May 31, 2011

Greek PM on Greece's current economic crisis

[Greece] will soon be out of the woods.

~George Papandreou, Greek Prime Minister, May 27, 2011

May 26, 2011

Barney Frank explains the essence of Washington, DC

If it is [a conflict of interest], then much of Washington is involved [in conflicts].

~Barney Frank, US representative, on helping his former lover, Herb Moses, land a lucrative position at Fannie Mae in the early 1990s

JP Morgan chief economist says 2011 recession threat is minimal

I would put the probability of a recession sometime in 2011 between 10 and 20%.

~Bruce Kasman, chief economist, JP Morgan, WSJ Big Interview with Kelly Evans, April 29, 2011

May 23, 2011

Toyota president hales the "entrepreneurialism" of Salesforce.com

This represents a concrete step towards creating a more mobile society. Toyota can learn a lot from an entrepreneurial firm like Salesforce.com.

~Akio Toyoda, president, Toyota Motor Corporation, during a joint press conference in Tokyo with Salesforce.com announcing the new "Toyota Friend" social network product, May 23rd, 2011

Jim Grant on "QE3 through QE N"

Because the Fed has coaxed or cajoled people into stocks, including many financial non-professionals, I think it has moral ownership of the market in a way that no recent Fed has had. Either the stock market owns the Fed, or vice versa but they are too intertwined now. If stocks pull back by 20 percent, how can Bernanke just sit there and say, `I want a bear market?' I think he has some moral responsibility for the finances of the non-professionals who bought.

It means QE 3 through QE N.

~Jim Grant, editor, Grant's Interest Rate Observer, Associated Press interview, May 20, 2011

Jim Grant says buying US debt will look foolish 10 years from now

I think it's useful to imagine how things might look ten years hence. What will one's children, heirs or successors think about a purchase today of ten-year Treasurys at 3.25 percent? They'll look back and say, `What were they thinking?' The (federal deficit) was running at 10 percent of GDP, the Fed had pressed its interest rates to zero, it had tripled the size of its balance sheet, and they bought bonds? Treasurys are hugely uninteresting, as is similar government debt the world over.

~Jim Grant, editor, Grant's Interest Rate Observer, Associated Press interview, May 20, 2011

Jim Grant on current valuations (mid-2011)

The trouble with the present is that nothing is actually cheap. My big thought is that our crises are becoming ever closer in time. The recovery time from the Great Depression was 25 years. The stock market peaked in 1929. It got back there in 1954. We had a peak in 2000, crash, levitation, then the biggest debt crisis in anybody's memory. The cycles are becoming compressed. The temptation to become invested at peaks of these shorter cycles is ever greater.

Perhaps one way to proceed is to hold cash at the opportunity cost of not much in Treasury bills. You make nothing, but you want to have this money when things are absolutely, not just relatively, cheap. This time of full or overvaluation shall pass. On recent form, it'll pass in a thunderclap and there will be a panic and it'll seem as if the world's ending. And that's when somebody who is nimble can get fully invested in a comfortable way.

It won't feel comfortable, it will feel awful, but I think that's the way to do it. I mean everything (you could invest in) is either uninteresting or rich, it seems to me.

~Jim Grant, editor, Grant's Interest Rate Observer, Associated Press interview, May 20, 2011

Jim Grant's misadventures with gold

Gold is a very difficult investment because its value is indeterminate. It is the reciprocal of the world's confidence in the likes of Ben Bernanke. I think the price will go higher.

My first misadventure with gold was standing in a queue in front of the Nicholas Deak currency and coin shop, which was on lower Broadway. And it might have been January of 1980 at the very peak but if not then, it was late 1979. I almost top ticked it. That was before I learned never to stand in line to buy an asset. You always want to go where nobody else is in line.

~ Jim Grant, editor, Grant's Interest Rate Observer, Associated Press interview, May 20, 2011

May 19, 2011

Tim Geithner on our proximity to another big financial crisis

It will come again. There will be another storm. But it's not going to come for a while.

It's not going to be possible for people to capture risk with perfect foresight and knowledge.

~Tim Geithner, US Treasury Secretary, in a speech given at the Time Warner Center screening of the new film, "Too Big To Fail", May 18, 2011

May 18, 2011

Jim Chanos says China can go forward or go in reverse, but not slow down

The fact of the matter is, if they [the Chinese economic planners] hit the brakes really hard, the economy goes into reverse, it doesn't slow down. And nobody will say that publicly because it's almost unbelievable but it happens to be the way the numbers work.

