Buffett used the Thriftsville vs. Squanderville metaphor in this brilliant article back in 2003. Now it’s Charlie Munger’s turn with a parable on the wealth of a nation and how to lose it. It’s a fun read.
We worried about implied expectations for 2010 in our Q4 2009 report and said that we were increasing the percentage of cash in our funds. Enter Greece and other European peripheral countries. Macro issues are not our core by any measure, and our point is just that volatility, that friend of the long-term investor holding a lot of cash, is on the rise. The post collects, as food for thought, interesting FT articles on Greece’s and Europe’s woes.
The investment mood is definitely optimistic and Merrill Lynch’s January 2010 fund manager survey is as good an indication as any: low cash balances, increasing exposure to equities, increasing appetite for risk. Some numbers are back to pre-crisis levels. As we point out in our Q4 2009 report (English version in the works), it’s hard to expect two consecutive years of out-sized returns and we’re prepared for a less ideal 2010.