Morgan Housel on the contradiction of the Berkshire Hathaway annual lovefest

Another version of [pluralistic ignorance] is when everyone thinks they’re a contrarian. The heart of pluralistic ignorance is having misperceptions about how others in your peer group think. And that’s usually what happens when you have a view about an investment that you assume isn’t held by a large percentage of other investors. Take the Berkshire Hathaway annual meeting, which is coming up next week. It’s 40,000 people, all of whom consider themselves contrarians. People show up at 4 am to wait in line with thousands of other people to tell each other about their lifelong commitment to not following the crowd. Pluralistic ignorance at its finest.

~ Morgan Housel, "You Played Yourself," Collaborative Fund blog, April 29, 2019

WeWork CFO on how investors should treat losses

We really want to emphasize the difference between losing money and investing money. You can lose money or you can invest money. At the end of this quarter, we have these cash flow-generating assets.

~ Artie Minson, WeWork CFO, as appeared on CNBC, May 22, 2019

Herbert Hoover on public debt

Blessed are the young, for they will inherit the national debt.

~ Herbert Hoover

Daniel Boorstin on the greatest obstacle to discovery

The greatest obstacle to discovery is not ignorance - it is the illusion of knowledge.

~ Daniel J. Boorstin, historian

Kevin Duffy on the changing nature of fraud

As a society, we’ve replaced conscious deceit with self-deceit, targeted fraud with intellectual fraud, and little lies with the Big Lie.

~ Kevin Duffy, May 24, 2019

Philip Duffy clears up the difference between democracy and a constitutional republic

The United States is not a democracy in spite of the nonsense that students learn in school.  It is a federation of sovereign state republics with limited, enumerated powers defined in a constitution.  That doesn't fit on a bumper sticker, whereas democracy does, which probably reflects its appeal.  The framers of the Constitution had a different perspective, choosing to not mention democracy once in the text of the Constitution.  It is not that they didn't think about the term.  Democracy is actually mentioned five times in The Federalist, all in a negative context.  The founders feared democracy as much as they feared monarchy.

~ Philip Duffy, March 22, 2019

Constitution Sesquicentennial
1787-1937

John Madden on competition

If you can't run with the big dogs, stay on the porch.

~ John Madden

John Madden on hard work

The road to Easy Street goes through the sewer.

~ John Madden

Marko Kolanovic sees 3,000 on the S&P 500 soon

If earnings season is not a complete disaster, I think markets will go higher and we could actually see our price target [of 3,000 on the S&P 500] being achieved earlier, maybe even sometime in May or June.

~ Marko Kolanovic, J.P. Morgan’s global head of quantitative and derivatives strategy, as appeared on CNBC, April 3, 2019

(The S&P 500 closed at 2873.)

Financial Times: "gold is a goner" (1997)

In the western world more people are buying gold to wear, as jewellery or watches, because it makes them feel good and they can pretend to themselves that these objects will hold their value. They conveniently ignore the fact that the cost of design, production, profit and taxes usually far outstrips the value of the gold content.

But when it comes to bullion as an investment, and as a measure of national wealth, gold is a goner. The reverse alchemy is almost complete. Eddie George, governor of the Bank of England, like Fort Knox, one of the great citadels of gold, recently told a European parliamentary committee: "Whereas gold used to be seen as a good asset, it is now seen as the bottom of the pile."

~ "The Death of Gold," Financial Times cover, by Kenneth Gooding, December 13, 1997

Western Mining Prospector
1898

Kevin Duffy: Is this country doomed?

No, the country is not doomed. But we clearly have "issues." If you want real problems, go to Venezuela. The amount of money going into private R&D around the world is at record levels. China was a basket case in 1980 with just 1% of the world's exports; now it's 13% and building a viable VC industry. The world's vital signs keep improving: life expectancy, infant mortality, homicide rates, etc. In the 1960s, 50 out of every 100,000 global citizens died annually from famine; by the 1990s, that number was 2.6.

This is all happening despite an epidemic of economic illiteracy and the resulting government meddling in the economy. It's amazing how the free market can still operate with all of the interference. Imagine the human potential if man figures this out! I am a long-term optimist on the human experiment, but that doesn't mean there won't be plenty of stumbles along the way.

