Some articles to start off the week

If you didn't have enough reading for the week, fear not. Information overload is just around the corner ;) Here are some items that you may find interesting...
  • Book excerpt - The Wizard of Lies: Bernie Madoff and the Death of Trust by Diana B. Henriques (New York Times): Major bubbles are often marked by criminal actions and the stock market crash that started in 2007 was no different. Bernie Madoff will be remembered for centuries, well beyond our lives.
  • Book excerpt - Money and Power: How Goldman Sachs Came to Rule the World by Wiliam D. Cohan (vanity Fair): Haven't read it yet but it seems to be about the battle between Jon Corzine and Henry Paulson for the leadership of Goldman Sachs.
  • Carl Icahn at 75 (New York Times; h/t The Reformed Broker): Hated by some, loved by some, we are seeing the final moments of one of the most influential shareholder activists that ever lived.
  • ROIC in various industries (Barel Karsan): Although returns for stockpickers is dependent on specific picks, it does help to be in an industry that has high ROIC (or ROE).
  • Portfolio concentration (Value Investment Institute): Concentrated investors may want to take a quick look at this. Nothing earth-shattering here but it's still good to read thoughts about concentrated investing.
  • (Highly Recommended) Prem Watsa at the Benjamin Graham School for Value Investing (Richard Ivey School of Business; h/t CanadianValue at GuruFocus): Haven't watched this video fully yet but it's always good to hear what, arguably the best value investor in Canada, Prem Watsa, has to say.
  • (Recommended) "How Warren Buffett Protege David Sokol Lost His Way" (Businessweek): This article seems a bit too critical but it's still worth reading if the subject matter interests you. I'm not too familiar with legal matters but it still doesn't seem as if David Sokol did anything illegal. Nevertheless, one should not leave themselves to be doubted by the public. Truly an unfortunate action by Sokol and a (minor) mistake by Warren Buffett.
  • The Credit-Anstalt failure of 1931 (Businessweek): A good, quick, recap of the major event that caused the spectacular crash during the early 1930's.
  • The amazing recovery of Alcatel-Lucent (Businessweek): I have to say it has been pretty impressive to see what has happened at Alcatel-Lucent. The stock is up around 100% so far this year, after terrible few years, in a tough industry. I have been following Nokia for a while and half of its business (under the Nokia Siemens banner) is wireless infrastructure so it's impressive to see what its main competitor has done. If Nokia can carry out even half of what Alcatel-Lucent has done, its market cap should see significant increase.
  • China bubble - a few quick thoughts (Buttonwood for The Economist): Buttonwood has a short blog entry citing some who think China may be seeing a bubble. I have been bearish on China for years and been completely wrong. (I have also been bearish on commodities and it'll be interesting to see what will happen there. Oil prices are starting to hit levels that should start to cool the economy. Also, the outcome to the parabolic rise in silver remains to be seen.)
  • Horace Deidu's thoughts on the future of mobile phones and PC computing (asymco): Every analyst has an opinion of the future and few turn out to be correct. Nevertheless, some people are worth reading or listening to because you may gain some insights about the industry, business models, customer behaviour and so on. Horace Deidu writes the excellent mobile phone blog, asymco, and I like checking out his views.
  • (Recommended for Canadians) The saga of the most valuable vacant lot in Toronto - 1 Bloor Street East (Report on Business magazine): "It's the sexiest vacant lot in Canada. What it lacks in amenities, it makes up for in location, location, location: the southeast corner of Yonge and Bloor Streets, Toronto’s crossroads, where the city’s most important subway lines meet underfoot. Just to the west is the snootiest row of shops in the country—Holt Renfrew, Cartier, Tiffany, Hugo Boss. A bit to the east soar the stately headquarters of corporate titans Manulife and Rogers... If you were making a movie of this saga, you’d set the first scene on Nov. 13, 2007. Hundreds of people line up on the sidewalk for the opening of the neighbouring sales office for One Bloor East. The proposed 80-storey condo and hotel tower will be the tallest in Toronto. Many of those in line are stand-ins, hired by real estate agents, and they’ve been waiting in line for days..."
  • Google's Patent Search (Fast Company): Some of you may find it useful. So far seems to be limited to US patent office. Direct link to Google patent search here.
  • "What LeBron James And The Miami Heat Teach Us About Teamwork" (Fast Company): Talent alone isn't good enough. Teamwork matters just as much.
  • (list) Ten most innovative companies in retail (Fast Company)
  • (slideshow) Apparently the world's largest producer of oil paintings is in China (The Globe & Mail)

Comments

  1. Parker BohnMay 7, 2011 at 10:13 PM

    Thanks as always for blogging 8-)

    Here is a (somewhat lengthy) article by Grantham that I found quite interesting.

