Doug Kassi prognoosid 2005. aastaks - $, SIRI, Buffett, Marc Cuban

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  • Doug Kass, meedias rohkesti tsiteeritud hedgefunder teeb 2005. aastaks prognoose. Eelmisel aastal tegi ta neid ka ning mitmed läksid ka täkkesse. Väga huvitav lugemine:

    Some Surprises in Store for 2005

     By Doug Kass
    Street Insight Contributor

    It's that time of the year again!

    Borrowing an idea created by Morgan Stanley's Byron Wien, every December I prepare a list of 25 possible surprises for the following year.

    My surprises are not intended to be predictions, but rather are intended to represent events that might have a reasonable chance of occurring despite the general perception of these events carrying very long odds. I call these "possible improbable" events.

    I have long felt that developing a variant view (read: surprise) remains an integral part of differentiating one's investment returns. Mainstream and consensus expectations are just that, and, in most cases, are deeply imbedded in today's stock prices.

    The real purpose of this endeavor is to consider positioning a portion of my portfolio in some part based on outlier events -- with large potential payoffs. After all, Wall Street research is still very much convention and groupthink, despite the reforms over the past several years. If I succeed in making you think about outlier events, the exercise has been successful.

    I hope some of my surprises helped in framing investment themes during the year. Many of my surprises were on target last year; to be precise, almost one-half of the "possible improbables" came true, up from only one-third of my 2003 surprises coming to fruition.

    In particular, the following actual events had a familiar ring for readers of my 2004 surprises.

    The No. 1 and most audacious forecast -- that of a crude oil price of more than $50 a barrel -- was realized. My interest forecast was spot-on (and equally audacious, at the time). I called for a bottoming-out in the 10-year yield at 3.20% when most were looking for an increase in interest rates (we were only a few basis points away) and a year-end yield close to the same levels of December 2003. The emergence of calm in Iraq, an absence of domestic terrorist incidents, still-low interest rates and an increase in merger and acquisitions activity contributed to a marked improvement in equities during the second half of the year. (It was an improvement, albeit far from our surprise of a 30% increase from the May lows and a 15% improvement year over year.) Merger activity accelerated, with, as expected, a plethora of bank stock deals leading the way. The automobile industry's fortunes declined dramatically. Despite widespread belief that housing activity would fall off the cliff, my expectation of a further rise in home prices, which began to resemble the bubble in the Nasdaq in the late 1990s, was realized. The IPO and secondary markets launched a meaningful comeback during the second half of the year. Calls for stricter hedge fund legislation made strong inroads. A unified Democratic party rallied behind Sen. John Kerry, who won the party's presidential nomination.

    Questionable accounting practices at Freddie Mac (FRE) led to more restrictive rules governing derivative accounting. The New York Stock Exchange, in a stunning reversal, made plans to go fully electronic. There were no terrorist acts in the U.S.

    Possible Surprises in 2005

    1. After a lackluster holiday retail season, the consumption binge of the last decade comes to an abrupt halt. Retail sales turn negative and home prices plummet (first on the east and west coasts, then in the rest of the country) while (cost-push) inflation accelerates. The minipanic of 2005 occurs -- during a two-day period the stock market drops by 9% -- as stagflation concerns surface.

    2. U.S. equity prices drop by double-digit percentages in the first half of 2005 and, unlike 2004, show no recovery after the initial drop for the balance of the year.

    3. The Japanese Nikkei is among the best-performing equity markets in the world; the London market is among the worst-performing equity markets.

    4. In the face of a precipitous drop in the U.S. dollar (with the euro briefly trading at 1.55!), the Federal Reserve drops its gradualist approach to monetary policy. Taking a tune from the Fed's moves in May and November 1994, the Fed tightens by 50 basis points and then by 75 basis points on two consecutive Fed meetings.

    5. The year 2005 brings another large-scale, Long-Term Capital-like failure precipitated by an astonishingly large derivative loss that three major U.S. and overseas money center banks are partially on the hook for.

    6. Europe sinks into a recession in the second quarter. The U.S. sinks into a recession in the fourth quarter.

    7. After a brief move back above $50 a barrel, crude oil trades back to less than $30 a barrel as demand slackens in the face of a worldwide economic slump.

    8. There are no major terrorist acts in the U.S. However, England becomes the target of a surprise contamination of that country's water supply by al Qaeda. Equity markets in England are closed for a 10-day period and the price of agricultural commodities rises dramatically (reminiscent of 2004's rise in the price of crude oil).

