I don't believe anything unless I understand it inside out. And even if I understand something, it is not uncommon that I disagree with accepted view (even if it's a Nobel laureate).
It is ludicrous to believe that asset bubbles can only be recognized in hindsight.
If you are going to be a great investor, you have to fit the style to who you are.
My natural state is an outsider. I've always felt outside the group, and I've always been analyzing the group.
I have always believed that a single talented analyst, working very hard, can cover an amazing amount of investment landscape, and this belief remains unchallenged in my mind.
I hated discussing ideas with investors, because then I become a Defender of the Idea, and that influences your thought process.
I just really like to find my own ideas.
Sometimes markets err big time. Markets erred when they gave America Online the currency to buy Time Warner. They erred when they bet against George Soros and for the British pound. And they are erring right now by continuing to float along as if the most significant credit bubble history has ever seen does not exist. Opportunities are rare, and large opportunities on which one can put nearly unlimited capital to work at tremendous potential returns are even more rare. Selectively shorting the most problematic mortgage-backed securities in history today amounts to just such an opportunity.
Read every line item until you get it.
The borrowers will always be willing to take a great deal for themselves. It’s up to the lenders to show restraint, and when they lose it, watch out.
In essence, the stock market represents three separate categories of business. They are, adjusted for inflation, those with shrinking intrinsic value, those with approximately stable intrinsic value, and those with steadily growing intrinsic value. The preference, always, would be to buy a long-term franchise at a substantial discount from growing intrinsic value.
I think a lot of funds get their ideas from Wall Street. I just like to find my own ideas. I read a lot. A lot of news. I just follow my nose. A lot of times it's a dead end, but sometimes there's value there.
However, if one has been playing the buy-and-hold game with quality securities, one has been exposed to a substantial amount of market risk because the valuations placed on these securities have implied overly rosy scenarios prone to popular revision in times of more realistic expectation. This is one of those times, but it is my feeling that the revisions have not been severe enough, the expectations not yet realistic enough. Hence, the world's best companies largely remain overpriced in the marketplace.
The late 90s almost forced me to identify myself as a value investor, because I thought what everybody else was doing was insane.
I didn't offer transparency. I provided one quarterly report in letter form. That was all you got. I basically demanded that if you're going to invest in my fund you need to accept my terms. The terms not being super highs, but just, I'm not going to cater to you.
Everything I do in investment is just very different.
Early on, people invested in me because of my letters and then, somehow, after they invested, they stopped reading them.
My positioning with my investors was always, I need three to five years.
When I stand on my special-issue "Intelligent Investor" ladder and peer out over the frenzied crowd, I see very few others doing the same. Many stocks remain overvalued, and speculative excess - both on the upside and on the downside - is embedded in the frenzy around stocks of all stripes. And yes, I am talking about March 2001, not March 2000.
