Joe Kernen believes 3600 on the S&P 500 was the low

Yesterday we had a guy say, "I've gone from selling strength back to buying dips."  That makes sense to me.  I don't think we see 3600 [on the S&P 500] again.

~ Joe Kernen, Ron Baron interview, 2:45 mark, CNBC, August 25, 2022.

(The S&P 500 closed at 4199.)

Ron Baron on the futility of macro predictions

Every time everyone tries to predict macro they're almost always wrong...  It's easy to get out of inflation, it's impossible to get out of deflation.  So we never predict anything about the economy or about the stock market.

~ Ron Baron, CNBC interview, 0:20 mark, August 25, 2022

George Soros on sovereignty

The principle of sovereignty needs to be reconsidered.  Sovereignty belongs to the people; the people are supposed to delegate it to the government through the electoral process.  But not all governments are democratically elected and even democratic governments may abuse the authority thus entrusted to them.  If the abuses of power are severe enough and the people are deprived of opportunities to correct them, outside interference is justified.  International intervention is often the only lifeline available to the oppressed.

[...]

The rulers of a sovereign state have a responsibility to protect the citizens.  When they fail to do so, the responsibility should be transferred to the international community.  That principle out to guide the international community in its policies.

~ George Soros, The Bubble of American Supremacy, "Sovereignty and Intervention," pp. 102-104

The Wall Street Journal: Japan returning to nuclear power

Energy common sense is in short supply these days, so all the more reason to cheer Japan for rethinking its flight from nuclear power. Prime Minister Fumio Kishida on Wednesday unveiled plans to return nuclear energy to a central place in the country’s electric grid. 

Tokyo will aim to bring seven reactors back into service, for a total of 17, and will invest in developing and installing next-generation reactors. Nuclear plants generated about a third of the country’s electricity 20 years ago, according to the International Atomic Energy Agency, but that has fallen to 7.2%. Most of the country’s 33 operational reactors have been offline for years undergoing safety checks. 

 [...]

As hard as the politics will be, however, Japan has little choice. Japan must import almost all of its coal, oil and natural gas, and the Russian invasion of Ukraine has sent global prices skyrocketing while setting off competition for supply. Japan’s electric grid has barely avoided blackouts this year. The economic costs of chronic energy shortages are starting to loom larger politically than the drawbacks of a nuclear restart. 

Perhaps Japan’s decision will get through to Germany, which also started phasing out nuclear after Fukushima and is now mired in a debate about keeping its three remaining reactors online. This should be an easy call as natural gas shortages loom this winter. Advanced economies need reliable base load power, and at least Tokyo understands this.

~ WSJ editorial board, "Japan Revives Nuclear Power," The Wall Street Journal, August 25, 2022

Japanese Prime Minister Fumio Kishida

Ryan Detrick: "This bear market may bottom soon"

If a full-blown crisis and recession such as in 2000-2002 and 2008-09 can be avoided, this bear market may bottom soon.  [With over half of the last five bear markets ending in three months or less,] “the current bear market may be closer to a bottom than many expect.  How this bear market will end will likely hinge on the pace at which inflation comes down, which will dictate the timing and magnitude of the Federal Reserve’s rate hiking campaign.

~ Ryan Detrick, chief market strategist for LPL Financial, "Stocks Are Crashing But History Shows This Bear Market Could Recovr Faster Than Others," Forbes, June 29, 2022

William McKinley on American expansion

The American flag has not been planted on foreign soil to acquire more territory but for humanity's sake.

~ William McKinley's remarks on 1900 US campaign poster of McKinley and his choice for second term Vice President, Theodore Roosevelt, July 12, 1900

William McKinley's benevolent assimilation proclamation

Finally it should be the earnest wish and paramount aim of the military administration to win the confidence, respect, and affection of the inhabitants of the Philippines by assuring them in every possible way that full measure of individual rights and liberties which is the heritage of free peoples, and by proving to them that the mission of the United States is one of benevolent assimilation substituting the mild sway of justice and right for arbitrary rule.