    9. The Bush administration imposes a national sales tax in an unsuccessful attempt to balance the budget. In the face of a worldwide downturn, the tax is repealed within six months.

    10. Warren Buffett raises Berkshire Hathaway's (BRK.A) stake in Coca-Cola (KO) to 13% by purchasing in a private transaction all 122 million shares owned by SunTrust (STI). Berkshire Hathaway goes on a buying spree as equities tumble. Berkshire acquires Dow Jones (DJ) at $58.50 a share and two troubled, publicly held reinsurers.

    11. Citigroup's (C) Bob Rubin takes over the reins at AIG (AIG) from Hank Greenberg, who retires.

    12. The junk bond market records its worst performance in more than a decade and underperforms almost every asset class in 2005.

    13. The gold market records the best performance of any asset class in 2005, briefly touching $575 an ounce.

    14. Housing stocks make nominal new highs as interest rates decline, but a series of order disappointments and guidedowns for 2006 make this sector among the worst-performing areas of the U.S. equity market as the inventory of unsold homes rises parabolically.

    15. A sub-prime lender or sub-prime insurer fails.

    16. A computer hacker generates a serious virus that infects a large portion of the Internet. This causes a problem for several weeks at Amazon (AMZN), Google (GOOG), eBay (EBAY), Yahoo! (YHOO), AOL and many other sites.

    17. Democratic aspirant Al Gore re-emerges on the political scene. New York Sen. Hillary Clinton announces her intention not to enter the 2008 presidential race. Both former President Clinton and Chelsea Clinton announce their candidacies for political offices. Late in the year, Tom Ridge announces his intention to seek the Republican nomination for the 2008 presidential election.

    18. Time Warner (TWX) sells its AOL division to Marc Cuban in a leveraged buyout after the company settles Securities and Exchange Commission and Justice Department charges and as subscriber defections moderate.

    19. AOL founder Steve Case re-emerges on the corporate scene as the CEO of an Internet startup that goes public and records the largest percentage rise in history of any initial public offering on its first day of trading.

    20. Tyco (TYC) embarks on a series of high-profile acquisitions.

    21. The SEC's experiment in eliminating the downtick rule is abandoned coincidently with the double-digit decline in stock prices during the first half of 2005.

    22. There is a major accounting irregularity (spring-loading earnings) uncovered in a highly regarded industrial conglomerate famous for its acquisitive appetite. Larry Summers leaves his post as president of Harvard University and becomes chairman of this troubled company.

    23. Sumner Redstone gives Howard Stern permission to leave Infinity Radio earlier than his contractual responsibility and Sirius Satellite Radio (SIRI) briefly trades at $10 a share. However, subscription levels at Sirius fail to reach expectations and the stock halves.

    24. HMOs become the new focus of New York Attorney General Eliot Spitzer.

    25. The New York Jets win the Super Bowl, the University of Illinois wins the NCAA Basketball Tournament and the New York Yankees capture the World Series. Pete Rose is elected to the Baseball Hall of Fame and Barry Bonds is barred from baseball for steroid use.

    Doug Kass is general partner for three investment partnerships, Circle T Market Neutral L.P., Seabreeze Partners L.P. and Kass Partners LLC. Until 1996, he was senior portfolio manager at Omega Advisors, a $4 billion investment partnership. Before that he was executive senior vice president and director of institutional equities of First Albany Corporation and JW Charles/CSG. He also was a general partner of Glickenhaus & Co., and held various positions with Putnam Management and Kidder, Peabody. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.

  • What a Long, Strange Trip It's Been

    By Doug Kass

    Holidays are for fun, family and reflection, especially as we near the year's end. I will concentrate on the reflection part today and hopefully will give Street Insight subscribers -- especially our relatively new subscribers -- a sense of the factors that have molded my investment persona.

    Fifty-some-odd years ago, I embarked on a rich personal and professional life full of successes and failures. Never dull, I have tried to embrace life and the markets with gusto and anticipation.

    Soon after my birth, the Dow Jones Industrial Average embarked on a new bull market rally from about 160 to over 300 by the beginning of the 1950s. In 1950, the largest monthly change in the DJIA for the full year was only 14 points!

