The business is saddled with about $550,000 in debt, primarily from the ill-fated opening of a second store in Beverly Hills, and has been coping not only with tumult in the book industry but also with the planned redevelopment of the structure -- known as the Barry Building -- where the bookstore has been a fixture since 1984. In January 2007, the landlord revealed plans to redevelop the entire site, which includes the three-section, 5,000-square-foot Dutton's and several other enterprises in a number of buildings.
The property is owned by billionaire investor Charles T. Munger and his wife, Nancy. A founder of the Los Angeles law firm Munger, Tolles & Olson, he partnered in 1978 with Warren E. Buffett to run Berkshire Hathaway Inc., a holding company.
Munger was in Washington on Monday and could not be reached. He said in a statement that he would allow Dutton's to use the space rent-free during the liquidation and that he would cover the $550,000 debt in exchange for the store's closing. Dutton described the offer as "very gracious and generous." As part of the deal, Munger said, Dutton would retain the Dutton's trade name.
Thursday, February 28, 2008
Wednesday, February 27, 2008
Your Chance to Ask Warren Buffett a Question
For the first time, we're giving you a chance to ask your own investment questions about the annual letter. CNBC will select some from your emails. Buffett will not see them in advance.
Tuesday, February 26, 2008
A voice in the wilderness who won’t be quiet
Jeremy Grantham does not take any pleasure in watching world markets melt down. Well, perhaps just a little.
This is because back in mid-November, the chairman of the Boston-based money manager GMO was feeling pretty foolish. He had just read in the Financial Times that corporate profit margins were taking a hit from the economic slowdown, and the news sent him into in a rare panic.
The 69-year-old investor had long thought those margins were the last leg propping up a shaky US economy, and if they collapsed, many other things would follow.
This is because back in mid-November, the chairman of the Boston-based money manager GMO was feeling pretty foolish. He had just read in the Financial Times that corporate profit margins were taking a hit from the economic slowdown, and the news sent him into in a rare panic.
The 69-year-old investor had long thought those margins were the last leg propping up a shaky US economy, and if they collapsed, many other things would follow.
Zell Tries to Unload Cubs
Real estate tycoon Sam Zell is hoping to hit a grand slam as he tries to unload the Chicago Cubs and its ballpark by opening day.
Tuesday, February 19, 2008
How to make better decisions
Consider this: every year in the United States, when the Discovery Channel broadcasts "Shark Week" visits to Florida beaches decline. Presumably, the network's programming makes the waters no less safe (assuming sharks are not, in fact, empowered by cable television).
However, after watching a week of kicking legs seen from below, the idea of shark attack is refreshed in our minds and we choose not to offer ourselves as bait. This phenomenon is known as an availability heuristic - a heuristic being a rule-of-thumb. Our rationality is subverted by easily available sensationalist images.
However, after watching a week of kicking legs seen from below, the idea of shark attack is refreshed in our minds and we choose not to offer ourselves as bait. This phenomenon is known as an availability heuristic - a heuristic being a rule-of-thumb. Our rationality is subverted by easily available sensationalist images.
Monday, February 18, 2008
Keep It Simple, Says Yale’s Top Investor
What should an individual investor do?
Don’t try anything fancy. Stick to a simple diversified portfolio, keep your costs down and rebalance periodically to keep your asset allocations in line with your long-term goals. That is the advice of David F. Swensen, who has run the Yale endowment since 1988, relying on a complex strategy that includes investments in hedge funds and other esoteric vehicles. The endowment earned 28 percent in its last fiscal year, which ended June 30, beating all other endowments. It finished the year with $22.5 billion.
“There is nothing that Cramer says that can help people make intelligent decisions,” Mr. Swensen said. “He takes something that is very serious and turns it into a game. If you want to have fun, go to Disney World.”
Saturday, February 16, 2008
Financial history, anyone?
The history of credit and banking goes back much further than the history of coins. Nevertheless the story of the origins of money goes back even further still.
Warfare, with its appalling humanitarian consequences and vast economic costs, has stimulated financial innovations from the spread of coinage to the creation of the national debt. Conversely, economic weakness and the inability to properly utilize financial resources have been causes of military defeats.
One of Glyn Davies's main themes is the problem of simultaneously trying to control the quality and quantity of money. He discusses many cases of inflation over the past couple of thousand years and identifies several (not necessarily mutually exclusive) causes.
Warfare, with its appalling humanitarian consequences and vast economic costs, has stimulated financial innovations from the spread of coinage to the creation of the national debt. Conversely, economic weakness and the inability to properly utilize financial resources have been causes of military defeats.
