Many clients thought he was crazy and transferred their accounts. It only took those clients about 25 years to be right! In the eighties, Guild was heavy into retail and other investments that do well in a disinflationary environment. In the nineties, he was in internet early but then shorted at the end of the decade. The internet shorts dampened returns for a few years but Guild was vindicated when the bubble burst in 2001.
Guild has had some blow out years ending up 50% or more a few times. Over the last ten years, one of his funds has outpaced the S&P by 4%, after fees. He chose to keep his firm small and focus on research, not marketing and attracting new clients. Guild and his partner Tony Danaher have been practicing Transcendental Meditation for many years. The Maharishi, head of the TM movement, would send Guild around the world to meet with CEOs to discuss the merits of the movement.
Since 2003, the firm has focused on precious metals and energy. In the last two years, he has focused on foods by investing in ETFs in America and London. Currently, Guild owns Diamond Offshore (DO), Transocean (RIG), and Niko Resources (NKO.TO), which have done well with the rise in oil.
Like Buffet, Guild is concerned about the $450 trillion in derivatives. He thinks that there is too much counterparty risk. He is afraid that central banks will have to step in and take over these obligations. When they do that, you can bet they will print money to mitigate the crisis. More money equals more inflation. Currencies that Guild is long include: the yen, Australian dollar, and Norwegian Kroner.
Guild and Danaher are also concerned about custody issues for client accounts. They make sure and read the fine print of the brokerage contracts. With investment banks levering up their equity 40 to 1, they do not want to get dragged down if things go bust.
Of Guild’s five analysts, one concentrates on nothing but fertilizers. Potash (POT), Agrium (AGU), Mosaic (MOS), and Israel Chemical (CHIM.TA) are some of his holdings. Guild said that the fertilizers are going to “blow out the numbers”. He does not feel that it has a double or triple left but could rise 50%.
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