value-is-what-you-get
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Posts posted by value-is-what-you-get
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The only recommendation I got was to buy the security directly on the foreign exchange however the brokerage fees were exorbitant - or so I thought. In retrospect the fees would have been an absolute bargain compared to the taxes I'll pay on gains from partial sales of Pink Sheet version from my non-registered account.
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In my opinion one of the headwinds Overstock faces is it's name - "Overstock" = "didn't sell" = "no one wanted it". This is a barrier to first time users. It only appeals to a certain part of the market. A name change would boost sales. ("Priced Right" - "A Penny Saved" etc) Agree with Sanjeev - it's a good trading stock!
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Just for fun, I snapped this photo recently while on vacation. I saw the Hollywood Hotel (aka Tower of Terror) as Mr. Market in all it's failed excesses with large chunks falling off in ruins (AIG, Fannie and Freddie etc) and people screaming while our well run Fairfax goes about it's business dishing out it's "Fare" of honesty and integrity right next door!
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You might find the last few pages of this very useful
SD
Thanks SD - nice presentation
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I think the FFH could have written many of the lessons. However, there are a couple that appear at odds with FFH (and even Buffett):
Lesson
16.Financial stocks are particularly risky. Banking, in particular, is a highly leveraged, extremely competitive, and challenging business. A major European bank recently announced the goal of achieving a 20% return on equity (ROE) within several years. Unfortunately, ROE is highly dependent on absolute yields, yield spreads, maintaining adequate loan loss reserves, and the amount of leverage used. What is the bank's management to do if it cannot readily get to 20%? Leverage up? Hold riskier assets? Ignore the risk of loss? In some ways, for a major financial institution even to have a ROE goal is to court disaster.
False Lesson
7.In a crisis, stocks of financial companies are great investments, because the tide is bound to turn. Massive losses on bad loans and soured investments are irrelevant to value; improving trends and future prospects are what matter, regardless of whether profits will have to be used to cover loan losses and equity shortfalls for years to come.
I think this is exactly the logic Buffett has used to explain his support for Wells Fargo... future earnings will cover current losses...???
I would say that on the surface it appears at odds, however Klarman's false lesson says "stocks of financial companies" as a generality and of course this is correct. I think Buffett has said as much too, but he has obviously done his own math on the reserves for losses and bad loans at Wells specifically and deemed it a bank that will earn it's way out of this. He has also said CITIbank is in the too tough pile so he's talking about specific companies as opposed to going with a general sector rule. I recall him saying that the idea here is to figure out which will still be standing when others fall.
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Thank-you very much farnamstreet.
I will keep that one in a safe place and re-read regularly.
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If anyone wants to find something in a book quickly (especially a large and popular one like The Snowball) just go to Google Books, type in "Snowball Buffett stealing" for example and then on the left side of the page is a little box with a "GO" button next to it. Type in "stealing" and it brings up all instances of the word in the book. Turns out it was golf balls. Elapsed time 3 minutes 25 seconds including this post.
Gotta love Google!
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Here's the link to part 1 of the interview - first thing WEB says is a smack down for dumbass Kernan. I particularly enjoyed that part!
http://www.cnbc.com/id/35641059
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I didn't realize they ran directly off the gas. As long as they don't actually burn the natural gas then there's probably something interesting there. If they burn the gas then might as well just generate electricity with it as there would be no environmental benefit.
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The main technology drive behind the commercialization of fuel cells is the maintenance of the existing corporate business infrastructure that sells you stuff through a pump. (Hydrogen instead of gas). Chemically and physically they are a disaster so they will never become viable. There is no point using electricity to make hydrogen, (which is adding an electron to an atom 2000 times it's size) transporting it to a filling station to pump into your tank to run through a device (the fuel cell) to strip off the electron for use in an electric motor when you can just obtain the electron directly through an existing electric grid.
They only work for the company pumping fuel - the rest of us are patsies!
Put your skills to work elsewhere - fuel cells are a mugs game (bld)
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Having read a great deal of Munger, I expect he could make the same proclamation of any person who has reached adulthood - Basically, it's over - but as we all know there are plenty of great times after that!
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Taleb is one of those guys who Buffett suggests should give away 40 points of IQ before he starts talking or thinking about investments.
Has anyone on this board ever made a financial or investment decision based on something Taleb said that actually resonated or was practically relevant?
How about same question for WEB?
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. . . of course WEB has been using them for his entire career. Munger is also a proponent of checklists. T
Here's a good one I found:
http://davidparmenter.com/files/buffet-checklist-v4.pdf
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Error of commission:
1. Bought BRK.UN reaching for the distribution yield - got two months worth and then they suspended and the price went in half. Saving grace - realized the game had changed and sold promptly saving another 50% drop and didn't put too much in it anyway.
