There They Go Again…Again – Howard Marks Memo

Some of the memos I’m happiest about having written came at times when bullish trends went too far, risk aversion disappeared and bubbles inflated. The first and best example is probably “bubble.com,” which raised questions about Internet and e-commerce stocks on the first business day of 2000. As I tell it, after ten years without a single response, that one made my memo writing an overnight success.

Another was “The Race to the Bottom” (February 2007), which talked about the mindless shouldering of risk that takes place when investors are eager to put money to work. Both of those memos raised doubts about investment trends that soon turned out to have been big mistakes.

howard marks

Those are only two of the many cautionary memos I’ve written over the years. In the last cycle, they started coming two years before “The Race to the Bottom” and included “There They Go Again” (the inspiration for this memo’s title), “Hindsight First, Please,” “Everyone Knows” and “It’s All Good.” When I wrote them, they appeared to be wrong for a while. It took time before they were shown to have been right, and just too early.

The memos that have raised yellow flags in the current up-cycle, starting with “How Quickly They Forget” in 2011 and including “On Uncertain Ground,” “Ditto,” and “The Race Is On,” also clearly were early, but so far they’re not right (and in fact, when you’re early by six or more years, it’s not clear you can ever be described as having been right). Since I’ve written so many cautionary memos, you might conclude that I’m just a born worrier who eventually is made to be right by the operation of the cycle, as is inevitable given enough time. I absolutely cannot disprove that interpretation. But my response would be that it’s essential to take note when sentiment (and thus market behavior) crosses into too-bullish territory, even though we know rising trends may well roll on for some time, and thus that such warnings are often premature. I think it’s better to turn cautious too soon (and thus perhaps underperform for a while) rather than too late, after the downslide has begun, making it hard to trim risk, achieve exits and cut losses.

Since I’m convinced “they” are at it again – engaging in willing risk-taking, funding risky deals and creating risky market conditions – it’s time for yet another cautionary memo. Too soon? I hope so; we’d rather make money for our clients in the next year or two than see the kind of bust that gives rise to bargains. (We all want there to be bargains, but no one’s eager to endure the price declines that create them.) Since we never know when risky behavior will bring on a market correction, I’m going to issue a warning today rather than wait until one is upon us.

I’m in the process of writing another book, going into great depth regarding one of the most important things discussed in my book The Most Important Thing: cycles, their causes, and what to do about them. It will be out next year, but this memo will give you a preview regarding one of the most important cyclical phenomena.

Before starting in, I want to apologize for the length of this memo, almost double the norm. First, the topic is wide-ranging – so much so that when I sat down to write, I found the task daunting. Second, my recent vacation gave me the luxury of time for writing. Believe it or not, I’ve cut what I could. I think what remains is essential.

Read the complete article here

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The Greatest Ever?

The Federer Express chugs on, merrily eclipsing all the records in his way and at the same time winning over friends and opponents with his ruthless display on the court.

Roger Federer finally broke the 14 Grand Slams record of Pete Sampras by winning the Wimbledon this weekend beating Andy Roddick of the US in a 5 set thriller.  The final set went on for an astonishing 95 minutes.

cup-federer-main-630

I was expecting to see another sobbing Federer at the end of the match, but it seems he managed to keep his emotions under perfect control.   An amazingly cool and composed player who very rarely loses his cool both on and off the pitch.  For a growing up kid, there is no better role model in Roger Federer.

He’s never been seen to yell either at the opponent / match officials, doesn’t spit on the ground, is modest about his achievements, but sometimes he does surprise us with his comments about the absolute confidence he has in his own game.

roger_federer

It would be easy to say that Federer won the last remaining Grand Slam, the French Open simply because Rafael Nadal was knocked out early in the tournament. And that Federer didnt have to meet his most decisive opponent in the finals.  But the fact is that it doesnt take away the sheen from his achievements.

Roger Federer’s Grand Slam victories

2003 – Wimbledon
2004 – Australian Open
2004 – Wimbledon
2004 – US Open
2005 – Wimbledon
2005 – US Open
2006 – Australian Open
2006 – Wimbledon
2006 – US Open
2007 – Australian Open
2007 – Wimbledon
2007 – US Open
2008 – US Open
2009 – French Open
2009 – Wimbledon

For a person who has achieved possibly everything that men’s singles tennis has to offer, it would be very tempting to either walk away from it all or to find motivation to save that one next set point or match point.   But knowing the champion that Federer is, am sure he will be back to entertain us, to show us the sheer joy of winning and most importantly that you dont need to be a brash, abusive, megalomaniac to be a champion.

