Dah Hui Lau (David)

Garlic Boom: 15-fold Increase!

2009-11-26T09:40:00.000Z

China, already beset by a worrying real estate bubble, is now grappling with surging prices for a dinner table staple closer to home – garlic.

The world’s largest producer of the pungent bulbs, China has seen wholesale prices rocket as much as 15-fold since March in large cities such as Beijing, forced up in part by a combination of reduced acreage being planted by local farmers because of the recession – and a belief that garlic can keep away swine flu.

Schools have been hoarding garlic for pupils to eat because of its reputed properties in warding off swine flu. The China Daily has reported that a high school in Hangzhou in eastern China, bought 200 kg of garlic and made students eat it at lunch to keep healthy.

Also supplies have been cut because farmers in China and elsewhere slashed plantings when prices collapsed in the financial crisis.

Full Article

Warren Buffett: Thriftville versus Squanderville

2009-11-20T12:15:00.000Z

New Yorker: Atul Gawande on Checklist Video

2009-11-18T14:17:00.000Z

Excellent video on checklist. Very interesting.

This is a great video for medical professionals as well as investors. In fact, for everyone!

MUST-WATCH!

Bruce Berkowitz on WealthTrack

2009-11-18T11:59:00.000Z

Warren Buffett on Charlie Rose's Show

2009-11-18T11:00:00.000Z

CHARLIE ROSE: Warren Buffett is here. As you know, he is perhaps the world’s most respected investor. He’s also chairman and CEO of Berkshire Hathaway.

He has been on this program many times. I last spoke with him over a year ago at the peak of the worst economic crisis since the Great Depression. At that time, he said that America had been struck by an economic Pearl Harbor, but much has changed since then, and he’s here to tell us how he views a global and American economy in recovery.

His own company reflects the progress made in recent months. Last week, Berkshire Hathaway struck a $26 billion deal to buy all of Burlington Northern Santa Fe railroad, the largest acquisition in company history. He called the deal an all-in wager on the American economy. He is in New York for a town hall event that he held with Bill Gates at Columbia University yesterday. He graciously agreed to stay over in New York an extra night, and I am pleased to have a good friend of this program and a good friend of mine back at this table. Welcome.

WARREN BUFFETT: Thank you, Charlie. Pleased to be here.

CHARLIE ROSE: Great to see you. It has been, certainly from the middle of 2008 to the middle of 2009, one incredible year.

WARREN BUFFETT: One incredible year. One to a lifetime, I hope.

CHARLIE ROSE: Yes. Tell me about it for you.

WARREN BUFFETT: Well, it was-- it really was an extraordinary time in this country. We came closer to a financial meltdown than certainly any time I have ever seen, and probably in certain respects even -- there was even more panic than the Great Depression, because it came on so fast and so unexpected.

And the whole country wanted to deleverage, corporations, individuals, and fortunately we had a government that responded. It was -- when we talked last, it was a little question of whether Congress would respond like they should. They finally did, and I -- I felt they would in the end. I mean, in the end, they come together for things that are this vital to the country. But we had the right people in Washington. If we’d had a group that behaved like a deer in the headlines, that deer would have gotten run over.

CHARLIE ROSE: So Paulson and Bernanke and Geithner were the right people at the right time, and you don’t know what might have happened if others had been in those positions of power.

WARREN BUFFETT: I can think of others-- I’m not going to name them-- but I can think of others where the ending would have been with us in the abyss rather than just peering down into it.

CHARLIE ROSE: You made some investments during that period.

Full Article

Exclusive Joel Greenblatt's Video

2009-11-18T10:52:00.000Z

The Value Investing Congress brings you a complete video presentation of one of our featured speakers — Joel Greenblatt’s Formula Investing with a Value Mindset, from the 5th Annual New York Value Investing Congress! To view the video, visit http://bit.ly/2lZAdT.

CNBC Video: Warren Buffett & Bill Gates - Keeping American Great

2009-11-16T14:15:00.001Z

The New Age of Walmart

2009-11-13T14:28:00.000Z

CNBC TRANSCRIPT: Warren Buffett & Bill Gates - Keeping America Great

2009-11-13T11:59:00.000Z

QUESTION: Hi, my name is Lisa Williams. I'm from South Orange, New Jersey. I'm currently a first-year at the MBA program. Glad to have you both here. My question is actually for Mr. Buffett. There has been a lost of discussion around the true drivers with the recent deal with Burlington Northern. I was wondering if you could share with us your key motivation for wanting to increase exposure to the railroad sector at this time.

