Hersh Cohen - Value Investor

Here is a video of Hersh Cohen that is a part of Consuelo Mac's excellent Wealthtrack series. This video, which I watched a little while ago, is the first time that I came across Hersh. Hersh has an investment attitude that I really like:

"Not one of my companies cut their dividend today."

Hersh invests for the long term and looks at todays problems in the context of history. We have obvious problems today but previously there have also been obvious problems. Hersh cites the oil crisis, Nixon's resignation, and the US being torn apart by the Vietnam war. The point being that yes there was a huge crisis but it is now history, it was survived and the market recovered and people became far more prosperous. This is a line of reasoning and a sentiment that I agree with.

The way that I, personally, differ slightly from Hersh is that I fear the big tectonic shifts of economic power in the world and a debt chris where the whole of the financial system is interlinked both in debt and by derivatives. My worry is that this time it might really be different. But yes, that said, is he right? Will the sun rise tomorrow? well yes, Will 1.6 billion servings of coke still be sold? I would guess so. Will this number grow in the future? Look at the shift in the tectonics, look at China and India. There is only one company in the world that makes Coke.

Hersh articulates something that I had thought of myself a few times that is that investing is a time arbitrage. It is a way of looking at investments that feels right.

I really like his interview.

The full list of Hersh Cohen's, stolen from here appears below. Enjoy!

“The One Investment...” First rate companies with great balances sheets and attractive dividend yields Stock Symbol Dividend Yield a/o 7/21/10 Abbot Labs (ABT) 3.5% AT&T (T) 6.7% (a/o 7/20) ExxonMobil (XOM) 2.9% Heinz (HNZ) 3.8% Home Depot (HD) 3.4% IBM (IBM) 1.8% (a/o 7/20) Intel (INTC) 2.8% (a/o 7/20) Johnson & Johnson (JNJ) 3.5% Kimberly-Clark Corporation (KMB) 4.0% McDonald’s (MCD) 3.1% Microsoft (MSFT) 2.1% Procter & Gamble (PG) 3.0% The Traveler’s Companies (TRV) 2.7% United Parcel Service (UPS) 3.1% Verizon (VZ) 7.2% Walmart (WMT) 2.3% 3M Company (MMM) 2.5%

Abbot Labs (ABT) 3.5%


AT&T (T) 6.7%


ExxonMobil (XOM) 2.9%


Heinz (HNZ) 3.8%


Home Depot (HD) 3.4%


IBM (IBM) 1.8%


Intel (INTC) 2.8%



Johnson & Johnson (JNJ) 3.5%


Kimberly-Clark Corporation (KMB) 4.0%


McDonald’s (MCD) 3.1%


Procter & Gamble (PG) 3.0%


The Traveler’s Companies (TRV) 2.7%


United Parcel Service (UPS) 3.1%


Verizon (VZ) 7.2%


Walmart (WMT) 2.3%


3M Company (MMM) 2.5%

Ron Hosen - Value Investor III

"If you want to understad the market pretend that the participants are on acid, speed, valium or some combination"

I am delighted to link to another series of videos posted by Ron Hosen. For reference Ron is an amateur value investor who historically managed to compound at 20% a year. In a new move, for me, I have stitched all the videos in this series into a play-list.

Roubini on gold

A short interview with Nouriel Roubini on gold. It is a reasoned considered dismissal of a return to the gold standard.

I spotted it on ZeroHedge (essential reading if you are a doom-junkie).

Seeking Beta - Calculating an Accurate Beta

I am following Aswad Damodaran's Valuation Course online. Mr Damodaran very generously publishes all of his lectures online with supporting materials. His lectures are clear, logical and very interesting. My only complaint is that the sound levels in some of the lectures are a little low which can make them hard to follow on my iPod. Fortunately I can throw technology at the problem and the tiny freestanding speakers at home makes it all possible.

I have just been looking at Betas. Betas are intended to give you an indication of the market risk that your company is exposed to (that is the risk that can not be diversified away from). The basic idea is that you can get a Beta for your company by regression of the stock price over the index as a whole. The problem with this is that what you will calculate will typically contain a huge amount of error - simply because the amount of data to get the error down to a reasonable level is unattainable. Additionally you could want a beta for an unlisted company - here you have no data to look at.

The steps from this are really logical - if you can't get a Beta for your company then the best thing that you could do is get a Beta of a company just like it. Of course to level the playing field you want an unlevered-Beta - that is you want to take away the effect of leverage. That way you can look at like with like. Of course doing this you are stuck with a small sample size, and the possible addition error of the company being different.

The next step is to say, well, what if there are a whole load of similar companies we could use all of those and average them. This means that with care you can get a Beta that is representative of the market into which you sell into by looking at all the players in that market. You have two choices when calculating this - you can either look at the companies that sell in that market, or in some cases, the companies that buy from that market. Your aim is to find as large a representative sample of companies as possible from which to calculate your Beta as this will give you the most accurate Beta as the larger your sample the smaller your statistical error. Calculating a Beta this way can give you a far more accurate Beta than than using the historic share price of your target company. Why? its a far larger sample.

At the end of the day what is Beta? Beta is a measure of the elasticity of your market. Low beta - inelastic market (essentials), high beta elastic market (discretionary purchases). What you are trying to do is calculate the risk that your company faces from the elasticity of the market it sells into. Or so, at least, is my understanding of things.

Don Yacktman - Value Investor

I came accross this interview with Don Yacktman (Yacktman Asset Management Co) on Bloomberg. Don is a value investor with a long time horizon. He has the kind of style that like. Particular favorites of Don are Microsoft, Pepsico and Newscorp. Interestingly some of the same stocks are held by Terry Smith's Fundsmith Fund. For me I am also intrigued that he sees value in Research in Motion (RIM). To me RIM seems to have good cash-flow, seems to be damn cheep, and to be deeply hated. I don't hold RIM as it seems to lack any kind of predictability that I can see - but I do hold the temptation. Temptation is always cheaper than regret. I would also say that I don't hold any Newscorp - it is not a company that I like. It is not a company that treats its shareholders as owners - that does not mean that there is no value there or that it is not a good buy, or that I pretend to know more than Don Yacktman (I certainly don't) it just means that I don't like it and I would rather invest in something else.



If you can fight through the advertising you can find details of his top holdings here.