All rise for the greatest tennis player ever.  Roger Federer.

Above pic source:  Din and Noise & IBNLive

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WTF – Fake Iron Man & Internet hoaxes

advani

Our fake ‘Iron Man’ and the eternal Prime Minister in waiting, LK Advani has fallen for a simple internet hoax.  Ya, the same kind of hoax mails that propagate that 30% of all Indians populate NASA, that 25% of all Microsoft employees are Indians etc..

Read Manish’s post as he busts the hoax that is popularly going round on the internet mentioning that almost US$ 5.7 trillion of Indian cash is being hoarded in Swiss banks and that he will bring them back to India.

Self-appointed Prime Minister Lal Krishna Advani apparently is too excited about the Internet.  He suddenly is receiving chain mails like all of us – and has decided the government policy should be decided based on these email forwards.

Mr.Advani now wants all black money stashed away in Swiss banks by Indians brought back. And he promises to do that if he comes to power. Well,  how a man who couldn’t negotiate a few hijackers – will arm-twist Swiss bankers is beyond me.

Read the rest of the post here.

We have such morons staking claims for the next PM’s gaddi.  I have always believed that leaving the Prime Minister’s reigns in the hands of a communal Advani (the one responsible for all the communal blood letting in India with his rath yatras) is foolhardy.  And now, with these comments, the belief that he is not only communal, but also a nutcase is only confirmed.

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Singapore pics

Full2 bijee at work.  Blogging is almost non-existent these days.  Though, am trying  to read as many blogs as possible.   Meanwhile, some random pictures of Singapore taken over the past month.

esplanade-and-business-district

spore-skyline

Singapore’s skyline (business district in the background)

fullerton

Fullerton hotel

t3

Changi Airport – Terminal3

t3-1

Changi Airport – Terminal3

skytrain

Skytrain @ Changi Airport – Terminal3

sentosa-beach

Beach @ Sentosa

south

psa

Cranes idle @ the port

psa1

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Marc Faber's prediction comes true

In February, Marc Faber in an interview with CNBC-TV18 predicted that the Indian market (BSE) was on a bubble and that it would fall to 14000 – 12000 (the market was around 18000 then).  What a fall it has been since.  We have already touched 8000, though the markets have slowly inched upto 9500, we are still not out of the woods.  With the US and other major economies into a recession, we are indeed looking at some tough months ahead.

I had made light of Marc Faber’s predictions then.  Now i have ended up with my foot in the mouth 😉

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Now reading – The Kaoboys of R&AW

A fascinating read about the evolution and journey of the ultra secretive Indian spy agency, Research and Analysis Wing (RAW) by a former intelligence officer of the organisation, B Raman.  The book tracks the birth  and the baby steps of the spy organisation under its founder father, Rameshwar Nath Kao.  So famous was the former spymaster and officers in it that the spies working in RAW were fondly called KAOboys (as in, the boys of Kao).

A detailed writeup of the book once i finish it.

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Movie Reviews & 500th post

Edit: Ya, just saw that this is my 500th post.  Yay 😀

Cold Mountain (2/5)

Inspite of the splendid acting, cinematography and music, the movie left me cold. Dunno why.

Inside Man (2.5/5)

Spike Lee directed movie starring Denzel Washington, Jodie Foster and Clive Owen.  Sure recipe for a taut thriller, right? Unfortunately not. But its not a bad watch.  Watch out for the opening and ending credits of the movie with AR Rahman’s Chhaiya Chhaiya playing in the background. No reason for the song to play there.  It felt more or less like watching an english movie with an item song in it 😉

Prom Night (0/5)

Pathetic, boring, stupid slasher flick.

Drona (-1/5)

Abhishek Bachchan and superhero? hahahaha.  That is the joke of the century.  Wish wifey dear Aishwarya would do something about hubby’s flabby body. Half of the time, Abhishek is so sissy and stands with his heads bowed that you wonder if the superhero is suffering from a bad case of ‘inferiority complex’.  And now, Goldie Behl (who?) is planning a sequel.  May God save all of us from this Groana.

For the first time i have used a negative rating and the honour goes to Drona.

