Only for the Long Term Investor

"This discussion of repurchases offers me the chance to address the irrational reaction of many investors to changes in stock prices."

"When we buy a stock in a company that is repurchasing shares, we hope for two events: ... earnings ... will increase at a good clip ...; and second, we also hope that the stock underperforms in the market for a long time as well."

Buffet, 2011 Letter to Investors

It was said

You could feel it while sitting down in the audience and listening to one of the directors of a Federal Reserve Bank. 

It had a familiar ring that I had witnessed before: specific opposite views and a campaign posture. 

Bernanke's role in the FED might change in the near future. He was between complete collapse and continuing on the same broken road. It was too risky to be innovative at the edge of the cliff. Many say otherwise: that he was bold and innovative. 

It was a tough position. He is not government. The FED was created to contain the dam from breaking when there is a run on the money supply or a freeze on the lending houses. Back in the storm, it looked like he was standing alone holding the puzzle together while the waves kept coming.

He was unsuccessful at one thing that seems small but that might have derailed progress. He was unsuccessful at fighting back on politicians requesting him to fix the economy while they were incapable to sign a budget. 

Outside of the FED, there hasn't been any accountability for the economy on either side. While the FED kept been requested to fix it, Congress has been playing Nerf wars. I never thought the encrypted messages of a Greenspan would be so on point as on today's state of affairs.

If the books about the collapse were inflammatory, I am hoping the new titles after his departure will return to serious analysis. There are two things Bernanke's reign leaves behind: a successful legacy to discuss and THE human face of the FED itself. 

Random Tick

65% of the world is not online yet.

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I am actually surprised 35% is.

SolChin

Something was telling me about that big solar company. "There is something in the water" I heard while walking through the empty halls like the Propel spot announcing its arrival.

This is why when there is not enough information on a sector, the best course is to try to find the hedge among the players while staying away from the market leader. I like to call it insulated isolation. It has a classy ring to it. Insulated because if a disaster occur in the sector is probably going to hit the leader the most absorbing most of the negative swing. This is why CSUN was a better investment than SunTech. And SunTech has become the first Chinese default of a US listing.

Sor

I had started this posting a few weeks back. Then, Soros passed away. I leave it unfinished.


"Soros looks for patterns of errors. He profits from calculating other people’s misinterpretations." from Brooks.

If I recall correctly it was breaking the bank of England based on a unsustainable pegged currency rate of the German Frank that led him to bet the house and make a billion in one trade. Later on, he would watched very closely Eastern European Communist countries and follow the ripple effect of their economies. At the same time, he flooded Hungary with printers and photocopy machines in a time when all printing material was closely controlled.

He became the greatest international philanthropist throughout his life reaching 350 millions in one year.

He is often cited as the top macro analyst of all times. I believe he was assigned the trucking sector early on in his career, and in no time he had consumed every detailed on what was considered an insignificant industry. But when M&A came knocking at the door, it made him a name for being the only expert around on such a niche sector.

And I always thought the Quantum fund had the greatest name of all.


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There is a drawback about being able to be on top of the news beat. Soros passing was a misprint. I leave it unfinished, Again, as it should.

Ben's legacy

The legacy of Bernanke is on the making every single month that passes. His most influential trait is probably that he has become a man of his time. Bernanke has opened up the Fed's decision making to the public discourse.

His new speeches are on a new book, and for a change, they seem to be a lot more fun to read than his essays on the Great Depression. It almost seems like the Fed is going through the same process the Catholic church went through a few years back when they started to review their own history publishing their past stances.

Bernanke has been painting the new view of recent events like defending the low interest rates against the guilt of the financial collapse by providing a better explanation based on the flow of massive capital from raising powers.

Where does the road goes from here? The main point of discussion is still the question on the Fed's role and on whether the Fed has been or is effective enough to become the new planner. One thing that everyone seems to miss is the fact that this is 2013 in the middle of a global multi-polar world. One has to wonder if the new research based on past decades of economic data apply to today's world or even to the immediate future.

Without any sure findings, the only course to follow is the academic discourse of ideas, and the one that has been there, and the one who is opening this new path is Ben. When there are no answers, it reminds me of when the crisis of 1909 surprised and panicked every banker, and J. P. Morgan's assistant asked him: Why don't you just tell them what to do?

J.P.Morgan replied for first time ending his assistant calm demeanor:
"Because I don't know. But one of them will have an answer; then, I will tell them."

And it all began

Mrs. Freddie sues big banks for losses related to a misstated Libor rate.