Sep
3
Non Olet
pecunia non olet
“The U.S., to be clear, has always had a debt, since 1776. The original Revolutionary War debt has never been repaid, and couldn’t be. The only person who made a serious effort to retire the debt was President Andrew Jackson. In order to do that he also had to get rid of the Bank of the United States, which was the equivalent of the Federal Reserve. As a result, basically, local banks had to take up the task of providing all the credit in the U.S. That caused incredible speculative bubbles, because there was no real control over how they would do that (one advantage of having a central bank is that you can keep an eye on it and make sure it doesn’t engage in completely inflationary policies). This led to the Panic of 1837 and a giant economic collapse. No one has tried to do it since.”
David Graeber (via azspot)
(via quotingthecrisis)
Jul
9
“This is obvious to us now, but could you have seen the danger of bad logic while the Bubble was growing? If you have to be really scientific about it, the answer is no. You would be like David Hume and say, “Well, this is the first time the Internet has ever become mainstream. There is no precedent for this. Therefore we cannot know what the potential is for Internet companies, and therefore we do not know whether their stock prices are rational.” If you go back to the concept that the Internet is not proprietary and use COMMON SENSE (which seems rare in frothy markets, especially if you are too scientific to risk inferring things), you would have realized the danger immediately. At least you would not be crazy enough to pay 150X revenue for this business. You might pay 10X.”
An email discussing Groupon (Part 1); First-mover advantage is definitely not permanent « Stableboy Selections
“I’ve had times where I spent 30 hours reading everything, only to get to valuation with cluttered thinking and become frustrated. At that point I never buy. It should be a screaming buy, otherwise I’ll just hold cash. With H&R Block, it was a screaming buy, I just didn’t recognize it because I spent 40 hours in one weekend and had muddled thinking. Never again.”
On the Simplicity of Thought « The ST Report
- Let’s pause for a second. In the 1990s, the Chinese banking system basically collapsed. To revive it, the Chinese government took bad loans from banks’ balance sheets and put them into off-balance-sheet vehicles (Enron would be proud of that financial ingenuity). Banks started to function as though nothing had happened. To finance the off-balance-sheet assets, the government set deposit interest rates at very low levels: 1% or so. In a country with a very high savings rate and 5% inflation, this resulted in a 4% annual loss of purchasing power.
- Chinese consumers were punished severely over the last 10 years for the banking crisis of the late ’90s. And they’ll be punished even more soon. Keeping money in the bank didn’t make that much sense, and investment alternatives were limited. However, they could invest in an asset that supposedly never declines in price – a house or condo. So they did. As China slams the brakes on the economy and as housing prices fall, the banks will lose plenty of money. But more importantly, it is the people who bought tremendously overpriced houses, and their relatives who lent them money, who will lose. The wealth and hard work of more than one generation will be lost, and this kind of pain leads to political unrest.
“China has invested heavily in its cement production capacity, nearly tripling its clinker production capacity between 2000 and 2010 according to the U.S. Geological Survey. Clinker is, in the most basic sense, a coarse form of cement which has yet to be ground down into the fine powdery substance that is cement, the glue that binds all the ingredients of concrete together.”
» Cement in China Market Size Blog
Jun
18
“even if the investor has no interest in buying more of a given position (e.g. income is negative, or a stock’s position is already large relative to the portfolio), he may still benefit from a lower rather than higher stock price. This occurs when the company is repurchasing shares. If the company is getting a better deal on its stock price, then so is the investor.”
Barel Karsan: The Lower The Better
Jun
5
“There is a prisoner’s dilemma among relative return investors vs. absolute return investors. Absolute returns can be very unattractive during periods of strong performance of relative return investors. If these conditions last long enough, they become self-fulfilling as they did in the late 1990′s. Money left old economy stocks to participate in the speculative mania in Internet stocks. Julian Robertson liquidated. And Stanley Druckenmiller jumped in at precisely the wrong time. This episode, along with the meltdown in 2008, has convinced me that aiming for absolute returns may not be ideal. The way the markets have evolved, with once obscure investment strategies becoming commonplace, I think that absolute returns are going to become generally less attractive.”
Baupost’s underperformance throughout the 90′s; relative performance and duplicate bridge scoring; my discussion with Longtop shareholders « Stableboy Selections
May
28
“Some people have observed that a good time to short the market is when the tallest building in the world is under construction. The Empire State Building, Sears Tower, WTC 1 and 2, Petronas Towers, Burj Khalifa all went up prior to severe recessions. I don’t expect any building to surpass the Burj Khalifa for a long time. So it’s enough that the second tallest building in the world is under construction in Shanghai. It’s time to build shorts.”
More on the Shenzhen property market. When will China build the world’s tallest building? NOAH collapses. « Stableboy Selections
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