Ian L
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Posts posted by Ian L
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Young Warren Buffetts
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I guess what I'm asking -- is there a cheap way to short the German 10 year where you can just sit on it for a long time? I have no idea on how this kind of trade would be structured and what it would cost.
Going short the futures on Eurex would be an efficient way to set up the trade, however you would end up having to roll the futures over up to 4 times a year, and that would depend on the price of the roll. You should wait until there is a liquid market in the roll before trading it.
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It depends upon what percentage of humanity should be called genius. Certain high IQ organisations would have us call each person testing in the top 2% a genius, with others having a much higher level required. I would call Buffett a genius, but it is subjective.
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I would consider FFH cash, so your portfolio is something like 34% stock and 66% cash which is very close to the above (main difference is you no longer are exposed to precious metals whereas a while back I remember you having some silver).
I would not consider FFH cash. To me, one of the benefits of having cash is to be able to pick up bargains as they occur in a downturn. In a market crash, FFH will probably go down as well.
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Its Knightsbridge (London, UK). Lux neighbourhood, lot of mistresses, convenient location, favoured foreign investment area. We bought it artificially cheap, & at the time - depression was clearly visible in the faces of most of those who work in the city. The only thing that will drop prices is either a material increase in domestic interest rates (extremely unlikely for a very long time), or a very sharp appreciation in the pound (again unlikely).
Im sure there are other risks. With the bulk of the buyers in Knightsbridge now being foreigners, the safe haven for their money might not be so safe. Prices have already rocketed from 10 years ago, so further appreciation lies at the hands of the international rich. Prices in London as a whole are very expensive now compared to outside London (typically the ratio was 1.2 - 1.5 times in London to the rest of England, now the ratio is 2 times), so this might mean revert. The next government is looking likely to be Labour, and led by Ed Miliband, who politically is left of any Prime Minister in the Uk since 1979. He has said that he wants to bring in a mansion tax, which will bring much higher housing taxes and should bring about some sellers.
I agree there is potential there if the rich keep getting richer and prime central london is a place where the ultra rich want to live, but just wanted to point out that although it seems like prices in London can only go up, that has been said about many other bubbles in the past.
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You have to look at it from a personal point of view as well. Are you happy to live in a place owned by someone else and pay rent to them?In the end, I got sick of renting and bought my own place, not because it is a good investment, but just so I could own my own place.
It might take years and years for house prices to correct. Politicians realize that many of the electorate want their house's price to go up and up, so engineering a continuation of the boom is what they try to do. In the UK, they brought in "help to buy", whereby the government would provide a loan to house buyers, so that they could buy a place with only a 5% deposit. This was sold to the public as helping hard working families buy, but the result is just that house prices just got pushed up. It should have been called "help to sell".
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The Euro zone has a balance of trade surplus and current account surplus, so it does not seem like the Euro is overvalued on that basis. That is the problem when countries like Germany have such success with exports, compared to some of the southern European countries.
Im sure the politicians would like it to go down a lot to reduce unemployment in certain areas, but then surely the Euro area will just export even more, pushing it up again.
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Thanks for that. There is such a huge contrast in the reading habits between the reading habits of the poor and wealthy. I didn't expect there to be such a difference.
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There are also non financial considerations. If you own the place you live, you don't have to deal with any meddling landlords, who might let themselves in during the day, or put up rent every year, or spend the minimal amount possible on the interior.
Owning the place I live in has given more security, less hassle and I can enjoy superior home furnishings that I buy myself.
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Which company is BNL?
I don't think the fair value for Markel in 5 years time will be BV. Being able to underwrite profitably on a consistent basis is worth more than book value and if they are still doing this in 5 years time, it will still be the case. As time moves on and Markel acquires more companies under Markel Ventures, then those companies may become worth substantially more than BV, just as Geico has become for Berkshire.
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Just find an illiquid micro cap and buy as much as you can regardless of price. The price should go up in the short term.
