rmitz
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Posts posted by rmitz
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On the book, I realize that online is superior, that's why I went online first. All the stats on the database are updated every 30m, prices update from Yahoo! and are "fresh", or as fresh as they might be given the illiquidity in these stocks.
Watsa, I agree with you on the book and time spent, the thing is I realized it would take almost no time. My site is already digital and there's a simple script I could use to extract the information and autogenerate the PDF's. It might take an hour or two of programming and the book would be generated. I could create it once a month or whenever I wanted by just clicking a button going forward.
The simple thing is to just grab the data I already have, put it in print and dump it on Amazon using self-publish. It doesn't cost me anything, Amazon prints a book on demand when someone purchases it. I also considered writing up an analyst note per stock as a way to enhance value in a book form. The problem is not everyone sees the world the way I do, and something that might be attractive to me might not be attractive to someone else.
I get the distinct sense that there is a subset of investors who like these unlisted stocks who are oldschool. A book might appeal to them, and as a bonus I could sell this thing to libraries too.
I just wanted to point out that if you have contributors right now, making and profiting off the book is a bit much unless you reduce their costs further or give them a percentage cut towards their fees. I'm not sure what if any legal agreement you have contributors sign now.
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Thanks for the notes. I am not sure that being impartial is the best business move any more. These days it seems like news organizations are making their money by figuring out what their audience wants to hear and then saying it.
The best business move does not necessarily equal the business move worth the most money. There is a moral equation here.
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If you want to get a basic feel for how certain components interact in the evaluation of Berkshire, you can play with the Berkshire Hathaway Intrinivaluator: http://www.creativeacademics.com/finance/IV.html
We don't have the data for the year end, but personally I think it's still at least 20% undervalued. That said I don't have a trading allocation in BRK at this point, just a smallish semi-permanent allocation which I would only sell if things look obviously overvalued.
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Well, you know I invest like I do business, because that is what I understand and that is where I think I have an edge on other people. To rely too much on numbers simply is not my game. On which numbers, anyway? Peter Lynch managed his fund right at the beginning of the most fantastic secular bull market in history… Are his numbers really reliable for what might happen in a secular bear? Not any secular bear, but a secular bear at the end of a 70-year debt super-cycle? I am skeptical…
I just want to point out one thing here. Not that I necessarily disagree, but not everyone may even accept that a secular bear market or a debt super-cycle is even something which exists. That's probably where some differences in thinking are.
History is a useful force in finding today's patterns, but you can't get too close to using the patterns of yesterday to define "where you are".
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Y-Charts calculates US Total Debt vs. GDP at 349.8% (last reading 09/30/2012):
http://ycharts.com/indicators/us_total_debt_gdp
The Economist puts it at 289%.
Does someone know what the exact percentage is?
Thank you,
giofranchi
There really isn't an exact percentage, since those rely on future projections of usage for medicare, medicaid, and social security, along with the entire rest of the budget. GDP itself is kind of fuzzy as well. The current debt is the only thing you can get close to "exact". You can look up the debt here: http://www.treasurydirect.gov/NP/BPDLogin?application=np
The last date they have is for 1/17, with values of 11,573,578,115,566.81 for public debt, 4,859,053,374,287.89 for intergovernmental holdings (like SS holding treasuries), and totaling to: 16,432,631,489,854.70. (I believe this number might be accurate due to the debt ceiling--I think right now they're at max borrow and are moving things around to pay bills.) Current GDP is around 15 trillion. So the real actual debt outstanding is somewhat over GDP, but a large chunk of that is really owed internally, so it's not really clear you should count that. I also think it's silly to get detailed in future debt to GDP projections, because what cannot happen, will not happen. Something will change.
There is still plenty of time to come to grips with these problems, but it isn't going to be easy with the environment in Washington.
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How many of these have you personally met and know or you saw on admittely spinned (looking for extremist without context) news shows?
Packer
I have personally met quite a number, and I have seen plenty of ugliness firsthand. Of course they claim that calling the president a "n*gger" doesn't make them racist.
There have been so many things over time, but let's look at just one. There is really no reasonable way to look at the old birther camp as anything but racists, or at least race-baiters. The evidence was overwhelming, people just chose to ignore it or willfully misunderstand it.
This country has a long and acknowledged history of racism. Many people thought we were turning a page in history, but it turns out that things don't happen that quickly. It was foolish to think that these attitudes change over a few short decades; much of this is just the natural consequence of the republican party targeting the area where these feelings were and are strongest.
