As fixed income loses the temporary sheen from 2008, Legg Mason bore the brunt of investor displeasure and lack of confidence losing $24 billion from fixed income schemes and close to $33 billion overall in the last quarter, 4 times more than the July – September Quarter. Most banks worldwide have reported losses in Fixed Income in the latest quarter as yields spike with China ready to go off the Charts from doubt in its banking system :lol
However that all seems to be passed as in after its results last week, news filtered in that new board member Nelson Peltz is selling an over 15% in H J Heinz ketchup worth $32 million and another $8 million in Tiffany’s Diamonds.
Interestingly, Legg Mason’s flagship Value fund is heavily invested in healthcare, read health insurers like Humana, Wellpoint and United Health who are celebrating after Scott Brown’s victory in Massachusetts! O What a tangled web we weave. Bill Miller, the fund’s Equities star also mentions of late his trust in the growing US GDP and in Equities. While we agree with the second, Obama’s latest belt-tightening measures may cloud America’s way on growing in double digits a year.
Fund Managers on Bills side in London and New York also feel more wary of heavily weighted China and India investments which we propose is heresy except that in China one must watch the for the bull entering the China Shop. And who’s invested in India? Not many more than 5 years ago..talk about oversimplification!!!
Note: From a September 09 flyer of the World #10 Asset manager, outflows of $33b would close out fixed income offerings in its entirety, leaving Bill Miller and $8 billion in equity that would be worth $800m, $40m seems at the top of the fair price range for 5%
It is the end of the year and crisis or no crisis sycophants and foxhole investors are back at what they do best..Witness this precious piece from Gregory Zuckermann in WSJ on John Paulson’s lessons. The ignorance and the lack of polish shines through in another woeful attempt by a media person and countless ‘investors’ or shadows thereof. So i felt bound to finally take the plunge and make matters right. You see, this is not how the Greatest trades were made. ( Link to the article is really superfluous, you can meet umpteen such articles in the financial media and even find ranches in Texas that would hold dinner galas spouting much the same philosophy.)
You see, this is not how the Greatest trades were made. ( Link to the article is really superfluous, you can meet umpteen such articles in the financial media and even find ranches in Texas that would hold dinner galas spouting much the same philosophy.) Also, the book is available from Amazon.com here Our comments are on Gregory Zuckerman’s ‘Lessons Learnt’ post in WSJ (Financial Adviser) The Amazon link with cover is also available on an alternative version of this post
1. Listen to your experts : And this is serious. The man who says the crisis teaches us to “Don’t rely on experts’, he s just taking time off to be a papa stooge. The experts not only have an edge on the information, they also have a ‘record’ behind them. But yes, don’t take one source for granted, be sceptical, trust your judgment
2. Bubble trouble – True. Everyone doing the same thing at the same time changes things. But the tectonic shift is not necessarily better always, or bad OR Black Swan either..and don’t ever use your nest savings..we are never even talking about it. Better still, for this take advice #1 and add to it..Dine with your experts..take an evening walk in the park with them, and don’t forge to be nice to them. This one also is not the excuse to shout and scream like Osama bin Laden, nor does that make you and your investments any better – or grade worthy – or worth selling low and buying high
3. The Contrarian point – is a studied viewpoint, not an allergic reaction to the expert’s makeup and Maria’s sartorial and travel lifestyle ( as ‘reported’ on CNBC. Drink it in with beer at dinner and wake up in the morning to drink another coffee..raving and ranting is counterproductive to gray cells..not the drinking
4. Focus on Debt Markets – That is a great lesson from this crisis. In fact that would even give us some breathing space when we try to avert the next crisis. There is an imperfect natural hedge there, and it saves us, esp when everyone starts thinking of OIL and GOLD too..those times or in a normal economy bubble or ultra mega size bubble, you need to see that the debt is at any time no less than 5 times the size of the entire Global Equity market investments and that is a lot, in fact what went out of equity went to bonds and then it will come back from there too..
5. Master new Investments – On the dot. Exchange Trading Funds are a good idea. Publicly traded debt in india, China and the N11, G8+3 not so much. So here, listen to more than one expert. Read us here. and don’t feel like Bruce Willis in Die Hard, Make the calls and ask around. That gets any thoughts of crises from developing, esp not overnight and not a crisis of the household budget
6. Use Derivatives to your advantage: Getting that safety net in place is harder to do with just CDs and real estate. You need to balance the equation more than once every year. Realign to a new fact or facts. Don’t sit on it. and then making a jump to new products is easier, and the ill-informed salesperson is unable to fool you into buying unsecured, unpayable. ETFs are a great place to start.
