bargainman

Sony walkman didn't have a lock on the cassette format. Nor was there a distribution moat since you couldn't connect to them all via the network. Here's the thing. Apple has 3 big businesses: Computers, iPods, iPhones. The first it owns 3-5% marketshare, the second it dominates, the third it has a lot of smartphone market share, but that's a small small percentage of the total mobile market share. ie. In spite of it's size, there's still room for growth.

To figure out AAPL's moat, just ask, what was MSFT's moat? Users and Applications. They have the high end user, and they have developers writing applications for them. One guy I know wants to get rid of his iPhone but can't cause it has the applications he wants. On top of that there is design, and the fact that they are the only company that builds the whole widget. That's a huge advantage in consumer electronics since they can control the whole experience.

A few things: I think it's a bad idea to short stocks period. Pabrai and others say "100% upside, infinite downside", vs long ideas "100% downside, infinite upside". It's a really really *really* bad idea to short a strong company based on valuation. For shorts you should go for optimisticly valued crumbling businesses with a catalyst that will bring them down. Netflix has quite a few good things going for it. Subscriber (recurring) revenue base with low attrition rates. Reed Hastings as CEO (very techie background). Ex-postmaster general on the board, to help with massive distribution of DVDs. Technology in place to efficiently order and route DVDs to people all throughout the US in optimized manner. Relationships with studios to use DVD content, and also now for streaming content. Very strong technical leadership and background. Really Netflix is a technology company in a content field. I'm not saying they aren't expensive.. But they are probably an acquisition target at some stage. They destroyed Blockbuster, and fended off both Walmart and Amazon from their turf. That should give you an idea of the quality of the company. Not maybe companies beat on Walmart and Amazon. As to where they can grow? I don't know, but their recent deal with Akamai indicates that for international they are probably thinking streaming. Anyway, I'm sure there are many, many *crappy* companies with sky high valuations and crushing debt. Those would be much better candidates for a short... Shorting great companies is just a bad bad idea, at any valuation... IMO.

I think that he came up with that checklist item after losing almost everything in CCRT, and maybe DFC (although I'm not sure about DFC). He put a lot into CCRT and lost pretty much all of it. I'm really not sure that I would draw the conclusion he did, ie that he shouldn't invest in companies where they 'are win-win for the ecosystem'. There is a lot to be said about high rate credit cards, and a lot of people defend them with good reason. I'm not sure that CCRT was engaged in activities that weren't 'win-win' for the ecosystem, but I guess everyone had moral judgements and it's up to each person to deal within their boundaries...

Um, and what would you call the investments they made with wintergreen and Bill Ackman, with the purpose of learning about other investments?

You could always sell some puts and earn some income while waiting for a lower price...

Has anyone bought LRE using IB? Can you get them directly on the LSE?

Well in this testimony today he seems to be taking his mea culpa all back...

Greenspan hasn't claimed no fault, to my knowledge, but has claimed that low interest rates did not significantly contribute to the credit bubble. He actually has a decent argument involving correlations between short-term rates, the 10-year treasuries, and overseas savings. However, that is not an argument to absolve the Fed given the regulatory powers that Greenspan squandered in his Fountainhead fantasy. http://finance.yahoo.com/news/Greenspan-defends-record-at-apf-712700185.html?x=0&sec=topStories&pos=main&asset=&ccode= "In his opening remarks, Greenspan blamed a litany of other parties and historical events for the meltdown but accepted no responsibility for himself or the Fed, which he led from 1987 until early 2006."

"The former Fed chairman responded that my insights had been a “statistical illusion.” Perhaps, he suggested, I was just a supremely lucky flipper of coins." Unbelievable. What's the old expression... "those who do not learn from the past...". I guess it doesn't matter with Greenspan since he'll be dead when the next fed caused bubble comes around...

Bronco, sorry, let me clarify my question. I guess I was asking "why the discrepancy between BV and FMV?" I was mostly curious at how they were tracking the 3 public companies on their books. Did they buy them at a cheaper price and have them at a much lower value on their books? Just curious if anyone has done that research. Thanks.

Can someone answer this: "On February 24, 2010, the aggregate market value of Loews’s ownership interests in our three publicly traded subsidiaries totaled approximately $15.2 billion, or $36 per share of Loews common stock. Other assets attributed to Loews common stock include our two wholly owned subsidiaries, HighMount and Loews Hotels; our 100 percent ownership of Boardwalk Pipeline’s general partner; holding company cash and investments net of holding company debt; CNA senior preferred stock; and Boardwalk Pipeline Class B units and subordinated debt." What I don't get though is why they say: "Book value = $39.76 at year-end 2009".. does that mean that their other own subs are only 3.76/share? Or is does the market value of their public subs not make it directly into the book value calculation?

Hmm according to 550, "If you are not in the business of writing options and an option you write on stocks, securities, commodities, or commodity futures is not exercised (or repurchased), the amount you receive is a short-term capital gain." So why are you concerned about the short term tax penalty? Doesn't matter if you sell leaps or not, you'll get short term tax rates..

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.

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..

Just curious, does he mention Fairfax at all?

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 :-)

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.

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.

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.

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! 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.

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.

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: http://www.huffingtonpost.com/2009/12/29/the-dumbest-quotes-of-the_n_405836.html?slidenumber=k937TPjX274%3D&slideshow#slide_image "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

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.

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.