Kudlow Says the Market was Down 190% between 1965-1982

Former Reagan economist and former Chief Economist at Bear Stearns was on his show last night discussing this WSJ article when he made a comment that made me question why anyone listens to him.

Basically, in talking about returns over several time periods, Kudlow said that the market was down 190% between 1965-1982. 190%!?! Of course that's impossible, and yet, there was Kudlow telling his viewers about other past market funks.

Short traders would love it if -190% returns were possible

Check out the video clip here.

Watch from about 2:10 to 2:25

Final ChiBus Column

Here is a link to my last column for the ChiBus

A Good Overview on Bear

Morningstar had a nice video interview that discusses the crisis at Bear Stearns. Check it out here.

60 Minutes Profiles Carl Icahn

60 Minutes profiles Carl Icahn here.

Most Recent ChiBus Article

Here is my most recent ChiBus article. Enjoy.

Bankruptcy Lawyer: Expect The Worse

Bankruptcy lawyer Harvey Miller had a good interview with IDD in the magazine's latest issue. Check out the article here.

Seth Klarman's Speech at MIT

Famed investor Seth Klarman gave a speech at MIT that is worth a read. Check out a transcript of the speech here.

Mark Sellers: Great Franchises Often Undervalued At IPO

Fund manager Mark Sellers had a great column in the Financial Times a few days ago that discussed the opportunities for investors to buy great businesses at attractive IPO prices given the market's inability to see a company's ability to ramp up performance through operating leverage and maintaining an economic moat.

Sellers talks about several examples of IPOs that have turned into homeruns including Google, Mastercard, the CME, Chipotle, and Morningstar.

In each case "analysts are too cautious at first. They do not know the company that well, so their estimates are all over the place. Investors can play this to their advantage by buying and holding great companies when they go public, ignoring what pundits or analysts say and betting that analyst estimates will rise and become more clustered, causing the p/e ratio to rise at the same time as earnings expectations."

Seller's Two Main Characteristics of Great IPO Candidates:

"There are two fundamental factors all these companies share. First, they have an “economic moat”, or natural defence against competitors, allowing them to generate high returns on capital. Second, they have lots of operating leverage (as opposed to financial leverage); in other words, a 10 per cent increase in revenue translates into far more than a 10 per cent increase in bottom-line profits. Operating leverage is almost always underestimated by analysts when they are not very familiar with a company."