“In good times, few focus on such ‘mundane’ issues as earnings quality and footnotes. However, this lack of attention to ‘detail’ tends to come back and bite investors in the arse during bad times. There are notable exceptions to this generalization…
Contrary to the silly populist backlash which sees short sellers as rumor mongers and conspirators, they are actually amongst the most fundamentally driven of all the investors I interact with. Rather than being some malignant force within the markets, in my experience short sellers are closer to the accounting police (something the SEC once purported to do!).
Whilst companies often accuse short sellers of lying and conspiracy, it turns out that the accusers are often the guilty party. Owen Lamont from Chicago University has examined the battles between corporates and short sellers in the U.S. between 1977-2002. He found that ultimately it was the shorts that were right; the stocks underperformed the market by a cumulative 42% over three years after the start of the battle.”
-James Montier, Mind Matters: Cooking the books, or, More sailing under the black flag, June 30, 2008
Fascinating discussion a few weeks ago in welling@weeden with Albert Edwards and James Montier of Societe Generale, reprinted with permission:
“In the cacophony that is global investment strategy research, Albert Edwards (that’s him, below left) and James Montier (on the right) stand out as clearly distinctive voices. And not merely because of their British accents or because they’ve tended to the decidedly bearish side of the scale over the last decade or so. Despite long tenure in the rarified top echelons of the investment banking world, for many years with Dresdner Kleinwort and more recently at Societe Generale(where they are co-heads of global cross asset strategy) both have managed to retain a natural plain-spoken bluntness. Also large dollops of common sense and strong streaks of reflexive independence, which they employ in conveying their often invaluable insights on investment strategy. In Albert’s case, those spring mostly from his long experience in the dismal science of economics and in James’, from his explorations of the equally mysterious realms of behavioral neuroscience.
They are, in a word, skeptics, and at this juncture most deeply skeptical of any and all notions that “the worst is over.” The recession, which has barely begun, is more likely to be deep than shallow, market valuations are hideously expensive and the flation policymakers should be worried about starts with de-, not in-.
In his latest Investment Outlook, Bill Gross, head honcho at PIMCO, discusses the advent of transitioning from the levering world of pre-2008 into the delevering world we now find ourselves in. He points out that in the 'new' world we should no longe
Government "Expenditures" Gone Wild
http://econompicdata.blogspot.com/2008/11/relative-size-of-pledges-part-iii.html
The current US bailout commitments of $8.2 trillion currently exceed all of the major US expenditures of since the Second World War adjusted for inflation. For a
10-Yr+ US Treasury and Canada Yields Falling
During the December 1st liquidation of stocks, the yield on 10-Yr. US treasury securities fell to 2.81%, a level not seen since 1954. Incidentally, during the 1935-1955 period, the yield on these was at levels far below current levels, this being the
Joe Stiglitz: Bigger is Better
Joe Stiglitz writes in the New York Times:
Joseph Eugene Stiglitz (born February 9, 1943) is an American economist and a professor at Columbia University. He was chairman of the Council of Economic Advisers from 1995 to 1997 and was awarded the N
Paul Krugman: Lest We Forget
Paul Krugman opines that financial reform and regulation of the shadow banking system cannot wait:
Paul Robin Krugman (pronounced /ˈkɹuːɡmən/; born February 28, 1953) is an American economist, columnist, author and intellectual.[2] He is a pr
The Road to Depression
Brad DeLong says two big mistakes made the crisis worse:
James Bradford DeLong (b. June 24, 1960, Boston) commonly known as Brad DeLong, is a professor of economics at the University of California, Berkeley and a former Deputy Assistant Secret
Words from the (investment) wise for the week that was (November 24 – 30, 2008)
We are very pleased to welcome Dr. Prieur du Plessis as an editorial contributor to GreenLightAdvisor.com. Prieur du Plessis has 25 years' of global experience in professional investment research and portfolio management. More than 1,000 of his art
'Encouraged by a wicked wizard, Greenspan, Bernanke toils at his printing press'
The Guardian has published below, an insight-full essay by Hugh Hendry, CIO, Eclectica Asset Management. Hendry's brash and eloquent commentary has earned him a reputation which he best personally describes as heresy, as many in the City of London ha
Credit Crisis Watch (November 28, 2008)
For the world’s financial system to start functioning normally again, it is imperative that confidence in the credit markets be restored. In order to gauge the progress being made to unclog credit markets, I regularly monitor a range of financial s
Must-Read China Reading: World Bank Quarterly
If you read one thing on China this week/month/quarter/season, let it be the new World Bank China Quarterly. Superbly useful stuff.
