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Brain Purge: Good Links For November 13

Posted on | November 13, 2008 Time: 9:20 am |

Given the retreat of major stock indexes back to year lows and below, I found myself needing a dose of international news and commentary. I needed to stretch out my gray matter and soak in news from around the world, because there are obviously still tail risks being represented in global equity prices.

FT’s Alphaville blog has a good read up that discusses all the recent rumors and fears surrounding Goldman Sachs (GS). I can’t personally speak to the accuracy of claims that Goldman is “bleeding prime brokerage clients”, but it’s worth noting that all of us who cover Goldman are divided on just what kind of business model the company will create going forward. Goldman is my #1 barometer for tail risks in the market.

Mish’s Global Economic Trend Analysis had a good (albeit lengthy - grab some coffee) post up yesterday talking about the battered state of retail. Mish notes that gift cards could be shunned in fear of further bankruptcies in the retail sector (a la’ Circuit City). One of my favorite Secular Trends holdings, grocer Safeway (SWY), has a burgeoning gift card business so I’ll be on the lookout for confirmation of this trend.

Over at SafeHaven.com, a reprint of John Mauldin’s weekly letter has him handing off to his London partner Neils Jensen. An extremely thought-provoking and well presented article follows, with discussions on the dire state of many sovereign entities like Hungary, Italy, Spain, and the OECD. I’d suggest making a pot of coffee for this one, but bookmark it if you need to, and finish the piece. I’m not as bearish as Mauldin and company (he’s been waiting many years to be right), but his thought positions are generally top-notch.

And finally, Paul Kedrosky over at Infectious Greed posed the “Mother of All Contentious Investing Questions” yesterday, asking if Warren Buffett has lost his touch in his golden years. I know that Paul isn’t necessarily behind the idea himself, but others wonder how it’s possible that Buffett invested in U.S. stocks two weeks ago….and he’s lost money on his trades.

The Man Put the “C” in Capitalism (or “C” me make more money than you…)

People thought Buffett had completely lost it in the late 90’s as he patiently sat on the sidelines of the tech boom. He missed out on “all those gains”…and all the losses which followed. He painted a picture of today’s credit crisis quite clearly many, many years ago. The first thing Buffett did when he bought General Re in 1998 was perform a (then costly) unwind of the derivatives business. Much of that business was with an insurer by the name of AIG.

And in the past decade, Buffett’s Berkshire Hathaway is up 52%, while the S&P 500 is down 25%. He remains, quite simply, a man amongst boys. And like a Supreme Court Justice or football coach Joe Paterno (Joe Pa!) over at Penn State (now in his 43rd season), Buffett’s position and leadership are beyond reproach until the day he’s no longer with us.

Ryan Barnes

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