Richly

2009-07-24T09:40:00.000-04:00

(nytimes/dealbook blog) Warren E. Buffett showed again why he is known as one of the world’s best investors, thanks in part to another prominent investor, Goldman Sachs.

Mr. Buffett’s stake in Goldman is now worth $9.1 billion, or about $4.1 billion more than what he paid 10 months ago, according to an analysis by Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette.

According to Mr. Wilson’s calculations, Mr. Buffett would realize an annualized return of about 111 percent if he sold his Goldman stake, which is held by his conglomerate Berkshire Hathaway.

Read the entire story

The Joy of Sachs

2009-07-17T15:34:00.001-04:00

(nytimes.com) OP/ED from Paul Krugman

The American economy remains in dire straits, with one worker in six unemployed or underemployed. Yet Goldman Sachs just reported record quarterly profits — and it’s preparing to hand out huge bonuses, comparable to what it was paying before the crisis. What does this contrast tell us?

First, it tells us that Goldman is very good at what it does. Unfortunately, what it does is bad for America.

Read the entire editorial

"Goldman Sachs In Talks To Acquire Treasury Department"

2009-07-16T12:13:00.002-04:00

Just kidding, but worth a read.

(businessinsider.com)

..........According to Goldman spokesperson Jonathan Hestron, the merger between Goldman and the Treasury Department is "a good fit" because "they're in the business of printing money and so are we."..........

Read the entire story here

First Pacific Advisors' Robert Rodriguez

2009-07-16T11:50:00.002-04:00

Consuelo Mack interviews one of the best in the business.

(wealthtrack.com)

This week on WealthTrack's "Great Investors" series: he races Porsches for fun and runs top performing stock and bond funds for his profession. What makes First Pacific Advisors' Robert Rodriguez step on the investment brakes or the accelerator? That's next on Consuelo Mack WealthTrack.
Hello and welcome to this "Great Investors" edition of WealthTrack. I'm Consuelo Mack. This week our great investor is Robert Rodriguez, a maverick money manager who has accomplished a feat no one else has. For the last 25 years, he has run not one but two top performing mutual funds, in not one but two asset classes, a stock fund and a bond fund. As widely followed personal finance columnist Jason Zweig put it, that is the investing equivalent of running two marathons at the same time, which is why Zweig calls him the best fund manager of our time.

Read the transcript here

Daily Show Takes on Lenny Dykstra

2009-07-15T13:54:00.002-04:00

(huffingtonpost.com) It was only a matter of time before Jon Stewart -- an unabashed New York Mets fan -- tackled the puzzling rise and spectacular fall of Lenny Dykstra's career as a financial guru. Dykstra, an ex-Mets star, declared bankruptcy last week, after amassing what seemed to be a staggering fortune, including a California home once owned by Wayne Gretzky.

Stewart showed a clip of some of Dykstra's profanity-laden responses his recent financial and legal troubles, and responded with:

Read the entire story

Madoff Is Headed for Prison in Butner, NC, Sources Say

2009-07-13T17:25:00.001-04:00

We really do not want Bernie in NC

(cnbc.com) Convicted swindler Bernie Madoff is on his way to federal prison in Butner, NC, where he is sentenced to spend the next 150 years, CNBC has learned.

According to the Federal Bureau of Prisons Web site, the Butner facility houses a total of about 3,400 inmates.

Read the entire story

Investment Outlook-Summer 2009

2009-07-13T13:08:00.001-04:00

Read the Investment Outlook-Summer 2009 from Jolley Asset Management, LLC

Go here to read the letter

Monday Interview: Man on the money with Buffett

2009-07-12T16:32:00.000-04:00

(ft.com) Wesco Financial’s Pasadena headquarters are a blur of earth tones and cloudless sky. Bathed in southern California sun, the offices hold a glow befitting the gilded career of the company’s chairman, Charlie Munger.

Mr Munger, best known as business partner to Warren Buffett, head of Berkshire Hathaway, is settled deep into his chair. His lips stretched to a thin smile, the 85-year-old billionaire peers through thick glasses.

Over the years, generations of investors, chief executives and journalists have wondered why Mr Munger has stayed happily in the background for almost half a century as Mr Buffett forged a reputation as the world’s greatest stock-picker.

Read the entire story

Who Cares If Bill Miller Is "Back"?

2009-07-07T12:51:00.000-04:00

(www.clusterstock.com) Hey hey, look who it is.

"Legendary" fund manager Bill Miller is back. Investor's Business Daily declares it Miller Time, noting that his Value Trust is handily outperforming the S&P 500 this year, up 9%. His Opportunity Fund is up 23%! Nice job to anyone who decided to put their money with the beaten-down start at the end of last year.

Read the entire article

Jim Cramer Is Less Powerful Than Hannah Storm

2009-07-06T09:18:00.001-04:00

This one is great....Cramer right there with Willard Scott!

