Can Turtles Fly?

Thanks to CanadianValue at GuruFocus, I ran across a good two-part interview of Jim Rogers at Investment U ( part 1 here and part 2 here ). I haven't followed Jim Rogers much in the last few years. Partly it's because I am bearish on commodities and China and I find that my views aren't consistent with his investment recommendations. The other reason is that I find him a bit repetitious since most of his interviews cover the same topic, with some interviewers even repeating the same questions of others. Yet, I do keep an eye on Jim Rogers' thoughts once in a while. Long-time readers may know that I started off more as a macro investor—I still am to some degree and you may get this feeling from my writings (haven't done much lately though :( ) and the articles I cover; it's also why I don't think I will ever be a true value investor—and Jim Rogers, along with Marc Faber, were two of my biggest influences. The good thing about Jim Rogers is that he is a s...

Here are some articles I ran across over the last few weeks. Articles near the very-bottom have nothing to do with investing so read it at your discretion. Fortress Paper & Chad Wasilenkoff (Report on Business magazine): Profile of a Canadian success story in the forestry industry " Is Apple once again riding for a fall? " (The Globe & Mail): Eric DeCloet, one of the best business writers in Canada, wonders if Apple is headed for a fall similar to what it experienced in the 90's. (Highly Recommended) John Paulson on the risk in risk arbitrage (market folly; h/t GuruFocus ): Good job by market folly on finding this gem from John Paulson. Before Paulson became famous for his bet against real estate, he was mostly into risk arbitrage. Anyone into risk arbitrage should check out the referenced article. ( PDF of cited article can be found here.) Is Steve Ballmer hurting Micrsoft? (Fortune): The company has been rock solid but on the other hand, it hasn't a...

Too many things to read... (Recommended) Benjamin Graham on intelligent vs unintelligent speculation (CanadianValue for GuruFocus): I'm not a classic value investor and think Graham is wayyy too conservative, but it's still good to think about risk. One distressed company to watch: Deans Foods (Bloomberg): Contrarians and distressed value investors may want to check out Dean Foods (DF), the largest dairy in America. Dean Foods is off around 66% in the last 3 years and is apparently struggling due to, what else, too much debt. I don't like companies like this but I notice many value investors like these old-school companies. One of the big risks with situations like this is a take-under. There is nothing to stop someone from coming in and buying this company at a really low price, especially if the stock keeps sliding for a while. WikiLeaks reveals Pfizer pressured Nigerian officials to drop suit by trying to uncover corruption (New York Times): According to one of th...

If you are already feeling information overload, let me make it worse and offer you the following articles ;) As usual, not in any particular order... GM changes its logo on its HQ building (The New York Times): Subtle but changes like this are important to motivate the employees and project a new brand image. The IPO was successful; the company has reduced its costs; new leadership; betting big on the Volt... Let's see if it re-invent itself, a la IBM in the 90's, or if it will continue its long decline into oblivion. Consulo Mack's Wealthtrack interview with David Einhorn (Wealthtrack; via Gurufocus): David Einhorn is a sharp, up-and-coming, value investor. If I'm not mistaken, he hails from the midwest and is kind of like a young Warren Buffett (less proven than Buffett though; also seems more shorter-term-oriented and doesn't employ strategies of 'Buffett Prime' i.e. 1970's+). He rarely gives interviews worth talking about but I thought I would l...

This month I will attempt to answer the entrance examination for the Chinese civil service. That is to say, I will attempt to tell you everything that I know. In doing so, I will argue that this year's rally in inflationary assets, from emerging stock markets to industrial commodities to the fall in the US dollar, could be a FAKE. Let me explain why. — Hugh Hendry, Nov '09 Eclectica Fund Manager Commentary One of the difficulties with contrarianism is that it is never clear whether you are being contrarian for the sake of being contrarian; or if you are actually right and the crowd is wrong. Such is the case with Hugh Hendry of Eclectica Asset Management. Whenever I look at his comments, it is hard to tell if he is going overboard by taking an extreme contrarian stance (I have a habit of doing this too :( ). His latest commentary touches on all sorts of issues and is an interesting read for macro-oriented investors (if link doesn't work, try the posting at Zero Hedge ). Th...

In what seems like a really bizarre policy, Russia is set to ban gambling from most of Russia. Casinos will be limited to some remote regions and shut down elsewhere. From The New York Times : One of the largest mass layoffs in recent Russian history is to occur on Wednesday, and the Kremlin itself is decreeing it, economic crisis or not. The government is shutting down every last legal casino and slot-machine parlor across the land, under an antivice plan promoted by Vladimir V. Putin that just a few months ago was widely perceived as far-fetched. But the result will be hundreds of thousands of people thrown out of work. And in a move that at times seems to have taken on almost farcical overtones, the Kremlin has offered the gambling industry only one option for survival: relocate to four regions in remote areas of Russia, as many as 4,000 miles from the capital. ... The gambling industry here does not have the loftiest of reputations, and many Russians will not grieve for it. Still, ...

