AccorHotels to bring global brands to India

French hospitality major AccorHotels is exploring the possibility of bringing some of its international brands to India, besides strengthening existing brands, said a top executive. “Currently, we have 10 brands operating in India out of the 30 established brands,” said Jean-Michel Casse, chief operating officer — India and South Asia, AccorHotels. “Raffles and Banyan Tree will be coming to India soon.” In June 2017, AccorHotels entered into a management pact with Surya Palace Hotel owners in Vadodara and rebranded it as Grand Mercure Vadodara Surya Palace. This will be followed by converting an existing property in South Goa to the Novotel brand.

As of now, AccorHotels has 53 properties with 9,700 ‘keys’ (rooms) operating in India. By year end, this will increase to 55. There are plans to add 30 more over the next five years to take the total number to 15,000 ‘keys’. Mr. Casse was in Chennai to inaugurate the first combo property in the city and second in the south (Novotel-ibis). The new property will start functioning from Sunday. The first combo property (Novotel-ibis) was opened in Bengaluru during 2011, followed by New Delhi (Novotel-Pullman).


“Following six years of successful run of Bengaluru hotels, we decided to start a combo property here. Chennai is already home to Novotel and ibis hotels along with Formule1. The next Novotel Hotel will be opened at Chamiers Road and Mercure in Oragadam, by April 2018,” he said. In Chennai OMR, Novotel has 153 ‘keys’ and ibis 189 ‘keys’. Novotel and ibis remain the most prominent brands with a network of 15 and 18 hotels respectively across the country, he said. “It is very difficult to measure the benefits of combo hotels. But it certainly saves around 15% of the capital expenditure with common infrastructure facilities such as air conditioners, laundry, kitchen and staff,” he said.

Daniel Chao, area general manager, ibis Chennai OMR, said, “Professionals, individuals and business travellers are the target audience. As part of a special inaugural offer, the hotels offer the scheme of ‘stay for three nights and pay for two nights’.”

  • The Hindu


3 Career Tips for Millennial Women

millenial woman
Photo courtesy of Pixabay by Janeb13

It’s official: millennials have already surpassed the number of Gen Xers in the workplace. By 2025, millennials (those born during or after the 1980s) will account for roughly 75% of the workforce. More than half of that number will be millennial women.

Are you one of the millions of millennial women who will be starting your career this year? If so, here’s some advice for young women entering the workforce for the first time:

Tip #1 – How to ensure your career advancement

What are your long-term career goals? Whether you plan to climb the corporate ladder or run your own business, it can be helpful to find a mentor. Think of a mentor as a loyal, wise advisor who will offer advice, answer your questions, cheer you on, and steer you towards a path of long-term success. If you live in the United States, your local small business association can help recommend mentors for starting a business. If you work for someone else, you can probably find a trusted colleague or coworker who is willing to mentor you.

Remember to take advantage of available resources. If you can’t afford an opportunity, get creative. The Silver Spoon Foundation, for instance, is a nonprofit providing peer-funded scholarships to “young and driven” millennials looking to attend career advancement conferences and networking events throughout the United States. Some conferences, like Emerging Women, offer free attendance in exchange for volunteering your time to help with the annual event.

Tip #2 – How to navigate sexism in the workplace
If, at some point, you encounter the almost inevitable sexism in your career, there are ways to handle it like a (lady) boss. Remember that sexism is usually subtle. Even the most family-friendly and forward-thinking organizations might occasionally hire people who engage in sexist behaviors. And sometimes, even the most progressive and well-meaning co-workers might accidentally make an unintentionally insensitive statement.

Fighting sexist comments doesn’t always mean you have to boldly call someone out or report them to human resources. Sometimes, it can mean calmly educating them with the facts. According to Huffington Post writer, Emma Gray, “Statistics can be your verbal karate. Anytime somebody tries to argue against this stuff, I just try to hit them with data.”

If it would be helpful to have some support during this process, find a Feminist Fight Club or a group of trusted business women you can turn to in your local area. (Pro tip: if there isn’t a group like this in your area? Start one! If you can’t get people to meet in person, Facebook groups can work wonders!)

