John Muir: Food for Thought for Value Investors

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In my last post I talked about how I enjoy reading and like to read as much non-finance material as possible. I have since finished the critique of John Muir’s writing that was published by I assume the now late Univ. of Wisconsin professor Herbert Smith (published in 1965). The following passage by Muir (from John of the Mountains; shared by Smith late in his review) may be applicable today as much as it must have been in his time ~100 years ago. Perhaps this is especially important to keep in mind during bull markets:

No sane man in the hands of nature can doubt the doubleness of his life. Soul and body receive separate nourishment and separate exercise, and speedily reach a stage of development wherein each is easily known apart from the other. Living artificially, we seldom see much of our real selves. Our torpid souls are hopelessly entangled with our torpid bodies, and not only is there a confused mingling of our own souls with our own bodies, but we hardly possess a separate existence from our neighbors. 

Emphasis added. Muir ends this thought by describing his favored means of independence.

The life of a mountaineer seems to be particularly favorable to the development of soul-life, as well as limb-life, each receiving abundance of exercise and abundance of food.

Previously: John Muir: Speaking of the Herd

 

John Muir: Speaking of the Herd

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Outside of work and preparing for the quarterly Uguisu Value newsletter (among plenty of other things going on!) I spend a fair amount of personal time reading. A number of wonderful books for value investors have been published in recent years — most notably I’m thinking of The Manual of Ideas and The Education of a Value Investor. In addition to reading investing books and annual reports, I like to mix in as much non-investing material as I can.

Recently I began reading a critical review of the famous environmental preservationist John Muir’s (1838-1914) writing. Not long after arriving in California, around the age of 30, Muir worked for a short while as a shepherd. He made the following observation about sheep (quote below). I’m sure there are not a few individual investors that end up in this situation with the vicissitudes of “the market” (or as we value investors prefer, “Mr. Market”). Muir’s depiction also reminds me of some of the institutional and HNWI investors that I pitched regarding a small-cap Japan activist fund. Recapitulating the investment merits of profitable companies trading at substantial discounts to tangible assets, to so-called sophisticated investors … while being grilled about macroeconomic risks and the very company-specific characteristics (smaller capitalization, obscurity, etc.) that make value investing attractive. Go figure.

Paraphrasing Muir:

Even sheep that have strayed from the flock huddle timidly and silently, basely human in their actions. Afraid of their freedom, not knowing what to do with it, and seeming glad to get back into their old familiar bondage.

It is worth mentioning that in fact Muir was fond of wild sheep.

Nostalgic for California this past winter, it was fun to see Muir’s name appear in Hampton Sides’ In the Kingdom of Ice. Put that book on your reading list. A character in Sides’ story is a Melville. The joys of being a value investor and not stuck watching stock quotes.

Some thoughts about investing in Japan

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I recently published an exclusive article at Seeking Alpha, “Thoughts About Investing in Japan.” I like how SA has incorporated the summary bullet points atop its posts. I’m posting them below here with the original article linked in the aforementioned title. It’s not easy writing about Japanese stocks on SA when fewer and fewer Japanese ADRs trade in the U.S. (you can’t link Tokyo-listed ordinary shares on the site), let alone the matter that I’m focused on smaller caps. Have a look at the SA article and by the way, if you missed it, I launched a small/micro cap quarterly best-idea Japanese stock newsletter (Uguisu Value) in January.

Summary

  • Nomura’s latest investor survey shows Japanese individuals remain long Japan.

  • Demand for Japanese stocks seen exceeding supply.

  • Most-watched stocks include many usual suspects.

  • Thinking of Soros, Templeton, and Marks for Japan 2015-20.

  • Japanese stock idea generation.