Some articles one may find interesting... as usual, not in any order... Business of movies (The Globe & Mail): A note about the present state of movies...also has an interesting note about movieds financed about private equity and hedge funds (I wonder if they are actually making money.) An opinion on why USA remains the leader (The Globe & Mail): Historian Freedman says, the reason USA hasn't faltered while many others have come down to "...two features which distinguish it from the dominant great powers of the past. American power is based on alliances rather than colonies. And it is associated with an ideology that is flexible, potentially universal and inherently subversive of alternative ideologies." The author, interpreting Freedman's views, says "Democracy itself is the first explanation for American flexibility. Capitalism is the second. Liberal democracies make for flexibility by allowing discontent to be expressed, channelled and absorbed. Ca...

Some articles to consider, in no particular order... Disney P/E at 20-year low (Financial Post): Supposedly the Disney P/E is below 14 and it hasn't traded at those valuations for decades. My impression is that Disney is not a cyclical (with unsustainably high earnings) so that's actually an impressive valuation. Anyone that has liked the company in the past may want research it further. However, do note that almost everything else is cheap too. I wanted to highlight this story, not because I am interested in Disney, but to highlight how companies that have never traded at low valuations for 20+ years are doing so now without (I'm guessing) any major permanent impairment in fundamentals (in contrast, a retailer, bank, or even oil & gas company trading at low valuations may have permanent damage to some fundamentals.) Bank of America plans to avoid relying on government (Fortune): Well, Ken Lewis dug himself and his company into a hole but is trying to get out of it. I...

The market rallied this week on expectation that the US government bailout is going to solve the problems. This could turn into another 'buy the rumour, sell the news' day if the market doesn't like what it hears of the government plan next week. Credit has improved significantly since late last year thank to FedRes actions but I'm still skeptical and would be careful. 'Danger...Stranger Beware' is probably the appropriate motto for the time being. Nothing much happening in my investment world. Just reading up and trying to come up with some investment ideas for the year. I will post my views soon. Unlike the last few years of floundering around and, at times, even being saved by the bull, I think now is the time to succeed or fail. Similar to how many hedge funds or mutual funds will go bankrupt in the near future, I think we, as small investors, will know very soon if we are cut out for stopicking or not. If the market ends up behaving as poorly as I think, th...

It's not a surprise given the collapse in the commodity markets but one of the hardest hit currencies is the Russian Ruble: Things are not well in the land of the bear. However, this isn't bad per se. Russia is a country dependent on commodity exports and it will become more competitive as the Ruble collapses. The ones that are hurt are the Russian savers who own Ruble-denominated assets. The question comes down to employment vs wealth. Weakening currencies tend to improve employment prospects while you lose your wealth. (A lot of other currencies are also weakening, with the British pound weakening over the last year to levels seen in early 2000's. My country, Canada, has a quasi-commodity currency and it weakened late last year but I do not anticipate major moves in either direction.)

It looks like Russia may let its currency depreciate . The Russian government has been expending huge sums trying to prop up its currency but it looks like a complete waste of money. I agree with the analysts in the story who say that Russia should just let its currency fall. I think it's better to let the currency be set by the market. If investment flees the counry, so be it. No point wasting billions on a futile task. The amazing thing to me is how badly the commodity exporters are doing even though prices are only back to what they were one or two years ago (at least for some commodities like oil.) The affected businesses were built on hope or involved very poor project management. If you are struggling with oil prices at $60, I wonder what would happen if oil hit $45 or $50 (not that I'm predicting that)? I'm not sure if this is going to set off a round of huge de-valuations everywhere else. Currency de-valuations against the US$ will hurt American exporters and worsen...

Supposedly this is the worst week ever for the stock market. The short-selling ban was removed on Thursday so that is partly what made it look worse than ever. Anyone sitting on the sidelines waiting to short clearly jumped into the market on Thursday and made it seem worse than it really was. This is more of a one-time thing and likely to subside in the future. Anyway some articles of interest: GM & Chrysler consider a merger (The New York Times): A blockbuster merger is being considered, with GM possibly merging with Chrysler. The transaction may involve GM giving up a small stake in the merged entity to Cerberus, the current majority owner of Chrysler, and/or swapping GMAC. A mega-merger with Chrysler? I'm not really sure whether this can be executed successfully. They would need serious concessions from the unions since there is going to be huge overlaps that they need to eliminate. Furthermore, I am of the belief that GM has mixed branding strategy and way too brands, a...