I've learned there's a big difference between a long-focused value investor and a good short-seller. That difference is psychological and I think it falls into the realm of behavioral finance.
James ChanosWhat we define as a bubble is any kind of debt-fueled asset inflation where the cash flow generated by the asset itself - a rental property, office building, condo - does not cover the debt incurred to buy the asset. So you depend on a greater fool, if you will, to come in and buy at a higher price.
James ChanosI call it the Rule of Three. If you read a company's financial statements three times, and you still can't figure out how they make their money, that's usually for a reason.
James ChanosHealthcare is growing now at about 10 per cent per annum in the U.S. top line, versus 3 per cent for the economy. As someone with a sharp pencil and an eye for this kind of thing, this can't last.
James ChanosBubbles are best identified by credit excesses, not valuation excesses. And there's no bigger credit excess than in China.
James ChanosOur concerns about what we saw in Australia: an economy clearly tied to China has hitched its wagon to the tail of the tiger. In terms of the general complacency, what we heard over and over from investors and clients and potential clients is, 'yes, yes, there are some excesses, but the government will figure out a way.
James Chanos