randomep

I saw HFNSA @ 120 today horray..... then oh wait..... I realize that was me adding to my position

One of the best investing books I've read. Looks like the posts here can provide material for a US based version of the book.

That's just cos he has 73.4% in cash, holy smokes! Imagine you are paying him to hold your money in cash! The whole letter is justifying his cash position. I'll read it though.

Well all rates are related right? Earnings is related to interest rates. With interest rates so low PE expansion will cause earnings to be low and that means dividends will be low. If you say that S&P500 yields 3% and say the 10yr treasury is now at 2.75%, then the AVERAGE dividend yield of an S&P 500 company will be more than risk free treasury? that would be almost be impossible. Anyway if you are looking at effective after tax returns, I wrote something about it, basically I give the effective after tax returns as a function of stock market returns , turnover, and tax rates. http://bovinebear.blogspot.com/2013/07/taxes-and-investment-returns.html I don't factor in dividend taxes since that is a small proportion of the return. Also it is effectively turning over annually.

Michael Burry told nobody. He just made his fund investors rich with his subprime trade. Mind you I think short sellers have a utility, but just wanted to correct your statement.

This is the same thing that's said about every short seller. When I short a company I believe to be fraudulent I don't think to myself, 'I can't wait until all of the workers get fired and lose their source of income.' What I hope for is the market to recognize the facts of reality. Every day that it doesn't is a day that capital is misallocated. I imagine the same is true of Mr. Bass. Do you really think he's sitting there thinking, 'I hope that millions of people lose their jobs and are starving in the street'? Unless he's psychotic, I doubt it. When the market does not reflect economic reality, that is categorically bad. Assuming the Japanese economy is on the brink of collapse (I don't have an opinion), think of all of the capital invested every day on the assumption that it is not going to collapse. Keeping a charade going isn't good for anyone if you're thinking beyond the immediate moment. I think you have a healthy point of view. My experience is that most who short don't have that same view. I have used Salesforce.com, I've seen it change businesses. The stock is overvalued, when I talk to short sellers about it they are hoping doom and gloom and that the company crashes and burns. They can't separate the stock valuation from the actual company. In theory the stock could go to zero and the company continue to hum along like nothing happened. Bass clearly benefits from the Japan gloom and doom trade. If Japan fails his mortgage is paid off with cheap Yen, his fund makes a mint and he can go on TV again and say he was right and attract even more assets. I don't short anything, I don't think there's anything wrong with shorting, but I'd rather be optimistically biased. I'd rather things turnaround and do well than fail. In the end I want everyone to do well. I actually don't understand why Bass is always on the road promoting Japan collapse. Does he actually think he can affect the value of the Yen? It is one thing to promote a short position on an individual company, but to promote the collapse of a currency backed by $1.3 trillion USD is like spitting in the wind. Analyzing a company is well within his capability. But looking at a whole nation 30yrs out is beyond him, or warren buffett or any nobel prize winner. We just don't know how it will play out. Japan is a country that was a feudal society in the 1860's. By 1940 they had one of the biggest navies in the world, a few years later they were annihlated, and a few decades after that the world thought they were a economic superpower. Now Bass is saying that eventually the average Japanese will lose 30-40% of his retirement savings. I say big deal! They've gone through much worse, losing a fraction of your retirement is not a reason for you to hoard gold bars and weapons and canned food. The undeniable fact is that he has lost tons (like hundreds of millions) on his Japan trade. And he says collapse is coming in 2yrs? But he has been saying that for more than 2yrs already!

Thanks! love the export to csv feature!

Russia defaulted back in 1998 and they printed their own currency. Big difference between Japan and Russia. Japan has a monster foreign reserve so no one can cause a run on the Yen. The Japanese can buy whatever they want in the world markets at reasonable Yen prices, eg. oil. So long as there is no run on the Yen, the Japanese money printing is not a problem. Also the world wants Japanese products so there is Yen demand. So long as the Japanese are productive people will want their products and pay yen. Thinking of debts too long term is not useful when looking at Japan and US. Ultimately it is a big ponzi scheme looking out 30yrs. People price Yen based what they can exchange for it today, the Yen is very liquid, it is productive etc. Maybe if Japan stagnates and becomes unproductive (big if) then the yen 30yrs from now will be almost worthless. Now the Russia situation is very different. Here is a country that is just out of communism and they need foreign capital, and what do they have to offer? not much, esp. when you remember the price of oil back then in the late 90's. So the Roble collapsed because nobody wanted it. Russia was offering huge interest rates to attract foreign capital, which causes inflation. If they kept borrowing and raising interest rates and printing money eventually Roble will be like the Zimbabwae currency.

