Men and Markets Observed

Howard Marks on Getting the Odds in Your Side | Must watch for Young Investors

2022-12-12T13:55:00.000-08:00

Howard Marks on Getting the Odds in Your Side | Must watch for Young Investors

https://youtu.be/LIEi4PjfFv4

Howard Stanley Marks (born April 23, 1946) is an American investor and writer. He is the co-founder and co-chairman of Oaktree Capital Management, the largest investor in distressed securities worldwide. In 2020, with a net worth of $2.1 billion, Marks was ranked No. 391 on the Forbes 400 rankings of the wealthiest Americans.

Marks is admired in the investment community for his "memos", which detail his investment strategies and insight into the economy and are posted publicly on the Oaktree website. He has also published 3 books on investing. According to Warren Buffett, "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book."

Marks focuses on risk management and says that investors should set investment strategy according to their personal situations and ask themselves whether they worry more about the risk of losing money or the risk of missing an opportunity. Marks believes that it is hard to gain an investment advantage through research since so many smart people are doing it already; the ways to get an advantage are through better inferring the consequences implied by current company data, managing the psychology of investing, and assessing the present stage of the business /market cycle. He hopes to have average returns during a bull market, while minimizing losses during bear markets due to his belief that losses do more harm than any benefit investors obtain from gains. Marks does favor using market timing strategies to have cash available to be invested during a downturn.Marks notes that it is important for investors to admit what they don't know instead of believing something is certain. He aims for a "high batting average" over "home runs".

Funds led by Marks have produced long term returns net of fees of 19% per year. Investors are primarily pension funds and sovereign wealth funds.

Citicorp...

From 1969 until 1978, Marks worked at Citicorp, first as an equity research analyst and then as the company's Director of Research. From 1978 to 1985, he served as a Vice President, as well as a senior portfolio manager overseeing convertible and high-yield debt. Citibank allowed him to move to Los Angeles in 1980.

TCW Group...

In 1985, Marks joined TCW Group where he led the groups that were responsible for investments in high-yield debt and convertible securities, and in 1988 he and Bruce Karsh organized one of the first distressed debt funds from a major financial institution. In 1995, he, Karsh, and 3 others decided to leave to start their own firm and petitioned TCW to let them continue managing the funds they managed at TCW, giving TCW a portion of the management fees; when TCW refused, the 5 partners left the company and founded Oaktree Capital Management in Los Angeles.

Oaktree...

After being founded in 1995, Oaktree grew rapidly, focusing on high-yield debt, distressed debt, and private equity.

During the financial crisis of 2007–08, Oaktree raised $10.9 billion, the largest distressed debt fund in history, to buy distressed assets, which "paid off richly for his investors".

In April 2012, Oaktree became a public company via an initial public offering on the New York Stock Exchange, raising $380 million by selling 8.84 million shares for $43 each.

In March 2019, Brookfield Asset Management acquired 62% of Oaktree. Marks and other members of Oaktree own 38% of the company and have full control of Oaktree's day-to-day operations.

Transcript

Follow along using the transcript.

EXCLUSIVE: Master Investor Howard Marks Shares His Blunt Advice On Inves...

2022-12-09T12:20:00.005-08:00

https://youtu.be/j4aSxgROpBo

2022-09-30T21:02:00.000-07:00

Ludwig von Mises, Economist, Author and Teacher, Dies at 92

By Leonard SilkOct. 11, 1973

About the Archive
This is a digitized version of an article from The Times’s print archive, before the start of online publication in 1996. To preserve these articles as they originally appeared, The Times does not alter, edit or update them.
Occasionally the digitization process introduces transcription errors or other problems; we are continuing to work to improve these archived versions.

Ludwig von Mises, one of the Foremost economists of this century, died yesterday in St. Vincent's Hospital at the age of 92. He lived at 777 West End Avenue.

