Quote of the Day: Jim Rogers

Throughout our history – any country’s history – the people who save their money and invest for their future are the ones that you build an economy, a society, and a nation on.

In America, many people saved their money, put it aside, and didn’t buy four or five houses with no job and no money down. They did what most people would consider the right thing, and what historically has been the right thing. But now, unfortunately, those people are being wiped out, because they are getting 0% return, or virtually no return, on their savings and their investments. We’re wiping them out at the expense of people who went deeply into debt, people who did what most people would consider the wrong thing at the expense of people who did the right thing. This, long-term, has terrible consequences for any nation, any society, any economy.

If you go back in history, you'll see what happened to the Germans when they wiped out their savings class in the 1920s. It didn’t lead to good things down the road for Germany. It didn’t lead to good things for Italy, which did the same thing. There were plenty of countries where it wiped out the people who saved and invested for their future. It’s usually a serious, political reaction, desperation in some cases, and looking for a savior and easy answers is usually what happens when you destroy the people who save and invest for the future.

~ Jim Rogers, from Peak Prosperity Interview, 3/9/2013

Grouch: Savers have been punished since the Fed's Quantitative Easing program began. Bank deposits, Certificates of Deposit, Money Market accounts and even investment grade bonds aren't even keeping up with inflation and taxes while the Fed continues its risk-on, asset inflation policy. All market-based incentives now lead rational investors to borrow at these cheap rates, instead of save and commit their capital to riskier projects in pursuit of return.

An Update on My Turnaround Stocks

First, a warning. Turnaround investing isn't for everyone. Only do it if you have a strong stomach, and can take the volatility and potential losses in pursuit of alpha. Some of these situations are dogs that will always remain dogs, but occasionally you'll hit a home run.

Around the beginning of 2012, I initiated a couple of "turnaround" positions in stocks that seemed cheap based upon their assets and earning potential-- Bank of America and Cedar Realty Trust. They performed well throughout the year. Then near the end of 2012 I purchased a couple of more turnarounds. The results are below:

Bank of America - this one was a no-brainer--- the bank everyone loves to hate.... what could be better to drive down the price to ridiculously cheap levels. The bank was essentially backstopped by the US Government so there was no chance of it going out of business, and there was no way Brian Moynihan could could be as dumb and reckless with shareholder capital as Ken Lewis. This one is going into the $20s in the next 3 years even if the yield curve steepens.

Cedar Realty Trust - this was another no-brainer that I should have picked up for $3.50 a share instead of $4.25 (shame on me) when it was clearly selling below the value of its assets. New CEO Bruce Schanzer has completed divesting the company of non-core assets accumulated by previous management, and is now working to strengthen the balance sheet, and put the company back on the path to FFO growth before increasing its dividend. Wouldn't surprise me to see this one trading trading in th $8-9 range in a couple of years, or to be merged into a larger REIT.

Hewlett Package - another no-brainer..... after 10+ years of stupid management dramatically overpaying for acquisitions on the hope and a prayer that they would reignite growth in the company, I decided to jump into this one when they announced their $8.8B dollar write down of the Automony acquisition. I chalk the writedown up to the company failing to do its due diligence. Shame on them, but an opportunity for investors. I bought this stock on the over-reaction to the writedown and in the belief that PCs and printers are still a profitable albeit under-appreciated business. I also bought on the faith that Meg Whitman would bring some much needed stability and strategic direction to the company. I expect this stock to be back in the low 30s in 2 - 3 years.

Chesapeake Energy - this is the riskiest stock of the turnarounds. It is largely dependent on the price of natural gas to help cure its debt problems. Good news is that lightning rod CEO Aubrey McClendon is retiring, and with a more independent board of directors, hopefully, they will not let the new CEO use the company as his own personal piggy bank. I expect this stock to be in the low 30s sometime in the next 3 years, but it could also fall to the single digits should the price of natural gas fall.

