Here's the intro to the podcast but be forewarned, Chanos has a legendarily dry sense of humor. Over the years I've found it best to assume that when I don't understand something he says that he is either making a joke or actually skipping ahead a couple spaces.
A recent example occurred in August.
Chanos was shorting SolarCity and when apprised of this fact, Lyndon Rive, CEO and cousin of Elon Musk said he'd never heard of Chanos.
On CNBC the next day Chanos was being interviewed and Musk's name came up.
Without missing a beat or cracking a smile Chanos asked "Elon who?"
A couple months later SCTY dropped 21% in one day.
From FT Alphaville:
Alphachatterbox is available on Acast, iTunes, and Stitcher.
Many people like it when stocks go up, and feel bad when prices go down.
Pension plans look healthier in bull markets. Dealmakers have more work to do when rich valuations encourage executives to go on buying sprees. Brokerage houses get more fees when amateur punters decide they need to own more shares. Corporate bosses get paid extra for hitting shareholder return targets. Politicians enjoy the boost to tax revenues and the (implied) vindication of their terms in office. Central bankers are glad to see traders betting on stable growth.
But markets aren’t supposed to make us feel good — they’re supposed to help us allocate finite resources towards their best uses. In a dynamic society, most companies should fail and be replaced by newer, better ones. Entire industries should get wiped out on a regular basis because they’re no longer necessary, even as new fields of endeavour, previously unimaginable, are born. Capitalism needs creators, but it also needs destroyers.
Alphachatterbox recently had the chance to talk to one of finance’s foremost destroyers, Jim Chanos, the founder and boss of Kynikos Associates. Chanos has been betting against companies for more than 30 years, with successes ranging from Enron to Eastman-Kodak.
We covered a lot of ground in our conversation, including, but not limited to:
- His firm’s research process
- The mechanics of short-selling
- How Kynikos manages risks
- The role of a short-seller in a diversified portfolio
- How Chanos and his partners invest their own money
- How he bet in anticipation of the global financial crisis
- How Kynikos decided to start betting against China’s economic model in 2009
- The importance of accounting standards and enforcement in making markets work
- The big opportunities Kynikos has missed over the years
Our first excerpt is part of Chanos’s description of how he and his colleagues realised the short-selling opportunities presented by China’s overinvestment:......MORE, including podcast.
Here's the transcript (27 page PDF)