boilermaker75
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Posts posted by boilermaker75
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From my one minute of due diligence I do not understand CBI, but STARZ looks interesting.
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I grew up watching Bobby Hull and Stan Mikita play, so I am a life-long Black Hawks fan. I waited in line once for about three hours to get Bobby and Dennis Hull's autographs.
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I apologize if this has been posted somewhere here before, which I think likely. But I found it interesting, and thought others would, to see what Buffett was like in 1962,
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When I visit my daughter in W. Hollywood, I like to grocery shop at Gelson's.
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Options may be a zero sum game....but how do you know that the expected value for the seller = 0?
The seller of the option is writing an insurance policy. A good job of underwriting and the put seller has a positive expected value.
Options are a zero sum game on the day of expiration, but I don’t view that as the end of the game. Being assigned, paying out on a policy, is not a loss as it is when paying out a claim on a wrecked car--as long as you are writing puts on positions that are selling dollars for much less than a dollar. As examples, I have had to pay claims by purchasing WFC under $20 and BRK/B under $70, positions I still have.
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EDIT: Writing options IMO is one of the best ideas. Just pinpoint a value you'd buy at, and sell a put so that after you net out the premium, you end up buying if the option is exercised, either way you win.
I would respectfully disagree.
Could you expand on exactly what you are disagreeing with and why?
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So you think that money is the root of all evil?" said Francisco
d'Aconia. .....
I loved that book, especially that passage.
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Boilermaker, I share your belief. The interesting question to me when thinking about it that way is whether it's more economic to sell the naked put, buy a call, or own the stock. Part of the challenge for me is that the more undervalued the stock, the more safety in selling the put, but also the more upside you miss out on if that put is never exercised and the stock quickly returns to fair value. In that case, the shares or long calls would be much more profitable. (e.g. most people were buying BAC calls or shares a year ago, and not selling calls).
Richard,
Yes the downside of selling naked puts to enter a position you want to hold is not getting assigned and missing the upside. Maybe I have just been lucky, but that really only happened to me once with MCD where I was trying to get it around 50. There are some that never got to my entry price and took off. But I walked away with some put premiums and would have had nothing waiting for my entry price.
Boiler
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What evidence do you have for that, twacowfca? That doesn't match my understanding, and can't really understand why that would be the case.
e.g. my penny argument proves that there is a price where selling options is unprofitable, and everyone agrees that there is a price where selling options is profitable, and I don't think it's hard to show that there exists a price at which it is neither profitable nor unprofitable to sell options. Why would one expect option prices to diverge from that price?
I've read a few books on options and played around with them for 20 years, but haven't really done them seriously. So if you have some actual evidence for that, it would be interesting to me.
No matter what the price of the option, it is not unprofitable if the position you are assigned is trading below intrinsic value. Then it is no different than buying the stock. I write many option contracts each month. For April I wrote 164 contracts that I held to expiration. Often all the contracts I write for a given month expire. April I was assigned a relatively high percentage, 48 total contracts. These were 16 BBT at 30, 10 NOV at 67.50, 19 BAC at 12, 1 AAPL at 410, and 2 AAPL at 425. I have written covered calls on some of these, the equivalent of writing a naked put. But I have a high-confidence level that holding all these positions would be profitable. So even if I made only a penny a contract, I would still be profitable because I used a value investing mindset to determine the stocks I wrote put options. Of course I do pay attention to the amount I am getting for the put option; my cost basis for the stock is lower by the amount of the premium.
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Same ideas I'm talking about, articulated better coming from a Harvard Law professor.
My daughter was flying to NYC for business two days after the Boston marathon bombing. When I got home the evening of the bombing, my wife was worried that my daughter shouldn't go. I told her not to worry that this is the safest time for our daughter to go to NYC because of the heightened awareness.
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Baron Rothschild when asked how he makes so much money:
"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.
I always buy before the bottom and need to watch it drop like a rock, then I always sell too soon and need to watch the price of what I no longer own skyrocket. If that was really the secret, I should be a billionaire by now.
I think that is what Rothschild was alluding to, that there is more to it because you can rarely, if ever, buy at the bottom, nor sell at the top. The first step is accepting that.
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In the last few days, I made one of the greatest trades of my life...perhaps one of the greatest trades on this board ever. Five days ago, I bought Overstock May '13 $12.50 calls. The stock was getting killed because of the markets, I thought they should make at least as much money as they did last year. They killed the earnings instead! I sold my options for five times the money in four days after buying them. Today, the god-damn thing is up nearly another $3.50, and those options are now worth 15 times what I paid...I'm crying right now...really it hurts like a bitch! :-X I had bet reasonably big too...1.5% of the fund in the options! Whhhhhaaaaaaaaaaaaaa! Cheers!
Baron Rothschild when asked how he makes so much money:
"I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.
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Just look at the US Federal income tax, the top rate of a whopping 7% didn't kick in until your income was over $500K per year which is almost $12M in 2012 dollars.
