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Showing posts from September, 2010

Macro themes dominate the investing world

The rise of global macro investing and the increased importance of weighing macro themes in everyday investing were the subject of this recent Wall Street Journal piece entitled, "Macro Forces in Market Confound Stock Pickers" (Hat tip: Abnormal Returns).

An excerpt from that piece:

"The market turmoil has battered many investors over the past few years. But for stock pickers like Neuberger Berman LLC's David Pedowitz, it has made their entire investing approach feel like an exercise in futility.Mr. Pedowitz buys and sells stocks based on research and analysis of individual companies. His investment strategy, he says, has been upended by a tidal wave of "macro" forces—big-picture market movers like the economy, politics and regulation.
More and more investors aren't bothering to pore through corporate reports searching for gems and duds, but are trading big buckets of stocks, bonds and commodities based mainly on macro concerns. As a result, al…

Recession Is Over! (if you want it)

Rejoice: the recession is over, at least according to the NBER's Business Cycle Dating Committee, which recently declared that our latest recession ended in June 2009.

This is awesome news for those of us living in September 2010 and in a little sphere of existence I like to call, "the real world". We can now celebrate the official end of what's been dubbed, "The Great Recession", a six quarter period of negative growth that now stands as a post-war record.

I'm sure Americans will be pleased to know that the GDP numbers and government unemployment statistics, which purposely gloss over the problems of longer-term, structural unemployment by omitting discouraged workers from the tally, are now signalling a light at the end of the economic tunnel.

We discussed the silliness (and uselessness) of the NBER committee's recession pronouncement rituals back in December 2008, when the same committee officially blessed the start of our "now-ended" slow…

Wisdom of Burton Pugh, 1930s stock trader

Found an interesting post from the Crosshairs Trader on the, "Wisdom of a Depression Era Stock Trader", Burton Pugh.

Since I'm always interested to learn more about traders and investors of the past, I thought I'd pass this along. Not only do we get to learn about a market student and trader of the past, we can also get an insight into his trading methods and market philosophy.

Here's an excerpt from Crosshairs Trader's post on Pugh:

"Burton Pugh, a well known trader, market commentator, and writer in the 1930s wrote numerous books, one of which discussed his trading methodology and the psychology behind it. Even after 80 years some things never change and most likely never will. Here is a list of some of the great nuggets of wisdom found in his book A Better Way to Make Money.1. The secret to losing money in the market is to know why. “The losers “were ‘playing the market’, not using it intelligently. The fellow at the other end of the deal, who…

Must hear interview with John Burbank of Passport Capital

Earlier in the week, we posed this question: who are the top global macro investors of today?

We started on the road to answering that question first by posing it to you (we're always interested to hear about up and coming investors from our many industry-savvy readers), then followed up by spotlighting Michael Burry's emergence as a global macro investor.

Today we shift gears by sharing an excellent Benzinga interview with an established star of the macro hedge fund world, John Burbank of Passport Capital.

You may already know that Burbank and Passport were thrust into the limelight when, like Michael Burry, their 2007 returns were boosted by short positions in the subprime housing market.

What you'll hear in this interview (transcripts: part 1, part 2) is how Burbank got his start in trading and investing and how he arrived at his global macro approach. There are too many interesting points to outline here, but be sure to listen to the full interview to hear his insights…

Michael Burry: an up and coming macro star?

Michael Burry is best known for his successful subprime CDS short trade during the great housing bubble of the mid-2000s (recently detailed by Greg Zuckerman in The Greatest Trade Ever, and in Michael Lewis' The Big Short).

What you may not know about Burry (if you haven't perused the ex post facto celebratory literature) is that he began his career as a value investing med student sharing ideas & research with fellow stock pickers on popular message boards like Silicon Investor, as well as on his blog, the now defunct valuestocks.net.

He then founded Scion Capital, a hedge fund devoted to his own unique brand of value investing and short speculating. As a witness to the relentless rise in real estate prices and the simultaneous plunge in borrowing standards for home mortgages, Burry decided to become a self-taught expert in subprime mortgage lending and the market for asset-backed securities based on these loans. His fund soon shifted its focus to shorting subprime bonds vi…

Who are the top macro investors of today?

During last week's MacroTwits discussion on StockTwits TV, Eric Jackson of Ironfire Capital posed a very worthwhile question to the group: who are the top global macro traders & investors of the day and what can we learn from them?

For those who may not know, global macro is a term used to describe a largely "top-down" approach to speculating and investing across multiple asset classes and locales. Macro traders and hedge funds often take a big picture view of emerging trends and geopolitical events and express their positions accordingly by speculating in any number of markets, be they debt, futures, currencies, or international shares.

The names of some now-legendary macro traders are probably familiar to most investors: George Soros, Jim Rogers, Stanley Druckenmiller, Louis Bacon, Paul Tudor Jones. But who are the rising stars and top practitioners of this investing style today?

That's a question we're going to examine a bit further in the weeks ahead. We'…

Features of the Week

Some worthwhile items of interest gathered for you in our Features linkfest:

1. Why saving is right and economists are wrong - Minyanville.

2. "My honest word": a translated interview with Vladimir Putin - Russia Watchers.

3. 7 things to do to improve your trading performance - The Kirk Report.

4. Our ongoing recession: stimulus-fueled recovery - Sense on Cents.

5. Castro: "Cuban model doesn't work for us anymore" - Credit Writedowns.

6. Media: How Fred Wilson killed Inc. Magazine - Zerobeta.

7. Reflections on the Sovereign Debt Crisis - Edward Chancellor at GMO.

8. To embrace death is to embrace life - The Financial Philosopher.

9. Fearless fall predictions & the illusion of knowledge - Derek Hernquist.

Enjoy the links & reading material, and thanks for stopping by. You can follow us on Twitter for timely financial updates and via our blog RSS to catch all our posts. Have a good weekend!

Michael Burry bullish on farmland, gold

Michael Burry, the California investor who profited by foreseeing the subprime mortgage collapse, is investing in farmland, small tech companies and Asian stocks, and gold.

Bloomberg has the details:
" “...I believe that agriculture land -- productive agricultural land with water on site -- will be very valuable in the future,” Burry, 39, said in a Bloomberg Television interview scheduled for broadcast this morning in New York. “I’ve put a good amount of money into that.” Burry, as head of Scion Capital LLC, prodded Wall Street banks in early 2005 to create credit-default swaps to bet against bonds backed by the riskiest home loans. The strategy paid off as borrowers defaulted, letting his investors more than quintuple their money from 2000 to 2008, according to Michael Lewis’s book “The Big Short” (Norton/Allen Lane). Burry, who now manages his own money after shuttering the fund in 2008, said finding original investments is difficult because many trades are crowded and as…

Niall Ferguson on entrepreneurial freedom and innovation

I am presently watching Niall Ferguson speak on entrepreneurial freedom in the global financial system, a presentation given at the St. Gallen Symposium 2010.

According to Professor Ferguson, the innovations brought about during the industrial revolution not only increased the efficiencies of goods manufacturing, it also made it easier for the very people who made those goods to buy more. These advances in economic ingenuity and processes are at the heart of rising living standards and economic growth.

Ferguson begins this lecture with some frank talk about Americans' delusions over their rapidly rising wealth twice over a ten year period (first in the dot com bubble, followed by the real estate boom); he then moves on to address the realities of economic decoupling, as seen in the recession in the developed world vs. slowing growth in developing economies.

He then offers a quick rundown of the factors which brought on the recent financial crisis, leading up to a historical …