rmitz

That's the number of shares.

Here's a somewhat old but good primer on some of the Fed basics: http://www.libertyunbound.com/archive/2004_10/woolsey-fed.html

Unfortunately, the answer to that isn't all that clear cut. Private business purchases *do* still have to take growth rates into account. There's a lot of unknowable moving parts and factors in here. Personally, I'm no where near either side on this one.

This is kind of an apples and oranges comparison. With the later stocks, timing is everything in terms of the investment value. With FFH and BRK, timing is important, but their longevity can make up for buying mistakes over time.

I just gotta say this once. You should lay off the capitals and bold in your writing. It makes me feel like I'm reading Zippy the Pinhead.

I very much agree with this point. I think it's the most important metric in valuing a home. However, there are some other variables that should be also be considered in conjunction with this metric; e.g., the $/sq ft for the total lot size and for the house size, the age of the home (this is important since old homes need much more maintenance), and the usable lot size (i.e., is part of the land on a hill?). I think you've still oversimplified things quite a bit. Is your driving time valueless? How about the costs in using a car at all? Proximity to stores, jobs, etc. are huge factors. How about the ratio of the $/sq ft against the local average wage? The build quality of the home (types of materials, craftsmanship factor) is also important. There are plenty of very old homes which remain in good shape because they were built well by someone who cared (with much higher quality materials than used today!), and the maintenance isn't really that much out of line with relatively new homes. Access to good schools, level of crime/quality of neighborhood, infrastructure quality, tax burden, ability to use property for other purposes...etc, etc. I'm sure I'm leaving a bunch out. Some of these things become very difficult to quantify, which is why reducing value to a single number doesn't really work that well.

This is going into my "too hard" pile for the moment. I'm going to need a good number of hours to read up on everything and I don't think I'll have that kind of time soon. My gut feeling is that it would be safer to look at the bonds as an investment, but I don't know about those returns.

Heh, if only.

This definitely sounds worth reading up on. I have one semi-rhetorical question for you--how capital intensive is the expansion of the business? Is there anything that prevents the chinese from stealing these ideas and running with them? Areas of the world with limited water resources would be the biggest beneficiaries of this sort of technology. As a cigar-butt, it doesn't have to be more than cheap, and all else being equal it sounds like it, but certainly a lot more research would be required.

A few years ago a Chinese company called China Expert Technology (CXTI) was discovered to be a fraud. They also had a brand-name auditor if I recall correctly (a member firm of BDO Seidman?). Here is how CXTI did it: The auditor signed off on their year-end financial statements, for our purposes this might be December 31, 2009. The subsequent quarterly statements are unaudited, so management can invent them if they wish to do so. The next audited financial statements for the year ending December 31, 2010 would not be due until March 31, 2011 or June 30, 2011, depending on whether the company files 10-Ks or 20-Fs. So, management has more than a year to put out fake quarterly financial statements in an attempt to get the share price up while disposing of their own shares in the company (probably without making the requisite SEC filings), and/or stealing the actual cash on hand. I believe this is also similar to what happened with ETLT.

From Buffett's perspective, Berkshire *was* his portfolio at the time (Not true, strictly speaking, but the general principal still holds). Since he has direct control of the capital allocation at Berkshire, it's just splitting hairs to say he has 100% of his assets in one "investment". I think the 20% principal is just hedging for future change. Will people *always* be able to trust management at Berkshire? In 50 years? 100? 500? I wouldn't even bet that they'd be *around* in 500 years.

Hahaha. I couldn't help it. We have clients exploring this...one client in particular just did a very large leveraged dividend (bullish sign). There would also seem to be substantial incentive to doing those special dividends this year. I suppose it will depend on how comfortable companies are feeling.

It's possible. I do wonder if there might be one more. It'll probably be mobbed, though.

Definitely some truth in here too. I, personally, don't really see the bad economy, except in the headline numbers and statistics, and maybe the occasional human interest piece. I live in Pittsburgh which has been slowly recovering from the departure of most of the Steel industry for many years. Things have pretty much continued with barely a pause. There was very little of a real estate dip here because there was never really a boom in the first place. Some articles place the local real estate market here as the best in the country (the raw numbers are no better than they were, but when you're playing football against a guy with one leg, you can do OK). The city finances still suck, but many other places are now much worse. So whatever happens in the economy, mostly just affects my mind, not my life.

