Quarterly Letters

These are my periodic letters and special reports for clients and the interested. My general theme are to identify risks and search for opportunities in the biggest trends.

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2009 Letter: 2008 Was A Whale of a Year

January 2, 2009 

2008 Review: A Whale of a Year

Mortgage Related Securities, Credit Default Swaps (huh?), Leverage, Bank Failures, Stock Market Crash (grrrr), Bailouts, TARP, Bernie Madoff.

These are just a few of the things we got to hear about on the nightly news this year on an all too regular basis.  It sounds horrible.  And it has been.  The vast majority of investors in the United States have lost money this year.  Many folks, I have heard, are not even opening up their statements anymore.  I suppose in a strange way that is good, because maybe they will wait for things to get better, rather than randomly selling assets (certainly some assets should be sold, but better investments should be bought in their place).

Read on to find out why things might not be so bad going forward.  And remember, I’m the guy who has been cautiously pessimistic for the better part of a decade now, to the point where some of my colleagues call me a Perma-Bear (a name for somebody who thinks the markets won’t go up for a long time- like from 1999 to 2008).

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2008 Letter: 2007 Was a Major Turning Point

[this letter was emailed to clients January of 2008]


2007 Review: Turning Point

A Glance Back, A Look Forward & Philosophy

2007 was a very eventful and fitful year in the stock and bond markets around the world.  Credit markets finally started to shake the fleas that had taken residence over several years of record breaking money creation by government, lending institutions and a quasi-banking system composed of hedge funds and private equity firms.  The volatility we saw in 2007 is not likely to subside in the short run. In fact, I believe that the problems at Bear Stearns are the tip of the iceberg regarding problems that are likely to emerge in the financial sector. 

Rather than bore you with a rehash of what went on specifically (there are plenty of out there), I am going to talk instead about our investment philosophy and how I look at investing- which is how I think you should look at investing. 

When I was in college, my first landlord was an older gentleman named Bill who owned a lot of property in the University of Wisconsin-Milwaukee area.  One day I asked Bill about property ownership and he was kind enough to discuss the process of buying, fixing up and renting out apartments.  When I offered up some bad information regarding the process I had gotten from a friend, Bill offered me some advice that is the best advice I have ever gotten from a non-family member.  He said, “Kirk, if you want to learn how to do something, learn from people who have done it.  Don’t ask your friends or your neighbors, ask somebody who has done it, learn from their experience.

To that end, I believe that there is a pretty good shortcut out there to doing well with investing. 

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