Two that Got Away - opportunities that I missed this past year were AIG and MBIA. Some financials are very difficult to evaluate, but it was clear AIG was another situation backstopped by the Feds so it wasn't going to fail.

2012 Performance of the Highly Diversified ETF Portfolio

For the year 2012, our diversified sample portfolio returned 15.23%, a very respectable performance for a low cost, passive portfolio. Given the volatility and continued economic uncertainty and low-growth environments both in the US and abroad, investors should be satisfied with this level of return in a moderate risk portfolio.

The Income Potential of MLPs

The past is no guarantee of the future, but for the period 1996 - 2011 the growth of MLP dividends blew away the competition. REITS, utilities, bonds and the S&P 500 couldn't keep up.

Energy Income Partners (energymlp.com), which manages two closed end funds for First Trust (www.ftportfolios.com) -- FEN (Energy Income and Growth) and FIF (First Trust Energy Infrastructure Fund)has prepared a chart that nicely illustrates this point.

A common way to invest in MLPs are through funds that track the Alerian MLP ETF index such as the JP Morgan Alerian MLP Index ETN (AMJ). There are two objections to this fund: 1) the high expense ratio for an ETF of .85%, and 2) the ETN structure exposes investors to the credit worthiness of JP Morgan with just took a headline catching $2 billion dollar loss on some foolish investments.

Given these objections and the limited universe of MLPs, individual investors may be better off buying these securities directly. The index is made up of companies like the ones below (a full list can be found at the Alerian site):

Security	Symbol
ENTERPRISE PRODUCTS PARTNERS L	EPD
KINDER MORGAN ENERGY PARTNERS L.P.	KMP
LINN ENERGY, LLC.	LINE
PLAINS ALL AMERICAN PIPELINE L	PAA
ENERGY TRANSFER PARTNERS LP	ETP
ONEOK PARTNERS LP	OKS
MAGELLAN MIDSTREAM PARTNERS LP	MMP
ENBRIDGE ENERGY PARTNERS LP	EEP
WILLIAMS PARTNERS LP	WPZ
MARKWEST ENERGY PARTNERS LP	MWE
EL PASO PIPELINE PARTNERS	EPB
BUCKEYE PARTNERS LP	BPL
TARGA RESOURCES PARTNERS LP	NGLS
NUSTAR ENERGY LP	NS
REGENCY ENERGY PARTNERS LP	RGP
SUNOCO LOGISTICS PARTNERS LP	SXL
WESTERN GAS PARTNERS LP	WES
BOARDWALK PIPELINE PARTNERS LP	BWP
COPANO ENERGY LLC	CPNO
GENESIS ENERGY LP	GEL
DCP MIDSTREAM PARTNERS LP	DPM
TC PIPELINES LP	TCP
SPECTRAENERGY PARTNERS LP	SEP
CHESAPEAKE MIDSTREAM PART	CHKM
EXTERRAN PARTNERS LP	EXLP
CROSSTEX ENERGY LP	XTEX

Most companies in the index deal with energy in some manner, such as exploration and production, or transport, and have a history of steady dividend increases. Merger activity has also picked up in this sector with Kinder Morgan's planned merger with El Paso, and Energy Transfer Partners planned merger with Sunoco.

The largest MLP at the moment is Energy Products Partners (EPD), and their dividend history is impressive, especially with reinvestments:

Year	Dividend
1999........	$0.92
2000........	$1.02
2001........	$1.14
2002........	$1.34
2003........	$1.44
2004........	$1.51
2005........	$1.66
2006........	$1.80
2007........	$1.92
2008........	$2.05
2009........	$2.17
2010........	$2.29
2011........	$2.41

Income investors should take a hard look at MLPs for their portfolios to supplement their traditional stock and bond allocations. The last decade was spectacular for MLPs as compared to stocks, and while that is not a predictor of the future the oil and gas boom on private lands is continuing to fuel the growth of these companies.

