yadayada

yesss i wonder why that is? Owners just want out at some point and accept a much lower multiple. Probably because it is harder to find buyers at that level, so less demand? When you read about some of Buffett's acquisitions, wasn't See's a private business? That was such a bargain for buffett.

Enterprise is a nice model. They buy small mom and pop companies and add capacity and let them work the year around instead of like 8 months. They give the owners some incentive and buy them for a nice price. What they bring to these small companies is basicly a scale advantage and access to cheap financing and industry connections. You also need to look at what industry they are in, and what kind of skills they can bring to the acquisition. For example, youtube must have been an insane bargain for google even with no earnings.

Honestly, in the hands of Yahoo it might have been too much. They might have fked up yahoo AND google and then some third search engine would now have the monopoly.

FWIW only venezuela and maybe Iran will get into trouble at prices below 80$. Russia can stand it, and SA have huge reserves. I think they will let it run at a low price and then cut some production perhaps. I think with all the shale fields youw ill see more volatile oil from now on.

That's somewhat like saying Alexander Graham Bell didn't have a large effect on the internet. True, but someone's gotta lay the foundation or light the spark for further development. Not comparable. Bell invented a entirely new technology. Musk didnt, he just made the current tech better. But current tech is worthless if we want to travel across solar systems. We would need break throughs in physics and not just engineering.. To colonize mars we would need breakthroughs in terraforming, in building very large and sustainable spacecrafts (and the problems with oxygen etc that brings), how to protect from radiation mars and in medical knowledge how to bypass effects of much lower gravity on human body. All things Musk likely wont provide. Again I think Musk is extremely awesome, but people are overhyping this all a lot. Still curious about the things he will do though. He has suprised people before. By that logic, Bell basically invented a better telegram. However, some would call that a breakthrough. Some would also call a cheap reusable rocket a breakthrough. I think the cheap satellite angle could have some very interesting implications. Or possibly we find some materials in space that will be very useful and worth the high price. But besides that, going to mars with our current understanding of biotech and just using rockets seem kinda pointless. We are better of making deserts hospitable. I think most people who get very excited about mars have seen too much star trek. Just look at that supposed canae drive you don't hear anything from now. That thing could be a breakthrough and was not made with any kind of space budget. I don't think the middle ages and modern age are comparable. Probably most breakthroughs that allow us to explore space in the future will come from other companies and research institutes that are not involved in space travel .

Because unlike the 90's the population is now srhinking in the past years. And this is basicly a ponzi scheme. Find more people to sell debt to so it can keep going. And the last guy who is still standing loses. In the 90's there were more people every year who would pay taxes and who they could sell debt to. But now it is the opposite, the tax paying population is shrinking and the number of people cashing in those bonds is rising. And they cannot sell these bonds for such a low rate outside of japan. I do agree with you that long term Japan will be fine. But short term it could become very rocky. And i you invest based on a 10 year horizon, the odds do not look good at all. At some point they run out of people to sell bonds to at such low rate, and old bonds need to be refinanced, and it will either end in default or in hyperinflation. I mean if they let a girl band sell those bonds to their fans, that kind of signals how desperate they are getting. Maybe it will go well for another few years. I doubt it can go on for another 10. If you think that, it would mean they will have to borrow trillions of dollars more, where will they get that money from ? Not within Japan.

@rukawa: I don't think they will skyrocket in actual value. If they sell stuff in Japan, that means they will now sell less stuff. So actual $ or EUR value will go down. 1. they did already, and it is not working. GDP goes down when they do that. Plus they would have to double taxes to actually fill that hole 2. that is a problem if they need to borrow 50 trillion a year. That would increase debt servicing costs by about 2-4 trillion a year? And when they need to roll over debt, it becomes a huge problem because a lot of debt has a maturity of a few years Your last 2 points are good. I wonder what value those assets have? 780 trillion in debt is 7 trillion US$. Im not sure if those assets are that valuable? They are maybe worth in the tens, maybe hundreds of billions? I think part of their problem is that more then half of taxes need to be paid out in social security. And then the rest to debt servicing.

yeah problem is, how do you find them. Those AR's barely contain any info and are in japanese. If they sell in japan, half their market cap is in cash, and PE is 6x, it might look cheap. Untill costs go up, and that cash stash is suddenly only worth half. I think ill be on the sidelines, and go in after it collapses. It will be very interesting to watch this play out. I think if any country could get out of this somewhat alive, it is japan.

I think you need to avoid companies that import and sell in japan. The ones that export and sell mostly to outside japan could be good bets. Especially if their costs are in yen.. I think it is best to use macro to avoid bad situations, not so much to make bets I guess.

