Sat 13 Mar 2010
Posted by Prieur du Plessis under Investment, Markets, Money
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The Roosevelt Institute recently hosted an investment conference, Make Markets Be Markets, in New York City. All the presentations are posted on Vimeo, icluding speakers such as George Soros, Joseph Stiglitz, Simon Johnson, Jim Chanos and Elizabeth Warren. Click here if you have some spare time over the weekend.
Sat 13 Mar 2010
Posted by Prieur du Plessis under Investment, Markets, Money
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Dylan Ratigan talks with former New York Gov. Eliot Spitzer about the release of a 2,200 page report laying out a potential criminal case against Lehman Brothers, whose collapse led to a major financial meltdown.
Visit msnbc.com for breaking news, world news, and news about the economy
Source: The Dylan Ratigan Show, MSNBC.com, March 12, 2010.
Sat 13 Mar 2010
Posted by Prieur du Plessis under Investment, Markets, Money
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Don Coxe has updated his popular webcast on Friday, March 12 - good news for his followers. You can access the recording here or from the sidebar of the Investment Postcards site (the column on the right-hand side) by clicking on Don’s photograph. Please note that access to Don’s recording works best with Firefox or the latest version of Internet Explorer.
Sat 13 Mar 2010
Posted by Prieur du Plessis under Investment, Markets, Money
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The video clips below provide a handy summary of the reports expected on the economic, financial and corporate front around the globe during the week ahead.
US: News
MarketWatch’s Stacey Delo has a preview of what will figure into the business and financial headlines in the coming week.
Europe: Bulgari, Inditex, Unicredit
Bulgari, Inditex, Unicredit earnings in focus. On the economic front, ZEW sentiment survey from Germany, Bank of England minutes.
Asia: Policy decisions
The Bank of Japan’s policy decision is a major highlight next week, along with the release of the Reserve Bank of Australia’s policy-meeting minutes.
Source: MarketWatch (here, here and here), March 12, 2010.
Fri 12 Mar 2010
Posted by Prieur du Plessis under Investment, Markets, Money
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I yesterday posted part 1 of a two-part interview with GMO’s James Montier. The interview comes courtesy of Miguel Barbosa, editor of the Simolean Sense blog, who has kindly given me permission to publish this excellent material here.
The second part follows below. (Please click here in case you missed the first part, dealing with value investing.)
Part 2: The Little Book of Behavioral Investing - How not to be your own worst enemy
* Image accessed via Amazon
Miguel: James thank you for joining us for the second part of our interview. This time we are here to talk about your other release - The Little Book of Behavioural Investing - How Not to Be Your Own Worst Enemy. Unlike other books which border on complexity and focus on academic speak -this little book provides an introduction to behavioural finance, decision making, and psychology.
James Montier: Thanks for having me back Miguel. The little book is aimed at everyone. It was the toughest thing I’ve had to write, trying to expunge the jargon and get down to the nitty gritty of how to defend ourselves against our own bad habits was a real challenge.
Miguel: … so let me ask you. Why are we our worst enemy?
James Montier: We are own our worst enemy because we are human. Evolution equipped us to deal well with savannah of 150,000 years ago, but that doesn’t necessarily equate to leaving us well prepared for the world we find ourselves living in now. Traits such over-optimism may have served us well historically (after all the pessimists probably stayed at home in the cave, and didn’t go out and try and catch woolly mammoths, and thus died out relatively quickly). However, over-optimism in investing can be an unmitigated disaster.
Miguel: Can we really develop self control? Why is it like a muscle?
James Montier: Self control is a tricky thing. It’s like a muscle because it suffers depletion. That’s to say it gets tired, and becomes harder and harder to use. But I think we can outsource self control in same regards. For instance, Sir John Templeton used to do his valuation work on a quite day in the markets, he’d come up with estimate of intrinsic value, and then calculate his required margin of safety. He’d then place an open order with his broker to buy when the stock was down at his level (say 40% below market price). Sir John was effectively outsourcing his self control, because he knew that on the day that stock was down 40% he wouldn’t have the courage to buy it.
Miguel: I was hoping I could outsource my self control to India. You’ve convinced me, I guess I’ll have to keep it in house.
Give us some insights - how can we become critical thinkers.
James Montier: Critical thinking is really all about being a contrarian in thought. Learning to be skeptical, to question what you hear, and evaluate it based on merit, rather than emotional appeal. In essence taking a contrarian view point requires us to learn three skills.
The first is highlighted by the legendary hedge fund manager Michael Steinhardt, who urged investors to have the courage to be different. He said, “The hardest thing over the years has been having the courage to go against the dominant wisdom of the time, to have a view that is at variance with the present consensus and bet that view.”
The second element is to be a critical thinker. As Joel Greenblatt has opined, “You can’t be a good value investor without being an independent thinker-you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value.”
Finally, you must have the perseverance and grit to stick to your principles. As Ben Graham noted, “If you believe that the value approach is inherently sound then devote yourself to that principle. Stick to it, and don’t be led astray by Wall Street’s fashions, illusions and its constant chase after the fast dollar. Let me emphasize that it does not take genius to be a successful value analyst, what it needs is, first, reasonably good intelligence; second, sound principles of operation; and third, and most important, firmness of character.”
Only by mastering all three of these elements can you hope to be at ease as a contrarian.
Critical thinking also involves pushing yourself to think in ways that don’t come naturally. For instance, you have to learn to look for the information that shows you are wrong. You have to learn to try and kill the idea, rather than nuture it. This goes against the grain. With practice all of these elements of critical thinking become a little bit easier - but never let your guard down, because that’s when the bad old habits start to creep in again.
Fri 12 Mar 2010
Posted by Prieur du Plessis under Investment, Markets, Money
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The Daily Reckoning Financial Darwin Awards recognize the efforts of companies that, through dedication to idiocy, ended their own lives. The recipient of the dumb-dumb award, as well as the names of the finalists, are given below.
Source: The Daily Reckoning, March 11, 2010.
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| Current call: March 12, 2010 |
![[Most Recent Charts from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_4.gif)
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