Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

Comments

  • As the article noted, it would be interesting to see how he is currently invested, but the 30% cash is instructive. When reading this, I couldn't help but recall the FMI paper I posted earlier...as many of the themes are the same.
  • 30% cash for Baupost is a on the lower side, historically.
  • Agree. Highly regarded First Eagle and IVA global funds are also holding over 20-30% cash and small % of gold.

    Don't recall ever seeing Klasman portfolio. Certainly he is not following the index and he had only 3 bad years out of 34 years of investing. And that is pretty good.
  • I am 30% cash too.. and thinking I will go higher. Seth must be looking over my shoulder

    Wish my wife and kids would pay me what he gets to run their accounts
  • edited March 2017
    It all depends on one's situation and this is not intended to represent advice.
  • Wow, some or most of his comments reflect my own thoughts on Trump policies and/or stated agenda around isolationism, tariff policies, tax cuts that in the past expanded the gap between the rich and the rest of us, and using antagonism as a negotiating tool. Higher cash holdings right now just seem to be verrrrry prudent.

    In the never ending debate around Index investing and managed fund investing, prudent management might make sense right now. @davidrmoran , good article.
  • I feel that even investing has become political. Look at what happened recently, Soros bet against Trump and missed the 'Trump' rally: Buffett put money into the 'Trump' rally.

    What did Klarman say when Obama was elected?
  • MaryKay , I don't see his comments on investing as political. I think he is just saying (his interpretation towards investing) if some of Trump's talking points become policy, in his view this will have a negative affect on the over-all economy (or maybe I'm reading to much into his words). I would say the same thing if Clinton was elected and she was pushing isolationist policies. They don't seem to work in the long run.

    Not sure what Klarman's comments about Obama's election 8 years ago has to do with his investing thoughts now.
  • Life is political. If you live in a society with laws, politics are involved with every aspect of those laws. And even if you live in a cave somewhere away from society, that in itself is a political statement.
  • MikeM said:

    MaryKay , I don't see his comments on investing as political. I think he is just saying (his interpretation towards investing) if some of Trump's talking points become policy, in his view this will have a negative affect on the over-all economy (or maybe I'm reading to much into his words). I would say the same thing if Clinton was elected and she was pushing isolationist policies. They don't seem to work in the long run.

    Not sure what Klarman's comments about Obama's election 8 years ago has to do with his investing thoughts now.

    Thank you for the reply.

    You can see the dog whistle of the political left in his comments - basically he projects negative qualities to the policies. For example: "“Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers,” Working in the best interest of the USA becomes protectionism and trade barriers. Read his comments in a similar light and your will see other examples.

    As to Obama; it would show two things, one were his predictions correct and were there political bias in them.

    I feel you can not let politics get into your investing decisions.

    I wonder if the author missed the 'Trump' rally.

  • edited February 2017
    Believing that you can't let politics get in the way of financial matters, investing or business is a political position. It's called libertarianism. There's a political party devoted to it. Just out of curiosity if you believe politics shouldn't be involved with business or investing--what about the laws politicians pass to protect property rights and the police force and military politicians fund via taxes used to protect property rights? Would an investment in say Merck, Amgen or Pfizer be as prosperous if there were no patent laws protecting their intellectual property rights for newly researched drugs? Would the modern publicly traded corporation even exist today were it not for changes in the laws in the U.S. made by politicians in the 19th century? What I think you mean is you want politics to be biased in favor of promoting business and individual property rights and away from societal benefits that may hinder those businesses such as taxation to fund the common good or regulations to protect employees or consumers. That's the libertarian bias embedded in such a position. Or do these modern apolitical businesses and investments just spring naturally from the ground like oak trees, grass and weeds and if there were just no laws, politics or government at all they would exist and prosper for all eternity?
  • I'd read the article before it was posted here, and my reaction was exactly the opposite. These days, so much is being written in black and white. Like Trump? Everything he's suggesting must be great for stocks. Hate Trump? He's going to drive the market into a tail spin.

    This was different because you got grays. Sure, some things could be good, other things could be bad. For example, he described tax cuts as stimulative (good) and potentially inflationary (not in itself necessarily bad since Fed has been targeting higher inflation, but bad when it drives up deficits).

    The behavioral investing observation Klarman made was on the mark - exuberant investors do see half-filled glasses as completely full.

    I'll stick with Buffet's supposed paraphrase of Graham: "In the short term, the market is a popularity contest; in the long term, it is a weighing machine." Tax cuts are popular.

    In the short run, the stock market means nothing.
  • edited March 2017


    Now where are we? We've taken a more aggressive military stance, ticked off a number of former allies, and rolled back (or attempted to) banking and consumer reform. I use LaGuardia quite a bit and am still waiting for the long overdue refurbishing there (as it was one of Donald's punching bags during the campaign). So, the one promise (infrastructure bets.
  • hank said:

    And generally when public investment interest is red hot, I'm pulling back and hedging my bets.

    Yes, and another thing to consider is that this economic expansion, while weak, is getting long in the tooth.

  • @MaryKay , I guess what msf says is pretty much true.
    Like Trump? Everything he's suggesting must be great for stocks. Hate Trump? He's going to drive the market into a tail spin.
    .

    Given your examples, I just don't see ..."the dog whisle of the politicle left". in his comments. I see that comment as taking offense to anything negative about Trump.
    "“Exuberant investors have focused on the potential benefits of stimulative tax cuts...
    Likely one big reasons for the Trump rally I suppose, so true.
    ...while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers
    . this is his financial opinion with a lot of financial history behind it I would think. Trump has indicated his intentions for America first protectionism. You call it "Working in the best interest of the USA" . But there are consequences in a global economy and Klarman is pointing that out. Not political but his perspective on his economic knowledge.