Disclosure: Long EPD, LINE, BIP.

WMDs Discovered at JP Morgan

Bloomberg breaking the story:


Jamie Diamond losing his street cred:


Reggie Middleton discussing derivatives in banking on 10/19/2010


As Warren Buffett says: "Derivatives are financial weapons of mass destruction." Will JP Morgan's misfortune present investors with a buying opportunity to pick up more conservatively run banks such as Wells Fargo, PNC or BB&T at attractive prices?

The Facebook Sales Pitch to Investors

I will not be buying the IPO. I don't see the durable competitive advantage of this company's business model. And quite frankly, I grew tired of using Facebook after about a month. So if a product doesn't appeal to me, I won't be buying into the company. Those who buy the IPO may indeed make money, but I'm looking for companies to buy and hold for 20 to 30 years and I do not see this company surviving anywhere near that long.

Learning from the Great Investors: Bruce Berkowitz

Bruce Berkowitz was Morningstar's manager of the decade while compiling an enviable record at the Fairholme Funds. Recently, he has taken a lot of criticism for picking investments that go against conventional wisdom, and significantly underperforming the market during the recovery from the financial crisis. Investors should keep in mind the motto of his firm is "Ignore the Crowd." In part due to his recent poor performance and the cash outflows from his funds as fair weather investor flee to chase better performing funds, Berkowitz has been doing some PR work to educate investors on his rational for some of his most controversial stock picks. This give students of investing a great opportunity to gain insight into the thinking of one of the great modern investors. Would you be interested in companies with the following characteristics:

Company 1

• Trades at less than one‐third book value
• Core businesses generating 1% return on assets and 10% return on equity
• Fortress balance sheet
• Largest U.S. retail deposit market share and serves one in every two U.S. households
• Operates in all 50 states and serves clients in over 100 countries
• Essential to global economic security

To find out more about this company access the presentation here.

Company 2

• Trades at less than one‐half tangible book value
• Fortress balance sheet
• Shareholder equity‐to‐assets ratio of 15%
• Repurchasing common stock
• Dominant U.S. life insurance and retirement services provider
• 86 million customer and client relationships worldwide

To find out more about this company access the presentation here.

I'm sure these names will surprise most investors. But Berkowitz isn't the average buy an index and wait forever investor. The quotes below will give you an some insight into his thought process:

“Current headlines remain scary...[and] company stock prices at times become schizophrenic, but in the end, they consistently revert to reasonable assessments of value.”
– Bruce R. Berkowitz, Letter to Clients, July 2008

“Our inclination remains to run from the popular and embrace the hated where prices tend to reflect such mistrust...we eventually get it right by seeing beyond temporary conditions and by avoiding diversification that leads to mediocrity.”
– Bruce R. Berkowitz, Semi-Annual Report, May 2011

“The seeds of great performance are usually sown in times of intense fear after a disaster.”
– Bruce R. Berkowitz, Letter to Clients, October 2011

“This is not an easy time for value investors. As we practice the strategy, value investing has been underperforming and prices for our companies are depressed and do not reflect intrinsic value or business fundamentals...Each of our holdings generates excess free cash. All are at bargain prices. Yet, our investment experience has taught us that we cannot control prices. Cheap can get cheaper, even if there is nothing fundamentally wrong. However, market history says that high quality, well‐managed companies don’t stay cheap for long.”
– Bruce R. Berkowitz, Letter to Clients, February 2000

Expenses Matter and Investment Expertise is as Rare as Blue Diamonds

One of my favorite pastimes on the weekend is to listen to financial radio shows as I'm working on projects. Everyone who has one of these shows is trying to sell the listeners something-- financial planning, investment advice, money management, etc. One show in particular caught my attention. The host, as expected, was very confident, had an investment "vision" for the next 3 - 5 years of what sectors/countries would excel and which ones would lag, and touted wonderful results from implemented the advice. Since truth in advertising is hard to come by in the investment community, I decided to do some research.

