Jean Marie Eveillard Quotes
102 Jean Marie Eveillard Quotes
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[In December 2007.] Over the past almost 30 years, we [First Eagle] have sort of floated between Ben Graham and Buffett. We began with the Graham approach which is somewhat static and less potentially rewarding than the Buffett approach, but less time consuming. So as we staffed up, we moved more to the Buffett approach, although not without trepidation because the Buffett approach – yes, you can get the numbers right, but there is also a major qualitative side to the Buffett approach.
Jean Marie Eveillard
[In December 2007.] I, surely do not have the extraordinary skills of Buffett, so one has to be very careful when one moves to the Buffett approach.
Jean Marie Eveillard
[In December 2007.] The late
Bill Ruane tried to figure out six or seven years ago, and it is probably true today – there was really no more than 5% of professionally managed money in the U.S. that was invested on a value basis, broadly speaking. And there was much less than that outside the U.S.
Jean Marie Eveillard
[In December 2007.] There are not a great number of value shops, although I must confess that there are quite a few value shops on the hedge fund side. Usually they are long only. They have the ability to borrow, the ability to short, but there are very few value investors that get involved in shorting because if you are a value investor, you are a long term investor. If you are a long term investor, you don’t have to worry about market psychology.
Jean Marie Eveillard
[In December 2007.] As Ben Grahm said: ‘Short term – the stock market is a voting machine; long term – it is a weighing machine.’ But it is very hard to get involved in shorting without taking market psychology into account.
Jean Marie Eveillard
[In December 2007.] Sell-side research is directed towards the 95% or so of professional investors who are not value investors, so their time horizon is usually more along the lines of six to twelve months as opposed to five or more years for us.
Jean Marie Eveillard
[In December 2007.] Every chief financial officer in this country, and even some outside the U.S., seems to be trying to show the highest possible reported earnings without going to jail. In order to do so, they have to make sure that they observe the letter of the regulation, but they don’t hesitate to betray the spirit of the regulations.
Jean Marie Eveillard
[In December 2007.] In the early 1970’s, Buffett figured out that the major characteristics of the newspaper business had to do with the fact that many newspapers had a quasi-monopoly. Buffett determined that what was important was not the fact that already in the 1970’s circulation was not growing much, if at all, but that the local department store automatically advertised in the local newspaper. On top of that, it was not a capital intensive business. It was a service business with higher margins, not that they could charge any price, but they were the advertising instrument of choice for local businesses. Wall Street was entirely focused on the fact that they were not growth companies, presumably because circulation was not going up.
Jean Marie Eveillard
[In December 2007.] Buffett says that value investors are not hostile to growth. Buffett says that value and growth are joined at the hip – value investors just want profitable growth and they don’t want to pay outrageous prices for future growth because, as Graham said, the future is uncertain.
Jean Marie Eveillard
[In December 2007.] A business can have value even if it is not growing. In that sense, value investors tend to think like private equity investors – we are looking for stable and profitable businesses – sometimes in what appears to be mundane areas.
Jean Marie Eveillard
[In December 2007.] Many years ago, when our younger daughter was six or seven years old, somebody at school must have asked her, ‘What does your father do?’ She was embarrassed because she didn’t know. And so that evening, when I came home, she asked ‘What do you do at the office?’ I thought rather than trying to explain what money management is to a six year old, I said, ‘I spend half of my time reading and half of my time talking with my colleagues.’ My daughter said: ‘Reading? Talking? That’s not work!’ But in fact, that is what I do! I spend a considerable amount of time talking with the analysts, looking with them at the various angles, tyring to make sure that they have properly estimate the strengths and the weaknesses of the business – then they go back and investigate further.
Jean Marie Eveillard
[In December 2007.] For value investors, the edge is seldom in unusual information which the rest of the market doesn’t have. There is a fine line between unusual information being obtained by regular means or by ‘not so regular’ means. It is more in the interpretation of the information. It is more figuring out the major characteristics of a business.
Jean Marie Eveillard
[In December 2007.] Buffett didn’t know more than Wall Street knew about the newspaper business. He just decided that looking at the advertising power of the newspaper was more important than the flat circulation numbers.
Jean Marie Eveillard
[In December 2007.] If you are a value investor – you are a long-term investor. Warren Buffett did not become very rich trading securities.
Jean Marie Eveillard
[In December 2007.] In less than 3 years, between the fall of 1997 and the spring of 2000, our Global Fund, which I had run since early 1979 and had a long term record, lost seven out of ten shareholders. One has to live with that because a mutual fund is open to subscriptions and redemptions every day. You don’t get to choose your investors. You take whoever is sending the check. You try in your sales effort to explain very clearly what you are trying to do, so that you don’t get the wrong type of investors. But there are many investors who will either not understand what we’re trying to do or will understand what we’re trying to do, but if we lag for a year or two, they will forget about it.
Jean Marie Eveillard
[In December 2007.] Why are there so few value investors if it makes sense, if the approach makes sense and it works? I think the answer is truly psychological…
Jean Marie Eveillard
[In December 2007.] Sometimes, there are non-value investors who tell me, well, I would love to do what you do, but if I did it and start lagging, either my boss or my shareholders will fire me. Of course, the answer is you have the wrong boss or wrong shareholders or both!
Jean Marie Eveillard
[In December 2007.] If you do what you think is right for the shareholders, even if they don’t seem to agree themselves, in the end, it benefits your business from a long-term point of view…
Jean Marie Eveillard
[In December 2007.]