And to be completely clear, I also know a great deal of rational, totally non-racist people who identify as republican. Until recently I counted myself in this camp. But anything I've said should not be read as a complete "all or nothing" kind of statement.
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How many of these have you personally met and know or you saw on admittely spinned (looking for extremist without context) news shows?
Packer
I have personally met quite a number, and I have seen plenty of ugliness firsthand. Of course they claim that calling the president a "n*gger" doesn't make them racist.
There have been so many things over time, but let's look at just one. There is really no reasonable way to look at the old birther camp as anything but racists, or at least race-baiters. The evidence was overwhelming, people just chose to ignore it or willfully misunderstand it.
This country has a long and acknowledged history of racism. Many people thought we were turning a page in history, but it turns out that things don't happen that quickly. It was foolish to think that these attitudes change over a few short decades; much of this is just the natural consequence of the republican party targeting the area where these feelings were and are strongest.
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I don't disagree with you about causality--disagreeing with the administration is not a reason to be called a racist. I certainly disagree on a wide variety of points. Sadly, large numbers of the Republican base, in addition to disagreeing, are either thinly or openly racist. I don't think it's a big step for a humor article to point this out, especially given the radical distortions an entertainment channel like Fox News regularly brings to bear to its own audience.
"Monday the network will broadcast a continuous photomontage of white people."
That is absolutely disgusting! So if someone is politically opposed or says anything contrary to the current party then he is a racist and has to be white. This leftist garbage or using race to discredit the opposition is some of the worst stuff that I have seen in politics. An extremely bad precedent which should be severely condemned. And it does not stop there. Some in the left even called Tim Scott or a recently elected black senator (and the only one), who is a conservative in South Carolina, someone who is not in support of equal rights! Allen West in Florida was also dismissed by the left.
In all my years working and managing various people, I have never judged anyone based on their race, faith, gender or any other visible difference. I have always given responsibilities and then judged based on their individual accomplishments. For your information, I have never seen any trend pointing to me that one group was better than any other. Meritocracy has served me well and should be the only tool used to reward and suggest improvement to any individual.
I am personally very disappointed by this president and the fact that he is like the last two or creating his own catastrophe down the road along with the Fed which this time around will be a fallout of government bonds and related public finances. Clinton for his part created the Internet bubble which ended up in a crash and Bush, the real estate bubble which also ended up in a crash. My disapproval has nothing to do with race, but mismanagement of public finances and the fact that interest rates and all kinds of asset prices have been manipulated now for over 25 years. This constant desire to avoid any pain at any cost has resulted in much higher costs to the poor to middle class by increasing their cost of goods significantly (housing, car, food, energy, overpriced investments). A few percentage points savings in interest rates simply does not compensate for the large increase in cost in all other facets of life with no offsetting gain in income.
What Fox News is doing is one thing, but for the left media to call anyone a racist because he or she differs from current decisions is wrong. To prevent blame or opposition against any individual actions because they are part of a minority is discriminatory. It destroys meritocracy and the right of each individual to perform at their best.
Cardboard
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I feel as if I do not understand these businesses that well. I understand that they are capital intensive businesses that are expected to earn good rates of returns on the capital deployed. Does anyone know what exactly the return characteristics are? Also, is there anything "special" about these companies that makes them different from their competitors?
They don't really have competitors. Being heavily regulated, and in Midamerican's case, a utility, means you don't really have to compete in the same ways. The railroads have parts of the country where they don't really operate as a matter of history. Now this does not describe the entirety of their businesses but I believe it's a large enough chunk, and really was the core of the thesis.
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It kinda baffles me how much the US encourages people to take on debt they cannot afford.
I don't think there's that it's too much "encouragement" that is the problem; it's really the lack of basic financial literacy and understanding what those big numbers of dollars owed will mean.
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Can the human eye tell the difference between the resolutions?
Technically yes.
http://michaelbach.de/ot/lum_hyperacuity/index.html
In practice, people may not notice??? There are a lot of things that we can spot but usually we don't notice. For example, people tried doing 4K resolution in movie theatres instead of 2K and apparently nobody cares.
Even without going to that level, the whole "Retina" thing was predicated on a certain usage distance. If you use it closer than that, you can easily see pixels.
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More media hype.
Outside of Cape Cod, Long Island or coastal Jersey and Delaware it will most likely be nothing more than a typical windy storm.
Considering millions of people live in those areas... it's not really hype IMO
It is hype if you don't live in those areas.
