Vish_ram

I've to disagree with your redistribution comment. If the kid going through Dakshina is really poor, he/she may not go to college. The Dakshina kid may deprive some other kid an IIT degree, but the deprived kid may still go to some other college. YOu cant say the same thing about Dakshina kid. There is also this secondary benefits, the Dakshina kid may inspire so many other poor kids to study hard. He/She may keep the hope alive for others. Now if you build a new school, how is it going to help poor kids unless you offer the education for free? If you have that kind of money, feel free to do it. How does building a road help alleviate poverty? Infrastructure doesn't translate to immediate attributable tangible benefits. It's not a bad idea to send poor kids to IIT as IIT'ians have higher chance of good pay (not guaranteed) and the positive cycle can continue. The pie grows and society benefits if you have hypothetical 60% going to college instead of 59% (or say 100 more Dakshina sponsored kids enter IT and get well paying jobs. The other 100 kids deprived of their IIT seats may still do something better). You should take a look at what Ebix's Robin Raina is doing; he is doing Pabrai to power of 10.

I hope Pabrai has a pay it forward policy for recipients; if he has one, this foundation will outlive Pabrai. It is refreshing to see "Don't give a man a fish, send him to fishing school" in action.

I'm just amazed that Dimon calls this an isolated incident. How come a bank CEO doesn't know the size & nature of derivative bets? I think that the temptation is just too great to screw around. It is like hiring a bunch of pyromaniacs to act as chef's and it is no surprise that the kitchen goes down in flames periodically. There is no hope on big banks. Dimon's tarnished reputation is the only good thing to come out of it.

I guess you have put this title in jest see this long term chart, http://upload.wikimedia.org/wikipedia/commons/d/df/JPY-USD_1950-.svg Japan with its industrial prowess, frugality & innovation has been having an appreciating currency for last 50 years. maybe all good things will come to an end.

Costco Trader Joe Both have fanatic set of followers; you have a winning formula when the perceived value of goods/experience is far more than the price you pay.

Why would Buffett associate himself with companies like Goldman? it certainly takes some sheen off him

Also the risks of real estate are grossly understated. I spent more than 10 hours driving around downtown/mid town Atlanta. I saw rows and rows of blighted neighbourhoods. These properties used to sell for 200K and above and are going for <10K. When you drive, all you'll see is some old drug addicted folks, walking by. People in Detroit have their sob stories as well. My guess is that, collectively people would have made more money investing in homes than in stocks (due to less trading). The other risks are HOA covenants, rise in crime, rezoning etc Also no one ever includes sweat equity; all the calls, drives, fixes go undocumented.

In USA, a single family home in an absolute worst investment with zero real return, and if you are lucky, you get some nominal return. the hidden costs are 1) maintenance of lawn, shrubs, 2) periodic painting inside and outside 3) constant upgrade to keep up the appearance, like upgrading outdated kitchen, bathrooms etc 4) rising property tax rates, this is like paying annual capital gains tax on a stock that hasn't been sold 5) constant replacement of HVAC, & other stuff You make money if you are lucky enough to buy before a bubble and sell it at peak of a bubble. In places like India that has high inflation rate, house is one of the few investment that protects you against raging inflation, you don't gain anything, but get to protect the purchasing power to an extent.

It is very interesting that you call this as "Berkshire moment". it is in fact the very anti-thesis of Berkshire. Buffett took money out of losing Berkshire and invested in profitable entities. Lampert has doubled down on SHLD selling other stuff & Sears revenues keep falling. Perhaps you should call this as Pre-Buffett Berkshire moment. I still cant figure out how long term shareholders (not those trading in and out) in the end will make money when revenues continue to drop. Lampert can star in the movie version of "Honey I shrunk the equity"

The main reason is human behavior. You have to minimize the spread of panic and its effect on consumption and consumer confidence. If mom and pop bank fails, most people would hardly notice. If a big bank fails, you'll hear it in every news media. Millions of people are directly/indirectly impacted and talk about it. We live in a new world where many banks are a twitter post away from a bank run. TBTF should be rechristened as TDTF (too dumb to fail) and FED should monitor the dumbness of management to decide how big they can get.

I've enjoyed reading harrylong's posts. I've owned EBIX for a long time and found his posts on EBIX refreshing, original. I have read his posts on computer trading with interest and it was above my IQ level (even though I work in IT & written code for years). I do like his new posts. What I like to see (may be more board members also) is, if you had a position that failed, we would like to know the thought process, what you've learnt and how you are correcting it in future. An over emphasis on positions that worked and sweeping under the carpet of others doesn't lend credibility. A good model to emulate is Pabrai, who had more than his fair share of failures, he explained, made corrections and doing just fine. It made Pabrai look more human. On a lighter note, one can make the computer system that came up with recommendations also suggest why the recommendation had failed later on. If the same computer can relearn from its mistakes, then we got an AI that will soon make human investors obsolete.

The solution to this is very simple; split GS to multiple independent companies GS proprietary trading GS Asset management GS IB Then ban any Goldmanite from taking a govt position for next 20 years; they have systematically infiltrated every govt organization that governs and regulates the markets. When these happen, I'll be riding the unicorn with tooth fairy on my lap

not quite, and also strap explosives to the same car, buy life insurance on the occupants, watch it explode & collect the insurance $. (was it Taibbi who gave this analogy?) I've long believed that there are only two kinds of people in wall street. Those who do fraud, and those who didn't have the opportunity to do fraud. With all this, this country has managed to be relatively stable, highest GDP in world, a birth place of innovation etc. Very strange indeed.

