David Einhorn recently gave a rather opinionated speech at the Value Investing Congress. In his speech, Einhorn criticized politicians for being to short sighted in trying to resolve the financial crisis. He says that they are more worried about getting re-elected than worried about the wide effects of their current decisions many years from now. Specifically, he called Ben Bernanke and Tim Geithner the quintessential short-term decision makers. At the same time, he blasts the banking lobbyists for twisting the proper arms in gov’t to bail them out.
The lesson of Lehman Brothers should not be that the government should have prevented its failure. The lesson of Lehman should be that Lehman should not have existed at a scale that allowed it to jeopardize the financial system. And the same logic applies to American International Group, Inc. (AIG, Financial), Fannie Mae (FNM, Financial), Freddie Mac (FRE, Financial), Bear Stearns, Citigroup Inc. (C, Financial) and a couple dozen others.
Einhorn goes on to propose that the largest banks be broken up just as AT&T Inc. (T, Financial) was 25 years ago. But acknowledges that for political reasons, that this is rather unlikely to occur with banks.
Recently, Goldman upgraded Wells Fargo & Company (WFC, Financial) partly based on its ability to earn long-term oligopolistic mortgage origination spreads. This is acknowledgement that WFC’s conservative nature is rewarding shareholders.
Einhorn discusses the current fiscal crisis with his opinion of where things are going using examples from the past. He is fearful that a lot of the major currencies around the world are at risk of loosing values. Saying that trying to pick a currency to invest in is like trying to pick out his favorite dental procedure. And for this reason, he likes gold. It is highly recommended that you read the entire transcript of his speech to learn more. This speech is a wonderful example of saying more with fewer words. It is a quick read and you will learn something.
David Einhorn Speech to Value Investors
The lesson of Lehman Brothers should not be that the government should have prevented its failure. The lesson of Lehman should be that Lehman should not have existed at a scale that allowed it to jeopardize the financial system. And the same logic applies to American International Group, Inc. (AIG, Financial), Fannie Mae (FNM, Financial), Freddie Mac (FRE, Financial), Bear Stearns, Citigroup Inc. (C, Financial) and a couple dozen others.
Einhorn goes on to propose that the largest banks be broken up just as AT&T Inc. (T, Financial) was 25 years ago. But acknowledges that for political reasons, that this is rather unlikely to occur with banks.
Recently, Goldman upgraded Wells Fargo & Company (WFC, Financial) partly based on its ability to earn long-term oligopolistic mortgage origination spreads. This is acknowledgement that WFC’s conservative nature is rewarding shareholders.
Einhorn discusses the current fiscal crisis with his opinion of where things are going using examples from the past. He is fearful that a lot of the major currencies around the world are at risk of loosing values. Saying that trying to pick a currency to invest in is like trying to pick out his favorite dental procedure. And for this reason, he likes gold. It is highly recommended that you read the entire transcript of his speech to learn more. This speech is a wonderful example of saying more with fewer words. It is a quick read and you will learn something.
David Einhorn Speech to Value Investors
