Monday, October 13, 2008

Julian Robertson Buying Some of Our Names - But Bearish on Economy

Julian Robertson is one of the legends in the hedge fund game - his fund has spawned many other hedge funds as traders leave his umbrella and strike out on their own. Word out today that he was buying many of the same names we did late last week (drats, I was going to buy along with the other 3 we bought Friday but resisted - now it is up 25%) [Oct 10: Bookeeping - Restarting 3 New Positions]
  • Today, on CNBC's Street Signs, legendary investor (Tiger Mgmt), Julian Robertson said during the past week he picked up shares of these stocks: Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), Baidu (Nasdaq: BIDU), Mastercard (NYSE: MA) and Visa (NYSE: V). He said all these stocks are all trading at very attractive valuations.
Oh, one more thing - Robertson says the US is in for 10-15 years of hard times
  • Multi-millionaire investor Julian Robertson told CNBC that the United States is "just getting into the recession," and that the poor economy will last as long as 10 to 15 years.
  • Last year, Robertson had said that the U.S. economy was in for "a doozy of a recession." He said the reason was the credit situation was worse than anyone had thought. [Oct 20: Julian Robertson Calling for a Doozy of a Recession"]
  • "I don’t mean to imply that this is going to last quite as long as what’s been happening in Japan, but when they went into their decline in 1990, almost 20 years ago, their people were loaded with savings—but [Americans are] all broke," he said. "...If we leave out the home in the calculations, I’d say that 80-85 percent of Americans are broke. So they have to cut back on their spending."
If you've been a regular reader here, you will of heard similar themes to what I've been writing in the words above. We're a 0% savings rate nation that the pundits now scream at us, will come back "soon" (the same pundits who yelled at us the past year that we are not in a recession and in fact there is no danger of getting into one and oh yeh - this is only a problem contained to the "subprime people") Now we roll out those same pundits (who have been wrong the whole way down) and they now scream the U.S. of Subprime will lead the world to a recovery.

I disagree 100%; the world will lead us out - and we'll be the last to recover. That's what an economy based 70% on Americans spending over their heads will do, when Americans finally run out of money after a 25 year binge. Just like we have been in denial about the credit issues (once we get rid of those subprime people everything will be ok) - and housing issues (housing will never go down nationwide) - this sense of arrogance has us denying that we are in for a long road ahead as savings needs to be rebuilt household by household. And that doesn't happen in 12 months, sorry. But I understand the denial, because facing the future reality will be a stark difference from where we came from in the last 25 years.

Needless to say I am pleased to see I am on the same page as one of the best minds ever in the business. For readers, you get the same thinking as one of the best hedge fund managers of all time, for "cheap" ;) with my future fund.

EDIT 8 PM (here is the video)

Long Apple, Mastercard in fund; no personal position

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