OID: At your annual meeting, you said that in 1987, stocks were basically expensive around the world -- whereas today, the overvaluation seems to be primarily in the U.S.
   Peter Cundill: That's right. We're finding opportunity elsewhere -- not that stocks are uniformly cheap anywhere. But there are always some cheap things -- even in really expensive markets -- as there are in the U.S. today. So you can't just buy a market.
   But we can't find very much in the way of bargains in the U.S., whereas there seems to be substantially more opportunity outside the U.S. So you do have to work at it, but they're there.

OID: You also mentioned at your annual meeting that cheapness isn't necessarily protection in the event of a crack in the U.S. market.
   Cundill: That's true. If the economic environment deteriorates like it did in 1990 -- when it seemed to fall apart right before our eyes -- all the asset value in the world won't help you.

OID: In the short run, at least. And couldn't you even go one step further and paraphrase the old saying about the U.S. economy -- that "when the U.S. sneezes, the rest of the world gets the flu"?
   Cundill: That's true. In fact, markets worldwide tend to follow the U.S. market to a remarkable degree. The only time I've seen them not do so was in the pre-bubble days when the Japanese market danced to its own tune. And to a slight extent, it's doing that now. However, I suspect U.S. capital markets are so powerful that we'll continue to see that in almost every market -- including Japan.

OID: And your put options and the futures that you're using to establish your short positions are...
   Cundill: In the U.S. and nowhere else. If the U.S. market were to falter, I don't think we'd have a free ride. Our securities would probably go down, too. Hopefully, however, our puts would protect us a bit.

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