~Jim Chanos, founder, Kynikos Associates, CNBC "Squawk Masters", May 18, 2011

Jim Chanos says the Chinese bank system will require a recapitalization

 In China, private credit is state credit and that's one of the things we have to be careful about with credit numbers in China. Because at the end of the day, we've already recapitalized the Chinese banking system twice in the last fifteen years. My guess is it's going to have to be recapitalized again after this latest spate of lending. And Western investors historically don't do well in those recaps. So, I think you buy these securities in Hong Kong at your own risk.

~Jim Chanos, founder, Kynikos Associates, CNBC "Squawk Masters", May 18, 2011

Jim Chanos on the hot Chinese IPO market

It is interesting that as the party elites and others are trying to get their money out, via circumventing the banking regs or through Macau or whatever, that the American public is being asked to buy right in through the IPO market.

~Jim Chanos, founder, Kynikos Associates, CNBC "Squawk Masters", May 18, 2011

Jim Chanos on the Chinese speculative perspective

The real estate economy is only 12 years old in China. Private property, owning property, is only 12 years old. So, they've only seen an up market, number one, so there's the arrogance of the first-time bull. But more importantly, there is just such an overriding view that the State will not let anything bad happen to 'me', by 'me' speculating. And history treats that statement very, very badly, I think, in terms of when people have felt that the government will not let anything go wrong.

~Jim Chanos, founder, Kynikos Associates, CNBC "Squawk Masters", May 18, 2011

May 17, 2011

Sam Zell says no hard landing in China

I don't see a hard landing [in China]. I actually see the Chinese administration, seemingly, becoming more enlightened, particularly with reference to the Yuan. We've seen it go up 2% in the last period of time. I think it will continue to go up. And as it goes up, it will reduce inflation in China and that's a positive.

~Sam Zell, chairman, Equity Group Investments, CNBC, May 16, 2011

China bull says an economic collapse is out of the picture

The final thing that I'd have to disagree with a little bit is [Bill Smead] said something about is that the most bearish people are talking about 4-5% growth. I think for the last two years we've heard a lot of people talk about a bust in the bubble, this speculative real estate bubble that's going to explode. There's no question, as I said, I go over there a lot, there's speculation in the real estate market.

When you go through the numbers, you come out with the worst possible case and you go back to subprime US... you can't get a burst in the economy. You're gonna get a burst in the real estate market, but it ain't anything like what happened in the US.

~Mike Holland, Holland and Company, CNBC's "Squawk on the Street", May 16, 2011

A China bear speaks out on the crowded China growth story trade

They're down to condo-flippers and subprime lenders in China. And remember, the news that you get out of China is delayed probably 6 to 9 months. So, the reality is the most successful emerging market in history was the United States of America, it grew 9% compounded annually for a hundred years between 1800 and 1900 with 15 recessions, 4 depressions and a civil war at halftime.

The Chinese haven't cleaned their system since the late '90s. They're in the process of hitting the "overbuilding wall", the urge to be prideful and make it look like they're still growing and what's happening is they're setting up a terrible market in everything from emerging markets to commodities, debt attached to countries like Australia and Canada. There are so many trades crowded into this phenomena, and we've traveled all around the country in the last year and a half, whether it's financial advisers, registered investment advisers or institutions, they're all crowded into this trade together and the reason they're performing poorly is there's just no one left to go in.

~Bill Smead, CEO & CIO, Smead Capital Management, CNBC's "Squawk on the Street", May 16, 2011

PIMCO's El-Arian on the arrest of IMF chief Strauss-Kahn

Don’t underestimate how important Dominique Strauss-Kahn was in coordinating action [among European nations]. It’s the worst possible time to lose your general. You need the IMF to coordinate this global healing.

He has been getting everybody to play from the same sheet of music. Without him it will be much more difficult to coordinate European governments.

~Mohamed El-Arian, chief executive officer, PIMCO, Bloomberg's "In The Loop", May 17, 2011
(El-Arian is also a former deputy managing director of the IMF)

May 16, 2011

Robert Murphy on insider trading

To drive home just how arbitrary and non-criminal "insider trading" really is, consider this scenario: Suppose someone had been planning on buying shares of Acme, but just before doing so, he caught wind of a bad earnings report. In light of the new information (which was not yet public), the person refrained from his intended purchase. Should this person be prosecuted for insider non-trading?

~ Robert Murphy, "Is Insider Trading Really a Crime?," Mises.org, May 16, 2011

May 14, 2011

Benjamin Franklin on opportunity

The best time to plant a tree was 20 years ago, the second best time is now.