Professor von Mises was best known in this country as a champion of libertarian economics — the doctine that regards with intense suspicion any intervention in the economy by government. He was recognized as a brilliant contributor to economic thought not only by his disciples but also by many who disagreed radically with his political and social philosophy, such as the outstanding socialist economist, Oskar Lange.

He acquired his first recognition for his “Theory of Money and Credit,” published in German in 1912. In that work he was the first to develop the theory of subjective value to explain the demand for cash balances as a basis for expansions and contractions in economic activity.

Stressing the causal role of individual human decisions, Professor von Mises observed that changes in the amount of cash individuals want to hold would cause expansions and contractions in the volume of money and credit.

Developed, Cyclical View

He went on to develop a complete theory of the business cycle resulting from the expansion and contraction of the money supply. Booms, he said, resulted from the expansion of fiduciary bank credit, which inflated the money supply and artificially lowered interest rates. This in turn led to overinvestment, which set the economy up for a slump. Depression would follow as the expansion of the money supply was brought to a halt—either because the banking system encountered a limit of reserves or because the monetary authorities clamped down on further credit expansion.

In 1922, Professor von Mises set forth his critique of collectivist economics in “Socialism: An Economic and Sociological Analysis.” The work was to have a major impact on socialist thinking.

He presented the challenging argument that rational economic organization was logically impossible in the absence of free markets. Hence, he contended, socialism was bound to wallow in inefficiency, because it lacked correct market prices on which to base decisions about what to produce and how to produce it.

Although they regarded his views as too extreme, such socialist economists as Oskar Lange in Poland and Abba P. Lerner in England took Professor von Mises's strictures seriously, and set out to construct a theory of socialism based on simulated markets—“playing the game of competition.” Professor Lange, who spent some years at the University of Chicago and returned to Communist Poland after World War H, once declared that “in front of every Socialist ministry of planning there should be a statue of Ludwig von Mises.”

It was not until the nineteensixties that the Soviet Union and other Communist countries began to take seriously the need for developing the market as a tool for rational planning and allocation of goods and resources.

Professor von Mises, however, regarded such socialist efforts at imitating the market—“planning not to plan”—as doomed to failure. “Unfortunately,” he wrote, “it is not possible to divorce the market ... from the working of a society which is based on private property in the means of production.” Without the striving of entrepreneurs for profit, of landlords for rent, of capitalists for interest and of workers for wages, the system could not succeed, he contended.

A Brilliant Teacher

The economist was regarded as a brilliant teacher. His students, at the University of Vienna and in his informal Wiener Kreis (Vienna circle), numbered many who were to go on to fame of their own as economists and philosophers. His students included Fritz Machlup, Gottfried von Haberler, Fredirch Hayek, Gerhard Tintner, Oskar Mogenstern, Ilse Mintz, Rudolf Carnap and Karl Popper.

Professor von Mises was credited with helping to revive respect for free‐market economics in Europe (he was considered by some the intellectual godfather of the German postwar “economic miracle”). His views are held in high regard at the American capital of libertarian economics, the University of Chicago, whose most famous resident scholar is Prof. Milton Friedman.

The economist was born in Lemberg, Austria, on Sept. 29, 1881. He left his professorship at the University of Vienna as the Nazi tide approached Austria, and became Professor of International Economic Relations at the Graduate Institute of International Studies in Geneva. He came to the United States in 1940 and became a citizen in 1946. He was a founder of the Mont Pelerin Society, a group of like‐minded economists; a member of the faculty of New York University from 1945 to 1969, and the author of 19 books.

Surviving is his widow, Margit.

The service will be held at noon Tuesday in the Universal Funeral Chapel, Lexington Avenue and 52d Street.

“The platform will always be the same, promise everything, deliver nothing.” Will Rogers

2022-09-16T21:09:00.000-07:00

“The platform will always be the same, promise everything, deliver nothing.”

