link01

i think the transfer will be 25% after a 6% hurdle, if i recall. and at least for now its capped at 10mln a year?

considering current book val per share is about 280 i'd hold my nose & back up the truck too. i think sardar has earned himself a permanent discount upon the sudden change in his tune concerning his repeated comments about his compensation views back in the western sizzlin days, that his modest salary meant that he wanted to get rich with shareholders he was invested along side of, not off them etc etc: that turned out to be a lot of empty self serving rhetoric. it was a very disconcertibg blindside to earlier shareholders who thought it was them & their kind sardar was seeking to cultivate in a way similar to WEB & his loyal berkshire shareholders.

susan jacques? i doubt that it is she "rapping at the chamber door". but my quess of your guess is probably wide of the rhyme & left of the alliteration :o

A Conversation with Peter Thiel http://www.the-american-interest.com/article.cfm?piece=1187 "...We have different kinds of challenges on the government side. One is a little more philosophical in nature: We tend to think the future is indeterminate. But it used to be seen as a much more determinate thing and subject to rational planning. If it’s fundamentally unknowable, it doesn’t make sense to say anything about it. To put it in mathematical terms, we’ve had a shift from thinking of the world in terms of calculus to statistics. So, where we once tracked the motions of the heavenly bodies and could send Voyager to Jupiter over a multiyear trajectory, now we tend to think nature is fundamentally driven by the random movements of atoms or the Black-Scholes mathematical model of financial markets—the random walk down Wall Street. You can’t know where things are going; you only know they’re going to be random. I think some things are true about this statistical view of the future, but it’s extremely toxic for any kind of rational planning. It’s probably linked in part to the failure of state communist central planning, though I would argue that there is something to be said for some planning over no planning. We should debate whether it should be decentralized or centralized, but what the United States has today is an extremely big government, a quasi-socialist government, but without a five-year plan, with no plan whatsoever..."

Personally, I don't believe stimulus will fix it, but I feel it will make things more pleasant until final demand returns. Robert Shiller believes in tax and spend (stimulus) as a way to get things moving again. He doesn't see why people believe that stimulus spending implies deficits. well, if each new incremental dollar of deficit spending yields increasingly less than a dollar of real GDP growth & attendant & tax revenues then where does the magic intersection of a real turning point come into view? http://www.businessinsider.com/doubleline-jeff-gundlach-us-decline-fall-roman-empire-2012-2#-11 http://www.businessinsider.com/doubleline-jeff-gundlach-us-decline-fall-roman-empire-2012-2#-13 http://www.businessinsider.com/doubleline-jeff-gundlach-us-decline-fall-roman-empire-2012-2#-14 http://www.businessinsider.com/doubleline-jeff-gundlach-us-decline-fall-roman-empire-2012-2#-15 http://www.businessinsider.com/doubleline-jeff-gundlach-us-decline-fall-roman-empire-2012-2#-16 http://www.businessinsider.com/doubleline-jeff-gundlach-us-decline-fall-roman-empire-2012-2#-17 http://www.businessinsider.com/doubleline-jeff-gundlach-us-decline-fall-roman-empire-2012-2#-19 http://www.businessinsider.com/doubleline-jeff-gundlach-us-decline-fall-roman-empire-2012-2#-20

ditto. wish he ran a non institutional mutual fund. he's a superbly rational investor.

a bond portfolio with an avg duration of .8 yrs yields little more than cash, & certainly has a negative current real yield. if you have an over-weighted probability forecast of deflation doesnt it make sense to at least go far enough out on the yield curve to earn a coupon a smidge over the current inflation rate? bill gross at least has the courage of his (well publisized) convictions, short cash, long the farther end of the curve for a duration of 7 or so. rodriguez seems to be stuck in neutral between the 2 polar viewpoints, really, with no strong view at all.

via zerohedge (screwball anarchists, but sharp-eyed): <<Charles Schwab Corp, the discount brokerage and money manager, has filed two lawsuits accusing 11 major banks of conspiring to manipulate Libor, which is used to set interest rates on hundreds of trillions of dollars of securities. According to complaints filed Tuesday with the U.S. District Court in San Francisco, where Schwab is based, the banks violated antitrust, racketeering and securities laws by teaming up to depress the London Interbank Offered Rate, a floating benchmark for what banks charge each other on short-term loans. Schwab's lawsuits said the collusion deprived it of returns on tens of billions of dollars of Libor-based investments that the company and eight of its money market and ultra-short term bond mutual funds made from 2007 to early 2011. "Surreptitiously bilking investors of their rightful rates of returns on their investments, defendants reaped hundreds of millions, if not billions, of dollars in ill-gotten gains," Schwab said. Its lawsuits seek unspecified actual and punitive damages, which Schwab said can be tripled under federal law. Who is being sued? Why everyone's favorite bailed out (alleged) criminals of course: Defendants include the three largest U.S. banks -- Bank of America Corp, JPMorgan Chase & Co and Citigroup Inc. Others include Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings Plc, Lloyds Banking Group Plc, Royal Bank of Scotland Group Plc, UBS AG and WestLB AG. Bank of America spokesman Lawrence Grayson declined to comment, but Citigroup spokeswoman Danielle Romero-Apsilos said: "We believe the lawsuits are without merit." JPMorgan did not immediately respond to a request for comment.>> http://www.zerohedge.com/news/lieborgate-set-become-next-big-litigation-thing-lawsuits-against-libor-banks-avalanche