"people supported the income tax because it was originally meant to impose only very low tax rates on only the highest incomes. Proponents argued that the 16th amendment to the U.S. Constitution would force the so-called "robber barons" to pay taxes. It was not supposed to provide a mechanism for Washington to reach into most Americans' pockets...high-octane fuel for the growth of government spending. Between 1913 and 1994, inflation-adjusted federal government expenditures increased by 13,592 percent! Over this same period, personal and corporate income taxes grew from 7 percent of total federal revenues and 0.1 percent of the economy, to more than 54 percent of total federal revenues and over 10 percent of U.S. GDP."
Original Intent and the Income Tax
Speaking of income tax, Wesley Snipes was just released from prison,
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So I think the solution is to get a bunch of wealthy Californian investors together to run an insurance company. Similar to how HWIC banded together and bought their first insurer in 1984.
The corporate 35% tax rate might look high, but for short term capital gains that's better than paying the higher than 35% tax rate on short term gains at the personal level. It goes well over 40% after adding in California state taxes.
Even the long term tax rate is lower at the corporate level. The Californian pays 20% to the US, then pays 13% to the California state treasury, then pays ObamaCare take, that medicare tax, and maybe I forgot something else.
In California, both short and long term capital gains tax rates wind up being higher than 35%.
And of course the insurer only pays 14.5% tax rate on dividends -- that one is just a no brainer.
Later, we buy up entire companies where the tax rate on dividends is 0%. Buffett talks about how they are really just passive investments -- he buys them with management intact and keeps himself out of their business. But technically, under the tax law, they are not considered to be "passive" and thus he doesn't need to keep them within insurance companies.
If you do decide to spend anything in CA, you then have the 9% sales tax.
Edit: When I was a kid in IN, there was no sales tax. I remember when it started, at 2%. It is now 7%.
They'll probably add a federal sales tax. Start off at something they can push through, 1%, and within a couple of decades it'll be in double digits.
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I'm on my 3rd and I'm confident that I'll finish this one since it has my attention and I find it really interesting (Dan Ariely's A Beginner's Guide to Irrational Behavior). It has real life, relatable examples and he's engaging.
I've given up twice on Model Thinking since it just doesn't live up to what I had thought it was. I just see a bunch of useless data that neatly fits into a model that they create around it. The problem is more my own since I relate models to Munger rather than University math course.
Augustabound, I assume you have a traditional college education? Just curious because these MOOC's are being touted as the salvation of America's crappy education system, and from everything I've read our undereducated don't have the motivation or discipline to complete these courses without some kind of institutional support. Shows great personal dedication to want to improve ones' self.
I teach in a top-ten engineering school at a land-grant university. Although we have a wide spectrum in the population of our undergraduate engineering students, they were all near the top of their high-school classes. So you would expect this population to consist of motivated and disciplined individuals compared to the average college student. For about half of them, they still need a forced discipline and motivation. I have a policy where class attendance results in extra credit opportunities. This results in a class attendance of about 90%. If I did not do this, the attendance would be around 50% by the middle of the semester. I doubt those not showing up for class would have the discipline to watch these MOOC's.
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Why is it unreasonable to tax retirement accounts over $3MM?
Don't tax me, don't tax you. Tax that fellow behind the tree!
Why limit it to retirement accounts? How about net worth over $3 milliion? Look at how much Buffett is cheating the federal government by not being taxed on all those long-term capital gains he has in his BRK stock.
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Next step will be to confiscate all retirement accounts and dole out to us what we need each month.
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We're only willing to buy if the price falls to less than $10.
LOL, good one! Always looking for those 50 cent dollars.
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Someone is selling T-shirts for the annual meeting at Ebay
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I got some good suggestions in this thread: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/analyzing-regional-banks/
I also liked this book: http://www.amazon.com/Analyzing-Investing-Community-Stocks-2005905835/dp/B0045LDM6E/ref=sr_1_1?ie=UTF8&qid=1364655521&sr=8-1&keywords=Investing+in+community+banks
The book is not available at AMZN, but googling it I found a pdf available,
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Posted by: boilermaker75
There is some issue with viewing YouTube videos with Safari on an iPad. It doesn't work for me either. But it does work on my iPad with another browser I have just for this reason, Puffin.Boilermaker,
What browser on the iPad do you use for viewing these?
Thanks,
Kiltacular
Kiltacular,
The name of the browser is "Puffin." It doesn't always work, but works with most web sites. It works with these youtube videos while Safari does not. You can try Puffin for free for a few days so that you can view these videos.
Boiler
Edit: Here is a link to the web site for this mobile browser,
http://www.puffinbrowser.com/index.php
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Both videos are not working for me on the iphone and ipad... is anyone else having this issue?
There is some issue with viewing YouTube videos with Safari on an iPad. It doesn't work for me either. But it does work on my iPad with another browser I have just for this reason, Puffin.
S&P Downgrades Berkshire
in Berkshire Hathaway
Posted
It is idiots like this that often gives us better opportunities. But doesn't look so in this case.