market folly

Christopher Begg is out with East Coast Asset Management's second quarter letter and in it takes a look at markets from a top-down perspective. While East Coast's investment principles are guided by value, they, like many other value investors such as David Einhorn (Greenlight Capital) have incorporated a top-down view into their thought process.

At present, East Coast takes the following notes:

- Developed countries continue to print money.

- Developed world currencies depreciate against emerging currencies.

- "Inflation will be heightened globally and accumulated wealth is at risk of losing purchasing power, therefore we will limit intermediate and long-term fixed-dollar investments."

- As paper currencies lose value, global equities will provide the alternative.

- Businesses with pricing power will outshine those without. (In the past, Market Folly highlighted how Berkshire Hathaway bought Lubrizol due to pricing power.)


Begg has also spent this summer teaching security analysis at Columbia Business School. The letter embedded below introduces his concept of 'finding longitude' which focuses on refining each investment to specific datasets that gauge how a business is truly performing:

(Email readers come to the site to read the letter)



East Coast's letters are always packed with insight, theory, and practical applications of investing so if you haven't read them, we'd highly recommend viewing East Coast's thoughts on:

- Competitive advantage
- On the topic of compounding
- Gaining an investment edge
- Variant perception