Peter Lynch was running the Fidelity Magellan fund. Lynch had a superior long-term track record, but he discovered to his dismay that the great majority of shareholders of the Magellan Fund during his management had done much worse than Peter Lynch’s record because they usually bought into the fund after Peter Lynch had really hit the ball and then they would leave if for six or nine months if he was doing less well or if the market went down during that period.
Jean Marie Eveillard
[In December 2007.] If you look at the U.S. equity market, we are in the midst of what appears to be a major and worldwide credit crisis. In August, the crisis was identified as a sub-prime housing American problem. Today, four months later, it appears to be a worldwide credit crisis, and yet the American stock market is 5% off its high at the end of the fifth year of a Bull market. Except for the Tokyo stock market, which I think is about 20% off its high, markets in the U.S. and Europe and most emerging markets are very close to their high.
Jean Marie Eveillard
[In December 2007.] We don’t find a tremendous amount of investment opportunities right now.
Jean Marie Eveillard
[In December 2007.] You know value investors are bottom-up investors, but I do pay some attention to the top-down.
Jean Marie Eveillard
[In December 2007.] I think it is Peter Bernstein who said sometimes what matters is not how low the odds are that something truly negative happens – and the odds are pretty low that the system blows up – sometimes what matters is what the consequences would be if it happened. For example, if I tell you if you do this, the odds are one-in-ten that you will lose $50, no big deal. If I tell you the odds are one-in-one hundred even better odds in the sense that the risk of losing is minute, that you die, then the consequences are so drastic that even the odds as low as one-in-one hundred are just not good enough.
Jean Marie Eveillard
[In December 2007.] I think there is a mindset among many professional investors that if I go down the drain, well it is o.k. as long as everyone else is going down the drain with me.
Jean Marie Eveillard
[In December 2007.] Risk to us goes back to not paying attention to how one does in the short term… Risk to us is absolutely not volatility.
Jean Marie Eveillard
[In December 2007.] You have people who tend to believe too easily that life is a valley of tears and that one can only be happy in the eternal. The truth is in between, one has to accept the fact that one is not happy every day. One is not entitled to be happy every day and I think that as an investor it is the same idea that we don’t need to win every day. We just need to win over time.
Jean Marie Eveillard
[On Index Funds in 2008.] If you are going to engage in index hugging, be prepared for the fact that the odds are that you will do slightly less than the index and thereby give your clients a reason to no longer need you.
Jean Marie Eveillard
[In January 2008 on the smartest advice I learnt from Benjamin Graham.] It was 1968, and I was in Central Park with two French students who told me about Benjamin Graham's book The Intelligent Investor, which turned out to be about common sense. It has three lessons. The first is humility, that the future is uncertain. There are people on Wall Street who will predict the Dow will be at a certain level, but that is nonsense. The second thing is that because the future is uncertain, there's a need for caution. The third thing was especially important. Graham values the idea that securities can be more than just paper. You should try to figure out the intrinsic value of a business. In the short term, the market is a voting machine where people vote with their dollars, but in the long term, it's a weighing machine that measures the realities of business.
Jean Marie Eveillard
[In September 2008.] We don’t like the idea of buying blind and if we don’t have confidence in the numbers as they are recorded then we will give it a pass.
Jean Marie Eveillard
[In September 2008 on what originally attracted him to Benjamin Graham.] It was a common-sense approach. The idea of order as opposed to chaos, the idea of long-term investing, the idea of intrinsic value made a lot of sense.
Jean Marie Eveillard
[In September 2008.] The availability of net cash stocks is a good indicator of how cheap the stock market is. If we don’t find any Graham types stocks or Buffett type stocks then we let the cash build up.
Jean Marie Eveillard
[In September 2008.] Value investors are bottom-up investors. But when we establish intrinsic values and update them, we do not assume eternal prosperity but accept that there is a business cycle.
Jean Marie Eveillard
[In September 2008.] A lot of investors will not touch a company that is not growing. But the truth is that even if the company is not growing it may be worth a lot. It may have a lot of cash, it may be in an industry which is not growing but may have very few new entrants which, can at times, can be an advantage.
Jean Marie Eveillard
[In September 2008.] Buffett made a lot of his money with simply often mundane businesses. Value investors, with exceptions, shy away from technology and capital-intensive businesses because there the returns in terms, of capital, is low.
Jean Marie Eveillard
[In September 2008.] Leverage works both ways and it reduces your staying power.
Jean Marie Eveillard
[In September 2008.] The value of assets is contingent, but debt is forever.
Jean Marie Eveillard
[In 2012] When I first became an analyst in the 1960s, security analysis was a new concept in France and in continental Europe as a whole. Before that, it had been a matter of insider trading, stock tips, and rumors. By security analysis, I don’t mean the Benjamin Graham approach. Instead, it was based more on the latest investment trend in the U.S., which was growth investing. The concept was to look for hot and momentum stocks rather than valuing their true business worth.
Jean Marie Eveillard
[In 2012] After six years at Societe Generale, I became bored, and I thought of doing something else because I found growth investing unsuited to my style.
Jean Marie Eveillard
[In 2012] After moving to New York, I met some French students from Columbia University. One day while cycling with them in Central Park, I shared my frustration with growth analysis, and they told me to read the books published by former Columbia professor Benjamin Graham. I bought a copy of ‘Security Analysis’, and after finishing it, I read ‘the Intelligent Investor’. Right away, I said, ‘Voila! This is the investment concept I’ve been looking for!
Jean Marie Eveillard
[In 2012] I think Warren Buffett once said that value investing is a concept that you either understand right away, or you don’t! Either you are a value investor, or you aren’t! It is unlikely that a person would gradually be converted into one.
Jean Marie Eveillard
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