Tip #3 – How to crack the ever-present glass ceiling
There is a definite pay gap between men versus women working the same job. Luckily, millennial women face less of a wage gap than women of any previous generation. You can continue this positive trend by asking for more money, practicing assertiveness, and being open to negotiating pay. You can further work to crack the ever-present glass ceiling by climbing the corporate ladder to earn a leadership position in your company. Or better yet – you can branch out as an entrepreneur and start your own company.

It’s an exciting time to be a millennial woman. As you enter the workforce, you are starting your career during a time when your generation is redefining what it means to “have it all.” You can choose whether you want to work for the institution or work for yourself. You can choose what your work-life balance looks like. You can even redefine gender roles in the workplace and show the world what it really means to be a “lady boss” in 2017. What groundbreaking things will you accomplish in your career this year? Only time will tell, but if you’re reading this article, then you’re clearly motivated and are probably off to a good start.

  • Dean Burgess (Guest Post Contributor)


Why Is Hong Kong One Of The Best Destinations To Visit?

Hong Kong is one of the most exotic tourist destinations in the planet: it is amassed with all sorts of beautiful sceneries, one of a kind monuments, fun-filled activities found nowhere else in the world. In a bid to showcase its magic, today we shall be taking a look at what the city dubbed the “Pearl of the Orient” has to offer:

Hong Kong is a shopper’s paradise
If you have a penchant for shopping, then Hong Kong is your equivalent of heaven on earth. The city has an abundance of major supermarkets with countless street markets and bazaars at the heart of all the buying and selling. Clothes, electronics, souvenirs, home furnishing, cosmetics you name it, anything you need you are sure to find it. Most popular shopping locations include the Temple Street and the kilometer-long market on Tung Choi Street.

Hong Kong SkylineUnrivalled sceneries
You’ll be spoilt for choice in terms of beautiful sceneries as the city has no shortage of them. First up is the Tsim Sha Tsui Promenade that offers a breathtaking view of nature’s work at its finest. From there, the mesmerizing skyline of the Hong Kong Island is visible alongside many of the city’s glamorous architectural prowess.

Another that offers quite the vantage point of the city’s skyline in all its glory is The Peak in Mid-Levels. The anvil-shaped structure provides one of the best viewing platforms in the city from which to take in the amazing show put on by Hong Kong’s army of unbridled skyscrapers. The city truly comes into its own at night time with an array of all sorts of mesmerizing lights bringing it into life. It makes for a scene right out of the Cinderella movies.

Rich blend of culture
Hong Kong is a concussion of many cultures and as such the city is amassed with numerous fairs and festivals all year round; there’s never a dull moment. These include the Chinese New Year, sports, Halloween and general art celebrations which feature a display of ancient culture and tradition, eye-watering fireworks and the dance and routines to match. What’s more, these events feature a variety of delicious cuisines to keep your taste buds occupied.

hongkong buildingsHong Kong is the city of Stars 
Hong Kong’s is renowned for producing a great deal of talented martial art superstars who went on to cement their name not only in the sands of time but also in stone in the famous “Avenue of Stars.” Located in Tsim Sha Tsui, the avenue contains an assembly of legendary figures (Bruce Lee, McDull, Anita Mui among many others) of the country’s movies industry immortalized in artistic statues. The “Garden of Stars” also encompasses handprint plaques of the industry’s greats and classic movie scenes brought to life in a mural; all of which can be experienced from regular exhibition displays.

Unforgettable Disney Land
A marvel inspired ride, Star Wars theme experience and the ultimate Iron Man display all ensure that your night is as magical as it gets. The Hong Kong Disney Land is a captivating destination for children and adults alike puts on a light show second to none thanks to state of the art technology.

hongkong harbour

Timeless Monuments
The Clock Tower standing elegantly at a junction where the center of the former Canton Terminus used to be puts on dazzling display with the granite tower complimented beautifully by shades of red brick. The tower not only serves as eye candy but also harbours within its walls tales of a century-old past of the steam age.

Soothing massages
Well, if you’re wondering why you’d travel across borders just to get a massage, then you most certainly have not been at the receiving end of a naturist massage in Hong Kong. Naturist massages have featured in countless films about the city and that’s because they are simply heavenly. Executed by highly skilled professionals, the art has been honed over time to provide a mind-shattering unforgettable experience that’ll leave you begging for more. Hong Kong is flooded with parlors and spas providing naturist massages and offers a great way to bring the curtains down on a fun-filled day.

