My Opinion > Investing

Letter to Investors Q2 2014 (Hedgehog Capital)

In: Investing • September 3, 2014

Both equity short sellers and precious metals investors have been in despair. This proves again that investing is not a craft for merely smart, intelligent people. The emotional skill set that one needs to endure market folly is just as necessary a prerequisite. I gladly recall the famous words of Jesse Livermore, a notorious speculator in the era of the Great Depression: “It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!” Apparently, [...]

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The Curse of Countercyclical Marketing

In: Investing • August 3, 2014

Procter & Gamble tried it and it utterly failed. The CEO at the time, Bob McDonald, was promptly removed from the board. Under his command, P&G became the world’s largest advertiser, with annual advertising expenditures exceeding $10 billion dollars. Bob McDonald never budged. He relentlessly refused to cut advertising costs. Yet by his refusal, he unwittingly signed his own death sentence. Would he have been blessed to read this text earlier, he might have saved himself from this corporate (and [...]

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Letter to Investors Q1 2014 (Hedgehog Capital)

In: Investing • April 20, 2014

Most of us remember the exuberance of the stock markets at the height of the dotcom bubble. Much, however, has apparently been forgotten. Then, back in 2000, internet companies that were planning to sell door knobs (but hadn’t sold one yet) were given a valuation that wouldn’t even be justified if they sold all door knobs in the world, let alone the ones bought over the internet. Their business models were weak, their revenues non-existent. Prices departed from value to [...]

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Why I’m Short Netflix: a Tale of Exuberance and Excess

In: Investing • March 23, 2014

It’s 2001 all over again. Netflix is being bought just because everybody’s buying. Netflix shares sell like hot cakes, even though they’re not generating a dime. Likewise, Facebook’s acquisition of WhatsApp was received euphorically by investors, with its stock price rising despite a 10% dilution of shareholder capital. Although Facebook is already a loser’s game, its small cousin (WhatsApp) was bought at an even more irrational valuation. It’s exuberance and excess again, just as in 2001; price doesn’t matter and [...]

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