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Dr Dre has been great at getting other rappers to promote these headphones so all of the kids and many young adults have been buying these over priced headphones. Now apple own them, is Jay Z, Diddy, Birdman or other going to start their own headphones brand? I bet apple have a plan to improve the headphones, but I wonder if they will appeal in the same way if the rappers are promoting some other headphones.
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For the buyback at 1.2 times book value, is the book value the last reported book value, or the book value on the day of the buyback?
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To run a business, it is easier if you get yourself a competitive edge. This can be having the right connections or being an expert in some niche area. If you have those, plus some capital, the chances of success are higher than without. A potential entrepreneur is more likely to have these connections/ expertise and possibly even capital with a few years working experience in their industry of choice, rather than just being a college student.
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Buffett has been sneered at by these Silicon Valley types before - 15 years ago. That didn't end too well for most dot com investors..
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Do you happen to know if he will be compensated by salary or by taking a share of the profits by investing the float in his funds?
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Just because Awilco the stock is/ has been undervalued doesnt mean their management is among the best ever in oil and gas.
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That is a good one. They seem to have a lot of insightful ideas to tackle age related diseases and problems. Aubrey de Grey is an interesting speaker.
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There will never be more than 21 M BTC.
There is nothing stopping more electronic currencies coming into being. A successor might take all of the hot money away and leave late stage investors nursing their losses.
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I have no idea how it can cost $50k tuition per year. If there are say, 20 hours tuition per week with over 35 weeks per year that works out at $71 per hour. Taking into account much of that tuition will be sitting in a lecture hall with many other students, it means someone is making a lot of money.
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This hindsight hedger says that he should have just bought an at-the-money index put and rolled it. That would have cost a lot less.
Similarly, any private owner of FFH shares that didn't like the hedges could have done the same (purchasing at-the-money calls to offset the onslaught of losses from the look-through index shorts).
Next time he hedges, and you disagree, just buy index calls to put a max cap on your share of the potential hedging losses.
For a more exact hedge, you should just buy the product that prem shorts. Otherwise, if the equity price stays the same, you would lose on your calls (the time component) and break even on the index.
Way too dangerous.
FFH could go down with the market at the same pace. Then you are doubly screwed.
Yes as we know the stock price is determined by Mr Market. Cancelling out the effect of the hedges on BVPS doesn't help to make the stock price more rational. If our aim was to get to a beta of 1 for the equity portion, then using the weighing method, it would be sufficient, but you are right that using the voting method we might end up with a beta of more than 1, especially if appetite for risk is driving the moves.
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This hindsight hedger says that he should have just bought an at-the-money index put and rolled it. That would have cost a lot less.
Similarly, any private owner of FFH shares that didn't like the hedges could have done the same (purchasing at-the-money calls to offset the onslaught of losses from the look-through index shorts).
Next time he hedges, and you disagree, just buy index calls to put a max cap on your share of the potential hedging losses.
For a more exact hedge, you should just buy the product that prem shorts. Otherwise, if the equity price stays the same, you would lose on your calls (the time component) and break even on the index.
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If a stock is high enough to be sold, it is high enough to be also sold short.
--Russell Sage
giofranchi
He ignores scarcity of capital and margin of safety. A stock can very simply be described as cheap, roughly fair value or expensive. You might want to sell a stock that you bought cheap when it becomes fair value, but you normally wouldn't want to sell it short at fair value.
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My guess is that he should have attended a Berkshire Annual meeting before declining Warren's offer. ;)
It was his life's work and I can imagine that it would be a different feeling to go from owning it and being the ultimate boss, to being owned by someone else. True, Warren treats the managers whose companies he buys extremely well, but it would be a different feeling for him and I dont blame him for not selling.
Plus, Warren buys these businesses to make more money so financially he probably has been better not selling too.
Pabrai q2 letter
in General Discussion
Posted
People are much the same the world over. He would receive a lot of praise and elevation alongside some criticism in most countries too.