Rakesh Jhunjhunwala interview: Wizards of Dalal Street

On CNBC India, Rakesh Jhunjhunwala is feted in the same way Warren Buffett is here in the USA. 

He is known as one of the great bulls of the Indian markets, and while his success has coincided with the recent decades' secular uptrend in Indian shares, Rakesh is also an adept trader who has made money selling short. He cites Buffett and Marc Faber as two of the greatest influences on his trading and his understanding of markets.

CNBC-TV 18 profiles the Indian share trader and investor in this biography special, Wizards of Dalal Street. Rakesh tells Ramesh Damani the story of how he got his start in the share markets and how he searches for attractive investments today. 

Here are a few excerpts from the discussion, in which Jhunjhunwala talks about his childhood interest in the workings of share market and shares a few lessons on speculation:

CNBC:  "But you're a bureaucrat's son. I mean, weren't you compelled into [that area]?"

Rakesh: "I was a bureaucrat's son, but fortunately I had a very democratic father. And also we had a business background...my father was an intelligent man and he encouraged me to do whatever I had an interest in."

On speculation and reality: 

CNBC: "Does speculation teach you to be realistic, because you are betting on leveraged money?" 

Rakesh: "I think so, because speculation requires and teaches you to accept reality as it is, rather than reality as you would like to have it."

An important point on risk taking and concentration: 

CNBC: "But is one of Rakesh Jhunjhunwala's tenets is when he finds an idea to bet big?" 

Rakesh: "Big is relative, Ramesh. But when I find an idea whose prospects are very good...you have to be conscience of one thing - the great investment opportunities are very rare. So when you get them, seize them. And seize them in a manner that if you're right, it makes some difference to your balance sheet."



Check out the full interview here. Much great wisdom and insights within.

If you're enjoying these posts and would like to see more, please subscribe to our free RSS updates and follow Finance Trends in real-time on Twitter and StockTwits. You can also check out our related posts below for more market wisdom and trading insights.  

Related articles and posts: 

1. Rakesh Jhunjhunwala interview on FT.com - Finance Trends.

2. FY 2012 has been the worst trading year of my life: Jhunjhunwala - Moneycontrol. 

3. Rakesh interview CNBC-TV 18 transcript: Momentum and risk - Moneycontrol.

Michael Steinhardt talks Buffett, America with CNBC

Legendary hedge fund manager, Michael Steinhardt has a few things on his mind and he shares them readily in this interview with CNBC.



A few highlights from Steinhardt's chat with the CNBC crew: 

• Hedge fund management is not the elite business it once was. Managers today content with low double digit returns, versus emphasis on true performance and 25%-40% annual returns in Steinhardt's days.  

•  Asked if he could repeat his performance today, Michael demurs, "I don't know". He notes that magnitude of funds involved in hedge funds is much larger today. Emphasis has shifted to making money off a large asset base, as opposed to performing for your investors. 

• You don't have to do what everyone else is doing. You do need to understand the way in which your perspective is different than the world's (your edge).

• Steinhardt is concerned about savers (old folks and retirees) getting shafted by near zero interest rates and inflation. This is a terrible situation for Americans.

• Buffett's carefully crafted PR persona and his philanthropy-in-one-fell-swoop approach are "worth reflecting on". 

• Superficially, the United States is doing okay. Steinhardt looks at the inflation picture, the valuations in the stock market, and America's economic strength and its cultural standing in more depth.

Seems a lot of the comment surrounding Steinhardt's interview today focused on the Buffett side of the equation (especially given the forum; CNBC is Buffett ass-kissing central). 

While it is interesting to hear someone publicly question Buffett's "PR" persona and his philanthropic gestures,  I'm actually more interested to hear Steinhardt's take on the economy and the reality of inflation, as well as how that affects the average person in America today. 

This rich guy gets it - why do all the pointy-headed academics have such a hard time voicing these simple truths (maybe because they're paid to do the opposite)? 

Goldman, Blankfein seek damage control

If you were tuned in to Bloomberg TV this past week, you probably caught Lloyd Blankfein on the Charlie Rose Show, as I did on Sunday.

Surprised to say I sat through most of it, considering I heard others who said they couldn't make it through 15 minutes of the guy's speil. I won't rehash for you here; if you're interested, take a look at the video link above.

