Guru Commentary – 2005

A summary of what some of my favorite investment gurus said in their 2005 Quarterly reports.

2005 Q1 Q2 Q3 Q4
Cash balances /Opportunities / Valuations Some high (Clipper, LongLeaf and Wietz);others retain their usual low cash(Bill Miller says, “No point holding cash @ 2%) Dodge & Cox has only 6% in cashValuations are not demanding; just about right. Slightly more opportunities than Q1. But, not much excitment and notthing bad either. “For the first time in two-and-a-half years all three Funds have cash below 10%…” and “…we are more optimistic about our portfolios than we have been in over two years…”
[Longleaf]finding things to invest in. [Dodge & Cox]”…now we are getting excited” [Weitz]
still finding things to invest in. Opportunities from globalization. Cash balance is about 5% [Dodge & Cox]2005 was stable and 2006 appears to be a generally positive environment as well. Real-estate might cool, and there’ll be scary headline, but on balance things look fine. Fund underperformed the S&P for 2005, but underlying values increased.
Other Hurricane Katrina in New Orleans affected Q2 for some firms; but the market seems to have shrugged it off even though 400,000 job losses are expected and a loss of over $30 billion. xxxx xxxx
Market Despair amidst good profitability xxx xxxx xxxx
Misc predictions Long rates will go up at some point, pushed by short rates (Wietz)Miller thinks the Euro is overvalued xxx “Three long-term trends appear to be pushing the world economy into a fertile and productive period” (Tech, Globalization, & strong U.S. economy)
[Dodge & Cox]
“Real-estate might cool, and there’ll be scary headline, but on balance things look fine ” [Weitz]
CPI (Yr/Yr) 3.1% 2.5% 4.6% 3.4%
Unemployment 5.2% 5.0% 5.0% 4.9%
Gold $420 $440 $495 $500
Fed Funds 2.63% 3.04% 3.62% 4.16%
S&P (Qtr) -2.2% +1.4% +3.6%
S&P Yr/Yr 6.7% 6.3% 12.2% 4.9%

Bill Miller [Q1 report], quotes Sir John Templeton (though he isn’t sure if he’s really the source), speaking of bull markets. They are: born in Pessimism (2001-2002)grow in Skepticism (2002- ???)mature in Optimism die of Euphoria.


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