giofranchi

Imo, this week missive is one of Mr. Hussman’s best. Not to be missed! giofranchi wmc130513.pdf

--John P. Hussman giofranchi

Great quote from today’s market commentary by Mr. John Hussman: -- J. Paul Getty giofranchi

Packer, I don’t really get either one of the bull arguments… 1) Stocks in general are not overvalued: the P/E of the S&P500 is 19, that is to say we enjoy an earnings yield of 5.3%… How many businessmen do you know who would even get out of bed in the morning for a 5.3% return? Not a single one. And earnings are also inflated, because margins are at an all time high! So, actually, you cannot even count on a 5.3%... You don’t have to look at Shiller PE Ratio, or Q Ratio, Market Cap / GDP Ratio, or Regression to the Mean Growth Trend, to get to the conclusion that stocks in general are overvalued. It is enough to think about what gets a businessman out of bed in the morning! :) It is enough to think about what will happen to the market, if the Fed stops buying… 2) I don’t even get Mr. Greenblatt’s argument: because a cautious businessman is not refraining from buying undervalued stocks; instead, he is just heeding Mr. Baruch 9th rule of investing: Always keep a good part of your capital in a cash reserve. Never invest all your funds. giofranchi

http://www.ritholtz.com/blog/2013/05/bernard-baruch-10-rules-of-investing/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29 giofranchi

The only thing we have to fear is the lack of fear itself. giofranchi The-Only-Thing-We-Have-To-Fear-Is-The-Lack-Of-Fear-Itself.pdf

TPOU is having another stellar year: +15.2% so far. And the stock price is gradually closing the gap to NAV. Yet, it still should rise 13.3%, before trading at NAV. giofranchi 2013-05-08-Estimated_NAV_Announcement.pdf

Oh, no! … Now that I have started the very first cycle of lessons about value investing at the Politecnico of Milan, I should warn my partners that chances are I will underperform dramatically in the future … ::) giofranchi

Part 5 in attachment. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Part 6 in attachment. giofranchi On-Insurance-Investing-Part6.pdf

Eclectica Q1 Review, 2013 giofranchi Q1-Review-2013-Hendry1.pdf

Maybe, after all, Mr. Watsa is right about the real estate bubble in China… please, take a look at what they are building over there… ;D ;D ;D If someone find this insulting, or bad taste, I really beg your pardon… not my fault!! ;) giofranchi

I simply don't know of a financial journalist that I have enjoyed more reading... It is very sad news... http://www.ritholtz.com/blog/2013/05/a-few-words-about-alan-abelson/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29 giofranchi

First of all, let’s be clear: there are a lot of different types of deflation, and I am only referring to a deflation in market prices, a drop in the value of the indices. The idea that monetary policy will dictate and control market prices forever is something I have an incredible hard time to accept, without believing that unintended consequences might follow. In other words, I do not have much faith in price control engineering, without risks. giofranchi

Yes, I agree! But, to do well, stocks also need to be undervalued. Today, vice versa, the general market is overvalued. I am not saying a correction is coming. I am only saying that the risk of it today shouldn’t be overlooked. And you don’t buy insurance, when you know something for certain, you buy insurance, when you don’t want to overlook a risk. UUP might be a good way to hedge, because I don’t see the USD depreciating much against other major currencies, even if a correction doesn’t materialize. So, I think it will protect and even increase purchasing power in a correction, on the other hand it will not cost much, if the market keeps marching upward. giofranchi

In attachment what Mr. Gary Shilling has to say about USD strength. Imo, not only “cash is king” in a deflationary scare, but also the USD remains “the only game in town”. And I don’t see how it could fail to appreciate against other major currencies. Would like to hear what people on the board think about it! Thank you, giofranchi insight-0513b-USD.pdf

-- Thomas Gayner, Markel Corp. giofranchi

Q1 2013 Earnings Call giofranchi Q1-2013-LMCA-Earnings-Call.pdf

Q1 2013 Letter to shareholders giofranchi Q1-2013-BAM-Letter.pdf

LakesideB, you are very welcome! :) giofranchi

Ok, if you hate hip-hop or rap, please, don’t go on reading… Otherwise, this is as close to a “free lunch” as it gets: a new 4 stars album from RollingStone “one of the year’s defining hip-hop releases”, that you can download completely free from the following link: http://www.rollingstone.com/music/albumreviews/acid-rap-20130508 Hey! Even if it were a cigar-butt, read a poor album!, Mr. Buffett would pick it up, read download it!, and take as many puffs as he could, read enjoy it as much as he could! ;D giofranchi

Thank you very much, Vinod! ;) giofranchi

True. Long term debt is a very substantial $10 billion. But, based on the projection of $5.55 Cash EPS for 2013, and 305,864,659 shares issued and outstanding as of April 30, 2013, FCF for this year is expected to be circa $1.7 billion. And if they grow FCF at 15% annual, it will take them little more than 4 years of FCF to pay long term debt down. Still, not something that could be overlooked, but I think a certain amount of debt might be justified and even useful for a company that is growing, trying to take advantage of many opportunities, and building scale. After the transition from a state of very high but ultimately unsustainable growth to a state of slower but more sustainable growth will have occurred, I expect them to decrease debt substantially. giofranchi

--David Herro, Harris Associates giofranchi

Well, this is much more sophistication!! ;) SharperDingaan, mine is the point of view of a businessman: believe me, what has become almost second nature to you, is not automatically clear or easy to put in practice for everyone else! Again, imo, what applies to 100 extremely sophisticated and extremely successful members of the board, doesn’t automatically apply to the remaining 1300, me included! Cheers! :) giofranchi

Not yet, but I will surely do! Thank you! :) giofranchi