This is so interesting I am going to read it several more times to really understand. But the 8.246% return will pay for the loss is not a correct analysis I think. The 8.246% return is correlated to the probability of loss on the contract. Or looking at it another way if Berkshire has a big loss on the contract, then the whole world is screwed and Berkshire won't be able to make 8%. But ya I can't fathom how Lehmans can accurately forecast the price of a 20yr put now to 5% of the premium! jeeze

The MAXIMUM the govt paid was $21,500 per single-family home. Maximum! Quoting: Other programs include:a $5,000 minimum home repair (MHR) grant from FEMA for limited repairs to primary dwellings, and Individual Family Grants (IFGP) combining FEMA and state funds (maximum $21,500) for real and personal property replacement. Yes, they are a guesstimate. Emphasis on guess. You started off in this thread claiming the government would pick up the tab. Not true! The MAJORITY of costs were born by the homeowner. Quoting the article again: The majority of the single-family housing reconstruction funding came through the SBA loan program. I thought the government would do more to bail me out if my house is demolished. Now I think I may be mistaken. OK!

Really? is this person for real? if so what does he use for an address in all the medical statements, bank statements , bills etc.

I think the problem that isn't mentioned is double taxation. If you say the IRS wants a cut no matter what and you paid taxes say in Canada, then you can deduct what you paid to Canada from your IRS because Canada/US have a tax treaty. And it is a simple short doc so there is lots of issues up to intereptation. Basically between the two countries you'll pay the higher tax rate but not double taxation. This is all based on my understanding and I am not a lawyer nor accountant :)

Well that's related to my post, I was asking the same thing. Although, between two countries you have to stay somewhere more than 6months. http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/canadaus-cross-border-issues/ I think people here are a bit shy to give legal or tax advice. I'll just say for my case I think of it this way. It just depends on the country of the brokerage. I assume that your address for that brokerage is in the same country. That country would expect to collect taxes on that account. That's generally what I do now, just pay the taxes to the country of the account. I don't have that much taxes that the government would protest anyway.

Ya I am a bit unclear on this. I generally think when you have an unrealized gain it is NOT income but it does increase equity and is counted as comprehensive income. I mean it is ridiculous to count unrealize gains as income cos you have to pay taxes. But apparently that's how it is done in HK. can someone shed some light on this to clear my confusion?

Randomep – We both have perspectives and there is no right or wrong as what works for you depends on your personal financial situation, risk appetite and number of other factors. So my intent is not to prove that my views are correct and yours not. Here are a few thoughts to consider. ABSOLUTELY :)

Our 401ks were rolled into Vanguard IRAs when we left our US employer. In 2008 we got polite letters from Vanguard informing us that while they were still happy to keep our money, they could no longer allow us to place trades in those accounts (so our positions were frozen unless we wanted to liquidate to cash and hold that for 30 years until retirement). This is apparently a common issue among US brokerages... most of them will not allow non-residents to make trades due to regulations I've never fully understood. Last year, I discovered that TD Ameritrade is an exception to that, presumably thanks to its Canadian parent company. So after switching brokers, I can now happily trade within our IRA accounts again. Yes, I expect I'll probably retire in Canada, but who knows. No experience collecting benefits. I'd be surprised if either country would allow non-residents to collect UI, but I'm certainly no expert. This year, for the first time, I am actively seeking out professional cross-border tax advice, due mainly to the new regulations going into effect this year (FATCA) that target American expats via foreign financial institutions (like Canadian banks), and the potential financial and privacy implications those regulations have for myself and our children. I'm finding it difficult to find a personal tax accountant who knows both US and Canadian tax law. http://www.cbc.ca/news/canada/u-s-fatca-tax-law-catches-unsuspecting-canadians-in-its-crosshairs-1.2493864 Similar if you're a Canadian resident living in the US. If you live in certain states you are still allowed to trade but the state you live in needs SEC approval. If the state doesn't have approval your account will be restricted to sells only. Interesting, that's what I love about this forum lots of stuff to learn. I must say with regard to the regulations. There is a big difference between rules (which I am sure if you looked at them all would coutradict each other) and practice. I think the key is to follow the intent of the law and to remember that we don't live in a facist state (although a noticeable minority in America would disagree) With regard to residency there are various categories, resident, non-resident and deemed resident/non-resident. All the banks/brokerages care about is that you comply with their requirement, that you have an address in their country. If you do they don't care how long you stay in their country and so long as you pay your taxes your with the IRS / rev-Canada. And even if you do not have an address in their country a previous poster stated that some brokerages will still let you trade.