Final Verdict
Hong Kong is not called the “Pearl of The Orient” for no reason; it is a buzz of all sorts of marvels and unmatched festivals making it one of the best places to visit. If you haven’t quite put a finger on where to go on your next vacation, then think no further. Hong Kong is the place to be.

  • Alex Dragas (Guest Post Contributor)


Bruce Berkowitz Liquidates Hedge Fund

Investor Bruce Berkowitz is shutting his hedge fund and distributing its holdings to investors, including a stake in Sears Holdings Corp. Berkowitz’s Fairholme Capital Management reported the fund’s unwinding, without naming it, in a U.S. Securities and Exchange Commission filing on Oct. 13. The fund is Fairholme Partnership, which Berkowitz created roughly five years ago, according to a person familiar with the situation. Berkowitz, a contrarian and the second-largest Sears investor, is known mostly for his mutual funds and has struggled this year as some of his biggest investments have declined. He made the move in his private fund before stepping down from the ailing retailer’s board Monday. When money managers shut down a hedge fund, they often distribute the securities in the fund rather than selling and parceling out the cash to investors to avoid flooding the market with shares. It’s also done for tax purposes.

bruce berkowitz

As part of the shut down, the fund distributed 3.14 million Sears shares and warrants. Berkowitz, a Partnership investor, personally received 727,816 Sears shares and warrants on 810,345 shares, according to the filing. The remaining holdings went to Fairholme clients who were previously investors in the hedge fund. Berkowitz joined the Sears board in February 2016 and has been bullish on the department store chain even as it has bled money. The Fairholme Partnership had $409.3 million of gross assets as of April, according to a regulatory filing. In statement released Monday, Fairholme said Berkowitz joined the Sears board to better communicate his views about the retailer. “Mr. Berkowitz believes that he has achieved that objective,” according to the statement. The investor’s $2.1 billion Fairholme Fund, a registered mutual fund, has lost 6.6 percent year-to-date. It has lagged 99 percent of rivals over five years, according to data compiled by Bloomberg. In his 2017 semi-annual report to investors, Berkowitz reiterated his view that Sears has potential. “Investors may disagree on the exact path forward for Sears, but the company owns many valuable assets and there is huge value in optimizing all of them,” he wrote. Those assets include real estate that the company controls and its competitive position as an appliance seller, he said. The liquidation involves both the domestic and offshore versions of the hedge funds. Berkowitz’s Fairholme Fund holds stakes in mortgage-finance giants Fannie Mae and Freddie Mac.

  • Bloomberg


A Thesis on the US Airline Industry

The premise of our investment is simple: The next few quarters are uncertain at best, but I believe that industry demand and earnings will be far higher over the next several years. The question, then, is whether certain individual businesses have the resilience to reap the benefits of that growth, and whether the offered price gives us an attractive return with room to be wrong. In both cases I believe the answer is yes. Most domestic airline equities suffered sharp price declines this summer due to a confluence of factors, and I believe this creates an attractive opportunity over a multi-year horizon. As always, the test remains our willingness to own these securities – partial ownership stakes in businesses – for the next five or 10 years. On that basis, I’m comfortable having a material portion of our capital invested in these companies.

Before going further a brief comment on the industry is required. (There is more background information in the Appendix.) The domestic airline industry has undergone a dramatic restructuring in the past 5-10 years and I think it will support a bright future. I’d had an interest in the sector for years, but a combination of inertia and an ingrained bias against airline investments had kept me from doing any meaningful research. When I finally did, beginning in the summer of 2016, a few features stood out:

us airline industry

Industry structure and financial strength – Competition remains tough in many individual markets, but consolidation has changed the overall pricing dynamic and created a level of profitability and stability that is unprecedented in the industry. Current operating margins are generally in the 10-20% range – a level that generates ample free cash flow – and I estimate that most airlines will generate significant profits even in a downturn. Balance sheets and cost structures are also far healthier and they will be able to withstand future cyclical downturns and exogenous shocks.

