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Bristlecone Monthly News Digest
Greetings!
Welcome
to this first edition of what we hope will be a monthly outreach to Bristlecone
clients.
Here we'll offer some brief comments on a few of the more insightful articles and interviews relating to the financial markets and the companies that you own. As the internet brings ever greater piles of information to our fingertips, culling the interesting and informative pieces becomes more challenging. Each of us here reads
prodigiously, and ideally these emails will provide a useful shortcut to the
good stuff (click on the blue links). Let us know how we're doing.
Ken
Lewis WSJ Op-Ed Piece: Some Myths About Banks
Ken Lewis
is the CEO of beleaguered Bank of America.
Beware, Lewis has the tough sales job of convincing customers,
investors, and regulators of his company's creditworthiness, so this piece
should be read with that in mind.
Nonetheless, Lewis spells out plainly here why some popular anger at
banks is misplaced and provides a little counter-balance to the wave of
skepticism directed at the industry.
Jeremy
Grantham: Reinvesting When Terrified
Jeremy
Grantham, the Chairman of GMO, is one of our favorite market observers. In addition to being exceedingly smart and a
good investor, he's also wonderfully articulate. His March 2009 commentary addresses head-on
one key issue many investors struggle with today - "Reinvesting When
Terrified." Key quotes: 1) "You absolutely must have a battle plan
for reinvestment and stick to it." 2) "Be aware that the market does not turn
when it sees a light at the end of the tunnel. It turns when all else looks
black, but just a subtle shade less black than the day before."
(This site
requires registration, but don't worry, you won't get any spam or
solicitations.)
If you have
25 extra minutes, we highly recommend this video of an interview of Grantham by
Steve Forbes. Grantham puts today's
market in finely balanced perspective in a way that few others can.
Wells Fargo - Dividend Cut Announcement
We don't
expect you to keep up with the news flow on all the companies in the portfolio,
that's our job. Nonetheless, this short
announcement is representative of the good news/bad news banks face today. We assess Wells Fargo to be a much better than
average bank, but it, too, is cutting its dividend to preserve capital and, it
hopes, repay government funds earlier.
But the announcement also stresses, and this you don't hear about much
in media reports, the many resources that are available to the company. The dividend cut will allow Wells Fargo to
preserve an additional $5 billion a year to reinvest in the business, build
market share, and make new loans at profitable rates. The announcement also covers Wells Fargo's
relative capital strength and the savings from its Wachovia acquisition.
Warren
Buffet - Annual Letter and CNBC Interview
There was
much press coverage of Warren Buffet's annual letter to shareholders. The most common quote pulled from the letter
was "the economy will be in shambles throughout 2009-and for that matter
probably well beyond . . . ." (The rest
of that sentence, which we didn't see quoted much, was " . . . but that
conclusion does not tell us whether the stock market will rise or fall.") The market seems to have no trouble finding
bad news to justify further selling, and Buffet's annual letter served that
purpose when it came out. But Buffet,
through Berkshire's incredibly diverse
business holdings, has as clear a view into the broad economy as anyone, and we
recommend reading the whole letter to gain the full measure of his valuable
insights.
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