Rabbitisrich
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Posts posted by Rabbitisrich
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Great, thanks for linking and thanks to Ben Claremon for writing and sharing.
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A UMass econometrician named Arinjadrit Dube looked at the timing of changes in debt/income and rate of changes in GDP growth: http://www.nextnewdeal.net/rortybomb/guest-post-reinhartrogoff-and-growth-time-debt
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Does anyone have any actual merit based objections? This seems like completely reasonable policy.
I'd like to see something like this done on TFSA's and RRSP's in Canada. When TFSA's were announced I instantly thought of how ridiculously expensive they will be in 20 years.
The government is using a creepy justification in granting itself the right to establish "reasonable" levels of savings. If they wanted to ban Romney type abuses, they could have targeted valuation procedures or eligibility requirements.
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Bo Xilai's 170 mistresses.
http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1101&MainCatID=11&id=20130315000010
That was far darker and more upsetting than your jolly description.
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The warnings against leverage are good and useful, but it's also good to avoid basing investment decisions on overly broad categories. Leverage isn't leverage isn't leverage. Particularly when it comes to leaps and some warrants, the ability to own underlying equity at a negative carry with NO RECOURSE can be very attractive. The no recourse feature of options is not to be underestimated. Investors might reasonably fear losing permanent money to irrational pricing, but those risks can be mitigated by position sizing, term management, and sticking with situations featuring deep discounts plus capable management.
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Wow, interesting. She consistently brings well thought ideas to Barron's despite poor fund performance through the recession. I don't know how she gets her ideas, but she has introduced investments, like KALU and MHK, that more superficial screens overlook. It's worth keeping her roundtable interviews even years later because her analysis usually cuts to the core of the company.
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"Perhaps the most significant is that it's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong ... Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig ... As far as Soros is concerned, when you're right on something, you can't own enough." - George Soros via Stanley Druckenmiller via The New Market Wizards via Market Folly.
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There is a powerful scene where the wife is staring at the floorplans of her dream home while murmuring, "Isn't it wonderful?" Later, she puts her family's net worth into two stocks, the names of which she can't recall. Less explicit versions of that cautionary tale effect even experienced investors.
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I'm under 3% cash before taxes, and not including funds set aside for 2012 taxes. I feel great about my portfolio operating results, but the recent Barron's cover is distressing.
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Sokol effectively got thrown under the bus as a result of the fairly vocal outrage over his trading in Lubrizol following this disclosure. Munger admitted as much in an interview (CNBC, I think) following that year's Annual Meeting.
Best,
Ragu
You are ignoring the important aspects of this skerfuffle. Sokol claimed to have purchased Lubrizol following independent research. He stood by this claim in a live interview on CNBC. Citi provided a different account in which Sokol contracted their services to provide a list of potential merger candidates while acting in his capacity as a Berkshire officer. He then directed Citi bankers to contact Lubrizol's CEO, James Hambrick, to discuss the merits of a merger. Without disclosing any of these facts, Sokol reported the idea to Buffett, and arranged a fact finding dinner with Hambrick, which ultimately sealed the buyout.
So you have the difference between a guy who likes a company, and is bringing the idea to you on its merits, versus a senior officer who has abused his position to appropriate the corporation's research, initiate dealmaking proceedings behind your back, and report information from an influential meeting without clarifying his conflicts. Why would you make someone like that CEO?
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Another problem is caused by the inevitably ad hoc nature of assignment of a risk weight to each category of assets. Because of this problem, creation of finer “buckets” can actually distort bank behaviors even more if the allocated risk weights differ from the risk differentials that banks perceive. For example, according to the Notice of Proposed Rulemaking on the Standardised Approach, residential mortgages are classified into eight buckets depending on the loan-to-value ratio and the type of loan and given different risk weights. Thus, the classification is finer than that in Basel I, which assigned 50% risk weight to all mortgage loans. Now a 30-year amortising mortgage with the loan-to-value ratio between 60% and 80% gets risk weight of 50%, while an interest-only loan with the same loan-to-value ratio receives increase the 100% risk weight.This would be fine if the bank sees the interest-only loan as twice as risky as the 30-year amortising loan and requires twice as much capital. If that is not the case, the bank will have an incentive to reduce one type of loan and increase the other. For example, if the bank sees that the risk of the interest-only loans they originate are not quite twice as high as the risk of the 30-year amortising loans, the new capital regulation will discourage the bank from originating such interest-only loans. At the same time, some other banks may find the type of interest-only loans that they generate are actually more than twice as risky as their 30-year amortising loans. In that case, these banks will actually amount of interest-only loans.
You already see the liquidity oriented rules biasing banks towards GSE securities, which allows for shadow financing to adopt dealer roles traditionally held by banks.
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I called them up a couple of weeks ago asking if they'd offer me a home loan (I knew ahead of time that they don't offer these).
Then I explained how I could only get a mortgage through Wells Fargo if I moved my brokerage relationship to them.
The Fidelity guy immediately started offering $5 commissions and asking what else he could do.
Did you eventually open an account with Wells Fargo? Any opinions on their service and execution?
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Better terms on margin balances - lowest rate they publish on all o/s balances
I once opened Fidelity account, and without my permission they assigned me to a "Private Banking" representative who was very gracious over the phone, and then immediately raised margin requirements for all of my levered positions and written puts. When I tried to close the account, they kept coming up with delays so that it took almost a month to complete the transfers. A form that I signed would be misplaced (with critical information), or I would get a call on Friday saying that I had to resubmit information. I'm pretty sure that Fidelity outsources their asset transfer process to the same team that handles Sirius radio cancellations.