One of Glyn Davies's main themes is the problem of simultaneously trying to control the quality and quantity of money. He discusses many cases of inflation over the past couple of thousand years and identifies several (not necessarily mutually exclusive) causes.
Is Your "Cash" in Danger?
Auction-rate securities, which thousands of companies report as a cash equivalent on balance sheets, may be imperiled.
The market for auction-rate securities seems to be coming to a screeching halt. And that's a frightening prospect for those companies that consider ARS to have the safety of cash on their balance sheets.
The investments at issue are so-called auction-rate securities, instruments at the center of the latest squeeze in the credit markets.
Goldman, Lehman Brothers, Merrill Lynch and other banks have been telling investors the market for these securities is frozen — and so is their cash.
The market for auction-rate securities seems to be coming to a screeching halt. And that's a frightening prospect for those companies that consider ARS to have the safety of cash on their balance sheets.
SOME well-heeled investors got a big jolt from Goldman Sachs this week: Goldman, the most celebrated bank on Wall Street, refused to let them withdraw money from investments that they had considered as safe as cash.
The investments at issue are so-called auction-rate securities, instruments at the center of the latest squeeze in the credit markets.
Goldman, Lehman Brothers, Merrill Lynch and other banks have been telling investors the market for these securities is frozen — and so is their cash.
Graham’s investing philosophy
THE recent developments over the subprime issues and the big volatility in regional markets have caused a lot of uneasiness to retail investors.
According to Benjamin Graham (1894-1976), investors should make market fluctuations their friends, rather than get carried away by the market sentiment. Investors should not try to time the market, as the stock market movement is always unpredictable.
In this article, we will look into some key elements of Graham’s investing philosophy.
Graham, the father of value investing, was born in London and moved to the United States when he was eight years old. In 1914, he graduated from Columbia University and started work as a financial analyst on Wall Street.
He started a private investment organisation, the Benjamin Graham Joint Account, on Jan 1, 1926, which was later joined by Jerry Newman at end-1926.
According to Benjamin Graham (1894-1976), investors should make market fluctuations their friends, rather than get carried away by the market sentiment. Investors should not try to time the market, as the stock market movement is always unpredictable.
In this article, we will look into some key elements of Graham’s investing philosophy.
Graham, the father of value investing, was born in London and moved to the United States when he was eight years old. In 1914, he graduated from Columbia University and started work as a financial analyst on Wall Street.
He started a private investment organisation, the Benjamin Graham Joint Account, on Jan 1, 1926, which was later joined by Jerry Newman at end-1926.
The Coming Ad Revolution
While the big news in the online world focuses on Google, Yahoo and Microsoft, a more profound revolution is taking place on the online social networks: The discussion about privacy is changing as users take control over their own online data. While they spread their Web presence, these users are not looking for privacy, but for recognition as individuals -- whether by friends or vendors. This will eventually change the whole world of advertising.
The current online-advertising model will become less effective, even as it gets increasingly sophisticated. New players are emerging to devalue the spaces that the ad giants are currently fighting over. Companies you've never heard of called NebuAd, Project Rialto, Phorm, Frontporch and Adzilla are pitching tools to Internet service providers that will enable them to track users and show them relevant ads. This approach (called behavioral targeting and already in service by ad networks that track users through so-called tracking cookies) undercuts traditional online publishers, who employ content to lure users and to sell adjacent ads. Now, the ISPs can sell advertisers direct access to the same users.
Friday, February 15, 2008
New Era Dawns for Rail Building
America is back to working on the railroads.
For decades, stretches of track west of this town were so rough that trains couldn't run faster than 25 miles an hour. Lanie Keith, a locomotive engineer for Kansas City Southern, recalls waiting for hours when trains stalled on a steep curve on a stretch of single track between Meridian and Shreveport, La.
But over the past two years, at a cost of $300 million, track crews have transformed the 320-mile route. Installing 960,000 crossties and 80 miles of new rail, they've turned a railroad backwater into a key link in a resurging national transport network. Mr. Keith now skims parts of the improved track, called the Meridian Speedway, at nearly 60 miles an hour. "You went from moving like a turtle to a jack rabbit," he says.
Wednesday, February 13, 2008
This Credit Crisis Has a Long Way to Run
Interview with Jeremy Grantham, Chief Investment Strategist, GMO
ONE OF THE GRANDEST OF THINKERS AND MOST ELOQUENT of oracles, Jeremy Grantham has long been the voice of reason in an industry prone to excesses and embellishment. By taking the long view, blending quantitative strategies and technical analysis with sound and experienced judgment, Grantham, chairman of Boston-based GMO, consistently uncovers with his team the best values among a wide range of global asset classes.
