Average Guy Investing

In the following article James Grant lays out the case for coming inflation.  This seems somewhat contradictory to an earlier post (Dec. 19, 2008) where Grant says he sees value in bonds.  If you wnat to invest in bonds and think that we will see some massive inflation, you had better keep the maturities short.

http://online.wsj.com/article/SB122973431525523215.html

Mark Sellers’ hedge fund, Sellers Capital Managment, is soliciting shareholders of Premier Exhibitions (PRXI) to elect new directors.

http://biz.yahoo.com/prnews/081218/ny53578.html?.v=2

Strangely enough, this apprears to be part of Sellers’ two year plan to sell off his fund and get out of the business.  The link below reports on Sellers’ past performance and his reasons for closing the hedge fund.

http://seekingalpha.com/article/99443-quitting-the-hedge-fund-game-mark-sellers

Ironically, Sellers says in a lecture given at the Harvard Business School that value investing in general and the ability to compound at 20% per year is hard wired in your brain at 11 or 12 years of age and that if you don’t have it you can’t get it. (see link below). I am not sure I agree with Mark on this point, but either way, it looks like he does not have it.

http://www.beearly.com/pdfFiles/Sellers24102004.pdf

James Grant sees great opportunity in investment grade corporate bonds.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a35qCx2mwMpg

Jim Uurio of TJM Institutional Services thinks that the stock market has begun its rally.

http://www.cnbc.com/id/15840232?video=971041746&play=1

In this video Barton Biggs says he is bullish, the credit markets are healing and that the bottom was put in back in November for equities.

http://www.cnbc.com/id/15840232?video=971041746&play=1

There is an interesting interview of Seth Klarman in the latest issue of the Harvard Business School magazine.  In the article Klarman speculates that value investing may be genetic.  Is he joking?

http://www.alumni.hbs.edu/bulletin/2008/december/oneonone.html

And here is a Christmas gift idea for the investor who has everything - Seth Klarman’s Margin of Safety.  This out of print book routinely sells for around $1,000.00. Hopefully you can find true value in this name at your local library.

In this clip James O’Shaughnessey expresses his opinion that we are mid way through the recession.  Jim notes that he is a buyer here. O’Shaughnessey says that like the Fed we are all in. O’Shaughnessey is known for his rigorous analysis of data going back over the last hundred years.

http://www.cnbc.com/id/15840232?video=968736674&play=1

O’Shaughnessey’s book, What Works on Wall Street was listed as recommended reading on the sylabus for Joel Greenblatt’s 2006 Value and special situation investing class at Columbia University.  In this book O’Shaughnessey lays out the performance data for a number of strategies, examining what has worked on Wall Street over the last 50 years. What works on Wall Street is a must have reference work for the long term value investor.

If you have any money invested in health care companies, I would recommend reading Senator, Tom Daschle’s book Critical.  Tom Daschle was quickly appointed by President Elect, Obama to head up health care issues. It is my opinion that this shows where health care reform ranks in terms of priority for the incoming administration.  This book currently provides the best road map of where Obama is headed on health care reform and is a must read for health care investors.

John Hussman at the Hussman Funds offers a wealth of insight on Japan’s lost decade and how it compares with the current U.S. market.

http://hussmanfunds.com/wmc/wmc081201.htm

I reviewed Meredith Whitney’s statements from yesterday looking to see where she got her shocking credit card debt number of 45%.  A Bloomberg article quotes her estimate as a reduction in “unused credit-card lines by 45 percent …”

I am not sure what is so alarming about this number.  If the article is correct, these are “unused” lines of credit.  This would include, for example, a credit card that I have not used in the last couple of years, but which I still have and which the issuing bank must record on its books.  It is my understanding that these unused lines are kept on the books and act to reduce the capital ratios of banks.  It seems to me that it would be wise for any bank that is watching its capital ratio decline to close accounts which are truly unused and take them off the books.

I suspect that a lot of these accounts have bloated over time as customers receive those wonderful mailouts that say “Your credit limit has been incresed by $xxxx.xx.”  Kiss em goodbye.