siddharth18
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http://econweb.ucsd.edu/~jhamilto/IAEE_2014.pdf
Paper by James D. Hamilton - Department of Economics
University of California, San Diego
July 20, 2014
6. Conclusions.
Although the oil industry has a long history of temporary booms followed by
busts, I do not expect the current episode to end as one more chapter in that familiar
story. The run-up of oil prices over the last decade resulted from strong growth of
demand from emerging economies confronting limited physical potential to increase
production from conventional sources. Certainly a change in those fundamentals could
shift the equation dramatically. If China were to face a financial crisis, or if peace and
stability were suddenly to break out in the Middle East and North Africa, a sharp drop in
oil prices would be expected. But even if such events were to occur, the emerging
economies would surely subsequently resume their growth, in which case any gains in
production from Libya or Iraq would only buy a few more years. If the oil industry does
experience another price cycle arising from such developments, any collapse in oil prices
would be short-lived.
My conclusion is that hundred-dollar oil is here to stay.
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I know there are a lot of Indians on this board (including NRIs). I'm wondering if anyone has had experience with FCNR (FOREIGN CURRENCY NON-RESIDENT) deposits. It's basically CDs offered by banks in India for NRIs, under the auspices of RBI (Reserve Bank of India - http://rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=8120).
Normally it would be an easy pass if:
(i) it offered same or nearly the same APY as US-based, FDIC insured banks, or
(ii) it was only offered by private banks with no accountability/oversight/creditworthiness.
but, in this case:
(i) The APYs are over double what the current saving banks offer in USA
(ii) It is offered by state-controlled banks such as SBI, Bank of Baroda, Syndicate Bank.
Take a look at the APY for 5-year CDs, denominated in USD: http://www.syndicatebank.in/scripts/FCNR.aspx
So I have two questions:
1. How should I be thinking about the risk in this case, especially since it's being offered by a state-owned/controlled bank? It's equivalent to buying an Indian government bond denominated in foreign currency (USD)?
2. Has anyone had experience with FCNR? What should I look out for?
I should mention that after maturity, the CD is fully and free repatriable back to the foreign country without any tax obligation arising in India.
More links:
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What I can't figure out is why crude has dropped 5-6% on widely expected "news". Seems to me that the lack of OPEC response was a given -- Saudia Arabia made this pretty clear. And most analysts question the impact that OPEC could have even if they did cut back production.
I could understand a small dip, but this much price movement really surprises me.
Because there were those in the market (analysts, traders, speculators, etc) that did expect OPEC to announce cuts in output. Remember the analysts were split before the meeting and it's likely that some market participants believed (and hence acted) as if there was a cut coming. And because it didn't, it was time to close their bets (ie - sell their long position) as the outcome contravened their thesis.
"A Bloomberg News survey showed 20 analysts were evenly divided on whether the Organization of Petroleum Exporting Countries will cut supply." Source: http://www.bloomberg.com/news/2014-11-25/wti-extends-drop-from-4-year-low-as-pre-opec-talks-fail-on-cuts.html
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Someone made an interesting comment on SeekingAlpha:
A great business plan by those who control vast amounts of production - short various sized oil/gas companies across the globe, then announce increased production and tell everyone to be prepared for lower long term prices.
Then reverse position and go long oil/gas 12-24 months later (prior to announcing production cuts) and lift oil back to $100+ so all of your holding increase 20-60% within a few months.
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Great info in this thread! Is there a particular time of the year that better deals are likely to be found? (for example stocks get beaten down during the month of December).
Also like stocks, there are lot more deals to be found during a recession/slowdown?
Cheers!
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Heh, isn't everything just a rehash of Ben Graham? The talk has nothing new, but the questions from the audience were good. They start at 30:30
Definitely not. Pabrai has lots of ideas that you won't simply know about by just reading Graham. The three biggest I found were Checklist, position sizing & cloning.
I like to watch every Pabrai video because even though he has a policy of not discussing current holdings, he will provide one or two examples of his current holdings nonetheless...or a new perspective on his past holding.
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Thank you for posting. He comes off as very unemotional and rational with his "you gotta do what you gotta do" type of personality, probably from having worked so many years at a ferociously competitive institution in a ferociously competitive industry and having seen how dark and deep the abyss can be.
Many good tidbits.
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Didn't he ride RiteAid from ~$1 to $7 ?
He had crazy performance while holding significant cash.
He was quite reticent and avoided publicity. Would've loved to know more about him, but RIP!
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Thanks Packer, for the specific names.
What about Russian stocks?
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food and beverage cos
I'm wondering which ones in particular?
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Every time I see Vinod Khosla's name I can't help but think about how he used to be a huge cheerleader for ethanol a few years ago. That left a bad taste in my mouth... But thanks for posting the interview, I'll check it out.
Or the beach controversy...
http://www.nytimes.com/2014/06/16/us/its-privacy-vs-the-people-in-the-battle-for-martins-beach.html
http://www.latimes.com/local/la-me-martins-beach-20140513-story.html
http://blog.sfgate.com/stew/2014/05/28/billionaire-claims-he-owns-the-road-the-beach-and-the-tides/
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ACH (or some other versions of it - like POPMoney, ClearXchange, Chase QuickPay) is 10,000% better than paper/physical check.
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Starting Page 617 of the book, and page 670 of the actual PDF file.
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I think Australia is due for a slow down, housing slump, china slump, or all of the above but have given up timing it or profiting from it.