7. Reconstruction is the key. So is infrastructure. Keep your eyes open. 3 out of 5 ETFs are going to fail. Derivatives by their nature are going to leave someone stranded again. It will happen. So will real estate, and Lehman Bros. and in fact next time the cash buried in the backyard would not be safe either. Get used to a little higher risk. start small.
8. Experience counts. On the dot. But hero-worship kills, indiscriminately
9. Luck helps? See 1 to 4 above and redo the equation . Talk to us. Talk to your neighbourhood broker. All investment classes are inherently the same once you have figured them out. They make money if they are right. and if they are right they work for you. and your friends.
Paulson made his greatest trades after he had made a few winning trades every year. that is the only thing to learn, rest is the debate..and hating the experts is only handing America’s markets to the Osamas of the world..
Also if you are a corporate denizen, take a lesson from the lady that failed to catch Cadbury and her investment bankers..you go in with only one price and you come out empty handed.
[Tag Paulson, investing, US, Retail Lifestyle, Wealth]
We didnt know it yet, but we had been playing in the Bernard Madoff Investment Securities LLC Fantasy Financial League. It began when we sold our home at the peak of the market, collected what was left from an old divorce, found other monies and then, with a combination of pleasure and trepidation, handed our bag of cash over to someone named Stanley Chais, the Los Angeles network organizer for a man named Bernard Madoff.
Of course, we never heard the name Madoff — which has a peculiarly Dickensian ring now — and had no idea how he achieved such fantastic returns over the past 40 years. All we knew was that my wifes entire family had been in the fund for decades and lived well on the returns, which ranged from 15% to 22%. It was all very secretive and tough to get into, which, looking back, was a brilliant strategy to lure suckers. Unlike the usual Ponzi mechanics, the fund even stopped investments into accounts a few years back, at least in our network. There were the usual warnings prior to investing — we all knew it was a risk, we were told to make sure we were diversified, blah-blah — but, my God, it had been going strong for so long and with such fantastic returns, we had to get in. The Securities and Exchange Commission even gave Madoff a clean bill of health several years ago, we now find out. Well, maybe not a clean bill, but it didnt shut him down either. In the topsy-turvy world of investment, we were quietly, richly safe. Until the call.
zyakaira notes: On the face of it the prognosis could not be simpler. The man bet on the larger index value ( Out of the Money Calls and Out of the Money Put Collars ) while he chose the stocks to select. He obviously had a few more days of losses but the strategy is one that any investor would employ at a simpler level and there are a lot of people who are finding enough to make money everyday. I think therefore the Ponzi scheme part is definitely someone just walking away with the money, without you knowing where the money is.
Well, you must have seen the markets and like all other Indians thought of the market reaching its bottom sooner than later at some point. As far as the Indian market goes, the worst fall may be over but there is plenty more to come.
However, Fixed Maturiy Plans and simpler money and even longer term fixed income funds are really going to boom in the next couple of months as yields steen down and the freed up SLR and CRR money does a few rounds. Yields are going to come to a saner point and then some , even though this rally is at the best temporary.
As of date, Gilt funds have already returned a positive 3-5% in one month, long term floaters upto 1%. Short term floaters and Money market funds have returned 1% and medium term income and bond funds have returned 2-4% in this 1 month till Nov 20. They all remain good investments. Fo fund selection, one can also refer to http://www.valueresearchonline.com
Also, it may be a good time to invest in some indices and keep your porfolio shored up with a Gold ETF or Gold in any other form. With elections round the corner, at least Christmas will be rosier than this Diwali was. Equity – if you are very sure, maybe 10% of your money in some really sound scrips. Some of the special situation funds are looking okay as is Reliance Regular Savings Equity Funds.
Banking funds are already down 10-20% in the last 1 month while even the Top 10 diversified funds have lost 5-10% and withdrawals continue to torment the fund managers plans. Withdrawals in October exceed Rs 1 Lakh Crores.
If you want specifics contact me and I will always be there to help you with a portfolio specific to your needs.