longhedge Investing, Links

Links 19.FEB.2016

  • Stephen Roach says negative interest rates set stage for next crisis – “by imposing penalties on excess reserves left on deposit with central banks, negative interest rates drive stimulus through the supply side of the credit equation — in effect, urging banks to make new loans regardless of the demand for such funds. This misses the essence of what is ailing a post-crisis world. As Nomura economist Richard Koo has argued about Japan, the focus should be on the demand side of crisis-battered economies, where growth is impaired by a debt-rejection syndrome that invariably takes hold in the aftermath of a ‘balance sheet recession.'” // GLAD TO SEE RICHARD KOO GETTING MENTIONED. HE PREDICTED A LOT OF WHATS HAPPENED IN THE LAST 10 YEARS. HIGHLY RECOMMEND HIS BOOKS ON BALANCE SHEET RECESSIONS: The Holy Grail of Macroeconomics & The Escape from Balance Sheet Recession and the QE Trap
  • Write up about @Nanexllc’s Eric Hunsader – “Hunsader’s research has made him a sought-after adviser to traders, broker-dealers and academics.” “Hunsader, sure he’d identified a core structural issue, later published more than 2,000 more reports — some a few sentences, others more detailed explanations of how he says markets are manipulated.”  // SUPER SMART GUY, HAS BUILT SEVERAL BUSINESSES, HAS LOTS OF ENEMIES WHO LIKE TO PRETEND HE DOESN’T EXIST OR CALL HIM CRAZY.
  • Federal Reserve’s FOMC statement (PDF) from January 27, 2016 – “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
  • Uber losing $1 billion a year to compete in China // I HAVE MY DOUBTS THE WAR FOR USERS WILL END WELL FOR THE ON-DEMAND DRIVER APPS. SWITCHING COSTS ARE LOW WHEN SUBSIDIES END AND NO ONE CARES IF THEY USE SAME APP AS THEIR FRIENDS (NETWORK AFFECT). MUCH TOO EASY TO INSTALL ANOTHER APP AND APPLE PAY JUST MAKES IT EVEN EASIER TO SWITCH SINCE USER WON’T HAVE TO ENTER CC#.
  • Info-graphic of all the worlds exchanges [image only] [via]
    • World total value = $69 trillion;
    • Shanghai = $4.46; Shenzhen = $3.42;
    • NYSE = $18.48; NASDAQ = $7.45;
    • US exchanges ~ 37.6%; China exchanges ~ 11.4%.
world exchanges
longhedge Investing, Links

Links 16.FEB.2016

Some interesting links I’ve been reading over the last week.
  • John Mihaljevic’s answer to How can I find stocks that are undervalued? – Quora – Mihaljevic wrote the Manual of Ideas
    • Idea generation is both art and science. Not as simple as just doing quantitative screens and buying those stocks.
    • John shares many other value investor’s insights. Here are just a few quotes:

      “The principal method of idea generation is through the use of very long-term performance charts, which help to identify areas of currently depressed sentiment and hence probable low valuations. Ideas also come through more quantitative screening, subscription to quality newsletters like the MOI and general reading.” – John Lambert (GAM)

      “It’s just a long-term search process of opening yourself up to different ideas, don’t be closed off. Ideas come in many forms and many types of businesses, and even the way you evaluate them can be different on a case-by-case basis.” – Larry Sarbit

      “I try to read as few newspapers as possible. Maybe 80% of what you read is just entertainment, 10% is pure propaganda and 10% is information, some true, some false.” – Fernando del Pino

      “I literally spend almost all of my time reading. And while it, no doubt, makes me a bit of an oddball, my greatest pleasure is to be constantly searching for wonderful businesses that, for whatever reason, are mispriced.” – Mark Massey (AltaRock Partners)