Covering the story is one thing but wall-to-wall, saturation news coverage coast to coast is indeed hype.
It involves New York City; and they were hit bad. That automatically amplifies the news effect.
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While BRK is huge, many businesses have plenty of growth potential left. It's not like you are buying a $250b+ (+- intrinsic value) company with a few divisions in one general sector.
tombgrt,
you are right and I always like your posts and find something interesting!
But that is exactly true for JNJ as well. During their whole history they have been great capital allocators. And they created the largest conglomerate in the healthcare sector worldwide. Also JNJ could be seen as a collection of much smaller businesses with growth potential. But growth is far from assured! Don’t look further than the last 5 years, during which EPS growth has been negative!
My point is simply this: both in a $1 billion company and in a $200 billion company the man at the helm is very important. When JNJ gets “lucky” and chooses an outstanding CEO, growth resumes. Vice versa, when the chosen CEO is not that good, growth stalls. Why should it be different for BRK?
There is also another point, that maybe is a little bit subtler: JNJ is much more “impersonal” than BRK. JNJ might be just seen as “the healthcare sector”, or better yet as “the best of the healthcare sector”. BRK, instead, is a very personal collection of businesses. I think it is easier for JNJ to find a new very good CEO, than it is for BRK to find the right person to follow in Mr. Buffett’s footsteps…
But then again, I might be completely wrong… just food for thought!
@ Gio: Outperformance of the business in the future is one thing. You are leaving out another important factor for good investor returns: the price you are paying! Return on our investment is what should matter, not the degree of business outperformance. Current share price of BRK has put little value on future growth, if any.
As long as return on investment is concerned, what are your views on BRK? I mean, 10 years from now? At which rate do you think BRK can go on increasing shareholders equity? And which multiple of BV do you think BRK deserves?
giofranchi
The key will be having a CEO, that when they feel they cannot beat the market even by a point or two over the long term, will start to return capital to shareholders. I don't really count growth much at all in terms of berkshire; I look at it as assets with a stream of income. Eventually that income will start being returned, and it will still be a very safe investment.
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It is no just about overconfidence, a lack of ego can be a problem too — Howard Marks
But a problem for whom?
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I've got an even rarer investment: a sealed box of Gulf War cards in mint condition. They were so special, the boys decided to let the investment compound, instead of trading them. :)
I'd trade that for an unopened case of 1988 Donruss baseball cards. Among all things that resulted from the 1980s bubble in sports cards, especially rookie cards and unopened cases/boxes, I can't think of a worse investment than anything related to 1988 Donruss. I am the proud owner of an unopened case (or 2) that has been sitting in my father's garage for almost 25 years.
Oh man, that set was uglier than 1990 Donruss. Well done.
Ugly in looks or ugly in value? It's got both of course, but the plainest, ugliest has got to be 1986 Topps. Of course my knowledge of cards ends as of about 1989-1990. My attempt at early mogulhood was very poorly executed. I do also have somewhere a fairly good amount of pristine Shawon Dunston rookies as well. Is he still the second coming?
Ugly in looks, but I was just thinking of Donruss cards. This thread actually caused me to look, and wow are cards really cheap now. One set I always liked aesthetically was 1984 Donruss, and even that's pretty cheap...and if someone were to take into account inflation, they'd probably cry.
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I've got an even rarer investment: a sealed box of Gulf War cards in mint condition. They were so special, the boys decided to let the investment compound, instead of trading them. :)
I'd trade that for an unopened case of 1988 Donruss baseball cards. Among all things that resulted from the 1980s bubble in sports cards, especially rookie cards and unopened cases/boxes, I can't think of a worse investment than anything related to 1988 Donruss. I am the proud owner of an unopened case (or 2) that has been sitting in my father's garage for almost 25 years.
Oh man, that set was uglier than 1990 Donruss. Well done.
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the average user doesn't even know what fragmentation is. they go into the store see a phone, like a phone, buy a phone and take it home and use the phone. they have no idea that the phone might be updated or can be updated. feature phones never used to be upgraded. my Dad bought a droid phone. when I visited him I saw he had many apps that needed updating and he had an OS update waiting for him. So I did all the updates. Know what he said? he complained that things didn't look the same as before. He has yet to contact me asking why android is So fragmented.
