Here is a continuation of the video interview of Bruce Greenwald from my previous article. To see the previous video click here
I will write a short introduction for Bruce Greenwald to people unfamiliar with him.
Bruce Greenwald is interviewed by an Financial Times Reporter on value investing. Bruce Greenwald is one of my favorite value gurus. He is the author of Value Investing: From Graham to Buffett and Beyond which is a superb book on value investing. The book is required reading for guru Joel Greenblatt’s class in Columbia business school. Bruce Greenwald is also a director of research at First Eagle Funds. First Eagle Funds are a family of value funds that have outperformed the market by significantly over a long time frame. Greenwald was described by the NY Times as “a guru to Wall Street’s gurus”.
George Soros And The Human Uncertainty Principle
The division between academic economics and the way traders look at the market is deep. The efficient market hypothesis assumes that markets and valuations are always pushing towards an equilibrium, and evidence to the contrary gets pushed aside as fluctuations or statistical deviations. But the dot com bubble, the
Greenwald has written a variety of books on economics and investing. In his book Competition Demystified Greenwald describes what makes some companies while others fail. Greenwald has a must read chapter on how Wal-Mart overtook Kmart to become king of retail USA. He also wrote about globalization and trade issues between China and the USA .
In this video Bruce Greenwald talks about shorting stocks. Bruce Greenwald believes shorting is not part of the value investing process except in extreme circumstances.
Short gains are taxed as short term capital gains.
The main reason to be skeptical of shorting is the risk of shorting. As the stock rises it becomes a bigger part of an investor’s portfolio. This goes against Benjamin Graham’s principle of avoiding risk, and investing with a margin of safety.
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You also have to perfect with timing, because you can short during a clear bubble, but the bubble can continue for many years like in Japan and during the tech bubble, which could wipe an investor out.
To read the rest of my article on GuruFocus.com click on the following link GuruFocus.com