Value Investing World

Europe Defenses for Greece Too Weak, Soros Says (video)

2012-01-27T17:25:00.000-05:00

Jan. 27 (Bloomberg) -- Billionaire investor George Soros talks about the European debt crisis. He speaks with Erik Schatzker on Bloomberg Television's "InsideTrack" from the World Economic Forum in Davos, Switzerland.

The State of OpenCourseWare

2012-01-27T09:39:00.000-05:00

Link to Infographic: The State of OpenCourseWare

In Punishing Year for Hedge Funds, Biggest One Thrived

2012-01-27T09:29:00.000-05:00

Found via ValueWalk.

The world’s biggest hedge fund is also one of the best performers.

Bridgewater Associates, which manages nearly $120 billion, posted returns of 23 percent in 2011 — a year when the average hedge fund portfolio lost 5 percent.

Against the backdrop of fear over European debt and stagnant global growth, the hedge fund, led by one of Wall Street’s more enigmatic titans, Ray Dalio, sidestepped the mess. The fund did it with bets on United States Treasuries, German bonds and the Japanese yen, according to people familiar with the firm’s investment strategy, who spoke on condition of anonymity because the information is private.

Such performance adds up. Over the last 20 years, Bridgewater had annualized returns of 14.7 percent, amounting to $50 billion of gains for investors. Over the same period, the Standard & Poor’s index of 500 stocks returned about 8.7 percent a year.

Lagarde Not 'Terribly Positive' on Greek Progress (video)

2012-01-27T09:07:00.001-05:00

Jan. 27 (Bloomberg) -- International Monetary Fund Managing Director Christine Lagarde discusses Greece's progress on structural overhauls and the role of the IMF in avoiding a default. She speaks with Maryam Nemazee and John Fraher on Bloomberg Television's "The Pulse" from the World Economic Forum's annual meeting in Davos, Switzerland.

George Soros quote

2012-01-27T09:02:00.000-05:00

“My financial success stands in stark contrast with my ability to forecast events. In this context, we must distinguish between events in financial markets and events in the real world. Events in financial markets determine financial success; events in the real world are relevant only in evaluating the scientific merit of my approach.

Even in predicting financial markets my record is less than impressive: the best that can be said for it is that my theoretical framework enables me to understand the significance of events as they unfold—although the record is less than spotless. One would expect a successful method to yield firm predictions; but all my forecasts are extremely tentative and subject to constant revision in the light of market developments. Occasionally I develop some conviction and, when I do, the payoff can be substantial; but even then, there is an ever-present danger that the course of events fails to correspond to my expectations. The concept of the “bull market of a lifetime” is a case in point: it was highly rewarding in Phase 1 but it became more of a hindrance than a help in Phase 2. My approach works not by making valid predictions but by allowing me to correct false ones.

With regards to events in the real world, my record is downright dismal. The outstanding feature of my predictions is that I keep on expecting developments that do not materialize. During the real-time experiment I often envisioned a recession that was just around the corner, but it never occurred….” –George Soros, The Alchemy of Finance

……………….

Related previous posts (see quotes from Hendry and Taleb in these posts relating to Soros and the quote above):

George Soros on the Coming U.S. Class War

Nassim Taleb on the importance (and difficulty) of being willing to change your mind if the facts change

Amazon's Hit Man

2012-01-26T17:36:00.001-05:00

Found via The Big Picture.

Larry Kirshbaum was the ultimate book industry insider—until Amazon called

In November 1997, on a night of pounding rain in midtown Manhattan, Rupert Murdoch threw a party for Jane Friedman, the new chief executive officer of News Corp.’s (NWS) HarperCollins book division. The luminaries of the publishing business, such as Random House’s then-CEO Alberto Vitale and literary agent Lynn Nesbit, crowded into the Monkey Bar on 54th Street, with its red-leather booths and hand-painted murals of gamboling chimps. Trudging six blocks through the downpour from the Time & Life Building, Laurence J. Kirshbaum, then the powerful head of Time Warner Book Group, brought a guest: a young online bookseller named Jeffrey P. Bezos, whose ambitions would eventually end up affecting the lives of everybody at the party. “It was one of those moments in your life where you remember everything,” Kirshbaum says. “In fact, I think Bezos still owes me an umbrella.”

