Feb 7, 2017

The Warren Buffett of Boston on Trump-era investing

Richard Drew / AP

The NYT Dealbook details the sobering letter Seth Klarman recently wrote to investors cautioning against overconfidence in the stock market. Klarman, runs the $30 billion Baupost Group, has been compared to Warren Buffett (and actually has received praise from Buffett) and has only lost money in three of the past 34 years.

  • On the markets: Klarman anticipates a "lengthy decline in dollar hegemony, a rapid rise in interest rates and inflation, and global angst."
  • On protectionism: He said "America-first protectionism" will "leave society worse off" and that investors are being blinded by the "potential benefits of stimulative tax cuts" when they know adding barriers to trade is not a path to growth.
  • On Trump's tax cuts: He said "The Trump tax cuts could drive government deficits considerably higher" and said they will harken back to the 2001 tax cuts that "fueled income inequality while triggering huge federal budget deficits." Klarman added that even without Trump's tax cuts, government debt will "skyrocket" when interest rates are raised.

Klarman's advice: Hedge fund managers should stop investing in funds that track the market — like index funds and exchange traded funds (E.T.F.s) — as it's depressing their returns. Hedge funds only returned 23% from 2010 to 2015, compared to the 108% returns for the Standard & Poor's index.

Go deeper

Pandemic and protests can't stop the stock market

Traders work on the floor of the NYSE. Photo: Spencer Platt/Getty Images.

United States equities were on pace to open higher Monday following big gains in Asia and Europe and a risk-on bid in currency markets.

Why it matters: Stock markets could continue to rise despite an unprecedented global pandemic, violent protests over police violence in the U.S. not seen since the 1960s, and spiking tensions between the world's two largest economies.

11 mins ago - Sports

The sports world speaks up about death of George Floyd

Celtics guard Jaylen Brown. Screenshot: Jaylen Brown/Instagram

There was a time when a months-long sports absence would have silenced athletes, leaving them without a platform to reach fans or make their voices heard.

Why it matters: But now that athletes boast massive social media followings and no longer need live game broadcasts or media outlets to reach millions, they're speaking out en masse amid protests over the death of George Floyd and other police-related killings of black people — delivering messages of frustration and unity, despite their leagues not currently operating.

The technology of witnessing brutality

Charging Alabama state troopers pass by fallen demonstrators in Selma on March 7, 1965. Photo: Bettmann/Getty Images

The ways Americans capture and share records of racist violence and police misconduct keep changing, but the pain of the underlying injustices they chronicle remains a stubborn constant.

Driving the news: After George Floyd's death at the hands of Minneapolis police sparked wide protests, Minnesota Gov. Tim Walz said, “Thank God a young person had a camera to video it."