~ President William McKinley, December 21, 1898

William McKinley
1904

Sheldon Richman on the early days of American imperialism

Unfortunately, even many critics of the American empire think it is relatively new.  Some do understand that its origins preceded the 20th century and that the empire did not begin with the Cold War or U.S. entry into the world wars.  They would likely see the Spanish-American War in 1898 as the beginning, when America acquired territory as far away as the Philippines.  But I would look even further back than that.  How far back?  The second half of the 18th century.  The earliest days of American empire-building shed light on how America's earliest rulers perceived their constitutional powers and hence on the Constitution itself...

Even the government's schools teach, or at least taught during my 12-year sentence, that America's founders had - let us say - an expansive vision for the country they were establishing.  The historian William Appleman Williams's extended essay, Empire as a Way of Life (1980), provides many details.  Clearly, these men had empire on their minds.

Before he became an evangelical for independence from Great Britain, Benjamin Franklin proposed a partnership between Great Britain and the American colonists to help spread enlightened empire throughout the Americas.  His proposal was rejected as impractical, so he embraced independence from Britain - without giving up the dream of empire in the New World.  George Washington would have shared the vision; he spoke of the "rising American empire" and described himself as living in an "infant empire."

Thomas Jefferson - "the most expansion-minded president in American history," (writes Gordon S. Wood in Empire of Liberty: A History of the Early Republic: 1789-1815 - set out a vision of an "Empire of Liberty," later revised as an "Empire for Libery," and left the presidency believing that "no constitution was ever before as well calculated as ours for extensive empire and self-government."  Before leaving office, of course, he acquired the gigantic Louisiana territory from France (828,000 square miles) without constitutional authority, a violation he was fully aware of.

[...]

Indeed, in the eyes of the founders, the American Revolution was largely a war between a mature, exhausted empire and a nascent one.  Many - but assuredly not all - Americans of the time would have cheerfully agreed...

The Indian Wars were among the first steps in empire building.  The unspeakable brutality and duplicity - the acts of ethnic cleansing and genocide, as we say today - were crimes, not merely against individuals, but also against whole societies and nations.  "Imperialism" was not yet a word in use, but that's what this was, as were the designs and moves on Canada (one of the objects of James Madison's War of 1812), Mexico, Cuba, Florida, the Mississippi and New Orleans, Louisiana, the Northwest, and the Pacific coast (the gateway to Asia).  The wishes of the inhabitants - who were "as yet incapable of self-government as children," as Jefferson said of Louisiana's residents - didn't count.  (Lincoln's war is thus understood as an exercise in empire preservation.)

~ Sheldon Richman, America's Counter-Revolution, "Empire on Their Minds," pp. 101-102

Vanity Fair on Warren Buffett's praise of George W. Bush for the 2008 Wall Street bailout

The lifelong Democrat, who recently announced that he was donating the majority of his wealth to the Gates Foundation, came under fire for a New York Times op-ed piece he wrote in November thanking the Bush administration for the Wall Street bailout.  "I felt that they deserved thanks," he tells [Bethany] McLean.  "People should see that the government can do things right."  He adds, "I may not have convinced anyone, but it should mean something when I say George Bush was right!"  Bush’s September 2008 declaration "If money isn’t loosened up, this sucker could go down!" Buffett calls "the 10 most immortal words in the history of economics."

~ Vanity Fair, Bethany McLean interview, January 5, 2011

Buffett with Treasury Secretary Hank Paulson

Warren Buffett on the U.S.: "we definitely had a system that unleashes potential"

We had four million people here in 1790.  We’re not more intelligent than people in China, which then had 290 million people, or Europe, which had 50 million.  We didn’t work harder, we didn’t have a better climate, and we didn’t have better resources.  But we definitely had a system that unleashes potential.  This system works.  Since then, we’ve been through at least 15 recessions, a civil war, a Great Depression.  All of these things happen.  But this country has optimized human potential, and it’s not over yet.  It’s like what’s written on the tomb of Sir Christopher Wren: "If you seek his monument, look around you."

~ Warren Buffett, as quoted in Bethany McLean interview, Vanity Fair, January 5, 2011

Nassim Taleb on opinions vs. actions

Never ask anyone for their opinion, forecast, or recommendation.  Just ask them what they have - or don't have - in their portfolio.