Fares and fees – It is far cheaper to fly in the U.S. today than it was a few decades ago but pricing is also far more rational. This is still a high-fixed and low-variable cost business, but consolidation has enabled the airlines to compete without destroying each other in the process. As a partial offset to lower inflation-adjusted fares and the recent capital spending, the airlines now generate material revenues and high-margin profits from non-ticket fees and loyalty/mileage programs tied to credit cards. Cyclicality has not been eliminated but it has been muted to a large degree.

Ultra-low-cost carriers (ULCCs) – Customers want low prices, and that simple fact dictates the entire business model. An airline taking a passenger from point to point is offering something close to a commodity, and price is by far the most important factor in the purchase decision. There is some customer loyalty for certain companies, and mileage programs can help, but these are not true brands that affect behavior on a large scale. A customer with his own money is likely to pick an airline that will save him $50, and the business with the lowest cost will often win in these circumstances. Low costs that are “reinvested” in lower prices can also create an enormous advantage over time. Airlines like Southwest and Ryanair are good examples of these concepts, and when I pulled my head out of the sand to look at what made them two of the world’s most successful businesses what I saw would be familiar to any analyst looking at Costco, Amazon, Nucor, or IKEA. A cost advantage is hard to establish and easy to lose, but if maintained it makes life miserable for the competition. In the U.S. market the ULCCs have a material and growing cost advantage that will enable years of future growth at attractive margins and returns on capital.

  • Read the rest of the interesting article here


Amazon Is Now Getting Into Sportswear Inc. is tapping some of the biggest athletic-apparel suppliers to make a foray into private-label sportswear, according to people familiar with the matter, setting the stage for further upheaval in an already-tumultuous industry. Makalot Industrial Co., a Taiwanese vendor that produces clothing for Gap Inc., Uniqlo and Kohl’s Corp., is making apparel for the Amazon line, a person with knowledge of the arrangement said. Eclat Textile Co., another Taiwanese supplier, is contributing to the effort as well — a relationship first noted by SinoPac Securities Corp. analyst Silvia Chiu.


The project is new and long-term contracts haven’t been signed yet, according to people involved. The manufacturers are producing small amounts of products for Amazon as part of a trial, said the people, who asked not to be identified because the effort isn’t being promoted yet. Amazon has previously ventured into private-label fashion, offering office clothing, jackets and dresses under names like Goodthreads and Paris Sunday. But pushing into activewear would bring fresh competition to some of the world’s biggest athletic brands. Eclat’s involvement is especially noteworthy because it makes clothing for Nike Inc., Lululemon Athletica Inc. and Under Armour Inc. and has key expertise in making high-performance sportswear. Amazon, based in Seattle, didn’t immediately respond to a request for comment.

The move comes as unwelcome news for activewear companies already struggling to stand out in a sea of competition and discounts. Last month, Nike said it expects sales to decline again this quarter in North America. Under Armour, meanwhile, cut its annual sales forecast in August. Lululemon has fared better this year, but it too is facing steeper competition in the market for yoga pants and other sporty apparel. That cutthroat environment in North America has pushed it to look overseas for growth. Amazon also has been hiring staff with know-how in private-label athletic apparel. In January, Kirsten K. Harris joined the company as a senior brand manager for Amazon active apparel, according to her LinkedIn profile.

She previously headed up product development at Nordstrom Inc.’s activewear brand for women, Zella. Before that, she held leadership roles in product development for Eddie Bauer and Nike. Harris didn’t respond to a request for comment through LinkedIn. Amazon has developed its own brands in part because they fill gaps in its inventory. If customers are searching for a certain type of shoe or skirt, and don’t see much of a selection from established brands, Amazon wants to be able to offer its own options. Oftentimes, shoppers may not realize that the names — such as Scout + Ro and North Eleven — are owned by Amazon. This also sends a message to brands reluctant to sell their full inventory on Amazon. If shoppers can’t find your products on the site, Amazon will make its own substitutes and become your competitor. For suppliers like Eclat, forging alliances with e-commerce companies reflects shifting demand from consumers, Chiu said in a note.

“Online apparel sales accounted for 19 percent of all apparel sales in 2016, up from 11 percent in 2011,” Chiu said. “Online sales are primed for strong growth.” Eclat expects new clients to contribute as much as 12 percent of 2018 sales, she said. The shipments to Amazon began in August, according to Chiu. “The contribution this year will be small, but the potential is high,” she said.