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I think that you are right. On the BAC Warrants thread, I thought that Buffett had copy and pasted the A warrant language, but it seems like ordinary cash dividends actually means ordinary cash dividends. Good catch.
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My favorite lie in the article is when the writer says "President Clinton balanced the budget, giving the government a surplus. Not one single Republican in either house voted for the balanced budget." Since Republicans were the majority in both houses at the time, it is mathematically impossible to be true.
I didn't read the article, so I may be off base, but the writer may have referred to the '93 budget under a Democrat majority.
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"More than half of Inditex’s manufacturing takes place either in the factories it owns or within proximity to company headquarters, which is to say in Europe or Northern Africa. Inditex owns factories in Spain and outsources production to factories in Portugal, Morocco and Turkey — considered costly labor markets, typically. The rest of its clothes are produced in China, Bangladesh, Vietnam and Brazil, among other countries. The trendiest items are made closest to home, however, so that the production process, from start to finish, takes only two to three weeks. Inditex’s higher labor costs are offset by greater flexibility — no extra inventory lying around — and on faster turnaround speed."
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I think Berkowitz makes a lot of sense. I think the writer makes some valid though futile points. in particular, financials are risky per se, but that doesn't mean they all are and berkowitz outlines the reasons why certain financials are good bargains.
The argument over whether AIG and BAC are bargains or not could go on forever without reaching a conclusion. The point the article was trying to get across was that financial companies (AIG and BAC included) are difficult to analyse because of insufficient information, they are levered and therefore the variability of outcomes is quite wide. Would you disagree? Is this something that Berkowitz openly acknowledges? No.
I think that granularity is somewhat overrated. I'm reminded of Mike Mayo on Bloomberg dismissing David Einhorn's broad arguments against Lehman, the substance of which sourced from SEC filings. Mayo essentially pitched granularity to portray Einhorn's arguments as lacking nuance. Conversely, sophisticated investors like Tom Brown and David Merkel experienced mixed performance despite deep knowledge and statutory level analysis. It's more fair to say that with financials, it's difficult to specify where problems will emerge, and in what order, than it is to say that you can't tell whether they will emerge.
Berkowitz does acknowledge BAC and AIG's opaqueness, if only obliquely, when he emphasizes that those companies have passed through several years of economic stress and regulatory attention. It's the skeletons in the closet, or the picture of tide going out. You don't use these metaphors for easily tracked business operations.
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Maybe, though I guess it depends on which investors you are talking about. One guy with a major stake in WFC was shocked when he saw their distribution of home loans in 2005, lol. But these products are commodities. To the extent that you have capital and distribution, ANYONE can compete. Saying that major bank X couldn't get traction in XYZ financial products is equivalent to saying that they wouldn't " ".
If all banks did the same thing, then they would have shown equivalent results within some luck determined range.
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Does anyone have thoughts on the knockon effects of this lawsuit? The market is clearly discounting something beyond the penalties sought by the AG (6,320 loans from '02 to '10, $190+ MM damages alleged, $570+ MM penalties), given that the stock is down by $3.7 B.
Does this suit open up new legal vulnerabilities?
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Yeah, if I remember right I once saw an article where an Aldi's manager had said they had found that they did better selling colgate toothpaste than with a cheaper variety. I imagine its the same way with coke and a few other brands that people really like. But my understanding is that their strategy is to sell their private label brand on most product categories.
I can't believe how little share the private labels have taken away from branded soda after all these years. There isn't much difference between colas, as far as my tastebuds can tell. It's amazing that a grocery store can place private labels next to Coke at a 25% discount, and STILL underperform.
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Is anyone seeing what is going on in California. That is merely a preview of HyperInflation. The world's resources are not as elastic as the PHD Standard would have you believe. Keep printing keep subsidizing unproductive classes, in the end they will suffer the most.
The reason they are printing money is to head off deflation and keep interest rates low. It will only cause inflation if and when those excess bank reserves enter into circulation. Do a search on debt deflation cycle. Ask the Japanese if they have had hyperinflation.
Anyway, here is what Bernanke recently said in response to this:
With monetary policy being so accommodative now, though, it is not unreasonable to ask whether we are sowing the seeds of future inflation. A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size. Moreover, the way the Fed finances its securities purchases is by creating reserves in the banking system. Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years.
Actually QE is an asset swap, Good job on posting that passage from bernanke's speech. He even says QE is not money printing if you read closely. Even though you said the fed was money printing.
Or not yet, at least. I like this FT article distinguishing between "today money" and "tomorrow money": http://ftalphaville.ft.com/2012/10/02/1187841/dont-call-it-money-printing-rubiks-cube-edition/
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Do you really think gas in california hit near $6 because of a refinery outage?
$6? Wow, glad I'm not living in that part of California.
The refinery is back online now, so soon you'll have your answer. Will prices decline in the weeks ahead?
Here is some more information for you:
http://www.usatoday.com/story/money/business/2012/10/07/calif-gas-prices-hit-all-time-high/1617801/
This is a good article summarizing the supply disruptions: http://www.econbrowser.com/archives/2012/10/california_gas.html
There isn't much evidence that California demand has exploded. For example, estimates of vehicle miles traveled on California highways ranged from flat to slightly over 1% growth YOY.
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19 miles? There's meticulous, and there's a waste of time. This is something that can happen with loosely consolidated conglomeration in a high regulation regime.
Notes from FFH 2013 annual meeting
in Fairfax Financial
Posted
I believe that he posts as the Inoculated Investor.