Blog

The 2% Joke (Thank you Stan Druckenmiller!)

Kudos to Stan Druckenmiller for his most recent CNBC interviews. Unlike many prominent investors, business people and politicians, Stan is not impressed by the policies of major central banks and believes that policies such as near zero interest rates and bond buying are leading to a misallocation of resources. We highlight the following quotes:

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Central Bankers Are Winning (and Common Sense Is Losing)

The case of Steinhoff International Holdings is the latest example of the absurdity of central banks and their policies. Consider this: The European Central Bank (ECB), through its “corporate sector purchase programme”, is the proud owner of Steinhoff debt. The latter is included among the program’s EUR 129 billion of corporate bond holdings as of December 1, 2017.

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Deregulation Gone Mad

Today’s surprisingly honest article from the Editorial Board at Bloomberg regarding the proposed deregulation of the U.S. for-profit education industry is spot on. However, it raises a larger issue: If the proposed deregulation of the U.S. for-profit education industry is such a raw deal for the vast majority of Americans, why would deregulating the financial services industry, or for that matter any industry where deregulation has shown to lead to unacceptable externalities and moral hazard, be anything but a raw deal for the vast majority of Americans?

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Generic vs. Branded Pharma: Hmm…

Given the negativity surrounding generic pharma companies in the U.S., we are quite puzzled by the valuations of branded pharma companies such as Pfizer, Merck and JNJ. After all, weren’t generic companies the “good” guys who were supposed to give us cheaper alternatives to the expensive branded medicines of the likes of Pfizer, Merck and JNJ?

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Stronger Than Ever? Ha!

It was just over a year ago that Erez Vigodman, President and CEO of Teva Pharmaceutical Industries proclaimed in a press release: “The acquisition of Actavis Generics comes at a time when Teva is stronger than ever—in both our generics and specialty businesses.” What a difference a year can make!

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Eureka!

For millennia, inventors have tried to build perpetual motion devices that could perform work indefinitely without an energy source. So far, this quest has proven futile as the laws of thermodynamics apparently dictated against the possibility of building such a device. But, as it turns out, and US equity investors already know, perpetual motion is possible after all!

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13 US Equities: Acquired or Bust

Given the euphoria prevalent in many global equity markets, especially so in the US market, we decided to compile the following list. It’s a list of 13 US equities that are, in our view, likely to cause investors substantial losses over time – unless these equities and their investors are saved by an acquisition. These equities may represent the ultimate speculations in today’s equity market in the sense that their prices can only be supported by what other people may pay for them.

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When a Global Duopoly Ends

You wouldn’t know it from the share prices of Boeing and Airbus (which are at all time highs), but this famous global duopoly on passenger jets is coming to an end. As China Aviation Review reported this weekend, the C919 – China’s first self-developed large passenger jet – is currently completing final tests and is due to have its maiden flight within the next few weeks.

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Value vs. What

A Google search for the word string “value vs. growth” returns 145 million results. A Google search for “intrinsic value” returns 4 million results. We think this is symptomatic of much that is deficient in how value investing is perceived by the majority of market participants. So, we would like to posit that the “value” in value investing refers to “intrinsic value” rather than a value concept that needs to stand in contrast to “growth.”

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A Favorite Warren Buffett Quote – Revisited

In the investment world, as well as in the world of economics and politics, it is hard to escape the all-around obsession with growth. Often without a clear definition or discussion of direct costs or externalities, growth is presented as something to be worshipped – no matter what. Whether it relates to the growth in the economy or in a specific industry, this obsession tends to cloud judgments, distort incentives and, ultimately, can lead to

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