Julian Robertson: Some Buying, but Bearish on the Economy

by: Trader Mark October 13, 2008 | about stocks: AAPL / BIDU / MA / MSFT / V    
Trader Mark

Trader Mark

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Julian Robertson is one of the legends in the hedge fund game - his fund has spawned many other hedge funds as traders leave his umbrella and strike out on their own. Word was out today via TV interviews that he was buying many of the same names we did late last week (drats, I was going to buy Baidu.com (BIDU) along with the other 3 we bought Friday but resisted - now it is up 25%)

  • Today, on CNBC's Street Signs, legendary investor (Tiger Mgmt) Julian Robertson said during the past week he picked up shares of these stocks: Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), Baidu (Nasdaq: BIDU), Mastercard (NYSE: MA) and Visa (NYSE: V). He said all these stocks are all trading at very attractive valuations.

Oh, one more thing -

Robertson says the US is in for 10-15 years of hard times

  • Multi-millionaire investor Julian Robertson told CNBC that the United States is "just getting into the recession," and that the poor economy will last as long as 10 to 15 years.
  • Last year, Robertson had said that the U.S. economy was in for "a doozy of a recession." He said the reason was the credit situation was worse than anyone had thought. [Oct 20: Julian Robertson Calling for a Doozy of a Recession"]
  • "I don’t mean to imply that this is going to last quite as long as what’s been happening in Japan, but when they went into their decline in 1990, almost 20 years ago, their people were loaded with savings—but [Americans are] all broke," he said. "...If we leave out the home in the calculations, I’d say that 80-85 percent of Americans are broke. So they have to cut back on their spending."

If you've been a regular reader here, you will have heard similar themes to what I've been writing in the words above. We're a 0% savings rate nation that the pundits now scream at us, will come back "soon" (the same pundits who yelled at us the past year that we are not in a recession and in fact there is no danger of getting into one and oh yeh - this is only a problem contained to the "subprime people"). Now we roll out those same pundits (who have been wrong the whole way down) and they now scream the U.S. of Subprime will lead the world to a recovery.

I disagree 100%; the world will lead us out - and we'll be the last to recover. That's what an economy based 70% on Americans spending over their heads will do, when Americans finally run out of money after a 25-year binge. Just like we have been in denial about the credit issues (once we get rid of those subprime people everything will be okay) - and housing issues (housing will never go down nationwide) - this sense of arrogance has us denying that we are in for a long road ahead as savings needs to be rebuilt household by household. And that doesn't happen in 12 months, sorry. But I understand the denial, because facing the future reality will be a stark difference from where we came from in the last 25 years.

Needless to say, I am pleased to see I am on the same page as one of the best minds ever in the business.


Disclosure: Long Apple, Mastercard in fund; no personal position

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This article has 18 comments:

  •  
    Oct 13 05:54 PM
    Whoo... Pretty negative and bitter. You must have gotten burned on the short side today...
    Reply | Link to Comment
  •  
    Oct 13 06:01 PM
    The credit issue was worse than many had expected. This is what took us down to 8000.

    I will say that consumer spending retrenchment will be worse than many expected in the upcoming months and quarters. This is what will take the Dow again to the 7000 range.
    Reply | Link to Comment
  •  
    Oct 13 06:14 PM
    Discounting a Depression while in a mild recession.

    Does anyone actually believe that all of this government will not be inflationary and even the idiots in Congress won't cut anyone's a taxes.

    If the Government would have just told the people who made all of the mistakes they would have to eat their losses, the propblem would have quickly and more efficiently ended months ago.

    Now Congree of both parties have all of these dollars to buy votes and bureacratic jobs to stick their political hacks until the next election as they did with Fanny and Freddie.

    Congressional Term Limits anyone?
    Reply | Link to Comment
  •  
    Oct 13 06:48 PM
    socioObamaists? funny. I will take Obama's policies over the Palincomparison McFascists, Alfred E. Bushwhackers ("what? me worry?), Disappearin' Dick ("gone huntin'") Cheney disciples and Republican deficit spenders .
    At least the Dems will spend $ on the US instead of sending it down an Iraqi rabbit hole.
    Reply | Link to Comment
  •  
    Oct 13 07:14 PM
    RAT, not RABBIT
    Reply | Link to Comment
  •  
    Oct 13 10:24 PM
    Isn't if funny how all these bitter, shrill 'defecit hawk' while spendin' big republicans are already blaming all the emergency actions of Bush on Obama?? Jeez, they can't see reality for their blinding ideology. No wonder we're where we are today.
    Reply | Link to Comment
  •  
    Oct 13 11:26 PM
    Julian appears to have a different longer-term view from Warren Buffett.....I wonder who is right.

    Only time will tell.
    Reply | Link to Comment
  •  
    Oct 13 11:40 PM
    Stagflation like the 70's. It will hit hard- and finally memorialize Bush correctly as the worst president ever of all time. Beating Hoover by many miles. He has ruined generations of future american's prospects.

    Reply | Link to Comment
  •  
    Oct 14 12:29 AM
    It astonishes me that Republicans continue to stand on their rooftops shouting about impending Obama "socialism" when it's the Republicans who have ushered in the sweeping "Marxist" reforms we are seeing in the headlines every day. And why? Because their brand of unfettered capitalism literally broke the bank.