Error of omission:
2. Not trusting my analysis of HTZ. Great brand, fast reaction by management wrt the downturn, good enough balance sheet at the time. That was around $2.75 / share. :-[
Congratulations to those whose major errors were ones of omission. They don't cost anything in $.
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Do they need this "benefit"?
Last I looked Fairfax and Apple were doing great - close to the top of their respective heaps actually!
Oops my mistake, I was looking at how much money they made. ;D
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I don't know much about Toyota stock but I do own a Toyota and I think that cars in general are very much commodities these days with the minimum standard of durability and quality being quite high across the board. All the major competitors make similar (almost indistinguishable) models for the bread and butter middle class markets. What I do notice is that the Toyota Dealer experience is outstanding. This may be specific to my Dealer but since my gas pedal has never stuck (it's not one of the affected models) I have no negative bias towards the brand and I expect the severe negative bias away from the brand will be experienced mainly by those who actually experienced a stuck pedal and their immediate circle of friends and family to whom they tell the harrowing tale. I don't buy new vehicles (buy 2 years old sell 4-5 years old - mileage dependent - cheapest form of vehicle ownership - thanks Lemon-Aid) but the local Toyota Dealer sure treats me well (complimentary food, internet enabled workstations, complimentary massage or manicure while you wait) considering I didn't even buy the vehicle from them and I just go there for oil changes and one warranty claim. The reality is I go for oil changes on massage day because I'm not much for manicures (tough guy!).
I won't buy a Ford for the exact same reason - Dealer quality. The cars may be fine but my local Dealer treated me like everything was my fault and routinely called flaws in quality "normal".
The media and competitors won't get this to the tipping point of permanent damage to Toyota because it just won't directly affect that many people whereas the fresh baked cookies and complimentary massage/manicure are available to all their customers. I know it's for all the wrong reasons but it works!!
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I thought there were a few points as well that were just too many steps away to anticipate, however building windmills on land you already own makes a lot of sense. Makes even more sense when you already have a railroad running right through the middle of it to deliver all the components, heavy equipment and a corridor to run the cabling.
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Here's an interesting read on the BNI acquisition:
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Thanks Sanjeev. Much appreciated.
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I respect his choice. There is a huge amount of capital available amongst board members here.
I generally dont disclose anything until I have bought all I want, not that my ideas are particularly original.
I'll second that - in fact I've noticed price jumps from time to time in small caps after being mentioned here - might be coincidence, might not. It's his homework, he doesn't have to let us copy it!
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Thanks for that Sanjeev.
On page two, he states:
"Buffett’s returns in arbitrage are his best-kept secret (attach study). "
Do you have a copy of said study you could post?
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The great majority of the purchases of the greatest stockpicker of all time work out very nicely in the frame of the time remaining on the option :)
. . . and as Munger has pointed out you could beat the S&P over time by buying what they SELL!
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Anybody believe Buffett, played the BRK.B split to get into the S&P 500, raise it's share price and therefore reduce the amount of shares issued? It doesn't sound like a Buffett play but it would have been pretty wise to keep an this ace up it's sleeve, waiting for a huge stock acquisition to use it.
What happens to the deal if the BRK.A shares pass the 120K$?
BeerBaron
I was thinking along these lines too BeerBaron. I expect it was probably a cost/benefit decision. Initially it looked like WEB was doing an about face on what he had said previously about stock splits, buying with undervalued shares etc. but his instinct probably went with the "all will be forgiven when the stock price goes up". I think in hindsight people can say he is the master who engineered all these careful and profitable market moves, but I also think that in reality he makes the decision based on a very basic cost/benefit analysis, albeit with some extremely complicated inputs. The genius is understanding and realistically valuing the inputs and the probabilities attached to them. Like playing bridge for 10s of billions!! ;D
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I recall WEB stating a while back with respect to the US debt that China holds that they'd be better off just giving the money to people of China to build infrastructure and their economy than buying more US debt. Looks like they were already doing a bit of that!
The Deputy and Teacher: The Economy and Their Pension
in Berkshire Hathaway
Posted
I've been a front row seat spectator watching a group of people (about 80 of them) who felt similar entitlements lose those entitlements and I can say the real damage is in how their mindsets have been completely detached from reality and are then zapped when reality sets in. It's resulted in bitterness and depression and relegated a group of 80 or so interesting and fun loving people into more or less miserable bitter and cynical bunch you don't want to be around. I guess this would exist in any situation where a deemed entitlement is removed. The degree to which a person does not give a damn about the economy is inversely proportional to the size of the zap they receive when economic reality knocks down the door.