Scott Barlow
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
John Hempton, a prominent, occasionally controversial Australian hedge fund manager wrote a post describing why neither he, nor managers purporting to "invest like Buffett," are capable of emulating the master,
"Buffett has often said, 'I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches - representing all the investments that you got to make in a lifetime. And once you'd punched through the card, you couldn't make any more investments at all. Under those rules, you'd really think carefully about what you did, and you'd be forced to load up on what you'd really thought about. So you'd do so much better.' … Find any investor who models themselves off Warren Buffett and look at what they do. And look at their investments against a twenty punch card test. They fail. They don't even come close."
This is a must-read post for investors in my opinion.
"Comments on investment philosophy - part one of hopefully a few..." – Hempton, Bronte Capital
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Deutsche Bank shares are trading at lows last seen in 1983 and investor's for whom "So what?" is their first reaction should be aware that the bank's balance sheet is larger than Germany's gross domestic product. Bailouts will not be a straightforward operation.
" Deutsche Bank Slumps as Investors Question Lender's Health" – Bloomberg
"Deutsche Bank's Woes: Will Germany's Sick Man Infect Global Markets?" – Barron's
"@tomkeene gallo: deutsche bank's balance sheet is bigger than Germany's gdp it is not Barclays. There is no domestic market to fall back on." – Twitter
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OPEC meets this week, and, while Algerian officials voiced some optimism that a production agreement could be reached, oil traders are having none of it,
"Money managers increased bets on falling prices by half as the Organization of Petroleum Exporting Countries kept pumping at a record rate before the meeting. Prices rose as high as $47.62 a barrel this month as OPEC officials conducted meetings from Vienna to Paris to Moscow in attempts to reach consensus. "The rhetoric around the meeting is ringing hollow," said John Kilduff, a partner at Again Capital LLC, a New York hedge fund focused on energy. "What they say and do are completely different since they continue to increase production."
"Oil Speculators Abandon Hope of OPEC Reaching Supply Accord" – Bloomberg
"Oil market has low expectations for Opec production deal" – Financial Times
"OPEC Divided on Production Cut Before Algiers Talks" – Bloomberg
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Economists are maddeningly prone to arguing stubborningly along ideologically lines but Canadian economist William White, chair of OECD's economic and development review committee, argues that both Keynes and Hayek's theories need to be applied to the world's current situation. This will no doubt annoy everyone in academia,
"To please John Maynard Keynes, two sets of solutions are commonly suggested. First, governments with fiscal room for manoeuvre should use it. That room could be increased through legislating medium-term fiscal frameworks to ensure debt sustainability over time. Second, emphasis should be put on infrastructure investment with the private sector.
To please Friedrich Hayek, two sets of solutions are also suggested. Excessive debt must be solved by write-offs and restructuring. This might require recapitalisation or closure of financial firms that made bad loans. Second, structural reforms to raise growth potential and the capacity to service debt will pay longer-term dividends.
We must please both Keynes and Hayek. It is not an either/or world."
"Only government action can resolve a global solvency crisis" – White, Financial Times
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Tweet of the Day: "@georgepearkes CS on Canadian real estate impact to GDP. Those commissions are something else, man. pic.twitter.com/RJTDj7jbkH " – (chart) Twitter
Diversion: "Romanian cave sealed for 5.5 million years is full of strange creatures" – Geek.com
Scott Barlow