tede02

I would personally support a massive infrastructure stimulus. Unfortunately, I'm pessimistic it would happen until there is some massive calamity. The public is far too short-sited. I live in the Minneapolis area. Even after the I35 bridge collapsed, the state reportedly still has over 800 "structurally deficient" bridges, yet policy makers kick the can down the road every legislative session.

At a minimum just run a small retail footprint with appliance, home services, auto and maybe tools. Basically, only keep the stuff men would buy. Did anyone rip him a new on for sending them a big tax bill in connection with a shitty AR number? I agree. They did talk about the capital gains. Bruce basically said he does pay attention to taxes and noted that he had to pay his share because all of his liquid net worth is in the fund. Said he didn't want to sell losers to offset the gains and have to wait 31 days to buy them back (for fear the prices would go up). Also noted that his own mother fired him last year.

I'm hoping the cash drain stops because they finally start winding down the retail operation and sell the brands.

I guess SHLD is still a turn-around play. Ugh.... :-\ ::)

I don't post much on this thread because its hard to add anything intelligent beyond what all the regulars put out there. I've taken a small position because the legal arguments do seem sound. However, what's worried me from the beginning, and the reason I don't take on more exposure, is the politics involved. I'm sure these judges are just as scared as the politicians of a headline to the effect of, "hedge funds score big on xx ruling on Fannie/Freddie." Although this "should" have no relevance from a legal standpoint, its obviously at least one elephant in the room. On the flip side, it is interesting to see the various special interest groups calling for the release of the companies. Political pressure is coming from lots of different directions.

Stocks with "value" characteristics have without a doubt, been unfavorable in recent years. Frankly, the best general approach in recent years was to own the S&P500. But as is always the case, market sentiment will eventually change and go in another direction. Value investing is an approach that works over time, not every time.

I read The Frackers last month. It's been recommended by others. I would also highly recommend it. Non-technical. Reads more like a good story. You'll learn about the history of the oil industry and how wildcatters operate. Also a lot of good historical info on Continental, Cheniere, and Chesapeake.

GGG FDS BR

I think its important to also note that hedge funds tend to use leverage. My only point here is strategies that don't use leverage and outperform after fees really deserve credit.

Responding to the subject line, I personally don't care in an absolute sense. Just depends on what I'm looking for. For example, I've owned NLY for 6 or 7 years. I bought it for the dividend. But when I'm looking at stocks generally, I don't really care. I agree with Buffett; if operating cash can be reinvested at a high rate of return, why pay it out?

After seeing some of the depositions of the various litigation against Cohen, sac or former employees, I'm just not a fan of him. These guys regularly sought and traded on insider info.

Seems pretty clear that nothing is going to happen by way of Congress (with respect to reform or recap). Any action (by Congress or the admin) will be re-active to how the lawsuits are proceeding or forced by actual rulings. How long will it take is the big question.

Out of curiosity, is there any speculation as to the origins of the 3rd amendment? Reading the Fortune article, I just kept thinking, who actually came up with the idea for the net worth sweep? Seems unlikely to be a cabinet level official. Probably some underling at Treasury or someone working on the budget.

I think many people have considered a similar strategy as you're proposing (basically owning a basket of investment gurus). I would expect the portfolio to perform inline with the S&P over time, especially if you add more names. This is the classic problem with diversification. Every additional holding is likely to only bring your returns closer to the average (Howard Marks talks about this a lot). You're obviously hoping the "average" of the basket is higher than the market as a whole, but that is not a bet I would make with any substantial sum based on my own experience.

Jeffrey Gundlach bought NLY over the summer and discussed it publicly. http://blogs.barrons.com/incomeinvesting/2015/07/15/annaly-gets-boost-from-gundlach/. At the time he said he liked the company but didn't understand why they didn't buy back shares because the company trades at a significant discount to book. Not long after his comments, the company announced the board approved a share repurchase plan. I wonder how aggressive the firm has been in buying back shares? I've owned NLY for 5+ years. Bought at different prices.

It is interesting to watch all the dynamics of the energy markets play out. US production is finally declining, but other world players keep pumping. Below is an interesting article on how the Middle East states are being negatively impacted by low prices (massive budget deficits). I wouldn't be surprised if oil goes lower in the short-term, but it's extremely hard to see low prices persisting, say, 3 years out (unless that corresponds with a significant world economic slowdown). http://money.cnn.com/2015/10/27/news/economy/saudi-arabia-gas-subsidies-cheap-oil/index.html?iid=surge-grid-dom

It is possible that the employer pays the admin expenses. This is an option every employer has when they establish a 401k plan (though it isn't very common in my experience). The short answer to your question is the fees are simply netted from the fund returns, thus the participant never sees them directly. The 401k plan providers (Fidelity, Principal, John Hancock, etc.) have different levels of pricing on the same funds depending on the size of the plan. With small plans in particular (less than $1 million in assets), you'll actually find the opposite of what you described; the mutual fund expenses within the plan will be higher than what you would pay if you bought the fund at retail price. For these reasons, the fees/expenses never hit the statement and people believe they aren't paying anything. However, it is true that big 401k plans have much more favorable pricing because of economies of scale. If you and your wife only worked for fFrtune 500 companies for example, the expenses you paid were much more likely to be fair. But in the small plan market (businesses with less than 100 employees typically), the fees can be extremely high (and again, they are usually buried).

