ni-co

+1

This podcast episode is very interesting for oil bulls and bears alike. Highly recommended: Macro Voices: The Coming Bottom in Oil Prices Part I: Deep into Fundamentals with Art Berman https://overcast.fm/+F9abLcik0

Except in China, where red is the lucky color and, therefore, it's the other way around. ;)

Exactly. He's been saying this for a few years. I think he recognized this when he and Charlie bought into Bluechip Stamps: When you don't have to dip into the float it's essentially an eternal loan which functionally makes the money your property. This aspect of Berkshire is very well described in Snowball.

I agree with that. Maybe I'm arguing too much toowards the homo oeconomicus in the Brits. ;)

+1 Basing anything on dividend yield is a red flag to me because it's so arbitrary.

Where is the Ponzi aspect here? Ponzi schemers don't take your money, invest it for their benefit, and pay it back/settle your insured event in the end.

Even if it was true that the EU has benefited more from the UK than the other way around, would this make for an argument against a membership? This is not the relevant question. What matters for GB is whether they benefit more from a membership than from being outside. I highly doubt that you'll find sensible economic arguments that show that being outside will be better. Also think about the fact that GB will face a far less liberal EU if it decides to leave, simply be because the EU would have lost its driving liberal force by then. The current issue of the Economist has a good summary of what is more or less my position, too. I could argue that if the EU benefits more from the UK than vice versa, then the EU's influence on the UK must by definition be negative - for the reasons Aberhound proposes, probably. I'm not sure I care very much if the EU becomes less liberal if we leave - in fact in the end I think that would be its undoing and I don't see the benefit of delaying that. Thanks for the recommendation of the Economist - will find and read. If you argued this way you'd be assuming that it's a zero sum game where what the EU wins Britains have to lose. Highly unlikely that that's the case. Britain should care very much about other EU countries becoming less liberal. Germany becoming more mercantilistic would be at least as bad for the UK as it would be for Germany… I really don't understand the British Brexit movement. What you want is having your neighbors freely trading with you. Leaving the EU is the best way to make this less likely and to give up all the influence and advantages the UK has been fighting for for decades. In my opinion, it's highly irrational and much more driven by emotions and an understandable hate for bureaucracy. But thinking that a formally more autonomous UK will actually be more autonomous and, above that, better-off when leaving is delusional.

Just stumbled upon this. Might also be useful for making the decision: https://next.ft.com/content/7e0bce28-dbda-11e5-a72f-1e7744c66818

Even if it was true that the EU has benefited more from the UK than the other way around, would this make for an argument against a membership? This is not the relevant question. What matters for GB is whether they benefit more from a membership than from being outside. I highly doubt that you'll find sensible economic arguments that show that being outside will be better. Also think about the fact that GB will face a far less liberal EU if it decides to leave, simply be because the EU would have lost its driving liberal force by then. The current issue of the Economist has a good summary of what is more or less my position, too.

Pete, While your first argument isn't really an argument I fully understand your second one. Maybe it's really different for the UK but for Germany at least the EU has been a huge force for liberalization. And I think a lot of that is also due to Britain's influence. Most people underestimate how many privacy, free trade, and (abolishment of discriminating) tax laws are direct or indirect result of EU directives or the Maastricht treaty/European court of justice. One example: If a British company wanted to take over Siemens it would be very hard if not impossible for the German government to block it. It wouldn't be a problem at all if a Swiss company tried to do that. That it works that way is a direct result of the Fundamental Freedoms in the Maastricht treaty and the European Court of Justice watching over them. You can't imagine how hard Germany could make it e.g. for UK banks to do their business in Germany/with Germans when there is an easy way to give this business to a German bank and how easy it would be for lobbyists of German banks to convince our government/parliament to do so. In my opinion most arguments against a EU membership are simply naïve and presuppose that external non-membership countries would retain the benefits without having to burden any of the liabilities. This is not how politics work in practice. There are a lot of more or less hidden benefits of being member in the EU that, in my opinion, are orders of magnitude larger than the price even a country like Germany is paying for the membership. But this is just how I see it (and I suppose how most UK businesses see it?) and I know that's certainly not a popular position, neither in the UK nor in Germany. While I'd subscribe to the view that the EU also makes Europe a safer place I'm looking at this much more from a practical/utalitarian point of view. And just to be clear: I'm not talking about the euro zone. As much as I like the abstract idea of a common currency, the euro has been a flawed construct from the beginning. This is just about the EU (You, as a European, know that but many non-Europeans confuse these two institutions.). The "Greek tragedy", I would argue, is a direct result of this failed construct and not a result of EU regulations.

In my opinion, there won't be a realistic chance of coming back after leaving, neither for GB nor for any other country. I don't see any scenario, even less a scenario with better terms. As long as Germany is in the EU leaving is nothing but a loss of influence/power. But maybe this is just my German perspective. Obviously, I don't want Britain to leave because it's a balancing force. What is the realist's case for leaving? (Honest question)

Not to sidetrack this discussion but, come on guys, keep it fair. I know that he has a lot of enemies. But did he really make "most of his gains" by front-running orders? And "without this advantage he would be a lesser legend or not a legend at all"? This is the first time I hear this. In my mind he has been a legend. I think – but of course I don't know – that his edge was mainly analytical. At least, this is what I gain from interviews and articles I read about him. The trade he's probably most famous for is buying treasuries in 1981. At least this one has nothing to do with front-running orders.