(clusterstock.com) We're checking out Mediaite.com this morning, the new media/news/blog/aggregator/opinion/whatever site from former NBC guy Dan Abrams. They've got some stuff about -- what else -- Sarah Palin and Michael Jackson, but the real draw is their devilish "power grid" for media figures, which ranks everyone in using some homebrewed algorithm designed to ensure maximum linkbaitiness.

The big shock so far: Jim Cramer ranks one slot below Hannah Storm in the TV Anchors/Hosts category. And he's only one slot above Willard Scott!

Read the entire article

U.S. regulators could learn from Canada's banks

2009-07-03T19:40:00.000-04:00

(usatoday.com) Our northern neighbor sometimes seems so similar to the United States that it's hard to tell where the USA ends and Canada begins. Here's one way: Canada is the place with healthy banks, taxpayers unscathed by megabillion-dollar bailouts and no need to overhaul financial regulation because it was done right the first time.

As U.S. officials scramble to prevent a crisis sequel, the ability of Canadian banks to navigate the current financial storm is earning global plaudits. The World Economic Forum in October ranked the country's financial institutions No. 1 in the world for solvency. U.S. banks came in 40th, two rungs behind Botswana.

Read the entire article

The Great American Bubble Machine

2009-07-03T19:23:00.000-04:00

(rollingstone.com) The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

Read the entire story

More on Ron Insana's New Stint

2009-07-02T10:19:00.001-04:00

(Clusterstock.com) Ron Insana -- the CNBC guy who plays the role of "wise one" because he had a stint in the fund-of-funds game -- has a new newsletter he's pumping with TheStreet.com.

If your the type of investor who thinks that getting Ron Insana's exclusive stock picks will help you make money, and you want to spend hundreds of dollars on that advice then more power to you, the link is here.

Read the entire article

CNBC’s Ron Insana Learns to Beat the Market — With Cramer’s Help

2009-07-01T15:58:00.003-04:00

Not sure if this a joke or not, but here it goes

(Wall Street Journal-MarketBeatBlog)

In less than a year, Ron Insana, the CNBC senior analyst, apparently has learned a trick or two to go from money-losing hedge fund manager to sure-fire stock picker.

Insana, you may remember, left CNBC in 2006 to launch his own firm, Insana Capital Partners, which was billed as a fund of hedge funds. He sold the firm last year and went to work at Steven Cohen’s SAC Capital Advisors. Neither venture was terribly successful.

Read the entire article

PIMCO's July Investment Outlook

2009-07-01T11:19:00.001-04:00

(PIMCO.com) “Kill the umpire,” the fan cried to open the 1996 baseball season in Cincinnati, and eight pitches later, the man behind the plate, John McSherry, was dead, all 320 pounds of him screaming for more and more oxygen to feed his spastic heart. He’d been killed by a billion molecules of sink-clogging, Drano-resistant cholesterol that fed on his coronary artery and sucked up his life’s blood like a vampire in the heat of the night. The next day Howard Stern had characteristically railed that the antidote was obvious. It was the same for all fat people: “DON’T EAT,” he howled. As if the ump hadn’t known. The fact was, he couldn’t stop. He loved the taste of food – every sugary, fat-ladened, carbohydrated morsel. The first bite was a special ecstasy, as was the last, and everything in between. The man, it seemed, was a Cuisinart with four limbs.

Read all of Bill Gross's letter here

Market Capitalization as a Percentage of GDP

2009-06-25T06:45:00.001-04:00

(ritholtz.com) Another interesting pair of chart from Ron Griess of The Chart Store. These two look at NYSE and NASDAQ relative to nominal GDP.

Read the entire article

Gartman: Warren Buffett Isn't An "Idiot" .. But He Allowed "Inexcusable" Losses

2009-06-23T08:16:00.000-04:00

(cnbc.com) Newsletter writer and frequent CNBC guest Dennis Gartman isn't standing behind his reported "Warren Buffett is an idiot" quote.

But Gartman does tell CNBC it's "inexcusable" that Berkshire Hathaway fell roughly 45 percent in one year because Buffett didn't do enough to "mitigate" his losses in a tough market environment.

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So whatever happened to Paul Volcker?

2009-06-16T09:29:00.000-04:00

(thedeal.com) As the details pile up about what Treasury will formally recommend on regulatory reform Wednesday, you do have to wonder what happened to Paul Volcker and his suggestion in February of a new kind of "Glass-Steagall-like" separation of financial institutions. Volcker, who heads up Obama's Economic Recovery Advisory Board, made the comments at a conference, setting off some discussion among the pundits. Then, silence. Volcker himself hasn't been seen very much -- certainly not like Treasury's Tim Geithner and the seemingly irrepressible head of the Council of Economic Advisors, Larry Summers. A piece on The Huffington Post in May did report that Volcker is talking to the economics team in Treasury and advising Obama, but his office space in the Executive Office Building is empty and the HuffPo suggested that if he has an "office," it's that of CEA member Austen Goolsbee in the White House.