Charles Maxwell - Energy Analyst

I found this video following the links from somebody who was following Ron Hosen, a value investor that I have a considerable amount of respect for. Charles Maxwell is an energy analyst and in a fascinating interview discusses his views and opinions on oil and energy. One of the things that Charles Maxwell does is to look at the number of barrels of reserves that a company has and the cost (in share price) for those reserves. So $100 dollars will on the one had get you 7 barrels of oil if you buy at Exxon, or 44 barrels if you buy at Suncorp. As time goes on we should see the price of oil rise which makes the extraction costs less important - so you should see a greater uplift in a company like Suncorp. Also being Canadian it is oil in a very stable economic setting. Another company that Charles likes is Cenovus also a Canadian oil sands company but with lower reserves per dollar.

Charles Maxwell covers a lot in the video - and it is well worth listening to.

Tom Gardner - Value Investor

This is an excellent interview with Tom Gardner the founder of the motley fool. Interestingly he stresses, amongst other things, the importance of a good company culture. The interview can be found here.

Bud Lab & Scot Thompson - Value Investors

Here is an excellent series of two videos that explain a Buffett & Munger approach to value investing with some details of discounted cash flow valuation.

Mohamed El-Erian

My focal point of interest over the past month or two has been debt crisis, both European and US. My big fear is of disorder in the Euro-Zone, the chaos over what happened with the US debt ceiling came as a surprise to me. The back drop to all of this is that the world is changing [James Wolfensohn], [David Mayhew], [Terry Smith]. We have also, in the west, been simply living beyond our means. A huge burden of debt has been transfered from business to the state. Governments are in a position where it is hard to see how they can act as the bank of last resort, and so it goes on.

Mohamed El-Erian, the co CEO of PIMCO is one of the most straight forward commentators and analysts of the changing world - he refers to the change as the "New Normal". His opinion is that we are moving to a new status quo. The future will be different. For me as somebody learning about investment it is interesting and important. It is not enough to choose a "best of breed" company and buy it at an attractive valuation - you have to look forward to where, in the words of Charlie Munger; "the puck is going to be". A really simple example would be that however attractive the valuation I would be reluctant to invest in a newspaper business why? well really the time for newspapers looks to be passing. I would not invest in a UK defense company, leaving aside I find the product rather distasteful, living beyond our means something has got to give - the cuts here seem to me inevitable and progressive.

Returning back to the bigger picture I think that it is important to have an idea of where the world is going, what the long term markets are going to look like, who is going to be buying what. Look for, as Roger Montgomery, calls it A1 businesses with big picture, long term, legs. Then let the cook - for how long? I am looking for a hold period of 10-20 years.

Returning back from the bigger picture to where I started. Here is a video by Mohamed El-Erian, one of my all time favorite commentators. The video is something like 15 mins. It is well worth the time. My take anyway.

Lena Komileva

I had to watch this video a couple of times. Lena Komileva talks quite quickly, additionally she uses turns of phrase that I am not that used to - the best one I came across was "continuos re-pricing of risk", yep I get it but it takes a moment to get your head in the right place. In the way that all roads lead to Rome Lena is former chief economist of Tullet Perbon (Terry Smith is the CEO of Tullet Perbon)

Lena raises some important issues. Europe impacts global financial stability. Government bonds are held by banks around the world, now the solvency of these governments is in question, the assumption that the bonds were essentially risk free is in question. Currently the European Central Bank is acting as bank of last resort - buying bonds from governments in the eurozone that are under pressure. Politically the ECB has the same troubles as the EuroZone. Can this last, what happens next?

The banking system is only as healthy as the quality of its assets. If the quality of these assets change then you have a sick banking system. Banks hold a lot of government bonds (from around the world), what happens as the risk of these bonds is re-priced? Now here, for me, is the scary bit if the governments themselves are essentially insolvent who can "step up to the plate" who can act as the banker of last resort?

Lena also points out that the banks are more reluctant to lend to each other, this is worrying as this mirrors the troubles of the 2008 crisis, and of course that banking is global, none of these entities are isolated but all interrelated. My understanding is that as well as holding bonds the whole of the financial system is pinned together with 600 trillion of financial derivatives. My guess is that this was a part of what prompted the Fed to bail out financial institutions indiscriminately rather than concentrating on the healthy ones in the last financial crisis.

The video is great and Lena is clearly very sharp indeed.

Joel Greenblatt - Value Investor

I came across this interview that Joel Greenblatt gave to Forbes. Joel covers a number of different topics but talks amongst other things about trackers and indexing. A problem with indexing is that most indexes are market cap rated. This means that as bubbles form your tracker is naturally weighted towards the inflated (bubbling) stock. He suggests that a value weighted index, also a product offered by his company, is a better solution. The idea that this is a fundamantal problem with indexes was something that I first came across from Parag Parikh. Another observation from Joel is that the stock market is becoming ever more short term. This is something that benefits the Value Investor.

The interview is excellent. Here is the video.

If you prefer text a full copy of the text of the interview is published by Forbes here.

Jim Rogers - Interview

This is an excellent interview from Jim Rogers. Bloomberg don't allow embedding of videos so I have made do with a screenshot with a link you can click on.

Jim is always interesting to listen to - one of the things that I got from this interview is that the next six months to a year are priced in by the market so it is pretty pointless trying to invest according to the news. You can not respond quickly enough to have an edge - really you need to be there six months or a year in advance. This is where the market is. This is quite interesting because when there is real volatility that may be because something that is not expected is being priced in. The other thing that occurs to me is that this leads to an idea of the time horizon for value investing - you should be looking out there more than six months or a year.

Roger Montgomery - Value Investor

Roger Montgomery is an Australian value investor who has a regular spot on Sky. He is something of an enthusiastic self publicist and I suspect has a bit of of a cult following. He is very good. There are many you tube videos featuring Roger - here is one of them:

Roger's approach to investing is seemingly simple - he classifies businesses on a scale of A1 to C4. He then uses ROE to estimate intrinsic value. He then seeks to invest in A1 or A2 businesses that trade at a discount to intrinsic value and sells them when they exceed it significantly or he sees better value elsewhere.

Roger publishes a book "Valu.able" that is available mail order from his web-site. It is an excellent book and I heartily recommend it. The only thing that detracts from the book is the fact that it has a full-stop (period) in the middle of the name.

I got a huge amount out of this book. Roger's gift, as an author, is explaining things clearly with examples and counter examples. There is a book review here. If you are new or newish to value investing I would really recommend it. You can order it from Rogers web-site here.

Wear Sunscreen (Mary Schmich)

This video has nothing to do with investing. A friend of mine passed it on to me and I like it.

