Frank Holmes: Gold Could "Absolutely" Hit US$2,000 Again This Year

The Stoicism Of Ben Graham

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Graham didn’t propose that a stereotypically stoic – that is, unemotional – temperament is a necessary condition of success as an investor. He did, however, consciously imbibe classical Stoicism. Hence the investor should strive to be “inversely emotional” (the term is Jason Zweig’s rather than Graham’s; see “If You Think the Worst Is Over, Take Benjamin Graham’s Advice,” The Wall Street Journal, 26 May 2009). Neither as a friend nor as a parent, spouse, etc., can or should you stifle all of your emotions. But as an investor, you should reason – that is, neither enthuse nor despair. Through reason perhaps you can – and through emotion you certainly cannot – ascertain sensible prices of securities and levels of markets, and act accordingly when prices don’t reflect values.

"The more you do so, the greater is the degree to which you’ll recognise as vices – and thereby discount – those passions that the crowd perversely regards as “good.” Moreover, you’ll acknowledge and cultivate as virtues those attitudes and behaviours that the crowd typically ignores (or regards as “bad”)."

Grant Williams: Super Terrific Happy Hour Ep. 7 - John Hathaway: Being A Doyen Is A Good Thing, Right?

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Join Stephanie and Grant for a fascinating conversation with a true legend of the precious metals industry, John Hathaway.

The three discuss John's storied career, what the gold market looked like twenty years ago, how John's experience of multiple cycles has helped him deal with the volatility inherent in the precious metals space and what he expects to see going forward.

Gold's role in a portfolio, how to identify potential investments and the importance of managing the psychological component of what can be a tempestuous ride all come under the microscope.

Crescat Capital Investor Letter Q3 2020

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History does not exactly repeat, but it often rhymes. The art and science of macro investing is comparing past business cycles with the present across a mosaic of different indicators and time frames to determine the most probable path forward for markets. Throughout time, financial markets and the economy have been intimately linked to cycles of expansion and contraction of money and credit. The Federal Reserve was created by bankers and enacted by Congress in 1913 to provide a more flexible and stable monetary and financial system, but by no means did the Fed repeal the business cycle. In fact, the central bank has often played a role in amplifying booms and busts. For example, after introducing large-scale purchases of government securities to stem the recession of 1923, the Fed continued to expand the money supply and suppress interest rates through the remainder of the 1920s. Such monetary policy fanned the flames of historic stock market speculation which culminated in the stock market crash of 1929 to 1932 and the Great Depression. The macro set-up today is eerily similar as we will explain below.

Policy makers have no choice but to continue diluting the value of fiat currencies to enable a levered financial system to withstand such extreme macro imbalances. If past is prologue, large central bank interventionism leads to the appreciation of monetary assets and, in our view, precious metals will be the real beneficiaries of a global synchronized debasement trend that now seems irreversible. Therewith, gold and silver mining companies should be the largest beneficiaries of this environment. They look fundamentally stronger than any other industry in equity markets today. In fact, free cash flow among the top 20 miners have grown by 132% year over year in their latest report. 

Smead Capital Management: Humility Produces Alpha

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Joe Kennedy was getting his shoes shined in 1929 and the shoeshine boy was giving him stock tips. Think of how humiliating it might have been to Kennedy, who had dramatically reduced his common stock ownership. This upstart had been making money and couldn’t wait to pass along his wisdom to Mr. Kennedy. Joe quickly surmised that there was nobody left to buy stocks and established a huge short position in the stock market. The fortune he made by betting against stocks was part of the wealth which led his son, John F. Kennedy, to become President of the United States in 1960.

We were at our grandkid’s soccer game recently and we struck up a conversation with one of the parents. They worked for a successful fintech company (which we owned for a long time) and explained to us that they had invested in Shopify (SHOP) at around $140 per share. I looked it up over the weekend and was astounded by what the numbers told me.

Old West Investment Management Q3 2020 Investor Letter

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Where does the market go from here? Hard to say, but look at these eye-popping returns of

certain stocks since January 1:

PAYPAL + 77%

TESLA + 422%

NVDIA + 120%

APPLE + 54%

These returns are for the first nine months of 2020. One has to ask: have these businesses improved that much in nine months, or is the market forming a bubble ala 1999? In determining whether the market is in bubble territory, I love a quote from legendary investorSir John Templeton: “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.”

The returns shown above, in my opinion, smack of euphoria. 

Smead Capital Management: Energy in the Icahn-ic Green Room

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David Dreman’s book, Contrarian Investment Strategies, was gospel to investors when it was first published in 1979. Investors had been decimated by markets going nowhere over the prior 10 years. Stock investors were ready for something new. Dreman had produced a lot of success as an investor and wanted to share his gospel of contrarian value investing.

The perfect picture of Dreman’s gospel comes from his opening chapter. He refers to the stock market as a casino with a green wing and a red wing. Looking into the green wing, “the atmosphere is unhurried, the blackjack tables are sparsely attended, and every player sits behind a mound of green and black chips.” As he points out, everything is so mundane that “you think you’ve come to the wrong place.” The next thing you notice is the players in the room, “they’re all winning.”