Results 2003 A summary of the composite results for Losch Management Company for the year 2003. And a somewhat cloudy look ahead. "...You can also expect more sell tickets than buy tickets as we position your portfolios for another down market. Exactly when the bear will re-emerge we can only guess. But sooner or later he will reappear."
The Balance of Payments "The trade deficit exists because of the power of the American consumer, and while it is likely that currency markets will remain volatile, and may even perhaps get violently more so in the near term, the underlying factors that are the cause of this overvaluation of the dollar are not likely to change in our lifetime."
Asset Allocation at Berkshire Hathaway "I have taken his table and added a couple of columns on the left side to cover the period that included the 1996 acquisition of GEICO. The result is a dramatic representation of Buffett's move away from the equity market. The move is very Buffett in that the shift is massive, but it was handled in such a way that unless you are really paying attention you would not notice. This table tells us better than mere words what is going on in Buffett's mind."
Physics Envy "In October of 2003 Charlie gave a lecture to the economics students at the University of California at Santa Barbara in which he discussed problems with the way that economics is taught in universities. One of the problems he described was based on what he called 'Physics Envy.' This Charlie says is 'the craving for a false precision. The wanting of a formula...'"
Costco's Cash "A check of Costco's balance sheet at the end of the 2nd quarter of 2004 shows that the retailer is accumulating cash at a rapid rate. Interestingly enough they are accumulation cash faster that they are earning it."
Timber "The trade deficit can not expand forever, and with three billion people in Asia experiencing a rapid expansion of personal income, prices of the basic things like oil, gas, wood, and paper are likely to increase faster than they have for the last twenty or thirty years."
Patterned Irrationality "I believe that markets are usually inefficiently priced, both in detail and in aggregate, and that they are driven by very fallible, emotional investors who have neither the mathematical nor the psychological means to process data efficiently."
The Chinese Century? "If 2003 trends quoted in the paragraph above from the Worldfact Book where to continue for the next twenty years, several interesting things would happen: 1) The world GDP would double by 2022. 2) China's GDP would be larger than ours by 2013 and be twice as big as the US by 2025. 3) India's GDP would pass us in 2035.""
Too Many Bears "The excesses of our recent tech bubble were so extreme that one three-year bear market is simply not enough to cleanse Mr. Market's Soul of his predilection to party on."
Some Thoughts on Risk There is no such thing as a risk free investment all investments carry some risk... "A good investment is one minimizes the risk that the investor faces, and that pays you well for taking the risk. All investments decisions should start with measuring risk."
Hedging a Currency Disaster "More remarkable still is the fact that this is the latest in a series of large macro bets: the purchase of S&P puts, junk bonds purchases, and fixed-income sales; actions so wonderfully out of character for the world's greatest value investor as to suggest that by some mysterious process Kiewit Plaza had been magically transported to Lower Manhattan and George Soros has taken possession of the Oracle's body."