Get it here.
[via Brad Setser]
'Here are some of Brad Setser's notes from his CFR blog:
1. China
Wise Words
It is quality rather than quantity that matters. — Seneca
Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment ... by Charles P. Kindleberger, Robert Aliber Amazon Price: $13.57
Customer Review: Kindleberger who passed away before the current financial crisis wrote the best book I have read on financial crises. His analysis of boom and bust cycle is prescient. It is much superior to Morris' still excellent The Trillion Dollar Meltdown: Eas...
When Markets Collide: Investment Strategies for the Age of Global Economic Ch... by Mohamed El-Erian Amazon Price: $18.45
Customer Review: 1. Emerging markets are a key to understanding the global economic and financial markets. Sovereign wealth funds will provide a new pool of money. Directives have helped open emerging markets and allow monetary investment not before possible.
Gold: The Once and Future Money by Nathan Lewis Amazon Price: $17.03
Customer Review: This is a great book discussing the reasons why Gold will be the ultimate monetary standard and why an individual should consider making gold a part of his personal portfolio. However, the people looking for an investment guide should look elsewhere....
The Master Swing Trader: Tools and Techniques to Profit from Outstanding Shor... by Alan S. Farley Amazon Price: $37.77
Customer Review: The book is largely about pattern recognition with the additional help of volume and some indicators. Pattern recognition is largely judgmental, so you need to be very comfortable with a judgmental approach. There are never any clear sell/buy signals...
Professionalizing Business Analysis: Breaking the Cycle of Challenged Project... by Kathleen B. Hass Amazon Price: $24.00
Customer Review: Business Analysis is an up and coming career opportunity. While Business Analysts work with Project Managers, they specialize in understanding the processes, their limitations and potential impact change will have on the processes (positive and negat...
Selling to Zebras: How to Close 90% of the Business You Pursue Faster, More E... by Jeff Koser, Chad Koser Amazon Price: $13.57
Customer Review: We've all been through many sales training classes and learned different sales methodologies, but Jeff's "Selling to Zebras" is unrivaled. It's different, it's logical, it's real, it hits home with prospects, and it works! Jeff's knowledge, deliver...
The Millionaire Maker's Guide to Wealth Cycle Investing by Loral Langemeier Amazon Price: $16.47
Customer Review: While this book covers some of the basics, it is far too general to be of much use. You can do better elsewhere. Think of it as an infomercial that funnels people into their other programs and personalized coaching where they can really get into yo...
Stock Cycles: Why Stocks Won't Beat Money Markets Over the Next Twenty Years by Michael A Alexander Amazon Price: $13.45
Customer Review: This book changed my life! This is a must read for everyone whether you invest in the stock market or not. This book displays the kind of economic and literary genius that comes along once in a lifetime. His points are well thought out and clearly ar...
Stay on top of the latest headlines from the Wall Street Journal Online.
Wall Street Journal's What's News, Dec. 3, 2008by The Wall Street Journal
Detroit's Big Three presented turnaround plans to Congress that indicate both GM and Chrysler could collapse by the end of December unless they get billions of dollars in emergency loans ... Treasury Secretary Paulson...
Jeffrey Saut Daily Audio Comment Raymond James
Listen to the recording with one of the media players below:
Jeff Saut’s Daily Audio Comment is recorded every weekday, except Wednesday, at 9 a.m. ET. It is made available to the public on this Web page at approximately 1 p.m. ET.
“In the cacophony that is global investment strategy research, Albert Edwards (that’s him, below left) and James Montier (on the right) stand out as clearly distinctive voices. And not merely because of their British accents or because they’ve tended to the decidedly bearish side of the scale over the last decade or so. Despite long tenure in the rarified top echelons of the investment banking world, for many years with Dresdner Kleinwort and more recently at Societe Generale(where they are co-heads of global cross asset strategy) both have managed to retain a natural plain-spoken bluntness. Also large dollops of common sense and strong streaks of reflexive independence, which they employ in conveying their often invaluable insights on investment strategy. In Albert’s case, those spring mostly from his long experience in the dismal science of economics and in James’, from his explorations of the equally mysterious realms of behavioral neuroscience.
Updated Twice Daily - Click to Listen