BUFFETT: You know, when I was six, I wanted a railroad set and my dad didn't get it. [APPLAUSE] You think about it. The railroads are tied to the future prosperity of this country. You can't move a railroad to China or India or anyplace else. We start out with the premise, and I can't think of a more sound premise, that there will be more people in this country, 10, 20, 30 years from now. They will be moving more and more goods back and forth to each other. And you have the most environmentally friendly and the most cost-efficient way of doing that on the railroads. The Burlington Northern last year moved -- on average it moved a ton of freight, 470 miles on one gallon of diesel. That is far, far more efficient than what takes place over the highways. You have the situation where overall they use 1/3 less fuel, they put far fewer pollutants into the atmosphere than trucks will. One train will supplant 280 trucks are so on the road. So the rails are in tune with the future. I like the West. I like the 30-some-thousand miles of roadway that Burlington has. And, you know, if this country has a poor future, the rails have a poor future. I'm willing to bet a lot of money, 34 billion to be specific -- [LAUGHTER] -- on the fact that 10 years from now, 20 years from now, 50 years from now, there will be more and more goods being moved by rail and better for the country and it will be better for the shareholders of the Burlington Northern.

QUESTION: I'm Peter Lawrence, first-year student from Columbia. And, first of all, thank you both so much for coming here. Mr. Buffett, the recent runup in the market has been historic. And it seems that many people question the sustainability of the current price level. Do you think the rally is for real?

BUFFETT: What's going to happen tomorrow, huh? [APPLAUSE] Let me give you an illustration. I bought my first stock in 1942. I was 11. I had been dillydallying up until then. I got serious. [LAUGHTER] What do you think the best year for the market has been since 1942? Best calendar year from 1942 to the present time. Well, there's no reason for you to know the answer. The answer is 1954. In 1954, the Dow … dividends was up 50%. Now if you look at 1954, we were in a recession a good bit of that time. The recession started in July of '53. Unemployment peaked in September of '54. So until November of '54 you hadn't seen an uptick in the employment figure. And the unemployment figure more than doubled during that period. It was the best year there was for the market. So it's a terrible mistake to look at what's going on in the economy today and then decide whether to buy or sell stocks based on it. You should decide whether to buy or sell stocks based on how much you're getting for your money, long-term value you're getting for your money at any given time. And next week doesn't make any difference because next week, next week is going to be a week further away. And the important thing is to have the right long-term outlook, evaluate the businesses you are buying. And then a terrible market or a terrible economy is your friend. I don't care, in making a purchase of the Burlington Northern, I don't care whether next week, or next month or even next year there is a big revival in car loadings or any of that sort of thing. A period like this gives me a chance to do things. It's silly to wait. I wrote an article. If you wait until you see the robin, spring will be over.

BECKY: All right. Welcome back, everybody. Welcome back to class. We have left that last break waiting for an answer from Bill Gates. Bill, if you had to pick one thing that makes you stand out from everyone else, what would that be?

GATES: Well, we talked about some of the basics, having great people around you, reading a lot, thinking long-term. I also think, though, there become a few magic moments where you have to have confidence in yourself. You know, Warren when he set off on his own, he could have gone and taken a job as an analyst somewhere. But he knew that he had the skill, that he was going to raise money and have his own partnership. When I dropped out of Harvard and said to my friends, ‘Come work for me,’ there was a certain kind of brass self-confidence in that. You have a few moments like that where trusting yourself and saying yes, this can come together -- you have to seize on those because not many come along.

Full CNBC Transcript

Day with Warren Buffett enriching to UA students

2009-11-12T09:41:00.000Z

''He goes to work happy every day, and so many of us go to work looking forward to the weekend,'' she said. Loving what you do is so much more important than making money, he advised.

Finkle said many comments made a deep impression on him as well, but one he'll never forget was in response to Finkle's own question about the most influential people in Buffett's life.

Among those Buffett named was a friend who was a Polish Jew, taken to a World War II concentration camp after an acquaintance reported the friend's hiding place to the Germans.

Buffett said ever since hearing that story, ''when he would begin friendships, he would ask the question: Would this person hide me from the Nazis?''

''He then went on to say that one of the most important things [if not the most important] was unconditional love. If you can find two or three people who love you unconditionally, you are a lucky person.''