~ Nassim Taleb

Stephen Kinzer on the sinking of the Maine and pro-war propaganda

Many Americans already felt a passionate hatred for Spanish colonialism and a romantic attachment to the idea of "Cuba Libre."  Their emotions had been fired by a series of wildly sensational newspaper reports that together consitute one of the most shameful episodes in the history of the American press.  William Randolph Hearst, the owner of the New York Journal and a string of other newspapers across the country, had been attracting readers for months with vivid denunciations of Spanish colonialists...

[...]

The moment Hearst heard about the sinking of the Maine, he recognized it as a great opportunity.  For weeks after the explosion, he filled page after page with mendacious "scoops," fabricated interviews with unnamed government officials, and declarations that the battleship had been "destroyed by treachery" and "split in two by an enemy's secret infernal machine."  The Journal's daily circulation doubled in four weeks.  Other newspapers joined the frenzy, and their campaign brought Americans to near-hysteria.

~ Stephen Kinzer, Overthrow: America's Century of Regime Change from Hawaii to Iraq, pp. 36-37

(Editor's note: The role of yellow journalism in whipping Americans into a pro-war frenzy may be overstated.)

Dwight D. Eisenhower's Chance for Peace speech

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone.  It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.  The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities.  It is two electric power plants, each serving a town of 60,000 population.  It is two fine, fully equipped hospitals.  It is some fifty miles of concrete pavement.  We pay for a single fighter with a half-million bushels of wheat.  We pay for a single destroyer with new homes that could have housed more than 8,000 people...  This is not a way of life at all, in any true sense.  Under the cloud of threatening war, it is humanity hanging from a cross of iron.

~ President Dwight D. Eisenhower, Chance for Peace speech, a.k.a. Cross of Iron speech, April 16, 1953

Dan Ferris on market extremes

I just have this view that you should be a bottom up investor most of the time...  But there are times when the top down gets so extreme.  I think at the extremes one needs to respect cycles and cycles do occur, right?  And cycles are brutal, aren't they?  Cycles don't care about how wonderful your business is, do they?  Dan spends all this time looking at free cash flow, balance sheets and moats...  Cycles don't care about any of that when they really get cooking at the extremes.

~ Dan Ferris, Brett Eversole interview, Stansberry Investor Hour, August 22, 2022

Walter Williams on social justice

Let me offer you my definition of social justice: I keep what I earn and you keep what you earn.  Do you disagree?  Well then tell me how much belongs to you and why.

~ Walter Williams

Benjamin Franklin on persuasion

If you want to persuade, appeal to interest not to reason.

~ Benjamin Franklin

Sheldon Richman on money in politics

There is only one answer.  We must strip government of the power to dispense privileges to anyone.  If we can pull that off, the problem of money in politics will evaporate.

~ Sheldon Richman, "The Only Way to Get Money out of Politics," The Future of Freedom Foundation, January 28, 2010

Stephen Kinzer on the rise of Fidel Castro

Castro was a pure product of American policy toward Cuba.  If the United States had not crushed Cuba's drive to independence in the early twentieth century, if it had not supported a series of repressive dictators there, and if it had not stood by while the 1952 election was canceled, a figure like Castro would almost certainly not have emerged.  His regime is the quintessential result of a "regime change" operation gone wrong, one that comes back to haunt the country that sponsored it.

~ Stephen Kinzer, Overthrow: America's Century of Regime Change From Hawaii to Iraq, p. 91

Stephen Kinzer on the U.S. shift to world power in 1898

Historic shifts in world politics often happen slowly and are hardly even noticeable until years later.  That was not the case with the emergence of the United States as a world power.  It happened quite suddenly in the spring and summer of 1898.

Until then, most Americans had seemed satisfied with a nation whose reach extended only across their own continent...

In 1898 the United States definitively embraced what Senator Henry Cabot Lodge called "the large policy."  Historians have given it various names: expansionism, imperialism, neocolonialism.  Whatever it is called, it represents the will of Americans to extend their global reach.

[...]

Henry Cabot Lodge was among several members of Congress who urged the annexation of Canada.  [Teddy] Roosevelt mused about attacking Spain, and picked out Cádiz and Barcelona as possible targets.  Portuguese leaders feared that American troops might seize the Azores.