I am just starting to look at Henderson Land, this HK company is ridiculous cheap. P/BV = 0.5x. Book value has grown around 10-20% EVERY year for the last decade..... does anyone own this baby? I am still in the process of due diligence which involves just glossing over their 10K (or the ADR equivalent) But Henderson is a HK company. Marty Whitman basically said HK has good regulations to protect minority shareholders. Do you not agree? Also according to Wikipedia, twice the owner tried to buyout the minority shareholders but failed to get the votes. Their glossy annual report and 10% annual increase in book value seems to show that the minority shareholders get a fair shake. no?

Hi I see a lot of Canadian and Americans on this site. So I think this is a good topic. Do you have experiences to share about border crossing issues, or taxation issues or social benefits issues across the border. For example: - do you have 401k and plan to live or retire in Canada? and vice versa for RRSP. - do you have brokerage accounts in both countries? - do you collect benefits in one country and live in the other? if so how do you handle taxes? - have you collected UI from US while living in Canada (and the government knows) and vise versa - if you don't work do you vacation in one for long period country and reside in the other?

Hahahahahahahahahahahahahah Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito. Well that was NOT a joke. Ok my use of the acronym FEMA may be incorrect. But when the fed government approves $3.5B in assistance to repair earthquakes, the fact that the funds are helping multi-millionaires in their beachfront condo is hidden from the taxpayer. That's my impression what happened in the 1989 quake. I just saw one article that said California paid $1B, and the Feds paid $3.5B, and elsewhere I read the cost of the quake is $5B. So there you go, seems like the math says the damage was 100% borne by the taxpayer. A friend of mine (when I was in high school) lived in a Los Altos Hills home that was knocked off it's foundation. No FEMA money. It was the Loma Prieta earthquake. Well, we are going back and forth on this, I stated that $5B was spent by the taxpayer to repair the damage from the Loma Prieta quake (I NOW live where the quake hit so this is not just a intellectual exercise). So let's invert the statement, are you saying none of that $5B was used to repair a home, or just none was used to repair a $3Mil home? Here are some facts regarding the financial assistance from the state/federal government with regards to the 1989 Loma Prieta earthquake: http://nisee.berkeley.edu/loma_prieta/comerio.html Repair of Single-Family Houses Individual homeowners with repairable damage found a variety of resources in federal and state housing recovery programs. The majority of the single-family housing reconstruction funding came through the SBA loan program. Other programs include:a $5,000 minimum home repair (MHR) grant from FEMA for limited repairs to primary dwellings, and Individual Family Grants (IFGP) combining FEMA and state funds (maximum $21,500) for real and personal property replacement. Mortgage assistance and Additional Living Expenses (ALE) were also available if needed through a FEMA program. Finally, if a homeowner’s needs were not met through these programs, they could apply for a loan from the California Disaster Assistance Program (CALDAP), administered by the state office of Housing and Community Development (HCD). The CALDAP program was initially set up on two tracks:CALDAP-O for owner occupiers, and CALDAP-R for rental housing owners, and initially funded with $23 million in each track for loans and grants. Four years after the event, CALDAP-O has provided $43 million in loans to homeowners, but there are still some loans applications pending. Ericopoly: I don't know what is your point in quoting the article because the article says nothing about how much gov't money was paid out for home repairs. I don't know whether you agree with my statement that gov't dollars went to repair homes. But I do see one fact from the article: about 43000 owned homes were damaged of which 1/4 was destroyed. So if that is 1/2 the damage of the earthquake that would work out to $5B / 2 / 43000 = 58k per house. So the cost of repair is about 58k which sounds reasonable. And the government paid $5B so it would make sense that the government could pay $58k on average for every damaged house. I mean my numbers are very rough guessemite but my point now sounds reasonable. I suppose a person can drown in a lake that is on average 1 millimeter deep. Therefore, the lake is safe enough to let your toddlers play in without any adult supervision??? I think that's what you are claiming. Or perhaps you don't need medical insurance because your expected losses from insured health issues don't exceed the monthly premium. That's a better analogy. Ahh.... but the point of insurance is to protect the individual that bears greater than his average share. So why are you making a point about average costs when you know some of the homes were completely destroyed? Didn't you tell us earlier that the government will pay for everything, so therefore catastrophic damage from an earthquake is not really something to worry about? PS: The article pointed out that the maximum cash grant was $21,500, and after that the individual homeowners were looking at getting further assistance via loans -- in other words, you are on the hook for the bulk of the catastrophic damage. OMG, I love your analogies, you have a library and you pull them out whether they make apply here or not. Firstly, we should talk of a typical house which my house is. If it is totaled, I think it'll cost say 250k to rebuild and make me whole (house is worth 600k but that's cos of where I live). In the last quake to hit my area, in 1989(emphasis) the average government assistance for repair was I guessemiate 58k. So let's go with my logic here. In 2013 if this happens and the government does the same then they would give 103k average assistance cos that's what 58k in 1989 is worth today. If it is 3:1 ratio of damaged to demolished house and say 50k is for each damaged house (which is already quite high its probably nothing really) and then it means that the average price of assistance to rebuild a demolished house is 250k. So at least I think I am covered, or are you just worried about the 3Mil houses, sure they got a problem, but they are rich and most of it is borne by the bank probably. This is simply my logic for living in the loma priota earthquake zone and not buying earthquake insurance. I am not paying the government beforehand for FEMA or whatever bill they will pass to give me relief in the quake so this is not insurance so I don't know why you refer to some premium, this is the government implicitly backing the banks or Fannie Mae. Secondly, you misunderstood your articles first 3 sentences. I am going to need to go to over each sentence. 1st sentence: there are various government schemes to help homeowners with relief (meaning, they don't know all the programs out there) 2nd sentence: the main program is so and so loan (I am skeptical what this generalization implies). 3rd sentence and so forth: eg. eg. eg. of programs one of which pays out max 21,000 So be logical, how can you know how much the government paid to each homeowner in the aggregate? Ok I am seriously not trying to be rude but I think this thread has gone on long enough don't you?

