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Macro Econ Wisdom

Employment is very key to guaging the future of the economy. 
Inflation is a lagging indicator; 
Credit is a leading indicator.  As the economy contracts, credit creation contracts, thus causing a decline in inflation. 

Trend followers will remind you that oversold conditions can stay oversoldIn a bull market, stocks should advance strongly from an oversold condition.  To the extent that they cannot, the possibility increases that the lows have not been reached.

You win [in investing] by not losing.  Your primary objective in investment management is to control risk.  - Charles Ellis

At the end of the day, a company is worth the cash it generates for its owners ... sterling balance sheet + huge free cash flow = Top Holding - Bruce Berkowitz of Fairholme Funds.  Bruce keeps three years of cash off to the side as his emergency fund.

Books to Read:  Devil takes the Hindmost (best book on bubbles); Manias, Panics & Crashes , both recos by Jeremy Grantham of GMO.  The Intelligent Investor, chapters 8 & 20, by Benjamen Graham.

Finally be aware, that the market does not turn when market participants begin to see light at the end of the tunnel.  It turns when all looks black, but just a subtle shade less black than the day before - Jeremy Grantham of GMO.  4 Mar 2009


In finding investment candidates, 'find one-foot hurdles to step over' -  Warren Buffet

When a guy is offering you free money, don't listen to the rest of the sentence - Charlie Munger


When free cash flow is produced, a board has five choices: 1) they can pay down debt 2) they can add it to their earnings capacity to produce more goods and services 3) they can make an acquisition 4) they can distribute the cash as dividends 5) they can buy back shares.   Buying back shares could be better in a high-tax dividend environment.

Creation date: Jul 20, 2010 7:29am     Last modified date: Jun 8, 2011 8:31pm   Last visit date: Nov 30, 2022 3:58am
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