Grant’s Interest Rate Observer: Opportunists apply here
China channels ‘Monkeybrains’: Now unfolding is a preview of the next, the future, credit collapse. Such methods as China is employing—a borrowing binge centrally planned and directed—will eventually come to grief, as the readers of Grant’s know full well. Indeed, in money matters, nearly everything seems to come to grief sooner or later. However, it is equally true that, before the grief, comes the laughter and levitation. Massive injections of money and credit are always unsound. But for stocks, commodities and credit, they are bullish before they are bearish. In the fad for “quantitative easing,” when might the laughter turn to tears? How to prepare for that inflection point? How to see it coming?
Read the whole thing.
Outlook India: The Sequoia Way
They have invested nearly $400 million in 49 start-ups, the most by any VC. That is also 15% of all VC investments made in India since 2004. They have exited with profits from seven of the 18 investments made from their first $135 million fund, even though it was launched on the eve of the dotcom crash of 2000. In just a few months, this fund will exit all remaining investments and return money to its limited partners (companies like Goldman Sachs, among others, that gave Sequoia India money to invest). Incidentally, this will be the first successful VC fund closure in India.
Over the years, two qualities have distinguished Sequoia India’s investment strategy—adaptability and a strong hold on ground realities. However, it did not always get it right. In the initial years, with Fund I, the investment thesis was to put 50% of the corpus in technology product companies and the other half in services. Both would involve companies that targeted the US as a market. The cross-border focus was bang on. But the product bet came a cropper. “We were wrong,” says Chadha. “When we set up the fund in early 2000, people were rushing to buy software products. At the end of 2000 and early 2001, they stopped buying.” The firm shut down most of the seven product companies it had invested in and put more money in services. “It was the best decision we took,” he says. Products, luckily, were just 6-7% of the fund’s investments. But it was a painful lesson to learn. “It is tough not to get emotional about young companies,” says Balaraj.
Janet Tavakoli: Where Were Drama Pundits [Whitney, Taleb and Gasparino] When It Mattered?
Taleb’s Empirica Kurtosis “black swan” fund had negative returns in 2001, the year of the 9/11 black swan event. Taleb later claimed he only called it a hedge fund “in May‐Oct 2001.” Perhaps he meant something else, because Empirica Kurtosis wound up at the beginning of 2005 with lackluster returns , and performance specifics are not public, but it may have been a stranded swan.
Taleb has appeared in public with Arianna Huffington who has credited him with courage, yet he plays the victim and resorts to unwarranted name calling when asked legitimate questions. He has said Myron Scholes belongs in a retirement home and called Nobel Prize winners charlatans. Viciousness isn’t the same as courage. It takes courage to be transparent not just when results look fabulous (temporarily or otherwise), but when they don’t make you look as favorable.
Taleb taking it from all sides. Time to disclose performance data?