Sunrider

Pinging Sanjeev ....?

Supported. Sanjeev - is that an easy adjustment?

Uh - what's not clear to me is why we (and anyone really) is debating whether the earth is warming? That is just basic physics: 1. You have a system which receives heat at a fairly constant rate (= our planet, from the sun, and no controversy about that input rate being constant enough). 2. That heat has to go somewhere by the laws of thermodynamics, which I think are not open to politics. It can either go into heating 'stuff', or it can be re-radiated off the object into cold, dark space (most of that by being reflected before it heats things). That's pretty much it. Since we don't (as yet) have any influence over how much energy arrives on earth, we only need to concern ourselves with how much is radiated back out vs. retained. Again, here it seems clear (=proven?), or at least not open to debate that nothing which we have come up with and/or put into the atmosphere actually increases the rate at which energy is reflected back into space. (Yes, airplane contrails and clouds formed around ship exhaust plumes reflect light, but all models on this show that this is a minor effect compared to the increased heat retention potential of 'greenhouse' gases.) CO2 (and other di- or tri- atomic molecules) are really great at absorbing heat - no scientific debate about this. Ergo, if you put more CO2 into the atmosphere, there is more opportunity for it to heat up and retain the heat (vs. radiating it back out), thus the system overall gains in heat. It's really just 'input to retention vs. loss' math. We are messing with the loss bit by giving radiation (light spectrum) more things to hit and heat up along its path. You can simulate this at any high school with a lamp, a glass box, a thermometer and some suitable gas. ----- All that said - the question on whether it's good or bad seems to be hard for people to wrap their head around because there is so much variability. Much of the heat the planet has gained through increased CO2 levels appears to have been stored away in the oceans, and some people just think 'we'll if we can grow crops in northern Manitoba for another 2 months of the year, what's so bad about that?'. That's a localised view and ignores the complexity of the system as a whole. Tweak one bit and things can change in very unexpected places. If the planet heats, we know that, on average, ice will melt and oceans expand (because pretty much all materials expand as they warm);so oceans rise; if oceans rise, expensive Miami condos have an issue, and hurricanes gain in force because of higher average temperatures, so that means more damage; if ice melts, the salinity balance of the oceans changes, which messes with the flow of water from the arctic to the equator and back up again - that heat re-distribution drives much of the northern hemisphere climate, if it stops, much of the northern hemisphere may well turn colder, not warmer, as most people expect. Etc. Are you happy to just prod it a bit and see what happens?

Check out the GSE thread on the prefs under general.

I think the ACG video could be a pump and dump scheme to support some big players to continue to unload. I do agree with everything she said though, but I've been consistent wrong on my FA......... . The "big players" have been in it since the beginning and show no signs of getting out without a resolution. I don't care who exactly it is. I trust my chart reading skills and it tells me big players are unloading. And for those waiting for the September treasury plan, I have to ask you this: Do you think there is still some opportunity for information arbitrary? Isn't it already well known that Treasury will have a plan released in early September, and it is supposed to be good? There is nothing in the charts to suggest "big players" are unloading. The volume the last couple of months outside of a couple of days would not let a big player out without crashing the price even in the most liquid FNMAS. That statement is twaddle. Again this is not a FA or chart "trade". The keys are Treasury plan, FHFA capital standards, 4th Amendment/NWS then recap. Each along the way may bump % of par value but final value will likely be realized in the days following the recap plan release. Didnt we already go over this?....and what big player would be unloading right before the fireworks go off? That's ridiculous IMO. For better or worse if you have made the decision to invest in this why would you get out right before the most anticipated 3-6 months in this whole saga? I look at 200 charts a day, so that’s how I get a feel of how things may play out. I agree with what you said “what bigger players would be selling right before a immediate huge catalyst”? That’s true, but the charts show they are selling. So could it be possible that they are smarter than us and they now expect something not as bullish as you and me are expecting? Big players don’t use a market order to get out with one click of a mouse. If you don’t understand how big players get in and out of a position, you may call TD AM’s institutional desk and ask them how to trade large quantities. I didn’t know anything like this until I called them for fun one day and then started to understand why sometimes charts show certain patterns. That's interesting - can you elaborate? What do they do and how does that turn up in a chart? I would've thought that if the volume isn't there, then there's not much they can, unless it's off market transactions (but then they would not be in your charts? And why would someone take the other side in size off market if the big players know something?) Thank you!

