Sep 13, 2014

Barron's reporter on risk of the Fed tightening too quickly

IN THE 1970S, high inflation wasn't just imagined -- it was very real. Today, however, those clamoring for rate hikes seek to head off potential threats -- of higher inflation, asset bubbles, and the like -- and ensure that U.S. growth continues to accelerate. In fact, inflation expectations in the U.S. have been falling recently, not rising. The risk becomes that the U.S. ends up repeating the '70s in reverse. Remember, in that decade, rates weren't hiked enough, causing inflation to reignite quickly, which never solved anything. Today, tighter policy could mean the economy never reaches escape velocity, instead remaining mired at 2% growth. And that's a mistake we don't want to make.

~ Ben Levisohn, "The '70s in Reverse," Barron's, September 15, 2014

Charles Munger on knowing the limits of your knowledge and competence

People chronically misappraise the limits of their own knowledge; that’s one of the most basic parts of human nature. Knowing the edge of your circle of competence is one of the most difficult things for a human being to do. Knowing what you don’t know is much more useful in life and business than being brilliant.

~ Charles Munger, "Charles Munger: Secret's of Buffett's Success?," The Wall Street Journal, September 12, 2014

Sep 6, 2014

Nassim Taleb on the role of ambition in success (and failure)

Ambition accounts for 50% of success. And 100% of (big) failures.

~ Nassim Taleb, posted on Facebook, August 17, 2014

Sep 4, 2014

JPMorgan strategist David Lebovitz dismisses bullish investor sentiment as a concern

Q: What about sentiment?  The I.I. Report [Investors Intelligence], which people monitor, shows that bearishness is now at a 27 year low...  Are people getting too optimistic, too exuberant over this rally?

A: I think people are getting complacent, but we've seen a strong of no bad news for the most part.  People are comfortable with the Ukraine.  They're comfortable with what's going on the Middle East.  So I expect that there will be something which catches us all by surprise at some point, but generally speaking things are pretty good.

~ David Lebovitz, global market strategist, JPMorgan Asset Management, as appeared on CNBC, September 4, 2014

(Lebovitz has been in the investment business all of 6 years, landing his first job in July, 2008.)

Aug 28, 2014

George Orwell on politics

In our age there is no such thing as "keeping out of politics." All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred and schizophrenia.

~ George Orwell

Dennis Gartman: Stocks melting up, think like a 4-year old

We are in fact melting up.  We just continue to make new highs and the odds are we will continue to make new highs...  It's still a bull market...  Sometimes thinking like a 4-year old, looking to see what the general trend is, is the best way of trading, the best way of investing.  Sometimes we make it just far too complicated and get in our own way.

~ Dennis Gartman, "More Melt-Up for Equities - Dennis Gartman," Kitco News, August 28, 2014

Aug 18, 2014

Aaron Task on the absence of irrational exuberance (2014)

I don't see much of any signs of irrational exuberance.  We've got the Shiller piece.  We're here talking about things people are worried about.  Who is out there banging the table saying, "you've gotta own stocks, they're fantastic, they're great, buy 'em here?"  Everyone thinks the wheels are about to come off the bus.  So until we get to a place where everyone says you can't lose in the stock market, then call me and talk about irrational exuberance.

~ Aaron Task, Yahoo Finance interview, August 18, 2014