Marty Whitman: The 8 greatest financial misunderstandings
It is difficult to function as a value investor unless the value analyst has a firm grasp of economic reality. It is equally difficult to promulgate intelligent financial regulations unless the sponsors of the regulation have a firm grasp of economic reality. Neither the general public, nor legislators and Obama administration officials, seem to have much of a grasp of economic reality, at least when it comes to dealing with troubled financial institutions.
I recently finished reading the book, Freefall by Joseph E. Stiglitz, an eminent economist. It certainly seems obvious from reading Stiglitz's prose that economists, whether left wing or right wing, have little conception in certain important areas of what is really involved in rehabilitating troubled companies, or what are the uses and limitations of financial accounting. In this letter, I discuss eight areas of financial misunderstanding —By Martin Whitman, chairman of Third Avenue Management and co-portfolio manager of Third Avenue Value Fund Ticker:(TAVFX)
To read Mr. Whitman's full commentary, click here
Photo by Arnie Adler