Kidnap (1/5)

A unique movie where mother (Vidya Malvade) and daughter (Minissa Lamba) compete on screen to see who has the better cleavage. Trust me, its still not worth it.  Sanjay Dutt looks haggard and wonders what the eff he was doing in this movie. As for Imran Khan, he has miles to go before he can even be a patch on his mamu jaan, Aamir Khan.  Sanjay Gadhvi, the director is an a$$.  He is better off in the company of the morons from Yash Raj.  Only they have the balls to promote his movies.

Pictures courtesy: Santabanta and IMDB

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Marc Faber's comment on the US economy

The federal government is sending each of us a $600 rebate.

If we spend that money at Wal-Mart, the money goes to China.
If we spend it on gasoline it goes to the Arabs.
If we buy a computer it will go to India.
If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala.
If we purchase a good car it will go to Germany.
If we purchase useless crap it will go to Taiwan and none of it will help the American economy.

The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US.  I’ve been doing my part.

More about Marc Faber at GloomBoomDoom

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Blog anniversary & Weekend movies

In the whole mess, i forgot something.  On 24th June 2008, i completed 4 years of blogging.  In this period, I moved from Fullhyderabad to Rediffblogs to WordPress.  Never thought i would survive so long.  So ya, iam amazed at my perseverance (if at all this does count).  I have no intentions of stopping even after marriage.  Am sure the married life will give me even more topics to write about.  Sure wifey wont mind me spilling all the ‘national secrets’ here.

Anyways, another weekend passed by and before i could realise, its monday. Lots of work to wind up before i leave for a 2 week holiday.  Yet to start packing, but then iam the same old lazy bum always.  End up packing at the last moment.  And then when i reach the destination, i realise that i forgot to carry something important.  Surely not passport or tickets, but something else important.

Watched another 3 movies this weekend.  An English, Telugu and Hindi movie.

Gamyam (Telugu)

A refreshing movie instead of the regular crap doled out by the telugu industry.  The son of a rich industrialist, Sharwanand, heartbroken after his girlfriend (Kamalini Mukherjee) walks out on him, sets out on her search. In the process meets up with a petty thief (Naresh).  The story is about how the two guys influence each other during the search and how their mindsets change as the story progresses.  Chased by the police, naxalites and shot in some of the most green, beautiful and mostly rural places of AP, the movie is indeed refreshing.  Its a complete road movie and very well picturised.  A commendable effort by debutant director RadhaKrishna.

My rating **** (4/5)

The Untouchables

Well, what more can i say about this movie? Its a classic and stars one of my most favourite actors, Robert de Niro.  That one reason is enough for me to watch it. Though am not a great fan of Brian de Palma, i believe his movies are excruciatingly slow and painful to watch.  But i was surprised by this well paced thriller about a federal agent (Kevin Costner) who builds his gang of untouchables (Andy Garcia, Sean Connery and another guy) to take on the mob leader, Al Capone (Robert de Niro).

My rating: **** (4/5)

Summer 2007

The movie has a superb plot.  Its about the farmer’s suicides in Vidharbha region of Maharashtra.  A group of medical students on a rural project get embroiled in the politics of the village leading to disastrous consequences.  Had the director roped in some competent actors and a better script, this one could have been a better movie.  Instead he gets people like Sikandar Kher.  Man, he is an ape.  He is great competition to his buddy Abhi ‘Shake’ Bachchan when it comes to defining ‘butt ugly’.  Both equally pathetic actors.

My rating * (1/5)

Above pictures courtesy: Idlebrain, imdb, funkymoose and Santabanta

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Weekend movies

Have been watching a lot of movies these past few days.  Went to the library on Friday and picked up 4 more movies and watched them over the weekend.  Still got a few more to go.  A friend lent me his collection of the Godfather movie series (Part 1, 2 and 3).  Haven’t found time to watch them.  Then there are tons of books to read that i have collected over the years.  Some spring cleaning bought them out of the dusty cupboards. Cant believe that i spent so much of money on books that are idling away in some corner of the bookshelves.

Rebel without a cause


My rating **** (4/5)

You dont mess with the Zohan


My rating * (1/5)

Tomorrow we move (French)

My rating ** (2/5)

Return of Magnificient Seven

My rating ** (2/5)

The Towering Inferno

My rating **** (4/5)

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