- Will Rogers

Federal Reserve Skeptic

2022-09-16T14:13:00.003-07:00

Short Selling

2022-09-15T23:54:00.000-07:00

Short Selling:

“The market can remain irrational longer than you can remain solvent.”

This is the danger in seeing stocks as over valued.

Roadmap to Managing Millions in Commercial Development in Mid & South At...

2022-09-14T01:14:00.000-07:00

https://youtu.be/xD-MIWTZ4tc

Charlie Munger Predicts a Horrible Economic Crisis Where EVERYTHING WILL...

2022-09-13T18:54:00.001-07:00

https://youtu.be/v5UCmsXpngA

Charlie Munger warns about the biggest inflationary bubble in world history bursting and shares his thoughts on how it is going to unfold.

He elaborates on the difficulty of building wealth for the young generation of today compared to his. Charlie says that we’re flirting with serious trouble and the consequences may be worse than what Paul Volcker was dealing with in the 1970s. Being a vice chairman of Berkshire Hathaway and the closest partner (right hand man) of Warren Buffett, Charles T. Munger has a net worth of around $2 billion. He is a profoundly wise man who is absolutely worth listening to, especially when it comes to investing, the psychology of wealthy people, rationality, and life experience. Share this video with a friend if you find it useful! Consider subscribing to the channel for videos about investing, business, stock market, managing money, building wealth, passive income, and other finance-related content! -------------------------------------------------- Yahoo Finance https://www.youtube.com/c/YahooFinance Becky Quick & CNBC https://www.youtube.com/c/CNBCtelevision 🎥 We own commercial licenses for all the content used in this video except parts about the topic that have been used under fair use and it was fully edited by us. For any concerns, business inquiries, etc. please contact us via email in the “About” section of the channel.
Charlie Munger Predicts a Horrible Economic Crisis Where EVERYTHING WILL COLLAPSE

Inside the Research Engine: Energy, Climate, and Geopolitics with Daniel Yergin

2022-08-13T15:01:00.001-07:00

Pulitzer Prize-winning author Daniel Yergin joins Co-CIO for Sustainability Karen Karniol-Tambour and our investment team for a conversation on the green energy transition, the key dynamics driving energy markets, and how the politics of energy are impacting international relations.

Energy, Climate, and Geopolitics with Daniel Yergin

https://youtu.be/9VenfPwVtoU

End of an Era: Russia’s Grip on Oil is Dwindling, Says Daniel Yergin

2022-08-12T17:00:00.000-07:00

End of an Era: Russia’s Grip on Oil is Dwindling, Says Daniel Yergin

As the West continues to levy economic sanctions on Russia, President Zelensky has renewed calls for an embargo on Russian oil. Daniel Yergin, author of "The New Map," is a leading authority on energy and the global economy. He joins Walter Isaacson to analyze how this war has impacted reliance on Russian energy.

Originally aired on April 12, 2022.

https://youtu.be/Zh4cm3mWgHc

Russia's Days as Energy Superpower Are Over, Yergin Says

2022-08-12T16:34:00.003-07:00

Russia's Days as Energy Superpower Are Over, Yergin Says

S&P Global Vice Chairman Daniel Yergin discusses the impact of Russia's invasion of Ukraine on energy markets, and calls by Congressional Democrats for a windfall-profits tax on oil companies.

He speaks with Bloomberg's David Westin on "Balance of Power."

https://youtu.be/MObUCf5YHjc

Hig/her Oil Prices Push Up Profits

2021-04-28T23:48:00.001-07:00

Higher oil prices push up Shell profits

Energy group confirms dividend increase after last year’s reduction

https://www.ft.com/content/35d04eae-df6a-4c7c-8c08-1b2d02e5b8ea

Higher oil prices push up Shell profits Energy group confirms dividend increase after last year’s reduction European groups, including Shell, are seeking to generate more cash to plough into cleaner energies © Bloomberg Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save Anjli Raval 3 MINUTES AGO 0 Print this page Royal Dutch Shell reported a 13 per cent rise in the first quarter earnings as higher oil prices and chemicals margins offset a weaker performance in the refining and marketing business.

