It’s been 20 years since the “Confisco”, the seizure of assets from current and savings accounts designed (so to speak) to deter then-rampant hyperinflation. Brazil was then in default on its external debt and had precious little reserves… But the point here is not to judge decisions taken under extreme distress. Twenty years. The very fact that it seems like ancient history shows how far we’ve come, yet it still serves as a fresh warning.
A rare but always welcome interview by Charlie Munger embedded inside, courtesy of an attentive reader and the Stanford Law School. Some highlights inside as well. The main theme is the economic/ financial crisis (what else?).
God has spoken, go out and read it. The core is dedicated to welcoming and explaining BRK to its new shareholders acquired through BNSF, so no big news. Buffett complains more about the media and investments analysts, on how they distort things, causing losses to the less diligent and recommends that everybody form their own knowledge base and opinion. Hope he lives to see that happening, but we sincerely doubt it.
In his latest post, Tom Barrack of Colony Capital writes about some similarities between a big wave surfer and a successful investor. While we would be even more conservative in general, we agree with most the “credos”.
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.
Buffett was particularly expansive regarding his processes and methods, and this alone makes this video worth the time (some 90 minutes). The fact that it was October 1998, a pivotal time in the dot-com boom and just after the LTCM imbroglio makes it even more interesting.
In the 1st Buysiders article inspired by a reader’s suggestion, we’d like to propose “anti-portfolios”. It’s a vital lesson in humility: our activity involves a certain degree of failure, of missed or simply wrong ideas. Recognizing that we are going to make mistakes over time is extremely important in order to mitigate risk as we define it (the permanent loss of capital). The objective here is to insist, once again, that price is the ultimate measure. (…) After you’ve done all the homework, you still have to demand a price that implies a large margin of safety – and keep analyzing the position everyday with the same skepticism you had before you bought it.
We refer you to part 1 of this series for an introduction to our post on IP’s Q4 2009 report. In this part 2 we highlight excerpts from both funds’ “Perspectives” sections. It’s no accident that they address the same themes and mention the same measures we’re taking.
Read more about IP report excerpts, vol. 5: Yellowstone? – part 2
In the latest of post of our series on IP’s reports, we discussed the current investment environment in the Q4 2009 letter. We liken the current optimism and false sense of security to the sensation some visitors to the Yellowstone National Park feel: they’re awed by the place and how beautiful it looks, but forget or don’t know that a large area of the park is in the very crater of one of the world’s largest super-volcanoes. In this part 1 we highlight excerpts from the “Introduction” section of the report.
Read more about IP report excerpts, vol. 5: Yellowstone? – part 1
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.