Ron Hosen - Value Investor II

"The company is at 61 and it deserves to be at 61 but it does not deserve to be bought there"

I spotted this new Video by Ron Hosen on Friday. Ron Hosen is a private Value Investor with an impressive track record - if I remember correctly he achieved something like a 20% return annually. Over the past couple of years he has generously shared his selections on YouTube. I first came across Ron something like a year ago and very much look forward to his videos.

In Ron's most recent video he also tackles the rather sad issue of his declining quality of life. Ron is in his 70s in, at times poor health, and has very limited fiancees - the investing is something that he does on behalf of his Niece rather than for himself.

The first of Ron's three videos is here - the other two can be found on YouTube.

Watching the Video I noted down the stocks, their price today and Rons suggested entry price - that is the price at which Ron would himself buy the stocks.

Company	Ticker	Price	Entry Price
Peabody Energy Corp	BTU:NYQ	$57.4	$45
Eog Resources Inc	EOG:NYQ	$98.2	$95
Occidental Petroleum Corp	OXY:NYQ	$98.6	$85-90
Seadrill Ltd	SDRL:NYQ	$33.4	$30
Canadian Oil Sands Ltd	COSWF:PKC	$26.6
Total SA	TOT:NYQ	$53.8	$50
Statoil ASA	STO:NY	$23	$20-22
Flowserve Corp	FLS:NYQ	$104	$85
CACI International Inc	CACI:NYQ	$63.7	$52
Innospec Inc	IOSP:NSQ	$30	$28
Rockwood Holdings Inc	ROC:NYQ	$51.8	$42
Teva Pharmaceutical Industries Ltd	TEVA:NSQ	$47.1	$44
Alliance Resource Partners LP	ARLP:NSQ	$74.6	$65
Aecom Technology Corp	ACM:NYQ	$26.4	$24
Macquarie Infrastructure Co	MIC:NYQ	$26.2	$25
Innophos Holdings Inc	IPHS:NSQ	$48	$40
KRONOS Worldwide Inc	KRO:NYQ	$28	$24
Covanta Holding Corp	CVA:NYQ	$16	$15
Ultra Petroleum Corp	UPL:NYQ	$43	$40
Suncor Energy Inc	SU:NYQ	$37.4	$35
Nexen Inc	NXY:TOR	$19	$20

I very much hope that Ron sticks around for a long time.

Parag Parikh - Value investor & the problems of Indexing

Parag Parikh is a value investor that I have a huge amount of respect for. I have mentioned him before in this blog and sure as eggs is eggs I will mention him again. Here is a video that was posted recently that features Mr Parikh talking about indexing and the folly that he sees in indexing. As an Indian investor Mr Parikh invests in the Indian stock market and so the examples that he draws on are different from other markets.

The particular thing that I have been thinking about having watched his video is that an index reflects price rather than value. The price of an index will change as bubbles occur. As Terry Smith points out that in buying and index you inevitably buy shares in companies that you would not normally buy. Similarly if you are invested in an index like say the FTSE100 or the S&P500 really good companies drop out of the index - they can be pushed out by what Parag Parikh calls "fancies" that people pay "fancy prices" - if you buy such an index inevatably, in such a situation, you will buy these companies as well as sell companies that are really good and will give you excellent earnings over the long term.

This is an insightfull presentation by Mr Parikh my only criticism is the quality of the sound which in contrast to the presentation is a little poor.

Margin of Safety - Seth Klarman

In 1991 Seth Klarman, a very well known and respected Value Investor, published a book "Margin of Saftey" it is out of print and I imagine a classic. I imagine that its a classic as you can buy only it costs more than a thousand pounds. With my rough grip on exchange rates I make it about two thousand dollars.

In here is an interesting conundrum. I generally hold that books are an interesting parallel to value investment philosophy. Why? Well a £100 stake in any company will cost you £100. The cost of a bad book is the same as the cost of a good book - all books are about £30 - well not quite but something like that.

Seeing the price on Amazon I looked for a Kindle edition, you would sort of get the Kindle free if it was available. But no it is not - what I did find was that there is a web site that has "made available" the margin of saftey as a PDF. There is a link to his page here. This is sort of the back to basics where, as a child, my friends and I used to record songs off the radio onto tape as tapes were affordable and the radio was, well, free.

Parang Parikh - Value Investor

Coming back from a weekend in away I discovered that there were a couple of new videos posted featuring Parang Parikh. Mr Parikh is a value investor that I have a huge amount of time for. Sadly for me, his firm is based in India and currently the indian stock market is not open to foreign investors.

Food prices 'will double by 2030' - BBC

"Food prices 'will double by 2030'"

I caught the thread on the BBC's Today program this morning. You can find a the article on the BC website here. Basically food prices will double in the next 20 years. I think that this is the basic medium term story for commodities. Things are exacerbated by a growing middle class who want to eat "Quality Food". Quality food is a euphemism for meat and a brief conversation with almost any vegetarian (many of my friends and family are vegetarians) will tell you that meat is a far less efficient way of producing food. It takes, from my ropy memory, 10 times as much land to feed a non-vegetarian.

Tesco & Branding

As a reader of the Motley Fool (an excellent, and free publication) I came across their article about Philip Clarke (Tesco CEO) vision. You can find the article here. Owning a slice of Tesco is the only thing that I know of that Warren Buffett and I have in common though I suspect I may well have the ability to make an expensive suit look cheap.

Looking through the article I noticed that Tesco want to focus, amongst other things, on developing brands. Philip Clarke put it as: "To be a creator of highly valued brands". This is interesting. To my mind there is a natural conflict between supermarkets and brands. The manufacturers of brands have a higher margin than the manufactures of generic goods. People want to drink Coke even though blind testing shows that few can tell the difference and often people prefer competing products. Strong brands give pricing power. They are the classic moat and a moat like Coke is a hard one to breach.

The emerging markets and growing middle class is a natural area of expansion for both the food manufactures (Nestle, Denone, Kraft, Pepsico and friends) as it is great expansion ground for the big supermarkets - Tesco is expanding very aggressively. It will be intersting to see how the brand war shapes up there as it does here.

David Herro - Value Investor

"The world ,as we know it, is ending" - David Darst (Morgan Stanley chief investment strategist).

This is the first time I have republished a video that was posted on somebody else's blog. This video appeared on Dah Hui Lau's blog yesterday. I am cheap enough to grab his video and post it myself as it was interesting. I am in good, cheap, company as WealthTrack, who publish the video, are themselves cheap enough to preamble it with some good wholesome advertising, followed by sponsorship - after all while you are waiting for the video to start you could be coming to some (subliminal) decision about products to buy. And why not?

