no_free_lunch

Well said cigarbutt, agree completely viking. This is what happens when you build plans with committees. Everyone has to have their inputs and you end up with something complicated but where everyone has 'contributed'. In addition to the complexity, extra government, potential for fraud, it is discriminatory. One first time home buyer opted to buy a condo and is living there now. They plan to upgrade when they have get married/have kids. Another just wants the house right away and is saving for it. The first is out of look under this program because they are not a first time buyer. I really have to insist that these government programs be equitable. If they are going to do it (and they shouldn't) but then everyone should have access to it.

We do have quite a bit of natural resources relative to the population. Much of the canadian economy, directly or indirectly, seems to tie into that. Farmland and oil are maybe the 2 biggest. These things are just scarce on a global basis and we get outsized profits from them or from the service economy around them. That is without having to do the kind of R&D that say a tech company does. The US has these things as well but with 9 or 10 times the population, I don't know if there is as much easy natural resources on a per capita basis. The other thing is defense spending, we just don't spend as much on it as the US. That right there is a 2-3% gdp drag on the US. Maybe the US would be much more wealthy per capita if these 2 factors were leveled out.

I am trying to get a sense of the numbers in a recap / release scenario. I know there are a many variables but even just some kind of baseline would help. I think we should look at pre gfc as a basis. Looking at 2007 data, I think that fnma was valued at around $60B vs $40B in equity, or a p/b of 1.5. Today they are talking $180B equity, how much of this would be for fnma vs freddie? What kind of p/b premium would there be? If there are new competitors entering the market and given the large amount of equity buffer they have to hold, would this not trade just a touch over book? Given that there is basically no capital it seems that after the capital raise all that would be left for shareholders, preferreds and senior preferreds would be to divvy up that premium over book. When I do some quick math it doesn't seem like the pot is big enough for the preferreds to be made whole. I know this has been discussed already, but I haven't seen the assumptions and input numbers, just the target prices. Regarding my bias, I am still in. It seems I am not comfortable being in or out of the preferreds.

This is what I am talking about. I hope this isn't what they are discussing. I guess even in this scenario they still might have to make the prefs whole but I think you would rely on the courts for that outcome. https://www.gao.gov/assets/700/696516.pdf

Wow. This is huge. My only concern right now is with Calabria's position. He seems to want to completely open things up for private industry and wind down the GSE's. Is it possible we are being fooled by this announcement?

I agree with the others, index and then invest when you find something in your area of competence. What are the other ways to invest? My experience in 08/09 was I wasn't worried about the quality stocks in my portfolio. I was scared about the lower quality stuff and I was scared about the ideas where I was just following someone. So just make sure you understand your ideas (same advice applies to me). This is why I now have stuff that I think is quality (ok maybe 1 or 2 exceptions) and then etfs. I am comfortable with both, I was comfortable with both on dec 24.

No offense taken. I am here to learn. It is what it is. I am okay holding compounders, high quality stuff that I think will ride out the storm. I have no idea how to handicap this one. When I was down 30%, I realized how little I really know about this situation. I realized how dependent I am on the government doing something and yet the political gridlock just seems to be increasing.

I am out. I wish you best of luck with it. I just can't handle the uncertainty and the politics behind it. The market offered me a chance to bail with a small profit and this position has actually outperformed S&P500. Good enough.

Do you have any particular names sharper or is this just an excuse for a political rant?

If you look at their performance historically, they did do well over 2007-2017. However, just about any period shorter than they aren't hitting 7% (from a bvps + dividend perspective) so I sure wouldn't expect it going forward either.

I read Peter Lynch's book when I started investing. He says over and over, don't time the market. Every book I have read on Buffet says don't time the market. Why are we doing this here? Why not just find high quality companies and eat it. If you are living off your funds I guess it is different but then I would have a bond buffer regardless.

It has felt like the time for capital preservation since 2014 to me. I am just glad I didn't act on it. Maybe time will prove me wrong. Still heavily invested..

I saw that announcement too. I just wonder what the terms are.