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Why Most Investment Managers Have it Backwards

2009-06-16T09:06:00.001-04:00

(www.advisorperspectives.com/Seth Klarman) For value investors, last fall’s crisis provided an unprecedented opportunity. Down markets are a great time to buy securities, as Graham and Dodd said in Securities Analysis, since the average investor can usually only get them “at prices that the future may cause him to regret.”

For Seth Klarman, founder and president of the Boston-based Baupost Group, last fall was a period that offered many of those opportunities. He delivered the keynote lecture at the annual meeting of the Boston Security Analysts Society last week. Klarman also was the lead editor of and authored the preface to the sixth edition of Graham and Dodd’s Securities Analysis, published in 2008.

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This Rally May Need a New Source of Fuel

2009-06-14T20:16:00.001-04:00

(nytimes.com) IN early March, when stocks fell to 12-year lows, many investors were confident of at least one thing: stocks were cheap.

Three months later, after huge gains, that consensus on stock valuations is breaking down. It’s quite possible that the rally will soon become a victim of its own swift success.

Liz Ann Sonders, chief investment strategist for the Charles Schwab brokerage firm, said that after seeing the Standard & Poor’s 500-stock index jump to above 940 from around 675 in just 14 weeks, a market that had been undervalued is now “fairly valued.” So a major tailwind that propelled stocks since March has disappeared.

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How Do I Know You’re Not Bernie Madoff?

2009-06-13T16:23:00.001-04:00

(nytimes.com) Tony Guernsey has been in the wealth management business for four decades. But clients have started asking him a question that at first caught him off guard: How do I know I own what you tell me I own?

This is the existential crisis rippling through wealth management right now, in the wake of the unraveling of Bernard L. Madoff’s long-running Ponzi scheme. Mr. Guernsey, the head of national wealth management at Wilmington Trust, says he understands why investors are asking the question, but it still unnerves him. “They got their statements from Madoff, and now they get their statement from XYZ Corporation. And they say, ‘How do I know they exist?’ ”

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Buying Stocks or Bonds is ‘Gambling’: John Bogle

2009-06-10T08:04:00.001-04:00

Why would anyone listen to John Bogle anymore? Does anyone?

(cnbc.com) Nobody should buy a stock and nobody should buy a bond, said John Bogle, founder and former CEO of The Vanguard Group.

“You’re betting on prices — you’re betting on buying them from those who don’t know how much they’re worth and selling them to somebody who thinks they’re worth more,” Bogle told CNBC.

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The End of the Armageddon Trade

2009-06-10T08:00:00.000-04:00

(wsj.com) Heard on the Street

It isn't the beginning of the end. But it may be the end of the beginning. The sharp rise in short-dated government bond yields in recent days around the world marks a shift in investor strategies: the Armageddon trade is being unwound.

Since the start of the year, investors have made huge gains betting on a steepening of government bond yield curves. They bought short-dated government bonds, betting yields would remain at low levels thanks to extremely accommodative monetary policy and continued risk aversion, while shorting longer-dated bonds, expecting yields would rise due to fears about inflation, massive government bond supply and fiscal deficits -- a trade known as a bear steepener.

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Berkshire Bought Municipal Bonds Amid Higher Yields

2009-06-09T09:15:00.000-04:00

(www.bloomberg.com) Warren Buffett’s Berkshire Hathaway Inc. doubled its municipal-bond holdings in nine months amid record swings in the value of the securities that the billionaire investor labeled “unthinkable.”

Berkshire increased its investment in debt issued by state and local governments to $4.05 billion as of March 31 from $2.05 billion on June 30, 2008, the Omaha, Nebraska-based company said in regulatory filings. Berkshire added $1.09 billion to the bet in last year’s third quarter and $985 million in the first three months of 2009.

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How to Fix Financial Television

2009-06-08T11:49:00.000-04:00

(www.ritholtz.com) Over the past 5 years, I have appeared on various Financial TV shows over a 100 times. But I am also a huge consumer of financial news, in print, on the web, radio, and of course, TV. Being on both sides of the camera gives me a fairly good perspective on what does and doesn’t work on TV. I also have some strong ideas as to what is good and bad TV in terms of providing a social utility, being part of the democratic process, etc.

Indeed, this is a longstanding interest of mine. Over the weekend, I referenced the current Columbia Journalism Review (CJR) issue that focused on the role of the media in the credit crisis, stock market and economic collapse (CJR on CNBC, WSJ & Business Press). This area has long interested me (hence, our media panel at TBP conference). But I was surprised this post generated 100 comments from readers.