David Herro is a Value Investor who achieves 9-10% average returns. The interview covers his investing philosophy gives some insight into his style. Here are a few points I picked up from the video:

• News is getting much more rapidly priced into stock. David finds that he holds onto stock far shorter (half the time) than he used to. He did not say if the discrepancies between cost and value are smaller. If they are not smaller then he should become more efficient as a value investor as Mr Market is less sluggish in figuring out that there is value.
• He sees a much greater market volatility and believes that it is here to stay. The volatility he sees washes across different sectors (asset classes) of the market. Presumably volatility is what you seek as a value investor as volatility implies that there will be times when stocks will be attractively priced.
• He sees an acceleration of economic expansion in developing world and decellaration in the developed world.
• He seeks to buy quality stocks.
• He is investing in Japan and now sees Japan as a home of improving corporate governance, and that there is good value. He currently holds Diawa Securities. Personally from what I have understood of corporate governance in Japan, (gleaned from Aswath Damodaran's lectures) is that the cross-holding structure corrects when there is an individual management failure in a single company but it is resistant to any kind of management cultural change. Additionally there is the curious practice that stock buy backs enable the company to vote for the shares that it bought back.
• He invests in Europe and points out (living in the UK this is no news to me) that Europe far from homogeneous boasts a wealth of economic policies, labour laws etc. But, of course, there is value to be had across Europe - Titan Cement in Greece (is an example). And he likes the corporate governance of Sweden as often a Swedish company will have part of its employees pension invested in the company and have a trade union presence on the board. To me this is a fantastic way of reigning in any recklessness in the board room and getting the employes to think of themselves as owners as well as the management.
• He is currently wary of Emerging Markets - and cites high prices and a great deal of lousy corporate governance. You should price this corporate governance in (it's risk after all) to your valuation. He sees the macro effect of demand (growing 10%-12%) from the emerging markets as a source of demand and a driver for global economic growth. The developed world OTH has lots of debt, low savings rates and therefor can not pace-up demand.
• When evaluating a company he looks at the macro influences on where the company makes its money. This is different from, my understanding, of the Buffett Munger approach where you look for outstanding companies and pay little regard to the macro picture.
• He invests in Small Caps and cites them as outperforming the market by 1-2%. This is consistent with Guy Spier, and Cale Smith (a value investors I particularly like) who hunt out small caps. Guy, as I remember, says that smaller more volatile stocks can represent better value. Francois Bonnin put it as "The greater the liquidity of an asset the greater the amount of information that is embedded in the price".

And what would an interview be without a tip? David recommends Diageo. As people age they transition from beer to spirits. Profit dynamics great - good return structure and good at allocating capital 10x cashflow. And my opinion what-do-you-know the middle class (and out there as the world develops boy is it growing) likes to drink, amongst many other things.

Enjoy the interview.

"People abandon common sense when macro trends disrupt them."

Obama - BBC Interview with Andrew Marr

A really excellent interview with Andrew Marr from the BBC. Andrew Mar probes Mr Obama, I think, quite carefully as well as with quite a lot of respect on forgien policy, Osama, Pakistan the Middle East. I watched it on BBC iPlayer - here is the same interview on youtube. It is well worth checking out.

Inflation - uniformed thoughts

I have been thinking a fair amount about inflation over the past months and this is a short summary of my understanding of inflation and general thoughts. It is a mixture of uninformed opinion and conjecture.

Inflation can be thought of an invisible tax. Whatever it is you have saved will buy you less in the future than it will do now. If you look at is as a tax it is a particularly clever one as even collects its self (no bureaucracy requited) whatever money you have is taxed.

The way that inflation affects you is dependent on what you buy. One of the most memorable accounts of inflation I came across was from Ron Hosen (a value investor) who discounted reports of inflation on the grounds that he had seen little inflation in the goods that he bought - most notably rotisserie chickens. In rotisserie chicken terms Ron had seen no price change at all so he was entirely correct in identifying that there was no inflation. I live in a different part of the world and consume a different set of goods than Ron and I have been experiencing a much higher level of inflation. Things just cost more, that is the things that I buy cost more. Most notably food costs more, gas and electricity costs more and for many years council tax has increased. If, in a homage, to Ron (who I have a lot of respect for) I look at poultry as a measure of inflation then when Virginia, now my wife, moved in eight or so years ago Tesco's economy turkey legs (there really is a meal for two in a leg and a damn good one if she cooks it) which were 89p each and now are I think £1.25 - is that 40% in eight years.

The serious part about inflation is what it affects and how it affects you. The government RPI and CPI are based on a set of goods and services. If your consumption is different from either of these two sets (and it will be) then inflation will affect you differently. If you, over the last few years, have bought consumer electronics then inflation has been kind to you. For many other goods (what I would consider the basic staples) it has not.

The counterpart of goods inflation is wages inflation. Over the last couple of years my wages have risen buy about 1% a year so I am a net looser. I mention this as an example rather than some kind of back-handed complaint, I am not complaining. However lets look at it - as my wages do not keep up with inflation the invisible tax gnaws away at my future earnings, and so attacks my future ability to save as well as what I have managed to save. Happy as I am with my job (great job BTW) financially I am bitch-slapped. We are currently in difficult economic times so generally people are relived to have a job - which makes wage inflation less likely. Even if they are not pleased with this, when the economy is slow the opportunities for moving to a new job are not good. As I understand it this sort of state of affairs is called Stagflation.

So does anyone benefit from inflation? Well if you get inflation your savings are attacked. If inflation is greater than interest you actually end up with less as time passes. Just look at your savings as "Tesco's economy turkey legs" and you have less. But what if you have debt? Well this is interesting - as long as your wages rise corresponding to inflation then your debt gets cheaper. At the moment at the NationWide building society I can borrow money at 7% or so for a personal loan - if inflation is 5%, and my wages were to keep up what do I care - as hey presto my loan is just 2% in "Tesco's economy turkey legs". If you are a government that can not balance it's books and has debt you can nibble away at it with inflation. What is owed shrinks. And who pays? well those who lent it money.

