Money World Interview with John Templeton

 

An old video but very good comments from Templeton.

Jean-Marie Eveillard: Investors Have To Have The Courage To Say No

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In Ronald Chan’s Book – The Value Investors, Jean-Marie Eveillard provides two examples of when he had the courage to say no. Here’s two excerpts from the book:

Because I became worried about the Japanese stock market in the late 1980s due to its gigantic credit boom, we sold all of our Japanese stocks in mid-1988. Some investors questioned us for pulling out from the second largest stock market in the world, but I said it’s better to take some money off the table than to participate in market mania.

Obviously, I was wrong and unhappy in the next 18 months because the market went up another 30 percent, but in 1990 when the market collapsed, we owned nothing in Japan and our decision was proved logical.

Meb Faber: Aaron Edelheit, Mindset Capital, “The Best Investors Are Those That View It As A Game”

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In today’s episode, we start with Aaron’s time as the CEO of The American Home, a company he grew to over 2,500 single-family rental homes and sold in 2015 to a REIT for over $250 million. He explains why that experience has led him to be bullish on Mexican homebuilders and why he thinks one specific homebuilder is the most undervalued company in North America. Then we turn to why Aaron thinks it’s helpful for investors to play video games and why he thinks Nintendo is undervalued.

As we wind down, we touch on the cannabis space and why Aaron is bullish on the sector.

  

Michael Mauboussin: The 3 Big Behavioral Investing Mistakes

 

In this interview with Outlook Business, Michael Mauboussin discusses the three big behavioral mistakes that investors make. Here’s an excerpt from the interview:

Mauboussin: Investors make a lot of behavioral mistakes but I’ll mention three I think are particularly prominent.

The first is this notion of being overconfident. People tend to be overconfident in understanding the future and the way that manifests for investors is they tend to project ranges of outcomes that are vastly too narrow. So investors really need to try to calibrate themselves to appropriate distributions of outcomes to offset that overconfidence.

The second really big one is called confirmation bias that basically says once you’ve made up your mind, made an investment, you can to seek information that confirms your point of view and dismiss or disavow information that doesn’t confirm it. One of the essential tasks of an investor is really to understand new information as it comes in and to revise your views appropriately.

The third big one is a failure to use base rates. So base rates are essentially a record of what’s happened in the past to companies in similar situations. An understanding of base rates in terms of sales growth rates or earnings growth rates or return on capital patterns can allow investors to have a much better understanding about how the future may unfold for a particular company or an industry.

GMO: When The Ducks Are Quacking Feed Them

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Stock issuance highest ever, as firms and Wall Street know when it’s time to sell to eager buyers.

Yes, we are witnessing new price records for the S&P 500, NASDAQ, and a host of other markets. That, in isolation, should not be worrisome. What should worry you, though, is that records are being set on the valuation front. By almost any measure – forward or backward-looking – we are staring at some of the most expensive valuations in history, especially in growth stocks. But we’ve talked about that inconvenient truth many times before. Here’s a new worry: Stock issuance in 2021 is also setting a new record, blowing away the last high set in the run-up to the Tech Bubble. This is a dubious item to celebrate if history is any guide.

Would You Have Found Berkshire Hathaway in 1975?

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Probably not, from the performance charts, writes Rekenthaler in this article from the archives.

My July 25, 2018, column suggested that time travelers purchase $1,000 worth of Berkshire Hathaway (BRK.A) stock in 1975. That position would be worth $7.5 million today. Which got me thinking: How did BRK’s equity appear at that time?

Warren Buffett gained control of BRK in May 1965. The chart below depicts the value of a $10,000 investment in BRK over the next five calendar years, from 1966 through 1970. For comparison’s sake, I included the S&P 500 and the price change of a barrel of crude oil. (The latter two investments are theoretical: There were no index funds, and oil barrels came with storage costs.) All figures are adjusted for inflation.

Josh Young: Delta variant and China’s economy are 'short-term concerns' for oil

 

Josh Young, CIO of Bison Interests, joins BNN Bloomberg for his outlook on the sell-off in oil. Young sees rising COVID-19 cases and weakness in the Chinese economy as "short-term concerns" and is buying more oil stocks on pullback from names like Baytex to SandRidge.