Yea agree should not be too important. Just thought i should warn the jap net net investors here. The thing that changed is shrinking population and speeding growth of retirees. So gov expense go up while people who could buy gov debt is shrinking. And odds for tax revenue going up aren't good either. Deleveraging has to end in hyperinflation though.

so basicly when the music stops it all collapses? This has to end badly someday, and it will end in large inflation numbers right? The debt just has to dissapear at some point, and that can only be through inflation. You have a 23%+ population of 65 years and older that see their pension wiped out? I think his call is that they are running out of people to sell the bonds to. So Endogenous demand is running out due to graying of the population. He mentioned that in the video. This means old people cashing in their bonds to spend that money in their old age. Population has been shrinking since 2007. Basicly as soon as they sold the last possible bond at this rate, they got problems. Then you see a rate hike, and then it can go fast with a lot of panic. I can not see this go another for another 5-6 years?

Lol they went through 5 finance minister, and the last one, after trying to balance the budget had to go to the hospital because of a anxiety atttack haha.

I think this deserves its own thread. I wonder what the best asymetrical way is to bet on a collapse here. This video explains it well And Kyle bass, the guy betting against housing before the crisis is betting against Japan as well. To give a synposis of the numbers (in link below): Gov budget: ~95 trillion yen of which 22 trilion yen is debt service, and rest expenditures Tax revenue ~45 trillion yen (was little over 60 trillion at all time high) part of 95 trilllion that is funded by debt: about 50 trillion yen. Now how much debt is outstanding? 780 trillion yen (!!) So that is over 15x tax revenue! And increasing 50 trillion a year to fill up the hole in the gov budget. http://www.mof.go.jp/english/budget/budget/fy2014/02.pdf Now what can happen? They currently print money, but because of inflation interest would go up. The central bank hopes that they can stimulate the economy by money printing without monetary inflation (which would cause rates to go up) and this would then hopefully bring in enough tax revenue to fill the gap and slowly shrink debt. 22 trillion of interest on 780 is roughly 2.7%? Let's say it goes to 4%, that would now be another 10 trillion yen that goes of the gov budget. Which would be significant and could easily cause a downward spiral. The only way to close this gap without some crazy hyperinflation scenario would be to raise tax revenue and/or lower government expenditures. The problem is if you raise taxes on a levered private sector, you might not get more taxes as spending goes down. If you lower government expenditures, due to the already high leverage, the economy would go down and tax revenue would go down. Anything you do that causes GDP to go down will cause a decrease in tax revenue. So if you get inflation by turning up the printing presses, rates would go up a bit, and government budget would be wiped out. The only way out of this is if GDP would suddenly turn up and tax revenue would go up while inflation stays very very low, and they magically get their way out of this while printing money without inflation causing rates to go up 1-2%. But GDP is actually DOWN this year... If Japan was a company it woudl look really horrible. This not going wrong for Japan is basicly a 30 feet hurdle. And they only have one leg and are overweight. So thoughts on this? Is there a way out of this that is not very ugly? Video of Bass going in dept explaining it. Another thing to reconsider would be japanese net nets wher eyou invest based on cash on the balance sheets. I would not want to be in japanese net nets right now. Hyperinflation would be a likely scenarion and that would be very bad?

yeah see it that way too. I think to see the government free money QE you would have to see the US gov in serious problems with their debt. and that seems unlikely for now. What I take from this is that they lower rates, so government can borrow cheaply to stimulate the economy so there is no deflation. This happens while the public sector (so corporations and private) deleverages. Once the everyone but the government is finished deleveraging, the budget deficit is closed, government can start of paying debts with increased tax income vs stagnant gv budgets, from rise of GDP. So for people saying FED stimulus did not help because money got stuck in financial system and only helped the rich, I don't think that is technically true. With higher interest rates government spending would have been lower. This probably means that lower interest enviroment will persist for some time untill the government has some more breathing room. They cannot really afford higher interest rates? What is interesting is that budget surpluses have been very rare in the past decades. And there either has to be a surplus or GDP has to grow a lot over the next decade on a stagnant budget to get debt/gdp of government to more normal levels. What is interesting in all this is canadian private sector. House prices vs median income is 9x vs 7x in the US height. And their conumer debt/GDP is much higher then the US . This visualizes nicely what is going on in Japan and what could go wrong in the US if they do not watch out. I guess this is what Gio said will happen if the US debt problem gets out of control. The problem is you also need a heavily leveraged private sector and a not so healthy resulting economy for this to happen (like in japan, and not in the US). I guess gov debt grows, consumer+corporate debt shrinks. Then the process reverses. And it all ends badly when both are inflated. If both are inflated, you get hyperinflation or a very long period of deflation. Which could then easily result in hyper inflation.

So large inflation usually happens when the central bank starts funding teh government with free money. That is how they push money in the system. It seems current QE is just buying worthless assets from banks balance sheet? But once you pour free money directly in the government, then you will see inflation on CPI level.

