bargainman

This has been brought up numerous times and I thought I'd ask again given the current political and macro climate. It used to be the value investor 'standard operating procedure' to ignore the macro and politics and just focus on the company and its intrinsic value. Since the financial crisis it seems that no one believes this is wise any longer. It seems like every other day there's something at the macro level or the political level that could have a large effect. Everything from europe to the debt ceiling to regulation or lack of regulation to ineffective politicians.. So what do you do? What have members on this board done? I find it kind of frustrating to read about politics and the greater environment, perhaps because it's just depressing and antagonistic all the time. But if I don't I'm afraid I'll miss out on what happened in 2008 all over again.. Would love to hear what the wise folks on this board think..

The thing that's missing from this is a comparison to previous tax regimes. The rich are taxed less now than they were during Reagan's era. That's saying something considering how Reagan is always held up as the model Republican. Recently, the budget director during the Reagan era blasted current Republicans for being 'credit card Republicans', http://www.alternet.org/newsandviews/article/366087/reagan_budget_director_slams_gop_for_'theology'_of_tax_cuts/ Democracy is some ways is supposed to be an equalizer between the haves and the have nots. The haves have a ton of money and resources and power, but the have nots have numbers which in some way helps counteract the unmitigated power of the haves. (Yes I know the US is not a democracy really, but close enough). However this counter balancing force seems to be failing, I'm not sure why. Since Reagan's time the taxation scale has gotten relatively less and less progressive. Every time taxes go down and get less progressive, the same arguments are thrown out over and over again to justify these actions. "Tax cuts raise revenue". Problem is that the historical data does not show that: http://www.cbpp.org/cms/?fa=view&id=165 http://www.businessinsider.com/history-of-tax-rates There are also issues with government spending, the data shows that government spending is horribly inefficient compared to the amount of economic activity it produces. So it's time to do something else. But that's a different although related discussion. Buffett's point I think was more about the widening gap between the rich and the poor, and the role that the anti-progressive tax system has played in that. Compared to most other times in history tax rates are unsustainably low, and are particularly not progressive. That's the thing that I think gets lost in the shuffle, people always look at rates compared to today or yesterday, not compared to the last 30 years.

I use everything :-) Mac Safari, Firefox, Chrome, and on windows IE 8/9, Chrome, Firefox. IE9 is ok, definitely better than the other IEs. I haven't had trouble with any of my broker sites really, and if I do I just open up another browser. The only one I've had mixed experiences with is Opera on Mac (haven't tried it much on windows).

One more thing.. Here's an interesting article about the geopolitics of China: http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2008/06/12/the-geopolitics-of-china.aspx It touches on some of the history you mentioned, in particular the migration of the rural class to the cities and that struggle throughout China's history..

Baoxiaodao, Thanks for the post, really fascinating. I guess I hadn't put 2 and 2 together that China had a lot of debt. I guess I knew that they passed a massive stimulus but I forgot to ask where that came from! I somehow always assumed that since China was the USA's biggest lender that they had a positive balance sheet, but I guess I was wrong! A few interesting things I thought of as I read your post: - Malcolm Gladwell talks about Chinese in his book "Outliers". 2 things he mentions: the culture of rice farming. Farming is extremely precise, where you have to watch over it 360 days a year otherwise you can lose the crop. He quoted some chinese expression like "He who works 10 hours a day and 360 days a year shall never go hungry"! Pretty amazing. The other thing was that in chinese you can remember more numbers on average. I forget the details but in english you can remember up to 7-9 numbers, but Chinese people can remember about 10-11, this is because in Chinese the # of syllables are fewer! This supposedly has some effect on how good chinese people are at math (and by extension perhaps money..) - Another thing I noticed and was also pointed out to me. In almost every country that the chinese immigrate to, they end up being the 'commerce class'. Just not in China! At least not until a few years ago! Thanks for your post, great to hear all this from someone in the know...

If it's any consolation a short while ago it would have been 'a paltry' 5-6 million. I wish I was part of the club where 3.5 million was considered 'paltry'!

Definitely agree. Freemium models I've seen usually have a 1-2% paid vs free user ratio. It's just the way the online world works. If you want to be paid, then the donation jar let's you contribute, problem solved without discouraging new recruits!

Definitely agree with this. tip jar would be the best imo. You definitely don't want to lock new prospective members out.