Old West Investment Management Q2 2021 Investor Letter

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Our firm recognized an extraordinary opportunity in the nuclear energy/ uranium mining industry several years ago. Old West partner and portfolio manager Brian Laks offers this update on our investments in this area:

It’s been two and a half years since we first wrote about uranium in our 2018 year-end letter. We launched our Opportunity Fund that year to focus on the idea as we saw industry fundamentals improving and felt that we were nearing a turn in the cycle. The timing turned out to be excellent as we were able to steadily raise and deploy capital building positions in a declining price environment as the stocks bottomed.

In April 2020 we wrote that we believed the inflection point had arrived. Since that time, our positions have multiplied in value and the patience of our investors has been greatly rewarded. In an interview we gave last quarter, we talked about the need to become more selective as general valuation levels improved. We think we are still in the early stages of a long overdue industry rebalancing, and we maintain core positions in what we believe are the best assets to capture improving economics in the industry. 

Sean Iddings: We All Need Some Perspective

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The bull market makes us all look like geniuses, but we’re not.

It’s time for a good dose of perspective and honesty.

Follow along…

In 2013, Brian Scalabrine, a recently retired 11-year NBA player, had enough.

Scalabrine was sick and tired of hearing average Joes say they could beat him one-on-one on the court. The armchair professionals insisted that Scalabrine, a 3 point per game player, a poor player by NBA standards, would be an easy challenge. 

Scalabrine wanted to shut them up. Scalabrine took on four of Boston’s best amateur ballers, dubbed it the “Scallenge” and recorded it for all to see. Some had Division - 1 college experience. All had supreme confidence they would win.

Here is how it went.

Smead Capital Management: Quail Pricing in Oil Assets

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On the insistence from a friend and a colleague, I watched the movie There Will Be Blood over the weekend. I’m a Daniel Day Lewis fan from his prior works like Gangs of New York, so was excited to watch this odd story. Lewis’s character Daniel Plainview is a silver speculator turned oilman who comes across an oil opportunity in Little Boston, CA. He takes his son (HW) to a property, owned by the Sunday family, that they are told contains oil. He tells the owner that they are going quail hunting, which wasn’t true. While hunting, HW stumbles upon an oil seepage confirming the oil is present on the land. They are both excited and the following scene ensues with his son:

HW (son): How much we gonna pay them?

Daniel (father): Who’s that?

HW (son): The Sunday Family

Daniel (father): We’re not going to give them oil prices. We’ll give them quail prices.

While we are not claiming to be getting our oil companies for birdfeed, it brings up the idea of distraction for the Sunday family in the movie and investors now. The Sundays had strangers show up looking to hunt quail, not knowing they were looking for oil. Outside of one family member believing there was a ruse, they were willing parties when the sale price was negotiated at what looked like low prices in the movie. These people had never seen oil drilled on their land, thus didn’t understand the opportunity that lied ahead.

The Folly of Ruling Out a Collapse

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A remarkable feature of extended bull markets is that investors come to believe – even in the face of extreme valuations – that the world has changed in ways that make steep market losses and extended periods of poor returns impossible. Among all the bubbles in history, including the 1929 bubble, the late-1960’s Go-Go bubble, the early 1970’s Nifty-Fifty mania, the late-1990’s tech bubble, and the 2007 mortgage bubble that preceded the global financial crisis, none has so thoroughly nurtured the illusion that extended losses are impossible than the bubble we find ourselves in today.

Benjamin Graham understood that even when extreme valuations are not immediately corrected by market losses in the shorter-run, they are typically followed by disappointing investment returns and very long, interesting trips to nowhere. The fact is that most of the fluctuation in 10-12 year S&P 500 returns is driven not by changes in fundamental growth, but by changes in valuation multiples. When valuations are depressed, investors not only purchase expected future cash flows at an attractive price; they also avail themselves of the potential for valuations to increase in the future. At extreme valuations, investors not only purchase expected future cash flows at an elevated price; they also expose themselves to the potential for valuations to retreat in the future.

Warren Buffett in Switzerland: A Few Lessons on Value Investing

 

Rare footage of Berkshire Hathaway’s CEO sharing his investment and business wisdom in a Q&A session in Switzerland.