[...]

Outsiders watched the emergence of this new America with a combination of awe and fear.  Among the most astonished were European newspaper correspondents who were posted in the United States during 1898.  One wrote in the London Times that he had witnessed nothing less than "a break in the history of the world."  Another, in the Manchester Guardian, reported that nearly every American had come to embrace the expansionist idea, while the few critics "are simply laughed at for their pains."

Some of these journalists were unsettled by what they saw...  Le Temps said the United States, formerly "as democratic as any society can be," had become "a state already closer to the other states of the old world, that arms itself like them and aggrandizes itself like them."  The Frankfurter Zeitung warned Americans against "the disastrous consequences of their exuberance" but realized that they would not listen.

~ Stephen Kinzer, Overthrow: America's Century of Regime Change From Hawaii to Iraq (2006), pp. 80-81

Congressman Tom Cole on why he voted for the CHIPS Act

Although this is not a perfect bill and not the one I would have written, it is a step in the right direction toward keeping Communist China at bay and protecting our nation’s economic and security interests.  At a time when China is becoming increasingly aggressive and dangerously trying to command the world order, the CHIPS and Science Act importantly strengthens America’s global competitiveness by investing in our nation’s semiconductor industry and encouraging manufacturing of those critical pieces of technology domestically.  We must secure our industries from foreign adversaries, and that is exactly what this legislation achieves.

~ Congressman Tom Cole (R-Okla.), "These are the 24 House Republicans who broke with the party to support chips and science bill," The Hill, July 28, 2022

Sheldon Richman on the fight between anti-federalists and federalists over forming a new government in America

The Anti-Federalists could not discuss power without expressing their distaste for aristocracy...  The Revolution... was as much an internal struggle against a conservative elite as an external struggle against the British.  Aristocracy in the new nation was no imaginary nemisis.  The Federalists complained that with the breakdown in social distinctions achieved through the Revolution (apparel no longer indicated who was well-born and who was not), the wrong sort of people were populating the state legislatures, people who actually worked for a living.  The remedy was a national government, which for various reasons would favor prominent wealthier men...

In retrospect, the Anti-Federalists seemed destined to lose because they conceded too much.  (They were also handicapped, as [Pauline] Maier and [Gordon S.] Wood documented, by newspaper bias toward the Federalists, who were concentrated in the cities and towns).  Anti-Federalists objected to power, but only up to a point.  They were willing to accept a stronger national government, and they accepted taxation, regulation, and other government activism at the state and local level.  This reduced the force of their case against the Federalists.  They were arguing not about power per se, but about which level of government should have the upper hand.  That made the difference a matter of degree not kind, which gave the advantage to the nationalists.  "In any conflict between two men (or two groups) who hold the same basic principles," Ayn Rand wrote in "The Anatomy of Compromise," "it is the more consistent one who wins."  Unfortunately, the Federaliss were the more consistent.

~ Sheldon Richman, America's Counter-Revolution, pp. 10-11

Julian Robertson on long-short investing

Our mandate is to find the 200 best companies in the world and invest in them, and find the 200 worst companies in the world and go short on them. If the 200 best don't do better than the 200 worst, you should probably be in another business.

~ Julian Robertson, 1932-2022

John Doerr on his early investments in Amazon and Google

I met Jeff [Bezos] when he was thirty years old and he and I were both computer science kinds of geeks. And Amazon had a business plan: it was growing to be the best bookseller online. And so I invested - I think it was $8 million for 15% of Amazon - and Jeff and I set out to build an amazing, world-class team.  And he had a vision, which is true to this day, that if he had the broadest selection with the most affordable prices and the best customer experience, that flywheel he could get to grow by obsessing on the customer.  And yes, I believed he was successful.  No, I had no idea that it would be worth $1.2 trillion today.

But the same thing happened a few years later when I met two 21-year old Stanford University PhD dropouts, Larry Page and Sergey Brin.  And in that case I invested $11 million for 11% of the company, which was very controversial.  They had no business plan, no revenues.  And I asked Larry Page.  He sat across the table from me.  I said, "Larry, how big do you think this can be?"  Without batting an eyelash he said $10 billion.  I said, "Surely you mean market cap, right?"  He said, "No, I'm talking revenues."  He said to me, "John, you have no idea how much we're going to be able to improve search and how important search is for finding all the world's information and services.