Searching for a Bullet-Proof Investment

2021-04-28T23:34:00.001-07:00

A discovery is said to be an accident meeting a prepared mind. ~ Albert von Szent-Gyorgyi

The mathematician who cracked Wall Street | Jim Simons

2017-07-14T23:17:00.000-07:00

Published on Sep 25, 2015

Jim Simons was a mathematician and cryptographer who realized: the complex math he used to break codes could help explain patterns in the world of finance. Billions later, he’s working to support the next generation of math teachers and scholars. TED’s Chris Anderson sits down with Simons to talk about his extraordinary life in numbers.

Link: https://youtu.be/U5kIdtMJGc8

Buffett: Valuation of a business

2017-05-06T14:42:00.001-07:00

Buffett: "Valuation of a business is not reducible to any formula where you can... put in the variables perfectly." http://yhoo.it/BRKLIVE

Disruption Drivers

2017-05-06T12:18:00.001-07:00

Doctors Are Looking To #AI To Speed Up Diagnosis

2017-05-05T23:18:00.001-07:00

‏ @RethinkRobotics

Software, Please: Doctors Are Looking To #AI To Speed Up Diagnosis

http://spr.ly/6014854cp by @GE_Reports

One brutal chart

2017-01-10T02:53:00.001-08:00

One brutal chart from the biggest hedge fund in the world explains everything

Rachael Levy and Matt Turner

Nov. 12, 2016, 10:58 AM
43,609

Working class people from the Rust Belt played a large part in getting Donald Trump elected earlier this week. These same types of people also played a role in voting the UK out of the European Union earlier this year.
Trump's campaign targeted people in once-booming manufacturing towns who felt the punch of globalization as jobs moved overseas. The Brexit campaign had similar success on the areas of Britain that hadn't shared in the prosperity of the UK capital, London.
This chart from $150 billion Bridgewater Associates, the world's biggest hedge fund, shows just how hard people across the US and Europe have been hit by globalization, and the loss of jobs to other countries and to technology.

Middle skill jobs have been hurt more than others since 1990. Bridgewater client note

The graph is based on data from MIT economist David Autor and shows how much middle-skill jobs, which generally require some education after high school like community college classes, have declined in the past 26 years. And it really explains an awful lot.
"What this election highlighted more than anything is that there are lot of people in this country who, regardless of their political leanings, are hurting," Jeffrey Solomon, CEO of Cowen and Company, said in a note. "Many who feel like their voices haven’t been heard for a long time."
Autor defines middle-skill jobs as white collar clerical, administrative, and sales occupations, and blue collar production, craft and operative occupations.
In an April 2010 research document, Autor said: "The decline in middle-skill jobs has been detrimental to the earnings and labor force participation rates of workers without a four-year college education, and differentially so for males, who are increasingly concentrated in lowpaying service occupations."
Which populations tended to vote for Trump? White men, typically over 45, typically without a college degree, who believe the economy is in bad shape and that the effect of foreign trade is to take jobs away from America.
In the UK, it is a similar story. Brexit voters were typically 45 and over and didn't stay in education beyond high school. In other words, the individuals who, in years gone by, may have taken up an apprenticeship, and found their way into a middle-skill, technical role, but have been replaced in recent years by overseas labor or robots.
That's not to say that these individuals haven't benefitted from globalization. Bridgewater estimates that the developed world has seen a 0.3% boost to annual growth, which over 40 years adds up to incomes that are on average 12% higher.

"Yes, these workers have benefited from cheaper goods, but the negatives, including job losses and stagnant incomes, are more directly visible and easily attributable to global competition," Bridgewater's Jason Rotenberg and Jeff Amato wrote in a Friday client note that was viewed by Business Insider.
The benefits of globalization are indeed harder to feel. Smartphones may be cheaper than they otherwise would be, for instance, but that's little consolation to someone who can't rely on the same line of work as his father.
Here is what Wall Street dealmaker Ken Moelis told Business Insider's Matt Turner recently:

"Turner: It feels like there is a group of people that has benefited from globalization, and a group of people who feel like they haven't. Those two worlds seem to be colliding.

