In Defense of the “Old Always” – James Montier – Montier offers a persuasive critique of trying to predict the economy. It should be noted that this is different from hedging, which is a form of insurance, and attempting to value the market. Klarman is a proponent of hedging, particularly when it can be done inexpensively. Holding a reasonable amount of cash is the simplest hedge, in my view.
Firm Makes Bold Bet on Falling Prices – WSJ.com – Fairfax has a CPI-linked derivative contract that provides a hedge agianst deflation in the U.S., E.U. and the U.K. See page 16 of the Fairfax 2011 shareholder letter for a detailed explanation. Disclosure: I am long Fairfax Financial.
Koo’s “Good News” – Interview with Nomura economist Richard Koo. Koo argues that the United States is in a balance sheet recession. His view is that monetary stimulus alone will not create economic expansion in the current environment. The reason is that private sector aggregate demand will continue to suffer as consumers rebuild their balance sheets. You may disagree with his conclusions but his reasoning is solid, and he provides a useful framework for making sense of current economic data.
MIT SHASS: Video – 2010 – Paul Krugman – learn from history – Krugman’s take on where we are at and the risks going forward. Krugman is not sanguine as he argues that we have forgotten important lessons from The Great Depression.
Structural alpha – The real secret to Buffett’s success (see page 57) – Many thanks to reader Giuseppe Piazzolla for sharing this article.
Process not outcomes: gambling, sport and investment! – James Montier – My view is that checklists are a simple, yet powerful, tool to improve your investing process.
Simoleon Sense » Blog Archive » Must Read: Fifteen Reasons News is Bad For You! – Good essay on turning down the volume on news and spending time reading books and in-depth articles as a path to real understanding (Plank knowledge vs. Chauffeur knowledge).
When Irish Eyes Are Crying | Business | Vanity Fair – “First Iceland. Then Greece. Now Ireland, which headed for bankruptcy with its own mysterious logic. In 2000, suddenly among the richest people in Europe, the Irish decided to buy their country—from one another. After which their banks and government really screwed them. So where’s the rage?” – Michael Lewis
The Game: Going on Safari With Warren Buffett – WSJ.com – WSJ gives its take – and some details – on what Buffett might be eying.