Looking at the medium term I personally expect inflation, to continue at levels greater than the Bank of England target (2%) and I would imagine greater than wages. Why? Well we are at the start of a new era where the balance of the world allocation of wealth and resources is changing. Currently 20% of the population have 80% of the wealth and this is changing. Also there are simply more people in the world - the population of the world is compounding. What this means for us (one of the 20%) is that it would seem that there is going to be just less to go around. A part of this is that we have limited natural resources and these will have to be spread differently, but also we have limited capabilities for growing food and that the world GDP won't necessarily increase fast enough to stop the people with more having less.

Naïvely, from my point of view, one of the things that seems to have kept inflation low in the UK is the influx of Chinese [imported] goods over the past years. My guess is that our currency has hung in there stronger than it should as our economy has reenforced its self on mushrooming consumer debt. So things change - debt is not indefinitely sustainable. Politically any boom is good, and the reverse looses you elections. So with when Brown was talking prudence and was fighting with No 10 and managing our economy the consumer led boom bubbled up with consumer debt. I suspect that the economy was really weaker than it seemed to be (debt made it appear stronger) and as we come to terms with this we experience the weakness we should have had - but with "interest" as there is never a free lunch.

Goods from China will become more expensive. China has growing aspirations, a growing middle class, growing wages. Recently the yuan has been allowed to appreciate against the dollar and my guess is that this appreciation will continue. I am sure that production in China will become ever more efficient - but I also can't fail to see that prices won't increase. How else do you pay for a growing middle class. I mention China as it is large, and in the forefront of people's minds, but it is not the only accelerating emerging economy.

Assuming inflation bites down on, and our wages fail to keep pace what will the effect be? We will have less and more of what we have will be spent on essentials. On the back of this is it not reasonable to assume that house prices will fall and rent will fall. Why? well rent and house prices soak up a huge amount of the slack in your personal finance. Discretionary spending will suffer.

The key issue here is the rate of change, the rate at which we become poorer. Go to Cuba and the average Cuban says "we have nothing". Compared to much of the 3rd world the average things are not bad in Cuba (though I will say for the avoidance of doubt not as we have it in the west by a large margin). As a whistle stop summary life expectancy of 76, education is good, more-or-less complete adult literacy. They have food, housing, low unemployment, strong family. Their perception has, to an extent, been colored by a sudden horrific drop in their standard of living. Compared to how they were before the fall of the soviet union and ratcheting up of the US trade embargo they have little. If this change had seeped in slowly over a generation or two it might have been easier.

So what do I hope for? Well I hope for a reasonable rate of change - that way we can adapt and adjust. Change upsets people, it is confusing, too much of it all at once always causes problems.

Mohamed El-Erian - Bloomberg Interview

Mohamed El-Erian, CEO of Pimco is one of the people that I specifically look for on YouTube. His videos are clear, interesting and instructional. I really like his take on things. In this video he talks about debt in the major economies, how is it going to be handled, what that means for investors - you just have to look at countries that have a better balance sheet or that do business with countries that have a better balance sheet. As bad-boy Clinton might say- it's the multi nationals stupid.

Mr El-Erian also talks about the IMF and Dominique Strauss-Kahn and the implications of Mr Strass-Kahn's situation, as well as touching a bit on his succession. I can not imagine the IMF being in much better hands than Mr El-Erian but there is this "problem" that he is neither American or European.

Guy Spier - Value Investor

An interesting interview with Guy Spier in the Manual of Ideas can be found here.

Guy is famous for having paid $650,100 for a lunch with Warren Buffett as the result of a charity auction that he won with Mohnish Pabrai. Far more important than how he spends his lunch times is what a man does - Guy is a committed value investor. Looking through the posts I have made I note that so far I have not posted anything about Guy - in spite of the fact that there is an excellent interview on Opalesque TV. I don't doubt I will dig it up and post it at some point soon. It is an excellent interview.

Jeff Immelt of GE - Interview

This is another Stanford Interview - this time with Jeff Immelt of GE. Geoff is an engaging and entertaining speaker. He talks about GE, managing GE dealing with problems and the challenges that he faces and will face. Here is a summary of some of the things that I got out of his lecture - but there is a lot in it.

• CEO needs a point of view of the world - and needs to invest using the world as you see it. If you are investing in a company it would seem to be a good idea to have some kind of faith in the management vision.
• We are in a reordering of global economy - this is something that is well mentioned by other leaders 20% have 80% of GDP this is changing. Also in his opinion europe will be slower growth region 5-10 years.
• Notion of productivity & cost - there will more products at more price points. Sell products at low price points and still make money as you attack new emerging markets.
• Resource scarcity - resource rich parts of world will be interesting. For example Angola. Kazakhstan Ubikistan Russia. Also conservation technology (to conserve scarce resources) is/will be interesting.
• Networked world. Not only IT but also collaborations - joint ventures etc.
• State economy - Governance through the world are very influential in business.
• World is and will become more volatile.
• You have to plan for the long term.
• You need to understand how things fail.

"A CEO drives change and develops other people."

Ed Catmul - Pixar (Great Interview)

Generally I post videos of investors or managers - that give me insight to specific points that are sort of investment related. I post them amongst other things because I use my blog as a record of things that I am interested in and can refer back to. A couple of weeks ago I was looking for that great video with Ed Catmul and could not find it.

So this video by Ed Catmul is just a really good video. It tracks the change of Pixar from being a company that produced software to a company that produces (primarily) animated films - the growing pains, the issues and how they were solved. It is a really excellent video and shows some really good management. Good management has undefinable qualities - I seem to remember somebody one saying "I don't know how to define obesity - but I know when I see it" - there is a lot of good management (I can see it) and good learning in this video. Enjoy!

Dick Kovacevich - Value Manager

"The only way to grow profits is to grow organic risk adjusted revenue."

There are so many great presentations from Stanford Business school. This is a lecture from Dick Kovacevich the former CEO of Wells Fargo. If you who follow Buffett this is a bank that Berkshire Hathaway invests in and indeed recently increased its investment.

The actual presentation is a little on the dry side - but the fact that there are no clowns or snappy one-liners does not stop it from being interesting. If your attention flags a little keep with it.

I was particularly interested in his take on M&A. It is pure value investing. M&A is by an large a great destroyer of shareholder value. Dick's take is that you have to buy at a good price, something only makes strategic sense if it contributes revenue and it should be able to contribute revenue at the rate that the rest of the bank does once it is integrated. He, generally allows three years for a new acquisition to get up to speed. Another interesting point is that he is not interested in acquiring a business simply for cost savings - cost savings are a one-off boost, what he is looking for is continuing revenue.

"You should never make an acquisition unless the revenue growth of the combined entity is not greater than the revenue growth of the parts."