– Bloomberg


Bitcoin Can Now Buy You Citizenship in Vanuatu

Got some bitcoin burning a hole in your digital wallet? And paradise on the mind? You could use it to buy a second passport. Vanuatu, a South Pacific archipelago of some 80 islands, will now let outsiders use the volatile cryptocurrency to apply for so-called investment citizenship. Fork over the equivalent of about $280,000, and your family of up to four can receive passports from what the New Economics Foundation, a U.K.-based think tank, calls the fourth-happiest country in the world. (It ranked No. 1 when the list was first published in 2006, but like the vagaries of the market, happiness can be a fleeting thing.

With bitcoin reaching a record price of $5,209 on Thursday, more than five times its value at the start of the year, passports for the whole clan cost about 53.8 bitcoin. Vanuatu isn’t the only island that offers citizenship for a price—the list includes Antigua, Grenada, Malta, and St. Kitts and Nevis—but it’s the first to allow payments via bitcoin. The development was announced in a press release on Investment Migration Insider, a website focused on investment citizenry. Tourists watch eruptions in the crater of the active Mt. Yasur on Tanna, an island in Tafea, Vanuatu. The volcano is continually active at a low to moderate level. Visitors may approach the rim to view the crater eruptions when the activity level is not dangerously high.


Vanuatu citizenship offers several advantages. The country has the 34th-most-“powerful” passport in the world, providing visa-free visits to 116 other countries, according to the Passport Index, a list of rankings maintained by Arton Capital, a company that facilitates foreign residence and citizenship applications. Vanuatu falls right below Panama and Paraguay (tied) and above Dominica; the U.K. is in a tie at third place, the U.S. at fourth, and Russia at 40th. The country also has no income, inheritance, or corporate tax. It’s not even customary to tip there, according to the Vanuatu Tourism Office. The archipelago is relatively accessible: about a three-and-a-half-hour flight from Sydney to Port Vila, the capital. And scuba aficionados will appreciate that it’s home to the world’s largest diveable wreck—the SS President Coolidge, a luxury liner-turned-troop ship that sank during World War II.

Should you really want a place to escape, Vanuatu’s abundance of islands and relatively small population (about 290,000) mean that your own private island may be within reach. The least expensive one currently on the market, according to real estate website Private Islands Online, is Lenur, priced at about $645,000. For that you get 84 acres including three sandy beaches, a handful of sleeping bungalows, and an open-plan kitchen. Most of the property is covered in coconut, fruit, and nut trees. Still, like investing in cryptocurrency in the first place, tropical life doesn’t come without risks. Earlier this month, residents had to be evacuated from the northern island of Ambae because its volcano, Manaro Voui, had rumbled to life and was spewing steam and rocks.

– Bloomberg


Ralph Lauren Won’t Let Go of His Shrinking Polo Empire

The first time fashion designer Ralph Lauren tried sharing control of his retail empire ended badly. The new CEO left after only 18 months. Creative clashes, they both acknowledged. Now the 77-year-old Lauren is making another bet on an outsider to help revitalize the company he founded a half-century ago. Patrice Louvet, a former Procter & Gamble Co. veteran, started as CEO in July amid promises of an amicable working arrangement. But Lauren, who often refers to the company as “my baby,’’ isn’t going anywhere. He remains heavily involved running the business, working at the Manhattan headquarters about four days a week, people familiar with the matter said. And he’s made sure that he retains control over the creative side of the business. Louvet’s contract contains a provision, largely unnoticed, that ties his hands. Lauren, who remains chief creative director, retains a final say in brand and creative decisions, as well as in hiring and firing senior executives in design and marketing areas, the contract states. The previous CEO, Stefan Larsson, 43, who left in May, had no such restraint.

ralph lauren

All this raises questions for a company that is struggling to reverse a three-year slump in same-store sales in a tumultuous retail environment. Retail experts say Ralph Lauren could use fresh thinking as it tries to revitalize a brand that has lost cachet. Even signature Polo Ralph Lauren polo shirts aren’t selling like they used to, losing business to hipper brands such as Vineyard Vines. While the company relies on an aspirational image of beaches and yachts, other retailers are turning to celebrities like singer Selena Gomez and model Gigi Hadid as their brand ambassadors. “He’s obviously someone with an iconic view and what he’s achieved is incredible,” said Simeon Siegel, an analyst at Instinet LLC. “That said, retail has evolved and the company has not responded to that as fast as its peers. That’s the issue.’’