I will say that while I was largely unimpressed with the broad details of the SEC's case against Goldman Sachs (and the political circus that quickly surrounded it), I also got the feeling that Blankfein was, at times, making some rather spurious arguments in his PR performance at Rose's table (Charlie is a friend of Warren Buffett's and the re-runs of Blankfein's spot coinciding with Buffett's defense of Goldman and Blankfein at the Berkshire Hathaway annual shareholders' meeting are no coincidence).

For some rather frank discussion of the problems facing Goldman Sachs (and other large, money center banks), may I recommend listening to the following recent interviews with James Rickards and Bill Laggner on the Eric King broadcast (Hat tip to Controlled Greed).

As Rickards notes in his discussion with Eric King, Goldman may be facing a very real danger from the recent blows to its reputation. And as Keith McCullough at Hedgeye points out, reputational risk is not something you can fix in a New York minute.

Bruce Berkowitz 'Wealthtrack' interview

Value investor and Fairholme Fund founder, Bruce Berkowitz sits down for an interview with Consuelo Mack on 'Wealthtrack'.

Thanks to Prieur at Investment Postcards for highlighting this interview, which offers a nice glimpse into Berkowitz' value investing style.

Check out the clip to hear Bruce's rules on investing, his thoughts on Berkshire Hathaway, and why Warren Buffett may be making a "brilliant" investment with his Burlington Northern acquisition.

When you're done with that, you can peruse our related posts for much more with Bruce and the aforementioned Berkshire Hathaway value investing greats. Enjoy!

Related articles and posts:

1. Bruce Berkowitz talks with Steve Forbes - Forbes.

2. Lessons from Warren Buffett - Finance Trends.

3. Lessons from Charlie Munger - Finance Trends.

Features of the week

It's been a while since we rolled up a new "Features" post, but we're serving one up today. Enjoy our latest selection of Friday links.

1. Robert Murphy: busting the myth of "green jobs".

2. America's AAA rating at risk: David Walker.

3. Hayman Capital's Kyle Bass predicts sovereign defaults.

4. Global crisis 'vastly worse' than 1930s, Taleb says.

5. Distressed debt investors work fallout of buy-out boom.

6. An offer US banks could not refuse: Paulson's tactics.

See also: 10/15/08 post, "Treasury bank plan: not so 'voluntary'".

7. Deleveraging is the only real solution to the crisis.

8. TARP beneficiary says 'sham' bailouts help speculators.

9. Buffett knows how to avoid common value traps.

10. 'Buy and hold' is not dead (if properly defined).

11. A brief history and Dow Theory update: Tim Wood.

Have a great weekend, and thanks for checking in with Finance Trends Matter (click here to subscribe to our RSS feed). We'll see you all next week!

Back to shorting banks...

Short sales of US bank shares have increased noticeably in recent weeks ahead of the government's "stress test" results, which are scheduled for a delayed May 7 release.

Bloomberg has the details in, "Short selling of banks accelerates":

"Short sellers, the bane of Wall Street executives last year, are back.

The number of Citigroup Inc. shares borrowed and sold short increased sixfold since Feb. 27, the day the U.S. Treasury announced it would convert some of its preferred shares in the New York-based bank into common stock.

Short interest in Bank of America Corp., MetLife Inc. and American Express Co. climbed more than 40 percent in the same period, according to data compiled by Bloomberg. In total, short sales of the 18 publicly traded financial companies undergoing government stress tests were twice as high on April 15 as they were at their peak last year in July, two months before Lehman Brothers Holdings Inc. collapsed.

“People are either positioning themselves for the potential of a preferred-to-common conversion, or they have an increased perception of risk in these companies,” said Andrew Baker, an equity strategist at Jefferies & Co. in New York."

Last week Jim Bianco spoke with Bloomberg TV about the delay of stress test results, saying that investors would be correct to assume that delays mean "the news is not good". He added that the stress test results might reveal that surprisingly large "TARP-like numbers" are needed to further recapitalize "stressed" banks for an economic downturn.

Meanwhile, Warren Buffett and Charlie Munger have criticized the stress tests for 19 large US banks, saying that most are not "too big to fail" and could easily be wound down with help from the FDIC. The two added upbeat opinions on some of Berkshire Hathaway's own financial holdings, including Wells Fargo (WFC).

Bloomberg, quoting analysts at CreditInsight, reported that Wells Fargo and some of its smaller rivals may have to turn their preferred shares into common stock as a result of the stress tests.