Moelis: Let me say this: There is a perception that that group has not benefitted. As I said, without going too deep, without globalization I am not sure everyone would be able to have a supercomputer in their pocket at the low cost.

Moelis: But that is hard to understand, so there are some very difficult things to understand that globalization is providing, that people really think are just here but really are a function of some of that. There are some very difficult arguments.

Turner: Right. Real wages haven't increased, but if things are getting cheaper and you're able to now afford a supercomputer in your pocket with that wage that hasn't increased in five years, it is difficult to pick that out.

Moelis: If you can watch the ball game on the bus, when you used to miss it ... and by the way, I think that life expectancy over the last 10 years has increased dramatically. You're living longer.

You ever go out to a restaurant now? You can get quality food — you can go out and get the best food that was available 20 years ago. They'll put it on a plate, you'll sit in a plastic chair because nobody values the chair, the white tablecloth, the maître d', but they'll put on your plate some great food for what used to be available at Applebee's prices. There are some really nice things going on, some external values being delivered to people. It's a story that is hard to tell."

The disconnect is also a story of growing income inequality. While the richest 5% of US households have seen incomes rise by 50% since 1990, incomes have barely grown for 80% of the population, Bridgwater notes below.

In the US, the richest 5% of have grown by 50%, while the bottom 5% of households have seen barely any income growth. Bridgewater client note

Bridgewater's external PR firm Prosek Partners didn't immediately respond to requests for comment.

NOW WATCH: Ex-Wells Fargo employees reveal how some bankers abused customers

Source: http://www.businessinsider.com/a-brutal-chart-from-bridgewater-explains-the-rise-of-trump-2016-11

Stock Selection Framework

2017-01-10T02:49:00.000-08:00

Politics, Policy Uncertainties Likely to Sway Markets in 2017

2017-01-10T02:16:00.000-08:00

Politics, Policy Uncertainties Likely to Sway Markets in 2017

January 9, 2017

Barbeau: We think headlines, rhetoric and speculation will continue to spark global mkt volatility in '17. Here’s why:

For fans of surprise endings, especially in political contests, 2016 was a banner year. Unexpected election outcomes swung global equity markets both up and down and continue to influence the outlook for many sectors and companies. And Coleen Barbeau, director of portfolio management, Franklin Equity Group, says the volatility likely will continue into 2017. In fact, she believes this year may be even more unpredictable, as additional elections are held and policy changes play out across the globe. While these events may sway equity markets, Barbeau maintains that stock fundamentals should—eventually—resume their place as the key determinant of stock value.

Coleen Barbeau

Coleen Barbeau
Senior Vice President, Director of Portfolio Management
Portfolio Manager
Franklin Equity Group

After the UK Brexit vote and the US presidential election, international equity markets should be accustomed to the unexpected by now.

And as 2017 unfolds,
we believe uncertainty is likely to persist. Instead of trading on underlying corporate fundamentals, we think this uncertainty creates the potential for markets to trade on news headlines as well as on rhetoric and speculation about policy changes coming from a number of Western capitals.
We believe the potential for significant policy change in the United States is what has largely driven the surge in equities since the presidential election in November. Growth stocks have drastically underperformed value stocks, as investors favored financial and energy names while selling what had been strong performers in the information technology and health care sectors. Bank stocks, in particular, have moved in dramatic fashion—rerating not on a near-term change in profit outlook, but simply on optimism about possible industry deregulation and a more rapid pace of interest rate increases.

Also, hopes for greater fiscal spending in the United States, along with the subsequent rise in bond yields, have led to a move into stocks that could benefit from faster growth and greater inflation—the so-called “reflation trade.”

