Opinion

James Saft

A leveraged bet on London banking and oligarchs: James Saft

Mar 11, 2014 04:01 UTC

March 11 (Reuters) – As a symbol of Britain’s ill-advised
romance with banking and dubious foreign money, a new prime
London property investment fund is hard to beat.

The investment vehicle from asset manager London Central
Portfolio Ltd, which will commit 100 million sterling to prime
residential property, amounts to a bet that London retains
official policies that make it the corrupt rentier’s bolt-hole
of choice.

To be clear, there is nothing illicit about investing in
London property, but London is what it is because of official
policy choices which are good for banking and for wealthy people
from less democratic places.

First, a quick take on the fund, which is interesting mostly
for the assumptions underlying its mode of doing business.

Citing what it says is a 40-year track record of 9 percent
annual price appreciation in central London property, the fund
plans to buy up one- and two-bedroom units, with an eye towards
renting them and then flipping them in five to seven years. If
you consider eternal 9 percent growth in property prices, even
in districts popular with Russian oligarchs, optimistic, wait
until you hear about the annual 14 to 18 percent rate of return
the fund is targeting. That figure is only therefore achievable,
of course, with a liberal dose of borrowed money.

Wealth rises but economy still sputters: James Saft

Mar 6, 2014 21:55 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – Americans are richer than ever and increasingly willing to take on a bit of extra debt and yet the overall atmosphere, and the economic recovery, are surprisingly flat.

That’s because the rise in wealth is highly concentrated, consumer debt is often going towards maintaining living standards in the absence of adequate income and, perhaps most importantly, businesses are simply not investing, very likely because they have a keen grasp of the first two points.

Household net worth rose nearly $3 trillion in the fourth quarter, up 3.8 percent, registering a 14 percent gain for 2014, according to Federal Reserve data released on Thursday. (here)

The patient and the brave

Mar 5, 2014 21:44 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – There are two main ways to get paid as a value investor: one is by avoiding the mistakes of your peers, the other is by making some mistakes of your own.

Avoiding other people’s mistakes is all about buying stocks which are cheap but solid and letting the dividends pile up and compound. Buy quality companies which are cheap and you, by definition, miss out on Pets.com, or, dare I say it, Facebook.

In a very real sense, and I’ll explain later, by doing this you are generating a stream of returns based on other money managers’ fear of losing their jobs.

Russia and the dead BRIC thesis: James Saft

Mar 4, 2014 05:01 UTC

March 4 (Reuters) – Sometimes it takes a slap in the face to
make you realize a long-cherished belief is long dead.

Russia’s power move in Ukraine is the slap and the so-called
BRICs (Brazil, Russia, India and China) as an investment concept
is the (now very much dead) belief.

That’s not because India will bomb Sri Lanka or Brazil
impose a ‘co-prosperity zone’ on Surinam. It is rather because
Russia’s move on Crimea demonstrates that history is not over,
that globalization is not inevitable, and that you as an
investor can very easily get worked over by this process.

Managers improve, but scale kills

Feb 26, 2014 21:46 UTC

Feb 26 (Reuters) – Fund managers are getting better, but
active fund management is getting worse.

Yes, I realize that is a bit like saying improved medical
care is causing us to lose more patients, but this is indeed the
upshot of new research and it should put investors in a
quandary.

Researchers have found that skill levels among active money
managers are rising in a measurable way, but that performance
across the active industry as a whole as it increases in size is
declining.

Column: Dwindling inflation puts pressure on ECB: James Saft

Feb 25, 2014 05:01 UTC

By James Saft

(Reuters) – Never a hot-bed of monetary policy activism, the European Central Bank may soon find itself forced into an uncomfortable period of experimentation.

At issue is inflation, or rather its increasing scarcity: euro zone inflation fell at its fastest ever month-on-month pace in January, down 1.1 percent from December. Only three small countries, Estonia, Slovakia and Latvia, saw consumer prices rise in the month, with the rest flat or in outright deflation. Annual inflation came in at 0.8 percent, far below the ECB’s 2.0 percent target and slightly below economists’ expectations.

Indeed with Germany seeing a month-on-month decline in prices, the supposed contrast between a healthy core and sclerotic periphery is harder to see, at least in inflation terms.

Dwindling inflation puts pressure on ECB: James Saft

Feb 25, 2014 05:01 UTC

Feb 25 (Reuters) – Never a hot-bed of monetary policy
activism, the European Central Bank may soon find itself forced
into an uncomfortable period of experimentation.

At issue is inflation, or rather its increasing scarcity:
euro zone inflation fell at its fastest ever month-on-month pace
in January, down 1.1 percent from December. Only three small
countries, Estonia, Slovakia and Latvia, saw consumer prices
rise in the month, with the rest flat or in outright deflation.
Annual inflation came in at 0.8 percent, far below the ECB’s 2.0
percent target and slightly below economists’ expectations.

Indeed with Germany seeing a month-on-month decline in
prices, the supposed contrast between a healthy core and
sclerotic periphery is harder to see, at least in inflation
terms.

Mark Zuckerberg, value investor: James Saft

Feb 20, 2014 21:38 UTC

By James Saft

(Reuters) – So now we know: Mark Zuckerberg is a value investor.

That’s true, at least if you accept his logic, which lays great emphasis on the sheer scale of users of mobile messaging company WhatsApp, which Facebook is buying for an astounding $19 billion.

“WhatsApp is on a path to connect one billion people,” Zuckerberg said in announcing the deal. “The services that reach that milestone are all incredibly valuable.”

Zuckerberg’s Facebook update about the deal only mentioned two numbers (neither of them with a dollar sign in front): WhatsApp’s current 450 million active users and the aspirational one billion.

Should you fire your economists?

Feb 19, 2014 21:12 UTC

Feb 19 (Reuters) – Rather than waste time and money making
doubtful predictions about economic growth, you might just do
better by buying stock in countries which have recently had hard
times.

A new study finds a rather puzzling outperformance of
equities in countries which, if you looked at the economic rates
of growth, would appear to be struggling.

This adds to earlier findings by the authors, Elroy Dimson,
Paul March and Mike Staunton of the London Business School,
which found a lack of correlation between economic growth and
investment returns.

Column: Abenomics’ wobbly arrows: James Saft

Feb 18, 2014 06:01 UTC

By James Saft

(Reuters) – Japan’s bold Abenomics plan is producing spluttering results on key consumption and investment measures, potentially undermining its resolve.

Japan’s economy grew by just 0.3 percent in the fourth quarter, less than half estimates. That’s despite Japan and its central bank following through strongly on a massive campaign of asset purchases which is on course to double the amount of money sloshing around the economy in the 20 months to the end of 2014. The Bank of Japan on Tuesday kept policy steady but increased a smaller lending program.

That buying, or money creation binge, has been successful on some fronts: creating the best growth in more than three years and lifting prices decisively.

  •