LC

Even longer term. It is publicly known that Rentech uses value/fundamental strategies. Simple 15 minute example: 1) Obtain credit ratings for all companies - proxy for "moat" 2) Determine trailing 1, 3, 5 year earnings/cash flows, growth rates 3) Make some exclusion/treatment rules to throw out highly volatile companies or correct for idiosyncratic events 4) Use 1)2) to build a fundamental model +/- 15% of normalized PEs and trade around that. You then combine this with other models in the firm which are estimating heatmaps of the market - i.e. expected cash inflows or outflows or some other metrics. So your +15% band expands during periods of expected inflows and your -15% band contracts during outflows. Now you've built a model to automate the fundamental investor.

Seriously. These guys are better than Buffett:

At about 5-10% but just temporary, I usually try to be fully invested. The point here is market timing : you think the market is going to drop (i.e. a recession is coming) and you want to move to cash. I would say, unless you have positions which you think are over-valued and want to trim, it may be more prudent to buy general market protection (SP puts).

About 10% right now. Am thinking of raising up to about 20-25%. Looks like a slowdown is coming.

It's also a plague to Amazon and Ebay. Those companies, Amazon in particular, are much better-suited to reimbursing for scams. However fraud is the definition of the cost-center. It is perennially under-allocated resources and it is most overlooked. Fraud models are somewhat helpful but it is much easier for individual scammers to one-up fraud models than it is for global companies to re-calibrate or re-develop these models and roll them out across their entire enterprise. (Reminds me of the "doping" scandal in sports in that way). It is interesting because in the case of fraud, many times the only thing maintaining an active fraud department at a global institution is regulators. I'll speak for the finance industry as that is what I know. Consumer fraud is taken as a BIG DEAL at banks not because of the cost of the transaction - that is usually a minor amount to reimburse. The problem is that when regulators see you have a series of fraud incidents, they will come down on you like an old testament plague. This incentives the banks to really get their act together. Most banks will have 5-10 fraud scores running concurrently, many are product-specific. And provide extensive training to customer-facing employees. Of course this encourages economies of scale because it is difficult to spread these costs over a small customer base. But, over millions the incremental cost per customer is almost non-existent, but it provides a great value. This is one case where regulation + industry concentration actually provides a positive cost-benefit to the customer.

Anyone interested audio gear, particularly vintage gear, should check out the audiokarma forums.

All banks forecast PD LGD EAD for their auto portfolio. PD and EAD are usually quite accurate but the problem is LGD (Severity). As you say banks must dispose of a quickly depreciating asset. These severity models are the least accurate particularly because many times there is lack of transparency into deal-level data. They are quite aware of this problem as is the FRB, usually accompanied by higher capital levels.

rk, thank you very much! Also, I see the "tell me a joke" thread is increasing it's presence :D :D

While we are somewhat on the topic of forum improvements, there is one item that has been bugging me for a while. When posting images using the (img)(/img) tags, many times the resulting image size is simply too large to be displayed reasonable in a browser window. So instead of actually inserting the image I would just paste the link, which opens up another browser tab. It's not a big deal, but is it possible to incorporate some scaling factor to reduce the size by X% and therefore make it comfortably visible? I'm not sure if it's even feasible but I just thought I'd mention it.

https://www.vice.com/en_us/article/43k7z3/nationwide-fake-host-scam-on-airbnb Pretty good article on a typical AirBNB scam.

Should be interesting, thanks for the update Sanj

Wework is doubly dependent on cheap capital. It needs cheap capital to acquire and maintain its leases. And the startup companies who are Wework's customers require the same cheap capital for funding. If that situation changes I would expect a lot of pain.

The criticism of Buffett has always been: ignore what he says and pay attention to what he does. Assuming he is still mentally sharp and interested in allocating capital @ Berkshire, his lack of purchasing signals that he we are in a high tide.

The description of "fraudulent" is unsubstantiated as I correctly explain here: http://www.cornerofberkshireandfairfax.ca/forum/politics/climate-change-flawed-statistics/msg384557/#msg384557 Yes but if certain forms of energy extraction are (1) more environmentally neutral and (2) comparable in cost, it makes sense to transition towards those.

Shout out to abe, some of the best private conversations i've had. the guy has such a broad and weird perspective.

Good luck bidders! Probably one of the best places to put your charity dollars. Plus, take a look at Mohnish...with that belly, you know this man knows good food! I'd wager that lunch is going to be DELICIOUS! ;D ;D

One other explanation (or contributing factor) is that the low-hanging fruit has all been plucked.

I see your Zappa and raise you Team America: World Police https://en.wikiquote.org/wiki/Team_America:_World_Police#Dicks,_Pussies,_Assholes_Speech Obviously some crude language but it gets the point across. Maybe? ;D

Poor and middle class assholes are easier to dismiss. Rich assholes live rent free in your head because jealousy is also involved. This is why people remember the Benz that cuts them off when merging lanes, but not the 1989 Toyota Corolla. Assholes are probably evenly distributed amongst the wealth groups, as are (I would wager) most personality characteristics.

The master strikes again :D I've been reading your posts doing this for years now - can you comment on average returns (or at least a sense of them, if you don't track explicitly?)

Great article. In my opinion he makes very compelling points: he gets demographics right, he gets power-dynamics right. I think he gets information sharing right as well but his arguments were a little kitschy there. Thanks for posting this one.

California has implemented data privacy laws, Spek: https://en.wikipedia.org/wiki/California_Consumer_Privacy_Act Most companies are wrapping up their adoption.

For institutional trader yes. For PAs you can wait until expiration and take delivery or close out with limited vega and theta exposure.

There is little economic difference between selling puts and going long. Compare the payoff curves. The key is you need to be correct on underlying direction. Whether you are long the underlying or short the put, you need to be right on the stock. This is where I want to put my analytic efforts and take my brain damage. Shorting puts present more brain damage in the form of portfolio management. Now you are sorting through another calculation. Which puts to sell? 3 month, 6 month, 1 week? What prices are fair? I'll let you guys with more energy and brain power to get paid from taking that brain damage :D

It's a pretty good idea - I am not denying that. The other component is the "brain damage" associated with this. I do not invest for a living, so I have to ask myself, what do I want to spend my energy on: 1- trying to be correct in the long term, or; 2- trying to be correct in the long term AND trying to trade around relative valuation AND trying to value put premiums on a risk adjusted basis AND trying to manage exposure per trade and per portfolio? For those with the time and energy, it is a great idea. Just take a look at boilermaker's posts about doing this with BRK over the years, he is an inspiration in this sense!