This radio personality occasionally mentioned a set of mutual funds she ran. I was able to locate them on Morningstar and get some raw information on expenses and performance. Boy was I surprised! These funds carried a 5.75% load. Ouch! They also levied 1.75 yearly expense ratio. So just to break even on the initial investment, the funds would have to return 8.1%. But wait..... that is not all. These funds were actually funds of funds investing in ETFs which incurred their own expenses. The ETF expenses ranged from a low of .40% to a high of .95%. So the effective expense rate of these funds is really around 2.25-2.45%.

But wait...... that's not all. To compensate for this kind of expense structure, these funds should be shooting the lights out on performance, right? Though heavily weighted toward commodities with precious metals ETFs and oil futures ETFs, not to mention shorting the S&P 500 while going long on the Peru and Vietnam stock markets, a $10,000 investment in these funds at inception (approximately a year ago) is now worth in the neighborhood of $7,000, falling quite short of the benchmarks. In fact, in the Morningstar performance rankings they consistently scored in the high 90's when compared to their peer group (1 is the best score, 99 the worst).

The moral of this story is quite simple: don't mistake confidence for competence. Anyone with money can buy their way into a weekend AM radio show. True investment talent is a rare commodity and takes many years to confirm. Most investment folks on the radio are sales people, not investment geniuses. Investment geniuses would be busy investing the money that keeps rolling in due to their successes, not trolling for new dollars from anonymous people listening on the airwaves. These funds may someday catch up with market returns, but they've set a high hurdled to overcome with their expense structure. The smart investor knows that expense ratios are the most reliable predictor of future results.

Update on Turnaround Situations

Near the beginning of the year, I named two stocks as potential turnaround situations that investors should do their due diligence on to see if they were suitable.  I picked both stocks because they were universally hated by everyone, yet in my opinion they were not in danger of going out of business. The catalyst for change for these companies were new managements being put in place with multi-year clean-ups ahead of them to undo on mess left by previous management.

Each stock has fared well so far this year:

What was my margin of safety on these stocks? In the case of BAC, it was the implied government guarantee and the fact the Warren Buffett committed a significant chunk of money to stock. Plus, the kicker was the universal hatred of the stock by bloggers and the Wall Street crowd driving up the pessimism surrounding the stock, and driving down the stock price. There was no way Brian Moynihan could be as dumb as Ken Lewis, who almost single-handedly destroyed the bank during the financial crises by making foolish acquisitions at exorbitant prices. For Cedar Realty, new management laid out a credible plan to correct the diworsification strategy of previous management through debt reduction, leveling out debt maturities, and divesting non-core assets. Cedar's properties consist of 80+% grocery store anchored shopping centers which provide a steady and predictable stream of income. After all, everyone has to eat. In addition, Cedar was selling at a discount to its core assets.

In my opinion, both of these stocks have further to run. I expect BAC to be in the mid 20s in 3-5 years and Cedar Realty to rise to the high single digits in 2-3 years. I would not be surprised to see Cedar acquired by another REIT once their turnaround is completed. As always, please do your own research before committing capital.

YTD Portfolio Performance - End of 1st Quarter

After a tough 2011, our sample highly diversified balanced portfolio returned a positive 8.60% for the 1st quarter, underperforming the S&P 500 return of 12.59%. Stocks had a tremendous 1st quarter, while bonds lagged last years performance. It's hard to see much upside potential in bonds at current yields.

Author of The Black Swan on Politics, Inflation and Investing

The Grouch's Millionaire Secrets

“Earnings are only a means to an end, and the means should not be mistaken for the end. Therefore, we must say that a stock derives its value from its dividend, not its earnings. In short, a stock is worth only what you can get out of it. Even so spoke the old farmer to his son: A cow for her milk/ A hen for her eggs/ And a stock, by heck/ For her dividends.”