"A good business model that is hard to do gives you a superior competitive advantage."

"Almost all businesses are cyclical"

Terry Smith - Value Investor (?)

I heard Terry Smith talk at the Master Investor show in Islington today. Living in Oxford I was fortunate that Islington is no more than a couple of hours away in a great bus+tube combo.

Terry smith has been a broker for many years and is probably best known for publishing a book exposing how very large companies have massaged their accounts. He is a man who has worked in the financial sector for a very long time and has a gift for talking about things in a no-nonsense logical way.

Terry was speaking at the master investor show really as a pitch for his new fund called Fundsmith. The key ideas behind Fundsmith are to invest in large stable companies with good cash-flow (yep real money is being made) and not to change tack. A simple strategy keeps costs down. A modest diversification 20-30 companies gives you the effect of almost total diversification. This also has the additional advantage that a concentrated portfolio allows you to avoid the worst companies that you get in an index. The cost of the fund is 1% a year which strangely is what Virgin (my pension provider) charge for something that is basically a tracker.

I really liked Terry's presentation - and there is a lot of sense in it. There is a fair amount of buffet - the only thing missing is the bit about "margin of safety" and the fact that he is, according to what he says, totally invested rather than with a war chest to spend on the next great idea.

Anyhow as it is much my custom to add videos to the post here is a video of Terry Smith - this is not giving the presentation I heard but being interviewed on Sky news about Fundsmith.

A link to an earlier interview in the Guardian, nothing to do with Fundsmith but very good) can be found here.

Cale Smith - Value investor

This is the first in a set of videos where Cale Smith explains value investing and his approach to investing. He runs his own investment company Islamorada Investment Management.

If you are interested in value investing this series of videos are a particularly good introduction. I very much like Cale's style. It is all long, no short and sees a lot of value in small caps. He manages two funds, which looking at his web-site have a management fee of 1.5% annually. This is low for a managed fund (I currently pay 1.0% for my pension that is little more than a blind tracker). Another interesting thing is at the moment the fund is tiny 15 million under management that gives Cale complete freedom. He can invest wherever he sees value without having to worry about the impact of his investment.

I particularly liked the last half of the last video in the set - here Cale goes through the various metrics ROE, ROC, P/E and gives insight into what they mean to him in terms of usefulness.

Here is the first part - you can find the rest on youtube.

Simon Johnson - Bloomberg Interview

Here is an excellent analysis by Simon Johnson from MIT of the banking crisis and the problems of big banks. Published by Bloomberg you will need to follow the link here (I am not able to embed it). The interview is 15 mins - here are a few points from the interview.

• UK banks are currently 5-6 times GDP. Iceland's banks where 11-13 times GDP when their banks collapsed.
• The UK and the swiss are getting worried about having such big highly leveraged financial sectors.
• Big banks tend to peruse the same assets. Previously it was real estate now it is emerging markets. This opens the possibility of them all failing at more-or-less the same time.
• UK Banks need to raise the levels of equity - this will reduce the implicitly subsidy of a highly leveraged operation. When things go well the banks get the benefit of the leverage when it goes badly the government picks up the tab. In the US debt went up 40% after the crisis as a result of bailing out the banks.
• Spanish banks are lucky - they escaped due to their heavy investment in Latin America - which with stability of commodity prices meant that they squeaked buy. They are still, however, under capitalized.
• German Banks are also under capitalized.
• American banks now want to "go crazy" in emerging markets e.g. City Group, JP Morgan. Emerging markets are, however, inherently unstable and will have financial crisis.

Bret Clayton (Rio Tinto) Stanford Interview

This is another interview that has been published on youtube from Stanford University. Bret Clayton is an executive director of Rio Tinto.

This interview gives an interesting insight into the world of mining. Projects are huge, budgets are massive and timescales are of a completely different order to what most businesses consider. The time from inception to operation of a mine could well be 15 years. Again this echos with the excellent talk I attended from David Mayhew.

There are also insights into his view of what will happen to commodities like copper over the next many years.

AB InBev's Brito: 'Hire the Right People'

Another interview from Stanford university. Brito covers many things but gives real insight into the value of leadership, good management and corporate culture. You also get a hint of the value of brands. He also mention something I first heard from Guy Kawasaki - "B players don't hire A players" (or something like that) - he puts it as mediocre people don't hire good people.

The interview and subsequent questions are well worth watching.

James Wolfensohn - Former World Bank President

I found what James Wolfensohn had to say consistent with something that James Meyhew (Chairman of JP Morgan Cazenove) mentioned in his talk. There is a change coming. One of the things that David Meyhew said was that politicians were nor being straight with us that there was this change coming. We [in the western world] will have to adjust to having less.

James Wolfensohn sets out what he sees as quite a different wealth distribution - rather than having 80% of the worlds GDP this will shift to 35%. In China and India there will be a huge growth in the middle class.

James covers and joins together many different threads in this speech at Stanford and with it is an underlying inescapable logic, including he observation that economic power and military power are inevitably linked.

The speech is close on an hour in duration including questions. It is well worth listening to.

John Doerr (Kleiner Perkins) - Venture Capitalist

Another great interview - this one from John Doer in 2009. John is the head of a Kleiner Perkins a venture capital company that invests in high tech. His insights are fascinating.

Here are a small number of things that stood out to me:

• 1/2 of the US energy is wasted.
• US has a tiny investment in renewable energy (wind, solar and battery) compared to the rest of the world. Only 13% of the companies come from the US.
• Importance of company culture. He identified missionary and mercenary culture as being the two cultures that he finds to be successful. My experience of working is that culture is incredibly important and very difficult to change. My observation is that if you do not find the culture of a company "right" you should get out. How you evaluate culture in a company in which you invest - I don't know. If you want an example of mercenary culture then check out the Bill Browden Interview and his account of working for Salomon Brothers.
• Ideas are easy, execution is everything, and in everything worth doing it takes a team.

The interview is a good one and covers far more than the few points that I broke our. I recommend listening to it.

Heidi Roizen - Stanford Interview

I am endlessly amazed by the quality and variety videos that are avaiable on YouTube. I am slowly working through some of the ones published by Stanford University. This is one from Heidi Roizen who I "know" from her time as the head of developer relations at Apple. Though I did not meet her personally I had a lot of respect for her.

A particularly interesting point made by Heidi: More that 75% of all board of director positions do not go through a headhunter and are filled by people "in the loop".