~ Kevin Duffy, Facebook post, May 9, 2019

Economist gloats about the Venezuelan economy (2013)

For more than a decade people opposed to the government of Venezuela have argued that its economy would implode. Like communists in the 1930s rooting for the final crisis of capitalism, they saw economic collapse just around the corner.  How frustrating it has been for them to witness only two recessions: one directly caused by the opposition's oil strike (December 2002-May 2003) and one brought on by the world recession (2009 and the first half of 2010). However, the government got control of the national oil company in 2003, and the whole decade's economic performance turned out quite well, with average annual growth of real income per person of 2.7% and poverty reduced by over half, and large gains for the majority in employment, access to health care, pensions and education.

Meanwhile, the poverty rate dropped by 20% in Venezuela last year – almost certainly the largest decline in poverty in the Americas for 2012, and one of the largest – if not the largest – in the world. 

~ Mark Weisbrot, economist, 2013

Donald Trump: the Japanese "want to own Manhattan" (1990)

The Japanese can buy our buildings, our Wall Street firms, and there's virtually nothing to stop them. In fact, bidding on a building in New York is an act of futility, because the Japanese will pay more than it's worth just to screw us. They want to own Manhattan.

~ Donald Trump, Playboy interview, March 1990

Thomas Lee sees plenty of "dry powder" on the sidelines

Retail investors have been selling stocks and buying bonds so far in 2019. And hedge fund net long positions are among the lowest levels in 5 years. Hence, only the long only funds are fully exposed to equities. With so much on the sidelines, markets near highs, and with manager underperformance, we see this dry powder as a key dynamic.

~ Thomas Lee, Fundstrat Global Advisors, from research note, May 6, 2019

Stephen Poloz: "the Canadian housing market remains solid"

The fundamentals of the Canadian housing market remain solid, and growth will resume once the effects of reduced expectations for house price inflation and the new mortgage guidelines have been absorbed... I can see how longer-term mortgages can contribute to a safer financial system and more stable economy.

~ Stephen Poloz, Bank of Canada Governor, May 6, 2019, speech in Winnipeg

Credit Suisse strategist: "we have an economy that is healthy and creating a ton of jobs"

We think stocks are going to continue to deliver over the next several years — high single digits or better returns... The real key here is that we have an economy that is healthy and creating a ton of jobs... I think the feeling among investors is anything that causes any near-term pain is inherently bad, but it’s very possible that as a result of this [trade war] we’d end up with more open access to Chinese markets in the long run, and a better situation for intellectual rights. And if those are the outcomes, then yes, this will increase volatility for a period of time, but it’s possible the results here are positive ones.

I think all the people who are waiting to buy on a dip this year, a lot of them waited too long. The market is very attractively valued, and the economy is in good shape and corporate profits were fine.

~ Jonathan Golub, chief U.S. equity strategist, Credit Suisse, "One of Wall Street’s biggest bulls is looking well past the trade drama," MarketWatch.com, May 7, 2019

Warren Buffett on the connection between business and investing

I am a better investor because I am a businessman and a better businessman because I am an investor.

~ Warren Buffett

John Mackey on youth and innovation

I think one of the advantages of being young is not only do you have a lot of energy, but you don't know what you can't do.  You don't yet know your limitations...  We usually depend upon a lot of our breakthroughs with young people because they naturally think outside the box because they have never been in the box.  And they naturally just tend to be more creative and you see many of the innovations that are happening in our society by people in their 20s.  In my generation, how old was Bill Gates when he started Microsoft, or Steve Job when he started Apple, or Michael Dell when he was in his college dorm selling computers?  Now, how old is Mark Zuckerberg when he started Facebook?  It's story after story after story of very young people who just went for it and are successful.

~ John Mackey, co-founder of Whole Foods Market, interview with Patrick Gentempo, "Money Revealed - Part 5"

Chamath Palihapitiya: recession "next to impossible" (2019)

I don't see a world in which we have any form of meaningful contraction nor any form of meaningful expansion. We have completely taken away the toolkit of how normal economies should work when we started with QE. I mean, the odds that there's a recession anymore in any Western country of the world is almost next to impossible now, save a complete financial externality that we can't forecast.

~ Chamath Palihapitiya, CEO of Social Capital and minority stakeholder of the NBA's Golden State Warriors, as appeared on CNBC's Fast Money Halftime Report, April 30, 2019