bargainman
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Posts posted by bargainman
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http://www.morningstar.com/cover/videocenter.aspx?id=324901
Bruce talks about Citi in the video above. His basic premise is that Citi essentially went through bankruptcy without going through bankruptcy, courtesy of the Fed (I think). The bad loans are working through the pipe, and the newest loans are their best loans. Interesting point of view. Not sure about AIG though..
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Just curious, does he mention Fairfax at all?
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When i think of nurture vs nature a few things come to mind
- Mark Seller's famous speech about this: http://www.beearly.com/pdfFiles/Sellers24102004.pdf
- David Rock's presentation at Google where he talks about the brain and the huge imbalance between threat response and reward response:
Related to this, I wonder if some people either are just trained to handle the threat response, or their brains are wired to not feel it.. See a few points below:- Jason Zweig's book (I haven't read it all yet), where he talks about how they imaged his brain, and while they saw that he was still susceptible to the same neurological conditions as everyone else with regards to losing money and placing bets, he had trained himself to be more patient, and the images showed that.
- Some research I read (I think it was in "Why smart people make dumb money mistakes" which talked about how they ran experiments asking people to take a bet. People with a damaged Amygdala(I think that's what it was) would take the bet regardless of whether it made financial sense or not. The theory being that the Amygdala is the piece of the brain that controls our ability to process threat/reward response. What parts of the brain are and aren't active in people that can be an advantage or disadvantage here?
- Something Nassim Taleb said about Soros and some other great traders he knew. Paraphrasing, he said that they were able to take one position with complete conviction one day, and then at the flip of a switch could take the totally opposite position, without so much as being bothered by their lack of consistency. These types of people, who he inferred were basically sociopaths were ultimately going to do much better simply because they were built to not be bothered by such inconsistency. (see Caildini's book Influence about how sales people use consistency to try to manipulate and close the sale.. the desire for consistency seems to be a trait most of us are wired for..)
- Genome - a fascinating book which I read a long time ago which illustrates with genetic precision that there are absolutely some things which are purely genes, and others which are a combination of nurture and nature.
Anyway, I do believe that it's a combination of both, and 10K Hours of training. That said, the thing that bothered me about the 10K hours 'experiments', and mind you I'm no scientist, is that they didn't seem to have a proper control group. Sure, people who were successful and brilliant were absolutely required to have 10K hours. But neither Outliers, or "Talent is overrated" talked about people who did spend 10K hours and weren't super successful (or maybe that's what how they distinguished between just practice and 'deliberate practice' . Also I believe that there's some survivorship bias here. If someone wasn't willing to get past the 1K hours of practice then does that automatically remove a whole pile of people who just didn't have the genetics to make it? All food for thought, and probably questions I'll never have answered :-)
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Let me post the quote here.. since I think people are blowing this out of proportion.
"I don’t want to spend too much time on Buffett. George Soros has 2 million times more statistical evidence that his results are not chance than Buffett does. Soros is vastly more robust. I am not saying Buffett doesn’t have skill—I’m just saying we don’t have enough evidence to say Buffett isn’t doing it by chance."
So basically he doesn't have enough evidence one way or the other, since Buffet makes fewer bets. If Taleb had the data and could look at all the bets that Buffett turned down, and compare them with the ones he did not turn down, he would probably have the statisticcal data he needs. He could look at the 1 million deals, look at the 1000 that Buffet did go after, and do a proper analysis. But since Soros's trading style is different it's easier and possible for him to statistically calculate the robustness.
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One of the things that Taleb talks about in one of his books is blow ups. People who make 100 million for 10 years straight and then blow up and lose it all in about 10 minutes. Remember that Buffet almost blew up at least 2 times. Soloman and Gen Re. I seem to remember there was a possible blow up with one of the newspapers as well. Still I agree that Taleb doesn't know much about Buffett, and is pretty full of himself.
