Posts Tagged ‘Interest Rate Observer’
James Grant: WealthTrack Transcript
Monday, November 9th, 2009
Last week, James Grant appeared on Connie Mack’s WealthTrack for an in-depth interview. Grant is bullish about the recovery, saying the recovery is going to be surprisingly strong. Grant is must-see, must read material. If you missed the video, you may watch it here.
CM: … He is James Grant, editor of the biweekly newsletter Grant’s Interest Rate Observer, a self-described independent, value-oriented and contrary-minded journal of the financial markets. A financial thought leader, Jim is one of Wall Street’s most astute, erudite and articulate observers. He is also the author of six books including a wonderful biography of the nation’s second president titled John Adams: Party of One and his most recent Mr. Market Miscalculates: The Bubble Years and Beyond. In an interview conducted before this week’s third quarter GDP report showing the economy expanding at a well above consensus pace of 3.5%, I asked Jim why he, a notorious glass half empty kind of guy has recently gone from economic bear to bull.
How zippy is the recovery?
JAMES GRANT: Pretty darn zippy. The finest expression was that of a long deceased economist named Pigou, a Brit actually, sounds French, who said that the error of optimism dies in the crisis; it is followed by the era of pessimism, which is born not an the infant but a giant. Which is a wonderful expression of the human tendency to overdo it. So all of the new era cats find out that they didn’t get the memo. They were all wrong. There was in fact a debt problem. It burst in their faces. What they do now? They are disconsolate, they inconsolable.
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Nothing like this has been seen in the history of the world, the patient will not live sadly. So it’s like that. And especially they overdo it on the downside and I think that goes for our esteemed government, especially the Fed, which not only didn’t see it coming but also didn’t comprehend it once it splattered all over its face like a cream pie.
CM: How robust do you think the recovery will be?
JAMES GRANT: I think it’s going to surprise to the upside and so old am I, Consuelo, I’m not going to give a number, nor am I going to give a date, but I think that it’s going to be surprisingly strong. The consensus is for next year to generate growth in our gross domestic product of about 2.5% after adjustment for price fluctuations. I expect it will be much better than that. Certainly for a couple of quarters which I think will jar people- they’ll say, wait, that was an unauthorized, who said they could do that? And you can see some of this in the making. The earnings call recently from Caterpillar featured the information that the dealers had run down their stocks to half of the usual and if they were only to restock to the little bit of the normal, there would be a big sales boom and CAT was kind of venturing that not implausible outcome next year would be growth of more than 10%. And I could see that throughout the economy, and people are expecting much, much less.
I think that the wisest course for investors is to heed the advice from the scripture of value investing, the Graham and Dodd idea that we can not know the future, therefore seek a margin of safety in investments in the present. That is to say, we can’t know really what’s going to happen in 2010, let alone 2017, but we can observe two things. We can observe the opportunities that are in front of us, in the securities as they are now priced, and two, importantly, they didn’t say this but I will, you can observe how the world is positioning itself for an expected outcome.
Read the whole transcript here, and here.
Tags: Biweekly Newsletter, Connie Mack, Cream Pie, Debt Problem, Depth Interview, Downside, Financial Markets, Gdp Report, History Of The World, Human Tendency, Independent Value, Interest Rate Observer, James Grant, John Adams, New Era, Pessimism, Quarter Gdp, Six Books, Thought Leader, Wealthtrack
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WealthTrack: Why Jim Grant is Bullish
Monday, November 2nd, 2009
This week on WealthTrack, Consuelo Mack sits down for a rare one-on-one interview with contrarian market observer and historian James Grant, publisher of the influential newsletter, Grant’s Interest Rate Observer. They discuss why the economic recovery could be much stronger than anticipated, and the ballooning federal deficit much more damaging. He also shares his views on the Fed, the US dollar, gold, China and some of his personal investing habits.
Grant is erudite, articulate, funny and opinionated - just the right ingredients for an interview not to be missed.
