Readings
I have been speaking to several friends who run small businesses, and they are universally depressed. They see ever-increasing regulations, taxes, government dis-function and poor prospects. They are battening down the hatches. Perhaps, that is good advice. Note the interview with an entrepreneur #3 below
- http://www.thereformedbroker.com/2013/03/29/factset-negative-earnings-guidance-at-seven-year-highs/
- http://www.hussmanfunds.com/wmc/wmc130408.htm
- http://classicvalueinvestors.com/i/2013/04/fabulous-interview-with-entrepreneur-alan-butler-about-the-economy/
- http://greenbackd.com/2013/04/05/robert-shiller-interviewed-on-cape-and-the-stock-market/
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Free Value Newsletter
Get on his email list for Value Investing News. I think he might even send out Baupost’s last 2012 annual letter if you ask. Ask to be on his list: pcordway@gmail.com. Below is a sample from his last emailed letter:
Subject: good reading
As usual, if anyone is going to Omaha for the Berkshire Hathaway annual meeting and wants to get together just drop me (Phillip) an email.
Facts and Figures
- Real, per capita disposable income in the U.S. has declined at 0.4% per year over the past five years (Source: Commerce Dept.)
- More, if you’re a glutton for punishment: America still has two million fewer jobs than it did in January ’08 (Brookings Inst.); food stamp enrollment is up 70% since ’08 to a record 47.8 million in Dec. ’12 (SSA); 43% of active workers reported no active saving for retirement (ERBI)
- In happier news:
- There are 1.7 million fewer underwater home owners (sic) in 4Q12, taking the total down to 21.5% from the peak of 25.2% in 4Q11 (Corelogix); U.S. R&D spending of 2.9% of GDP is back to its space-race peak economist); household net worth rose $1.17 trillion in 4Q12 to $66.07 trillion, the highest since 4Q07
Links
- 9th Annual Demographia International Housing Affordability Survey: 2013 — Always a worthwhile read.
- Cred and Credulity: A collection of Popular Delusions essays from 2009 to 2012 — This is a 244-page collection from Dylan Grice of SocGen. (If that link doesn’t work just email me for a pdf copy.)
- Daniel Kahneman & Nassim Taleb Live from NYPL — Audio/video of a panel featuring Kahneman and Taleb discussing decision making.
- Beware the Big Errors of “Big Data” — More from Taleb.
- “Household Debt and Credit: Student Debt” — A presentation from the NY Fed outlining some of the key aspects of the current student loan market. Thanks to Vitaliy for passing this along.
Books
- Top 10 Books for the New Investor, or Great Books to Read or Review for the Not-So-New-Investor — Hard to argue with any of these choices from Joe Koster at Value Investing World.
- On a similar note, “The Essays of Warren Buffett” was just released in a Third Edition that is updated to include material from the past few years. An interview with the author is here.
- The Outsiders — This has been recommended by several people, most recently and notably by Warren Buffett himself in his annual letter. I’ll throw in my two cents — this is probably the best business book I’ve read in the past year.
- The Clash of Cultures: Investment vs. Speculation –Buffett also recommended this book, which is Bogle’s living history of the changes (almost all negative) he’s witnessed in 60+ years of financial markets. This is a good and important book.
- Investing Between the Lines: How to Make Smarter Decisions by Decoding CEO Communications — Buffett’s third recommendation covers an important topic, but I thought the book left something to be desired. I love the book’s topic and message, but a look through the author’s “Rittenhouse Rankings” and the various articles describing it tell you everything you need to know without a 275-page book.
- The Manual of Ideas: The Proven Framework for Finding the Best Value Investments — John Mihaljevic of “The Manual of Ideas” fame is releasing a new book this summer that looks very promising. In the meantime, his Value Conferences and The Manual of Ideas are great resources.
- The Great Deformation — I haven’t read this book yet, and I’m certainly not endorsing the author’s views (his last sentence in this essay is particularly nonsensical), so don’t shoot the messenger. But wow, you don’t see a vicious takedown of both sides like this very often. Like the Baupost letter, I would advise that you don’t read any of this with sharp objects at hand.
Attachments
- Baupost 2012 Annual Letter — This has been out for a month or two and I won’t clog your inboxes any further, but if you haven’t read this yet you should. This was by far the winner of any otherwise lackluster shareholder letter season.
- Household formation — A chart from BAML showing the 5-year rolling change in numbers of households, which obviously fell off a cliff in ’08 and hasn’t really rebounded much.
- Buffett Stock Gauge Sends U.S. Caution Signal — Buffett has said that “probably the best single measure of where valuations stand at any given moment” is the market capitalization of all stocks (the Wilshire 5000) against gross national product. He added, importantly, that the ratio has “certain limitations in telling you what you need to know.” He believed it would be hard to go too wrong with the ratio in the 70-80% range, with anything approaching 200% deemed to be “playing with fire.” So there is nothing from his direct commentary to suggest that he viewed 100% as anything more than a round number, but it’s worth looking at where the ratio has been and where it is currently (as well as the margins supporting currently valuations).
- Cyclically Adjusted PE Ratios — Similar to the market cap / NG is the ratio of price to 10-year-average profits shows. This chart, compiled by Goldman, shows CAPE ratios worldwide.
Articles……..