Tag Archives: Bernanke

Book Club for The Intelligent Investor; Can a Company Have Too Much Debt? Free Courses


Book Club for Value Investors (Discussion) http://www.moderngraham.com/

Graham & Doddsville – Issue 20 – Winter 2014

Can a Firm Have Too Much Debt


Is There Too Much Corporate Debt_Bernankie 1988

The above papers were written during the LBO craze of the late 1980s which, in turn, was driven by the all-time low in asset values of the early 1980s.

Liquidation and Debt Capacity   Worth a read!

Free Course with Yale’s Schiller on Financial Markets and Risk:


Argument Clinic

Chapter 11 in Competition Demystified: Games Companies Play, Of Interest

Obvious prospects for physical growth in a business do not translate into obvious profits for investors.–Ben Graham

Games Companies Play: A Structured Approach to Competitive Strategy, Part II Entry/Preemption Games.

This chapter may help you with your case study in Fox Broadcasting (Previous post found here:http://wp.me/p1PgpH-AK).

Question 1: What are the four characteristics of entry/preemption or “quantity” competitive situations that differ from pricing issues?

Question 2: What can a potential entrant do to discourage incumbents from resisting its entrance?

Question 3: You are faced with analyzing a competitive industry, and you want to understand what the players might do. Describe what techniques you might use to accomplish this analysis.

Weekend Reading

Ben Bernanke gives his point of view: http://www.theatlantic.com/magazine/archive/2012/04/the-villain/8901/

Prize awarded to anyone who can explain the following. If central planning of an economy has been shown repeatedly to fail–witness USSR, Communist China, Cuba, North Korea, Welfare Europe–how can the Federal Reserve succeed in manipulating interest rates for a multi-trillion dollar economy?

How is Ben doing? Purchasing Power Calculator:   http://www.bls.gov/data/inflation_calculator.htm

Corporate compensation or Failure is the New Success:http://prudent-speculation.blogspot.com/2012/03/gimme-failure-baby.html  Why is this not surprising?  Why do corporate CEOs receive such distorted compensation. Hint: follow the money!

The government builds a listening center. Comforting. http://www.wired.com/threatlevel/2012/03/ff_nsadatacenter/all/1

Next week while you do your case studies, we will discuss how to read a Value-Line Tear Sheet.  Do you know that almost any major library will have Value-Line available on-line for your use from home? It doesn’t get better than that!

Have a good weekend.


I don’t understand it. Jack will spend any amount of money to buy votes but he balks at investing a thousand dollars in a beautiful painting.–Jackie Kennedy

Articles on Current Inflation

Bailing out banks is inflationary: http://mises.org/daily/5890/Bailing-Out-Banks-Is-Inflationary

How we can transition to honest money: http://mises.org/daily/5926/The-Transition-to-Monetary-Freedom

Current prices for pancakes around the world: http://www.economicpolicyjournal.com/2012/02/cost-of-making-pancakes-around-world.html

Opposing view: Diapers and Deflation (What is Krugman Smoking?) http://krugman.blogs.nytimes.com/2012/02/06/diapers-and-deflation/

The next worry from the Fed: http://blog.haysadvisory.com/


Strategic Logic Quiz, Review of Austrian Economics, and What about Tomorrow?

The three biggest achievements of the Cuban revolution are health, education, and low infant-mortality rates, and that its three biggest failures are breakfast, lunch, and dinner. — Government Worker, Habana, Cuba.

Strategic Logic Quiz

Last week, I promised the greatest business analysis ever done.  See here: http://wp.me/p1PgpH-cs

A reader, Logan, gave a strong hint for the solution.  Before I post the answer, let’s try another question.

Use Munger’s multidisciplinary thinking or Professor Greenwald’s strategic logic to find an answer to the following problem: The Cuban dictatorship collapses and property rights are restored. You have been given the job to develop a business in Cuba with barriers to entry.  You must build a business with the strongest combination of competitive advantages. What business would you choose, why and how would you build barriers to entry? How many advantages can you design for development? If you come up with a sensible plan, you will be given $5 million to start.

Two hints: the business can not be involved in cigars or tourism (like hotels or restaurants). A reading of Cuban business history would lead you to an answer, but I presume many have little knowledge of that history.

Tip: A great way to learn about businesses is to read corporate history or the biographies of business leaders.  You will sense how a business grows and develops advantages or loses them.

Austrian Economic Review

What are the markets telling us? Deflation has gold and commodities selling off?   I don’t think so. Never predict, but here goes………The Fed and the ECB both have the ability to print money and exchange good collateral for bad collateral with banks. What do central banks know how to do? What motivates central bankers? What are the monetary aggregates telling us?

The dollar is weak: http://scottgrannis.blogspot.com/2011/12/dollar-is-still-very-weak.html#links

Keeping an eye on longer-term investors: Insiders are long-term bullish. http://www.marketwatch.com/story/those-bullish-corporate-insiders-2011-12-07

Place facts into a coherent theory

How do we place facts into context? A rap video of Hayek (Austrian Economist) vs. Keynes (An Interventionist)http://www.youtube.com/watch?v=d0nERTFo-Sk

Bernanke vs. the Austrians during the housing bubble:http://www.youtube.com/watch?feature=player_embedded&v=MnekzRuu8wo

What confidence do you have in Bernanke’s planning ability or in bureaucrats controlling our monetary system?

Inflation today: http://www.economicpolicyjournal.com/2011/12/exposed-why-krugman-smoothed-inflation.html

Note the unusual bond yields.http://scottgrannis.blogspot.com/2011/12/bond-yields-are-out-of-whack.html

MF Global is an example of our Ponzi financial system in action: http://lewrockwell.com/french/french143.html

Murray Rothbard wrote, “If no business firm can be insured, then an industry consisting of hundreds of insolvent (banks) firms is surely the last institution about which anyone can mention ‘insurance’ with a straight face. ‘Deposit insurance’ is simply a fraudulent racket, and a cruel one at that, since it may plunder the life savings and the money stock of the entire public.”

Our Media

The videos below reinforce the need to read original documents or to speak to people who are actually involved in an industry or sent to war rather than believing our press. Excuse the political connotations.

A savage spoof of the media and our government that hits closer to the truth than I would like! Hitler reacts to Ron Paul’s Rise in the Polls: http://www.youtube.com/watch?src_vid=fFbc3sHl3Ic&annotation_id=annotation_162843&feature=iv&v=5ScPXDRcIfc

War and the importance of understanding history: http://www.youtube.com/watch?v=I8NhRPo0WAo&feature=youtu.be  Note that many against war are the folks who actually have experienced it.

Entrepreneurial Alertness

A podcast on finding opportunity: http://www.economicpolicyjournal.com/search/label/The%20Robert%20Wenzel%20Show  Scroll down to the second or third show.

Adapt or Die: Be Creative and Sell your Skills http://www.lewrockwell.com/north/north1073.html

Old (2007) but detailed Longleaf Interview:  http://www.palmerstongroup.com/articles/2007july/interview.html

Interesting Blog from a former Wall Streeter: Reading Fiction will Make You a Better Investor: http://interloping.com/

Have a great day and weekend.