William Browder (Bill Browder) - Stanford Interview

This is a longer and earlier interview with Bill Browder that the one I posted recently. It is a fascinating interview covering his early life as well as what happened next. I really recommend it - though the short documentary at the end is not that good compared to Bill's own account of it.

William Browder (Bill Browder) - Activist Investor

This is one of he most interesting and unsettling of the accounts of Active Investment. Activist investment is basically taking a badly run company and creating change so that it would be run better. Bill Browder did the whole thing on steroids - he invested in companies that were being criminally embezzled, exposed the scams and created value for the owners by stopping them from being robbed blind. Fantastic idea - just good. A win win for the government, the owners - everybody except for those doing the stealing.

The unsettling thing is when the tables turn, when power rests with the criminals the game changes. The fate of one of the lawyers involved is truly horrific.

Francois Bonnin - Asset Liquidity & Information

Not often that I post a part 2 of a video - but here in part 2 there was a really interesting opinion from Francis Bonnin.

The greater the liquidity of an asset the greater the amount of information that is embedded in the price.

To me this is both logical and really interesting. There are a couple of strands to it.

• What kind of information is in the price. Is it the right information, can it be relied on.
• With a value investor hat on - should you avoid the information that is in the price, is it the kind of information that you should be interested in?

Basically both points are the same thing - are liquid stocks more likely to be priced correctly. It is also a close relation to the observation that you are less likely to find miss pricing in well researched stocks. You can well imagine that well researched stocks are less liquid.

Anyhow here is Francois Bonnin's interview. YouTube will serve up part 1 as well if you look for it.

Walter Schloss - Value Investor

Here is a video of Walter Schloss, one of the value investing greats. Walter started off by reading "The Intelligent Investor", took a couple of his courses and went on from there. Over the life of his investment firm walter averaged 15.3% between 1955 and 2000. More details as ever on wikipedia and can be found here.

The video quality is not great but the sound is clear enough. Here is the first of five parts.

I found what walter had to say very interesting. His approach was to buy shares that were undervalued and sell them whenever they had gained 50%. He did not seem to be particularly bothered about buying particularly good companies in the Buffett sense.

Ron Hosen - Value Investor

Here is another video from Ron Hosen. I very much appreciate Ron's contribution to the value investing community. I think that he approaches investment with a great deal of logic and insight. His video is delivered in two parts. The first part deals with investment, the second is much more devoted to Ron's view of the world.

Seth Klarman - Value investor

This is a talk given by Seth Klarman - the quality of the video delivery is a bit rubbish - but what Seth says is really interesting. There is no problem at all in following what he says. This is the first of six videos.

Mark Mobius Interview

An interesting interview with mark Mobius. Some interesting points aboit mexico.

• Crime does not affect his investment - he has no feedback from the companies that he deals with that the security is a problem.
• The crime in mexico is a result of the economic disparity between the US and mexico and the fact that the economic growth does not keep up with population growth. He believes that a loosening of govt. regulation & structures to make small business prosper, reform in labor to make labour more flexible - all of which would ave a positive impact on the economy.

You can get to the video here.

Mohamed El-Erian - Interview

A fascinating interview from El-Erian chief executive officer of Pacific Investment Management Co. This is one of the few interviews that succulently expresses some important ideas Europe. Europe is a two speed economy - on the inside there is Germany and France on the outside Spain, Portugal, Ireland etc. As a result the ECB's job is tricky - it needs monetary policy and support for the banking system.

Spain is improving Spain is not Greece and need not be Ireland. It has a banking issue but not a government debt problem. It could, like Ireland take on liabilities of the [savings] banking sector or it can try and force as many savings banks as possible to raise capital merge etc. It is trying to fore it to get the private sector to take care of the problem. As a result it is significantly outperforming Greece and Ireland. Greece and Ireland are using liquidity to address solvency and growth problems - and approach that can not continue indefinitely. The underlying issues need to be addressed. They need to restructure the debt like Uruguay, also structural reforms to allow them to grow.

For reasons that I don't fully understand but are probably due to copyright I could not embed the video but you can get it from here.

Motley Fool - ValueInvesting

Here is a short interesting article on Value Investing "Trawling for Bargain Shares" published on the Motley Fool. Enjoy!

passionsaving - website

This is another good web site. The author explores the idea that passive investing is just not a good idea. His alternative is to change your stock allocation according to the price of the market. There is a link to it here. It is, in my opinion, a value based approach to investing in an index fund.

valuewalk - website

A short post to pass on details of ValueWalk a website that I have just found that is "Devoted to Value Investing and Legendary Value Investors" There is a lot of interesting material - you can find it here.

Investing in Gold

Yesterday I spotted the following on YouTube "Charlie Munger of Berkshire Hathaway thinks you are a jerk for owning gold" which is a video repost against Charlie's statement. You can look at the video here.

I don't think you are a jerk, if you hold gold, but I don't think I would hold gold myself. Warren Buffett said this about investing in gold. ‘You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all — not some — all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?’

It is quite an interesting way of looking at things. My take on things is that gold is a way of storing value but not a way of growing value. It's value depends on people valuing it, people have valued it throughout history and it seems unlikely that this value will disappear. It differs 180 degrees from a company or enterprise that, when working properly, generates value. A good company will grow its intrinsic value and/or return to you the (part) owner a return (dividend). Gold will never give you a dividend.

The value of gold changes as its the demand for it changes. In times of high inflation or uncertainty it generally appreciates in value. At the moment we are in times of inflation and uncertainty. I also suspect that we are seeing an increased demand for gold from India and from China - people have new wealth and gold is a way of "capturing" that wealth.

One of the things that LibertyandEconomics (the author of the video) points out is that the purchasing power of gold has not fundamentally changed since roman times. This is an intelligent observation and highlights one of the remarkable properties of gold. However give me the choice of holding gold from Roman times until today or investing it I would rater invest it. Why? well imagine of you got a managed a 1% growth a year for the 2000 years from roman times to now - your one gold piece would have compounded into 439,000,000 or so pieces. On the other hand, as LibertyandEconomics you could have retained the value (or so) across the centuries.

One of the more interesting gold plays I came across was my father's. He had what he referred to as "a few shares" in a minor gold mine that was barely profitable. His take was in times of trouble gold becomes valuable, the barely profitable mine becomes very profitable. This was his hedge against uncertainty.

Philippe Brugere - Value Investor

I came across this video from Philippe Brugere this mourning. When I wake up an hour or two earlier than I would like and am unable to sleep, I crawl out of bed into the bath and scour the web for videos and soak. I spotted this one. This is the first time that I had come across Philippe Brugere - and I like his take on things.