Infrastructure and defense-related names—especially those sporting low valuations as measured by price-to-earnings ratios—surged at the expense of what we view as higher-quality stocks that generally offer more sustainable earnings growth, cash flows and dividend streams.
While these moves may mark the dawn of a new period for global equity markets, in our view, not much has changed fundamentally. According to the International Monetary Fund, the pace of global economic growth is likely to remain steady in 2017, with global gross domestic product growing a projected 3.4% after a 3.1% expansion in 2016.¹

Underpinning these forecasts is relatively robust growth in emerging markets and more modest expansion in developed economies, including somewhat faster growth in the United States, a slowdown in Europe and the United Kingdom and continued sluggishness in Japan.
Although the US Federal Reserve may continue to raise interest rates modestly over the course of 2017, the European Central Bank (ECB) and Bank of Japan are likely to continue asset purchases as they look to support growth and bolster inflation in their respective economies.

We anticipate that this liquidity should continue to buoy international equity markets, even as the ECB begins to taper bond purchases in April 2017. Additionally, a stronger US dollar is likely to put a cap on US equity markets, after the recent move higher has left them trading at the top of their historic valuation range.
With many US stocks potentially at their peaks, we see greater opportunities to seek best-in-class, non-US companies that are positioned to take advantage of growth opportunities around the world.

Moreover, unlike US stocks, many of these companies have traded sideways over the past few years, and their valuations look more compelling to us.

For instance, our bottom-up research has led us to individual opportunities more recently in the United Kingdom and Japan.

We are focused on companies which garner most of their revenues abroad, as they leverage their robust business models to capture growth opportunities in faster-growing regions like the United States or emerging markets.

Politics remain the wildcard. What a combination of lower taxes, looser regulation and potentially greater protectionist policies in the United States may mean for the economy and global trade remains to be seen.

Increased protectionism, in particular, could upend supply chains and make doing business globally more challenging. The populist rhetoric might also increase across Europe in 2017 as French, German and Dutch voters head to the polls.

Although political rhetoric, a changing regulatory regime and potentially more protectionist policies may influence how markets trade from day-to-day in 2017, we believe fundamentals will ultimately matter. As markets get more clarity on the emerging policy backdrop, we believe companies with strong growth potential that the market has overlooked will likely fare well over the longer term.

Get more perspectives from Franklin Templeton Investments delivered to your inbox. Subscribe to the Beyond Bulls & Bears blog.
For timely investing tidbits, follow us on Twitter @FTI_Global and on LinkedIn.

___________________________________________________
1. Source: International Monetary Fund, World Economic Outlook, October 2016. There is no assurance that any estimate, forecast or projection will be realized.

Financial Dictionary Xetra

2017-01-10T00:55:00.000-08:00

Xetra

Financial Dictionary
a b c d e f g h i j k l m n o p q r s t u v w x y z
Search for terms:

Xetra

An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra platform offers increased flexibility for seeing order depth within the markets and offers trading in stocks, funds, bonds, warrants and commodities contracts.

The Xetra system was originally created for use on the Frankfurt Stock Exchange, but has expanded to be used by various stock exchanges throughout Europe.

Equity Scholar is a market-leading financial education service for traders and investors alike. Built to be the best, Equity Scholar offers a full range of free educational products and services that provide lifelong learning and support to those seeking improvement in their trading and investing performance.

Related Terms

X Mark Signature
X Efficiency
Xenocurrency
XRT Symbol
XD
XRT

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Trumponomics gets the thumbs down from Nobel-winning economists

2017-01-10T00:47:00.001-08:00

Trumponomics gets the thumbs down from Nobel-winning economists

January 8 2017

Trumponomics gets the thumbs down from Nobel-winning economists

Rich Miller

A pack of Nobel Prize-winning economists gave Donald Trump and his policy plans the thumbs-down on Friday, with one saying the president-elect's programs could lead to a deep recession.Speaking on a panel during the first day of the annual American Economic Association meeting in Chicago, the Nobel laureates voiced a variety of concerns about the billionaire developer's stance, from his haranguing of US companies about their outsourcing plans to the risk that his tax and spending proposals could lead to run-away budget deficits.