that's helpful, thx

and with a 'risk on' trade in the middle of a possible 100 year macro storm we are potentially more likely to see our 'receivables' become payables. in lieu of which i've for the 1st time last year i held a portion of my portfolio in bond mutual funds. never owned a mutual fund of any stripe before. and my portfolio turn over was worthy of a schitzo. tax man is gonna be happy. me, i've always preferred buy, hold, compound. but i confess that macro skepticism & confirmational market volatility changed my game plan temporarily on all but a handful of holdings

you're saying that as long as they manage to grow GDP faster than than their debt then the burden becomes progressively lighter over time? that sounds about right but walking a thin tightrope is still fraught with pitfalls.

assuming negative real rates of interest prevail, then that would indeed slowly chisel away at the over all burden of their debt carry. otherwise...?

the connundrum that wont soon go away softly into the night, unfortunately: <<The sustainable level of debt depends upon the existing level of public debt (as per cent of gross domestic product, the current budget position (per cent of gross domestic product, interest rates and growth rates as follows: Changes in government debt = budget deficit + [(Interest Rate – GDP growth) times debt] Italy illustrates the relationship between debt levels and growth. Assuming average borrowing costs of 4 per cent and a debt to GDP ratio of 120 per cent, Italy needs to grow at 4.8 per cent just to avoid increasing its debt burden where its budget is balanced. At current market borrowing costs of 6 per cent, Italy has to grow at a 7.2 per cent just to avoid increases in its debt levels. With a projected growth rate of only of 1 per cent to 2 per cent at best, Italy must reduce its debt levels significantly to avoid the risk of insolvency. Assuming interest costs of 4 per cent and growth of 2 per cent, Italy would have to run a budget surplus of 5 per cent per annum for 10 years to reduce its debt to 90 per cent of GDP. The UK's current net debt, ignoring measures to support the financial sector, is around £1,000bn (around 63 per cent of GDP). Interest costs are around £49bn, equivalent to 5 per cent per annum (around 3 per cent of GDP and 10 per cent of tax revenue). Assuming government revenues equal expenditures, Britain must grow at 3 per cent per annum just to ensure its debt levels do not rise. In the UK, significant cuts in government spending and higher taxes to bring the budget into balance have contributed to slower growth, in turn increasing the budget deficit driving higher government borrowing requirements and overall debt levels. The link between growth and debt levels highlights the vulnerability of any indebted economy. Economies with debt are forced to run a budget surplus (through spending cuts and tax increases), grow at very high rates, decrease borrowing costs or combination of these to merely stabilise debt levels. Where growth slows, indebted governments can become trapped in a self-defeating cycle of ever greater cycle of austerity which compound rather than solve the problem of debt or public finances.>> http://www.independent.co.uk/news/business/comment/satyajit-das-the-impossible-puzzle-how-to-reduce-debt-without-growth-6579616.html

ditto that!

some interesting points made here, tho i'm not so sure she speaks beyond the short term economic malaise: http://www.americanbanker.com/bankthink/How-Will-Big-Banks-Make-Money-1046203-1.html

inspiring article from mohnish: http://www.forbes.com/sites/mohnishpabrai/2012/02/01/i-stole-this-idea-get-untouchables-into-indias-m-i-t/?partner=yahootix

capitalism in crisis, & populist proposals on how to fix it: http://www.forbes.com/sites/robertlenzner/2012/01/30/the-fts-martin-wolf-wants-explicit-fiscal-redistribution-from-the-winners-to-the-losers/?partner=yahootix http://www.ft.com/intl/cms/s/0/c80b0d2c-4377-11e1-8489-00144feab49a.html#axzz1l3MStuqC

http://www.forbes.com/sites/robertlenzner/2012/01/30/the-economist-blasts-private-equity-romneys-path-to-fortune/?partner=yahootix

