[davelj]

DiCaprio… yes… a green condo… a Prius… and that pesky private plane that offsets all of his other green efforts by a factor of 20. It’s all appearance, folks. What is right for thee isn’t necessarily for me.

[davelj]

DiCaprio… yes… a green condo… a Prius… and that pesky private plane that offsets all of his other green efforts by a factor of 20. It’s all appearance, folks. What is right for thee isn’t necessarily for me.

[davelj]

DiCaprio… yes… a green condo… a Prius… and that pesky private plane that offsets all of his other green efforts by a factor of 20. It’s all appearance, folks. What is right for thee isn’t necessarily for me.

[davelj]

DiCaprio… yes… a green condo… a Prius… and that pesky private plane that offsets all of his other green efforts by a factor of 20. It’s all appearance, folks. What is right for thee isn’t necessarily for me.

[davelj]

patientrenter,

My two current partnerships are closed. But I’d be happy to send you information on future partnerships. I may form another one in the next 12-18 months. Just depends on what opportunities present themselves (or don’t). I’ll warn you ahead of time that the lock-ups are onerous – eight years on the two I’m currently managing. Just fair warning. They aren’t for everybody.

The charter for one of my partnerships requires that the capital be fully invested by early next year. After I’ve invested the capital and my LPs have had a chance to co-invest (also part of the agreement with my LPs) then I’ll probably post the names of some of the semi-public positions on my firm’s website so that others can piggyback if they so choose.

Anyhow, we can pick this up at a later date. In the meantime, lots of land mines masquerading as shiny toys.

[davelj]

patientrenter,

My two current partnerships are closed. But I’d be happy to send you information on future partnerships. I may form another one in the next 12-18 months. Just depends on what opportunities present themselves (or don’t). I’ll warn you ahead of time that the lock-ups are onerous – eight years on the two I’m currently managing. Just fair warning. They aren’t for everybody.

The charter for one of my partnerships requires that the capital be fully invested by early next year. After I’ve invested the capital and my LPs have had a chance to co-invest (also part of the agreement with my LPs) then I’ll probably post the names of some of the semi-public positions on my firm’s website so that others can piggyback if they so choose.

Anyhow, we can pick this up at a later date. In the meantime, lots of land mines masquerading as shiny toys.

[davelj]

patientrenter,

My two current partnerships are closed. But I’d be happy to send you information on future partnerships. I may form another one in the next 12-18 months. Just depends on what opportunities present themselves (or don’t). I’ll warn you ahead of time that the lock-ups are onerous – eight years on the two I’m currently managing. Just fair warning. They aren’t for everybody.

The charter for one of my partnerships requires that the capital be fully invested by early next year. After I’ve invested the capital and my LPs have had a chance to co-invest (also part of the agreement with my LPs) then I’ll probably post the names of some of the semi-public positions on my firm’s website so that others can piggyback if they so choose.

Anyhow, we can pick this up at a later date. In the meantime, lots of land mines masquerading as shiny toys.

[davelj]

patientrenter,

My two current partnerships are closed. But I’d be happy to send you information on future partnerships. I may form another one in the next 12-18 months. Just depends on what opportunities present themselves (or don’t). I’ll warn you ahead of time that the lock-ups are onerous – eight years on the two I’m currently managing. Just fair warning. They aren’t for everybody.

The charter for one of my partnerships requires that the capital be fully invested by early next year. After I’ve invested the capital and my LPs have had a chance to co-invest (also part of the agreement with my LPs) then I’ll probably post the names of some of the semi-public positions on my firm’s website so that others can piggyback if they so choose.

Anyhow, we can pick this up at a later date. In the meantime, lots of land mines masquerading as shiny toys.

[davelj]

patientrenter,

My two current partnerships are closed. But I’d be happy to send you information on future partnerships. I may form another one in the next 12-18 months. Just depends on what opportunities present themselves (or don’t). I’ll warn you ahead of time that the lock-ups are onerous – eight years on the two I’m currently managing. Just fair warning. They aren’t for everybody.

The charter for one of my partnerships requires that the capital be fully invested by early next year. After I’ve invested the capital and my LPs have had a chance to co-invest (also part of the agreement with my LPs) then I’ll probably post the names of some of the semi-public positions on my firm’s website so that others can piggyback if they so choose.

