James Grant

"One of the most thoughtful was James Grant, editor of Grant’s Interest Rate Observer, who had carved out his anti-junk position back in September 1984. Grant explained that he had reached this point of view, first, because the world even at that time was long on debt and short on equity, and he followed the old investment adage that one should own the thing in short supply and shun the thing in surplus. What an illiquid world needs is cash, he reasoned, and so the debt security to own (if one chooses to own debt at all) is the one with the highest ratio of cash flow to interest expense—not, in other words, the junk securities of companies which typically have little financial leeway. Second, Grant reasoned that the holdings of junk bonds were so concentrated in a handful of institutions (Milken’s inner circle)—which issued bonds and bought each other’s paper—as to invalidate the argument of safety through diversification in one’s portfolio. And, third, he declared that the junk idea had been carried too far, and that a faddishness had grown around its progenitor and prose-lytizer, Milken. Thus, Grant declared in September 1984, “. . . our hunch is . . . that, in some basic way, junk has had its day.”"

"One of the most thoughtful was James Grant, editor of Grant’s Interest Rate Observer, who had carved out his anti-junk position back in September 1984. Grant explained that he had reached this point of view, first, because the world even at that time was long on debt and short on equity, and he followed the old investment adage that one should own the thing in short supply and shun the thing in surplus. What an illiquid world needs is cash, he reasoned, and so the debt security to own (if one chooses to own debt at all) is the one with the highest ratio of cash flow to interest expense—not, in other words, the junk securities of companies which typically have little financial leeway. Second, Grant reasoned that the holdings of junk bonds were so concentrated in a handful of institutions (Milken’s inner circle)—which issued bonds and bought each other’s paper—as to invalidate the argument of safety through diversification in one’s portfolio. And, third, he declared that the junk idea had been carried too far, and that a faddishness had grown around its progenitor and prose-lytizer, Milken. Thus, Grant declared in September 1984, “. . . our hunch is . . . that, in some basic way, junk has had its day.”"

"concerning capital: “It arises solely out of saving. It stands always for self-denial and abstinence.”"

"Work will cure everything, and I would be very unhappy and I know you would be if you did not have some object or ambition which involved study and continuous work.”)"

"As a stock trader, he was accustomed to seeing the economy whole, of seeking the facts and of wondering (after taking action) whether the facts had changed."

"Whether a given increase in the money supply is inflationary depends on the rigor of business, just as whether a given number of calories is fattening depends on the metabolism of the diner."

"“I have always thought that if, in the lamentable era of ‘New Economics,’ culminating in 1929, even in the very presence of dizzily spiraling prices, we had all continuously repeated ‘two and two still make four,’ much of the evil might have been averted,” he wrote. “Similarly, even in the general moment of gloom in which this foreword is written, when many begin to wonder if declines will never halt, the appropriate abracadabra may be: ‘They always did.’"