"Passing ANY bailout plan is completely un-American. Government has no business in the free markets and frankly this plan is a complete bailout of Wall Street. The same people who told you we didn’t have a problem are now blackmailing the American people. Yes not passing this plan will likely cause the markets to decline, but I can assure you they are going to decline no matter what government does. If you think the government knows better than the free market you are not a capitalist".
-An excerpt from Paul Jaber’s September 25, 2008 letter to Senator Chris Dodd
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In December 2008 I decided to put this web site online as a way to communicate our current investment outlook and thoughts to our investors and potential investors. This site is NOT a blog, we have no interest in a two-way conversation of other’s investment views. We are professional money managers that focus on a very specific investment strategy. WE ARE HAPPY TO SHARE OUR OUTLOOK AND THOUGHTS BUT NOTHING ON THIS SITE SHOULD BE CONSIDERED INVESTMENT ADVICE. Please see disclosure on bottom of page.
I feel the two graphs on the left are very fitting and clearly outline the risks we currently face investing in stock markets around the world. The graph on the top shows the Dow Jones Industrial average from 1970 to December 2008. Two bubbles are extremely obvious on the graph – the technology bubble of 2000 and the credit bubble of 2001 - 2007. The double bubbles caused a lot of smart portfolio managers to question their disciplines & strategies and has essentially left our capital markets with below average managers. This happens in all bubbles, from Tulips in Holland to the British Empire’s South Sea Company bubble to Japan’s housing and credit bubble – ALL bubbles force out the so called smart money and leave a void.
The graph on the bottom shows Japan’s Nikkei 225 average from 1985 to December 2008. I highlight this graph to show just how long financial pain can last, even with a country’s government doing everything it can to stop the fall. Japan peaked in 1990 when they were buying some high profile pieces of real estate in the United States. In the late 1980s Japan was living large and the envy of the world. As you can clearly see Japan has been down for decades – investment losses in Japan have been massive for 20+ years. Time will tell if the United States will follow Japan’s lost decades but the massive reliance on our government to save us does not bode well. And yes there are major differences between Japan and the United States but unfortunately it looks like the difference may actually benefit Japan in any such comparisons.
Welcome to the site. I hope you enjoy it,
Paul Jaber, Jr., CFA
Portfolio Manager
Perpetual Value
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This communication is being provided for informational purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security referenced herein. It is being provided to you on the condition that it will not form the primary basis for any investment decision. Perpetual Value and its affiliates may have positions (long or short), effect transactions or make markets in securities or options on such securities referenced herein. The information contained herein is of the date referenced and Perpetual Value does not undertake an obligation to update such information. Perpetual Value has obtained all market prices, data and other information from sources believed to be reliable although its accuracy or completeness cannot be guaranteed. Such information is subject to change without notice. The securities mentioned herein may not be suitable for all investors. THIS IS NOT INVESTMENT ADVICE.
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