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Did a bit of research on HALL. Does anyone know much about Mark Schwarz and Newcastle partners? I had a hard time finding anything too specific regarding their equity portfolio. But the fact that they didn't implode in the last couple of years in and of itself was semi interesting. They have a couple of interesting presentations here:
http://www.hallmarkgrp.com/CompanyPresentations.asp
They definitely say a lot of the right things in the slides. In the annual report Mark mentions Buffett and Value in passing but doesn't say much else. I'm just curious what their equity portfolio will look like going forward. Still, if they can keep making money on niche underwriting and grow book value at the rate they have been, it looks kind of interesting.
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I'm only going by his mutual fund performance as linked to above, but that to me shows that he had no divinity what was coming in 2008/2009. Don't get me wrong, I'm not saying he's a bad investor. But I sure as hell wouldn't be writing a book about a crash that I didn't see coming!tanked in 2009? sure about that?
I listened to a conference call for the Mutual funds. He was pretty upfront about this. He said that it was horrible and embarrassing. They did know it was coming, they wrote about it and warned about it and bought fairfax, and yet they still got creamed. He felt pretty bad about it, but that's what happens when all asset classes become correlated I suppose. As Nasim Taleb would say, it's one thing to make a call and a very different thing to profit from it. Ultimately though one year does not a record make, so I'd judge his investing prowess by his long term success.
Not offering an opinion one way or the other about Tilson, but at least he was upfront about this on the call.
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I think this is getting a little out of hand. watsa_the_i_banker? Yes, I do work for an investment bank...with about 100 employees...with no involvement in underwriting or trading MBS, CDS, CDOs, or other toxic assets. In no way can you attach any sort of responsibility for this mess on myself personally or the firm I work for. I've worked about 80-100 hours/week this year, and after my bonus, I made less than my girlfriend on an hourly basis...is this the evil you desire to tax? That will provide great motivation and incentives for people all across America...
-why not tax anyone who bought a 2nd home between 2004 - 2007?
-why not tax members of the former greenspan federal reserve for not preventing this bubble?
-why not tax former employees of Fannie/Freddie for overlevering its balance sheet?
-why not tax oil companies for causing $140 oil & perhaps increasing the severity of this recession?
-why not tax members of congress meddling with the economy to the point where it slows growth?
My point is there are many places one can point a finger for the cause of this recession...not just ibanks. Yet people have a desire to single-out this set of people and cap their wages out of some sort of jealousy...as if they know better than the employees/shareholders who these people work for. Is it possible that some bankers / traders create enough value for their employers to justify these bonuses? Or no, that is impossible? And the average American (with no banking or trading experience) somehow knows better than the employer trying to pay these sums of money?
Everyone on this board is entrenched in their own political/philosophical views. This is going nowhere...
Well, I think you're taking this a bit more personally than you should, and as such making it more personal that it should be. You certainly exacerbated the problem by calling people's statements stupid. Just because you disagree with a statement, or more accurately misunderstand a statement, doesn't mean it's stupid. I also believe that your statement that "Everyone on this board is entrenched in their own political/philosophical views" is incorrect. There are many many reasonable evidence and reason focused debates going on on this board that show people aren't entrenched in their views and are willing to expand their beliefs in a reasonable non-confrontational manner. I never said I disagreed with any of your 'philosophies' and I didn't even argue with any of them. My one comment was specific to a statement you made which I know from a legal standpoint was patently false. You went ahead and called it the stupidest thing ever which I think meant you took it all very personally and weren't listening to the actual argument. Your statement was legally incorrect. The government does have the right as long as it passes through the system set up by the constitution and the law. You still haven't responded to the actual argument or acknowledged it.