Anyhow, we can pick this up at a later date. In the meantime, lots of land mines masquerading as shiny toys.

[davelj]

Related to this subject, I’ll try to keep this as short and as whine-free as possible but I may fail to some degree on both counts.

One of the two investment partnerships that I manage is, essentially, 70% cash. Wonderful, you say. Yes, kind of, I suppose. Anyhow, one of the reasons it’s 70% cash is because I’ve been waiting patiently for the bottom to drop out of the small-cap depositories. I mean REALLY drop out. As it should based on the fundamentals. Because when it does I want to do some bottom fishing at the illiquid, semi-private micro-cap end. That’s part of what I do. So, imagine how I feel when my thesis – lower housing prices and loose lending lead to foreclosures which lead to a credit crisis and recession, and depository prices go into the toilet – proves correct, but the government uses my tax dollars to change the rules of the (purportedly capitalist) game and “rescue” Wall Street (more specifically, financial asset prices) and other irresponsible parties? Now, admittedly, bank prices have still been hammered. But there’s still a ways to go to the “real bottom” and we were on the way there when Bernanke/Pauson & Co. decided to change the rules. It’s as if I were playing a game of chess, moving deliberately toward checkmate and the Establishment came along and said, “Voila! Now the rooks are bishops and the pawns are queens! Play on!” Anyhow, it’s not the end of the world and I know that this sort of thing can happen. In some ways, that the rules are occasionally changed is part of the game itself. I’m an adult and I accept this (grudgingly). And we’ll get to where we’re going regardless of these shenanigans. Nevertheless, it’s mildly irritating when you’re trying to invest and the Establishment keeps pushing off the inevitable further into the future… with the assistance of your own tax dollars.

I think I’ve posted this before, but one thing to keep in mind at times like these is that the world is 99.8% long. Governments, the citizenry, financial market participants, etc. etc. almost all benefit in the short term when asset prices rise. The investors that benefit from lower prices (those either short or waiting on the sidelines) are a miniscule portion of the total financial system. The world is WAY WAY net long. Therefore, the miniscule group of bears is always fighting a battle with almost the entire rest of the world. And the world fights back dirty. No holds barred. And the Establishment has a LOT of capital and levers at its disposal. Now, eventually prices get to where they’re supposed to be. Always. But “eventually” can be a long time. A lot longer than it should be. Look at the Nasdaq Bubble. Or the current Housing Bubble. Two quotes come to mind:

“Markets can remain irrational longer than you can remain solvent.” – John Maynard Keynes

“Everything that’s supposed to happen in financial markets eventually does, but it often takes a lot longer than anyone anticipated.” – Larry Summers

Personally, I don’t short anything. I’ve seen the Keynes observation bury people. Also, I don’t really do much with publicly-traded stocks. But that Summers quote rings very true. If you’re patient enough, things that are supposed to happen will. They always do. But a lot of the time you gotta grind it out in the waiting room. Because the world wants you to be wrong and to fail. Consequently, caution continues to trade at a steep discount; but eventually it will trade at a premium. Personally, I try to manage my affairs in a manner that doesn’t penalize patience too greatly.

[davelj]

Related to this subject, I’ll try to keep this as short and as whine-free as possible but I may fail to some degree on both counts.

One of the two investment partnerships that I manage is, essentially, 70% cash. Wonderful, you say. Yes, kind of, I suppose. Anyhow, one of the reasons it’s 70% cash is because I’ve been waiting patiently for the bottom to drop out of the small-cap depositories. I mean REALLY drop out. As it should based on the fundamentals. Because when it does I want to do some bottom fishing at the illiquid, semi-private micro-cap end. That’s part of what I do. So, imagine how I feel when my thesis – lower housing prices and loose lending lead to foreclosures which lead to a credit crisis and recession, and depository prices go into the toilet – proves correct, but the government uses my tax dollars to change the rules of the (purportedly capitalist) game and “rescue” Wall Street (more specifically, financial asset prices) and other irresponsible parties? Now, admittedly, bank prices have still been hammered. But there’s still a ways to go to the “real bottom” and we were on the way there when Bernanke/Pauson & Co. decided to change the rules. It’s as if I were playing a game of chess, moving deliberately toward checkmate and the Establishment came along and said, “Voila! Now the rooks are bishops and the pawns are queens! Play on!” Anyhow, it’s not the end of the world and I know that this sort of thing can happen. In some ways, that the rules are occasionally changed is part of the game itself. I’m an adult and I accept this (grudgingly). And we’ll get to where we’re going regardless of these shenanigans. Nevertheless, it’s mildly irritating when you’re trying to invest and the Establishment keeps pushing off the inevitable further into the future… with the assistance of your own tax dollars.