Why Warren Buffett Disdains The Private Equity Crowd Oracle of Omaha has never retreated from his long standing revulsion at the Leveraged Buyout Crowd who tried to camouflage their profession by calling themselves The Private Equity Crowd. He and his curmudgeon partner Charlie Munger also show their disdain for Mitt Romney’s wheeling and dealing at Bain & Co. by calling the Private Equity Crowd The Two and Twenty Crowd for the obscene 2% management fees and 20% carried The Private Equity Crowd demand for their services.( A recent report said Bain even charged a 30% carried interest fee, which brings PE to a new level of high class greed, if there is such a thing) Just recently Buffett told Time Magazine that “I don’t like what private equity firms do in terms of taking every dime they can and leveraging (companies) up so that they really aren’t equipped, in some cases, for the future.” More generally Buffett always includes a pungent blast at The Private Equity Crowd in his letters to shareholder. Just last year Buffett stuck it to the Private Equity Crowd for changing their “moniker” from “leveraged-buyout operators” to “private equity,” which you may notice no longer has the attribute “leverage” in its name. He has always sworn never to buy a company from the PE Crowd– as it doesn’t have the long-standing management-owner nucleus long associated with it. Calling this “Orwellian”: Buffett wrote that “private equity” is a “name that turns facts upside-down: A purchase of a business by these firms almost invariably results in dramatic reductions in the equity portion of the acquiree’s capital structure compared to that previously existing.” In other words its “Orwellian” because in point of fact there is less private equity and more dangerous debt piled on them. ” A number of these acquirees are now in mortal danger because of the debt piled on them by their private-equity buyers,” Buffett wrote. “ It’s a lopsided system whereby 2% of your principal is paid each year to the manager(ie Bain & Co.) even if he accomplishes nothing– or, for that matter, loses you a bundle– and additionally 20% of your profit is paid to him if he succeeds.” Now, The Private Equity Crowd– as personified by Mitt Romney’s quest for the White House, has become the vivid and telling controversy over the future of finance Capitalism. It is an issue closely related to the income disparity between rich and poor, between the 1% on Wall Street and the 99% on Main Street. Romney is being attacked by his rivals in the Republican party and will be assaulted by the notion of his greed during the days he ran Bain during the general campaign, should he, as seems likely, win the nomination.. That’s why such highly respected and influential pundits as David Brooks of the New York Times, Mark Shields, a syndicated columnist on PBS and Peggy Noonan in the Wall Street Journal are calling on Bain to articulate his views on the unfair ramifications of finance today and relate it to what Romney promises to do once he’s in the White House– profuse claims of creating new jobs in the economy. Trust me, his Private Equity Model isn’t going to create any new jobs. In the first instance, it’s going to reduce them.

you make some good points. but some pundits argue that it is especially the "tissue" segment of the pulp/paper market that is poised for growth: <<When I was in China this summer, I was a bit disturbed by the bathroom facilities in the rural areas—the communal poo rag had not yet been replaced by toilet paper. Even in tourist locations like the Great Wall, the restrooms had a rag attached to the wall to be used for wiping your ass. I had to ask our tour guide for confirmation that I wasn’t just imagining this—unfortunately I wasn’t. At the time, I just shrugged my shoulders and thought about it as little as possible. That was until I was alerted to the investment implications of this. Put simply, the average westerner uses over 25 lbs of tissue and toilet paper a year (hereafter simply called tissue). In most of the undeveloped world, the usage is a tiny fraction of that number, but it is growing rapidly....>> http://adventuresincapitalism.com/post/2011/01/09/What-Happens-When-4-Billion-People-Decide-To-Wipe-Their-Ass.aspx never the less, this mngt hasnt exaclty distinguished itself to date & should discounted with a skeptical eye, imo.

the point of max pessimsim was prob 15-20% points lower than now. the article might be a bit late. :-\

looks pretty nifty, & at a low cost too, as i recall when i was watching more closely. sardar, imo, is a much better operator of business than an investor. basically because he's shown himself to be tone-deaf to the long range implications of that elitist compensation scheme he put in place that pays himself like a hege fund manager vs a common ceo. in the long run this is going to cost him & his shareholders....his shareholders even more so.

thx, BG. he's def a fantastic young portrait painter. a great future lies in front of him. truth be told, tho, i personally incline more towards paintings with an expressionistic flavor vs the more photographic realism i see here buti'm impressed never the less.

i dont know. it sure seems like kuhn is making very specualtive bets here, which is fine if backed up by strong fundamental analysis & conviction. but why doesnt the artcicle specify whether these are leveraged or unleveraged returns? it does matter, after all. gundlachs returns, as i understand it, while less spectacular, are at least unleveraged & with a healthy cash cushion to enhance optionality in the event of extreme moves in subsets of the mbs market relative to others, & is less directional in its bets. it rather seeks low risk adjusted cash flow maximiziation (ie low duration in the present environment) positioning. kuhn leads a mortgage reit called TWO that is leveraged 7 to 1. that hasnt yet exactly shot the lights out. NLY remains the creme de la creme of reits in my book. but even its unlevered returns fall short of gundlachs total return bond fund, imo.

I find it strange that they hedge their equity portfolio for a major correction and then invest in such an economically sensitive industry. cheers Zorro well, in general stock prices are much more volatile than the underlying performance of the businesses, often for long periods of time. even more so in a secular regime change from bull market optimism apex to bear market pesssimism nadir, which is what ffh has been hedging against in its stock holdings.