As to your other points, you are correct that there are many *many* other people that the government could use as scapegoats, and that the bankers in general, while they were guilty of causing this mess, they were not the *only* ones guilty of it. So are our politicians conveniently singling them out and conveniently not pointing their fingers at themselves? Sure. Are they conveniently playing with the 'mob rule' and giving the crowd what they want? Sure. Welcome to politics. That said, the problem with the argument that people who owned AIG/Freddie/Fannie debt should have taken huge losses is that who knows who actually owns that debt? It could be 'sophisticated investors' but so were the investors who invested with Madoff! (how many charities and trusting individuals where labelled 'sophisticated'?) Everything is interconnected and who knows who actually ended up owning it. Personally I think many of these institutions should be dismantled so we have a more resilient system. But that's just one arm chair economist's opinion.
Just try not to take it personally man, life is too short. And goodness get out of the office! 80-100 hours a week!? Again.. life is too short. IMHO.
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Ok just one more then I'm done. Sorry Ben Hacker. Radian hero, If you still believe it was the dumbest thing you've ever heard, I submit these for your consideration:
"I personally believe, that US Americans are unable to do so, because some people out there, in our nation, don't have that, and eh I believe that our education, like such as in South Africa, and the Iraq, everywhere like such as, and I believe that they should, our education over here, in the US, should help the US, or should help South Africa, and should help the Iraq and the Asian countries, so we will be able to build up our future... for our children."
Also:
http://www.jimgeary.com/faves/joxe/JOXETC01.HTM
;D
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Sure they do. It's called the progressive tax system. To an extreme the government could impose a 100% tax bracket for the highest income earners. The government has a right to tax its people. That is by law. So I don't understand how you say 'the government has no right'. That statement is completely false, the government has every right as long as it's passed by law.
Have you ever read Atlas Shrugged? I suggest you do.
"That statement is completely false, the government has every right as long as it's passed by law." - This is probably the dumbest statement I have ever read. Have you ever considered what gives the government the right to pass a law?
The government has only powers, given to it by the people it governs. The definition of an illegitimate governing body is one that exercises powers in excess of those given to it by the individuals it governs.
Well I never claimed to be as smart as an investment banker such as yourself, but I think you're probably being a bit extreme in claiming my statement to be the dumbest you've ever heard. Or maybe you've never been exposed to dumber people than I. It's probably possible since I'm kind of scraping the bottom of the barrel.
Ayn Rand huh? That's one sure way of declaring your political and philosophical standing to the world. And I think that's ultimately what the argument comes down to. Philosophy. You're arguing philosophy, I'm arguing law and legality. I'm well aware of what supposedly gives the government powers. That varies a lot depending on whether the government is a democracy, a republic, a dictatorship etc. I'm not sure what you declare to be an illegitimate government either. Is China's governing body illegitimate? I can guarantee you that they exercise powers way beyond those supposedly given 'to it by the individuals it governs'. When you say "The government has no right to impose limitations on the ability of a person to earn a specific wage", to me that is a legal question not a philosophical one. Sure there are gray areas, but ultimately if Congress can pass the law and the president will sign it, then the government does have the legal right. People can then challenge the constitutional legality of the law through the judicial branch if they so wish. Checks and balances, separation of powers, all that good stuff. Congress is elected by the people they govern. If they get too far out of line they'll get voted out. Now does the government have the philosophical 'right'? Well I don't quite know what that is since there are many philosophies in this world and each may give you a different answer.
Anyway, your further statement that "The government has only powers, given to it by the people it governs" is bewildering under the circumstances. I'm guessing that if you asked the majority of people in the US today, they'd likely vote to tax the banks and restrict egregious bonuses on the very people that almost brought us to financial ruin, what's your guess?
Sorry if I've uttered any other dumb statements, I was under the impression that this was a generally civil discussion board welcoming even stupid people as myself. That said I'd rather try to rationally debate a statement than have my statements labelled "dumbest I've ever heard" even by an obviously overly intelligent investment banker such as yourself.
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2. I dont think should ever happen. The government has no right to impose limitations on the ability of a person to earn a specific wage.
Sure they do. It's called the progressive tax system. To an extreme the government could impose a 100% tax bracket for the highest income earners. The government has a right to tax its people. That is by law. So I don't understand how you say 'the government has no right'. That statement is completely false, the government has every right as long as it's passed by law.