~ John Burr Williams, “The Theory of Investment Value” (1938)

Many books have been written over the years on how to become a millionaire. Some are based on sound business and investment principals while others are based on the latest fad of the moment. But you don't need to waste your money on these types of books (invest it instead). In the simple world of the Grouch, they can all be boiled down into a handful of key items that can fit on a single sheet of paper.

1. A million bucks ain't what it used to be. The younger you are, the more money you will need to live independently. You should set your goals higher, probably somewhere in the 3 - 5M range, before telling your current boss goodbye for good.

2. Your house is not an investment. It is a place to live. The days of massive real estate gains are over. Long term house price tend to move in line with inflation. The current correction in real estate is a reversion to the long term trend line. Until we have a good dose of inflation and higher employment rates, don't expect to see prices rise significantly.

3. Gold is not an investment. At best, gold is an insurance policy against fear. Gold has no fundamentals, no earnings, no cash flow, no dividends or interest. Its price is determined by supply and demand, and most of all by fear. In troubled times, its price will move higher as stocks move lower. In good times, its price will tend to drift lower.

4. Invest early and often. Let the power of compounding work for you and be happy with the 7 - 12% average gains of the market over the long term. Compounding is a magical thing that can turn small sums of money into large sums of money.

5. Choose low cost investments. Cost are subject to the laws of negative compounding. A 2% expense ratio is a tough hurdle to overcome year after year. Even the most talented stockpickers must take extra risk to beat the market. An index with an expense ratio of .07% is much more likely outperform a fund with an expense ratio north of 2%. It does happened, but it is usually luck rather than skill that lands a person in these fortunate funds. Odds are not in an investors favor with high expenses. Why buy yachts for your broker or fund manager instead of yourself?

6. Stay away from today's hot hand and pick managers based on investment philosophy, or invest your own money. Statistically, value investing produces higher returns over the long-haul as compared to growth investing. Chasing performance only works occasionally, and usually results in permanent loss of capital. Pick managers that apply a consistent discipline to their investments and only buy assets that they believe are selling for cents on the dollar.

7. Be a contrarian. The best deals are to be found in what investors are currently shunning. Major stock market corrections like in 2008 and 2009 are a prime example of this. But it is hard to control the emotions and be rational when fear is so thick in the air you can almost cut it with a knife. So do your homework and make sure the current problems with a business or security aren’t of a permanent or fatal nature.

8. Be frugal. Live well below your means. Make bargain-finding a lifestyle. Be a coupon-clipper at the grocery store, and put at least 100K miles on your cars.

9. Use demographics in your favor. Observe the world around you with fresh eyes every day. See where the population trends are heading and invest in these areas prior to discovering trends with the masses from Money Magazine, Kiplingers or Smart Money. By then, it is too late.

10. Look at everything with a skeptical eye. Try to poke hole in every investment thesis, and understand the potential downside of every investment before committing capital. This is more important than understanding the potential upside of investments.

11. Keep a balanced approach. Use some income assets to help you deal with portfolio volatility, and to provide stability in the bad times. But realize you will never get rich off of these type of investments. At best you will stay 1 or 2 percentage points ahead of inflation.

12. Invest in yourself. Always seek to grow your base of knowledge every chance you get, whether through formal or informal education. Reading books, youTube and blogs are a great source of knowledge as well as misinformation so you have to apply a filter to everything you experience to separate the wheat from the chaff.

13. Have fun. Life's an adventure. If you don’t enjoy compounding wealth, then by all means be like most people and live paycheck to paycheck. Buy whatever your heart desires, but don’t come boo-hooing to Uncle Sam that the taxpayers should fund your dream retirement. This isn't Greece. But for those who want to try something different, compounding wealth can be a lot of fun. Not just for misers, but for regular folks who may ultimately want to give it all away to their favorite cause, or just take care of their families.


