Globalfinancialcrisis
The Financial Times had a piece about Greece’s woes on August 24th – and how Brazil’s fiscal policy presents an alternative. We feel it’s our duty as Brazilians to inform the FT that they’re basically right: Greece can borrow pages from the playbook of 2002 Brazil (or Lula, since the article mentions him). 2010 Brazil’s fiscal policies, however, should not be copied. What a difference a few years make.
A LEX column reminds us that Buffett runs Berkshire and for over 50 years has taken calculated risks better than most; he has avoided and profited from most crises including the last one; and he has written and talked extensively about excessive risk-taking, the dangers of leverage and spendthrift economic policies and etc.. And yet he has been soundly ignored by most investors, CEOs, regulators and policy makers.
In this Q1 2010 report, we describe how the last few months were a period of much study and few operations. We have found ourselves in a phase with few new situations in which we could have great convictions. We also announced the “Prêmio Investidor Profissional de Arte – PIPA” to our clients.
Update (April 6th, 2010): Please see inside for Mike Burry’s op-ed in the New York Times ranting on the Fed. On tour to promote his book “The Big Short”, Michael Lewis interviews have been popping up all over the Internet. Required reading is the excerpt from the book at Vanity Fair. We especially liked this bit: “I hated discussing ideas with investors,†(Mike Burry said), “because I then become a Defender of the Idea, and that influences your thought process. Once you became an idea’s defender, you had a harder time changing your mind about it.â€
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.
Prof. Joe Stiglitz has been on a tear recently, first describing 5 lessons we should learn from the crisis and later presenting a tough message at the American Economic Association. The bulk of the messages: Wall Street ain’t that smart, and it failed miserably to perform on its purpose. Before the reader thinks “well academe didn’t do much better”, he also blames economists for continuing to rely on “rational player” models.