Related articles and posts:

1. Investors seem resigned to Bank USA - Wall Street Journal.

2. More banks will need capital - Wall Street Journal.

Buffett's successor + Woodstock for capitalists

It's that time again: this weekend a boatload of Berkshire Hathaway (BRK.A, BRK.B) shareholders will descend on Omaha to attend the annual Berkshire shareholders' meeting and hear the great Oracle, Warren Buffett, speak.

Only problem is, this year WB will have some explaining to do. As the Financial Times reports, Buffett faces a grilling from investors who'll expect him to account for the company's worst year ever.

Excerpt from the FT piece:

"Buffett-watchers say this year’s meeting of shareholders in Berkshire Hathaway, his candies-to-insurance group, will depart from the usual pattern of deferential questions and folksy answers and witness some criticism of the billionaire investor.

“The hard questions will be asked this year,” said James Altucher, a hedge fund manager and author of Trade Like Warren Buffett. “There will be people who always stand by him and others who will ask: ‘Have you lost your way?’”."

Another small cloud looming over Berkshire Hathaway is the now-frequently discussed issue of CEO succession. Who will fill Warren Buffett's shoes as Chief Executive Officer and Chief Investment Officer at Berkshire?

In fact, as Berkshire followers already know, it will likely take two individuals to carry out these seperate roles that superstar-CEO Buffett has long carried out himself.

There is a good deal of concern about finding successors who could live up to Buffett's outstanding long-term track record of success, but Berkshire insiders are confident that the unique corporate culture put in place by Buffett and Vice-Chairman Charlie Munger will continue after Buffett is gone.

We've added some recent Bloomberg TV segments here which speak to that issue. Bill Gates, Donald Keough, David Sokol, Byron Trott, and Buffett himself are interviewed for this special on Buffett's inner circle and succession at Berkshire Hathaway. You'll find more on this topic below in our related articles section.

Related articles and posts:

1. Buffett refocuses attention on Berkshire - Bloomberg.

2. Eveillard, Child, Pabrai on Berkshire, Buffett - Bloomberg.

3. Berkshire, Buffett bear brunt of bear market - Finance Trends.

Features of the week

Some of the more notable stories and items of interest that we've clipped and saved this week:

1. Household net worth plunges 18% in 2008.

2. China expresses worry over its US assets.

3. Fitch cuts GE, Berkshire Hathaway AAA ratings status

4. Berkshire Hathaway CDS trading on par with Turkey, Peru.

5. South Sea bubble descendant has advice for fellow bankers.

6. Pimco predicts inflation joining Buffett, Faber, and Rogers.

7. Jim Rogers talks to Bloomberg about the dollar, inflation.

8. John Authers on the importance of a Swiss Franc devaluation.

9. Switzerland, Luxembourg relent on bank secrecy.

10. Financial Times examines, "The Future of Capitalism".

11. Making the numbers: "Bernie, Jack, and the rest of us".

12. Grand Illusion - life in a Fed-driven economy.

Thanks for reading Finance Trends Matter. If you'd like to keep up with our latest content, you can subscribe to our blog feed in your RSS feed reader. Enjoy your weekend!

Jim Rogers talks to Bloomberg TV

Well, Warren Buffett is not the only one getting up early in the morning for tv interviews.

Jim Rogers sat down to chat with Bloomberg TV (parts one & two) from Singapore the other day, and he's got plenty to share on the state of the world economy and the financial markets.

As always, Jim has some colorful ways of expressing his long-term bullish outlook on commodities. He says that farmers will be the ones to drive Lamborghinis in the coming years (in place of stock brokers and other finance types), and that ex-Wall Streeters should learn to drive tractors if they want to make it in the future, as wealth shifts to producers of real things and tangible commodities.

Rogers also made a great point about the ongoing interventions into the economy, saying that America is making the very same mistakes Japan made in propping up their zombie banks and ushering in a "lost decade" of economic decline.

Here's how Jim put it: "Sometimes you can spend more money trying to prevent a recession than if you just went ahead and had the recession, cleaned out the system, and started over!".

Food for thought, it's really as simple as that. The rest is just bullshit.

Related articles and posts:

1. Jim Rogers says Fed to buy Treasuries - Bloomberg.

2. Jim Rogers: Geithner clueless - Finance Trends.

Warren Buffett Monday on CNBC

Well, there are a lot of things going on in the markets and the economy that we could talk about today, but let's not fight the whale.

Warren Buffett is front and center in the business news today, as he joined CNBC this morning for an extended "Ask Warren 2009" interview special.

Transcripts and video clips are all there in the link, and there's plenty for WB and Becky Quick to talk about, including the news of a merger between Schering Plough and Merck, which broke in the opening moments of this morning's interview.

