Articles for a Friday

Some articles you may have missed...

• Seth Klarman annual meeting notes (various sources; h/t itznuthin1 and toughiee @ GuruFocus): News spreads on the internet like wildfire. Apparently Baupost held its first annual meeting and someone took some notes. It was published on various sites but later withdrawn at the request of the author. I have no idea who the author is or why it was withdrawn so one should be careful when reading this. It either means that the information was not meant to be public or the information may be incorrect (possibly fake.) Since the withdrawl notice didn't suggest the reason for pulling the notes, one can only speculate... I don't really follow Seth Klarman closely because it is virtually impossible to implement his strategies (even if you were able to implement them, it is difficult to figure out why Klarman purchased or sold a security.) Anyway, one interesting tidbit that stood out was Klarman's view that stocks were not cheap, even at the March low. He suggests that if March 09 were the ultimate lows, it is a very expensive bottom relative to prior cycles. This is also my view and it's good to hear a superinvestor confirm my stance. In line with this view, Klarman says that bargains are in the debt market, not necessarily the equity market.
  
  
• Transcript of CNBC segment with Warren Buffett and Bill Gates (CNBC; h/t GuruFocus): Pretty lengthy and covers various topics.
  
  
• Why gold's intrinsic value is zero (Maverecon @ FT; h/t The Big Picture): Willem Buiter, an economist, claims gold is a fiat commodity and hence has an intrinsic value of zero. I think most people, including goldbugs, knew that already (there is no way to justify why gold should be, say, $1100/ounce rather than $1500 or $500 or $10) but what is interesting to me is how Buiter compares it to fiat currencies... None of this means that gold is a bad investment right now. However, I do think that it will lose its value over the super-long-run. If we were investing for 5000 years, I would avoid or even sell short gold. It is highly likely that gold will lose its monetary value over time—very slowly though. Silver used to be a monetary metal similar to present day gold but it lost its monetary feature several hundread years ago (it is primarily an industrial metal now.) In real terms, silver is down around 93% from its peak and it will never go back anywhere near its peak set in 1477. Gold, in real terms, has maintained its value but I believe it will be worth perhaps 5% of its current value—the 5% value is solely due to gold's industrial usage—when humans start colonizing other planets... To reiterate, we are talking about the super-long-term here and one should not make near-term investment decisions off any of this. For instance, I don't think gold is going to drop 95% within my lifetime, even though I am pretty sure it eventually will.
  
  
• George Soros lecture on his reflexivity theory, his open society framework, and China (Financial Times; h/t GuruFocus, which credits SimoleonSense for the find): Haven't watched the series yet but will check it out.
  
  
• (Recommended if you are into real estate) Behind-the-scenes look at the condominium development - Part 1 (The Star): First part of a detailed look at the development of a condominum complex in Toronto. Looks like an educational series for those wanting to know about real estate development.
  
  
• Smartphone competition heating up but RIM CEO says he is confident (Financial Times via The Globe & Mail): I applied to a job at RIM—chance of me getting a job is probably as low as finding water on the moon—so I have been paying a bit more attention to the mobile phone market. The competition is crazy and Dell recently announced it was releasing phones in China and Brazil so it remains to be seen how this pans out. Mobile phones are a good case study for investors because it is an emerging industry, with fierce competition, and big profit potential. One may recall how Palm used to be influential 10 years ago but completely fell apart. We also had Motorola's consumer phones were flying high about 5 years ago, only to see it crash hard a few years later. It remains to be seen if RIM can tackle the challenges. If RIM doesn't execute well over the next 2 years, it could run into serious problems.
  
  
• (not related to investing) Slideshow: 25 fattiest fast foods (BusinessWeek): Not sure why I'm linking to this... I'm not really into fast food or dining out in general...