I think I’ve posted this before, but one thing to keep in mind at times like these is that the world is 99.8% long. Governments, the citizenry, financial market participants, etc. etc. almost all benefit in the short term when asset prices rise. The investors that benefit from lower prices (those either short or waiting on the sidelines) are a miniscule portion of the total financial system. The world is WAY WAY net long. Therefore, the miniscule group of bears is always fighting a battle with almost the entire rest of the world. And the world fights back dirty. No holds barred. And the Establishment has a LOT of capital and levers at its disposal. Now, eventually prices get to where they’re supposed to be. Always. But “eventually” can be a long time. A lot longer than it should be. Look at the Nasdaq Bubble. Or the current Housing Bubble. Two quotes come to mind:

“Markets can remain irrational longer than you can remain solvent.” – John Maynard Keynes

“Everything that’s supposed to happen in financial markets eventually does, but it often takes a lot longer than anyone anticipated.” – Larry Summers

Personally, I don’t short anything. I’ve seen the Keynes observation bury people. Also, I don’t really do much with publicly-traded stocks. But that Summers quote rings very true. If you’re patient enough, things that are supposed to happen will. They always do. But a lot of the time you gotta grind it out in the waiting room. Because the world wants you to be wrong and to fail. Consequently, caution continues to trade at a steep discount; but eventually it will trade at a premium. Personally, I try to manage my affairs in a manner that doesn’t penalize patience too greatly.

[davelj]

Related to this subject, I’ll try to keep this as short and as whine-free as possible but I may fail to some degree on both counts.

One of the two investment partnerships that I manage is, essentially, 70% cash. Wonderful, you say. Yes, kind of, I suppose. Anyhow, one of the reasons it’s 70% cash is because I’ve been waiting patiently for the bottom to drop out of the small-cap depositories. I mean REALLY drop out. As it should based on the fundamentals. Because when it does I want to do some bottom fishing at the illiquid, semi-private micro-cap end. That’s part of what I do. So, imagine how I feel when my thesis – lower housing prices and loose lending lead to foreclosures which lead to a credit crisis and recession, and depository prices go into the toilet – proves correct, but the government uses my tax dollars to change the rules of the (purportedly capitalist) game and “rescue” Wall Street (more specifically, financial asset prices) and other irresponsible parties? Now, admittedly, bank prices have still been hammered. But there’s still a ways to go to the “real bottom” and we were on the way there when Bernanke/Pauson & Co. decided to change the rules. It’s as if I were playing a game of chess, moving deliberately toward checkmate and the Establishment came along and said, “Voila! Now the rooks are bishops and the pawns are queens! Play on!” Anyhow, it’s not the end of the world and I know that this sort of thing can happen. In some ways, that the rules are occasionally changed is part of the game itself. I’m an adult and I accept this (grudgingly). And we’ll get to where we’re going regardless of these shenanigans. Nevertheless, it’s mildly irritating when you’re trying to invest and the Establishment keeps pushing off the inevitable further into the future… with the assistance of your own tax dollars.