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Oh man.. not again! sigh.. Since the days I owned MFCAF (if that was in fact the original ticker I think i was mass financial back then), they bought then spun off KHD, then spun off blue earth refineries, then some australian reit, then merged back blue earth, then listed on the Vienna exchange, and now are splitting khd.. Is all this splitting and restructuring really the best idea they can think of to 'enhance share holder value'? Makes figuring out the tax implications one sordid affair... sigh.
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Just because the bottom fell out of the market in March and the price of SHLD dropped like a rock doesn't make his initial purchases necessarily a bad decision. The question to answer is 'what was the intrinsic value of the shares vs the market price at the time? Also, what were other potentially better uses of capital at the time?'. We can't be applying hindsight bias here. Bruce B. went to every local district to figure out the price of the Real estate back when SHLD was trading in the 120+ range. He said that *conservatively.. conservatively* they estimated the value of the real estate to be about $95-100/ share. Then he asked.. what do you pay for the brands (Die hard, Ken more, Craftsman, Lands End)? What do you pay for the largest appliance servicer in the US? What do you pay for the sears.com website? Just because subsequent to that there was a huge liquidity crisis that caused all sorts of forced selling, doesn't make the buyback decision a bad decision. I'm not saying Lampert is a saint and has done no wrong, and he has admitted that he obviously wishes he hadn't bought back shares at those higher prices. But I'm not sure we can say with the benefit of hindsight that it was a bad decision... BRK suffered a 50% plus drop back in the day too if I remember my history..
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The know nothing approach makes no sense.
It also devalues the many long term Berkshire shareholders, some of whom
must sell a certain percentage of their shares each year at far less than their intrinsic
value or much less than what shares of lower quality companies would bring.
On behalf of the many loyal long term shareholders, we appeal to you to rationalize your sales plan for Berkshire shares.
Doesn't Klarman always say that he looks at forced selling situations? As someone who may want to be acquiring BRK this is actually an opportunity! Buffet also always says that as long as your retirement is about 10 years+ away you actually want shares to go down in price so you can get them cheaper. Thank you Mr. Gates for creating artificial downward pressure on the shares! Now regarding retired folks who are living off of the BRK shares.. they should probably be living off bonds or something else. In the short term any equity's price can be irrational. That's not to say I'm not sympathetic, but this type of forced selling is exactly what we should be looking for and going after as value investors no?
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they claim to do dividend tracking. I haven't used them extensively though. If you do use them please do report back and let me know if they are as good as they claim to be.
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Apparently they are a spin off of NLY:
http://www.fool.com/investing/small-cap/2009/12/03/3-stocks-ready-to-roar.aspx
"Annaly Capital Management (NYSE: NLY) is doing the same thing with Chimera Investment, which it spun off to invest in the many distressed real-estate assets and mortgages that proliferate today."
Also looks like insiders were buying at $2.8-3.8 earlier this year. Reasonably significant amounts as well:
http://finance.yahoo.com/q/it?s=CIM
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http://open.salon.com/blog/kind_of_blue/2009/12/18/something_just_doesnt_add_the_fk_up
http://blogs.surfermag.com/office-blog/north-shore-1989-vs-2009/
Seriously, DEFLATION??? For everything that really matters to me and the average Joe, we've lived in inflationary times.
Know anyone who got a raise this year? Know anyone who got a paycut? Know anyone willing to go into more debt after their home equity went upside down? Oh, and that computer and cell phone.. how much would they have cost 5 years ago? How much do they cost now for double the speed? Deflation is all around :-) So is inflation.. Just depends where you look...
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Don't get too excited:
"Still, just a paltry 4% of all homeowners in need of workouts are receiving them."
I still hear that banks are very unlikely to do a loan modification.