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Who Is Going To Lend Us The Money To Fund Our Exploding Debt?

2009-06-06T19:59:00.001-04:00

(businessinsider.com) PIMCO's Bill Gross joins the chorus of folks concerned that our exploding deficits are leading us down the road to ruin.

The key questions here are:"Who is going to lend us the $2 trillion a year necessary to fund this spending?" and What interest rates are they going to demand to do it?"

Read the entire story here

Buffett Is Less Bullish on U.S. Than You Think:

2009-06-04T06:56:00.001-04:00

(Bloomberg--Alice Schroeder) To the unschooled ear, Warren Buffett’s reassuring words that “America’s best days lie ahead” and that he’s buying U.S. stocks sound prescient, not preposterous.

But fair warning -- he’s not as bullish as he sounds.

Buffett has been right so often that what his words mean, and whether he is right now, are important questions. His skill as a forecaster has a lot to do with his psychology: a buoyant optimism tempered by extreme caution that let him score killings on stocks such as Geico and American Express Co. while steering clear of speculative bubbles, leverage, subprime mortgages, and trying to figure out a rescue for his pal Hank Greenberg’s company American International Group Inc.

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Julian Robertson's Steepener Swap Play

2009-06-03T14:22:00.001-04:00

(marketfolly.com) Simply put, Julian Robertson is the definition of a hedge fund legend. And, his success is noted by the fortune he has amassed as he now graces the Forbes' billionaire list. He has pioneered a successful investment methodology, he has generated outstanding returns at his famous hedge fund Tiger Management, and his influence has sprouted some of the most successful modern day hedge funds in the form of the 'Tiger Cubs.' And, most importantly, he predicted the financial crisis two and a half years ago in an interview with Value Investor Insight. When he talks, you listen.

For those unfamiliar with Robertson, we'd highly recommend checking out the profile/biography we just wrote on him this morning. In that piece, we have outlined exactly why you should follow him (and the Tiger Cubs for that matter too). As we detailed in his profile, Robertson has a unique investment methodology. He takes a macro approach, finds a smart idea, researches it exhaustively, and places a big bet. And, when he feels he is more than correct, he will 'bet the farm.' And, it looks like we have identified Robertson's next play where he has and will continue to 'bet the farm.'

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CHART OF THE DAY: The Trash Rally

2009-06-03T11:11:00.000-04:00

(Businessinsider.com)

Skeptical bears have dismissed the nearly 3-month old rally as just a lot of short-covering and piling into beaten down trash, like financials. With this chart, you can see what they mean. Since the lows in early March, the S&P 500 is up less than 50%, but the NASDAQ OMX Government Relief index -- a basket of companies that have taken government support in one way has more than doubled. Though interestingly, the financial heavy index has slipped a bit since early may. Major banks, which were once the most volatile stocks, have become a snooze.

See the chart here

Reflections and Outrage

2009-06-02T16:18:00.001-04:00

Transcript of Robert Rodriquez's recent speech at the Morningstar Conference.

(fpafunds.com)

I want to thank Morningstar for this honor of speaking to you today. We go back a long time, beginning in 1986, when Don Phillips became the very first analyst to cover my two funds, FPA Capital and FPA New Income. I am deeply grateful for having been selected three times for the Morningstar Manager of the Year award and being recognized for my work in both equity and fixed income management.

For those of you who do not know, I will be taking a sabbatical beginning next year. My trusted partners, Dennis Bryan and Rikard Ekstrand will assume leadership of FPA Capital Fund while Tom Atteberry will do the same for FPA New Income. These three outstanding managers are here today should any of you wish to meet and speak with them. Having a high degree of confidence in them as well as FPA, I will be leaving all my personal investments in the various funds and will retain my equity ownership in the firm. Many executives say they have confidence in their associates but few demonstrate this in such a tangible way. I will return 2011 in a supporting role. My decision to take a sabbatical has nothing to do with the current tumultuous market or my health. More than six years ago, I discussed this as a possibility. I consider this step part of the process of succession planning and execution.

Read the entire speech

Jeremy Grantham's Warnings to Investors

2009-06-02T09:20:00.001-04:00

Another excellent article explaining Grantham's 2009 battle plan
(advisorperspectives.com)

Read the article here

Chinese Students Laugh At Tim Geithner

2009-06-01T15:40:00.001-04:00

(www.businessinsider.com) Poor Tim Geithner. He already comes off as kind of nervous and insecure when talking in public, but at least in the US, the only people who ever bother him are crazed Code Pink activists.

But in China, representing the country as chief bond salesman, the man named to People's 50 most beautiful people list was openly mocked.

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Government’s response to financial crisis has been all wrong, Bob Rodriguez says

2009-05-29T20:09:00.000-04:00

(investmentnews.com) The U.S. government’s response to the economic crisis has been “financially imprudent and irresponsible,” Robert L. Rodriguez, chief executive of First Pacific Advisors LLC of Los Angeles, said today.