    Don't mean to argue with you because back to what msf said... some will love him and see no wrong. Some will hate him and never see the good. Comments push buttons no matter what slant we have. I see yours were pushed by the article. I hope Trump gets jobs back. Who doesn't? But to think there won't be consequences some place else is naive I would think. History will decide which side the balance falls too.
  • Politics Ain't Beanbag and Neither is Running a Hedge Fund

    Hedge Fund Alert. February 08, 2017
    Mezvinsky and Partners Disband Eaglevale
    Eaglevale Partners, a global-macro shop co-founded by Hillary Clinton’s son-in-law, Marc Mezvinsky, is no longer in business.
    The New York firm shut down last month, sources said. Eaglevale, led by Mezvinsky and two former colleagues from Goldman Sachs, enjoyed early backing from blue-chip names including Goldman chairman Lloyd Blankfein and Avenue Capital founder Marc Lasry. But the flagship Eaglevale Partners Fund suffered from weak performance, and last year the firm shuttered a small vehicle focused on investments in Greek debt after it lost an estimated 90%.
    https://www.hfalert.com/search.pl?ARTICLE=170921
    Original link
    http://finance.yahoo.com/news/clinton-son-law-hedge-fund-144812445.html
  • edited February 2017
    Hi @hank
    Just after the elections results, one will find in the below graphics the drop in price and rise in yield for gov't. issues. The 2, 5 and 10 year notes, as well as the 30 year bond all reflect a similar pattern relative to that issue type.


    This link is for 10 year T-note pricing.

    http://finviz.com/futures_charts.ashx?t=ZN&p=d1

    This link is for 10 year T-note yield: You'll note at the right edge of the graph is the "YIELD" not a price. Example: Today's closing yield is 2.34%, which on this graph is highlighted with a bold black box along the right edge. OF INTEREST: review the yields going back to the September time frame, eh?

    http://stockcharts.com/h-sc/ui?s=$UST10Y&p=D&b=5&g=0&id=p12444354262


    Regards,
    Catch
  • edited February 2017
    Take another look (first link). Right after (for a few moments or hours) the price spiked. Shown by a red line that appears to run straight up. I don't know how many minutes or hours it lasted - but the initial instinct on the part of traders seemed to be to buy bonds. For a fleeting moment.
    Thanks for the links Catch.
    -

    Additional: November 8, 2016, Marcy Kreiter:
    "Republican Donald Trump’s strong showing in early presidential election results Tuesday sent stock futures tumbling. Overnight Dow Jones futures plunged more than 500 points shortly after 9 p.m. The Standard & Poor’s index futures was off 58 points and the Nasdaq fell 123 points.

    The Mexican peso, which had been surging in recent days on perceptions Democrat Hillary Clinton would prevail, slid as much as 4.6 percent. Trump has been highly critical of the North American Free Trade Agreement, which sent thousands of U.S. jobs to Mexico where labor was cheaper. Trump also has based much of his campaign on berating Mexican immigrants.

    Safe havens, including U.S. government bonds, gold and the Japanese yen, rallied, with the benchmark 10-year Treasury note rising as high as 1.89 percent, fractionally higher than Tuesday’s close."
    http://themoderatevoice.com/early-trump-lead-sends-stock-futures-plunging/
  • MJG
    edited February 2017
    Hi Guys,

    Seth Klarman is a smart guy who has followed a mostly winning formula for a long time. None of us are always forecasting geniuses, but he has an admirable record and deserves attention.

    The stock market is sensitive to politics and the presidential election cycle reflects that fact. In particular, Sam Stovall has invested much time in researching this issue. I had difficulty accessing any of his papers directly, but here is a Link that at least summaries some of his findings:

    http://www.marketwatch.com/story/2016-predictions-what-presidential-election-years-mean-for-stocks-2015-12-29

    The markets don"t do all that well in a Presidential election year when only rookie candidates are on the ballot. And Republican rookies don't do as well as Democratic rookies, although President Obama was an outlier. Much data scatter has been recorded so firm conclusions are impossible and multiple interpretations are the rule and not the exception.

    As Murphy observed: "Anything that can go wrong will go wrong". Some folks have added that "Murphy was an optimist".

    The marketplace is a complex multidimensional mechanism that includes unfathomable emotional inputs. I don't have the smarts, the patience, or the courage to offer a truely imdependent assessment, so I'll punt and go with the cumulative positive statistics. Since I am in the required drawdown phase of my life, my equity exposure is being reduced anyway.

    Best Wishes
  • MikeM said:



    Given your examples, I just don't see ..."the dog whisle of the politicle left". in his comments. I see that comment as taking offense to anything negative about Trump.

    Forgive me, I am new here and not qualified to comment on your visual acuity. Please reread my post and you will see I only gave one "For example" and then wrote "Read his (the author's) comments in a similar light and your will see other examples."

  • edited March 2017
    It's hard to separate our political beliefs from our investment smarts
  • Difficult to disagree in the abstract, ... but if a money manager likes a pol who preaches that free trade is harmful, does not know what a strong / weak dollar means, opposes getting the min wage out of the 1970s, stiffs subcontractors, denies global warming, loves fossil fuels, and buys into supply-side econ and worse, well, then, that tells me something important about that manager's worldview, likely decisionmaking, and intellectual (if not moral) hygiene.
Sign In or Register to comment.