The payoff is outstanding performance and risk management. In return, clients have entrusted the firm with about $150 billion. As the man who warned early of a worldwide bubble forming, we turned to him as that bubble has started bursting.
ONE OF THE GRANDEST OF THINKERS AND MOST ELOQUENT of oracles, Jeremy Grantham has long been the voice of reason in an industry prone to excesses and embellishment. By taking the long view, blending quantitative strategies and technical analysis with sound and experienced judgment, Grantham, chairman of Boston-based GMO, consistently uncovers with his team the best values among a wide range of global asset classes.
The payoff is outstanding performance and risk management. In return, clients have entrusted the firm with about $150 billion. As the man who warned early of a worldwide bubble forming, we turned to him as that bubble has started bursting.
Down to the Last Drop of Profit Growth
STOCKS ARE ALLEGEDLY CHEAP NOW, at 17 times 2007 earnings. And they are cheap by historical standards. Only seven years ago, they were at price/earnings ratios double today’s; they are even cheaper if you compare their forward earnings yield of 6.7% to Treasuries’ yield of 4.25%. They are cheap, cheap, cheap! Or so we’ve been told.
Unfortunately, the cheapness argument falls on its face once we realize that pretax profit margins are hovering at an all-time high of 11.9%, almost 40% above their average of 8.5% since 1980. Once profit margins revert to their historical mean, the “E” in the P/E equation will decline. If the market made no price change in response, its P/E would rise from 17 to 23.8 times trailing earnings.
Many disagree that the profit-margin reversion will take place. Here are the most common arguments against it, and some food for thought on why “common” doesn’t necessarily translate as “wise.”
Unfortunately, the cheapness argument falls on its face once we realize that pretax profit margins are hovering at an all-time high of 11.9%, almost 40% above their average of 8.5% since 1980. Once profit margins revert to their historical mean, the “E” in the P/E equation will decline. If the market made no price change in response, its P/E would rise from 17 to 23.8 times trailing earnings.
Many disagree that the profit-margin reversion will take place. Here are the most common arguments against it, and some food for thought on why “common” doesn’t necessarily translate as “wise.”
Look who's buying now
Fortune asked 13 money managers about the current downturn, and what they're buying (or not buying) now.
The List: John Neff, Leon Cooperman, Christopher Ailman, Michael Steinhardt, Whitney Tilson, Jeff Mortimer, Nouriel Roubini, Bill Stone, Bob Rodriguez, Ron Muhlenkamp, Ken Heebner, Mustafa Sagun
The List: John Neff, Leon Cooperman, Christopher Ailman, Michael Steinhardt, Whitney Tilson, Jeff Mortimer, Nouriel Roubini, Bill Stone, Bob Rodriguez, Ron Muhlenkamp, Ken Heebner, Mustafa Sagun
Buffett's Big Muni Bond Offer: CNBC Interview Transcript
This morning on CNBC's Squawk Box, Warren Buffett publicly revealed for the first time that he has offered to reinsure $800 billion in municipal bonds now covered by the troubled insurers MBIA, Ambac and FGIC.
That would effectively give those bonds a AAA credit rating. So far, he says one insurer has turned him down and he hasn't heard from the other two.
This is a transcript of this morning's live phone conversation:
That would effectively give those bonds a AAA credit rating. So far, he says one insurer has turned him down and he hasn't heard from the other two.
This is a transcript of this morning's live phone conversation:
Tuesday, February 12, 2008
How Lee Ainslie does it
As [Lee] Ainslie [founder of Maverick Capital Ltd. of Dallas] began attracting assets and adding investment staff, he created a business model that differs slightly from those of most large funds, which generally fall into two categories.
One is the Julian Robertson [founder and managing partner of Tiger Management Corp. of New York] approach, in which one or two guys run the show and make virtually all the investment decisions.
The other, the model preferred by Paul Jones's Tudor Investment Corp. [of Greenwich, Conn.] and Steven A. Cohen's SAC Capital [of Stamford, Conn.] is to have various desks, each more or less auton-omous, making investment decisions for their own books.
A leader at the helm of the firm takes care of risk management and asset allocation.
Maverick's model is a hybrid of the two. The firm has six industry sector heads, most of whom are more or less the same age as Mr. Ainslie.
One is the Julian Robertson [founder and managing partner of Tiger Management Corp. of New York] approach, in which one or two guys run the show and make virtually all the investment decisions.