I think it's a good bet but many unknowns so I would need to size it fairly small. Same with FCAU, which I do own. My concern with AAPL is there really hasn't been any dominating new tech since the IPAD. What role did Jobs play in it all and can they innovate without him? Didn't the IPOD/IPHONE/IPAD all happen within about 7 years? Now it has been 8 years without anything comparable. You can also throw in itunes I think. The company really went to hell the last time he left, I am concerned it can happen again. I am not really into tech so I might be missing something but this is how I understand the company. That is the bear case and you have laid out the bull case succinctly. I have a hard time deciding which side is correct but agree the market is not pricing much of the bull case in. I think closer to 10x earnings and it's a 5% position for me. That's about all I can do with this one. What I would like to see is some new innovation that review sites are pumped about. If that happens and the stock doesn't move I would make it a larger position.

Also, on the bank runs, I don't think the federal reserve is needed there. Isn't that what FDIC is for?

No, that's a data point dalal. You are going to have to deal with it. Here is another one, us real GDP grew 4% per year 1871 to 1913. From 1913 to today it has averaged 3%.

I actually realized that I made a mistake when I posted before. The US stock market did 7% from 1871 to 1913, including all of your panics that you are panicking about. There was actually price deflation this entire period. Investors did very well. From 1913 to today, the US stock market did about 6.6%. I will call that a rounding error and say it was about the same. I don't think anyone needs to prove the fed made things worse. Prove they made things better. If you can't why don't we just revert back to a more natural state. Why do we keep rolling the dice with central planning?

I really like GUD.TO right here. It is around 1.1x book value with a large portion of book in cash. It seems that the selloff in pharma is beneficial as they are sitting on so much cash. I think some of the smaller companies will start to get hungry and knight should be able to scoop up some good deals. After BRK/BAM it is my largest position.

Merry Christmas all! This market rout has been a wonderful gift. I am hopeful it will keep giving.

I really don't know anything about Transalta. They appear a bit riskier. However the yield is higher and the underlying stock still pays a dividend, which could be cut and provides a buffer for the preferreds. I would need to do some work on them but thanks for the suggestions all. Dundee is indeed an interesting situation. I am just not quite there yet with it. If I started to see a turnaround operationally this would be a no brainer but for now I will just watch.

It certainly could be too early. However, some of the fairfax prefs (series C) are within a few percent of their 2016 bottoms and below where they spent the majority of that period. If they can ever get back to levels from a couple months ago you have 30-35% upside plus a 6.3% yield, and on a relatively low risk company.

Fairfax prefs are getting cheap. It's not hard to see double digit returns at these prices. Fairfax is not without risk but it's investment grade, conservative and fairly diversified. Seems like a decent cash alternative. Does anyone see any other good deals in preferreds?

There has been asset price inflation like crazy here in Canada. Housing prices doubling or tripling against near flat incomes? I think that is all interest rates. The other way to look at it, if the fed is just mirroring what the market would do, then why do we need the fed? The thing that really concerns me is the crazy stuff you are seeing elsewhere. Negative interest rates? Bank of Canada buying home loans? It seems like as the facade starts to unravel they are reaching deeper and deeper when really maybe it was all caused by them artificially messing with the system.

Oh, you're an "abolish the Fed" kind of person. No point in engaging further. OK. Well I will engage you nonetheless. I don't think it's such a wild idea to be against central planning, ok? USSR had a central bank as well. I think the differentiator IS the free markets. I am okay with deposit insurance, financial regulation and I see how you might have to intervene in a 2008 scenario, but otherwise why are we letting a small cabal of intellectuals control the economy. Everywhere else in the economy we accept that business know best. If we do have to have a fed I actually do like that he is raising rates. I don't agree with trumpy on this. However, based on the above, why do we need these magicians to be involved. Let rates do what they will. I think that without the fed keeping rates on the floor, yields would be higher and the govenment wouldn't be able to run these deficits.

I think you could keep deposit insurance. You haven't seen any boom bust since the fed? What I have seen is the US and all developing economies jack their debt levels up to war era levels in the middle of normal times. I guess that is part of prosperity. ::)