I’d like to use a convertible desk. Half-day sitting, half-day standing.
“It’s not a matter of being excessive, ludicrous and insane about standing, but it cuts both ways,” says the Mayo Clinic’s Levine. “If one were to be sitting all day, compulsively, that is equally absurd as far as the body’s construction is concerned. The evidence is in: Sitting all day is harmful for our health.”
Interesting approach to the irrational inability of humans to save.
One of the topics we talked about was the Chilean retirement saving plan. By law, 11% of every employee’s salary is automatically transferred into a retirement account. Employees select their preferred level of risk, with the following restrictions: They may not choose either 100% equities or 100% bonds, and the percentage of equity that they can select diminishes as they age. When employees reach retirement, their savings are converted into annuities. The government auctions off the rights to annuitize retirees in groups of 250,000.
Another insightful RSA Animate:
Daniel Pink. Illustrated.
Bill Gross’ latest missive, a couple choice excerpts:
“Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic.”
“…Having arrived at its destination, the market then offers near 0% returns and a picking of the creditor’s pocket via inflation and negative real interest rates.”
“We will tell them this. Certain Turkeys receive a Thanksgiving pardon or they just run faster than others! We intend PIMCO to be one of the chosen gobblers. We haven’t been around for 35+ years and not figured out a way to avoid the November axe. We are a survivor and our clients are not going to be Turkeys on a platter. You may not be strutting around the barnyard as briskly as you used to – those near 10% annualized yields in stocks and bonds are a thing of the past – but you’re gonna be around next year, and then the next, and the next. Interest rates may be rock bottom, but there are other ways – what we call “safe spread” ways –to beat the axe without taking a lot of risk: developing/emerging market debt with higher yields and non-dollar denominations is one way; high quality global corporate bonds are another. Even U.S. Agency mortgages yielding 200 basis points more than those 1% Treasuries, qualify as “safe spreads.” While our “safe spread” terminology offers no guarantees, it is designed to let you sleep at night with less interest rate volatility.”
Another great missive from Mr. Grantham over at GMO – making lots of sense.
What a powerful and noble experiment! We tripled debt to GDP ratio over 28 years, and yet GDP growth slowed! And it slowed increasingly, especially after 2000. The 3.4% trend line had been intact for over 100 years, from 1880 to 1982. From this data it is possible to hope that the decline in GDP would have been even worse if we had not been wallowing in debt. But I believe it probably suggests that there is no long-term connection between debt and GDP growth. After all, the last 10 to 15 years have revealed some great reasons for GDP growth to be stronger than average, not weaker: the growth rate of emerging countries helped along by the collapse of communism and the moderate de-bureaucratization of India, the ensuing explosion of world trade, and a claimed surge in productivity from the rapid developments of the internet and cell phone technology in particular. Given the above, there is little or no room for higher debt levels to provide a net benefit to economic growth. Therefore, artificially low interest rates must also be of insignificant help to long-term growth, for its main role in stimulating growth is to encourage more debt. After all, a lower rate hurts lenders exactly as much as it helps the borrowers. The debt expansion, though, was great for financial industry profits: more debt instruments to put together, to sell, and to maintain. Not to mention all of those debt officers to pay for and charge for, and all of that increased debt for investment managers to manage. Thus, the role of finance grew far beyond its point of usefulness.
The latest issue of the Columbia Business School newsletter is out and an excellent resource as always. Great interviews with Steven Romick and Donald Smith.
“Being a really good investment manager is equal parts being a financial analyst, business analyst, and psychologist with conviction to act when others are panicking.” - Steven Romick
“We really look for stocks where earnings can turn around. That’s what gives you the doubles, triples, quadruples. We put that all together and come up with 20 to 30 best ideas.” - Donald Smith
Dan Seth Loeb is American hedge fund manager and founder of Third Point LLC, managing over $5.5 billion in assets. From 1995 to 2005 he returned 28.9% a year. He’s famous for more than his returns though, with a history of writing scathing public letters to CEO’s and Boards to shame them into boosting the value of his investment. For example, here’s an excerpt from an open letter to Salton Company from 2005:
“What is most astounding about the Company’s apparent death spiral is Mr. Dreimann’s inexplicably insouciant attitude and the fact that he remains in charge…. “The conference call debacle pales in comparison to what I witnessed last summer when I attended the U.S. Open tennis final. You can only imagine my consternation when I looked around the stadium and saw the Salton name emblazoned all around the interior of the stadium walls next to such robust companies as IBM, JP Morgan and Mass Mutual. I had to wonder how much precious capital had been squandered in such a poorly conceived marketing scheme to promote the Salton name when the Company was in such dire financial straits. My bewilderment quickly turned to anger when I saw the crowd seeking autographs from the Olsen twins just below the private box that seemed to be occupied by Mr. Dreimann and others who were enjoying the match and summer sun while hobnobbing, snacking on shrimp cocktails and sipping chilled Gewurztraminer.”
Full SEC letter:
http://www.sec.gov/Archives/edgar/data/878280/000089914005000130/t2775852.txt
Bloomberg profile on Loeb:
Good op-ed in today’s New York Times from Peter Orszag here.
Let me focus today on the core one. Too many of us believe in the “talent” myth — that top performers are born, rather than built. But Syed shows that in almost every arena in which tasks are complex, top performers excel not because of innate ability but because of dedicated practice.
In effect, the stars among us have practiced so much that they are better at what psychologists call “chunking.” Imagine trying to remember 41 letters or numbers. Most of us couldn’t come close to doing that. Now imagine trying to remember a sentence with 47 letters or numbers, like: “Imagine trying to remember 41 letters or numbers.” Most of us can do that with little difficulty, because we are chunking the letters and numbers. We remember the words, and we know the letters in each word.
http://opinionator.blogs.nytimes.com/2010/09/08/sweating-your-way-to-success/
Good article written by Bill Miller of Legg Mason Capital Management in the Financial Times on the opportunities available in US blue chip.
The public’s distaste for equities is palpable and understandable. Negative returns for 10 years in stocks while “riskless” Treasuries have soared, and right after one of the best six months Treasuries have had in the decade, is more than enough to convince folks that stocks are not good long-term investments.
Then there is the really long term. Long-term Treasuries, as measured by the Barclays Capital Long Term Treasury Bond total return index, have beaten equities as measured by the S&P 500 in the year to date, and in the 3-, 5-, 10-, 15-, and 20-year time frames. It’s a tie at 25 years. More than 20 years of superior returns over stocks in an asset guaranteed by the US government seems to be sufficient to drive a stake through the heart of the idea that you want stocks for the long term.
It’s a truism in capital markets that the best investments are those that have previously done worst, where expectations are low, demand is down, and prospects appear at best highly uncertain. In 1980, bonds had been through a 30-year bear market relative to stocks, inflation was soaring, yields were at historic highs, yet expected to go higher, and a long bull market in bonds was at hand.
The idea that US interest rates would be near all-time lows 30 years later would have been dismissed as ludicrous. The situation is now reversed, with stocks having underperformed bonds for decades.
The point here is simple: US large capitalisation stocks represent a once-in-a- lifetime opportunity in my opinion to buy the best quality companies in the world at bargain prices. The last time they were this cheap relative to bonds was 1951. I was one year old then, but did not have sufficient sentience to invest. I do now, and if you are reading this, so do you.
http://www.ft.com/cms/s/0/40d69234-b518-11df-9af8-00144feabdc0.html