"There is a broad consensus that the kind of policies that our president-elect has proposed are among the polices that will not work," said Joseph Stiglitz, summing up the views of the panel that included his fellow Columbia University professor Edmund Phelps and Yale University's Robert Shiller.Such disapproval though is likely to fall on deaf ears. Trump rode to victory on the back of an unconventional campaign that was short on advice from PhD economists -- relying more on a team of wealthy businessmen -- and there's no indication that's about to change.
He pledges to accelerate growth and create millions of well-paid jobs through spending hikes and tax cuts as well as reduced regulations and renegotiated trade deals.

Discouraging newcomers

Phelps was particularly critical of Trump's singling out of individual companies for abuse and praise, saying such interference could end up discouraging newcomers from entering markets and bringing with them much-needed innovation.
"The Trump government is threatening to drive a silver spike into the heart of the innovation process," he said.
Phelps also voiced concern about Trump's plans for big tax cuts and spending increases. "Such a policy runs the risk it could lead to an explosion of public debt and ultimately cause a serious loss of confidence and a deep recession," he said.
That also has the University of Chicago's Roger Myerson worried. While other presidents have run big budget deficits in the past, they depended on foreign purchases of US debt to do so.

'Confidence and trust'

With Trump threatening to renegotiate US trade agreements and shift to an "America First" policy, the willingness of foreigners to keep buying US government securities can't be taken for granted, Myerson said.
America's interaction with other countries "has to be based on confidence and trust," Stiglitz said. "That's being eroded."
Angus Deaton of Princeton University said he was less worried about the US economy under Trump than he was about international relations, particularly when it comes to China.

The Asian nation was facing difficult economic problems and sounding more bellicose in the region even before Trump won the presidency on a vow to take it on, Deaton said.
Yale's Shiller was the only Nobel Prize winner on the panel discussion who didn't take a shot at Trump. "I'm a natural optimist and I would not like to speculate on how bad it could get," he said. "Maybe one of the other panelists wants to do that."
They certainly did.
Bloomberg

How do we redesign work?

2016-11-14T18:48:00.003-08:00

How do we redesign work? Rather brilliant talk by Nick Leon @RCA_SD

Vancouver Island University visiting Scholar

2016-11-14T17:36:00.001-08:00

Wall Street Short Seller Betting Against Canadian Real Estate

2016-10-31T23:30:00.004-07:00

Meet Wall Streeter, Marc Cohodes

By Sarah Berman

Staff Writer

July 5, 2016

Marc Cohodes wants to make money off Canada's real estate market, but not by flipping houses or renting out micro-condos like other rich speculators...

Cohodes has spent three decades of his career as a Wall Street short seller, which means he's pretty good at spotting bubbles and betting against them just before they burst.

Cohodes walked away from trading after he made a controversial but accurate bet against Lehman Brothers in 2008, which put his $1.5 billion hedge fund at odds with their prime broker Goldman Sachs. Now he runs a chicken farm in California.

Seeing Canadian housing values skyrocket over the last couple years, Cohodes couldn't stay out of the game. Like the guys in The Big Short, he's got a hunch that something is out of whack, and he's hoping to make some cash off at least one company's downfall.

VICE reached out to Cohodes to learn why he's pissed off about Canadian real estate regulation, and what he thinks young and broke renters should be doing about it.

VICE: Can you tell me a bit about your short-selling career?

Marc Cohodes: I've been at this since 1982, professionally I've done it since 1985. In Canada I would short Clearly Canadian, Cott Beverages, I would short the various resource flame-outs over time. In the United States I'd short Krispy Kreme donuts, I would short the mortgage fraud players when we had our housing debacle. I've been around some real winners. A lot of battles, scars, victories, defeats—the whole thing.