This year, Ralph Lauren dropped off a ranking of the 100 best global brands for the first time since 2011, according to consultant Interbrand, which looks at things like financial return and customer loyalty. The company has been closing retail locations, including the flagship Polo store on Fifth Avenue, and its stock has dropped by more than half from its peak in 2013. The shares, which declined 16 percent in the past year, fell as much as 2.3 percent on Thursday. “The combination of Ralph and Patrice’s experience lends itself to a powerful partnership,” the company said in a statement. “Together with the company’s leadership team, they are already evolving how our iconic brand is experienced and expressed, and we are encouraged by the early progress.” The 53-year-old Louvet said during an analysts’ call in August that Lauren was in charge of the creative side of the business and he would lead the company’s strategy, execution and business results.

Lauren’s longevity in retail fashion is unusual. He was 23 when he had his first big success. He convinced Bloomingdale’s to buy his wide ties when narrow neckwear was in vogue. His old-money styles have been followed and copied worldwide, and today he’s worth almost $6 billion, according to the Bloomberg Billionaires Index. He controls the majority of the company’s voting shares with his family. But the company, like other retailers, has been hit hard by the shift to online shopping from brick-and-mortar locations, forcing department stores to discount products. Ralph Lauren relies on retailers such as T.J. Maxx and Macy’s Inc. for more than 40 percent of its sales. Meanwhile, its product styling and marketing remain largely stuck in the past, retail analysts say. Ralph Lauren, which has historically succeeded on the back of its founder’s vision, continues to use him as a primary face of his company. Top pages of Polo Ralph Lauren’s Instagram account show old pictures of the founder and his family.

The troubles show up in sales of its polo shirt, which remains one of Ralph Lauren’s biggest revenue sources. The three best-selling full-priced polo shirts in the last six months are from Antigua, Nike and Moncler. Polo Ralph Lauren ranks 21st, according to fashion analytics company Edited. Analysts thought they saw signs of change in 2015 when Lauren, for the first time, stepped down as CEO and hired Larsson, a former H&M and Old Navy executive. He slashed more than 1,000 jobs and reduced the time it took to bring new fashion to the market. But Larsson and Lauren clashed over the CEO’s efforts to reinvent products, focus on core brands and bring in fresh design talent, according to people who declined to be named because the information is private. Larsson also faced resistance from employees close to the fashion idol. And there was a division between the creative and business operations. Lauren’s design team often pushed back suggestions from the wholesale group to align its products with what’s selling, the people said.

Larsson’s departure followed disagreement over his authority to overhaul the business, they said. He declined to comment, according to his representative. Louvet hasn’t yet detailed his strategy but told analysts he wants to improve the brand image, beef up the company’s online strategy and enhance the customer shopping experience. During 25 years at P&G, Louvet’s experience included running the global beauty business and fashion brands such as Gucci and Hugo Boss. There are signs that Ralph Lauren is trying to win back customers and create hype by bringing back its vintage pieces, for example. Its latest quarterly results showed it was making headway in getting customers to pay full price, even as same-store sales continued to fall. It will report its second-quarter results on Nov. 2. But Lauren and Louvet face more crucial decisions. Analysts have urged the company to reduce its roughly dozen brands to avoid consumer confusion, but that would mean sacrificing sales. And it needs to enhance its premium image and reduce its exposure in the mass market.

“A lot of his reputation is at stake on this,” Neil Saunders, managing director of GlobalData Retail, said of Lauren. “If this goes wrong again, it will tie back to him and investors will start to question whether he’s actually more of a liability or an asset.”