Interesting to note that Buffett is seeing a lot of change in consumer behavior recently. He said that the American public has changed its buying habits, and that the level of fear that's taken hold among Americans is something he's never seen before. The widespread confusion and fear over the economy has led the buying public to really pull back in recent months.

And as you may have noticed in last week's coverage of Berkshire Hathaway's annual report, Buffett is not exactly holding back about the state of the economy.

When he noted this morning that the economy "has fallen off a cliff", Bloomberg picked up the story and ran the quote in their headline.

Related articles and posts:

1. Berkshire, Buffett bear brunt of bear market - Finance Trends.

2. Graham shows S&P 500 too high as Buffett loses - Bloomberg.

3. Lessons from Warren Buffett - Finance Trends.

Berkshire, Buffett bear brunt of bear market

Berkshire Hathaway and its chairman, Warren Buffett, are certainly bearing the brunt of this bear market in shares.

Last week, Bloomberg reported that Berkshire Hathaway shares had fallen to a five-year low on concern about possible losses and writedowns from "bets the billionaire chairman has taken on world stock markets."

Berkshire won't have to pay out on the contracts until "at least" 2019, but falling stock market prices and increased volatility in the interim require the company to take quarterly writedowns on those positions.

Today, Bloomberg reports that writedowns from those derivative bets, along with losses in the company's stock portfolio, may cause Berkshire to report its worst results ever, according to the gauge most touted by Buffett: the company's book value per share.

"Berkshire Hathaway Inc. may report its worst results since Warren Buffett took over in 1965, based on a measure the billionaire chairman cites on the first page of his firm’s annual letter to shareholders.

Losses in Berkshire’s stock portfolio and writedowns on derivative bets tied to equity markets may have caused book value per share, a measure of assets minus liabilities, to fall by 8.5 percent, according to Gary Ransom, an analyst with Fox- Pitt Kelton Cochran Caronia Waller. That ratio declined only once before on Buffett’s watch, falling 6.2 percent in 2001.

Berkshire suffered as the benchmark Standard & Poor’s 500 Index turned in its worst year since 1937. The expected writedown on derivatives may reflect both that decline and the increasing volatility of equity markets, though the $35.5 billion in derivative contracts don’t require Omaha, Nebraska- based Berkshire to pay out until at least 2019, if at all..."

The article goes on to explain the importance that this book value per share measure has to Berkshire shareholders:

"...If Buffett’s 2008 report, expected tomorrow, follows the template from past years, the first sentence of the letter to shareholders will disclose the change in book value. In his “owner’s manual” for Berkshire shareholders, Buffett says he considers the figure to be an objective substitute for the best, albeit subjective, measure of a firm’s success: a metric he calls intrinsic value."

Read on for more on Berkshire and the importance of this intrinsic value measurement.

You can also check out the links below to find the upcoming (8 a.m. Saturday) Berkshire Hathaway annual report, and a 2008 discussion with investor Warren Buffett.

Related items and posts:

1. Berkshire Hathaway annual & interim reports - Berkshire Hathaway.

2. Buffett watchers await annual report - Daily Finance.

3. Lessons from Warren Buffett - Finance Trends Matter.

Features of the week

Plenty to read and hear in our latest, "Features of the week".

1. US economy: jobless rate soars and payrolls plunge by 598,000.

2. TARP robs $78 billion in taxpayer cash (at least).

3. Faber Friday: Bloomberg interview clips with investor Marc Faber.

(a) Faber says US stimulus may lead to dire consequences (video).

(b) Faber favors US tech stocks: Cisco, Intel (audio).

(c) Marc Faber says stocks will fall after mid-year bounce (video).

4. The "bad bank" proposal: even worse than you imagined.

5. Dividends are forecast to decline in Europe and in the S&P 500.

6. Should you follow Buffett and be greedy now?

7. In Daschle's tax woes, a peek into how Washington works.

8. Corn ethanol takes another hit.

9. Downturn ends boom in wind and solar power.

10. Clean Money is a useful guide for clean-tech investors.

11. Uncle Sam takes salary, leaves allowance.

12. The History of Money: Peru.

13. Chart spotlight: January forecasts a down year - Carl Swenlin.

14. Drivers for natural resources in 2009 - Frank Holmes.

15. Credit crisis watch: some positive developments.

16. Don't take economic stimulus measures into your own hands.

Thanks for reading Finance Trends Matter. Enjoy your weekend!