There is only one pro argument but in my opinion it's the only convincing one: stay in the EU, for as long as it lasts, to keep having influence on decisions made there. GB already has the best possible deal.

I think what we are witnessing here is Germany preparing for the rescue of DB and other German banks: https://next.ft.com/content/49f1119a-dbdd-11e5-98fd-06d75973fe09

I don't think so but you may know more than I do.

My two cents: Good research is necessary but not sufficient. If your research results in what Michael Steinhardt calls "variant perception" then the odds may be in your favor; i.e. after having done "good research" your opinion has to be different from the consensus (which is usually reflected in the market price of a security) to really have the chance to profit from it. Most of my research goes into looking what the consensus opinion is on a company/asset etc. and usually I become interested when my view is significantly different (in either direction). But, by any means, this doesn't make it a sure winner (some sadist in this thread mentioned SHLD as an example where it hasn't worked out). In my mind, it only raises the chances (i.e. risk/reward) somewhere above 50/50 – which should be enough to outperform the market in the long term. From a Charly Rose interview with Steinhardt: (I stole this here)

Interesting article: http://www.euromoney.com/Article/3531616/Bank-capital-Sell-off-sparks-game-over-fear-for-AT1.html Game over for CoCos. We all know what this means: issuing equity is left as the only sensible option.

Thanks! Yes, I saw it. Hard to estimate how likely this is. I think the reason the ECB hasn't done it is that it is a tricky political issue. In the end, it would mean using creditor countries' money to rescue European banks in – inter alia – debtor countries. The more this situation is developing into a real crisis and people become aware that this is also threatening banks in creditor countries (like DB and ING) the more politicians may be willing to allow the ECB to do something like that. That said, I don't really see an advantage of buying the debt vs. direct equity infusions.

I'm sure that solves the problem. What they also could do is simply come together and agree that the banks are "rock-solid".

These different terms are useful mental models, if you use them precisely. Unfortunately, most people don't. 1. Conglomerate - A diversified set of independent businesses. This is usually an agency problem. The management benefits from the size and stability, but shareholders do not benefit. Berkshire is a notable exception (central control of capital allocation adds value). 2. Roll-ups - Try to consolidate a fragmented industry. Goal is to achieve economies of scale, reduce competition, and lower cost of capital. Exxon, railroads, waste management, cable companies. 3. Platform - Set of existing assets or operational knowledge that allow you to quickly add value to acquisitions (or organic investments). For example, Coke's distribution network. Facebook's ad network. Philidor. Restaurant Brand's zero-based budgeting, ownership culture, and master franchise model. The dynamics are very different for each of these. But there are other important distinctions. Small bolt-ons are usually better than large transformational deals. Cash deals are usually better than debt or stock deals. Thank you, this is indeed a helpful way to differentiate between those mental models. However, what I meant by dynamics are the debt/equity dynamics – and they are very similar. The simple idea is that the ROI on your acquisition post synergies > interest on the additional debt. There are tremendous dangers for this model to get out of hand sooner or later, especially when the entity is not controlled by a single "owner" (Buffett, Malone) but by independent agents that are, on top of that, rewarded with stock options (though even "owners" can overdo it like the Drahi/Altice example shows IMO).

Yes. It's always slightly different. But the dynamics are the same. And you could make the argument that when even most broadly diversified conglomerates collapsed after their acquisition boom in the 1960s this must be even more true for roll-ups.

What Malone is doing is shielding profits earned by his cash-cows by combining them with growth companies with high capex needs. Prototypical are the QVC/LVNTA tracking stocks. This is fundamentally different from what pharma conglomerates do, blowing-up their EPS through shady acquisition accounting, which is almost exactly what the conglomerates did in the 1960s. The only thing those two models have in common is that they thrive on cheap debt through acquisitions. I found it very interesting to see that in the recent sell-off LBTYA sold off in unison with the other "platform" cos. So consensus seems to be that they are one basket. But I agree with (board-member) Liberty that, at least in this case (Malone), you have to focus on the company level to get the difference. That said, I think the pharma "platform" cos are very comparable to the 1960s conglomerate and the REIT boom/bust sequences (both well documented and analyzed in Soros's Alchemy of Finance) but throwing in LBTYA doesn't add to the argument – it deducts from it.

Actually, given Bridgewater's Pure Alpha performance in 2008 was near +10% while global equities were significantly negative (S&P at -38.5%), I think it's fair to say Dalio's model did predict the crisis and profited from it... I'm also not sure whether White and Dalio are using the same analogy here. Does Dalio really say that the machine "can be closely controlled"? – I always pictured this more as an autonomous machine, though he definitely does say that it can be understood.

http://lynncinnamon.com/2016/01/the-big-short-how-michael-burry-invests-in-water/