Rather than help the economy and the markets recover, the government’s moves to prop up failing companies and get consumers spending again may actually make matters worse, he said during a keynote presentation at the Morningstar Investment Conference in Chicago, which was sponsored by Morningstar Inc., which is based in that city.

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Still Working, but Making Do With Less

2009-05-29T11:10:00.002-04:00

The new consumer is more frugal and likely to stay that way

(nytimes.com) LINCOLN, Calif. — The Ferrells have cut back on dance lessons for their twin daughters. Vaccinations for the family’s two cats and two dogs are out. Haircuts have become a luxury. And before heading out recently to the discount grocery store that has become the family’s new lifeline, Sharon Ferrell checked her bank account balance one more time, dialing the toll-free number from memory.

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Top Buffett Aide Says There's No Sign Of A Recovery

2009-05-29T07:44:00.002-04:00

Berkshire not seeing the same "green shoots" as the media......

(www.businessinsider.com) During the recent Berkshire Hathaway (BRK) annual meeting, Warren Buffett admitted that signs of an economic recovery were few and far between, at least at his businesses.

His close advisors are saying the same thing. Speaking at the Ira Sohn investment conference in New York, top aide David Sokol, the head of Mid-America energy holdings said there were no signs of a rebound ("We're not seeing the green shoots.") in housing or the economy and that the housing mess might persist through 2011.

Read the entire article here

Mortgage Rates Soar As Quantitative Easing Fails

2009-05-27T16:08:00.001-04:00

(www.businessinsider.com) $1.25 trillion of quantitive easing hasn't been enough to keep mortgage rates down. Will the government double down again?

Bloomberg: Yields on Fannie Mae and Freddie Mac mortgage bonds rose for a fourth day, after yesterday for the first time exceeding where they stood before the Federal Reserve announced it would expand purchases to drive down loan rates.

Yields on Washington-based Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds climbed to 4.3 percent as of 10:25 a.m. in New York, the highest since March 10and up from 3.94 percent on May 20, data compiled by Bloomberg show.

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The Last Hurrah and Seven Lean Years

2009-05-23T15:19:00.001-04:00

(www.gmo.com) Another must read from Jeremy Grantham...this time his May letter

Read the letter here

TARP Warrants Show Banks May Reap ‘Ruthless Bargain’

2009-05-23T15:16:00.000-04:00

(bloomberg.com) Banks negotiating to reclaim stock warrants they granted in return for Troubled Asset Relief Program money may shortchange taxpayers by almost $10 billion if Treasury Secretary Timothy Geithner’s first sale sets the pace, data compiled by Bloomberg show.

While 17 financial institutions have repaid TARP funds, two have come to terms with the U.S. on the value of the rights to buy stock that taxpayers received for the risk of recapitalizing the industry. The first was Old National Bancorp in Evansville, Indiana, which gave the Treasury Department $1.2 million last week for warrants that may have been worth $5.81 million, according to the data.

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Yale’s Swensen Recommends TIPS to Hedge ‘Substantial Inflation’

2009-05-23T15:00:00.001-04:00

(bloomberg.com) May 23--David Swensen, the top-ranked college endowment manager in the past decade, said individual investors should own inflation-protected Treasuries because U.S. economic recovery efforts may lead to an increase in consumer prices.

“We’ve had this massive fiscal stimulus, massive monetary stimulus, and it’s hard to see how that doesn’t translate into pretty substantial inflation, or at least pretty substantial risk of inflation,” Swensen, Yale University’s investment chief, said in an interview on the “Consuelo Mack WealthTrack” television show that aired yesterday. Treasury Inflation- Protected Securities “should be in every investor’s portfolio," he said.

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CHART OF THE DAY: Credit Card Debt Swallows American Households*

2009-05-23T14:55:00.000-04:00

(Clusterstock.com) *UPDATE: As several readers have noted, this chart compares an aggregate national figure with a per-household figure. This is an apples-and-oranges comparison. We apologize for the illogic and thank to our readers for catching it. We'll fix the chart on Monday.

EARLIER: Americans built up a lot of spending power over the last three decades, but it wasn't because they started earning more money. As today's chart starkly illustrates, credit card debt has exploded, making up for more modest gains in median household income. As you can see, for the very first time in history, credit card debt is creeping down, though it has a long way to go. And of course, this doesn't even include home all the home equity loans Americans used in place of the ATM. (Both lines are based on non-adjusted numbers)

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Breakfast with David Rosenberg

2009-05-20T06:57:00.001-04:00

(pragcap.com)The bulls enjoyed and the bears endured a massive 37% rally in the S&P 500 from the March 9th lows to the May 8th highs. Both in terms of duration and magnitude, this proved to be the most intense rally during this 20-month long bear market. And, the bounce has been so impressive that it has taken what was widely considered to be a massively undervalued stock market in early March to one that is now at least moderately expensive. (The FTSE All-World market P/E ratio on forward earnings estimates is now around 15x, well above pre-Lehman collapse levels and nearly double the lows for the cycle.)