Note: The transcript of this interview is not available yet, but will be posted here as soon as it arrives.
Source: Wealthtrack, October 30, 2009.
Tags: Advertisement, China, Consuelo Mack, Dollar Gold, Economic Recovery, Emerging Markets, Federal Deficit, Funny, Gold, Historian, Interest Rate Observer, James Grant, Jim Grant, Newsletter, Personal Grant, Personal Investing, Publisher, US Dollar, Wealthtrack
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James Grant: Return-Free Risk
Sunday, December 7th, 2008
James Grant, founder and editor of Grant’s Interest Rate Observer, and an editor of the newly published sixth edition of “Security Analysis,” by Benjamin Graham and David L. Dodd, has published a column at FT.com and been the subject of a 24-minute Bloomberg audio interview (below) about the new nature of the market and government securities.
Click Play for James Grant’s December 5, 2008 Bloomberg Audio Interview
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Grant very succinctly redefines the bond market as providing Return-Free Risk, rather than the old standby, Risk-Free Return. Here are a few excerpts:
The truth is that no investment asset is inherently safe. Risk or safety is an attribute of price. At the right price, a lowly convertible bond is a safer proposition than an exalted Treasury. Watching the government securities market zoom, many mistake price action for price.
Yes, Treasuries might conceivably redeem the hopes of their besotted admirers. Maybe a deflationary chasm is about to swallow us all. Never before has the US been so leveraged. And-just possibly-never before were lending standards so reckless as the ones that brought joy to so many astonished mortgage applicants in 2005 and 2006.
In their magnum opus Security Analysis Benjamin Graham and David L. Dodd advise that “bonds should be bought on their ability to withstand depression”. They wrote that in 1934. So far is that rule from being honoured by today’s financiers that not a few bonds-and boxcars full of mortgages - could hardly withstand prosperity. Two urgent questions present themselves. One: does something far worse than recession loom? Two: does that certain something definitely spell much lower interest rates?
On non-Treasury and corporate bonds:
The non-Treasury departments of the credit markets have crashed. No surprise then that prices and values are deranged. Market makers have closed up shop for the year, while hedge funds cower in fear of redemptions. You’d suppose that professional investors – doughty seekers of value – would be combing through the debris for bargains. Alas, no. Most seem content to lend money to Henry Paulson (subsequently to Timothy Geithner) at 2 per cent or 3 per cent.
In corporate debt and mortgages, anomalies and non sequiturs abound. They are especially prevalent in convertible bonds. More so than even the average stressed-out fund manager, convertible arbitrageurs have been through the mill. It was they—and almost they alone—who owned convertibles. Now many of these folk must sell them.
Few buyers are presenting themselves, however, though extraordinary bargains keep popping up.
“Risk‐free return” is the standard tag attached to the government’s solemn obligations. An investor I know, repulsed by prevailing government yields, has a timelier description - “return‐free risk”.
Read the complete article here.
Tags: Admirers, Attribute, Audio Interview, Benjamin Graham, Bloomberg, Bond Market, Bonds, Boxcars, Br, Chasm, Convertible Bond, Corporate Bonds, Crash, Credit, Credit Market, Credit Markets, Deflation, Desc, Dodd, Eco, Economics, Economy, Excerpt, Excerpts, Financiers, Free Risk, FT.com, government securities, Government Securities Market, Hedge Fund, Hedge Funds, Henry Paulson, Img, Interest Rate Observer, interest rates, interview, Investment, Investment Asset, Investors, James Grant, Jim Grant, Leverage, Loc, Loom, Magnum Opus, Markets, Money, Mortgage, Mortgage Applicants, Paulson, Professional Investors, Prosperity, Recession, Redemptions, risk, Security Analysis, Timothy Geithner, Treasuries, Treasury Bonds, Treasury Departments, Urgent Questions, Value
Posted in Bonds, Credit Markets, Economy, Markets | No Comments »
