Above all, we will survive because, unlike the fallen, our portfolios do not consist of great piles of manure, bought as if it were gold. If we own some manure, here or there, and we always do because we bought it on purpose, as the fine manure it is, and at bargain prices — for manure. It is not for nothing we live in farm country.
This response to our own financial crisis seems dramatic and startling. In actuality, it is long overdue and is not a result of any creative thought. It is certainly a socialistic cure, however, one that was needed at this point in the crisis. The absurdity of the situation is that it took us so long to get here. The IMF has analyzed banking crises around the world and their position could be summarized in 10 simple steps to follow in such a crisis...
...Unfortunately, it appears that the government has failed to properly implement one critical step.
In order to diversify the risk of the Washington Mutual investment, TPG's $1.35 billion commitment was split across three funds — $475 million to TPG V, $475 million to TPG VI and $400 million to TPG Financial Partners, a co-investment vehicle targeted at financial services opportunities...
...Unfortunately, the chaos and uncertainty of the financial and housing crises has led to the addition of Washington Mutual to the growing list of unsuccessful financial institution investments.
Maverick’s quarterly letters have always started with a brief sentence reviewing the strength or weakness of the previous quarter. Unfortunately, I cannot find words to describe our disappointment, embarrassment and shock over the above results. As you might suspect, in the past quarter our results were horrible in every sector and region in which we invest (although our returns in healthcare and emerging markets were arguably only disappointing.)
Perhaps most sadly, our country and the system that has brought the world so much prosperity is in danger of becoming discredited. Years of excess, enabled by spineless and economically ignorant politicians, weak-kneed regulators, greedy investment bankers, and an acquiescent and shortsighted populace have backed our country into a corner where we may uncomfortably find ourselves for some time.
This banking crisis hit the US in the fall of 1873. Railroad companies tumbled first. They had crafted complex financial instruments that promised a fixed return, although few understood the underlying object that was guaranteed to investors in case of default. (Answer: nothing). The bonds had sold well at first...The panic continued for more than four years in the US and for nearly six years in Europe.
In the third stage of a bear market, on the other hand, everyone agrees things can only get worse. The risk in that – in terms of opportunity costs, or forgone profits – is equally clear. There’s no doubt in my mind that the bear market reached the third stage last week. That doesn’t mean it can’t decline further, or that a bull market’s about to start. But it does mean the negatives are on the table, optimism is thoroughlylacking, and the greater long-term risk probably lies in not investing.
The excesses, mistakes and foolishness of the 2003-2007 upward leg of the cycle were the greatest I’ve ever witnessed. So has been the resulting panic.
While I wholeheartedly respect my elders, Mr. Buffet’s (sic) comments today in the NY Times worry me. I am going to both agree and respectfully disagree with him. The disagreement is fundamentally based upon timing...If you bought stocks in mid 1929, you didn’t get back to EVEN until 1954!
I wonder how much money Mr. Buffett will cost people with his Op-Ed piece today?
Our third quarter performance was down 6.13% and we are down 9.32% year to date. We are disappointed with our recent performance, particularly since we have been reducing our overall equity exposure and building liquidity for over twelve months in anticipation of a global credit crisis. Given our concerns about the macro environment, we entered September with the least amount of directional market exposure we have had in the last few years. Our cash balances also increased significantly, rising from 26% at the end of August to 31% by the end of September, one of the highest levels the firm has ever held.
Until the last ten days of September, the fund’s performance held up relatively well...
We probably won’t have to pay any capital gains taxes this year. If Contango had been sold in September, as planned, we would have had huge long-term capital gains this year and would have to pay a lot of taxes as a result. At this point, it doesn’t look like we’ll have much, if any, realized capital gains in 2008.
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