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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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The July MFO Commentary is Out.

JohnChisum
in Off-Topic
First, this a long and thorough commentary. A lot of info so expect to set aside some time to read it. There is so much information it's hard to know where to begin. I'll leave that to the rest of you.

One part caught my eye, in Edwards section there is a link to the tragic rubber sandal (flip flops) factory fire that killed many workers in Manila. As with most places here that utilize large numbers of workers, the company is constantly fighting against theft. It is very commonplace here whether a large factory or a three person shed. The owners decide to lock doors and put metal grates on windows to keep workers at their stations. The safety consequences are huge to say the least.

In this instance, a welder was doing work inside. The area was not cleaned and there was no fire watch in place. The rest is known.

Thanks again to David, Charles, Ed and the rest for another great commentary.

Comments

  • Dex
    When will the tweet come out?
  • JohnChisum
    The tweet?
  • jlev
    I read that first as twerk rather than tweet, which led to many chuckles.

    A terrific and dense commentary. Still working through it, but thank you to everyone who put it together.
  • TedTed
    @MFO Members: I started to read the Commentary, but unfortunately I fell asleep and began dreaming. I dreamt I was on a beach reading James A. Michener book Hawaii. However, when I wake-up I'll dig right into the meat of the matter. There's a lot of great information here David.
    Regards,
    Ted
  • JohnChisum
    Maybe that's a hint for a Hawaii vacation?
  • TedTed
    edited July 2015
    @ John Chisum Great idea, but not this time of year. Why would the Linkster want to go to Hawaii in July, when I go to a Chicago Lake Michigan beach and gaze at the tax filled azure blue clouds !
    Regards,
    Ted
    https://www.google.com/search?q=azure+blue+clouds&biw=1280&bih=603&tbm=isch&imgil=tP3LDkIVn92jOM%3A%3BXXkQzO95bRDO3M%3Bhttp%253A%252F%252Fwww.istockphoto.com%252Fphoto%252Fwhite-fluffy-clouds-on-azure-blue-sky-58581630&source=iu&pf=m&fir=tP3LDkIVn92jOM%3A%2CXXkQzO95bRDO3M%2C_&usg=__RM4S9KRzwYbf8x3euCc8cQjQeBU=&ved=0CCoQyjc&ei=Ri2VVfDGIIjmgwSqwoiIDQ#imgrc=tP3LDkIVn92jOM:&usg=__RM4S9KRzwYbf8x3euCc8cQjQeBU=
  • Dex
    Ted said:

    However, when I wake-up I'll dig right into the meat of the matter. There's a lot of great information here David.
    Regards,
    Ted

    How about a summary after that?

  • davidrmorandavidrmoran
    edited July 2015
    >> Grantham argues that we’re heading for a massive stock market crash (something on the order of a 60% fall), ...
    >> Grantham ... once again reiterated his belief that US stocks are 30 – 60% overvalued, still paying for overvaluation sins of our fathers … the great bull run of 1990, which started in 1987, finished in 2000, and was right on the heels of the great bull run of the 1980s. ... He blames ... Bernanke and Yellen for distorting valuations, the capital markets, the zero interest rate policy … leading to artificially inflated equity prices

    Wow. And people still take this guy seriously? For what reason? cuz he gets invited to speak at conferences? Famous for being famous? What value has he added? I am having trouble finding any at the wikip entry and in this:
    https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdf

  • TedTed
    edited July 2015
    @Dex: I think I do my fair share of keeping the discussion board alive. A large chunk of David's Commentary was information regarding the M* Conference that I linked 6/24-6/26 ,which in my opinion, was a complement to David's excellent summary of the Conference. There's nothing stopping you from writing a summary after next month's Commentary.
    Regards,
    Ted
  • Dex
    Ted said:

    @Dex: There's nothing stopping you from writing a suumary after next month's Commentary.
    Regards,
    Ted

    Brrrrrrrrrrrrrrrrrrrriiiiiiiiiiiiiiiiiiiiiiiiiinnnnnnnnnnnnnnnnnnnnnggggggggggggggggg it on!

  • David_Snowball
    On Grantham: through about 2010, GMO's asset class projections were about spot-on. They were right both in order (the asset class they said would finish first, finished first and so on) and in magnitude (when they said "asset X will earn 8% on 5, 7 or 10 years," there were usually within a percent or so).

    Why not lately? Grantham argues that the Fed's zero-interest / QE policies have scrambled the deck for now; at such interest rates, it makes sense to issue corporate bonds in order to repay corporate stocks. That's largely displayed capex spending. In the short term profit margins stay huge because (1) there are fewer shares outstanding and (2) you're not wasting money by investing in productive assets, you're letting it pile up as profits. Lots of stats, available through Morningstar's reproduction of his talk, followed.

    As a result, profit margins and p/e ratios haven't regressed. If they do regress, the stock market crashes. If they don't regress, the economy crashes since you can't operate forever with no reinvestment in the business.

    David
  • davidrmorandavidrmoran
    DS,
    Thanks v much for answering my query. You'd think the wikip page would be more substantial.

    >> If they do regress, the stock market crashes. If they don't regress, the economy crashes ...

    All righty then, that settles that.
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