Since the rebound from the March 9th lows was again led by the four sectors that led the decline during the bear phase – financials, consumer discretionary, materials and industrials – it stands to reason that this was just another counter-trend rally. What we know about history is that the sectors that led the downturn are never the ones to emerge as leaders in the next sustainable bull market.

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Benefits of Being Benchmark Agnostic

2009-05-20T06:50:00.003-04:00

(firsteaglefunds.com) Excellent piece by Jean-Marie Eveillard about benchmarking and closet indexing.

Read the article here

Charlie Munger's got a billion words of wisdom

2009-05-17T16:34:00.000-04:00

(latimes.com) About an hour before Charlie Munger, the Oracle of Pasadena, is set to speak, the pilgrims start filling a ballroom at the Pasadena Civic Center.

I am one of them. As I settle in, I meet Imelda McCarthy, retired and "a bit over 21," who is here from Dublin, Ireland, and attending with her 34-year-old son, Darrach, who lives in West Los Angeles. Bush Helzberg, an investment manager, flew in with his wife from Kansas City, Mo. Michael McGowan, author of "The Guide to Gold," comes every year from just down the street in Pasadena.

Read the entire article

CNBC Blog from the Berkshire Hathaway Annual Meeting

2009-05-02T11:32:00.002-04:00

Go here for live updates from the meeting

One on One with Charlie Munger, Vice Chairman Berkshire Hathaway

2009-05-02T11:31:00.000-04:00

(www.pbs.org) SUZANNE PRATT: Warren Buffett says he wants tough questions from shareholders at Berkshire Hathaway's annual meeting tomorrow. Investors will certainly ask about the company's stock. It has tumbled more than 30 percent in the past year. Also answering questions, Charlie Munger, Buffett's business partner for half a century and Berkshire's vice chairman. Munger keeps a low profile, but today in Omaha, he sat down for an interview with Susie Gharib. She began by asking him what he'll say to shareholders tomorrow to restore confidence in Berkshire.

CHARLES MUNGER, VICE CHAIRMAN, BERKSHIRE HATHAWAY: I think the reality is that if you hold a stock for a long long term even though it's screamingly successful as an investment, you will have huge declines in the value of that stock two or three times in half a century. And I don't think that should bother long term holders all that much.

GHARIB: Mr. Munger, shareholders will certainly have questions tomorrow on why Berkshire took such large positions in derivatives especially since you and Mr. Buffett have warned for years that derivatives are dangerous investments. What are you going to tell them?

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Squawk Box Regular Gabelli Slams CNBC On Fox Biz

2009-04-15T17:38:00.000-04:00

(clusterstock.com) Uh-oh. Will we ever see Mario Gabelli on CNBC again? During an interview on Fox Biz this afternoon, Liz Clayman asked him what the #1 mistake investors were making.

His answer: It's fairly simple, they listen to CNBC all day and panic.

Watch the video here

Marry a Farmer

2009-04-12T09:09:00.000-04:00

(Newsweek.com) Jim Rogers, the legendary American investor, financial commentator and, along with George Soros, founder of the Quantum Fund, is the ultimate commodities bull. More than 10 years ago, he started the Rogers International Commodities Index, and in 2005 he wrote "Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market." Below, he explains to NEWSWEEK's Rana Foroohar why oil is still black gold.

Foroohar: Inflation-adjusted, oil is the same price that it was in 1976, and in 1870. So why are you still a bull?
Rogers: It doesn't matter. It's also true that just about any stock you can think about is at or below where it was in the 1970s right now. So what? There are still 15- to 20-year periods when commodities, stocks and any other asset class goes up a great deal. In 1987 stocks collapsed by 40 to 80 percent. But people who were smart enough to stay in them made 1,000 percent returns in the next decade. The point is to take advantage of those periods and make some money.

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Investment Outlook-Spring 2009

2009-04-12T08:48:00.002-04:00

Read the latest Investment Outlook-Spring 2009 from Jolley Asset Management

Volcker Assumes Smaller-Than-Expected Role With Obama

2009-04-11T12:46:00.000-04:00

I knew it was only a matter of time before we saw this headline.

(WSJ.com) As an early supporter of Barack Obama, Paul Volcker gave the young presidential candidate gravitas and advice. He frequently sat by Mr. Obama's side at key economic events, and started carrying a cellphone for the first time, just to be able to brainstorm with the candidate from the campaign trail.

