David Einhorn (WealthTrack -- Video Interview)

CONSUELO MACK: In a recent letter to Greenlight Partners, which, for those of us who don’t own hedge funds, means investors, you wrote-- you were very critical of the Federal Reserve, and the most recent round of quantitative easing. And not only do you doubt it is going to be successful, but you also think that it could actually be harmful. Why?


DAVID EINHORN: Well, I think it’ll be harmful for growth, right away, if the purpose of the quantitative easing is to ease financial conditions, thereby, according to the Fed Chairman’s op-ed, make the stock market go up, make some people feel wealthy, and then go out into the stores and buy things. That’s offset by the fact that they’re trying to create inflation. And the may not get the inflation where they want. They’d love the inflation to be in house prices. But they might get it instead in oil prices. Or cotton prices. Or food prices. And there’s already a lot of evidence of this. The problem is that those prices affect a large number of people who have to buy these sort of necessities of life.

CONSUELO MACK: Food and shelter.

DAVID EINHORN: Food and shelter, and …

CONSUELO MACK: Right. Energy.

DAVID EINHORN: … clothing, and energy. And if the prices of those things go up, they’re not going to have as much money to buy other things. And so you may actually not get any increase in demand. You may actually slow down economic growth. And that is separate and apart from the longer-term ramifications of going through a process of effectively money printing, buying, creating electronic money to buy Treasury securities, which is what the so-called quantitative easing ultimately amounts to.

Mark Boyar -- "Deja Vu All Over Again"

"The markets also look similar to ’stagflation’ markets during his start-up. The indices went nowhere until 1982, but below the surface there were great stock buys. It was a stock-picker’s market, and he thinks we are in for more of the same. Like in 1975, Boyar looks at the uncertainty and confusion in today’s markets, and sees opportunity." (Mark Boyar)


"The past few years have been a different story for us. At  the end of 1975 our insurance subsidiaries held common equities  with a market value exactly equal to cost of $39.3 million. At  the end of 1978 this position had been increased to equities (including a convertible preferred) with a cost of $129.1 million  and a market value of $216.5 million. During the intervening  three years we also had realized pre-tax gains from common  equities of approximately $24.7 million. Therefore, our overall  unrealized and realized pre-tax gains in equities for the three  year period came to approximately $112 million. During this same  interval the Dow-Jones Industrial Average declined from 852 to 805. It was a marvelous period for the value-oriented equity buyer." (Warren Buffet, 1978 Annual Letter)

Whitney Tilson: Market Comments

Whitney Tilson's Thoughts on the Market and Economy.

Whitney Tilson: Quality on Sale.