Hahahahahahahahahahahahahah Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito. Well that was NOT a joke. Ok my use of the acronym FEMA may be incorrect. But when the fed government approves $3.5B in assistance to repair earthquakes, the fact that the funds are helping multi-millionaires in their beachfront condo is hidden from the taxpayer. That's my impression what happened in the 1989 quake. I just saw one article that said California paid $1B, and the Feds paid $3.5B, and elsewhere I read the cost of the quake is $5B. So there you go, seems like the math says the damage was 100% borne by the taxpayer. A friend of mine (when I was in high school) lived in a Los Altos Hills home that was knocked off it's foundation. No FEMA money. It was the Loma Prieta earthquake. Well, we are going back and forth on this, I stated that $5B was spent by the taxpayer to repair the damage from the Loma Prieta quake (I NOW live where the quake hit so this is not just a intellectual exercise). So let's invert the statement, are you saying none of that $5B was used to repair a home, or just none was used to repair a $3Mil home? Here are some facts regarding the financial assistance from the state/federal government with regards to the 1989 Loma Prieta earthquake: http://nisee.berkeley.edu/loma_prieta/comerio.html Repair of Single-Family Houses Individual homeowners with repairable damage found a variety of resources in federal and state housing recovery programs. The majority of the single-family housing reconstruction funding came through the SBA loan program. Other programs include:a $5,000 minimum home repair (MHR) grant from FEMA for limited repairs to primary dwellings, and Individual Family Grants (IFGP) combining FEMA and state funds (maximum $21,500) for real and personal property replacement. Mortgage assistance and Additional Living Expenses (ALE) were also available if needed through a FEMA program. Finally, if a homeowner’s needs were not met through these programs, they could apply for a loan from the California Disaster Assistance Program (CALDAP), administered by the state office of Housing and Community Development (HCD). The CALDAP program was initially set up on two tracks:CALDAP-O for owner occupiers, and CALDAP-R for rental housing owners, and initially funded with $23 million in each track for loans and grants. Four years after the event, CALDAP-O has provided $43 million in loans to homeowners, but there are still some loans applications pending. Ericopoly: I don't know what is your point in quoting the article because the article says nothing about how much gov't money was paid out for home repairs. I don't know whether you agree with my statement that gov't dollars went to repair homes. But I do see one fact from the article: about 43000 owned homes were damaged of which 1/4 was destroyed. So if that is 1/2 the damage of the earthquake that would work out to $5B / 2 / 43000 = 58k per house. So the cost of repair is about 58k which sounds reasonable. And the government paid $5B so it would make sense that the government could pay $58k on average for every damaged house. I mean my numbers are very rough guessemite but my point now sounds reasonable.