What about long duration, out of the money puts (LEAPs) on Australian banks?
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I love American Greed!
A few of the episodes on "The Profit" have left me wanting for more. They spend almost an hour telling me about a specific business, the negotiations, etc but the final outcome isn't well described. For example, the "Key West Key Lime Pie" describes a nice "turnaround" but doesn't mention how well the business did on the first day. Revenue, profit, etc would've helped. I guess it takes a while for the revenue/profit to ramp up and for the business to gain momentum after it has experienced a tremendous makeover...so I'm hoping Markus will share some numbers of his previous deals on forthcoming episodes!
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managed to cash out luckily in the height of the dot com boom, is that true?
For the most part. He was entrepreneurial from the beginning though. So it was very likely that he'd succeed...it's just that you couldn't have told that he would make a few hundred million or BILLIONS. He was at the right place at the right time and convinced (to Cuban's credit) the right sucker (Yahoo) who handed over billions to him during the dot com frenzy. Maybe Mark was smart or maybe he got lucky or both, but he was definitely NOT dumb!
To quote Pabrai, Mark "only drank half the kool-aid of the dot-com bubble" and was smart enough to get out at the top. I think he made the right moves after that pay day - he bought puts to lock in his profits and then bought a bunch of other assets to make sure he stayed rich.
See http://www.bloomberg.com/video/bloomberg-game-changers-mark-cuban-FAScYey5RIiO~5MyEg1yGw.html
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It's said that you can't last in this business of investing if you have no passion for it. In other words, you can't fake passion...
So with that in mind, I really wondered if there were members on this board who were into investing just for the sake of money and not because they "loved" it. Meaning if they had enough money to live comfortably from the passive income (dividends) would they opt for it?
Do we have any Andrew Lahdes on this board?
Well I guess this thread answers/will answer that question.
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Also the investment community in Canada in general is not as sophisticated as the U.S.
The result is far fewer micro-cap bargain hunters and less competition.
It was a bit shocking to see when Automodular on TSE was selling for less than cash on their books last May...but your postulation would seem to justify it. I wonder if that'd been the case if Automodular were trading on NYSE/NASDAQ.
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I think John Fredriksen and the Awilhelmsen Group of Norway have a strong track record.
Robin Raina at EBIX has a good track record too - he has rolled over so many companies without sacrificing margins and knows when to issue stock and when to issue cash. From 2005 to 2011, his share count has increased by 48% while the per-share revenue has increased 480% all the while increasing margins. This has led to an EPS growth of over 1000% in face of a 48% share count increase...
looks like they had a bad year with all the litigation nonsense. What do you think about that? ALso why is their tax rate so low, and how will that look going forward?
It looks pretty cheap if business picks up next year. Easily a double with their growth prospects and ROIC.
I feel like EBIX has been misunderstood and the management has been heavily distracted. I was a buyer around $10-$11/share and lower - I'm just holding here as I feel it has a pretty good business model. Tax rate is poised to gradually increase as we go forward and the overseas tax holiday comes to an end. At this price, the shares are slightly undervalued if you assume no growth but cheap if you think Raina hasn't lost his talent for acquisitions. Or you could just stay out of the stock until the investigation is resolved or if you can't handle the volatility.
For what it's worth, Don Braid of Mainfreight Ltd based in New Zealand is cut from a different cloth than most:
Wow - quite a track record! If I may ask - how does this compare to XPO and its chief Brad Jacobs? Definitely seems like an "outsider"! All we need is a handful of such companies to get very rich over time!
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Thanks for posting.
There was a thread on here some time ago with a Google spreadsheet listing all the good shareholder/investor letters. Can anyone share the link to that spreadsheet if they have it?
Thanks
There you go - https://docs.google.com/spreadsheet/ccc?key=0Aisl_3YDx6vMdGZ2QnloNDJUNmlvS2lVcXFkdDA2RFE&usp=drive_web#gid=0
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Common-sense rules from a guy with an extraordinary track record. Can't go wrong there; thanks for posting!
Value Traps
in General Discussion
Posted
Lots of good information in this thread and I don't want to sound as if I'm pontificating, as I'm still learning. But one of the questions I ask myself before buying is - What would happen if the stock price dropped by 50% without any news? Would I still hold it or even increase my position? Or Would I sell? If you answered "NO" to the first question, it means you don't know enough about the company and you need to research more.
I learned a lot by reading about Dr. Mike Burry. He's one of the true outsider, who thought like an outsider from Day 1 and always thought independently. Read his letters to investors and how he made money. If I recall correctly, by the time he was done researching a company, he knew more about it, than anyone on Earth. And that research is what will give you the conviction to stick to your thesis when everyone is panicking from the mark-to-market losses.
In the stock market, you're competing with all sorts of people - idiots and geniuses. You better know at least more than the average participant or else you'd have no hope.
Oh and about buying something simply because Einhorn and Buffett buys it, ask yourself this:
Will Einhorn or Buffett call you if/when they sell?
Is the position an equal % of your assets as theirs?
Are you aware of all their hedges for a particular position? (and I'm not just talking about direct hedging via derivatives, but also indirect hedging - like investing in oil producer but also owning a company that benefits from cheap oil)
Do you even know if they'll be right for that particular position?
Will you have other winners in your portfolio like them, if this specific pick backfires?
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We all make mistakes...but the smart ones learn from them and promise to never repeat them...