Hottest Links: Buffett’s Bet, Thinking In Motifs, And The Noble Lie


Hottest links for Tuesday, 10th December, the late edition (see Monday’s edition of hottest links). Get our free daily newsletter (which HAS BEEN RECENTLY UPDATED) and never miss a single linkfest. Also, now if you sign up you will get our new e-book on value investing.

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Top stories for today are included below.  Today, we’ve got some great stories, including an update on Warren Buffett’s bet with the hedge funds, Goldman Sachs’ regurgitated New Year’s resolutions, a secret revolution in the financial world, and a curious phenomenon where boardrooms and activist investors are getting along rather than fighting like cats and dogs.

Hottest Links: Stories

Value Investing

Currency Carry: It Depends on the Valuation

Morningstar Investment Conference: Everything You Need To Know About Preferred Securities

Arena Investors Chilton Capital Management Schonfeld Strategic Advisors Robert Atchinson Phillip Gross favorite hedge fundsPreferred stock has been around for more than 150 years. One study suggests that the first shares of preferred stock were issued in 1836 by internal improvement companies in Maryland. However, some investors might not have given this asset class much thought until the government commandeered preferred shareholders' dividends in the government-sponsored enterprises Fannie Mae Read More

With the US Dollar being undervalued against most pairs on a PPP valuation basis I thought I would chime in quickly as a follow up to our last currency post. [Mebane Faber]

A Noble Lie

The cyclically adjusted price/earnings ratio, or Shiller P/E, one of the best valuation signals, will give you only a ballpark range of returns over the next five to 10 years. [Samuel Lee , Morning Star via Abnormal Returns]

Hottest Links

How to commit fraud and get away with it: A Guide for CEOs”

CEOs and senior managers of modern corporations possess the ability to engineer fraud on an organizational scale and capture the upside without running the risk of doing any jail time. In other words, they can reliably commit fraud and get away with it. [Climateer Investing]

Warren Buffett’s Meeting with University of Maryland MBA Students

Warren Buffett (WB) met with 20 MBA students from each of eight universities, including the University of Maryland, on November 15, 2013.  The MBA students asked 16 questions in the following order.. [David Kass, Univesity of Maryland]

The 5 Golden Rules Of Finance

I own one finance textbook, and I occasionally open it to remind myself how little I know about finance. It’s packed with formulas on complex option pricing, the Gaussian copula function, and a chapter titled, “Assessment of Confidence Limits of Selected Values of Complex-Valued Models.” [Morgan Housel, Business Insider]

So, Growth…or Value?

At one extreme, we have the wild-eyed growth investor foaming at the mouth over a great story. A silky-tongued CEO’s painted unicorns & castles in the air, and our reckless plunger’s itching to dance the magic rainbow. [Wexboy]


While Regulators Drew Map, Street Changed

That is how long it took President Barack Obama to announce the surprise new ban on Wall Street banks’ trading with their own capital and owning hedge funds. That was back in January 2010. [Francesco Guerrera, MoneyBeat]

Hedge Funds May Rebound and Spoil Buffett’s Bet

Timing isn’t everything, but it sure helps. Six years ago, Warren Buffett, chairman of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B), made a $1 million bet with hedge-fund manager Protégé Partners that a simple stock-index fund would beat their handpicked stable of five funds of hedge funds over a decade. Then 2008 happened and the funds, though they declined, lived… [Spencer Jakab, The Wall Street Journal]

Marc Faber is sounding like a reluctant bull

Amid all the steady-as-she-goes predictions for the S&P 500 INDEX (INDEXCBOE:SPX) Marc Faber is predicting U.S. markets could rise another 20% from here. [Barbara Kollmeyer, The Tell]

Fund Investors Still Glum on Commodities

When it comes to ETFs, investors this year have moved the most money into ProShares Ultra Silver (ETF) (NYSEARCA:AGQ) and iShares Silver Trust (ETF) (NYSEARCA:SLV), but the ranks of ETFs with inflows thins out pretty quickly. [Brendan Conway, Focus on Funds]

Nontransparent ETFs to Trade Like Foreign Stock Funds

The nontransparent ETF idea, broached by Eaton Vance Corp (NYSE:EV)  among others, has drawn a number of questions, starting with necessity: Do investors really need to be able to “trade” a stock-fund manager’s strategy? [Brendan Conway, Focus on Funds]

New hedge funds need $300 mln in assets just to break even

Traders launching a hedge fund need to raise at least $300 million in assets to pay for rising regulatory costs and to offset lower fees, a survey showed, a far cry from the pre-crisis days when managers could start with tens of millions. [Reuters]

O’Neill, Man Who Coined ‘BRICs,’ Still Likes BRICs, But Likes MINTs, Too

The creator of the BRIC acronym says he hasn’t always been an optimist, but right now his enthusiasm for the global economy is running sky-high. [Luciana Magalhaes and Matthew Cowley, Money Beat]


The Unofficial Goldman Sachs Guide To New Year’s Resolutions

Goldman Sachs Group Inc (NYSE:GS) guide to New Year’s resolutions: Exercise more. Drink less. Travel. Save money. These are your unoriginal regurgitated New Year’s resolutions. [GSElevator, Bloomberg]

Everything To Know About The Stock Market

What in the world is the stock market? Here are your 10 most basic finance questions, answered. [Mariah Summers, BuzzFeed]

Special Situation watch: Metso Oy / Valmet Spin-off

In the course of 2013 however, Metso decided to split again. From the beginning of January 2014, Metso Oyj (HEL:MEO1V) (OTCMKTS:MXCYY) shareholders will get shares in Valmet, the Pulp and Paper machinery maker. [memyselfandi007, ValueAndOppurtunity]

The Secret Revolution in Finance

The cold war in the world of trading and information is heating up, as Reuters scrambles to move clients over to a new platform. But this makes me ask myself two questions: Is the world of finance ready to move forward from high priced trading and information platforms? And will thinking in Motifs change everything? [Sverre Rørvik Nilsen aka finansakrobat, CFA Institute]

Companies, Activists Declare Truce in Boardroom Battles

Activist investors are increasingly encountering an unusual reception when approaching corporate targets: an open door. Instead of pulling up the drawbridge as activists approach, corporate executives and directors more often are engaging, concluding that it is easier and cheaper to negotiate rather than resist and risk a public fight, advisers and executives said. [David Benoit, The Wall Street Journal]

The Obsession of John Paulson

There are Calders everywhere. One Calder canvas anchors the west wall, one the east; a bronze Calder sculpture guards the windows facing north, high above midtown Manhattan. [Joseph Ciardiello, aiCIO]

Hottest Links: Not The Onion

The Australian Army Faked A Death Scene

In one exercise designed to test stress, a simulated massacre, six litres of tomato sauce was used to make soldiers look like they’d been involved in a serious accident. The recipe was apparently successful because a bus driver took legal action claiming damages for the fright he said he suffered when he saw the scene. [Chris Pash, Business Insider]

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