      “I prioritize the companies that seem to be attractively priced, but a lot of the time I find myself researching companies in order to be prepared if the price becomes attractive in the future. Because of the very narrow focus on great businesses, I do not find as many interesting situations as many other investors do. A great deal of the work I do is simply expanding my knowledge base.” – Josh Tarasoff (Greenlea Lane Capital)

  • Charlie Munger answering questions at the Daily Journal 2016 Annual Meeting [transcript] [soundcloud] // AS ALWAYS, TONS OF QUOTABLES FROM MUNGER. HIGHLY RECOMMEND.
    • “Try to do a few things well, and it will work out. A few good decisions over a long period of time can lead to great success. You make your money by the waiting. A fair amount of patience is required. Like when we had all this money flowing in from the foreclosure boom, and we deployed it in a day. It wasn’t luck we had the money on hand.”
  • The Reality of Missing Out, Stratechery. // GREAT EXPLANATION OF HOW DIGITAL ADVERTISING 2.0 WORKS (BUT NOT FOR EVERYONE). GOOGLE AND FACEBOOK ARE BUILDING VERY LARGE MOATS IN A WINNER-TAKES-ALL BUSINESS. SOME EXCERPTS:
    • “Digital advertising is becoming a rather simple proposition: Facebook, Google, or don’t bother.”
    • “What Sandberg is detailing here is really quite extraordinary: Facebook helped Shop Direct move customers through every part of the funnel: from awareness through Instagram video ads to consideration through retargeting and finally to conversion with dynamic product ads on Facebook (and, in the not too distant future, a direct customer relationship to build loyalty via Messenger).”
  • Mark Cuban bets on gold due to confusion in market. [CNBC 11.Feb.2016] via ProfitConfidential – “When traders don’t know what to do, they go where everybody is. And I thought that would be gold,” said Cuban.
longhedge Links

Links 02.FEB.2016

TUMBLR REPOST

Some interesting links out today.

  • New issue of Graham & Doddsville (PDF, Winter 2016) has a very candid interview with Craig Effron, who is a long-time trader hedge fund manager and provides valuable insight on the current state of hedge funds and how his firm invests.
  • Ray Dalio in the FT on why tightening now is a mistake. He believes (as do I) that we are nearing the end of the expansion phase of a Long-Term Debt Cycle. The problem is, this is comes 7 years into the expansion phase of a short-term business cycle, which is typically the time to tighten fed policy. The heart of the matter is that debt and debt servicing costs are high relative to income. He suggests central bankers to “err on the side of waiting until they see the whites of the eyes of inflation before tightening.” // NOTE: AFAIK THE ALL WEATHER FUND LEVERS UP BOND HOLDINGS TO ATTAIN RISK PARITY. #BOOKTALKWARNING
longhedge Links

Links 05.OCT.2015

TUMBLR REPOST

I’ve been away from this blog for a long time . I’ll be sharing links I find interesting every now and then. Optimistically, I will try for weekly or, perhaps most likely, monthly updates. Feel free to subscribe to get email updates with new posts.

  1. Chinese kid in LA first to Lumber Liquidators short, actually did the homework: noticed complaints in forums online and ordered product then sent it out for testing, found high levels of formaldehyde
  2. The attackers advantage – “The fundamental dilemma is that it always appears to be more economic to protect the old business than to feed the new one at least until competitors pursuing the new approach get the upper hand.”
  3. The Most Important Question – #life “Because happiness requires struggle. The positive is the side effect of handling the negative. You can only avoid negative experiences for so long before they come roaring back to life.” (link to my tweet)
  4. Links to all presentations from Sohn Canada Investment Conference
longhedge Investing, Links, Macro

Thoughts on the EU & Euro

TUMBLR REPOST.

While the regular doom and gloom vultures are circling the EU, Greece, Spain and the Globe right now, sometimes you have to flip an argument over and look at it from another angle. I’m sure it’s been said before, but last week Jahncke’s (President of Townsend Group Intrn’l) suggestion for Germany to exit from the Euro does make some sense. Continue reading “Thoughts on the EU & Euro” →