Professor Glen Arnold

The biggest single danger for investors according to Warren Buffett

May 20 2021 @ 09:53
At Berkshire Hathaway’s Annual General Meeting (1st May) Warren Buffett warned investors to keep a close eye on managerial quality because it is there that the biggest risk resides. In the lead up to that statement he talked about how, when you’ve made a mistake and put money into a badly managed firm or in […]

Buffett and Munger – we are living in “the most interesting movie, by far, that we have ever seen in terms of economics”, but it could end in “disaster”

May 15 2021 @ 03:05
Warren Buffett, speaking at the Berkshire Hathaway AGM, said: “The Fed moved with speed and a decisiveness on March 23rd 2020,  that changed the situation, where the economy had stopped. Then Congress acted very, very big, so you have fiscal and monetary policy that responded in a way that was incredible, and it did the job…better […]

Warren Buffett advises new investors

May 14 2021 @ 09:52
In the May 1st Annual General Meeting of Berkshire Hathaway Warren Buffett warned investors with little experience or sense of stock market history to be cautious.  Investing in a way that allows you to out-perform is not as easy as it looks. He said: “I would like particularly new entrants to the stock market to ponder […]

Fletcher King – more about the business

May 08 2021 @ 04:36
Yesterday’s newsletter showed that Fletcher King (LSE:FLK) is trading below its net current asset value. In addition, its share price has fallen so much that it is now only 7.5 times average earning per share over the last ten years (excluding the Covid period). This newsletter describes the five types of property-related services it offers […]

Fletcher King – bought for my net current asset value portfolio

May 07 2021 @ 10:42
I’ve bought Fletcher King (LSE:FLK) shares at an average price of 32.65p.  This property advisory and property management company had cash at the bank of £3.1m (and no debt) at the last accounting date, which is more than its current market capitalisation of 9.2m shares x £0.3265p = £3m. In addition, it owns a stake […]

George Soros Case Study: The Housing Bubble and the Super-bubble

Apr 27 2021 @ 07:37
In the aftermath of the financial crisis of 2007-08 Soros provided explanations for the housing crash. But more than that, he pointed out that the housing problem was but a part of a much larger and more broadly based super-bubble that started in the early 1980s.  The lessons learned in that period may help us […]

Third George Soros Case Study: The International Banking Crisis of the 1980s

Apr 26 2021 @ 07:24
The first two case studies (Conglomerate and REITs bubbles) are examples of the use of equity leverage – see last week’s newsletters).  The international banking crisis, on the other hand, was caused by debt leverage.  This case study is particularly useful today because we currently have the sight of massive fiscal and monetary stimuli creating […]

George Soros case study of a far-from equilibrium market: Real Estate Investment Trusts (REITs)

Apr 23 2021 @ 05:02
REITS, also called mortgage trusts, were subject to special tax provision in America: if they distributed more than 95% of their income, they can do so free of income tax. This was largely unexploited until 1969 when they really started to take off. Recognising the boom/bust potential, in February 1970 Soros published a research report […]

George Soros’s reflexivity model illustrated by the conglomerate boom

Apr 22 2021 @ 07:06
The conglomerate boom of the 1960s was the first time Soros systematically put into practice his theory. Managements of high technology defence companies feared a slowdown in sales after the Vietnam War, e.g., Textron, LTV and Teledyne.  They used their highly priced shares to buy other companies. By purchasing companies on relatively low price-earnings ratios […]

George Soros’s understanding of bubbles

Apr 21 2021 @ 09:35
We may be seeing bubbles blowing up in some equity markets right now. Others may follow. We need to be able to read the signs of both the blow-up and any potential crash.  George Soros’s reflexivity model can help. Soros sees bubbles as consisting of two components: (i) a trend based on reality (ii) a […]
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