You are right, risk has to be factored in. However, you may be making the assumption that risk is high, which may not be the case. Risk is an individual think that depends on number of personal factors so what may be low risk to you could be dangerously high risk to me. Obviously the least risky solution maybe to stuff it under the mattress, yet we all go and do things that carry higher risk. As some on this thread have pointed out, even putting money in your own house has risks to capital like earthquake ...... Here's another example. What if I take the money and invest in rental property that produces 9% pre-tax and potential upside? Will that be a risk worth taking? Well, my only point is that when you talk about investment returns, that is an orthogonal issue to the problem of whether you pay down the mortgage. And returns a whole can of worms. In fact this whole forum is devoted to that. So using this thread to answer that isn't possible. But if you talk about rental income and housing. I will tell you what I plan to do with my house(s) and why. I do not plan to ever rent for profit because: 1. income is taxable 2. I don't believe it can be 9% after factoring all costs 3. I believe as Shiller says, housing has traditionally grown at inflation rate, so my expected return on my house is inflation (despite the fact that my house has gone up 15% last year) 4. frictional cost of house sale is 6% fees 5. the work and stress makes renting different from being a true passive investor whose only tool is the computer 6. the single family home rental market is distorted by lots of unknowledgable people acting as landlords, so overall it is probably not a profitable industry If I have more than one house, which is likely to happen in the future, I will only rent it out for a nominal fee to friends or relatives, so that it covers their utilities usage and minor upkeep. Maybe you are right it is truly 9% return. But I know of people who have taken a year to evict someone. If you factor that in it is still expected to be 9%? ok. I own a house as if it is gold, no returns, just keep up with inflation. The plus side to gold is that it is not as volatile, and the downside is the 6% transaction fee. Also have you factored in the labour cost of yourself going there to fix the water heater or broken toilets? cheers

Hahahahahahahahahahahahahah Yeah, that would go over really well on the national news -- Obama orders it an emergency and uses national funds to restore $3m homes in Montecito. Well that was NOT a joke. Ok my use of the acronym FEMA may be incorrect. But when the fed government approves $3.5B in assistance to repair earthquakes, the fact that the funds are helping multi-millionaires in their beachfront condo is hidden from the taxpayer. That's my impression what happened in the 1989 quake. I just saw one article that said California paid $1B, and the Feds paid $3.5B, and elsewhere I read the cost of the quake is $5B. So there you go, seems like the math says the damage was 100% borne by the taxpayer. A friend of mine (when I was in high school) lived in a Los Altos Hills home that was knocked off it's foundation. No FEMA money. It was the Loma Prieta earthquake. Well, we are going back and forth on this, I stated that $5B was spent by the taxpayer to repair the damage from the Loma Prieta quake (I NOW live where the quake hit so this is not just a intellectual exercise). So let's invert the statement, are you saying none of that $5B was used to repair a home, or just none was used to repair a $3Mil home?

We don't need Shiller to tell us that. Of course there is no "proof" it will happen. There is no proof that Shiller will live another week. Or me. Or you. There is just, "life expectancy". Are we playing with semantics? Ok there is no proof that the expected return over the next 100yrs is 6-7%? happy? Now I do recall doing many derivations or proofs in class regard the expectation of random variable. Ok did I confuse by misquoting him?: I looked at the video and now I hear him say, there is no THEORY that says the market will return as it did the last two hundred years, that is something thought provoking to me. And I am just point out this comment made by shiller. http://www.cnbc.com/id/101353571

Wow..... You all are smart guys but talk about making a simple issue complicated. I am conceptually with bargainman. The way I look at it, money invested in my primary residence generates ( or saves ) about 4% ( lower if you consider tax deductions). I can take the same money and invest in private mortgages at 12% pre-tax or 7% + post tax. As long as risk is within limits, why will I not do this? Someone mentioned tax liens at 18%. I have not used that but sounds a good option. You are talking about investing with returns of 12-18% pre tax? I think you have forgotten to mention a bit problem with that, called risk. The market giving 6-7% is not guaranteed. In fact, Shiller just recently said there is no proof that the next hundred years will return 6-7% . If investing just boils down one number like that. Then it is simple, just be fully investing 100% of the time, In fact, lever it up to the hilt. There is no mathematical formula to describe investing. Like many have learned in the last recession that they must have some cash on hand. Same for mortgage and real estate and investment. Graham kept talking about a ratio of stocks to bonds, there is no mathematical proof for it. I think you are oversimplifying.

I am just starting to look at Henderson Land, this HK company is ridiculous cheap. P/BV = 0.5x. Book value has grown around 10-20% EVERY year for the last decade..... does anyone own this baby? I am still in the process of due diligence which involves just glossing over their 10K (or the ADR equivalent)