JimChanosKynikosAssociates:Thirtyyearsoflessonslearnedsortof.

GrantsInterestRateObserverFall2013ConferenceOctober22,2013
Whatsoldisnew
o FinancialInnovation
80sJunkBonds,BridgeNotes,PIK,CBO
2000sDerivatives
o CommercialRealEstate
80sSNL
2000sHousingbust,Dubai
o AlternativeInvesting
90sMusicBonds(BowieBonds)
2000sSportsstarIPOs
o VictimsofHubris
80sDrexel
2000sLehman
o InsiderTrading
80sBoesky
2000sRajaratnam
Raidersrebranded(celebrityinvesting)
o Activiststoday(Ackman,Icahn,etc.)areliketheraidersinthe80s
o Sameresultsinretail(agraveyardofvalueinvesting)
80sFederated
2000sKmart/Sears
2010sJ.C.Penney
DotCom1.0Web2.0
o Valuationmetricschangedfromeyeballsviewingtomobilesubscribers
o Werenotat2000levels,wereatmid99levels
o Twitteristhenewmessageboardtohypestocks
Omegamessageboardpeopleputoutbullishreportstomanipulatethe
stockhigher
o ShortedAOLat8andcoveredat80
Modeldidntmakeanymoneybutpeoplethoughtitwouldscale
RemindshimofFacebookwhichisnotprofitablebutsupposedtoscale
ArtMarketBubble
o Sothebysnewhighpricecorrelatedwellwithfinancialbubbles[aremoststocks?]
o DotComartbubble:Warhol
o Contemporaryartisimpossibletovalue
Onestreetartistwhosepaintingsroutinelysellinthe~$10millionrange
triedtoselltheartonthestreetcornerandcouldntgetmorethan$710a
painting.
TheJapanesewayisnowtheChineseway
o Japanesecoulddonowrong,nowitstheChinese
o Newmanagementbooks
o Anewkindofcapitalism
JimChanosKynikosAssociates:Thirtyyearsoflessonslearnedsortof.
GrantsInterestRateObserverFall2013ConferenceOctober22,2013
o CulturalembracekidsneedtolearnChineseinschool
o Totalcreditgrowingat35%whileGDPgrowingat10%meansnetdebtgrowingat
25%ayear,adoubleevery3years
o ChinasdebtlevelnumbersapproachingJapansin1989
o ChinesenowacquiringtrophypropertiesliketheJapanese
o Bothexperiencingrealestatebubble
o Buildingwhiteelephants,bridgestonowhere
LessonsLearned?
o Fedputcontinues
o Unprecedentedamountof$printing
o WidespreadbeliefthatChinawillalwaysstimulate,Chineseput
o BecarefulwithanythingdependentongrowthinChinamining,commodities
o Someofthebigmarketcaptechstocksactuallyhavefairlysmallfloats
Watchforshareissuance,thatcouldbethebeginningoftheend