Goldman Sachs latest Top of Mind publication is about the bond bear market, and there are a number of opposing views on whether yields are going to continue climbing, or if inflation is going to accelerate or stay under control.
One of the most bearish views on bonds came from Paul Tudor Jones, the founder, CIO and principal of Tudor Investment Corporation, which has c$11 bn of assets under management according to Pitchbook.
Here are some of the most interesting quotes in the interview.
Michael Mauboussin is a highly respected investor, teacher, speaker and book writer. I came across a number of his notes in the past (including this one which I liked a lot). Thanks to the Internet and the many people who share good thinking, most of his notes are there to grasp and read.
While re-populating my blog, I came into his 1997 reflections on valuation. As Graham/Buffett nicely put it: price is what you paid, value is what you get. So to earn decent return when investing, you need to know the value so you can pay a price that gives you a good margin of safety.
The full note is available to read here. I just wrote down a couple of remarks that make sense to me and hopefully give you a quick overview of why it might be useful and what you will find inside.
Key purpose of the note is to defend the value-based approach of investing, to keep in mind what really matters in valuation and not to fall into « market myths ».
Markets have been unnerved by rising interest rates in the US, with ripple effects around the world. The most staggering event has happened on the VIX market with a number of funds/ETNs making the headlines after having lost tons of money. What should investors take from these events ? A couple of reflections and interesting comments seen here and there. Continuer la lecture de « Putting Recent Market Sell-off in Perspective »
Alexandre Bompard, the young and alert new CEO of troubled French retailer Carrefour, will soon have a chance to show if he can thwart this priceless but nonetheless true observation from Warren Buffett:
Ok. Now stop everything you’re doing and take 50 min of your time listening to Charlie Munger. Mr Munger is the most amazing person to listen to about life, human values and of course investing. If you want to know/feel the guy, read a great biography by Janet Low.
For those unfamiliar with Seth Klarman, he is the founder of the Baupost Group, and one of the most respected and admired value investors. I think it’s both because of his track record, his core values as an investor (patience and discipline among others) but also his humanitarian values that put him on par with Warren Buffett and Charlie Munger.
His words/remarks/interviews are very rare, so any opportunity to hear/read him is a fantastic one for investors willing to improve their process/thinking about investing/life in general.
Better growth, low inflation. It’s the perfect backdrop for risky assets. But in a late cycle environment, one of the driver of financial markets people should always be fearful about is the « fear of missing out », especially when the rise in stock market accelerates and relies more on multiple expansion than fundamental improvement.
« As equities rallied and bonds sold off, our measure of risk appetite reached a new post-crisis high, but it has started to retreat more recently. Near-term, we think growth optimism will persist and keep risk appetite strong. We are long US equity near-term as it should be a direct beneficiary of growth optimism, but expect optimism to moderate eventually. Later in 2017 we are looking to rotate from S&P 500 to EM (specifically EM-ex-China) where risk appetite has lagged and we expect the growth picture to be more supportive. We also like Europe and Japan on a 12-month horizon in our asset allocation. Both of these lagged global equities in 2016, but should continue to be beneficiaries of reflation and have supportive monetary policy backdrops. »
On a 12 month horizon, GS is overweight Equities, with a bias towards Europe and Japan, but underweight US equities and Neutral on Asia ex-Japan.
The bank underweights Government bonds and is Neutral on credit (yet with a preference for US High Yield and Euro High Yield).