~Benjamin Franklin

G. K. Chesterton on public schooling

The purpose of Compulsory Education is to deprive the common people of their commonsense.

~ G. K. Chesterton

May 13, 2011

Phil Fisher on stock market participants

The stock market is filled with individuals who know the price of everything, but the value of nothing.

~Philip Fisher, legendary investor, Common Stocks and Uncommon Profits

Charlie Munger on good assets mixed with bad

When you mix raisins with turds, they are still turds.

~Charlie Munger, vice president, Berkshire Hathaway

Ben Graham on IPOs in bull markets

Somewhere in the middle of the Bull market the first common-stock flotations make their appearance. These are priced not unattractively, and some large profits are made by the buyers of the early issues. As the market rise continues, this brand of financing grows more frequent; the quality of the companies becomes steadily poorer; the prices asked and obtained verge on exorbitant. One fairly dependable sign of the approaching end of a bull swing is the fact that new common stocks of small and nondescript companies are offered at prices somewhat higher than the current level for many medium-sized companies with a long market history. The heedlessness of the public and the willingness of the selling organization to sell whatever may be profitably sold can have only one result - price collapse.

~ Benjamin Graham, dean of the value school

Rich Karlgaard: No safe harbors for traditional value stocks (2000)

From where did this loony idea emerge that a cowlicked midwesterner who buys stock in companies that turn out syrupy fizz water, bland ice milk and lefty newspapers should thus be known as a Value Investor?...Tech will roar back. It will continue its merry dash toward infinite powers at zero cost. It will transform all in its path. Markets may (and just did) correct for overvalue, but they can't abjure the laws of physics... Bottom line: In such an explosive economy, there will be no safe harbors for traditional 'value' stocks."

~Rich Karlgaard, publisher, Forbes Magazine, Forbes, May 2000

May 11, 2011

PIMCO equity manager Charles Lahr says buy the dip on volatility

If you're a long-term investor, [volatility created by the end of QEII] is likely to create some good opportunities and some good values, again, in a path toward higher stock market values.

If you're invested in stocks, if you're invested in a fund like Pathfinder, it's sort of a prerequisite to have a long-term approach. Stocks are volatile. There's very little you can do to avoid the volatility in equities, especially if you're a long-term value investor. But when these opportunities come along, it's very difficult to see with many of the names we own, this being anything more than a mark-to-market issue. So, volatility may drive the stock market down but the long-term value, the intrinsic value of the equities we own, are still there.

So, it's really the market serving up a blue light special to you, and telling you to go out and buy some more.

~Charles Lahr, portfolio manager, PIMCO EqS Pathfinder Fund, Consuelo Mack Wealthtrack, April 22, 2011

Jason Trennert foresees a volatile rally heading into 2012

I do think for the next twelve months the markets are going to reach new highs. The one thing for the individual investor, the one thing I would focus on is the importance of active management. You're not going to have a situation like the '80s and '90s where multiples went from 6 to 30. This is a situation where the rallies will be very steep, there will be a lot of volatility, but you'll also have to have your wits about you because things could change relatively quickly.

~Jason Trennert, managing partner, Strategas Research, Consuelo Mack Wealthtrack, April 22, 2011

Jason Trennert sees new highs in the S&P500 in 12 months

It wouldn't surprise me, candidly, to see the market hit a new high sometime in the next 12 months. Corporate profits, as measured from the GDP accounts, are actually past the prior peak. I would say the quality of the earnings is much better than it was when we were at the previous peak because a third of those earnings just came from one sector, which was financials. I think the Fed, personally, is going to remain a lot easier, longer than people are expecting. I think the whole idea that central banks, particularly the Fed, has made the decision that it won't tolerate deflation makes the asset allocation decisions a lot easier.

Now that you kind of know that inflation, or sticking the landing, are the two most likely outcomes, the equity allocation decision is just beginning. In my view, that is the greatest single catalyst. Hedge funds have already moved a lot of assets towards equities but long-only funds, retail investors, pensions and endowments are just starting to move the turrets toward equities and equity investments. That tends to happen over a very long period of time, it doesn't happen over a two or three month period, which is all we've seen in terms of flows into equity funds.

~Jason Trennert, managing partner, Strategas Research, Consuelo Mack Wealthtrack, April 22, 2011

May 9, 2011

Yaron Brook on the forecasting abilities of most economists

Most economists didn't see this recession coming. Most economists thought that housing prices were going to continue to go up. Most economists are wrong most of the time. That's why, after all, we call it the dismal profession.