Berkshire Margin of Safety is not on price, but qualitative factors

Ben Graham

Price

Long term investing

Durable competitive advantage

Products

Nestle

Management qualitative factors “Management you’re gonna love 20 years from now.”

Passion

Predictably 

Future profits

Evaluation of a business

Software products

Tech / computer/ IT industry (Microsoft, Google)

Change

Being chief risk officer as CEO

Control / decentralised management of acquisitions and holdings

Values / ethics and behaviour

Charity is up to shareholders to allocate, not up to us to allocate their funds

Jeremy Grantham: Beware The ‘Confidence Termites’

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In his recent interview on The Moneyweek Podcast, Jeremy Grantham discussed what might bring this latest prolonged bubble to an end, and the role of the ‘confidence termites’. Here’s an excerpt from the interview:

Grantham: The history books are pretty clear, there doesn’t have to be a pin. No one can tell you what the pin was in 1929. We’re not even certain in 2000. It’s more like air leaking out of a balloon. You get to a point of maximum confidence, of maximum leverage, maximum debt, and then the air begins to leak.

And I like to say, the bubble doesn’t reach its maximum and then get frightened to death, what happens is the air starts to leak out slowly because tomorrow is a little less optimistic than yesterday. And gradually, people begin to pull back. And the process is very interesting, in that before the end of the great bubbles, and there’s only been a handful, so we can get carried away with over-analysis.

A Conversation with America's #1 Futurist

Stansberry Investment Hour:

On this week’s episode of the Stansberry Investor Hour, Dan invites an incredibly special guest onto the show.

He studied for years under Henry Kissinger at Harvard University…

He later helped pioneer the formulation of supply-side economics as Chairman of the Lehrman Institute’s Economic Roundtable…

And he’s widely regarded as America’s #1 futurist…

The one and only, George Gilder.

George is best known for many of his best-selling books including, Wealth and Poverty, Life After Television, Life After Google, and his latest work, Gaming A.I.: Why A.I. Can’t Think but Can Transform Jobs. 

Howard Marks: Thinking About Macro

Oaktree Capital

Regular readers of my memos know that Oaktree and I approach macro forecasts with a high degree of skepticism.  In fact, one of the six tenets of Oaktree’s investment philosophy states flatly that we don’t base our investment decisions on macro forecasts.  Oaktree doesn’t employ any economists, and we rarely invite them to our offices to share their views.

The reason for this is simple: to use Buffett’s terminology, we’re convinced the macro future isn’t knowable.  Or, rather, macro forecasting is another area whereas with investing in general – it’s easy to be as right as the consensus, but very hard to be more right.  Consensus forecasts provide no advantage; it’s only from being more right than others – from having a knowledge advantage – that investors can expect to dependably earn above-average returns.

John Polomny: Regulatory Capture Of The FED By Crooked Former FED Officials. They Get Rich, You Get Screwed

www.actionableintelligencealert.com

Just more crookery as people work at the FED where they ostensibly regulate the banks. We see all these so-called smart people work at the FED and manage our economy. After they blow serial bubbles and ruin average people's financial lives they move to private industry (banks) and get fat salaries and perks.

Goehring & Rozencwajg Q2 2021 market commentary: The IEA Ushers in the Coming Oil Crisis

Goehring & Rozencwajg 

The fundamental problems facing global oil markets are much more severe than 2021’s spike in oil prices would suggest.

Our newest commentary, The IEA Ushers in the Coming Oil Crisis, provides an in-depth look at why global oil demand will not taper off due to ESG-related reasons, as the IEA predicts, and supply growth will likely remain restricted — a recipe for a dramatic oil deficit.

• Problems facing the oil supermajors: Exxon, Chevron, Royal Dutch Shell and Total
• Shrinking global oil inventories
• Tightness in the US natural gas markets
• Higher-than-expected Chinese agricultural demand

Harris Kupperman Interviews Josh Young Of Bison Interests

In this episode, Patrick Ceresna and Kevin Muir take a backseat and let fan-favourite Harris Kupperman aka Kuppy interview Josh Young from Bison Interests.  Josh has been hitting out of the park when it comes to his energy picks, and he comes back to the Market Huddle to give us his new picks.