Last week, I chatted with Wally Forbes about what was going on in the fund world, the markets, the economy:

“There are lots of opportunities, even if you’re not happy with the economy. Let me rephrase this precisely. Whenever I get a tirade from either an institutional client or a fund manager about the, “Fed is doing this and it’s just terrible,” I always have to say, “Hey, you know what? If you want to join a think tank in D.C. and become a Monday morning armchair policy wonk, you can. But that’s not what my job is.”

My job is to look out at the landscape and say, “Where are the opportunities?” I could read you chapter and verse as to why I think all the policy decisions that the Fed has done is wrong, from LTCM to Bear Stearns to ZIRP. I – literally – wrote a book detailing all of their screw ups.

But that’s what I do on my weekends. During my day job, I have to turn over rocks and say, “Where is there opportunity to deploy capital?” And I think a lot of people make the mistake of ignoring opportunity, and overlooking risk. It’s one thing to be a fan and either cheer or jeer while sitting up in the cheap seats. But it’s something else entirely when you’re on the playing field.”

The whole interview is fun stuff . . .


Stop Criticizing Bernanke, Start Finding Investment Opportunities
Wallace Forbes
Forbes May 17 2011

Category: Media

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

19 Responses to “Forbes Interview: “Shut Up, and Go Find Opportunities””

  1. Arequipa01 says:

    “Where is there opportunity to deploy capital?”

    You describe the answer to this question as a process of ‘turning over rocks’. I would suggest that it is also a process of interacting with/interpreting signals/stimuli in the environment. So, in the present environment, populated with false signals (whose valence can be changed in an instant without notice), how does one deploy capital in the US financial markets?

    ‘common ordinal interpretation of signals’- if this does not hold, then what?


  2. Pawn shop business is booming.

    So are repo guys

    There is some activity in the building trades……building houses of destitution

  3. James says:

    And whenever anybody gets up and rails about the end of the dollar and the collapse of the Western Civilization, and the end of the United States, I just want to stop them and say, “Let me guess, this 106% move from March 2009 to yesterday – you missed most of that, didn’t you?”

    Heh, heh – loved this.

  4. ashpelham2 says:

    I’m not an optimist. To be in Forbes’ shoes, you must be willing to ignore some of the bad that’s out there and seek out what could be profitable, ie, good. It’s hard for me to find that on a long term, but on a short term, there’s always a buck to be made.

  5. couragesd says:

    YES!!! YESS!! YES!! I coulnd’t agree with him more. If there weren’t opportunities then we would all be sitting in a puddle of mud 100,000 years ago. And guess what even then there were opportunities.

  6. lumpy oatmeal says:

    According to the article your company is 86% long, I thought you guys were about 50% long or so from a recent post, but maybe I missed a recent post?


    BR: It changes frequently as conditions warrant — we deployed more cash in April (discussed here).

    Our long position is still in the 80-86% range

  7. Africa to be ‘next investment destination’

    LAGOS (AFP) – Resource-rich Africa is set to be the world’s next investment destination thanks to an array of reforms sweeping across many previously troubled countries, a former Nigerian leader said on Wednesday.

    Olusegun Obasanjo, in office in Nigeria for eight years until 2007, said that after many years of stagnation the continent’s economies saw a sharp growth in the past decade. Real GDP increased by 5.2 percent annually, compared with 2.3 percent in the 1990s.

  8. Topspin says:

    Chinese are buying tons of real estate in Canada and the U.S.

  9. gordo365 says:

    Awesome post and interview! Made my day.

  10. Doubtful says:

    How long is “for some time” in
    “We’re now about 86% long and have been for some time.”?
    Six weeks? On March 30 you wrote in your blog,
    “Our main model is now 51% cash, 49% long”.

  11. nofoulsontheplayground says:

    That’s the thing about trading/investing. There are opportunities for to make money every single trading day. It’s up to the trader to identify and exploit those opportunities that offer a high risk/reward ratio.

  12. nofoulsontheplayground says:

    Man, I wish there was an after post edit feature here to allow folks like me to clean up spelling and grammar errors.

  13. HonestJohn says:

    I totally agree with you, after the dot com bust, where I lost 65% of my retirement, I got educated, but it took me years, and I’m still learning to find these opportunities. Luckily I was young enough…maybe, well see.
    But what do you say to the “average” person, who doesn’t have the time to do this, or the single mom, who will never retire because she lives day to day, or the kids coming out of college up to their eyeballs in debt. Fact is, only people with money, make money in stocks, or they blindly dollar cost average in their 401k come hell or high water, because that’s what they’ve been told to do by the “experts” how have they done? …They guy ranting at you missed the 106% return since the “bottom”, because he never got out, and now he’s pissed that he’ll have to work until he drops dead.
    The middle class has been decimated. Western civilization may not collapse right away, but we are slowly, painfully, crumbling, brick by brick…We are Rome at about 360 AD.

  14. I mentioned Risk because its (obviously) not all opportunity — there has to be a balance.

  15. machinehead says:

    ‘But what do you say to the “average” person, who doesn’t have the time to do this [search out opportunities to deploy capital]? — HonestJohn

    This is a 64 million dollar question — one I’ve been thinking about for decades.

    Social Security took the paternalistic approach: we’ll sequester part of your paycheck, and invest it in safe Treasury bonds for you. We now know — thanks to the Ibbotson research on long-term returns — that bonds have underperformed stocks by several percentage points annually. And — lacking proper reserving and fiduciary protections — SocSec has a large negative net worth.

    Wall Street told the average person, just buy and hold a diversified stock portfolio: you’ll make about 10 percent a year. They forgot to mention the risk of 50-percent plus drawdowns, and grinding secular bear markets that can last 17 years.

    Probably the best answer is that one needs to hold a multi-asset portfolio, in which the components are as uncorrelated with each other as possible. A basic example would be stocks, bonds, and gold (gold being essential because it is uncorrelated with stocks and bonds).

    The average person is not well equipped to identify financial opportunities in competition with professionals who do it all day, every day. What they need is an historically-tested roadmap for a well-diversified deployment of capital among several large, liquid asset classes, which will earn a solid positive return most of the time, and avoid disastrous drawdowns. Neither stocks alone, nor the traditional 60% stock /40% bonds portfolio is capable of meeting this objective. But some portfolios can.

  16. jsp9999 says:

    Great “STFU, do your job” interview.

  17. jswap says:

    “Stop Criticizing Bernanke, Start Finding Investment Opportunities”

    I can walk and chew gum at the same time.

  18. Giovanni says:

    Great post, I was reminded of a line from a book I read in the eighties. “What were you doing while you were waiting in the gas line? Complaining? Or thinking, somebody must be making a lot of money on this and how do I get some?

  19. Greshams-law says:

    Haha, indeed. ‘Business as usual’ for the past 30 years has been business with a levering uptrend, I guess people are finding it difficult to adjust!