Full Article

The Hour: Malcolm Gladwell

2009-11-10T13:43:00.000Z

Listen! Warren Buffett Speaks About Railroad

2009-11-03T17:38:00.001Z

Berkshire Hathaway To Acquire Burlington Northern Santa Fe Corporation

2009-11-03T14:16:00.002Z

Buffett is buying 100% of Burlington Northern Santa Fe!!

Full Article

If you would like to read my 245-word write-up on railroad, shoot me an email.

Jeremy Grantham: Markets Being Silly Again

2009-10-27T14:12:00.001Z

A good read.

Complete article

BBC on Warren Buffett

2009-10-26T18:04:00.003Z

Evan Davis talks to Warren Buffett

http://news.bbc.co.uk/1/hi/business/8322957.stm

David 'Sandy' Gottesman: 'He loves hamburgers'

http://news.bbc.co.uk/1/hi/business/8322958.stm

Gates: Buffett is 'unique leader'

http://news.bbc.co.uk/1/hi/business/8322950.stm

Don Graham's debt to Warren Buffett

http://news.bbc.co.uk/1/hi/business/8322961.stm

Susie Buffett on being Warren's daughter

http://news.bbc.co.uk/1/hi/business/8326348.stm

David Sokol on Economy

2009-10-26T13:52:00.000Z

George Soros interview by the FT

2009-10-26T10:42:00.000Z

FT: How do you judge the state of the world economy? Has the world recovered from the crisis of 2007/2008?

GS: Well, certainly the financial markets have regained their composure so they’re beginning to function again, and also the world economy has overcome the shock that it has suffered because for a while everything froze and now things are moving again. So there is rebound, but I think that the facts of the crisis will take a long time for the world to absorb and the main source of the problem is in the United States. This is where consumers have spent more than they earned for a period of 25 years; where we have accumulated current account deficit that reached 6.5 per cent at its peak, which actually could have continued because there were other countries – particularly China and the Asian tigers – that were very happy to run a continuous surplus and to finance our deficit. So that could have actually continued, but the households became over-indebted and it’s the consumer who accounts for over 70 per cent of the US economy that has to cut down, and that will take a while.

Then also you’ve got the banking system that basically was bankrupted. It’s at the bottom and has to earn its way out of a hole and, again, it’s happening at a pretty fast clip because banks borrow at zero and buy 10-year government bonds, yielding 3.5 per cent, and that’s a pretty fast rate of earnings for no risk. So, they’ll earn their way out of a hole, but it will also take time. And then there’s still the whole area of commercial real estate, where the losses have not been recognised. So the source of weakness in the world will be mainly in the US consumer spending and in, let’s say, the decline in the banking sector.

FT: And is that weakness in the US sufficiently grave that there could be a W-shaped recovery, that there could be another dip downwards?

GS: Well, I think certainly there could be another dip in the stock market because, right now we are enjoying the confidence multiplier and there’s a sort of a hope that this is a crisis like the previous ones and we will just sort of recover in a V-shape recovery. So, when that hope is not fulfilled, I think that will be ...

Full Article

MUST READ: Persuasion Tactics by Prof. Sanjay Bakshi

2009-10-24T16:29:00.001Z

Prof. Sanjay Bakshi was recently invited by India’s Ministry of Finance to make a presentation to delegates from seventeen third-world nations who had come to India for a training program.

The presentation on “Persuasion Tactics” can be downloaded from here.

Many thanks Prof. Bakshi for sharing this wonderful presentation.

Then Next Mozart?

2009-10-24T08:13:00.000Z

MUST WATCH: The Animal Odd Couple

2009-10-24T07:34:00.001Z

Mohnish Pabrai's Interview

2009-10-22T10:18:00.000Z

What are the factors you look at before deciding to invest in a company? Can you give us an example?
The first thing you got to look at is, "I am not buying a stock, but I am buying a business." And you only buy the business if you were willing to buy the entire business if you had money for it. So, for example, if Reliance Industries has a market cap of $100 billion and you had a $300 billion, the question you would ask yourself is, would I buy the entire business for a $100 billion?

The first thing is that you are not buying pieces of paper, but you are buying an entire business. The second is that you ask yourself, do I understand the business? Do I truly understand how it will work, how it makes money, how will it do in the future?