The other, the model preferred by Paul Jones's Tudor Investment Corp. [of Greenwich, Conn.] and Steven A. Cohen's SAC Capital [of Stamford, Conn.] is to have various desks, each more or less auton-omous, making investment decisions for their own books.
A leader at the helm of the firm takes care of risk management and asset allocation.
Maverick's model is a hybrid of the two. The firm has six industry sector heads, most of whom are more or less the same age as Mr. Ainslie.
A Sense of the Future
How do you predict the future without making a fool of yourself? You can extrapolate current trends to their logical next steps, but unless you stick to the weather -- hurricanes a-comin' next year! -- you're likely to be wrong. Human beings should have been cloned by now. Gasoline should be pumping at $5 a gallon. California, to the disappointment of many, has yet to collapse into the sea along its fault lines, metaphorical or otherwise. What, then, is the point of predicting the future at all?
Saturday, February 9, 2008
Transcript: Tony Tan of Singapore’s Government Investment Corporate
Interview with Tony Tan, deputy chairman and executive director of the Government Investment Corporation of Singapore at Davos, January 25
Wednesday, February 6, 2008
Michael Steinhardt Speaks
Legendary investor Michael Steinhardt, known to many as the father of the modern hedge fund era, offers his perspective on the Fed and advice for today’s tumultuous market.
What Went Wrong at Citi and Merrill
Economist Henry Kaufman says senior management was caught up in frenzied pursuit of short-term gain. But "Dr. Doom" still has faith in the American economy's resilience.
Senior managements and the boards of directors of major financial institutions such as Citicorp (C) and Merrill Lynch (MER) failed to perform their proper corporate governance roles, helping to precipitate the financial markets crisis of recent weeks, says Henry Kaufman, president of Henry Kaufman & Co. and a board member at Lehman Brothers (LEH). The Federal Reserve also failed to understand risks created by the proliferation of new financial instruments, says Kaufman, who previously served on the Federal Reserve Bank of New York. Here are edited excerpts from a recent conversation.
Senior managements and the boards of directors of major financial institutions such as Citicorp (C) and Merrill Lynch (MER) failed to perform their proper corporate governance roles, helping to precipitate the financial markets crisis of recent weeks, says Henry Kaufman, president of Henry Kaufman & Co. and a board member at Lehman Brothers (LEH). The Federal Reserve also failed to understand risks created by the proliferation of new financial instruments, says Kaufman, who previously served on the Federal Reserve Bank of New York. Here are edited excerpts from a recent conversation.
Resolutions on Randomness: Beware the Black Swan
Resolutions on Randomness: Beware the Black Swan
You pay close attention to your marketing campaigns. You resolve to be ever more quantitative and rigorous in your approach for 2008. But have you also resolved not to be fooled by randomness, and to be aware of the nature of probabilities and risks that you face in your efforts to measure and predict the future? A few nuggets of unconventional mathematical wisdom inspired by a well-known rogue “empirical skeptic” might help.
Tuesday, February 5, 2008
Ghosn Maps Path Through Slump
Nearly a decade ago, Carlos Ghosn rose to fame for rescuing Nissan Motor Co. from near collapse and turning it into one of the world's most profitable auto makers.
Today, Mr. Ghosn, 54 years old, now chief executive of both Nissan and Renault SA, sees the global auto industry in need of a similar reversal of fortune. Strained by a weak U.S. market, rapid expansion in emerging markets and a shift in demand from gas guzzlers to ultra-low cost cars and fuel-sipping green vehicles, the world's auto makers are at a crossroads.
Born in Brazil to Lebanese parents and fluent in six languages, Mr. Ghosn divides his time between Tokyo and Paris. He stopped at The Wall Street Journal in New York recently to share his thoughts on the auto industry. Excerpts:
Today, Mr. Ghosn, 54 years old, now chief executive of both Nissan and Renault SA, sees the global auto industry in need of a similar reversal of fortune. Strained by a weak U.S. market, rapid expansion in emerging markets and a shift in demand from gas guzzlers to ultra-low cost cars and fuel-sipping green vehicles, the world's auto makers are at a crossroads.
Born in Brazil to Lebanese parents and fluent in six languages, Mr. Ghosn divides his time between Tokyo and Paris. He stopped at The Wall Street Journal in New York recently to share his thoughts on the auto industry. Excerpts:
Saturday, February 2, 2008
View from the Top transcript: John Thain
A transcript of the FT’s interview with John Thain, chief executive of Merrill Lynch. He speaks to US managing director Chrystia Freeland about managing risk, CDOs, monolines, emerging markets, the world economy and John McCain.
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