I think I’ve posted this before, but one thing to keep in mind at times like these is that the world is 99.8% long. Governments, the citizenry, financial market participants, etc. etc. almost all benefit in the short term when asset prices rise. The investors that benefit from lower prices (those either short or waiting on the sidelines) are a miniscule portion of the total financial system. The world is WAY WAY net long. Therefore, the miniscule group of bears is always fighting a battle with almost the entire rest of the world. And the world fights back dirty. No holds barred. And the Establishment has a LOT of capital and levers at its disposal. Now, eventually prices get to where they’re supposed to be. Always. But “eventually” can be a long time. A lot longer than it should be. Look at the Nasdaq Bubble. Or the current Housing Bubble. Two quotes come to mind:

“Markets can remain irrational longer than you can remain solvent.” – John Maynard Keynes

“Everything that’s supposed to happen in financial markets eventually does, but it often takes a lot longer than anyone anticipated.” – Larry Summers

Personally, I don’t short anything. I’ve seen the Keynes observation bury people. Also, I don’t really do much with publicly-traded stocks. But that Summers quote rings very true. If you’re patient enough, things that are supposed to happen will. They always do. But a lot of the time you gotta grind it out in the waiting room. Because the world wants you to be wrong and to fail. Consequently, caution continues to trade at a steep discount; but eventually it will trade at a premium. Personally, I try to manage my affairs in a manner that doesn’t penalize patience too greatly.

[davelj]

Related to this subject, I’ll try to keep this as short and as whine-free as possible but I may fail to some degree on both counts.

One of the two investment partnerships that I manage is, essentially, 70% cash. Wonderful, you say. Yes, kind of, I suppose. Anyhow, one of the reasons it’s 70% cash is because I’ve been waiting patiently for the bottom to drop out of the small-cap depositories. I mean REALLY drop out. As it should based on the fundamentals. Because when it does I want to do some bottom fishing at the illiquid, semi-private micro-cap end. That’s part of what I do. So, imagine how I feel when my thesis – lower housing prices and loose lending lead to foreclosures which lead to a credit crisis and recession, and depository prices go into the toilet – proves correct, but the government uses my tax dollars to change the rules of the (purportedly capitalist) game and “rescue” Wall Street (more specifically, financial asset prices) and other irresponsible parties? Now, admittedly, bank prices have still been hammered. But there’s still a ways to go to the “real bottom” and we were on the way there when Bernanke/Pauson & Co. decided to change the rules. It’s as if I were playing a game of chess, moving deliberately toward checkmate and the Establishment came along and said, “Voila! Now the rooks are bishops and the pawns are queens! Play on!” Anyhow, it’s not the end of the world and I know that this sort of thing can happen. In some ways, that the rules are occasionally changed is part of the game itself. I’m an adult and I accept this (grudgingly). And we’ll get to where we’re going regardless of these shenanigans. Nevertheless, it’s mildly irritating when you’re trying to invest and the Establishment keeps pushing off the inevitable further into the future… with the assistance of your own tax dollars.

I think I’ve posted this before, but one thing to keep in mind at times like these is that the world is 99.8% long. Governments, the citizenry, financial market participants, etc. etc. almost all benefit in the short term when asset prices rise. The investors that benefit from lower prices (those either short or waiting on the sidelines) are a miniscule portion of the total financial system. The world is WAY WAY net long. Therefore, the miniscule group of bears is always fighting a battle with almost the entire rest of the world. And the world fights back dirty. No holds barred. And the Establishment has a LOT of capital and levers at its disposal. Now, eventually prices get to where they’re supposed to be. Always. But “eventually” can be a long time. A lot longer than it should be. Look at the Nasdaq Bubble. Or the current Housing Bubble. Two quotes come to mind:

“Markets can remain irrational longer than you can remain solvent.” – John Maynard Keynes

“Everything that’s supposed to happen in financial markets eventually does, but it often takes a lot longer than anyone anticipated.” – Larry Summers

Personally, I don’t short anything. I’ve seen the Keynes observation bury people. Also, I don’t really do much with publicly-traded stocks. But that Summers quote rings very true. If you’re patient enough, things that are supposed to happen will. They always do. But a lot of the time you gotta grind it out in the waiting room. Because the world wants you to be wrong and to fail. Consequently, caution continues to trade at a steep discount; but eventually it will trade at a premium. Personally, I try to manage my affairs in a manner that doesn’t penalize patience too greatly.

[davelj]

Related to this subject, I’ll try to keep this as short and as whine-free as possible but I may fail to some degree on both counts.