Then the third thing is, if Reliance produces$3 billion a year cash flow and it trades for $100 billion, I have no intention of buying it at 33 times cash flow. It is like I have no interest in putting money in an account that pays 3% interest.

So I love Reliance, maybe, if the fair value of business is 15 times cash flow, which is $45 billion. And since I am cheapskate, I don't want to buy it for more than half its fair value, so I just say to myself, that if it goes below $20 billion in value -- or one-fifth the current price -- then I will look at it again. In fact, that is the way to look at the Indian Sensex. You take all the Reliances, the Wipros and Infosyses of the world, chop their price by four, and that's your entry price.

What has been your most successful stockpick till date?
You know that's a very funny question. The most successful company I ever invested in is Satyam. I invested in 1995, and I was completely out by 2000. When I invested the stock was at Rs 40, and Satyam's earnings at that time were about at Rs 12 a share, so you were buying a business for three-and-a-half times earnings. And the more interesting thing for me was that property the company had in Hyderabad exceeded the market capitalisation as it was carried at a value that was bought a long time ago.

The only reason I knew about Satyam was because I was in the IT services space. These guys had actually visited us to see if they could do business together. And I had been pretty impressed by the way the business operated and the people I had met.

I looked at it from my investment point of view after was amazed that such a business could trade at such a price. So I invested in Satyam. In 2000, it was trading at Rs 7,000, that is about a 150 times the price I bought it at. This was in the days before demat, and actually when I bought the stock with an account through Kotak that I had in Mumbai, I was given physical delivery of these shares that looked like tattered pieces of paper that were falling apart.

Satyam from less than a PE of 3 to more than PE of 100. I just said I am out of it because now I owned a bubble stock even though I did not buy it at bubble price. I sold my entire position within 5% of the peak. Within six months it had dropped from Rs 7,000 to Rs 1,000, and continued on the sidelines for a while. That was the best deal that I ever made.

Full Article

Transcript: Warren Buffett on What's Next in the Payments Industry

2009-10-21T08:59:00.000Z

CATHY BARON TAMRAZ: Greetings from San Diego, where we have just completed the Fortune Most Powerful Women’s Summit. I am Cathy Baron Tamraz, CEO of Business Wire, and I am here with the only male that is allowed into this conference and that is Warren Buffett, Chairman of Berkshire Hathaway, which is also the parent company of Business Wire. Warren has graciously agreed to answer some questions today, and kick off a conference that Business Wire and Market Platform Dynamics are holding in New York City, to launch a new Web site about the payment industry callexd PYMNTS.com. We are really excited about this new portal, which will be a primary source of news for the payments industry. It will havebreaking news and regulatory news in the payment industry, new technology and new products.

Because the payment industry is so vital to the economy, we thought it would be relevant to talk to Warren and hear his views on the state of the economy and what we can do to revitalize it. So thank you, Warren, for speaking with us today and agreeing to be interviewed by me.

WARREN BUFFETT: You are my favorite interviewer!

CBT: Thank you very much. That’s on tape, by the way. So, the first question I have for you is about the near-term future of our economy. The last 12 months feels like a really bad dream. This year has been the year that shook the world. It’s been a year since the bankruptcy of Lehman Brothers and it almost sent the economy over a cliff. We had the Bear Stearns fallout, Merrill Lynch sold to Bank of America, the AIG crisis, Fannie and Freddie falling under government control. It’s been a really difficult year. So, what do you think is going to happen now in the fourth quarter of 2009 and also in 2010?

WB: I am not sure about exact quarters or anything of the sort. Who knows about next week or next month? We made enormous progress since a year ago. We had a real panic. And if you didn’t panic, you didn’t understand what was going on. What happened in September and October of 2008 will particularly be remembered for a long, long time. And while the governmental authorities malign things sometimes, they fortunately did some very right things, very important things. They did them properly, and they kept us from going over the cliff. The fallout from that financial panic hit the regular economy in the fourth quarter like a ton of bricks. We are coming back from that. The patient really went into the emergency room and it won’t come out of the hospital entirely for a while.

There are things that have to be cured in the system, but this system works. If you look at this country, we have gone through the Great Depression, we have gone through world wars, we have gone through civil war, and we have progressed like no country in the world. We have the right system. It doesn’t avoid all the problems, but it overcomes all the problems.

CBT: Do you see consumer-spending increasing in the near term?