So from your experience, what makes you think Canadian real estate is worth betting against?

Let's focus on Vancouver, which is a lovely town—I love going there, I have friends there. I think what's going on is sort of tragic. In Vancouver, housing is being traded like penny stocks on the old Vancouver Stock Exchange. There are no economics whatsoever behind housing in Vancouver. Statistics show the average family makes $80,000 a year, and for argument's sake I always say double that, even make it $200K. The multiplier on what you can afford is between four and six—and yet these properties are trading at huge multipliers to that.

So who on the Canadian market have you decided to short?

The only Canadian stock that I'm short [selling] that affects housing is something called Home Capital Group, which trades in Toronto under the symbol HCG. In Vancouver there's nothing to short. People ask me about it all the time. I don't stand to profit by Vancouver collapsing, I will make zero money. What I'm doing, is speaking out through the experiences I've had in life, that this is a disaster waiting to happen. I'm trying to flash a red light, so politicians and regulators act to avert or control a disaster.

Is this an imminent disaster? When do you see the bubble bursting?

It can last. It can blow. There's no real way to predict when it will happen. But here's what you know for sure: you know China has capital controls on—they restrict their citizens from pulling more than $50,000 out of the country. So when a college girl buys a $31 million place in Vancouver—who has no income, who can't answer questions about what her father does for a living, who can't answer questions about where she gets the money—you know the Chinese don't want this going on. They're pissed about capital flight into YVR. Toronto as well.

At any point in time, the Chinese can crack down on people, on Canada—they can do whatever behind the scenes to make it end abruptly. Without warning or notice...

At some point a cool mind should say, "Hey, why don't we just have open disclosure of who owns all these properties?" That's a real solution. Like in Sonoma county, if you want to go to Santa Rosa, and pull the deed for a farm which I own, it'll say: here's who owns it, here's what was paid, here's when it was bought, here are the bank loans involved. So why can't Canada or BC have this open disclosure?

But what would disclosure really do in terms of bringing down prices?

What it will do for journalists, for regulators, for people who are interested, is they'll see where the money is coming from, if laws are being broken, if crimes are being committed...

Because when you buy something and don't occupy it, when you launder money through housing, it will absolutely destroy the community. Instead of going to restaurants and buying movies and sending kids to school, they don't do any of this.

The money gets tied up in places to live, but the economy suffers and suffers big. It makes the costs for people who want to live in Vancouver go up, and then if you're running a bakery you can't afford to hire people to work there. The business goes down the drain because you don't have any customers. And it becomes a vicious, negative loop. Which is bad.

That does sound bad. But what does that mean for, say, a twenty-something who is obviously not invested?

What are young people supposed to do?

Rent, rent, rent and rent. Because when things blow, you're going to want to have cash to come in and buy. And you will have an opportunity. Because when things go, they're not going to go by a little bit. They're going to go by a lot.

Why, what gives you that feeling?

Because at the end of the day, the pendulum goes too far in all directions. It's gone way too far on the up, and it's been fueled by laundered money on top of mass speculation. You've had this force and effect where the banks have also helped foster this. When things blow, said money launderers are going to have to sell, but there'll be no bids in the market, because affordability in these places is still out of control. When things get cheap enough, banks won't be in a lending mood unless it's sort of a steal. Then I think prices will come way, way, way down. That's when your millennials, your 28-year-olds, your 30-year-olds will be in a position to buy. Right now you're so, so far from that. But when things break, they're going to break huge. Just have patience and wait it out. Don't get sucked in by the propaganda of 'It always goes up.'

Should young people also be betting against Canadian real estate with their tip money?

God, no. I say don't try this at home. What people should do is keep their eye on the situation, and actively engage regulators. Asking for full disclosure of records is not a bad start.

Follow Sarah on Twitter.

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