Category Archives: Videos

Wall Street Crash of 1929 and the Great Depression

The Wall Street Crash of 1929, also known as Black Tuesday,   the Great Crash, or the Stock Market Crash of 1929, began on October 24, 1929, and was the most devastating stock market crash in the history of the United States,  when taking into consideration the full extent and duration of its fallout.  The crash signaled the beginning of the 10-year Great Depression that  affected all Western industrialized countries. – Wikipedia

The following video (https://www.youtube.com/watch?v=POMhTJqw1d4) is worth watching for the events leading to the Wall Street Crash of 1929 and the subsequent Great Depression.

Irving Kahn – passing of a great value investor


(https://www.youtube.com/watch?v=P4CPj6aiD7g)

The value investing world  has lost a great member  –  American businessman and investor  Irving Kahn (December 19, 1905 – February 24, 2015),  who was the oldest living active investment professional.  Wikipedia says he was an early disciple of Benjamin Graham, the creator of the value investing methodology. Kahn began his career in 1928 and continued to work until his death. He was chairman of Kahn Brothers Group, Inc., the privately owned investment advisory and broker-dealer firm that he founded with his sons, Thomas and Alan, in 1978.

Irving Kahn was the oldest active money manager on Wall Street.  He made his first trade—a short sale of a copper mining company—in the summer of 1929, months before the infamous market crash in October of that year.

Educated at the City College of New York, Irving Kahn served as the second teaching assistant to Benjamin Graham at Columbia Business School. At the time, other notable students and/or teaching assistants to Graham included future Berkshire Hathaway chairman Warren Buffett and future value investors William J. Ruane, Walter J. Schloss, and Charles Brandes, among others. Graham had such an enormous influence on his students that both Irving Kahn and Warren Buffett named their sons after him. Kahn named his third son, born in 1942, Thomas Graham, and Buffett, his first son, born in 1954, Howard Graham.

Kahn was a Chartered Financial Analyst and among the first round of applicants to take the CFA exam. He was a founding member of the New York Society of Security Analysts and the Financial Analysts’ Journal.

A February 28, 2015,  post (Irving Kahn’s Legacy To Investors: Style Is Everything) in Forbes by contributor John S. Tobey says:

“Irving Kahn’s particular value approach was to identify stocks that were selling at a deep discount (i.e., an attractive “value”) and that were generally ignored or disliked by others (i.e., “contrarian”). On the positive side, he required strong financials (i.e., little or no debt), management commitment (i.e., a stake in the business), and the potential for growth (i.e., a fundamental driver that could push the stock price up and create investor interest).

“From this approach, he sought to produce superior long-term returns while avoiding risk of significant loss. He often described the key ingredient necessary for success as “patience” – the ability to wait for the tide to turn.”

A Bloobberg report dated February 26, 2015  ( Irving Kahn, Investor Who Profited in ’29 Crash, Dies at 109) said:  “Among the memories he filed away was his work with Benjamin Graham, the stock picker and Columbia Business School professor whose belief in value investing influenced a generation of traders including Warren Buffett. Graham, who died in 1976, distinguished between investors, to whom he addressed his advice, with mere “speculators.”

“Kahn assisted Graham and his co-author, David Dodd, in the research for “Security Analysis,” their seminal work on finding undervalued stocks and bonds, which was first published in 1934. In the book’s second edition, published in 1940, the authors credited Kahn for guiding a study on the significance of a stock’s relative price and earnings.”

 

Who is Barton Biggs?


(https://www.youtube.com/watch?v=w_1dGYDwmU4)
According to Wikipedia, Barton Michael Biggs (November 26, 1932 – July 14, 2012) was a money manager whose attention to emerging markets marked him as one of the world’s first and foremost global investment strategists, a position he held—after inventing it in 1985—at Morgan Stanley, where he worked as a partner for over 30 years. Following his retirement in 2003, he founded Traxis Partners,  a multi-billion dollar hedge fund, based in Greenwich, Connecticut.  He is best known for accurately predicting the dot.com bubble in the late 1990s.

At age 18, Barton Biggs was given a portfolio of 15 stocks worth about $150,000, but he showed little interest in finance and investing in his youth. He ended up choosing that career path after feeling left out from conversations between his father and younger brother, Jeremy, who worked at a pension fund. He took his father’s advice and read Security Analysis by Benjamin Graham and David Dodd, first published in 1934. He graduated from NYU Stern School of Business with distinction.