WB: No, and not for a while. I think people had an experience a year ago that they are not going to get over quickly. But the factories are there, the human potential is there, the system is there. It works over time. Your kids will live better than you and I live, and our grandchildren will live better than they do. This country moves forward.

If you take the 20th century, we had a Great Depression, world wars, a nuclear bomb, a flu epidemic. We had all these things, and at the end of the 20th century, the average American was living seven times better than at the start of the century. It’s amazing. The Dow Jones Average had gone from 66 to 11,400. So the country works, you don’t have to worry about that.

Full Article

David Einhorn's Speech at Value Investing Congress (VIC)

2009-10-20T07:53:00.002Z

One of the nice aspects of trying to solve investment puzzles is recognizing that even
though I am not always going to be right, I don’t have to be. Decent portfolio management
allows for some bad luck and some bad decisions. When something does go wrong, I like to
think about the bad decisions and learn from them so that hopefully I don’t repeat the same
mistakes. This leaves me plenty of room to make fresh mistakes going forward. I’d like to
start today by reviewing a bad decision I made and share with you what I’ve learned from that
error and how I am attempting to apply the lessons to improve our funds’ prospects.

At the May 2005 Ira Sohn Investment Research Conference in New York, I
recommended MDC Holdings, a homebuilder, at $67 per share. Two months later MDC
reached $89 a share, a nice quick return if you timed your sale perfectly. Then the stock
collapsed with the rest of the sector. Some of my MDC analysis was correct: it was less risky
than its peers and would hold-up better in a down cycle because it had less leverage and held
less land. But this just meant that almost half a decade later, anyone who listened to me
would have lost about forty percent of his investment, instead of the seventy percent that the
homebuilding sector lost.

I want to revisit this because the loss was not bad luck; it was bad analysis. I down
played the importance of what was then an ongoing housing bubble. On the very same day, at
the very same conference, a more experienced and wiser investor, Stanley Druckenmiller,
explained in gory detail the big picture problem the country faced from a growing housing
bubble fueled by a growing debt bubble. At the time, I wondered whether even if he were
correct, would it be possible to convert such big picture macro-thinking into successful
portfolio management? I thought this was particularly tricky since getting both the timing of
big macro changes as well as the market’s recognition of them correct has proven at best a
difficult proposition. Smart investors had been complaining about the housing bubble since at
least 2001. I ignored Stan, rationalizing that even if he were right, there was no way to know
when he would be right. This was an expensive error.

Full Speech

Joel Greenblatt on CNBC

2009-10-19T15:11:00.000Z

Anthony Bolton: A seven-point banking plan

2009-10-13T08:48:00.000Z

Over my 38 years in the investment business I have experienced six banking crises, starting with the UK secondary banking collapse of the mid-1970s.

Since then I have witnessed the Latin American debt crisis of the 1980s, the American savings and loan debacle, problems in Scandinavia in the early 1990s and later that decade in Asia. The recent global banking crisis is not without precedent. Such blow-ups are not unique to the past 40 years, either: anyone who has studied the long-term financial history of the developed world will know that it is peppered with similar events. The recent crisis was certainly the worst I’ve seen but I doubt it will be the last.

Much has been written about what we should do to prevent a recurrence of banking problems in the future and I thought that a year on from the Lehman bankruptcy was a good time to summarise my views. My seven-point plan is as follows:

1. A number of banks have become too big. Sadly, few seem to be prepared to tackle this aspect of the crisis, possibly because the influence of large banks within the establishment is too great. I don’t see why banks need to be as big as some have become, or why their activities need to be as wide-ranging as they are. In particular I think the case for separating commercial and investment banking is a strong one. Unfortunately we seem to be progressing in the opposite direction, with some large US investment institutions becoming universal banks. As soon as banks become global, we run the risk of worldwide rather than regional crises. Regulation is still carried out on a regional or, in most cases, national basis. This mismatch of activities and regulation exposes the system to significant risks.

2. As the finance director of one of the banks that has come out of the crisis largely unscathed argued in a recent meeting, it is trading and treasury functions and not commercial lending that got the industry into trouble. The case for increased regulation of trading and treasury functions is strong and banks should be required to carry significantly more regulatory capital for these activities.

3. Wholesale funding can be more risky than deposit funding as it tends to be less sticky, particularly when there is a loss of confidence. I think there is a case for encouraging the development of more, longer-term wholesale funding to complement customer deposits.

Full Article