Ok. So there’s nothing secret about anything in this list. It’s all just common sense, and if applied consistently throughout your life will make you very wealthy, much more than your friends who will be laughing at how cheap you are. It all comes down to what you want to do with your life. If being financially independent is important, these items can provide some general guidance. Each person will have to individually map out their course to wealth, but the principles are universal and timeless.

The Best Buying Opportunity in a Generation for Investors?

Edelman Financial Services CEO Ric Edelman on why there are such great opportunities for investors right now in the markets.

Grouch: My love/hate relationship continues with Ric Edelmann. I believe he is one of the better and more consistent people in the financial planning industry, but the personality is sometimes a little too much for me. I do agree with the premise of his comments.

The Grouch's Dividend Picks for 2012

I'm an invest-for-the-long-term kinda guy so I'm looking for stocks that I think have good long-term prospects, a solid business in a stable industry that won't become obsolete next year and where there are barriers to entry. I don't want to invest in industries that every kid who graduates from MIT is dreaming of revolutionizing. This naturally leads me away from technology, though I am a technologist by profession. I also tend to be a bit of a contrarian and have a natural tendency to look for turn around plays.

My picks for 2012 are:

Brookfield Infrastructure Partners (BIP) yield 4.80% - what could be more boring than owning timberlands, electric transmissions lines, natural gas pipelines, port operations, toll roads, coal terminals, and railroad tracks all over the world? And profitable. With inflation based increases built into most of their contracts, these assets are poise to generate mucho deniro. This is also a potential play on cash-strapped governments in Europe and around the world selling off state-own assets cheap to pay their bills. As long as Brookfield is smart about financing, they will do very well.

BHP Billiton (BBL) yield 3.35% - the investment theme for BHP is the continued need of China for raw materials to fuel their economic growth as well as the natural gas revolution in America. BHP Billiton is one of the world's leading miners of aluminum, copper, lead, iron ore, manganese, energy coal, metallurgical coal, uranium, etc. Their acquisition of Petrohawk gives them a strong position in the North American Oil and Natural Gas business.

Conoco Phillips (COP) yield 3.70% - diversified oil and gas company that is slated to split into two companies in 2012 to unlock shareholder value. This is a bet that two companies are worth more than one and will pay higher total dividends to investors that keep both stocks.

Abbott Labs (ABT) yield 3.50% - diversified healthcare company that is slated to split into two companies in 2012. This is a bet that the split will unlock hidden value, result in an increased overall dividend and perhaps position the new companies to be acquired by larger players.

Cedar Realty Trust (CDR) yield 7.75% - Primarily a shopping center REIT that specializes in grocery store anchored properties. Turnaround play. Previous management constantly diworsified the portfolio and ran up debt. New management has been brought in and put together a plan to rationalize the portfolio, divest non-core assets, reduce debt and return the company to steady FFO growth and dividend. The dividend was reduced in 2011 to free up more cash to reduce debt and the stock price fell significantly, creating this opportunity. For those who think CDR is too risky, try Washington Real Estate Investment Trust (WRE) yielding 6%.

Johnson and Johnson (JNJ) yield 3.50% - is a diversified health care company. Its high growth days are over, but it just keeps pumping out the dividends and generating free cash flow for share buy-backs. This steady eddie company belongs in every dividend investor's portfolio at the right price.

Nestle (NSRGY) yield 3.61% - is a diversified food company. Its growth rate may be limited, but everyone has heard of brands like Carnation, Libby's, Nestle Toll House, Stouffers, Baby Ruth, Butterfingers, DiGiorno Pizza, Hot Pockets, Lean Cuisine, Nescafe, Coffeemate, Häagen-Dazs, ect. It is another steady eddie company that just keeps pumping out the dividends and generating free cash flow for share buy-backs.

