Comments on: Seth Klarman: Investing Against Deflation http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/ Wisdom on such diverse topics as: spin-offs, merger arbitrage, post-bankruptcy equities, global macro commentary and short ideas. Thu, 11 Mar 2010 12:12:18 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Jae Jun http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/comment-page-1/#comment-1839 Jae Jun Thu, 11 Dec 2008 22:33:00 +0000 http://streetcapitalist.com/?p=416#comment-1839 Klarman may be a tough nut to decipher but I must say he wears a mean suit. Klarman may be a tough nut to decipher but I must say he wears a mean suit.

]]> By: Chris http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/comment-page-1/#comment-1812 Chris Sun, 07 Dec 2008 06:14:36 +0000 http://streetcapitalist.com/?p=416#comment-1812 Travis, you ask why you as a stockholder should be concerned with deflation. Equities by their nature are junior securities. Bondholders claims do not get marked down in deflation. If your company cannot service debt you are wiped out. Simple as that. I would suggest purchasing equities that have no debt and substantial cash balances. Japan is my favorite market now, with plenty of profitable companies near net cash. Their earnings may deflate but cash retains its value. Travis, you ask why you as a stockholder should be concerned with deflation. Equities by their nature are junior securities. Bondholders claims do not get marked down in deflation. If your company cannot service debt you are wiped out. Simple as that.

I would suggest purchasing equities that have no debt and substantial cash balances. Japan is my favorite market now, with plenty of profitable companies near net cash. Their earnings may deflate but cash retains its value.

]]> By: Tariq http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/comment-page-1/#comment-1811 Tariq Sat, 06 Dec 2008 19:41:35 +0000 http://streetcapitalist.com/?p=416#comment-1811 Travis, I think when we invest we're not so much trying to preserve wealth but also grow it. That's why deflation can make things tough, since asset values would be falling. Travis, I think when we invest we’re not so much trying to preserve wealth but also grow it. That’s why deflation can make things tough, since asset values would be falling.

]]> By: market folly http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/comment-page-1/#comment-1807 market folly Sat, 06 Dec 2008 00:52:40 +0000 http://streetcapitalist.com/?p=416#comment-1807 hey good site, just wanted to toss these general investment these out for both inflationary and deflationary environments. curious as to your thoughts on what i've proposed http://www.marketfolly.com/2008/08/investment-scenarios-inflation-vs.html hey good site, just wanted to toss these general investment these out for both inflationary and deflationary environments. curious as to your thoughts on what i’ve proposed

http://www.marketfolly.com/2008/08/investment-scenarios-inflation-vs.html

]]> By: Travis http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/comment-page-1/#comment-1806 Travis Fri, 05 Dec 2008 20:59:08 +0000 http://streetcapitalist.com/?p=416#comment-1806 Deflation is a broad decrease in the cost of things. Assets, consumables... everything. So why should I care. If my stock is worth xxx dollars and will by me a house or two, then deflation hits and my stock is worth xxx/2 dollars but will still by me a house or two, why should I care? Also when gas goes from $2 to $4 and its terrible for everyone but people invested in oil, how can it be terrible for everyone in general is gas goes from $4 to $2? Deflation is a broad decrease in the cost of things. Assets, consumables… everything. So why should I care. If my stock is worth xxx dollars and will by me a house or two, then deflation hits and my stock is worth xxx/2 dollars but will still by me a house or two, why should I care?

Also when gas goes from $2 to $4 and its terrible for everyone but people invested in oil, how can it be terrible for everyone in general is gas goes from $4 to $2?

]]> By: Brooklyn Holdings http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/comment-page-1/#comment-1804 Brooklyn Holdings Fri, 05 Dec 2008 17:17:09 +0000 http://streetcapitalist.com/?p=416#comment-1804 Joe, I believe Tariq is referring to Taleb's comments about "massive deflation" in the future. His notes on Klarman serve as a guide, should we face deflation. Just my 2 cents... Tariq, great post by the way. Joe, I believe Tariq is referring to Taleb’s comments about “massive deflation” in the future. His notes on Klarman serve as a guide, should we face deflation. Just my 2 cents…

Tariq, great post by the way.

]]> By: Tariq http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/comment-page-1/#comment-1803 Tariq Fri, 05 Dec 2008 17:11:02 +0000 http://streetcapitalist.com/?p=416#comment-1803 I posted about that before as well. The way I look at it Joe is that it does not hurt to know how to invest in either economic environment. I posted about that before as well. The way I look at it Joe is that it does not hurt to know how to invest in either economic environment.

]]> By: Joe http://streetcapitalist.com/2008/12/05/seth-klarman-investing-against-deflation/comment-page-1/#comment-1802 Joe Fri, 05 Dec 2008 16:43:58 +0000 http://streetcapitalist.com/?p=416#comment-1802 Thing is, Klarman thinks inflation will come- not deflation: http://nakedshorts.typepad.com/investorletters/2008_1028_Letters/Baupost_Klarman_20081010.pdf Thing is, Klarman thinks inflation will come- not deflation: http://nakedshorts.typepad.com/investorletters/2008_1028_Letters/Baupost_Klarman_20081010.pdf

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