~Yaron Brook, president, Ayn Rand Institute, Yahoo! Finance's Daily Ticker, May 9, 2011

May 8, 2011

"Warren Buffett of China" Yang Liu, on Buffett and China

I'm 45 years old, he's 80. My compounded annual gross return is 30% a year. His isn't. My returns are seven times over the past 15 years. Is that a miracle? It is.

This coming 10 years is the golden age. You must own China.

~Yang Liu, manager, Atlantis China fund, Barron's, May 7, 2011

Value investor Michael Price is bullish on GS

Some of the ugly ducklings, Goldman Sachs, Bank of America, people hate, they're in the press -- negative press -- never leave Goldman alone. Goldman more or less bottomed at $50 but was $80 or so during the real crunch. You know what Goldman's earned since mid-'08? Thirty-five bucks a share. The stock's $150 they're earning twenty bucks, right? Book is $130, we own Goldman, we buy Goldman on dips.

I think Goldman's a great, large cap financial value-guys' stock. Same thing with B of A.

I'm a sum of the parts guy, smart guy's running it. I hated the Senate report, the investigation report. Some of it read very poorly. But it's given them a lot of religion about how they treat clients and how they appear in the press. I'm a sum of the parts guy, you've got three or four distinct divisions. They're all over-capitalized. Great asset management business, amazing investment bank. I think more powerful than GreenHill, and you look at GreenHill's multiple. So you apply a normal 18 P/E on their asset management business, maybe a 25 or 30 P/E versus GreenHill's 40 on the M&A advisory business, and you're sitting on the broker-dealer for nothing. With excess capital.

Okay, see that dip [in the crash of '08]? That was an aberration. But you look in the middle of the dip, it was 80 or 90, they've earned thirty-five bucks a share since. I don't think the dividend is the story here. I think it's just an earnings-driven story in this expanding economy where the world needs financiers like a Goldman.


~Michael Price, president of MFP Investors LLC, Bloomberg's "Surveillance Midday", May 3, 2011

EU official on the need to lie to manage market confidence

When it becomes serious, you have to lie.

~Jean-Claude Junker, prime minister of Luxembourg, "Market jitters bring difficult choice between truth and lies for politicians, spokespeople," AP, May 4, 2011

May 5, 2011

Jamie Dimon on the important role foreclosure plays in relieving consumers of debt

Giving debt relief to people that really need it, that's what foreclosure is. [Homeowners] are probably better off going somewhere else, because they get relieved almost 100% of the debt through foreclosure.

~Jamie Dimon, CEO, JPMorgan Chase, CNBC Interview, January 11, 2011

Eike Batista on his biggest concern

My biggest concern? Well, none.

~Eike Batista, chairman and CEO, EBX Group, CNBC interview, May 4, 2011

Eike Batista on his quest to become the world's richest man

I have created 5 companies that have in them, embedded resources, worth $2 trillion, at very low cost to produce them. So, it's just a question of time [before he becomes the world's richest man] okay? So, Mr. Slim, I'm sorry, I don't know if I'm going to pass him on the right side or the left side but it's going to happen.

I haven't finished drilling yet. At today's prices we have $2.3 trillion of underlying assets.

~Eike Batista, chairman and CEO, EBX Group, CNBC interview, May 4, 2011

Eike Batista on Brazil's new president Dilma Rousseff

Listen, thanks [sic] God we have Dilma [Rousseff] running our country because she wants to, President Lula's legacy was to keep inflation under control because during his 8 years, the Brazilian worker had a 40% increase in his purchasing power. So, inflation control was crucial because before I know inflation eroded the purchasing power of the Brazilian worker.

She will preserve this legacy of keeping inflation rates under control, that's why interest rates are 13%. So, we are a country where inflation is demand-driven. The reason we increase interest rates, use nominal monetary tools, is unique in the world, we are a demand-driven economy. She has to cool it down, cool it down, with high interest because there are bottlenecks in infrastructure so after maybe, 3 years from now, we can go above 5 or 6% [inflation] again if we de-bottleneck the country.

~Eike Batista, chairman and CEO, EBX Group, CNBC interview, May 4, 2011

Eike Batista on the safe corporate legal environment in Brazil

Respect to contracts, right to law, and everything that you have acquired today is grandfathered. Let's say, whatever assets my company has today, in my mining company, my oil company, they are concessions. For instance, in oil they last for 28 years, they're grandfathered. This is very important. The government will not change the rules on what I already have. I think for investors this is very important. They may change the rules going forward -- increase taxes, royalties -- but what I have today, I have today.