I never said anything about him being wrong about his investments! I suspect that most or all will be right in the long run! He's certainly convinced me of that. However I do think it's his fault that ppl pulled money out! He should have known if he kept the fund open for so long to new investors, that that would happen. His fund more than doubled in assets. I found some asset data... He had 7 billion in 2008 and assets grew to about 20 billion or so by 2010. I'm sure some of it was appreciation but a lot of it was letting in new money.. He should have done a soft close, letting current shareholders put in new money but no new shareholders. He kept resisting the move over and over, claiming that the fact that he had all his family's money in there would make sure he closed it when it needed to be.. I guess he just didn't see this one coming... I always thought that the biggest risk that SHLD faces is that Lampert can't keep control due to redemptions. Since FAIRX has such big holdings, a big risk is what we just saw.. forced selling of his biggest positions, forced selling that moves the market down.. Kind of dangerous for a financial (an entity that relies on so much confidence...)

Sanjeev, where do you get information on the degree of margin use out there? I always thought that analyzing liquidity positions is reasonably important to understand the fragility of the system. When someone posted that mutual funds were at 3% cash I knew that was one possible liquidity issue. I would love to know of any other, and margin definitely looks like one..

That's what I didn't get at the time Parsad. Bruce always came off as humble and self deprecating. When he got his manager of the decade award he basically said "yeah thanks, but umm it doesn't mean much". I just don't understand how he missed this one... I guess he saw the upside (ie it worked well the last time...) but not the downside.. it won't work well with new shareholders... Anyway I wish him the best, and I'll probably keep piling in as others pull out...

Excellent! Thanks Ericopoly! I actually just found the "warrants" tab in the webtrader too, and it also brings up the warrants for the symbol! I don't know how I missed that..

Does anyone know where I can get the warrants symbols for Interactive Brokers? I looked here: http://individuals.interactivebrokers.com/en/p.php?f=products under warrants (there are none in North America for some reason) and under NYSE in the stocks section but I don't see any warrants for AIG or C. Thanks!

When people would ask Bruce B about why he didn't close the fund he said that having the extra cash and liquidity allowed him to do deals he could not have done otherwise. Years ago near the bottom of the market in 2009 he said on a call how proud he was of FAIRX's shareholders for not doing any redemptions while the market tanked. I hope Bruce B has learned that having cash and liquidity in a fund is a function of the actual cash, *and* the willingness of his shareholders to let him keep that cash in a downturn! His original early shareholders had that willingness back in 2009, but by keeping the fund open for so long and hence attracting so much hot money he basically opened himself to this position where he was forced to redeem to this new class of shareholder, even though he very recently had close to 20% cash.. I don't know where the asset history is, but if I remember right probably 50% of his fund was new money since the financial crisis. That meant even a 20% cash buffer wouldn't help much.. Let it be a lesson Bruce B. I hope he learns it. I mean this in a heartfelt manner, and I am one of the 'older' FAIRX holders. And for the record I bought more FAIRX today... Hope this doesn't come off as preachery, I'm just a shareholder making an observation and hoping Bruce considers this next time he asks "how can I kill a company/how can I kill an investment?" - This time the answer is "by being forced to sell to liquidate to meet redemptions on hot money I attracted...

First of all I don't pay Bruce to explain every investment he makes to me and everyone else in detail and in a public forum. I pay him to make the risk/reward calls and do the research, so I don't care if he explains why he sold PFE or not. He bought it when it was selling for a 6/7 PE if I remember right, they had a AAA balance sheet with a ton of cash, everyone thought healthcare was going down the tubes. The risk reward was right. He never said there wasn't anything wrong with PFE, but I'm sure he knows in private was is wrong with every investment he makes. He uses the public forums to try to communicate with his shareholders, and that's great, but I don't that's his job. His job is to make the investments.

You can. It's just not a fundamental part of the architecture like in G+, it's not as easy to use, and it's not used as much by actual users. Plus it wasn't there from the start which means people are less likely to go and set it up now after the fact. With G+ it's one of the most highly advertised features. I'm kind of surprised that some don't use facebook etc, and yet invest in technology. While I wouldn't say it's a requirement it definitely gives you a leg up. Along the lines of 'circle of competence'

Sure, but back then his relative performance if I remember correctly, was still quite good, or at least average. This time other funds are doing well and he's not. That's different from everyone doing horribly and FAIRX doing less horribly or equally horribly. Plus he's had a lot of press lately (morningstar's manager of the decade etc) so I'm sure there's a lot of 'hot' money that found its way into the fund. Before that he was still reasonably well known, but no where near as well as he is now. So those investors who found him understood his style better. My bet would be most of the money pulling out is made of new investors. I'm sure there are a few long time investors pulling out because of the St Joe's hoopla, but my guess is that's the minority...