The thing I've been wondering, is: What's going to happen with those people who got burned in the stock market when they get burned in the bond market too? Because of the way bond funds are structured, it's not like just holding long bonds and eventually getting your principal back. The MTM loss will be psychologically shocking.

Nope, wasn't me. I'd never discussed the company here before. I think I bought originally around $24, and sold around $40 to raise capital during the downturn. Of course there were dividends in there too. I re-bought at $15 during March 09. I'm not totally convinced it's a great investment at these levels. The reason I continue holding is that with the basis so low, I figure sitting on the dividend generating power is totally adequate. It's also not a large position, and I'm pretty sure that we won't see that kind of price again (unless the company itself is having bigger problems). That said, I should be doing a valuation to determine when I would need to sell. I do also appreciate the Chilean economy, and think they are the best place in South America to be doing business. My original thesis for PVD was definitely tied to the anticipated bright future of Chile, as a way to get involved in a foreign economy without being in an index fund. On the drawbacks, there are some structural benefits to PVD in particular that can change over time, and the actual earnings of the company are significantly tied with overall market performance. I was a little surprised by that last time, but I don't think they would be in the situation of the company itself being at risk.

It's important to note that today's web browsers require a pretty good chunk of horsepower; and as more functionality goes online, complexity will continue to increase in that area. While it has gotten more efficient, running javascript in the browser is still a lot more computationally expensive than running native code. I haven't run tests, but certainly it takes more computing power to run google docs than an older version of MS word. It has always been somewhat frustrating to me that MS Office 97 did everything I really needed and ran quickly on a simple pentium laptop...while today's software would not even start on a machine with only 64M of ram. [MSFT has made billions on locking people in to an upgrade cycle they don't actually need]. So while huge number crunching may move away from the desktop, those "lightweight" interfaces aren't necessarily that lightweight. Just *try* running Firefox or Safari on a machine only a few years old. The general point is that it seems that computing capacity has always increased to fill whatever you've got available, and I don't really see an inflection point yet. There are some possible ones, but nothing that is a done deal.

ATSG (Largest) BRK.B (Common and 2012 LEAPs) FBK (Recent) PVD (Have owned twice since 2006--picked it up this time in March 09) LRE BRFS TPL

If you want to call a massive position in Berkshire (et al) plus the investment of Berkshire's funds in fully-owned businesses, 100% cash, then so be it. It is true that by 1969 he had moved Berkshire out of all its marketable securities positions (Berkshire 1969 annual letter), but those were being at least somewhat reinvested in other ventures.

Well, except he didn't do that. He was in Berkshire at that point, and that was the vast majority of his holdings. And lest you think that's misleading, he was also actively investing from within Berkshire at that point.

I should *hope* that someone doing this as a job rather than a hobby can spend more time on the research than I can. :)

If the GDP is the same or lower 20-30 years from now, there must have been a measure of deflation. In broad strokes, this affects the entire economy. I don't actually believe that will happen. Just as others are arguing that the level of corporate profits as a percentage of GDP is unsustainable [i have no opinion on that issue], so likely is that expected level of health care spending as a percentage of GDP. It's obvious there will have to be changes along the way, and we have a LOT of time before the chickens come home to roost on that issue. The world, the whole environment is going to change in that time period, making precise predictions pretty fictional. So the point in general is, saying that that fictional predicted value amounts to a specific percentage of current debt...just doesn't make sense. Do we need some amount of more discipline in government? Absolutely. Is it the end of the world? Hardly.

Over 20 years, I think it would be extremely pessimistic to think that GDP will not be higher. That said, if GDP is NOT higher, likely the projections for future estimate costs for the entitlement programs are too high, so the percentage would be lower either way.

This debt number is misleading at best. 358% is only true if you count very long term commitments to Medicare and other entitlements, which are not current debt at all. There are three good reasons. 1) The programs can be changed long before the debt is a significant issue. 2) While the debt is higher right now, it's also nowhere near as high as Japan or a bunch of the european countries. The basic point here is that debt is sustainable for a lot longer than most people expect. 3) The GDP will be higher by the time these expenses actually occur.

The problem is Japan is already a nation of savers. Most of them would have just put the money back in the national post office / bank. In the US, you can bet that most people would spend it, at least after clearing out their debt.