Tuesday, May 19, 2009
Tuesday, May 05, 2009
Messrs. Buffett and Munger made clear their complete disdain for the use of higher-order mathematics in finance.
"There is so much that's false and nutty in modern investing practice and modern investment banking, that if you just reduced the nonsense, that's a goal you should reasonably hope for," Mr. Buffett said. Regarding complex calculations used to value purchases, he said: "If you need to use a computer or a calculator to make the calculation, you shouldn't buy it."
Said Mr. Munger: "Some of the worst business decisions I've ever seen are those with future projections and discounts back. It seems like the higher mathematics with more false precision should help you, but it doesn't. They teach that in business schools because, well, they've got to do something."
Mr. Buffett said: "If you stand up in front of a business class and say a bird in the hand is worth two in the bush, you won't get tenure....Higher mathematics my be dangerous and lead you down pathways that are better left untrod."
Friday, May 01, 2009
Wednesday, April 29, 2009
Monday, April 06, 2009
Friday, April 03, 2009
Monday, March 30, 2009
Thursday, March 26, 2009
Wednesday, March 25, 2009
Thursday, March 19, 2009
Wednesday, March 18, 2009
Tuesday, March 17, 2009
Monday, March 16, 2009
Friday, March 13, 2009
Wednesday, March 11, 2009
"Courage is not the absence of fear, but rather the judgment that something else is more important than one's fear. The timid presume it is lack of fear that allows the brave to act when the timid do not. But to take action when one is not afraid is easy. To refrain when afraid is also easy. To take action regardless of fear is brave."
Tuesday, March 10, 2009
Wednesday, March 04, 2009
Thursday, February 19, 2009
Tuesday, February 10, 2009
Monday, February 02, 2009
1) Banks are not lending even though they took in the TARP money from the government. And instead of lending, they are using the capital to shore up their balance sheets or make mergers and acquisitions.
The simple truth:
Of course they are! Banks are businesses out to make money, not provide social security. They lend you an umbrella when it is sunny. Not when it is raining. And certainly not when they need the umbrella themselves!
Business is bad and this economic tsunami is big. The bankers certainly know it. They are not going to lend if they know businesses are going to go 'out of' business 6 months from now. They know things are not going to get better no matter what the politicians say. TARP money or no TARP money. Get used to it. And all these portfolio managers and talking heads need to shut up about things getting better in the second half of 2009. This financial trouble we are in right now is so big that it is going to take at least 5 to 10 years to get through. They of course have an agenda to say it will get better soon because they want you to invest money into the markets not withdraw from it!
As for the banks using the TARP money to shore up balance sheets and make acquisitions. Of course they are going to do it. They are here to make money. Lending it to soon-to-be-bankrupt small businesses will lose them money. But scooping up distressed competitors will make them money.
2) Bailouts, stimulus package and more bailouts!
The simple truth:
Out economies are contracting from a level that was simply an inflated bubble. We were living in a world fueled by debt. Money borrowed from the future. Make no mistake about it. Whatever comforts, increasing standards of living and entitlement one may feel especially was created from debt. This is especially true for most Western and developed economies. There has been little real value created with the ever expanding service industry.
Now is the time to pay the price as this bubble has popped and will continue to deflate. All this rubbish talk from politicians around the world talking about 'fixing' the problem with more debt is ludicrous. First of all, excessive debt is what got us here in the first place. Second of all, this bust cycle we are in now is so big, that nothing these politicians do now can stop the tide in the short term. The only way is to suffer the pain in this bust cycle the same way we all enjoyed the boom cycle. Let companies fail. Deal with the layoffs, high jobless rates and home foreclosures. Values will decrease and then money will come back into the markets naturally when the prices have reached the right level. Things have been overpriced, too high and for too long. Now prices must come down for our economies to truly be healthy again and resume on an upward trajectory. Home prices, wages, standards of living have all been inflated and overshot to the upside. Now they must come down as part of a natural cycle.
Unfortunately politicians need votes in the short term. So they want short term solutions and push the real solution away which is short term pain for long term gain.
And as people, we have become accustomed to expect only good times. We feel entitled to a good life and ever increasing standards of living.
And this is the world that we live. And this will continue to prevent us from accepting the reality of the situation required to take on real solutions. So let’s just continue to talk about it on Bloomberg and maybe a miracle will happen. We'll wake up and this was all just a bad dream.
Tuesday, January 20, 2009
Wednesday, January 14, 2009
Friday, January 09, 2009