Philippe looks for companies that he feels are given a low value for the wrong reasons - obviously a company that has a low value for the right reasons is something to avoid.

Philippe Brugere is looking to Europe as as source of value - European manufacturing and European banks. I am personally suspicious of banks - but make no mistake this does not mean that they are not good and sound investments, Warren Buffett has increased the Berkshire Hathaway stake in Wells Fargo, Philippe Brugere thinks that BNP and UBS are interesting and is particularly interested in Barclays.

His example of manufacturing is Aktiebolaget Skf a ball-bearing manufacture - SKF has a ROE of 28 and a historic ROE of 22 - over the past 5 years.

Dividends

The other thing that I found very interesting is Philippe's take on dividends. My (rough take) has been that dividends should not be paid if the company can put the money to better use (can generate a high return) from them by retaining them. Obviously with a low ROE the company should pay them out. Philippe's take is different - he likes dividends because they are a sign by which the value of a company can be seen by others. If I understand the way that he thinks of things correctly he buys undervalued stock and then waits for them to achieve their intrinsic value and subsequently sells them (when exactly is maybe not so important) the issue is how long does it take a stock to be recognized by the rest of the market as undervalued. What makes the undervaluation disappear. This is where the dividend comes in - it is the red flag to the bull.

Aswath Damodaran - on brands

This is really excellent video by Aswath Damodaran - the guy who, through the web, introduced me to corporate finance (the assimilation of which is an ongoing saga). Aswath is the kind of teacher that you get rarely and is able to turn a subject that I, left to my own devices, would recoil from in horror into something interesting. How - well it is the magic of somebody who sees things as interesting and explains them in an easy logic. He is also very funny.

In this video he values the brand of Coca-Cola in it he gives a lot of insight into why brands are so powerful and important.

• Brands give you sustainable competitive advantage.
• A good brand is enduring (lasts a long time).
• A good brand gives you pricing power - yes you can just sell the same product for more.

You may have wondered why Waren Buffet was and is so big on CocaCola - now there's a question.

The video is well worth watching (great jumper) or listening to - Damodaran puts it far better that I can.

Lyons Brown - Altamar Brands

Lyons Brown is an excellent public speaker. He gives some frank as well as rather good insight into the US drinks industry. Check it out.

I have become more interested in brands and branding. I figure that brands have become an integral part of what we consider our culture. Thinking back I grew up on Birds-Eye fish fingers because they were "better". If you buy Ice cream what brand do you want if you have friends calling around. What kind of cereals to you want to pour into your bowl in the morning. You buy a bottle of water!!? (it is 100% drinkable and clean out the tap) and you hit out for a brand and so it goes on.

A strong brand is a moat around a business.

James Pan - Value Investor

Here is a series of videos of a lecture given by James Pan. I came across them trawling YouTube last year. Here is the first - you can get the rest from YouTube quite easily.

I very much enjoyed the videos there are a couple things that stick in my mind even though it is, now, quite a while since I listened to them.

1. There is nothing quite like the feeling of a successful short.
2. Who can understand the company report of a bank?

The second point is quite interesting - if you can not understand the company report what hope do you have of figuring out for yourself if the company is good or bad or mediocre. You can, of course, rely on other peoples advice. I have got burnt that way once and almost burnt another time. Almost burnt is probably the more interesting. I am an on and off reader of the Investors Chronicle (which is excellent) I remember a recommendation for the Anglo Irish Bank.

Warren Buffet and Charlie Munger are adamant about investing in things that they understand. The more I think about this the more it makes sense.

Ron Hosen - Value Investor

At the back end of last year I came across a series of videos by Ron Hosen. Looking at the number of views these are not popular - but I recommend them. I found them insightful and very interesting - Ron is a skilled investor. Anybody who manages 20% a year compounded is.

There are five videos in the series - I recommend listening to them all. I did a fair bit of my listening as I did the washing up. Somewhere in the middle Ron describes his take on inflation in terms of Rotisserie Chickens. Two bouts of QE have failed to change the cost of chickens so Ron (quite correctly) establishes that there is zero inflation. Inflation affects you only in the things that you buy. I, unfortunately, don't buy Rotisserie Chickens and I do buy quite a lot of other things. I am feeling inflation bite.

Here is the first of Ron's videos - YouTube will offer you the rest.

A few days ago Ron published a followup Video - a shorter set of two where he goes over the "crumbs" that are left.

David Mayhew - Chairman of JP Morgan Cazenove

On Friday I was fortunate enough to attend a lecture given by David Mayhew the chairman of JP Morgan Cazenove. It was a good lecture - David covered his early life - how he got stared in banking through to where he is today. Like many successful men he rests a lot in the value of hard work and is wise enough to have stressed a few times the role of luck in his career.

I won't attempt to cover what David covered in his lecture in any way - what I will enumerate is a few points that he covered that I found particularly interesting and have thought about afterwards. Because a blog is not a fixed thing I may well add to this later as I think about what he said.

• Monopolies are hard to break. He mentioned this in the context of the 15 years it took to replace the old system of Jobbers and Brokers - wikipedia covers the "Big Bang" here.
• Reputation is very important. This is something I have thought about a fair bit over the years.
• The next decade will not be as good as the past one.
• If you loose control of costs you loose control of decision making.
• Quantative easing will inevitably produce inflation.
• Quantitive easing was necessary to provide liquidity to the banks.
• Qualitative easing has helped to provoke the bubble in the emerging markets. This is because it has provoked a rush of money into these markets.
• Politicians are not being straight when they fail to tell us that basically we will be worse off.
• It takes 10 years for a mine to be developed and be productive - if you are interested in mining stocks this is worth thinking about.
• There is plenty of iron ore in the world - the problem is mining capacity.
• Transparency is important. If I understand things correctly then he believes that a key role of regulation is to introduce transparency. Transparency leads to confidence which is important for investment.

I guess that low interest rates are a part of what is pushing money into emerging markets.

Updated 20-feb-2010

Setting out

Like many men I have traded on the stock market. I think that it is a part of what the modern man does - he fixes his own car, he builds his own house and he trades shares and wins on the stock market. I have not won - I have probably broken even which is what happens if you don't know what you are doing but are patient.

What I hope to do in this blog is to collate the things that I learn and have learnt. The internet is an incredible resource. Books are, compared to many forms of training (check out what an MBA will set you back) inexpensive. So as I go and as I learn I hope to post.