Archive for December, 2007
This article was originally called Will Gold Shine Again?. It was excerpted from my book Active Value Investing and appeared in the Rocky Mountain News. I have no intention of making an argument of where the gold prices will be over next month or five years from now - I simply don’t know. My intention is to dispel this notion that gold was a great investment - it simply not the case, and offer a caution that gold may not be a great investment going forward.
December 22nd, 2007
Denver Post wrote an article about my book Active Value Investing. The question that comes to mind - what am I doing reading my own book (see picture in the article)? I don’t really have a good answer to that question. I’ve read it so many times while writing it that I really cannot read it anymore. Denver Post’s photographer thought it was a good idea. Now that I look at the picture, not sure I agree. It is a good article though, read it.
December 20th, 2007
I spent my youth in Murmansk, a city in the northwest part of Russia (located right above the Arctic Circle). Murmansk owes its existence to the port that, due to the warm Gulf Stream, doesn’t freeze during the long winters,
providing unique access to Russia from the north. During the Cold War, Murmansk’s coordinates must have been on the speed dial of the U.S. military, as it is the headquarters of the Russian Northern Navy Fleet (the headquarters actually are in Severomorsk, a town 20 miles away, but the distinction is rarely made). Fans of Tom Clancy’s The Hunt for Red October may remember Murmansk as the home base for the submarine Red October.
Continue Reading December 15th, 2007
By Vitaliy Katsenelson, CFA
After 16 years of almost no contact with my Russian high school and college friends I stumbled on Odnoklassniki.ru, a website very similar to Classmates.com. I reconnected with a lot of childhood friends. It was a very nostalgic and quite depressing experience as I found out two of my close childhood friends and five classmates died from drinking — most were in their mid-twenties.
The story is the same — drinking a couple days a week leads to drinking every day, get fired, wife leaves, no source of income, sell apartment, money doesn’t last long, start drinking technical alcohol (used to clean engines), death from heart shutting down. What made this even worse: I remember most all of those friends when they were only teenagers. My sister-in-law’s cousins, one is 33 another 41, drinking heavily, ditched by their wives, sold their apartment — well, you know what is coming. I don’t know if living in a city where winter lasts eight months a year has anything to do with it, or just simply Russia being Russia. It is probably that latter. Life expectancy for men is 59; for women is 72. I bet drinking accounts for a very large portion of this gap between men and women. I remember vaguely when I was very young that almost all of my neighbors were drinking. One would get drunk and beat up his wife, so she would hide in our apartment to avoid the beating. Another would pay a regular weekly visit asking for money or alcohol. It always upset me when Americans, after finding out I am Russian, would start talking to me about Russian vodka. Well, I guess Russia deserves that reputation.
December 15th, 2007
Jos A. Bank (JOSB) reported decent numbers yesterday: sales grew 10%. It’s not a blow out number but a respectable number for this environment. Profit margins have expanded as corporate expenses are leveraged across a larger store base, driving earnings growth to 27%.
At some point its advertising expenses will start declining as percent of sales and margins should go up further. At today’s incredibly cheap valuation of 10x 2007 earnings, all the company had to do is be able to fog a mirror - they did a lot more than that. It seems that this performance has legs as same store sales in November came in at 15%.
I wrote several articles in the past, little have changed since. Well, except earnings are up in 30-40%, inventory is not a concern anymore and stock price is back to where it was then.
December 14th, 2007
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