... haven't said anything here for a while... for my part, I appreciated your contributions, whether I believe TA or not, whether I can use your insights or not, I'd rather have them - it works for you so there must be some value in it, whether I can derive it or, I'd rather have it here. So please keep on with it. I agree. Well said. I guess this is why I should stop talking about TA. Still..... Just for fundamental investors, I still think it is important to be open minded, and constantly look for ways to improve the process, and be disciplined. When I was a fundamental investor from 2009 to 2018, I was doing lazy and lousy work, eager to put my cash to work, and once I buy a stock, I would rationalize it as hard as I could to hold on to the position, because, hey, selling at a loss means "lack of conviction", which is not supposed to happen for great investors. Eventually, I took big losses on certain names. I already realized the problem with TA so I stopped talking about it, but I wanted to share with you my own pain and hope it helps with some of you. I don't see how my comment on "If you don't learn, you get slapped by Mr. market" upset people. I got slapped several times by Mr. market by taking big losses on some names in those 9 years, and vowed to not to let it happen again. Maybe it was because Midas kept thinking I was referring to him when I was not. Getting back to the GSEs..... I think the probability is high that the treasury plan is a disappointment, which propped Calabria to file in Collins for FHFA constitutionality position to buy himself time. Collins ruling itself is not something I could speak of though.

Good point. I too am ignorant on the specifics. I didn't mean to impugn Metro Bank management, but to respond to Cubsfan's comments and assessments as I understood them. Falling victim to a charlatan is the worst case scenario that we all are trying to avoid, but there are many lessor risks in evaluating manager skill and honesty. Well you can and should impugn them - getting risk weightings on mortgages wrong is kinda difficult unless you’re either (i) incompetent or (ii) trying to do it deliberately. Calculating RWA is one of the most basic things in banking ...

Chris - I agree with your views & that understanding politics is informative in relation to predicting how this may play out. I'm simply tired of seeing one or the other side of the political divide (for it is now really a divide) accuse the other of stonewalling, abdicating their duty, being evil, etc. When you consider yourself righteous and the other side evil, it's not hard to see why nothing productive gets done. Sadly, it doesn't matter which side it comes from, it's just the kettle calling the pot black. I'm not American and for me the US used to be the beacon of liberty, so it is very disappointing to see what a bunch of small-minded, squabbling, barely competent, ill-informed, and often ignorant people get to positions of power. The current president's lack of ethics are just the visible symptom of a deeper malaise affecting what used to be the leading country of the free world. (To be clear, I don't care much what side of the aisle he comes from, nor do I think does he, I judge him by what he says and does.) That's where I'm coming from --- and thus I felt compelled to call out this instance of somewhat hypocritical (whether intended or not) political hogwash (not your analysis, but the statement of 'Democrats are X' ... it's the same as 'Republicans are Y'). Cheers.

There is no longer any rational thinking by the Democrats today. The only thing they do is to angrily object anything. I dare say if Trump declares himself as self-identified woman, and therefore the first female president in the US, the democrats will not celebrate, but instead yelling angrily. (Even though they should celebrate, as that seems to be inline with their value.) Let's leave D/R politics out of here ... your statement would just as well apply to R during Obama - in fact they are on record saying "We will sabotage and object to anything this president wants to do." It's sad that this sort of 'politics' seems to be the norm now (and as per your statement the D are now doing the same as the R back then). Representatives are elected to do work - which typically means compromising to find workable, albeit imperfect, solutions.

Hands down Christian deserves the MVP award for Most Valuable Poster. His work on MBIA was incredible as well. I have a law degree and still learn a ton reading his posts. Thank you!! Once this saga ends, I hope you find another potential investment to keep the intelligent posts coming! Seconded.

Hmm ... wondering if it makes sense to swap some FNMAS into FNMAJ - similar coupon but at 20% discount.... I presume there's no reason to think the different pref series will be treated differently if there is a deal / conversion / etc.? Thanks!

Yes - but also ‘defendants do not believe ADR would be productive’ .... so I’m not sure what you make of this? Thanks!

Emily, I think some people tried to tell you this before on the board. Your last post is a perfect example of why you should not get back in, and probably should take a big step back from stock investing. Greed and Fear. It kills you. I’ve been there and it took me a long time before I could look at quietly accept that the stocks in my portfolio weren’t doing what they were supposed to be doing ... AND not react much one way or the other. Whether FNMA or FMCK, just ask yourself if your thesis has changed. If yes, act. If not, don’t. Hope that helps.

Backside cover for court cases that are ongoing

Awesome thank you. So lgd = 50% and loss to mortgage insurer 50% less equity, so call that 31% of principal assuming everyone is at just 19% equity. Now all we need is a good estimate of the default rate over the next years.

