Palantir

I'm currently looking at investing in small cap ETFs from emerging markets. I figure that these are an illiquid group comparatively, and maybe I can capture the "small size premium" by buying up baskets of them especially as I have an infinite time horizon.

To your point, theres about 1.4B in net cash there, so you're really paying 8.6B for that 3M in cash flow. That being said, their share dilution has been erratic, I'd prefer to see consistent buybacks over time....but maybe that will be the case going forward.

To the bulls on HDD, what are your FCF projections for the future? On the surface of this this sounds good, a "commoditized" industry, however, nobody would really want to enter this space, so the scale players could really become good investments. This all makes sense, but is there a specific "turning point" that you're looking for that will unlock valuation?

I totally disagree, but appreciate your opinion nonetheless.

Trading on volatility is a decent idea, I havent thought much about it because I'm just trading my little Roth IRA, so it's not really feasible for me. I just like the idea of selling puts because I already own the stock, and I'm happy to scoop up near riskless profits driven by the fact I have a decent idea of the underlying's intrinsic value. But broadly, what I think is - whenever you have a stock that is moderately undervalued, so not undervalued enough to buy, but just enough to follow, it would be a good idea to sell puts at a strike price such that your strike-option premium <= your target buy price. That way, if the option triggers, you can buy the stock at the price you want, and if it doesnt, then you still collect the premium. Doing this on regular 3 month basis could add up small, but steady profits. In this case, I think the way to go would be to find a price such that the Strike-premium <= 89, where 89 is the 1.2*BV number. And If IV keeps going up as Buffett has done, the option value degrades very strongly, which is exactly what you want.

No, he can do monetary "tightening" too. What evidence is there that the results have been "disastrous"? Please remind me what happened the last time the money supply contracted after a massive credit bubble burst? Are you aware the Federal Reserve started raising their rates starting with 2004 from their low and pretty much every quarter until the credit crisis broke out in 2007? Overall Fed rates stayed depressed for only a short period of time, and cannot account for the massive credit bubble. Why were there credit bubbles elsewhere? You've bought into this BS of "Fed caused the bubble because they kept rates low 02-07", a position that has little empirical evidence and yet you presume it to be fact. You realize many of the people who saw the credit bubble happening first thought about it in the 98-03 period? Mike Burry published his report on "Extension of Credit by Instrument" in 2003... So yes, I have heard of "monetary easing and low interest rates back then". You basically ignored every single point I made in the post above. Instead of questioning why I have heard of it, please try to learn why others have a very obvious reason for disagreeing with you.

Another economist fighting yesterdays war. Many of these practitioners have built their ideas and careers on fighting inflation, and as a result tend to be ideologically opposed to monetary easing measures. Man with a hammer.... Mr Balcerowicz does not acknowledge the obvious problems with his ideas - he doesn't recognize the fact that we're seeing the risk of monetary contraction with the end of a credit bubble, something that would be disastrous and impair the economy massively for many years. He assumes that businesses will immediately implement structural changes in a slowing economy, and doesnt acknowledge the fact that many of them would find it impossible to do so with credit tightening substantially. He assumes that ME is distortive, but apparently believes that monetary contraction wouldn't be? Finally, there's another implicit assumption in his line of logic that the credit bubble and recession was driven by business efficiencies, and that it is these businesses that need to restructure operations, and are being hindered by Fed policies. There is no theoretical or empirical basis for this idea. Nobody knows why credit bubbles happen...

I think it might be a decent idea to constantly sell puts at a strike price of 90 or thereabouts. Basically at the money or even a little higher.

^We could also see a dividend then.

Mr Parsad, I see your point, but guns are an important part of culture in some parts of the US, in places like rural areas...and given the huge number of people who hunt, it's unlikely to see them get banned.

I don't think you understand Taleb's argument then. It is obvious that "things change fast". But his point is, some institutions can rapidly embrace change, and understanding the drivers that underlie these institutions help us to think about what will happen in the future. WEB can throw his hands up in the air and be like, "I have no idea", but if you can think through the facts and make an educated guess, you should do that. That's a big part of investing.

Uh it was supposed to be tongue in cheek, not literally DPRK.....but as in an organization led by a charismatic leader with an associated personality cult and total centralized control in his hands. Not too different...

If it is is "business" then why did he not buy these shares on the open market? The next time he buys a subsidiary using BRK shares as currency, he can reassure the seller that his/her heirs will be able to unload them upon death. Classy way to treat the people -- just like agreeing to never trade away the company purchased. This cultivates better transactions in the future by showing the world that any business owners willing to sell their company to Berkshire will be treated well till death do us part. Fair enough, makes sense. I think I might add to my position if the stock goes between the 1.1-1.2 level. We don't know whether he'll purchase a lot of shares at the sub 1.2 level.....but I hope so.

Fair enough, I appreciate the response.

I strongly disagree, I think he's hinting towards his point of "built in instability" versus "stable" systems. Especially given the idea behind the talk - "Things that gain from disorder". Apple's corporate structure at least under Jobs, was sort of like North Korea, and makes me believe that is the one he was referring to. Although same could be said for AMZN under Bezos.

If it is is "business" then why did he not buy these shares on the open market?

You guys make sense when you treat BRK as a "strategic investor" in BNSF with its ability to use its float to leverage the railroad, treating it like a bond etc etc. That's fine, and makes sense, but that doesn't explain why others have gone into railroads, before and after Buffett, in addition, railroads have done really well since before WEB made his buy and have continued to be strong. Cascade Investments' purchase of CN Rail is an example of that. So, I think there is more to the story than simply its fit into Berk's collection of businesses.

1G would be great....as to why people need it? They may not "need" it now, but in the future, with HD video/TV transmitted over the internet, really high speeds will be necessary.

Yeah I don't think he should have released the price he's willing to buy at. It keeps a floor, but it can also become a ceiling, furthermore, it doesn't necessarily mean that a buy at 1.15*BV is a bad idea for Berk to pursue. I think he should have just kept quiet and rapidly bought back stock whenever the price moved too low. But that's just IMO.

It's not just a random guess. You have to understand the basic concept he's getting at - institutions that have disorder inherently built into them are far more stable and long lasting than organizations that try to resist change and stay in a "stable state". Best example is a dictatorship - a dictatorship is at face value, very stable, as it is ruled with an iron fist. But in the long term, it is very unstable as there is no mechanism that allows it to change with the times and shifting political opinion, and as a result it always lives in fear of uprising (Syria, Libya, Egypt etc.). A republic on the other hand, has that mechanism built in, so while it may be more unstable in the short term with multiple leaders over many years (Japan), it has regular elections that allow it to constantly reinvent itself. The end result is that you get an institution that is very stable in the long term, as many of its processes, policies, and goals are institutionalized. I personally think he meant Apple, but I can see the case for Amazon. Not Google though IMO, Google has change built into the firm's inherent structure.

*does a little dance*

Damn you're making a persuasive case for this stock.......basically an old-style rollup in a consolidating/declining industry.

http://us.ishares.com/product_info/fund/overview/IGM.htm http://us.ishares.com/product_info/fund/overview/IGV.htm http://us.ishares.com/product_info/fund/overview/IYW.htm

Wow, so Jim Cramer is an actual, real life, honest to god investor with a strong track record. I had no idea about that really.

I thought Ben Bernanke was printing money and debasing the dollar and raising inflation and generally sending America to hell incahoots with his communist buddy BHO! [/sarcasm] . Apparently Big Ben knew what he was doing with a program of monetary easing. More seriously though I think most have expected EU to see deflationary pressures unless it initiates a program of monetary easing, which it is prohibited from doing...how that affects investments, no idea.