How times have changed. Physical book sales have been flat for a decade and are starting to get eclipsed by e-books. Friedman left News Corp. in 2008. And Jeff Bezos, who once courted the publishing aristocracy of New York, now competes against them. Last May, Amazon (AMZN) hired Kirshbaum, 67, to run Amazon Publishing, a fledgling New York-based imprint whose lofty goal is to publish bestselling books by big-name authors—the bread and butter of New York’s book industry. In the high-rise offices of the big publishers, with their crowded bookshelves and resplendent views, the reaction to Amazon’s move is analogous to the screech of a small woodland creature being pursued by a jungle predator.

Top 21 Investment Blogs

2012-01-26T17:27:00.004-05:00

Thanks to Vuru for naming this one of its Top 21 Investment Blogs. There is some great company on that list. And thanks to everyone who visits Value Investing World for the support!

Link to: Vuru's Top 21 Investment Blogs

East Coast Asset Management's Q4 Letter

2012-01-26T15:30:00.001-05:00

Found via Market Folly.

On behalf of our entire team at East Coast, I want to extend to you and your family our sincere wishes for health and prosperity in the new year. Although we would love to start the year reporting that the equity market turbulence is behind us, we are expecting volatility to persist. Continued deleveraging of the global economic system coupled with heightened political inputs will fuel fear of the unknown. Our best absolute performance years have rarely been born out of a cheery consensus, thus this prognosis may not result in anemic returns. While an emotional “all clear” sign remains elusive for investors, we are finding the environment attractive for purchasing equity of competitively entrenched businesses.

We observe a general misclassification between uncertainty and risk. Looking forward, we also anticipate the general perception of “risk” versus” risk-free” assets will change. Central bank intervention to mitigate the effects of the inevitable deleveraging cycle will raise the cost of capital and compromise the value of paper currency. We expect this could be a disappointing realization for those seeking long-term shelter in cash and bonds. We will share some insight on these observations in this year-end letter.

Former CEO taking over at Coastal Carolina

2012-01-26T15:16:00.002-05:00

Another story on my Alma Mater and its new football coach, a friend of Warren Buffett according to the article.

The new boss opens the door of his office, where the walls are still bare, and walks into the adjacent conference room. When he sits at the head of the table, his employees get quiet. Then Joe Moglia begins talking about how his new team will sell their new product.

This is a familiar scene for Moglia, the 61-year-old Fortune 500 CEO-turned-football coach: Uniting a team under a big-picture vision while obsessing over details. Details like getting Equal instead of Splenda for the coffee room. Or using a bigger font for the list of recruits. Or that it's of utmost importance to pronounce a recruit's name correctly -- to know Octavius goes by "Tae" -- because that makes a kid feel special.

But at this coaches' meeting just weeks before signing day, it's not Moglia's obsessing over small details that defines him. Instead, it's the inspirational qualities we all want in our football coaches that captures the room.

Moglia starts riffing to his staff on what to say during a meeting with a recruit, and it's clear he's selling more than football.

"'You think you may have an opportunity to play in the NFL?'" Moglia says. "'We very well could help you with that, but that's not what we're about. Because at some point in time, your career comes to an end … The decision you're really making at this point in your life is this: Where am I going to go that's going to give me the best chance to make it as a man, as a leader, as a father, as a husband?'"

The stuff of a head coach -- the delegating, the analyzing problems and making decisions on the fly, the projecting an aura of decisiveness from the head of the room: it's old hat to this man. He rose through Merrill Lynch until he was in charge of all investment products for private clients. He became CEO of Ameritrade Holding Corp., and he increased the company's market capitalization from $700 million to $12 billion.

But the most striking difference on this sunny morning near Myrtle Beach? The surroundings. Right now, outside Moglia's conference room window aren't the high-rises of Manhattan or the TD Ameritrade campus in Omaha but instead the quaint football stadium at Coastal Carolina University, a low-level Division 1 school where Moglia was hired last month.

Right now, it seems, Joe Moglia is the least likely head coach in all of college football.

The challenge of Coastal Carolina's new CEO of football will be twofold: To sell Coastal Carolina. And to sell himself as a real football coach, not just some rich man who wants a new hobby.

David Einhorn Tells His Side Of The Story On The FSA's Insider Trading Fine

2012-01-26T14:47:00.001-05:00

Prominent hedge fund manager David Einhorn, who is known for seeing problems at Lehman Brothers and publicly shorting the stock prior to the bank's demise, was fined yesterday by the U.K. Financial Services Authority.