~Eike Batista, chairman and CEO, EBX Group, CNBC interview, May 4, 2011

Eike Batista on the reasonable tax rates in Brazil

Countries like Brazil and Colombia have allowed the private sector to own national oil company or resource company assets. See, this is something people have to understand. The taxation, the government take, is very reasonable. In Brazil, the government take is 52%. In Angola, which is in Africa, it's 85[%]. So, it's really wealth creation for our shareholders.

~Eike Batista, chairman and CEO, EBX Group, CNBC interview, May 4, 2011

Eike Batista, 8th richest man in the world, and his 'idiot-proof' oil assets

The difference between us is really being in the shallow waters of Brazil. So, shallow waters implies low cost production which is spectacular. If oil is today $120, $18 [cost per barrel extracted] is an 85% EBITDA margin. We call it 'idiot-proof assets.'

~Eike Batista, chairman and CEO, EBX Group, CNBC interview, May 4, 2011

Barry Ritholz on reasons for being bullish on equities

What is keeping us long?

None of the usual technical or internal signs of a major correction are present (yet). Supply continues to be constrained, selling pressure is light to moderate, breadth and liquidity are strong.

Giving the markets the benefit of the doubt has been the winning play so far. We expect this to continue to work until it doesn’t.

Hopefully, I will be able to warn you in advance before markets get too far gone.

May 4, 2011

Warren Buffett on the reported death of OBL

Well, it's always been a mistake to bet against America, since 1776. And, you know, we take our body blows from time to time, but this country always comes through. And when we get united, get out of the way. It--and we are--at moments like this you particularly see that. And of course, after 9/11 we saw it. But I've always had enormous faith in this country to do anything, whether it's in economics or whether it's in liberating people or whatever it may be. And this is just one more dramatic illustration of when the United States sets out to do something, it gets it done.

~Warren Buffett, chairman, Berkshire Hathaway, CNBC's Squawk Box, May 2, 2011

Jim Paulsen on what the reported killing of OBL says to the rest of the world

We've cut the head of the snake off this organization at the same time that we're almost in the process of continually remaking the Middle East in general, with a breakout towards embracement of democracy, which will ultimately lead to more capitalism... there's just a sense of this thing finally turning in the right direction. And I wonder if a ways from now we'll look back and this will be a flag in the sand where we finally turned the corner, even though it's not necessarily the event that did it, it might be the event that marks when Americans in general and investors in general are feeling better.

This morning America is back, and we don't have to take crap from China or North Korea or anybody. That's a good feeling overall.

~Jim Paulsen, chief investment strategist, Wells Capital Management, CNBC's Squawk Box, May 2, 2011

Jim Paulsen on the reported killing of Osama Bin Laden

It is a great morning. In some ways, I think that in some ways what we're doing in the last couple of years in this country financially, in the financial markets, is rebuilding confidence, which we utterly destroyed in the 2008 crisis. And, a big part of that is to effect the mood and confidence and I think this is just what the doctor ordered for that. You know, it's not going to have a dramatic impact this morning that's going to last, but I think overtime it'll have a greater impact than you think.

The US has been battered for a decade or more with the failures of WMDs, and backing out of Iraq and to have a great success on a national scale puts us back in play. I think it's just the type of thing that adds to the confidence to spend some of the cash flow, for example, or to feel better about your portfolio and about equities in general.

~Jim Paulsen, chief investment strategist, Wells Capital Management, CNBC's Squawk Box, May 2, 2011

Charlie Munger speaks out against his own investment in GS

Wall Street to some extent is deliberately trying to profit from sin, and I think it’s a mistake. Why should an investment banker go to Greece to teach them how to pretend their finances are different from what they really are? Why isn’t that a perfectly disgusting bit of human behavior?

~Charlie Munger, Vice-Chairman, Berkshire Hathaway, "Wall Street Bankers Share Blame for Europe Crisis, Berkshire’s Munger Says", Bloomberg, May 2, 2011

May 3, 2011

Ben Stein on gold

I don't recommend the small individual investor buy individual commodities at all. I've been a pessimist on gold, and I still don't think gold deserves to be at the price it's at. I just don't see why it is considered so valuable. It earns no interest. It's just a passive, inert metal. It's like an obsession, it's like a mania, to have it. And I don't see what the value is

~Ben Stein, author, actor, investor, "Q&A with Ben Stein", Associated Press, May 1, 2011