Yes a small percentage of vocal users who do know about this stuff claim fragmentation is killing android. but the numbers of activations of android suggest otherwise. it's growing like a weed. products that grow like weeds don't have issues with consumers. it suggests that consumers find them of high value and utility.
if you do care about updates you have a choice to buy a nexus phone. you will get all the updates you want. you could also buy an Apple phone and pay their tax and you will get to update your phone. unfortunately you will get the "update" without getting all the features. but at least you can claim you are using a platform that is not fragmented.
Agreed. I can't get my girlfriend to update her SGS2 to ICS because she likes it the way it is. I think most people like a phone that will just work. If you really want the latest and greatest, root your phone and install any number of custom roms. I think most of the complaining about fragmentation is coming from bloggers and sudo developers who use/make custom roms and can't enable new flavors of android without phone drivers spoon fed to them by the phone manufacturers. The technically inclined may cry the loudest, but I have never seen a facebook status from someone complaining their phone is not getting the latest google update.
However, it is much more difficult for app *developers* to target a platform like that. Two reasons:
1) The aforementioned fragmentation makes the platform a nightmare to develop for in the same consistant way--your app may work, but certain APIs may be broken, things will look "wrong", bug reports will be numerous, and if you tried to be professional, it would be very difficult to test your code on the variety of phones out there. Testing matters.
2) There have been indications that a far lower percentage of people buy software on Android. Not only is there much higher piracy
http://www.gamasutra.com/view/news/176214/The_Android_piracy_problem.php
, but as you've indicated here, there are lots of people who never update anything, and so they won't be buying new software either.
And if we were to quote Ballmer, a platform's success hinges on "Developers, Developers, Developers, Developers." While many people won't be buying stuff, the margin usually does make or break the overall success of a platform.
Misc issues with not updating the software:
1) Giant security issues. The big viruses of the future will probably be targeting mobile devices.
2) Users have little choice for getting the touted "new android features" without buying a new phone. That may or may not work; I have heard of just as many people switching back to iOS from Android as the other way around, after dealing with hardware problems or software bugs on Android.
I certainly see no reason that Android shouldn't essentially own the lower end of the cellphone market--it's much more effective than rolling your own os or licensing another one for the low-margin cellphone maker.
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DaVita is a great business with obvious tailwinds (aging population with bulging waistlines=more diabetes). You have tremendous customer lock-in too, as customers come back regularly for treatments at the same facility.
Well, to a point--it isn't as strong as most of companies Buffett would get involved with, as technological change can greatly change the evaluation. In this area, that change may come somewhat faster than in transportation (railroads), for example. Even railroads are at the potential mercy to long-term technological change.
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My IB commission was $2.50 to convert the currency, so the fee isn't an issue. I'll definitely be exchanging into foreign currency before I make my next foreign investment. No more loans for me.
Note that you don't need to do this--when you're in the trader workstation, and you bring up your account summary, right click on your temporary loan after you purchase. Then you can select to close the currency transaction (I forget the exact menu option). This way you buy exactly the amount of foreign currency you need, and it's honestly less work.
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That'll be very interesting. Of course everything will depend on the price, but if they're priced according to Black-Scholes, there will probably be some structural undervaluation.
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I just can't bring myself to vote for either major party
I'm for following the constitution exactly as its written under Article 1, Section 8 (http://www.usconstitution.net/xconst_A1Sec8.html) which if followed we would have a govt much, much, much, more smaller than today. These people take an oath to uphold the constitution, but everyday they break it when they vote to add a new entitlement program or to spend money on things that are not specifically authorized.
In my opinion, we shouldn't have troops station in over 100 countries protecting some of the wealthiest nations on Earth or the most corrupt authoritarian regimes in the world. In total, the US spends over $1 trillion on foreign relations when you count military, foreign aid, intelligence agencies, Veteran Affairs, and etc. One would think this could be reduced to cut spending enough to begin cutting into our deficit but neither party is talking about it. Furthermore, we shouldn't go to war without a declaration of war issued by Congress--both parties are guilty of going to war without seeking a declaration over the past 6 decades.
Secondly, Social Security, Medicaid, Medicare, Food Stamps, unemployment, and all other welfare or entitlements programs are not authorized under the constitution. Neither party supports doing any dramatic cuts to the welfare or warfare aspect of our spending as I would like to see.