Einhorn and his fund Greenlight Capital, which has about $8 billion AUM, were slapped with a $11.2 million penalty by the FSA for trading stock in Punch Taverns PLC on inside information back in 2009.

While the hedge fund manager said that he completely disagrees with the FSA's decision, he said his fund will not seek further litigation.

"We doubt our chances of having a fair hearing," he said during a conference call Wednesday afternoon.

In fact, Einhorn had "quite a lot to say" during the 54-minute call to get his side of the story out there.

"I agree this is a serious matter, but not for the same reasons as the FSA. The FSA says this was an act of 'insider dealing.' This resembles insider dealing as much as soccer resembles football," Einhorn said.

Dimon on World Economy, Geithner & Bernanke

2012-01-26T09:29:00.000-05:00

Link

Ron Johnson on CNBC

2012-01-25T16:26:00.001-05:00

Link

....................

Harvard's Ferguson on China, Europe, Global Economy (video)

2012-01-25T16:22:00.001-05:00

Jan. 25 (Bloomberg) -- Niall Ferguson, a history professor at Harvard University and a Bloomberg Television contributing editor, talks about Europe's challenges, China's growth and the global economy. He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday."

Soros: Europe in Self-Reinforcing 'Spiral of Decline'

2012-01-25T15:52:00.001-05:00

Link

...................

Related article: New Year, Same Crisis - By George Soros

Karl Popper: Conjectures and Refutations

2012-01-25T13:58:00.001-05:00

“Popper introduced the mechanism of conjectures and refutations, which works as follows: you formulate a (bold) conjecture and you start looking for the observation that would prove you wrong. This is the alternative to our search for confirmatory instances. If you think the task is easy, you will be disappointed—few humans have a natural ability to do this. I confess that I am not one of them; it does not come naturally to me.” –Nassim Taleb, The Black Swan

When capitalism and corporate self-interest collide - By John Kay

2012-01-25T13:53:00.001-05:00

Adam Smith understood the difference between policies that favoured free trade and policies that favoured established business. “The interest of the dealers in any particular branch of trade or manufacturers,” he wrote, “is always in some respects different from, and even opposite to, that of the public.” He went on to observe that any proposals coming from business “ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention”. Information and communications technology today is dominated by Microsoft and Intel, Apple, Amazon and Google. The oldest of these, Intel, was founded in 1968; at about that time the British government sponsored a merger of the computer divisions of electrical companies to create a national champion able to compete in world markets. Every big European country put an entrant into the same race. They all fell before the post – and so did IBM.

Content was king, they said: but digital publishing was to be dominated not by Time Warner, EMI or Columbia Pictures, but by Apple and Amazon. Rapid innovation is everywhere associated with market entry. Google occupies the position that only a decade ago people expected would be occupied by Yahoo and AOL, just as Facebook displaced MySpace. What became of Sirius (the Exxon subsidiary that made the first personal computer I ever used) or CompuServe (which provided its communications)?

Joseph Schumpeter applied the term “creative destruction” to the dynamic of the market economy. Not only does the new technology displace the old: the new company displaces the old. Innovation mostly comes from entrepreneurs outside established businesses, engaged in an endless succession of experiments. Most fail, but not all. Bill Gates, Andy Grove, Jeff Bezos and Steve Jobs were talented people, but most of all they were lucky people.

……………….

Related book: The Innovator's Dilemma

Related previous post: Clayton Christensen Presentation: Reinventing IT

Europe Unprepared for Greek Default, Rogoff Says (video)

2012-01-25T11:58:00.000-05:00

Jan. 25 (Bloomberg) -- Kenneth Rogoff, an economist at Harvard University, talks about the European debt crisis and the impact of a Greek default on the region. Rogoff, speaking with Erik Schatzker on Bloomberg Television's "InsideTrack," also discusses the mood at the World Economic Forum annual meeting in Davos, Switzerland.

Simoleon Sense Podcast

2012-01-25T09:39:00.001-05:00

As most readers of this blog probably also follow my friend Miguel at Simoleon Sense, you’ve probably seen that he’s going to be starting a podcast. I can’t wait to be able to watch the quality content he produces. He’s almost halfway to his fundraising goal to be able to purchase the proper equipment to get started. If you have the means, please consider helping to get him all the way there by visiting the bottom of his post HERE.