Hmm ... I’m wondering whether we’re getting close to the point where this becomes shortable? From my time in Canada, I recall that there is government and private mortgage insurance, and they should be the first loss tranche, after the borrower, of course. Does anyone know if the insureres are obligated to immediately pay off the entire loan amount to the lender in case of borrower default or are they able to pay obligations as they arise (as is the case with MBI and OCN for bonds)? In the latter case one would expect that the insureres will be hit less hard - they still have premia coming in and can pay obligations from those ... there would be dividend cuts, but it may not be catastrophic. If the banks can immediately recover their principal then that would be a bloodbath for the insurers given that insurance is taken out where people don’t have a 20% cushion, and a lot of people should be dead in the water with a 12% drop as that chart on the prior page indicates. Of course not all of those will be unable to pay their obligations, and I think those mortgages aren’t non-recourse ... but I thought I’d tap into the wisdom of this board to see what people think. Thank you.

The defence really infuriates me at times and the judges even more so. Normally goes something like this: "Whats left for shareholders?" "your honor, you have to remember the tax payers put up x billion dollars" And?? How does that impact whats left for shareholders? What do you mean? That’s standard practice in Donald times - his classic response to something he doesn’t like ... “yeah but what about Hilary/bad person x doing x?”(even if completely unrelated :)

What gives you comfort that they got a handle on operations so that they can continue repurchasing shares? I only had a cursory glance through the annual report but it seems like lots of issues with assets. It's cheap, but is management competent and honest?

I wonder about the use of options in this context. The calls will be adjusted to deliver the spin and $8.xx in cash. Is your thought that remainco will start trading up quite quickly? Do you intend to roll the options if nothing happens for a while? Thank you!

Well, for what it's worth, you'd have my vote if you get shareholders organised (not that I own many shares)!

Well, the housing market != the real estate market. The housing market is part of the RE market. And you can happily build and sell offices, hotels, casinos and even luxury condos without ever worrying about the GSEs. Not trying to start an argument here ... just saying. The Donald is so self-focussed and absorbed that it would not be surprising at all, not only that he's got no idea about this, but also that he doesn't actually care.

I think there is no question this is premeditated. Not sure I could give a good answer for it though. I'm not sure that's the simplest explanation (which should be the preferred one in the absence of more data) ... what about him simply never having thought about the GSEs. A poster up-board made a point about him having made his money in RE. Well, that's somewhat debatable (although I think Trump steaks wouldn't have contributed all too much), but more importantly the type of RE he's been dealing in has absolutely nothing to do with the GSEs, so there's absolutely no reason for him to have these on his radar. Most people (especially those that voted for him) do not know what the GSEs are, what they do, and why they are necessary, so why should he care/mention them/otherwise be bothered. Don't get me wrong, I'd like to believe that there's a good reason (for shareholders) for his silence ... but you need to develop rather convoluted theories for that when the alternative is much simpler. ... and this ain't X files. Cheers! I agree. Trump says/tweets so many things without thinking, he has to have a reason for de facto radio silence on the issue. While I struggle to think of plausible reform scenarios that wipe the companies out, I find it even harder to imagine one that involves this level of silence beforehand.

Yes, I agree! It’s very very unfair ... as your CinC would say (kinda like when the US lost against Trinidad and Tobago in cricket - had to play two countries at the same time ... very very unfair! Seriously - don’t bitch, ... go vote. Go write to your congressman and get everyone else you know to write as well. If there’s no public pressure, why would a politician do anything? It’s not in their nature. :) Emily, it's probably against the rules of this website to copy a previous post of yours, delete the original, and then re-post it so it shows up as the most recent post. That's happened at least 3 times with the post I've quoted above. Keep in mind that the fundamental concept of value investing is to find something that should be at $X but instead is trading at a discount. I understand your frustration, but security prices staying low for a lot longer (or forever) than one would hope or think is part of the process. I have a question (note I'm not emily's 2nd secret account) I just have a question. At what point does it become problematic that the entire gov't and 100% of the media is lying to the public about this subject and has been for an entire decade while the public is on the hook for it? I would think people here, while I'm sure are feeling beat down, wouldn't be so quick to berate others pointing out the inequities that have persisted for so long. We're supposedly a country where the rule of law is equally applied. Thusfar the justice system has done nothing to convince me of that in my LIFETIME. Not just this case but everywhere I look. When the going gets tough the judges seem to get paid under the table or coerced into rulings that benefit the gov't. So yes it isn't helpful to keep bringing up the same crimes over and over but it's worth remembering that at some point, if we continue down this path, our institutions are going to face votes of no confidence top to bottom. We must reverse course or else. I think it is important to remind everyone of the context here from time to time. This is supposed to be America.

Amen.

Set yourself up a little scenario model in excel with inflation rates and some default assumptions on the lease payments. Choose a discount rate, DCF, look at the distribution of values ... pretty straight forward.