~ John Doerr, Bloomberg Wealth inverview with David Rubenstein, August 23, 2022

Richard Bernstein on the Nifty Fifty bubble

In the late 1960s and early 1970s, major institutional portfolio managers became so enamored with the idea of growth in general, and with the so-called "Nifty-Fifty" growth stocks in particular, that they were willing to pay any price at all for the privilege of owning shares in companies like Xerox, Coca Cola, IBM, and Polaroid.  These investment managers defined the risk in the Nifty-Fifty, not as the risk of overpaying, but as the risk of not owning them: the growth prospects seemed so certain that the future level of earnings and dividends would, in God's time, always justify whatever they paid.  They considered the risk of paying too much miniscule compared with the risk of buying shares, even at a low price, in companies like Union Carbide or General Motors, whose fortunes were uncertain because of their exposure to business cycles and competition.

~ Richard Bernstein, Against the Gods

(See here for larger image of below's page.)

Arthur Ekirch Jr. on the major trend in American history

Since the time of the American Revolution the major trend in our history has been in the direction of ever-greater centralization and concentration of control - politically, economically, and socially.  As part of this drift toward 'state capitalism' or 'socialism,' the liberal values associated with the eighteenth-century Enlightenment - and especially that of individual freedom - have slowly lost their primary importance in American life and thought.

~ Arthur A. Ekirch Jr., The Decline of American Liberalism (1967)

Barbara Tuchman on the U.S. military's first involvement in Vietnam

A week after the Japanese surrender in August 1945, a Viet-Minh congress in Hanoi proclaimed the Democratic Republic of Vietnam and after taking control in Saigon declared its independence, quoting the opening phrases of the American Declaration of Independence of 1776.  In a message to the UN transmitted by the OSS, Ho Chi Minh warned that if the UN failed to fulfill the promise of its charter and failed to grant independence to Indochina, "we will keep on fighting until we get it."

[...]

Self-declared independence lasted less than a month.  Ferried from Ceylon [Sri Lanka] by American C-47s, a British general and British troops with a scattering of French units entered Saigon on 12 September, supplemented by 1500 French troops who arrived on French warships two days later.  Meanwhile, the bulk of two French divisions had sailed from Marseilles and Madasgar on board two American troopships in the first significant act of American aid...  Afterward, the State Department, closing the stable door, advised the War Department that it was contrary to United States policy "to employ American flag vessels or aircraft to transport troops of any nationality to or from the Netherlands East Indies or French Indochina, or to permit the use of such craft to carry arms, ammunition or military equipment to those areas."

~ Barbara Tuchman, The March of Folly, pp. 240-241

Ron Paul on personal vendettas and political movements

If your driving force is your hatred towards somebody, eventually you're going to come up short.

~ Ron Paul, "Twilight of the Neocons? Liz Cheney Laughed Out of Wyoming," 1:30 mark, The Ron Paul Report, August 17, 2022

Douglas Blair on the backlash against the green movement

It’s clear that moves by world governments to prostrate themselves on the altar of environmentalism are neither effective nor popular with their citizens. They might make Swedish teen climate activist Greta Thunberg happy, but you’d think the country’s leaders would prefer one unhappy Swedish youth to a mob of angry citizens.

~ Douglas Blair, "Sri Lanka Collapses and Dutch Farmers Revolt. Blame ‘Green’ Policies.," The Daily Signal, July 15, 2022

Kevin Duffy on the Left vs. Right

The left and right are competing views on how to gain political power and run the apparatus of government, with plenty of overlap.

~ Kevin Duffy

Rolf Dobelli quotes Charlie Munger on the "man with the hammer tendency"

"If your only tool is a hammer, all your problems will be nails," said Mark Twain - a quote that sums up the déformation professionnelle perfectly.  Charlie Munger, Warren Buffett's business partner, named the effect the "man with the hammer tendency" after Twain: "But that's a perfectly disastrous way to think and a perfectly disastrous way to operate in the world.  So you've got to have multiple models.  And the models have to come from multiple disciplines - because all the wisdom of the world is not to be found in one little academic department."