In the Obama White House, the role of the 81-year-old former chairman of the Federal Reserve has been more limited.

The one-time central banker has been put in charge of a presidential advisory board that hasn't yet had a formal meeting. It has been nearly a month since he has seen Mr. Obama. Mr. Volcker hasn't been a main player in key decisions handling the global financial crisis.

Read the entire article

Return of Stock Bulls Signals Time to Sell: Technical Analysis

2009-04-11T12:44:00.000-04:00

(Bloomberg.com) Investors turned optimistic for the third time since the credit crisis started last year, gauges of sentiment among individual investors in the U.S. show, a pattern that Helmsman Global Trading says is a signal to sell.

The difference between the American Association of Individual Investors Bull Index and Bear Index surged to 5.6 as of April 2. When the reading rose to 11.5 in November and 13.6 in January it coincided with the end of “bear-market rallies” of at least 21 percent by the MSCI World Index.

“What that’s going to show is that people always want to look at the glass as if it is half full,” said Martin Marnick, head of trading at Helmsman Global Trading Ltd. in Hong Kong. “Using common sense you know what that general trend is. We’re in a recession and this is not the start of a bull market.”

Read the entire article

CRAMER A 'BUFFOON'

2009-04-08T07:38:00.000-04:00

(nypost.com) Controversial CNBC market guru Jim Cramer has another feud on his hands.

Just weeks after "The Daily Show" host Jon Stewart took Cramer to task for trying to turn finance reporting into a "game," bear economist Nouriel Roubini attacked Cramer yesterday for predicting bull markets.

"Cramer is a buffoon," said Roubini, an NYU economics professor often called Dr. Doom. "He was one of those who called six times in a row for this bear-market rally to be a bull-market rally, and he got it wrong. And after all this mess and Jon Stewart, he should just shut up, because he has no shame."

Read the entire article

No Wonder Summers Is So Eager To Save Wall Street

2009-04-04T08:51:00.000-04:00

(Clusterstock.com) Does the fact that Larry Summers made $2.8 million in speaking fees from Goldman Sachs, JP Morgan, Citigroup, and others last year explain the administration's ongoing generosity to Wall Street--both in terms of defining the problem in a way that benefits Wall Street (a "lack of liquidity") and in continuing to bail out the banks at taxpayer expense?

Read the entire story

Buffett Punished in Bond Market as Citigroup Borrows for Less

2009-04-02T06:53:00.000-04:00

(Bloomberg.com) Billionaire Warren Buffett’s Berkshire Hathaway Inc. is being penalized in the bond market, paying more to borrow than bailed-out companies including Citigroup Inc.

Buffett’s firm paid more for its latest debt offering than Fannie Mae and Freddie Mac, the mortgage lenders that lost a combined $108.8 billion last year. Bank of America Corp. is also paying lower interest on notes under a program in which the U.S. agrees to guarantee debt.

Read the entire story

Munger's Year End Letter to Shareholders

2009-04-01T18:24:00.001-04:00

(wescofinancial.com)The worldwide economy is currently suffering the effects of a deepening recession, perhaps the worst economic disaster since the Great Depression. We will not attempt to prognosticate the effects thatWesco will suffer or when the economy will recover, but we are certain that in due course, Wesco will prosper. In the mean time, Wesco’s operations will bear their share of economicwoes.We will continue to practice Ben Franklin’s advice,that “a penny saved is a penny earned,” as we trim expenses, albeit in higher denominations, to better endure the weakening economic conditions that surely lie ahead.

Read the entire letter

The Prime of Mr. Nouriel Roubini

2009-03-26T06:13:00.001-04:00

Am I the only one who thinks Roubini may have peaked out?

(portfolio.com) It’s Saturday night. A stream of young fashionistas and other assorted Manhattan scenesters pours into a fashionable Tribeca building. They’re all headed for the loft of a middle-aged economist—a man whose name would hardly have registered with anyone but the most obsessive CNBC watcher a few years ago. A doorman on duty surveys the scene and rolls his eyes. “Another Roubini party,” he mutters.

Nouriel Roubini's thoughts about the economy in October 2008.The host of the hour, Nouriel Roubini—the New York University professor credited with calling the current economic collapse and a ubiquitous presence on financial-news shows who continues to forecast gloom and doom—is looking positively upbeat this evening. He greets guest after guest with a kiss on both cheeks as music thumps at a volume loud enough to irritate the neighbors. Suspended from the ceiling, above the throngs of minglers, are dozens of small glass globes, resembling nothing so much as bubbles.

Read the entire article here

‘Bull Market’ Has Begun, Templeton’s Mark Mobius Says

2009-03-25T06:08:00.000-04:00

(Bloomberg.com) The next “bull-market” rally has begun and there are bargains in every emerging market following a record slump in stocks, Templeton Asset Management Ltd.’s Mark Mobius said.

