February 19, 2019

Doug Kass VS Warren Buffett

Flash back video from 2013.

Doug Kass after being picked by Warren Buffett to lead the "Credentialed Bear" panel at Warren Buffett's Berkshire Annual Meeting.

Click here if the above video does not play

February 12, 2019

We might see an Earnings Recession

Is the stock market back in a Bull market and are we going to see new highs ? 

Warren Buffett famously said that higher stock prices are the enemy of the rational investor.

Price has a way of changing sentiment but we should not lose sight that upside reward v. downside risk is a dynamic and quickly changing calculus.

Reward doesn’t get better with higher stock prices, it deteriorates when stocks are advancing. Often, as might be the case, sharp and unrelenting advances lull us into a false sense of security, particularly when global economic growth is so fragile and beginning to show signs of deteriorating (from a rate of change standpoint).

As I mentioned in yesterday’s Bloomberg interview, we are not quite back to the euphoria of late January, 2018 or mid September, 2018 – but we are definitely back into the Bull Market in Complacency.

It can be argued (and I do), that the market has been materially fueled, in no small measure, by the dominance and impact of the machines and algos – that worship at the altar of price momentum. More than ever, our markets have become a one-way trip (up or down) – difficult to navigate (as suggested by all the long/short hedge fund closures in the last 18 months) – and hard to interpret and trade.

via Realinvestmentadvice

January 30, 2019

Rate hikes could be stopped in 2019

Doug Kass thinks the US Fed is going to be more Dovish in 2019.

 I continue to believe the Fed, facing a disappointing domestic economy, will cease rate hikes in 2019. While many see this as positive, I think it reflects slowing growth. And with federal funds at only about 2.5% there are few monetary tools to stimulate growth going forward.

via realinvestmentadvice

January 29, 2019

Doug Kass praises Seth Klarman

Doug Kass has professed his admiration for Seth Klarman saying that Mr Klarman may be as great as Warren Buffett in investing.

Below is a summary of Mr Klarman's January 2019 Letter outlining 2018 in review.

- Value investors should have a game plan that ignores making emotional moves. Value investors should keep a long term view for investments.

- The markets can be volatile and known facts such as upcoming Federal Reserve rate hikes, Trade War move markets downwards when they were once ignored.

- Index investing continued to grow up thru 2018.

- 2018 was much more volatile for US stocks than 2017

- For governments, political reasons favor borrowing money  instead of managing finances responsibly. This could cause Debt to GDP ratios to grow larger and might be a cause for a major financial crisis.

- Algorithm stock trading is growing and questions can be asked as to how the algorithms could respond to higher volatility and difficult market conditions.

- Small cap companies and small cap stocks could suffer more in a bear market.

- The Q4 2018 market sell off could have been a good buying opportunity due to lowered valuations.

- Some ways to maintain a good long term portfolio is to make fact based decisions, diversify, and avoid leverage.

- When their share prices drop, investors should see the price drops as a new opportunity to buy the shares at a lower price instead of a seeing it as a mistake.