Deflation in Europe would be less spending there, so less imports, hence less exports by the US to Europe. Importing from Europe will become cheaper though. So im not sure how much influence that really has on consumption in the US. Probably somewhat negative. This quote is interesting from his paper:

look in the Coinstar thread on buybacks. If current market cap is lower then future cash flows added up of say next 10-15 years, then a buyback is good for shareholders. It is bad if the stock is overvalued. So my guess is, some buybacks with borrowed money are good, and some are bad. If you think the stocks on average doing those buybacks are overvalued, then they are destroying value. But that is an average. Some are creating v alue, but some are destroying more value then the others create, so on average value would be destroyed if you think there are more overvalued companies buying back stock. The thing I see Dalio not really mentioning is productivity. You cannot discuss debt markets without discussing productivity too. http://bwater.com/Uploads/FileManager/research/how-the-economic-machine-works/ray_dalio__how_the_economic_machine_works__leveragings_and_deleveragings.pdf#page=2 Reading this now :) . Also don't understand how inflation would happen. Inflation happen when prices are going up. This can be because of 1. Demand goes up, and supply is not elastic enough 2. costs of making goods and services demanded go up Now if the traditional goods like food, gadgets transportation etc (excluding housing for a second) would become more expensive. It would mean: -more money is bidding on these things. -supply cannot keep up (either because of too much demand at once, or because we are running out of the low cost commodities). So for more money to be bidding on these thigns, wages would have to rise? If the FED injects money in the economy, that means they give it to financial institutions. But to get it in the economy and cause inflation, it would still have to end up in people's bank accounts somehow and be spent so the above things can happen. In the housing bubble this happened in the form of very easy credit bidding up a limited number of houses. But in order for the other things in the CPI to become more expensive you would have to have factories with costs going up either due to rising commodity prices, or due to having to pay their workers more (because unemployment is low, meaning more negotiating leverage for workers). If demand of things like food and other things in the CPI (except housing) would go up, it seems supply can easily meet up. They can just add another factory and there is no shortage of food or arable land. Productivity in these area's is only going up, and dependance on commodities will go down over the next 10 years probably. monetary inflation It seems hyperinflation is what you get if the government injects money directly in the economy by basicly giving people money? How did this happen in germany and Zimbabwe? How did money go from the financial system to the general public? Because you would have to see more money bidding on the same goods and services. This can not come from that much increased debt. Edit: Hmm it seems those financial institutions that now have increased (non debt) money supply, they can invest that money in things like commodities pushing up prices. If Banks would gamble on things like grain, it would push up the price of food for consumers, so you would see inflation on the CPI.

you either buy from a sucker or sell to a sucker . I rather not do both. If you buy net nets and you want to sell at book value, your basicly buying from a sucker and selling to a sucker. Decreases the odds of a good return imo. If you exploit inneficiences in the market you should probably sell when you can still make a slightly outsized return vs the market on the security. If you think long term markets are efficient, then you should not have to rely on dumb buyers.

http://www.economicprinciples.org/ The podcast of little over an hour is interesting, he goes a bit more in debt. He makes some interesting observations on velocity.

What is so horrible about paulson? I can see the others though. Shorting IBM and Coke...

comparable to the shipping man?

You need to have a lot of models to process information. Like in Munger's speech he mentions a bunch. I dont mean models as in complicated math formula's and numbers. The one who has more correct models, and has a better intuitive understanding of them, processes the information better. That is why munger advocates learning basics of fields like psychology and physics. A lot of these observations in nature happen on our level too.

Probably a lot of people here interested in science. And it probably relates to a lot of investments as well as tech is in almost anything now. So fore xample, if you think battery cars will be big, then betting on aluminum now could be a good idea. I think having a clue what is going on in the science community can pay off nicely. So make this a thread where we post links to interesting break throughs or studies? Ill start off: a new microscope has been developed that is suposed to ground breaking http://www.washingtonpost.com/news/speaking-of-science/wp/2014/10/23/weeks-after-winning-a-nobel-prize-for-his-microscope-eric-betzig-just-revolutionized-microscopy-again/ Could also be interesting to track wether any of these things actually amount to anything.

I would love software that would send a text message to my phone when a stock hits a certain price. It will also send some basic information like ebitda FCF, EV and the note I possibly made about the stock. That way you could make a watch list of like 500 stocks you barely understand and looked remotely interesting and always pounce whenever some great mispricing occurs without constantly having to check my google docs and browse through 500 names. I think over the years you could build up quite the list and gain some basic knowledge on each one.

comments in your link @ rkbabang make some good points. -why does lockheed only spend a million a year on this? -100mw means an enourmous amount of heat, how do you control that with such a small device?