    I wish Freud were alive, he'd appropriately diagnose the situation as wholesale "projection" with an unhealthy amount of "cognitive dissonance."

    The Republicans blew up the system...and they are unwilling to take the blame.

    Pretty typical for the Republicans, I'd say. And it's the reason the party is going down in flames in three weeks.
    Reply | Link to Comment
  •  
    Oct 14 12:46 AM
    @nycTrax

    The totally amazing thing is that Obama is not at 70-80%.

    It is a tribute to the Republican propaganda machine that they still have as much support as they do. The Dems always were major wuss when it comes to promoting ideology.

    Great call on "Projection" I have been saying that ever since Reagan complained about the "ME generation"! Talking about a classic case!

    As for the Great Republican Recession: If we start to turn around in 4 years I will consider it lucky.
    Reply | Link to Comment
  •  
    Oct 14 12:46 AM
    Is this the same Julian Robertson who lives in N.Z.??

    The greedy multi-millionaire who cries all the time about how he
    could be so much richer if he didn't sell out of his hedge fund.

    What a greedy jerk he is!!I hope he stays in the U.S.

    Reply | Link to Comment
  •  
    Oct 14 12:52 AM
    I really don't see a break below the historical support we bounced off of last week. Sideways channeling and very slow rebound, sure. But perpetual bears always talk this way.
    Reply | Link to Comment
  •  
    Oct 14 07:26 AM
    Until the market manipulations are stopped - comprehensively and effectively - there is no support level one can trust, and no rally that will be sustained. I do not believe it is short selling that is the problem. It is gross manipulations of the prices at the open. It is manipulation of prices down ward in the After-Market, the Pre-Market, and the Opening cross by persons or groups who hope to manipulate the opening prices by creating the illusion of sell pressure thru a pattern of obscenely low bids. It is criminals who manage to push thru obscenely low trades that trigger all the stop-loss orders unfairly, creating the illusion of sell pressure. It is those who manipulate prices down and down and down so they can impose margin calls when stocks have been manipulated so low that the client/investor/pensio... will NEVER recover. The brokers and banks seem to have solved their liquidity problems the last two weeks by emptying investors accounts under the guise of margin calls that were precipitated by rampant price manipulations. Apple at $21.70 on October 1, an $31.00 on September 30, then the Steve Jobs rumor October 3. No wonder Apple went $115 to $87 in 5 days. And RIMM $100 to $60 in less than 48 hours, on a false pretense. The POINT of the 40-50% losses is to produce the margin calls that provide cash and highly discounted shares to the brokers and banks. They saw they couldn't count on Congress, and they took it from our accounts, in the midst of a terrifying disinformation campaign. We need at least as much oversight and reform of the trading and brokerages as is needed in the banking sector.
    Reply | Link to Comment
  •  
    Oct 14 08:47 AM
    I believe Clinton signed the bank deregulaiton in 1999 and the Dems refused to investigate a runaway housing agency that was in turn a key campaign contributor for them and actively still is. The collapse of this liberal corrupt agency is 4 trillion overhang and a resulting socialization of the banking and housing.

    I guess we are ready for the high school textbooks to rewrite the history ala the Kennedy memoirs .

    Don't forget the Democrats biggest highway project in history 18 billion dollars for increasing traffic through Boston and ceiling tiles still falling down 10 plus year laters. Public works projects are still revered by poorly educated groups of people who rather redistribute money and chase the remaining private capital overseas - out of pride and moral superiority.
    Reply | Link to Comment
  •  
    Oct 14 09:08 AM
    As a former Congressman and CPA of which I was one of three in the US Congress I can assure the public that the principal concern of Barney Frank is not fiscal responsibility on the part of the managment of Fannie or Freddie but the maximum politcal advantage obtained for incumbents(primarily Democrats) . Never in my professional career have I seen a chief executive compensated on the basis of gross sales as was Franklin Raines but he was as safe under the prevailing Washington philosophy as if he owned the company.

    The media will never report the whole story of the cost of this debacle to the responsible American.
    Reply | Link to Comment
  •  
    Oct 14 05:28 PM
    Obama is not up to 70% because of Obama.

    If you don't like where the republicans have taken us I completely understand, they have done a lousy job over the last 8 years.

    But please don't try and sell me on Obama doing great new things. He is just another leftist and will lead left.

    Obama voters will be greatly disappointed after a few months of his presidency.
    Reply | Link to Comment
  •  
    Oct 15 02:04 AM
    The VP ran HAL, perhaps one of the most corrupt companies ever. The extent of this debacle is almost incomprehensible. Would not the country have been far better off with McCain in 2000? Didn't the Republicans hold the White House and the Congress for the first term of W? They couldn't have investigated everything that was going on without the Dems? Sure they could have but cash is king and they all got theirs. Maybe the system is just broken. BTW, enrico caruso, I have got to believe the selling in this market is by really big boys who know their way around a market. They are just absolutely astounded by the magnitude of the carnage.
    Reply | Link to Comment
  •  
    Oct 15 08:47 AM
    Talk about denial !!!

    The Oprah Society has sat on its widening arse, believing mass advertising that they were failures if they didn't have one that was the biggest on their street and when it goes pear shape, as a widening arse tends to do, they blame everyone except themselves. But of course isn't that true Socialism???
    Its always someone elses fault your an idiot, until the good times come along then your a "star"
    regards
    Reply | Link to Comment
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