~ Rolf Dobelli, The Art of Thinking Clearly, "Those Wielding Hammers See Only Nails," pp. 275-276

Rolf Dobelli on déformation professionnelle

Here are a few examples of déformation professionnelle: Surgeons want to solve almost every medical problem with a scalpel, even if their patients could be treated with less invasive methods.  Armies think of military solutions first.  Engineers, structural.  Trend gurus see trends in everything (incidentally, this is one of the most idiotic ways to view the world).  In short: If you ask people the crux of a particular problem, they usually link it to their own expertise.

~ Rolf Dobelli, The Art of Thinking Clearly, p. 276

Rolf Dobelli on the limits of expertise and value of expanding our circle of competence

If you take your problem to an expert, don't expect the overall best solution. Expect an approach than can be solved with the expert's tool kit.  The brain is not a central computer.  Rather, it is a Swiss Army knife with many specialized tools.  Unfortunately, our "pocketknives" are incomplete.  Given our life experiences and our professional expertise, we must try to add two or three additional tools to our repertoire - mental models that are far afield from our areas of expertise.  For example, over the past few years, I have begun to take a biological view of the world and have won a new understanding of complex systems.  Locate your shortcomings and find suitable knowledge and methodologies to balance them.  It takes about a year to internalize the most important ideas of a new field, and it's worth it: Your pocketknife will be bigger and more versatile, and your thoughts sharper.

~ Rolf Dobelli, The Art of Thinking Clearly, p. 277

The Economist: "Brazil takes off"

China may be leading the world economy out of recession but Brazil is also on a roll.  It did not avoid the downturn, but was among the last in and the first out.  Its economy is growing again at an annualised rate of 5%.  It should pick up more speed over the next few years as big new deep-sea oilfields come on stream, and as Asian countries still hunger for food and minerals from Brazil's vast and bountiful land.  Forecasts vary, but sometime in the decade after 2014—rather sooner than Goldman Sachs envisaged— Brazil is likely to become the world's fifth-largest economy, overtaking Britain and France.  By 2025 São Paulo will be its fifth-wealthiest city, according to PwC, a consultancy.

~ "Brazil takes off: Now the risk for Latin America’s big success story is hubris," The Economist, November 12, 2009

Warren Buffett on forecasting

Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.

~ Warren Buffett

Warren Buffett on the value of bear markets

The best chance to deploy capital is when things are going down.

~ Warren Buffett

Olivia Newton-John on her cancer struggle

I look at my cancer journey as a gift: It made me slow down and realise the important things in life and taught me to not sweat the small stuff.

~ Olivia Newton-John, 1948-2022

Olivia Newton-John on learning

My biggest mistake was my best lesson... you don't learn anything when everything is going perfectly.

~ Olivia Newton-John, RIP

Peter Lynch on investing

Selling your winners and holding your losers is like cutting the flowers and watering the weeds.

~ Peter Lynch

The Economist on the 2020-21 government borrowing binge

In recent years government debt appeared to matter less and less even as countries borrowed more and more.  Falling interest rates made debts cheap to service, even as they grew to levels that would have seemed dangerous a generation before.  The pandemic put both trends into overdrive: the rich world borrowed 10.5% of its gdp in 2020 and another 7.3% in 2021, even as long-term bond yields plunged.  Now central banks are raising interest rates to fight inflation and public debt is becoming more burdensome.  Our calculations show that government budgets will feel a squeeze far more quickly than is commonly understood.

~ The Economist, "How higher interest rates will squeeze government budgetsRising borrowing costs will hit taxpayers sooner than you think," July 12, 2022

Rolf Dobelli on long-term thinking and persistence

Once you've identified your circle of competence, stick to it as long as possible.  Likewise if you find a good spouse, a suitable place to live or a rewarding hobby.  Perseverance, tenacity and long-term thinking are highly valuable yet underrated virtues.

~ Rolf Dobelli, The Art of the Good Life, "The Secret of Persistence," p. 61

Bill Russell on teamwork

The most important measure of how good a game I played was how much better I’d made my teammates play. 

~ Bill Russell, 1934-2022