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I just really like to find my own ideas.
Everything I do in investment is just very different.
My positioning with my investors was always, I need three to five years.
Lost dollars are simply harder to replace than gained dollars are to lose.
If you are going to be a great investor, you have to fit the style to who you are.
It is ludicrous to believe that asset bubbles can only be recognized in hindsight.
One of the risks for anybody in the lending business is that being conservative can harm your competitiveness.
My natural state is an outsider. I've always felt outside the group, and I've always been analyzing the group.
I believe that agriculture land - productive agricultural land with water on site - will be valuable in the future.
The idea that growth will remedy our debts is so addictive for politicians, but the citizens end up paying the price.
Early on, people invested in me because of my letters and then, somehow, after they invested, they stopped reading them.
I try to buy shares of unpopular companies when they look like road kill and sell them when they've been polished up a bit.
I hated discussing ideas with investors, because then I become a Defender of the Idea, and that influences your thought process.
The late 90s almost forced me to identify myself as a value investor, because I thought what everybody else was doing was insane.
I will always choose the dollar bill carrying a wildly fluctuating discount rather than the dollar bill selling for a quite stable premium.
Subprime mortgages, typically defined as those issued to borrowers with low credit scores, make up roughly the riskiest one-third of all mortgages.
Regardless of what the future holds, intelligent investment in common stocks offer a solid route for a reasonable return on investment going forward.
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.
My natural state is an outsider, and no matter what group I'm in or where I am, I've always felt like I'm outside the group, and I've always been analyzing the group.
Sadly, in the highest levels of economic thought in government, questions are not tolerated. It is as if we're dealing with the binary thinking of a fundamentalist religion.
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.
Credit-default swaps remedied the problem of open-ended risk for me. If I bought a credit-default swap, my downside was defined and certain, and the upside was many multiples of it.
The major reform legislation, Dodd-Frank, was named after two guys bought and sold by special interests, and one of them should be shouldering a good amount of blame for the crisis.
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).
I seek individual investments that will allow me to target total portfolio returns of at least 20% annually after fees and expenses on an annual basis over a period of years, not months.
What you want to watch are the lenders, not the borrowers. 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.
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.
I started trading stocks, options and futures while I was at UCLA, using my earnings from working summers at the old IBM plant on Cottle Road. I never lost interest in how companies work. It's fundamental to who I am.
Back in 2005 and 2006, I argued as forcefully as I could, in letters to clients of my investment firm, 'Scion Capital', that the mortgage market would melt down in the second half of 2007, causing substantial damage to the economy.
In June 2005, mortgage rates were at 40-year lows, and risk premiums on mortgage securities were at all-time lows. Once the banks migrated to the subprime area, there was little else that could be done to send housing prices higher.
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.
I think a lot of hedge funds get their trades from Wall Street and get their ideas from Wall Street. And I just like to find my own ideas. I'm reading a lot; I read a lot of news. I'm addicted to it. I basically - I follow my nose on news stories.
It is a tenet of my investment style that, on the subject of common stock investment, maximizing the upside means first and foremost minimizing the downside. The deleterious effect of permanent capital loss on portfolio returns cannot be overstated.
Government policies and regulations in the postcrisis era have aided the hollowing-out of middle America far more than anything the private sector has done. These changes even expanded the wealth gap by making asset owners richer at the expense of renters.
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.
Innovation, especially in America, is continuing at a breakneck pace, even in areas facing substantial political or regulatory headwinds. The advances in health care in particular are breathtaking - so many selfless souls are working to advance science, and this is heartening.
The post-crisis perception, at least in the media, appears to be one of Americans being held down by Wall Street, by big companies in the private sector, and by the wealthy. Capitalism is on trial. I see it a little differently. If a lender offers me free money, I do not have to take it.
Americans have so much natural entrepreneurial drive. The caveat is that it is technology that should be a tool making lives better in the real world, and in line with the American spirit of getting better and better at something, whether it's curing cancer or creating a better taxi service.
Common hedging techniques include shorting stocks, buying put options, writing call options, and various types of leverage and paired transactions. While I do reserve the right to use these tools if and when appropriate, my firm opinion is that the best hedge is buying an appropriately safe and cheap stock.
'Ick investing' means taking a special analytical interest in stocks that inspire a first reaction of 'ick.' I tend to become interested in stocks that by their very names or circumstances inspire unwillingness - and an 'ick' accompanied by a wrinkle of the nose on the part of most investors to delve any further.
At one point, I recognized that Warren Buffett, though he had every advantage in learning from Ben Graham, did not copy Ben Graham but, rather, set out on his own path and ran money his way, by his own rules... I also immediately internalized the idea that no school could teach someone how to be a great investor.
I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate a greater volume of loans. Throughout 2004, I had watched as these mortgages were offered to more and more subprime borrowers - those with the weakest credit.
Throughout the universe of public and private funds, managers are measured quarterly against one index or another, defined by statistics, and corralled into this category or that category so that fund of funds, pensions, and other institutions can make comforting - if not necessarily prudent - asset allocation decisions.
Fresh, clean water cannot be taken for granted. And it is not - water is political, and litigious. Transporting water is impractical for both political and physical reasons, so buying up water rights did not make a lot of sense to me, unless I was pursuing a greater fool theory of investment - which was not my intention.
In early 2005, I really studied the prospectuses of these mortgage pools that were tranched out into different-rated slices rated by agencies like S&P and Moody's. They had names like Park Place and People's Choice. It was clear to me that many of the buyers of these repackaged subprime mortgages were doing little analysis.
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.
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.
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.
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.