– Bloomberg


Warren Buffett on Tax Reforms, Markets & Investments

Well, valuations make sense with interest rates where they are. I mean, in the end you measure laying out money for an asset in relation to what you are going to get back, and the number one yard stick is U.S. governments. When you get 2.30 on the ten-year, I think stocks will do considerably better than that. If I have a choice of the two, I’m going to take stocks at that point. On the other hand, if interest rates were on the ten-year were five or six, you know, a whole different valuation standard for stocks. And we’ve talked about that for some time now.

tax reforms

Interest rates are gravity. If we knew interest rates were going to be zero from now until judgment day, you could pay a lot of money for any other asset. You would not want to put your money out at zero. I would have thought back in 19 — I mean, 2009 that rates would not be this low eight years later. It’s been a powerful factor, and the longer it persists, the more people start thinking in terms of something close to the rates they’ve seen for a long time. The one thing I’m sure of is that over time stocks from this level will beat bonds from this level. If I can be short the 30-year bond at 3 percent or something and long the S&P 500 and just have it put away for 30 years, stocks are going to far outperform bonds. The question is which variable is going to change. Everybody expects interest rates to change. But they’ve been expecting that for quite a while.

I don’t try to guess the stock market: I find businesses I like. But if I were to guess: if interest rates — if the ten-year moved up to 5 percent, stocks would be somewhat cheaper.

It’s been so wide I’ve written about it in annual reports. Stocks have been so much more attractive than bonds for a long time now and that’s partly intentional on the part of the fed. I mean, they want assets to increase in value and the way to do it was to reduce that gravity force of higher interest rates.

I think they expect it to increase, but the question is how much. If three years from now interest rates are 100 basis points higher than this, stocks will still be cheap at these prices. If it’s 300 or 400 basis points, they won’t look cheap. Janet Yellen doesn’t know what she would do three years from now. She’s got more of a job than –that’s a simple factor of the stock market. It’s interesting because the fed has said that they would like to see 2% inflation. That’s fairly recent. Paul Volcker would not have slept if he’d ever heard that in the 80s.

If the U.S. government is borrowing at ten years from you at 2.3%, and their own instrument, the fed, is saying ‘we would really like money to become more 2% a year or less,’ they’re not promising you very much in terms of real terms for saving.

Read the full interview here


Did Warren Buffett Kill Value Investing?

From 1957-1969, Warren Buffett’s partnership returned 2800%, or 29.5% a year*. Over the same time, the S&P 500 rose 153%, or 7.4% a year. Warren Buffett has been crushing the market for seven decades, but his early success went largely unnoticed. His name didn’t appear anywhere noteworthy until Adam Smith’s Supermoney, which wasn’t written until 1972. While his name gained traction in the investment community, it took many years before it became what it is today. Buffett is synonymous with investing, and If you type his name in the Amazon search bar, the machine spits back 1822 book results. His rise to ubiquity can be traced back to 1984, when he destroyed an efficient market hypothesizer.

value investing

On the 50th anniversary of Security Analysis, Buffett wrote an article in the Columbia Business School Magazine called The Superinvestors of Graham-and-Doddsville . A few weeks prior, Buffett faced off against Michael Jensen, a professor from the University of Rochester and the school of efficient markets. In the speech, which was translated into the article, Buffett told a story that would remove any doubt that value investors outperformance should be attributed to skill rather than luck. Imagine that 225 million Americans all flipped a coin. If you landed on heads, you lived to flip another coin. If this was repeated twenty times, 215 people would be expected to remain.

But then some business school professor would probably be rude enough to bring up the fact that if 225 million orangutans had engaged in a similar exercise, the results would be much the same…I would argue, however, that there are some important differences in the examples I am going to present. For one thing, if (a) you had taken 225 million orangutans distributed roughly as the U.S. population is; if (b) 215 winners were left after 20 days; and if (c) you found that 40 came from a particular zoo in Omaha, you would be pretty sure you were onto something. So You would probably go out and ask the zoo keeper about what he’s feeding them….A disproportionate number of successful coin-flippers in the investment world came from a very small intellectual village that could be called Graham-and-Doddsville.

From 1926 until the time that Buffett wrote this article, the Fama French U.S. Large Value Index, which did not exist until the early 90s, crushed the S&P 500. But you can see that until 1970, the red and black line were neck and neck. So all of the outperformance over this 58 year period came in the 14 years leading up to Buffett’s coin-flipping speech.

Read rest of the article here