What I don't understand is, in his latest book he goes over himself to recommend ETFs as a tax efficient structure and the best way to go. Now he released mutual funds? Maybe ETFs are harder?

A sense of loyalty to the investors who trusted him from day one? Also, possibly because this vehicle is available to all investors, whereas an investment fund would be limited to accredited investors only. Cheers! Greenblatt has a few other gems in this video (and in his newest book) http://blogs.forbes.com/steveforbes/2011/07/05/joel-greenblatt-interview-transcript/ " if you look at top performers over the last decade, the top 25% of managers that have outperformed – came out with the best record for the last ten years – 97% of those top managers spent at least three years in the bottom half of performance. 79% spent at least three years in the bottom quartile of performance. And almost half, 47%, spent at least three years in the bottom 10% of performance" Bruce has stated numerous times in interviews that he chose a mutual fund structure and a relatively modest fee of 1% because it's accessible to everyone. Given his record he could have easily gone after a 2/20 or 1/20. He was also managing a reasonable amount of money as a broker before he opened up FAIRX.

Interesting comments about the unemployment issues: "you know, when i look at the unemployment in this country, it's really a skills gap more than a job gap. you know, if we set up a new site to hire 100 software or storage or networking engineers, we have to go find them one at a time and seek them out and convince them and cajole them to come work for us. if we set up a warehouse or distribution center and we have 100 jobs there, withe eel have a line of 10,000 people waiting outside to try to get those jobs. so this unemployment issue is really more of a skills gap in this country. and, you know, probably be more conversation about, you know, where are the highly skilled, highly educated workers that the -- you know, that we need and how do we make the united states a great destination for those -- for those people from wherever they may come around the world, i think -- i think there there's, you know, how to -- "

And you could say the opposite in search and ads.

So I just got an Android device and navigated to this site. It's pretty tough to read given the 4"+ screen. I'm wondering is there a mobile version of the site, or a better way to read the forum than the standard url? Thanks!

Here's an interesting article (not much depth to it, and kind of misses the point, but interesting nonetheless wrt the consolidation point in particular) http://finance.yahoo.com/family-home/article/112989/brands-disappear-2012-247 5. Sears The parent of Sears and Kmart — Sears Holdings — is in a lot of trouble. Total revenue dropped $341 million to $9.7 billion for the quarter which closed April 30, 2011. The company had a net loss of $170 million. Sears Holdings was created by a merger of the parents of the two chains on March 24, 2005. The operation has been a disaster ever since. The company has tried to run 4,000 stores which operate across the US and Canada. Neither Sears nor Kmart have done well recently, but Sears' domestic locations same store numbers were off 5.2% in the first quarter and Kmart's were down 1.6%. Last year domestic comparable store sales declined 1.6% in the total, with an increase at Kmart of .7% and a decline at Sears Domestic of 3.6%. New CEO Lou D'Ambrosio recently said of the last quarter that, "we also fell short on executing with excellence. We cannot control the weather or economy or government spending. But we can control how we execute and leverage the potent set of assets we have." D'Ambrosio needs to pull a rabbit out of his hat soon. Sharex are down 55% during the last five years. D'Ambrosio's only reasonable solution to the firm's financial problems is to stop supporting two brands which compete with one another and larger rivals such as Walmart (NYSE: WMT - News) and Target (NYSE: TGT - News). The cost to market two brands and maintain stores which overlap one another geographically must be in the hundreds of millions of dollars each year. Employee and supply chain costs are also gigantic. The path D'Ambrosio is likely to take is to consolidate two brand into one — keeping the better performing Kmart and shuttering Sears.

Hmm.. Here is a thought, this seems to be the only major area other than Windows where MSFT is winning the consumer arena. It also seems to be the only place where they control the ecosystem from software to hardware no? How tight are their marketplace standards, does anyone know? Is it a closed system the way most consoles are?

On the same day last week I read these articles: http://www.ritholtz.com/blog/2011/06/biotech-and-the-unintended-consequences-of-moore’s-law/ http://www.cnn.com/2011/WORLD/africa/06/14/libya.rape.hfr/ http://thecnnfreedomproject.blogs.cnn.com/2011/06/16/abolishing-sex-slavery-by-helping-one-girl-at-a-time/ It's just amazing to me how in one part of the world the progress we are making is incredible and exponentially getting better, and yet in other parts we're stuck with slavery still in existence and brutal dictators using sexual assault as a war weapon. It's truly a strange world.