I would be willing to make a significant wager that the 401ks you and your wife participated in did in-fact charge significant fees that you never saw. Consumers (rightly so) have caused a big stir in recent years because they finally figured out that huge fees were being charged within 401k plans without any transparency. I'm in the business and have seen it first hand. Most 401k participants wrongly assume they pay no fees. But what is actually happening is the fees are being charged through a special share class or at the plan level. The "fee" never hits the participants statement but it is definitely there. The highest I've seen was a 2% wrap fee being charged to a group of fire fighters by one of the big brokerage firms. 1% was a lot more common up until the last 5 years. Fortunately for consumers, fee compression is occurring because of more awareness and competition. Additionally, new regulation has been gradually rolling out forcing plan providers to explicitly state what plan participants are paying on their individual statements (much to the chagrin of those in the financial services business).

It seems like the pressure just continues to build. Now Joe Biden's buddy is an investor in Fannie/Freddie and is suing the government (apologies if this was already posted but I hadn't seen it). http://www.bloomberg.com/politics/articles/2015-10-09/a-biden-buddy-picks-a-fight-over-mortgages

Regarding the proposals made by Corker, it seems like everything he wants to do could be implemented within the existing GSEs. However, as I understand his proposal, he would wipe out the existing GSEs and basically just replace them with one or more newly created entities that incorporate the changes he would like for the system. I suppose "getting rid of Freddie and Fannie" sounds good politically in some circles. But practically speaking, it seems kind of dumb to eliminate these two massive institutions that have decades of knowledge, experience and data in mortgage finance, not to mention their existing infrastructure (employees, technology, etc.) and start from scratch. Additionally, as I understand Corker's proposal, it still incorporates the key to the entire US housing market, government backing (although a bit watered down). Ackman, Bethany Mclean and others all seem to be correct in that there really isn't another viable option other than the GSEs if the country wants to maintain access to the 30 year fixed rate mortgage. I guess we (as a country) could set-up new institutions with different names. But what's the point (other than politics) if the system is fundamentally the same (meaning the government backing largely stays in tact)? It is all political.

Well written ni-co. That is a very good summary (at least as I perceived it) from Dalio. What this story also tells me is we're lucky that the entire world didn't experience some nasty deflation following 2009. There definitely was some, but I'm getting the picture that it could have been far worse as was the Great Depression. Bernanke clearly was worried about it. With respect to fiat money, I'm not sure how big a difference it makes. I'm certainly no expert here. If I understand Dalio correctly, interest rates stay low because people and businesses are deleveraging instead of spending (during this part of the cycle). Therefore, demand for credit remains extremely low.

I've been listening to some of Ray Dalio's stuff this week. He talks a lot about cycles and how most people are surprised when events happen that they've never experienced in there life-time even though these events have been repeated throughout history. This got me thinking about interest rates. What is the historical precedent for what seems to be very low rates? Looking at the ten year Treasury data on Robert Shiller's website, I found that the ten year yield dropped below 4% in February of 1880. Rates stayed below 4% until 1911 (over 31 years). A few decades later, rates dropped again for a long period. The ten year yield dropped below 3% in June of 1934. Rates basically did not get above 3% again until 1956 (with the exception of two months in 1953 when rates briefly exceeded 3%). That's essentially 22 years of rock bottom interest rates (just like we have today). Economists have been saying for over 3 years that rates have to rise, and like many, I used to just accepted the idea at face value (they have to rise because they are really low). But history certainly seems to suggest otherwise. Lastly, Dalio's 30 minute video on "How the economy works" is worth watching. It helped be better understand that is makes sense for rates to stay low for an extended period of time as much of the world deleverages.

And I'm sure they wouldn't mind a headline to the effect of "taxpayers earn $200 billion profit on Fannie/Freddie bailout" I absolutely agree. I understand doughishere's point, but don't see any repubs taking this angle. Populism is sweeping across the US as evidenced by the leading candidates (on both sides) for president. I don't think politicians of either side want ANY association (real, imagined, direct, or indirect) with hedge-funds.

This sure does make you wonder what is happening behind the scenes. Politically, I suspect that neither the White House or members of Congress want any headlines to the effect of "hedge-funds earn millions/billions in legal victory against Treasury".

@doughishere Extremely well put! I wholeheartedly agree.