The MSCI Emerging Markets Index has jumped 26 percent since reaching a four-year low on Oct. 27, outperforming the 4.2 percent drop in the MSCI World Index and 9.5 percent decline in the Standard & Poor’s 500 Index. Emerging markets made up the 10 best-performing benchmark gauges this year, led by the 28 percent gain for China’s Shanghai Composite Index.

“You have to be careful not to miss the opportunity,” said Mobius, who helps oversee about $20 billion of emerging- market assets as executive chairman at San Mateo, California- based Templeton. “With all the negative news, there is a tendency to hold back.”

Read the entire article

No Safety in Numbers

2009-03-22T17:36:00.001-04:00

(NYTimes.com) Is there such a thing left as a safe investment? Stocks have been massacred, real estate all but wiped out. Each was promoted in its day — as was gold — as safe and secure, appropriate for widows and orphans.

If there is a truly last bastion of safety, it would be, of course, the U.S. Treasury bond, that venerable instrument with the full faith and credit of the United States behind it. Perhaps it is esteemed so highly because we think of it not as an “investment” per se but as an article of faith in Washington and, by extension, the entire country. It is our tax dollars, after all, that stand behind it — the accumulated output of our citizens. And ever since the Wall Street meltdown, as investors have fled from any security carrying a whiff of danger, Treasuries have been in hot demand.

Read the entire article

Enjoy The Sucker's Rally, Says Merrill's Rosenberg

2009-03-19T10:00:00.000-04:00

(Clusterstock.com) David Rosenberg:

[The Fed's purchase of $300 billion of Treasuries] is equivalent to nearly 20% of this year’s bond borrowing requirement. As a stand-alone event we think this is worth 75-100 basis points of interest rate reduction (so today’s post-meeting 50bp rally takes us between one-quarter and half-way there). We also believe that the risk to this program size is clearly to the upside...

Fed’s announcement less bullish for equities, in our view.
But the equity market, which had already been enjoying a classic short-covering rally accentuated by quarter-end pressures, also reacted very positively to the Fed’s announcement today and at one point the S&P 500 looked set to break above the 800 threshold for the first time since mid-February. We are of the view that what occurred this afternoon was less bullish for the equity market than meets the eye. Here’s why:

Read the entire article

Treasurys Rally on Fed's Long-Term Purchase Plan

2009-03-19T06:03:00.000-04:00

(CNBC.com) Treasury debt prices soared Wednesday, prompting the biggest one-day drop in benchmark yields since 1987, after the Federal Reserve made a surprise announcement that it would buy long-term Treasuries.

In a statement released at the end of its two-day policy meeting, the Fed said it would buy up to $300 billion worth of longer-term U.S. government debt over the next six months and expand purchases of mortgage-related debt to help ease credit market conditions.

Bond prices soared on the news. Benchmark 10-year note prices rose four full points while their yields, which move inversely, had the biggest one-day drop since October 20, 1987, the day after the 1987 stock market crash.

Read the entire article

Rep. Maxine Waters Held Stock In Tiny Bank She Boosted

2009-03-13T07:55:00.001-04:00

(WSJ.com) When Rep. Barney Frank was looking to aid a Boston-based lender last fall, the Massachusetts Democrat urged Maxine Waters, a colleague on the House Financial Services Committee, to "stay out of it," he says.

The reason: Ms. Waters, a longtime congresswoman from California, had close ties to the minority-owned institution, OneUnited Bank.

Ms. Waters and her husband have both held financial stakes in the bank. Until recently, her husband was a director. At the same time, Ms. Waters has publicly boosted OneUnited's executives and criticized its government regulators during congressional hearings. Last fall, she helped secure the bank a meeting with Treasury officials.

Read the entire article

China’s Premier Wen ‘Worried’ on Safety of Treasuries

2009-03-13T07:41:00.000-04:00

(Bloomberg.com) China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said.

“We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today after the annual meeting of the legislature. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

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Stewart vs Cramer--The Complete Ass Kicking

2009-03-13T07:32:00.001-04:00

(Clusterstock.com)

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Rebalancing the Books-unpleasant but not unbearable

2009-03-11T16:12:00.000-04:00

(Jeremy Grantham--FT.com) The proximate cause of our problems today is the breaking of the US housing bubble, and the ultimate cause is the remarkably widespread belief in rational expectations: that economic man behaves like a logical machine that in turn causes markets to tend to efficiency and equilibrium. In such a world the tech bubble was rationalised by Alan Greenspan as an internet-driven productivity burst, and the housing bubble (in reality a 100-year event) was so preposterous an idea that Ben Bernanke could not see it, such was his faith in efficiency.

In an efficient world all asset price changes merely reflect fundamental change and thousands of well-informed investors are bound to be right. There is never anything to fear and we can all keep dancing for ever.

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