Monthly Archives: November 2008


This week’s report will be short, because there’s nothing new to cover on the macro scene, but I do want to highlight a few thoughts about the word “impossible.” 

Berkshire Hathaway 

I have a set up in Berkshire Hathaway that would allow for a full 30-40% crash this week in that stock.  The majority would say that’s “impossible” but my answer to them would be, nothing is impossible when you’re talking about markets.  Warren Buffet has, according to an article written by Doug Kass, already lost 9 billion on bad derivatives bets this year–and that’s not chump-change no matter who you are.  Remember, the way in which these derivatives are inter-connected is something that not even the foremost “experts” understand.  I’ve said it before and I’ll say it again, the “financial engineers” screwed us BIG-TIME on this one and when the dust settles we’re not going to be able to fathom that WE allowed this to happen to US. 

Bone To Pick 

I have a serious bone to pick with all of these guys who got everything wrong this year and, as a result, want to convince the world that it would have been “impossible” to predict not only the current macro problems facing the investment world, but the extent to which they would torture markets. 

In this week’s Barron’s, on page 42, “Wading Back In Slowly” Howard Mark, when referring to the current market and the future direction of markets, says “nobody knows.”  And again on page 33, Harley Lance Kaplan is quoted as saying “no one can predict what will happen.”  

My answer to both of these gentlemen and the hundreds of other members of the “sour grapes” club, is that maybe they didn’t spend twenty years of their lives trying to figure out how to predict the markets.  I don’t know squat about constructing an earnings forecast but I would never have the arrogance to say “nobody can predict earnings.” 

Look, it’s fine for these guys to say “I don’t know” but to say that nobody knows, is not only arrogant—i.e. if I don’t know then how could anybody else possibly know—but it’s an insult to people like me who have spent twenty years of hard work to devise a system that CAN make solid predictions about—AND PROFIT FROM—the direction of financial markets.  That’s all…

Full report coming soon