Warren Buffett: 85% Fisher, 15% Graham

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In John Train’s The Midas Touch (Amazon; recent post), published in 1987, he describes Warren Buffett as 85% influenced by Benjamin Graham and 15% by Philip Fisher. After re-reading Fisher’s Common Stocks and Uncommon Profits and typing up 15+ pages of notes to substitute for a future re-read, I am convinced that Buffett is much closer to 85%-Fisher and 15%-Graham, and he was arguably already leaning more Fisher-like than Graham when Train began writing about him. Put Common Stocks on your reading list and consider a re-read if it’s already on your shelf. Continue reading

Nomura’s Individual Japanese Investor Survey

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The results of the latest Nomura survey of individual investors in Japan (August 14th) show Japanese investors are slightly less bullish — naturally given Ukraine/Russia, Iraq, Israel/Hamas, etc — though they are not getting spooked out of equities. Investors remain upbeat on the yen (correspondingly bearish on the euro) and they say they like Japanese equities best again (most bullish on capital goods and bearish on consumer goods).  Continue reading

Business Adventures notes

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Like many others, I became aware of John Brooks’ Business Adventures after the recent WSJ essay by Bill Gates wherein Gates said the book was his favorite of the business genre and that it was Warren Buffett’s recommendation to him in 1991 when he asked Buffett for his best business read (the story goes that Buffett mailed Gates his personal copy and Gates has kept it to this day). I’m in the middle of chapter three (about the U.S. federal income tax) but wanted to share a few notes from the first chapter, “The Fluctuation: The Little Crash in ’62” [chapter two is a 50-page entry about the failed Ford Edsel, a rather quick, enjoyable and informative read]. Continue reading

What to like about investing in Japan

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In a recent article by IBD about the attractiveness of foreign stocks, Dennis Stattman (a manager of the $60 billion BlackRock Global Allocation — ticker: MDLOX), commented that there is a lot to like in Japan. Dennis cited upward earnings revisions; corporate managers starting shareholder-friendly policies; and attractive valuations. He believes Japan is in the very early stages of a multi-year bull market. Continue reading

Nomura’s Individual Japanese Investor Survey (June 2014)

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Nomura’s (NYSE: NMR) (TYO: 8604) monthly “Individual Investor Survey” was released yesterday. (Here’s my walk-through for May). Japanese investors are slightly more bullish, while they remain concerned about international affairs with a particular interest in forex developments, naturally. Their top sector focus (most appealing/unappealing) was unchanged: they like capital goods and autos, somewhat surprisingly in my opinion; bearish on transportation and utilities, unsurprisingly. Japanese investors seem to always have a place in their heart for higher yielding currencies, hence their fondness for the Australian dollar, though they also like the yen, which is interesting because 65% of respondents see a weaker yen on the horizon. So what investment do Japanese investors like most?  Continue reading

Nomura’s individual Japanese investor survey (May 2014)

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Nomura’s (NYSE: NMR) (TYO: 8604) monthly “Individual Investor Survey” was released late last week. This is worth an investor’s time to flip through for a read on the psychology of the Japanese investor. Nomura also lists participants’ most-watched stocks (keep reading for a screen cap) and includes questions that deal with current developments (this month’s concern the consumption tax hike impact and shareholder meetings). I discussed Nomura’s survey as a resource in my book, Investing in Japan. The survey is one of a few resources that will enhance English-language access to, and understanding of, the Japanese market. Continue reading

I don’t see the yen “blowing up”

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An excerpt from a post I made in January 2013, and not dissimilar to what I’ve said in times past or believe today. I included some present day comments in brackets.

I don’t see the yen “blowing up” — it’s not as simple as some may wish [initials K.B.] or have been led to believe [initials J.M.] to see a currency like the yen or a country like Japan “blow up” in a straight line. Beware macro pontification coattailing [did I coin a term?]. The great 2005 Nikkei rally saw a roughly 10% weakening of the yen. Overnight [15 Jan 2013], Economy Minister Akira Amari warned excessive yen appreciation (typo: depreciation) may benefit exporters but would hurt people’s livelihoods. The business press is concluding Minister Amari as having suggested the yen has weakened enough. In fact, too weak of a yen begins to hurt exporters if materials costs don’t start to decrease. In this sense, the input environment is quite different than ’05; ditto the strength of the global economy now vs. then. [e.g. crude oil ~$100/bbl these days; Friedman’s The World is Flat was published in 2005]