There was No “De-Leveraging”

Ray Dalio of Bridgewater is fond of calling our government bailout a “beautiful deleveraging” (http://www.bwater.com/Uploads/FileManager/research/deleveraging/an-in-depth-look-at-deleveragings–ray-dalio-bridgewater.pdf) probably because he bet correctly that the flood of liquidity would lift all boats in the short run. But, I have been arguing the point in the attached blogpost from BlackRock since the crisis began. The growth in total debt is a major long-term problem that few have sufficiently considered. It will be… Continue reading

Share
Posted in Uncategorized | Tagged , , , , , , , , , , | Leave a comment

Bloomberg Article on the Myopia of Buying a Vacation Home

When viewing a vacation home as an investment, most fail to account for all of the costs associated with home ownership. Even after the investment is sold, people overestimate their return because they fail to track all of the costs.

In most cases, residential investments deliver net returns equal to the rate of inflation, at best, and that does not factor in the amount of time the homeowner spends… Continue reading

Share
Posted in Uncategorized | Tagged , , , , , , | Leave a comment

Why the Singularity Makes Me a Rational Optimist

The main reason that I am a rational optimist in the long run, like Matt Ridley, is that technology is expanding exponentially; it is growing at a growing rate. Kurzweil in his book, The Singularity is Near, discusses how difficult it is for us to perceive the exponential growth. Compare it to standing on earth and looking out to the horizon; the ground looks flat near us, but it… Continue reading

Share
Posted in Uncategorized | Tagged , , , , | Leave a comment

This is the Worst Recovery in the Post WWII Era

I think my former Wall Street colleagues know this without the need to read a chart. I added Sufi and Mian’s blog to the economics blogroll on the right after seeing the CFA Institute’s webcast of Sufi’s presentation at a conference at the University of Chicago. Sufi also projected a slide showing that GDP growth has fallen far off trend and is getting worse, not better. Normally, GDP catches up to… Continue reading

Share
Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , | Leave a comment

The Market and the Economy Mid-Year 2014: A Top-Down View

I have excerpted part of PAR’s semi-annual letter that PAR sent to clients on July 7, 2014, and I have pasted it below. No one knows where the market is going to end up in the near term, but over the long haul (ten- to twenty-years), the odds are that returns will be lower than they have been in the lifetime of anyone born after 1945. Risk management and discipline… Continue reading

Share
Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

What is the Effect of a Label? Smart Beta Makes Bill Sharpe “Sick”

Bill Sharpe gave us the Sharpe Ratio to help determine whether an active investment manager is “beating” the market after adjusting for the risk that the manager assumed. Sharpe is from the Efficient Market school of academia, which believes that markets are too efficient to beat consistently. He is also the founder of an online investment adviser.

At this month’s CFA Institute Annual Conference in Seattle, Sharpe said… Continue reading

Share
Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

The Guilty and Gullible Revealed

The WSJ published another great Review section in today’s Weekend edition. The lead article was an excerpt from University of Chicago economist Levitt and Dubner’s upcoming book. The excerpt was from a chapter on tricking the guilty and the gullible to reveal themselves. There are a few nice anecdotes about King Solomon (a well known one) and David Lee Roth (a not so well known one). I didn’t know… Continue reading

Share
Posted in Uncategorized | Tagged , , , | Leave a comment

Howard Marks: The Top-Ten Qualities that Make Warren Buffett Different from Most Investors

The following are bullet points reproduced (and numbered by order of appearance) from Howard Marks’s Forward to the third edition of The Warren Buffett Way, by Robert G. Hagstrom. Marks writes a couple of paragraphs to elaborate on each bullet point, and you should read them (TWBW 3 Ed. has been added to the value investing bookstore above), but the comments below are my mostly take.… Continue reading

Share
Posted in Uncategorized | Tagged , , , , , , , , , , , , , , , , , , | Leave a comment

A Classic Example of Why Discipline and Wealth Go Hand-in-Hand

A great quote from The Warren Buffett Way, Third Edition, (2014) by Robert G. Hagstrom.

The difference between Warren Buffett and most investors has more to do with discipline than just about any other quality. There are plenty of smart investors, and most of them failed to deliver results that compare with Buffett (I will soon write another blog post that summarizes Howard Marks’s forward to… Continue reading

Share
Posted in Uncategorized | Tagged , , , , , , , , , , , | Leave a comment

Mohnish Pabrai Has Not Made an Investment in a New Idea in Over 18 Months

Forbes once identified Mohnish as one of the investment managers who could assume the value-investing guru mantle from Buffett. In his 2013 Annual Letter, Pabrai wrote that he has not found a new idea in which to invest in over eighteen months. Such is the life of a contrarian value investor like Pabrai, Klarman, and PAR. When markets are rising like crazy (2013) they remain true to their discipline… Continue reading

Share
Posted in Uncategorized | Tagged , , , , , , , , , , , , | Leave a comment