    In it, he challenges some widely held beliefs about compound growth.  He advances some ideas that I have been thinking about for a while, but previously never heard from anyone else.
    ---- for instance, here are my thoughts:
    http://chromainvesting.com/2010/09/09/is-wealth-destruction-inevitable/

    And here is the Grantham piece:
    http://www.energybulletin.net/stories/2011-04-29/time-wake-days-abundant-resources-and-falling-prices-are-over-forever

    ReplyDelete
  2. Sivaram VelauthapillaiMay 9, 2011 at 8:47 PM

    Thanks for the links. I saw the Grantham piece... haven't read it yet but was going to respond to it. I have been wrong on my bearish call on commodities (maybe?) but I have a hard time buying the 'finite resource' argument. My view, as always, is that human ingenuity--technology, better processes, efficiency, conservation,etc--ensures that we won't run out of resources on a grand scale. Sure, some will dissapear but not many.

    I'll check out your response and post my thoughts if I get around to it.

    ReplyDelete
  3. Parker BohnMay 10, 2011 at 3:59 AM

    Thanks.
    The essential point I made in the linked comment (and that Grantham obviously copied from me ;) ) is not about commodities per se, but about the very nature of exponential growth.

    He says it it his piece, and I'll say it again --- over the long run, exponential growth, regardless of the rate, is nonsense.

    ReplyDelete
  4. Sivaram VelauthapillaiMay 10, 2011 at 7:55 PM

    Read through your posts. I agree wtih you that exponential growth makes no sense in the very long run. What we are seeing in the world is unsustainable in the long run. Using up resources, destroying the environment, occupying more space, etc, just cannot go on forever.

    Although we are seeing strong growth in the last few hundread years, do note that a lot of it is due to population growth. The somewhat high population growth led to high GDP expansion. I think it will become more and more difficult to grow GDP per capita. This is already the case in developed countries and even developing countries will have a hard time.

    Also masking the current period is the fact that we are seeing a trade boom. My guess is that the trade boom won't last more than a decade longer (in fact it may already be seeing its last legs).


    Having said all that, if you are a stockpicker, none of this matters. The world could be growing at 0.5% and you can sitll post 10% profit growth. Furthermore, the exponential growth is only unsustainable in the very long run that spans 500+ years.

    ReplyDelete

Post a Comment

Popular Posts

Thoughts on the stock market - March 2020

Image
Right now, DJIA has a P/E of 16.8 and forwand P/E of 15.1, whereas S&P 500 is at 20.1 with forward P/E of 15.8. Source: WSJ market Data If you ignore interest rates and inflation expectations--both of these influence valuations but depends on your macro call-- the market is not cheap. Long-term P/E is around 15. Trailing P/E is around 20% (Dow) to 40% (S&P500) higher than average. Forward P/E is in line with long term average but that assumes a strong V recovery. Consensus forecast is for profits to drop 1.2% in 2020. In 2008, it dropped 25.4% so current forecast is a very mild recession. Covid-19 coronavirus is not going to last more than a few months but these forecasts are still too rosy in my opinion. So I wouldn't rely on forward P/E. The richly valued (mostly tech or high quality) have not fallen much but the distressed ones have. So if you want to outperform in the long run, I think one’s choice right now is to: • Wait for market to fall another, say
✖ READ MORE >>>

Warren Buffett's Evolution and his Three Investment Styles

Image
A Young Warren Buffett In a comment to one of my posts , Mark Carter, who incidentally appears to have a  good blog worth checking out , asked: "Buffett Prime is 1970's to early 1990's" Could you elaborate? I have vaguely indicated how I view Warren Buffett in the past, but I thought I would detail my view of his investing behaviour. This is more of an opinion piece and many others would disagree with me (if you do, I'm curious to hear your thoughts). I don't follow Warren Buffett as closely as many value investors so I may get some facts wrong. My view is that Warren Buffett went through three different phases, with each consisting of different investment techniques. The overall investment theory remained the same—what people call value investing—but his execution, tactics, and strategy differs across the three phases. Some people may break up his career into additional periods but my feeling is that the three I will describe essentially capt
✖ READ MORE >>>

Charlie Munger: Stock market as a pari-mutuel betting system

The model I like to sort of simplify the notion of what goes o­n in a market for common stocks is the pari-mutuel system at the racetrack. If you stop to think about it, a pari-mutuel system is a market . Everybody goes there and bets and the odds change based o­n what's bet. That's what happens in the stock market. —Charlie Munger, "Art of Stock Picking" Although I don't share the same views on politics, I am probably closer to Charlie Munger than Warren Buffett when it comes to how we view the world. Warren Buffett is almost singly focused on business and investing, and is not very opinionated, indeed possibly not knowledgeable, in other areas. In contrast, I am closer to Charlie Munger in the sense that I have diverse interests—you can probably tell by the articles I link to or write about—and have an opinion on almost anything. There is one big difference though: I am not into the field of psychology quite like Munger. So it may be surprising to see me rarely
✖ READ MORE >>>