If the people wanted these programs they should do it legally by going through the amendment process to the constitution to add a line to allow for whatever entitlement program they wanted implemented. I don't like the idea that a simple majority at whatever time in history can ram down the throats of the minority a program they demand followed. This to me is majority dictatorship. Also, with the trashing of the constitution everyday our freedoms are being slowly taken away. What freedom will be taken away next? I fear someday it will be the freedom of speech or the freedom of religion that we all want to enjoy. How anyone can say we live in a truly free nation anymore when 40% of our income is stolen every year, I mean taken by the govt, even if that money is used for good? Charity should come from the heart, not from the govt holding a gun to my head demanding I give.
I am a former "pure" libertarian. I'd encourage you to sit down and think, think very hard about what the world would look like without government that has enough power to make and actually enforce laws. Libertarian thought tends to simplify everything into a "if the corporation infringes on my right to clean water or clean air, they are in the wrong", and that would be true, but then the system has no way to enforce anything. Power and might will make all.
*Someone* will find a way to take your money.
In reality the only way to keep yourself safe would depend on your own personal relationships. It would depend on the power of your tribe, which can only get so large based on your power structure. Overall wealth would deteriorate rapidly.
I actually agree with you when it comes to military costs--the needs are real geopolitical concerns, but I think we don't need to spend as much as we do. The savings there alone could be huge.
This is only one facet. When you actually look at how society actually works, keep following the underlying threads...
I do not believe that government is purely good, and neither do I believe that corporations are purely evil; though I think we have drifted too far into territory where corporations having morals is considered a bad thing. The important thing is the balance. Freedom exists in the clash of great forces within the country, though not for all, unfortunately. I believe the answer is a more perfect union, not less.
Science moves forward year by year with greater understanding. The idea that we had the perfect governmental system worked out over 200 years ago seems somewhat naive--the founders built the system to evolve over time, though they disagreed on how to do it, and how much power should reside in what part of the system. Like all of us, they were just people.
Our understanding of morality also moves forward year by year, though this progress is agonizingly slow in comparison and almost no one in general pays attention. If you were to sit down and study the actual bodies of work in this area you would find they certainly do not require religion any longer to live what most people would consider a good and honorable life.
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Well said Cardboard. Global recession, secular bear combined with a massive debt overhang and the market at over 20X normal earnings?? Fantasy land IMO. EVERYONE is expecting QE3 and EVERYONE is expecting it to buoy the market - classic set up to sell the news?
I seriously question the benefit of the ECB's conditional bond buying program as Europe continues to grind itself into depression. LTRO effect lasted for what? 90 days? Real sustainable. I honestly cannot believe what Europe is actually doing. It's fascinating to watch quite frankly. The US did such a good job arresting itself from a deflationary trap via TARP and massive deficits (QE was merely coincidental) - how can Europe not follow our model? Fascinating!!
I try to reconcile this with my own portfolio, and I find it somewhat difficult. The only company I own with a PE above 11 is Berkshire, at 18, and we all know that's not the right way to look at BRK. It's probably worth noting that companies probably have a lot more cash and assets now. It's also true for me that most of my stocks have not really appreciated in this market, so that makes it difficult to take profits and sit out...
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I've always thought hedge fund job job postings where pretty funny sometimes. You'll see analyst positions with a requirement that you generate your own successful investment ideas. If I could pull successful investment ideas out of a hat, why would I want to be your analyst? You become an analyst to move up the ladder in hopes that one day you can LEARN to generate your own investment ideas.
It'd be like saying, "Investment banking analyst position opening. Must bring a large book of business." If I have a large book of iBanking business, why the hell would I be an analyst?
This is just a specific example of more and more businesses abdicating any interest in training, and trying to build skill sets rather than just hiring *exactly* the right person who has done exactly the same job...and most people who fit that, why would they want exactly the same job they have now? Then businesses complain about not being able to hire anyone.
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Without the pensions problem, USPS would still be profitable, as I understand it.
I don't understand the vitriol many people have for the postal service. I have always had great service from them, they have many more convenient locations than any of the private carriers, the time it takes is minimal, and once they came in with their new pricing model a few years ago they were almost always cheaper, unless you have some large negotiation power.
I personally loathe dealing with the other carriers for actually shipping anything, and their delivery has given me more trouble over time as well.
If we were to get rid of the postal service, we would have to start regulating the other carriers to make sure they will serve the outlying areas adequately. This will of course cut back on their profits, so I can't see why they would agree to that.
Buffett Outlining Dividend Plan May Ease Successor’s Path
in Berkshire Hathaway
Posted
Basically zero when you read the letter and find that Warren is arguing that Berkshire is *stronger* for the diversity. I'd wager that anyone who is being considered for that job reads the annual letters.