He “sealed his fame” as an investor when he correctly identified the dot-com bubble at a time the Dow Jones Industrial Average was posting annual gains that had averaged 25 percent from 1995 to 1999. In a July 1999 interview in Bloomberg Television, Barton Biggs called the U.S. stock market “the biggest bubble in the history of the world”, a view that was dismissed by the industry until March 2000, when the Nasdaq Composite Index dropped 78 percent.

Barton Biggs was the author of Hedgehogging, which came from a journal kept by the former creative writing major at Yale and chronicles some of the indignities of being in the hedge fund business as well as its “very brilliant and often eccentric and obsessive people”. He wrote about quirks of hedge fund culture; he noted that golf was very popular, perhaps due to its “measurable” nature similar to investing. “Or”, he wrote, “maybe it’s because hedge-fund guys are so competitive and have such massive egos”.

Barton Biggs was also author of the 2008 book Wealth, War and Wisdom.  He had a gloomy outlook for the economic future, and suggests that investors take survivalist measures, such as looking into “polar cities” as safe refuges for future survivors of global warming. Biggs recommended that his readers should “assume the possibility of a breakdown of the civilized infrastructure”. He went so far as to recommend planning adaptation strategies now and setting up survival retreats: “Your safe haven must be self-sufficient and capable of growing some kind of food”, Mr. Biggs wrote. “It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. Think Swiss Family Robinson. Even in America and Europe there could be moments of riot and rebellion when law and order temporarily completely breaks down.”

In 2010, Barton Biggs published a novel about the stock market, A Hedge-Fund Tale.  In 2012, a final book, “Diary of a Hedgehog” was published posthumously on November 6.

One notable quote which superstar investor Warren Buffett attributed to the late  Barton Biggs is: “A bull market is like sex. It feels best just before it ends.” Warren Buffett was making the  point about the danger of a timid or beginning investor  entering  the market at a time of extreme exuberance and then becoming  disillusioned when paper losses occur (When Warren Buffett and Charlie Munger buy stocks…).

 

Why Warren Buffett won’t sell coke stock

Published on Jul 23, 2013
“The Oracle of Omaha” and Coca-Cola board member, Warren Buffett sits down with Coke CEO Muhtar Kent to share his history, affection and enthusiasm for the company, KO stock and explains why he’ll never sell a share. Article link.

In 1937, a seven-year-old entrepreneur in Omaha, Nebraska had the bright idea to buy six-packs of Coca-Cola from his grandfather’s store for a quarter and sell the bottles to his thirsty neighbors for a nickel apiece.

He couldn’t keep them in stock, especially during the sweltering summer months.

“I had no inventory or receivables… it was the best business I ever had,” said Warren Buffett, now 82. “But I made one mistake. I didn’t put the money I made into Coca-Cola stock.”

He rectified that mistake several years later. Buffett’s company, Berkshire Hathaway, is now the largest Coca-Cola shareowner. He has never sold a share of Coke stock, and says he never will.

During a 20-minute conversation with Coca-Cola chairman and CEO Muhtar Kent today at the company’s annual general meeting in Atlanta, “The Oracle of Omaha” explained why KO will always have a “Buy” rating in his book.

“I’m the kind of guy who likes to bet on sure things,” said Buffett, who served on Coke’s board of directors for 17 years. “No business has ever failed with happy customers… and you’re selling happiness.”

“I like wonderful brands,” he added. “If you take care of a great brand, it’s forever.”

Calling complacency the fatal flaw of many businesses, Buffett credited Coke with resisting temptation to rest on its laurels. “You want a restlessness… a feeling that someone is always after you, but that you’re going to stay ahead of them,” he said. “That restlessness – that tomorrow is more exciting than today – you have to have it permeate the organization.”

Buffett shared his thoughts on why America’s best days are still ahead, calling a baby born in the U.S. today the luckiest person in the world.

“Just think – in 1790, we had 4 million people here, and there were hundreds of millions of people in the world,” he said. “We weren’t smarter and we didn’t even work harder than people elsewhere, necessarily. But we had a system that unleashed human potential. And that system – quality of opportunity, a rule of law, a market system – has produced an abundance. It has improved the standard of living in my lifetime six to one.”

He concluded, “We’ve got the formula. We’ll always have problems… but the world does not belong to the pessimist, believe me.”

Article link.