Best investment adviser Richard Losch's blog

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.

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. Jeremy Grantham.

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.

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.

Physics Envy by Charlie Munger

In October of 2003 Charlie Munger 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 ..."

Asset Allocation at Berkshire Hathaway

I, as investment manager, 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 Warren Buffett's move away from the equity market. The move is very Warren 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 Warren Buffett's mind.

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.

2003 Investment year results

A summary of the composite results for Losch Investment Management Company for the investment 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."

Hedge Funds

The one unbroken rule on Wall Street is that easy equity and cheap leverage inevitably attract those species most dangerous to investment capital: mediocre talent with no comprehension of the limits of their talent, and intelligent people who are ethically challenged.

The trade deficit is not debt

It has always been my view that trade deficit is more a refection of the worlds desire to hold dollars than it is anything else. The current account (trade and services) is in deficit because there is a Capital account surplus, not the other way around.

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