Monday, November 29, 2010

The Spanish Prisoner

Succint Krugman piece:

The bad news about America is that a powerful political faction is trying to shackle the Federal Reserve, in effect removing the one big advantage we have over the suffering Spaniards. Republican attacks on the Fed — demands that it stop trying to promote economic recovery and focus instead on keeping the dollar strong and fighting the imaginary risks of inflation — amount to a demand that we voluntarily put ourselves in the Spanish prison.

Monday, November 22, 2010

Long Interview w. Alice Shroeder [Buffett biographer]

Here's a bit---the whole thing's here:

I’ve heard some people say, “He’s in his heyday.” The market has certainly worked in his favor. But the gigantic anchor of capital that Berkshire has to invest means that no environment can be as good for him as the past. If people are following his investments, they should consider how limited his universe of possible ideas is compared to their own.

He is being forced to accept lower returns than smaller investors simply by virtue of his market cap limitation. He’s given fair warning of this often enough, so it shouldn’t surprise us now. He’s often spoken nostalgically of how much better he could do running a smaller portfolio.

Therefore, let’s invert the situation. If you are running a smaller portfolio, the stocks he owns are interesting to consider, but not necessarily the first place I would look for investment ideas.

Wednesday, November 17, 2010

Li Lu on Charlie Munger

A beautiful lady once insisted that Charlie use one word to sum up the source of his success, Charlie said it was being “rational.” However, he has a more stringent definition of rationality. It is this kind of “rationality” that grants him the sensitive and unique vision and insight. Even in a completely unfamiliar territory, with just one look he could see through to the essence of things. Buffett calls this characteristic of Charlie the “two-minute effect” — he said Charlie can, in the shortest time possible, unravel the nature of a complex business and understand it better than anyone else can.

Thursday, November 4, 2010

Sector Bests: Materials

In Sector Bests I will present the top 5 companies in various industries according to their ability to maintain and enhance their economic value. I’m starting here with the materials sector. No attempt has been made to refer to P/E, P/S or the like, because, given a long-enough holding period, such distinctions are likely to become less significant.

CVVT
China Valves Technology, Inc. is engaged in the development, manufacture, and sale of metal valves. CVVT manufactures and sells over 800 models with more than 10,000 specifications of low, medium and high-pressure valves. The Company sells its products to customers in the electricity, petroleum, chemical, water, gas and metal industries throughout China. Return on Equity = 31.79.

BVN
Compania de Minas Buenaventura S.A.A. is a precious metals company engaged in the exploration, mining and processing of gold, silver and other metals in Peru. Return on Equity = 30.09.

NEU
NewMarket Corporation is a holding company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The Company has two primary segments: petroleum additives and real estate development. Return on Equity = 39.05.

PKX
POSCO is an integrated steel producer in Korea. POSCO operates in four segments: steel, engineering and construction, trading, and others. The steel segment includes production of steel products and sale of such products. The engineering and construction segment includes planning, designing and construction of industrial plants, civil engineering projects and commercial and residential buildings. The trading segment consists of exporting and importing a range of steel products. The others segment includes power generation, liquefied natural gas production, logistics and magnesium coil and sheet production. Return on Equity = 23.07.

SVM
Silvercorp Metals Inc. is a silver producing company. During the fiscal year ended March 31, 2010, Silvercorp mined 406,754 tons of ore. In fiscal 2010, the Company produced and sold 4.6 million ounces of silver, 62.4 million pounds of lead and 14.7 million pounds of zinc. The Company’s properties include Ying Mine (77.5%), HPG Property (80%), TLP Mine (77.5%), LM Mine (80%), Nabao Project (82%), GC Project (95%) and Silvertip Project (100%). The GC Project is a pre-development stage silver-lead-zinc project in Guangdong Province, China. In February 2010, the Company completed the acquisition of a 100% interest in the Silvertip silver-lead-zinc project covering 216 square kilometers in northern British Columbia, Canada. Return on Equity = 23.26.

Wednesday, November 3, 2010

excellent compilation of papers by Benjamin Graham

"Valuehuntr just posted up an excellent compilation of papers by Benjamin Graham from 1930 to 1974. Graham, the author of pioneer value investing books such as Security Analysis and The Intelligent Investor, also penned numerous papers that were not included in his books.

The piece starts with a brilliant comparison of investment versus speculation. Graham writes that, "It is indeed ironical (though not surprising) that common-stock purchases of all kinds were quite generally regarded as highly speculative or risky at a time when they were selling on a most attractive basis, and due soon to begin their greatest advance in history; conversely the very fact they had advanced to what were undoubtedly dangerous levels as judged by past experience later transformed them into 'investments' and the entire stock-buying public into 'investors'."

It's fascinating how early on Graham was able to pick up on a trend that still entangles investors today. The general investing public seems most prone to buy when they're comfortable with the markets, buying 'high' when instead they should be examining their complacency and doing the exact opposite.

Equally disappointing, Graham observes, was the inability for many investors to purchase stocks when they were trading at the largest discounts. This comes down to human emotion interfering as greed and fear get in the way of rational decision making. The most intriguing thing about all this is that behavior Graham identified decades ago still holds true today."

---MarketFolly