    My grandmother, Grandma Koufax, was a great stock trader and investor. She owned her own business well before it was fashionable for women to be entrepreneurs. She was well ahead of her time. By the time I was 16 years old, she had taught me to chart stocks in a small notebook that I kept with me at all times. I charted my imaginary "holdings" daily, and spent my Christmas and Easter holidays in a Long Island brokerage office watching the tape all day (at that time the market was only open for a few hours each day) as if I was watching a movie. My preoccupation with the markets, especially during those holidays, led some of my friends to think that I was weird. In retrospect, they were insightful!

    I made my first real trade while getting my MBA at Wharton. After weeks of analysis, I bought a couple of shares of Teledyne (TDY) (and I really mean just a couple!). Run by Dr. Henry Singleton, it was the Google (GOOG) of its time, a stock of the decade that went up nearly tenfold. With the proceeds of that first big trade, I purchased my first automobile, a Triumph sports car. By then, I was immersed in the stock market -- you could say I was almost addicted -- even before I had my first job on the Street.

    At Wharton, I learned the theories behind portfolio management and securities analysis on the way to getting my MBA. While at the University of Pennsylvania, I met Ralph Nader and I co-authored Citibank: The Ralph Nader Report with Ralph and the Center for the Study of Responsive Law. My contribution to that book also became my master's thesis.

    My first job was as a housing analyst at the venerable brokerage firm Kidder Peabody. I learned how to prepare company spreadsheets and about the integrity of independent analysis under Director of Research Johann Gouws, who had successfully led one of the first research boutiques (H.C. Wainright) into prominence earlier. Interestingly, my office was next to Julian Robertson, soon to be of Tiger Management, who at the time was a retail broker!

    After a few years, I ended up at Putnam Management, considered one of the premier money managers extant, in Boston. I worked under two individuals, Larry Lasser and Jerry Jordan (The Chief), who profoundly influenced my career by teaching me how to logically process data and to succinctly develop that data into a well-reasoned and profitable analytical conclusion. Jerry, in particular, taught me how and when to press an investment decision -- a technique that is quite important in the hedge fund business today.

    Glickenhaus & Co. was my next stop, where I honed my money management skills under the talented and legendary Seth Glickenhaus. It is through his influence that I became a contrarian and began to regularly take variant views against the market's prevailing bias. I had my own money management firm during most of the 1980s and, while experiencing some periods of success, I learned the importance of a team.

    In the late 1980s, I acquired a large 13-D position in a NYSE-listed company, thinking that I was going to become the next takeover king. I quickly learned to stick to my knitting -- analyzing and investing, not taking over companies.

    But I should digress. During the mid-1980s I took up driving harness horses as a hobby. I broke a world record and one of my horses, Kassa Branca (a play on words from the movie Casablanca and named for me and Brooklyn Dodger pitching great Ralph Branca), won a million-dollar race! Unfortunately in 1990, I was almost killed in a harness racing accident while driving in a race in Pennsylvania. I was in a body cast and wheelchair for nearly two years, and I still feel the physical pain daily.

    The supine position gives one a lot of time to contemplate one's future.

    By 1992, I was able to work again (though I still could not walk unaided) and while running the research and institutional department at First Albany, I met Alan Abelson of Barron's. That relationship led to a cover story that I wrote for Barron's on Marvel Entertainment (a negative assessment of Marvel's prospects, and the company ultimately filed bankruptcy). That start was followed by approximately 30 interviews and articles over the years in Abelson's column or in other areas of Barron's.

    I believe my relationships with Ralph Nader and Alan Abelson as well as my period of time reflecting on life after my accident importantly framed the manner in which I have viewed markets and companies -- a glass half empty, if you will.

    A stint with the remarkable Leon Cooperman at Omega Advisors taught me the tough hedge fund game and independence of analysis, after which I started my own partnerships, which I have had for nearly seven years.

    I sit here grateful and satisfied, though looking forward to the continued challenges presented by the markets with enthusiasm and excitement.

    It seems as if I have never had a dull moment in the investment business over the last three decades. What moves me is that it seems that there are new and different variables to consider every day, and with over 6,000 publicly-traded securities, projects are rarely duplicated.

    What a long, strange trip it has been.
  • Sellest aastast on SEC-i poolt tehtud ka mõned muudatused seoses aktsiate shortimisega. Piirangud on peale keeratud n.ö. naked short sellingule. See peaks eelkõige just mõjutama odavamaid aktsiaid, kuna paljud neist on viimasel ajal sattunud selle ohvriks. Mis juhtub, kui neid short-e mingil hetkel katma hakatakse? Kui palju neist piirangutest reaalselt kasu on?

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