Phillip Morris (PM) yield 4.20% - What can be better than legally selling a product that is adictive? Aside from some of the moral issues with tobacco that individual investors will have to grapple with, it is a tremendously profitable business. I believe the international exposure of Phillip Morris will result in a greater growth profile when compared to its domestic counterpart, Altria.

TEVA Pharmaceuticals (TEVA) yield 2.00% - Teva is an Israeli pharmacological company known for its aggressive acquisition streak and its legal shenanigans ti turn patented drugs into generic drugs. Future acquisition possibilities look to be few and far between so I believe Teva will concentrate its energies on running the core business and use its excess cash flow to increase its dividend payout.

Darden Restaurants (DRI) yield 3.78% - Darden is an owner of restaurant chains and the parent company of Olive Garden and Red Lobster. Currently, it is more attractively priced than some fast food restaurants such as McDonalds. It has little international exposure and has room to expand in the area. It has run into some short-term turbulence with sales at it Olive Garden franchise, which has temporarily beaten down the price, but management is focused on turning this situation around.


For those who feel they need tech exposure, please do your own research on Intel (INTC), Microsoft (MSFT) and IBM. They have attractive yields and decent intermediate to long-term prospects.

For the ultimate turnaround play, I'd look at the much hated Bank of America (BAC). Previous management constantly overpaid for acquisitions, and made of number of strategic blunders with the prices they paid for severely damaged companies like Merrill Lynch and Countrywide during the financial crisis. I don't think value investors like Bruce Berkowitz and Warren Buffett would be putting money at risk if they didn't see light at the end of the tunnel.

As always, do your own research before committing capital.

Byron Wien's Top Ten Surprises for 2012

Prognosticators are notoriously wrong in the stock market and economics. Nevertheless, it's interesting to read their predictions at the start of each year. Byron Wein offers up a few this year that go against the grain of conventional wisdom. We'll see how things pan out.

Top Ten Surprises for 2012

2011 Highly Diversified ETF Portfolio Performance

2011 ended the year with an uptick in the equity markets. Our sample highly diversified balanced portfolio returned a mildly disappointing -2.20% for the year, underperforming the S&P 500 with a positive 2.11% return. Readers might recall the Meredith Whitney prediction of doom for Municipal Bonds. Ironically enough, Municipal Bonds have turned in the best performance of the year in this portfolio. Bonds in general carried the year as International markets got creamed and were the biggest drag on performance.

Chris Davis and David Winters on Wealthtrack

Two investors from the Ben Graham and Warren Buffett school of value investing appear on WealthTrack this week. Chris Davis shares three generations of investment lessons he is applying at the Davis Funds. Wintergreen Fund’s David Winters explains his market and peer beating global strategies.

Charlie Ellis on Wealthtrack

Charlie Ellis, author of Winning the Loser's Game and The Elements of Investing, gives his views on investing and indexing.

Charlie Rose Interviews Seth Klarman

The first 18 minutes is about "Facing History", his nonprofit organizaiton. Then they turn to his book of "Margin of Safety". Klarman's discusses his view of Warren Buffett's three stages of investing:

1. Buy cigar butts at good prices.
2. Buy great companies at great prices.
3. Buy great companies at so so prices.

Klarman thinks that his own personal investing strategy is still at stage 1.

Elvis has Left the Building

The last of the mutual fund rock stars, Bill Miller of Legg Mason Value Trust, has decided to give up active management of that fund in the near future to assume the role of Chief Investment Officer.

Bill Miller became a household name and his fund, a member of many 401k plans, amid a 15-year streak of beating the S&P 500, beginning in the early 1990s. But in recent years reversion to mean has punished Miller run funds and their shareholders mightily.

Some might argue that the era of the mutual fund and superstar stock pickers have gone the way of AOL, one of the stocks Miller built his reputation on. Ultimately, Miller's gunslinging twist on value investing was unable to match his past superior performance due to his love of financial stocks and an expense ratio of over 1.76% at a time when certain ETFs and index funds are charging as little as .07% in fees.