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Monthly Archives: May 2008
Run don’t walk to Jeff Matthews latest post on his dealings with Congress about whether hedge funds are responsible for the rise in the price of oil.
This is an excellent blog post from Will Wilkinson’ blog, The Fly Bottle. It discusses what few people are talking about in regards to the Burma natural disaster: the helping hand that socialism gives to killing people, destroying homes and hurting a country. Check it out:
The below link is a very thought provoking video of Malcolm Gladwell from the New Yorker Magazine conference talking about the mismatches of NHL combines, hiring of teachers and the Wunderlick test for judging the the intelligence of quarterbacks. Very interesting.
Great blog post from the NY Times on how income inequality is lower that conventional wisdom thinks.
I really respect Mohnish Pabrai, especially after I had the chance to meet him in person. Here is a good interview with him from Smartmoney:
The government reported on Wednesday that inflation was tame and lower than expected. The markets rallied on the news. But look into the numbers and one realizes that they are useful as Argentina’s or Venezuela’s inflation statistics.
Our esteemed government let us know that the price of gasoline fell 2% in April. While in the real world, gasoline prices actually rose 11%. Real world companies such as Fedex announced that fuel prices rose so much since the end of March that they reduced their earnings forecast.
We are witnessing a sad, sad act of absolute incompetence, mismanagement and lies at several levels of our government. Between our federal government’s reckless spending, our Federal Reserve’s destruction of the US dollar and Federal bailouts to everyone, and now outright lies from the hacks in charge of telling us what inflation is supposed to be, we are witnessing an outright theft of our way of life, our wealth and our financial standing in the world.
Don’t accept the nonsense coming from Washington, its all meant to distract you from what they are trying to do, which is spend, borrow and debase their way out of problems. What a shame.
Very interesting talk on the concept of cognitive surplus, described by Clay Shirky. This link is from Barry Ritholz’s blog, The Big Picture:
Higher oil prices are great. Before I explain why, let me step back for a second and explain the power of Capitalism and the information that prices convey. When a commodity or a service gets scarce or there is too much demand for that service, the price rises. The power of that price rise is very important, because it is communicating to the market that supplies are getting scarce and alternatives need to be found, or more efficient use needs to be enacted.
So with this in mind let’s turn back to oil. What does $126 a barrel and $4 a gallon gasoline tell the market? It tells the market be aware, there is too much demand and not enough supply. So, what is the reaction? First, people stop using as much oil and gas. And this is happening in miles driven stats and a recent article from the New York Times on a surge in mass transit usage:
The next thing that happens is money and investment pours into alternative sources of energy from solar to wind, to nuclear to clean coal to natural gas. Here is another article talking about how in California investment into alternative energy is soaring:
Here’s another article talking about the billions being thrown into clean energy:
Or what about the government of Abu Dubai investing $15 billion into alternative energies that was announced earlier this year?
All of this is possible by soaring oil prices. Its spurring massive investment and innovation. Think of the push for high gas mileage cars, fuel cells and hybrids. None of this would be possible without the massive catalyst of higher oil prices.
And this says nothing for the benefit to the environment, which will be the biggest beneficiary of all if we are forced off of oil because of high prices.
And this is the wonderful thing about capitalism, it sends us signals and price information so that we can act accordingly. The problem is that sometimes it creates short term pain like higher oil and gasoline prices, but in the long run, it really helps us out. In the end the high prices of oil, will be its undoing and will be the key that frees us from the grip of being addicted to oil as an economy and as a country. It may take awhile, but be sure, the faster oil goes up and the more expensive it is, the better it is for us in the long run, because it will spur us even more to find alternatives and to be efficient, and in the end everyone will benefit.
I was invited by Whitney Tilson and John Schwartz to speak at their Value Investing Congress in Pasadena on May 7th. For me this conference was an absolute thrill. From meeting other money managers that I have admired from afar, to listening to excellent well researched presentations by some of the best and most successful value managers and meeting with new contacts of people interested in my approach and investment ideas, this was a great conference.
I gave my speech to the Value Investing Congress yesterday, and I believe it was well received by the 400 or so audience members. Beyond talking about my strategy and my philosophy, I recommended two stocks, which are the two largest positions in my fund.
I thought the conference was first class and I was very impressed by the quality of not only the speakers and their presentations, but by the quality of the attendees. I would recommend this conference to any investor.
Here is a link:
You should spend exactly 15 seconds thinking about the MSFT/YHOO drama. Its interesting yes, but it is completely distracting and offers no real opportunity to help you invest wisely or make money in the market. Why? Because your goal should be to find the companies and stories that aren’t on the front page or even in the newspaper, but will be in the future. I learned this valuable lesson from one of the great value investors, Michael Price. See below link:
Ask yourself what is going on around me that might be a big issue to profit from. My guess is that a big underreported story is the below one about water in California.
There will be ridiculous amount of ink and commentary spilled and shared on the MSFT/YHOO drama of egos. Ignore it. And while everyone else is focusing on this big story of the day try to figure out what is coming down the line that will be just as big if not bigger.