One of the two investment partnerships that I manage is, essentially, 70% cash. Wonderful, you say. Yes, kind of, I suppose. Anyhow, one of the reasons it’s 70% cash is because I’ve been waiting patiently for the bottom to drop out of the small-cap depositories. I mean REALLY drop out. As it should based on the fundamentals. Because when it does I want to do some bottom fishing at the illiquid, semi-private micro-cap end. That’s part of what I do. So, imagine how I feel when my thesis – lower housing prices and loose lending lead to foreclosures which lead to a credit crisis and recession, and depository prices go into the toilet – proves correct, but the government uses my tax dollars to change the rules of the (purportedly capitalist) game and “rescue” Wall Street (more specifically, financial asset prices) and other irresponsible parties? Now, admittedly, bank prices have still been hammered. But there’s still a ways to go to the “real bottom” and we were on the way there when Bernanke/Pauson & Co. decided to change the rules. It’s as if I were playing a game of chess, moving deliberately toward checkmate and the Establishment came along and said, “Voila! Now the rooks are bishops and the pawns are queens! Play on!” Anyhow, it’s not the end of the world and I know that this sort of thing can happen. In some ways, that the rules are occasionally changed is part of the game itself. I’m an adult and I accept this (grudgingly). And we’ll get to where we’re going regardless of these shenanigans. Nevertheless, it’s mildly irritating when you’re trying to invest and the Establishment keeps pushing off the inevitable further into the future… with the assistance of your own tax dollars.

I think I’ve posted this before, but one thing to keep in mind at times like these is that the world is 99.8% long. Governments, the citizenry, financial market participants, etc. etc. almost all benefit in the short term when asset prices rise. The investors that benefit from lower prices (those either short or waiting on the sidelines) are a miniscule portion of the total financial system. The world is WAY WAY net long. Therefore, the miniscule group of bears is always fighting a battle with almost the entire rest of the world. And the world fights back dirty. No holds barred. And the Establishment has a LOT of capital and levers at its disposal. Now, eventually prices get to where they’re supposed to be. Always. But “eventually” can be a long time. A lot longer than it should be. Look at the Nasdaq Bubble. Or the current Housing Bubble. Two quotes come to mind:

“Markets can remain irrational longer than you can remain solvent.” – John Maynard Keynes

“Everything that’s supposed to happen in financial markets eventually does, but it often takes a lot longer than anyone anticipated.” – Larry Summers

Personally, I don’t short anything. I’ve seen the Keynes observation bury people. Also, I don’t really do much with publicly-traded stocks. But that Summers quote rings very true. If you’re patient enough, things that are supposed to happen will. They always do. But a lot of the time you gotta grind it out in the waiting room. Because the world wants you to be wrong and to fail. Consequently, caution continues to trade at a steep discount; but eventually it will trade at a premium. Personally, I try to manage my affairs in a manner that doesn’t penalize patience too greatly.

[davelj]

I’m not short financials, nor long gold or commodities.

Here’s a couple of things I know, however:

1. Stocks are volatile.
2. This market, specifically, has “no memory” – that is, what happened yesterday is irrelevant. It’s all about what’s happening today. That’s not healthy long term.
3. It’s hard to believe that either the January or Bear Stearns bottoms were the last bottoms in this cycle seeing as we never even actually entered bear market territory (20% down from the peak) and we’re in the midst of the biggest credit crisis since the Great Depression. The average bear market decline is 30% from the prior peak.
4. Market action implies clearly that participants are STILL more worried about “missing the rally” than about protecting capital during an economic downturn.
5. Earnings estimates are still way too high for 2008. As we get deeper into the recession they’ll be scaled back significantly. Non-financial earnings fall by an average of 15%-20% during recessions. 2008 estimates still reflect 10%+ growth over 2007 (and extraordinarily high profit margins, which generally mean revert during recessions). Possible? Yes. Likely? Hardly.
6. This is one of those moments when bad news is deemed company specific (GE, Fed Ex, UPS, Seagate, AMD) but good news (Intel, IBM, Google) is deemed good for the whole planet. This reflects extreme bullishness.
7. Most of the biggest up days (in percentage terms) in the history of the stock market have been in the midst of bear market rallies that later failed.
8. See 1 again: Stocks are volatile.

I don’t know how low we’ll go (1000-1100 perhaps on the S&P?), but I think we’ll blow through the prior lows sometime during 2008. The current rally notwithstanding.

[Author]

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