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Didn't Warren do a bit of this sort of thing in his youth? ;D
Too funny. Bruce B admitted to being a bookie for a few years too! He actually dropped out of high school to do it! Then he went back. Funny (or sad) thing is that apparently it took him 10+ years to get back to the same level of income after he got educated :-)
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Will AMZN get in on any of this? IF I were a Kindle owner --- I sure would want access to these extra 1.8 million titles!
http://blog.shortcovers.com/2009/12/14/shortcovers-adds-1-8-million-titles-from-internet-archives/
http://finance.yahoo.com/news/Shortcovers-Adds-18-Million-bw-2553771753.html?x=0&.v=1
Why should investors assume that Amazon's free cash flow is free? They get it by squeezing their suppliers.
As they become less popular, the "free" cash flow will become less free. Make no mistake -- ALL retailers
eventually become less popular because there are few if any durable moats in that industry.
I agree. This will be more about relationships. I learned a very long time ago that in doing business, your customers are a lot more than just those you sell products to. A company’s customers are also it’s suppliers, employees, shareholders, etc. A top class company will do a great job of balancing out all these customer relationships. The more one looks into AMZN --- there are some very obvious pitfalls. AMZN’s approach is ‘their way or the highway’ ... but publishers have started to stand up to AMZN:
http://m.usatoday.com/Money/1148806/full/;jsessionid=EA918CCBBE0E13874E96C104343D36DB.wap2
AMZN might just have some viable competition when it comes to digital books. Shortcovers understands the importance of relationships and also supports all mobile device formats. Shortcovers would seem to be establishing a key leading role in working out issues with the publishing industry as to how digital content delivery evolves: http://www.blip.tv/file/2798840
A rebranding of Shortcovers is supposedly underway to something called: KOBO(More details are due out tomorrow). Heather Reisman has put together one heck of a team – they have done a lot in a very short period of time.
UCP / DD
This kind of reminds me of Apple. After Apple overpowered the digital download industry and took away all their pricing power, they had a much harder time getting into Video.. Apple TV anyone? None of the video studios wanted to deal with them.
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Zorro, where do you see a Fairholme purchase? I though Fairholme was limited to 5%. I remember Bruce saying there was a limit on how many shares a single external entity could own, and that was 5%, otherwise he would buy more...
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Forget about prosper, go for lendingclub.com. They actually screen their applicants! No one with a credit score under ~670 gets in to request a loan. They claim that the 'average' lender gets 9% a year. They have some interesting presentations on their websites. Supposedly the lowest defaults on loans are on credit refinances (makes sense..) and get this... on weddings and vacations! If someone stops paying, they get the collections people on them after a certain amount of time, plus all payments are reported to the credit score agencies, so people who default or don't pay will get their credit score whacked.
https://www.lendingclub.com/info/about-us.action
https://www.lendingclub.com/info/statistics.action
Average Interest Rate 12.97%
Annualized Default Rate 2.97%
Average Net Annualized Return 9.67%
Here's a guy who's invested with them a lot:
http://www.peerlendingwealth.com
If someone actually wants to open an account let me know.. They have a special offer where new lenders get $60 of 'free money' to lend:
I put it in my "junk bond" asset allocation. Haven't had it for over a year yet, had a few defaults. Haven't drawn any hard conclusions yet, but it's definitely better than prosper! Worth some entertainment money...
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Well, it's about time! The U.S. will be taxing fund managers and private equity managers at the 35% tax rate, rather than the lower capital gains rate of 15% some of them were paying. We've been paying the full 35% at MPIC from day one, and treated it as ordinary income. No more loophole for some of these guys! Cheers!
http://www.reuters.com/article/idUSN0923425920091209
You're saying it like it's a done deal. The bill hasn't passed the Senate yet, and apparently that's where this measure has failed to pass before... From the link: "The tax on fund managers' pay faces opposition from some Democrats in the Senate, which could stall that measure."
Need a Mutual Fund Recommendation
in General Discussion
Posted
As far as small undiscovered funds, I'd look at TILDX. They use options to earn some income but focus on fundamentals and value investing. Only bad thing is that small size makes the fee pretty high, but their performance has more than made up for it.