These ECRI guys are selling a product and people suck it up. Even if ECRI guys are predicting economy accurately 75% of the time, and if assuming that you're correct 75% in predicting market using economic indicators (a generous number), you arrive at 55% chance of making $ using ECRI. That is as good as a coin toss.

If Kurzweil's prediction comes true by 2019, then the entire auto insurance industry will collapse. Berkshire's Geico will be worth 25-40 billion by 2019 and may just vanish. Computers do most of the vehicle driving—-humans are in fact prohibited from driving on highways unassisted. Furthermore, when humans do take over the wheel, the onboard computer system constantly monitors their actions and takes control whenever the human drives recklessly. As a result, there are very few transportation accidents. Most roads now have automated driving systems—networks of monitoring and communication devices that allow computer-controlled automobiles to safely navigate.

At the end of it all, this saying will hold true "The vendors may remain irrational longer than the retailer can remain solvent"

the challenge is, 1) Lampert is not liquidating SHLD right now, hence basic liquidation analysis doesn't matter. 2) The market is going to price in never ending losses till Lampert reverses the current strategy. Any inventory valuations doesn't matter now. It might matter if a 3rd party can take over the company, but given the high insider ownership ,it is a moot point. 3) RE prices matter if Lampert is going for quick sale of RE assets. SHLD is like a candle burning furiosly on both sides, all Lampert is doing is to pour kerosene to it. We've seen funny things happen. In crisis, the vendors can demand upfront cash, causing severe liquidity issues. We may reach that state when SHLD trades below 10. I think that the short puts are speculative at best, what if a put doesn't trade at all (it has happened to me all the time, the spread widens to crazy levels). If you owned a share, you can sell it and get out gracefully. Short puts make sense if survival is guaranteed. I think there are other easy ways to lose money in the market.

I think Lampert's strategy would have worked 20 or even 15 years back. We live in an age of internet, with folks comparing prices using smart phones. With the entire industry reducing the number of retail locations or cutting it back, the marginal players like SHLD will get squeezed out. I have never seen or heard of a retailer that shrunk their (revenues) way to profitability & prosperity. The same goes for a retailer that never spruced up the stores. Lampert can only blame the economy for so long, the truth will be out soon. Few months back, when I spent 5K on appliances, I didnt find any compelling prices at Sears online. i've not visited a sears store in 2 years. They've totally lost the my mind share. Here is an option, spin off lands end, craftsman and other good brands and let that co. license to sears holding. THen slowly lead the main sears holding to bankruptcy or liquidate. what is amazing is that the market has been right so far.

On the issue of gaming the system, I recently watched the movie "Inside job". The SEC under pressure from Hank Paulson (GS CEO) to allow increase of leverage, convened the board meeting. One member said, "we asked the industry what the appropriate leverage should be", another commenting, "these are sophisticated investors.." and unanimously approved the leverage limit increase. It is like jailers getting the help of inmates to design the security system. The fact of the matter is that the wall street owns the government. we are yet to see the fallout and the political ramifications. I see a slow backlash brewing, it may amount to nothing too. We would know the outcome in a decade or two.

Given the momentum driven nature, wont it be funny if he lost money being long as well (at least in the short term)?

Sometimes I think that for every $1 benefit that the society got for Darpa-net kind of projects were offset by $10 worth of solyndra projects. The govt is better off sticking to military and bridges to nowhere (wait, missed an hyphen now-here)

It is fools gold to pursue these two "Taxing power" & "print your way out" 1) There is a limit to the taxing power if you follow Laffer curve. It gets counterproductive beyond a point. In a global interconnected world, an individual country has no power. Look at GE. they moved everything to offshore to hide taxes. The wealthy individuals also setup offshore accounts to minimize or evade taxes. How much can you squeeze the middle and lower class? 2) If US wants to retain their status as world currency, they cant print their way out. It is again self-defeating.

an interesting link http://online.wsj.com/article/SB10001424052748704662604576256782014528702.html?mod=wsj_share_facebook I think any concept taken to the extreme becomes a crap. We saw this in the recent financial debacle. Who would have had the chutzpah to speak for government regulation of mortgage industry during 2006? The context has also changed. When Rand wrote her book, it was the communist era.

interesting speech by Elizabeth Warren thanks to google, i found the pdf that has the pics that she is showing in the presentation http://www.yale.edu/law/leo/052005/papers/Warren.pdf this came in 2008, she was prescient. look at recent wsj article about P&G Hourglass strategy and Fairfax's bet on falling CPI

Frank Martin's article is half-baked at best. First he doesn't suggest the alternatives. For a moment lets do what he suggests; increase rates. What will happen? The C who got $ will benefit. Many millions will get moved from C to Jobless. The market will plunge with GDP dropping off a cliff. Then what? you'd have 30% unemployment rate, there'll be long lines to soup kitchen, people will be selling apples for 10 cents, you'll deal with law and order situation with increasing robbery,... not to mention race riots, xenophobia etc The fact of the matter is, A, B, & C are soaking in the same pool and B may manage to make it a cesspool time and again. it is easy to comment. what we've here is a complex situation. To give you an example, it costs 300K for a student to become a physician in US, where as in India, it costs maybe around 20K. How can an American citizen in bottom run compete with a chinese worker who is paid 10c/hr? Now you'll say educate them. where are they going to get the $ from? only a fraction go to colleges in US. (you can easily apply this to other developed countries as well). Look at the unemployment rate for graduates in US. it is hardly 4% or less. you are not having an issue. This unemployment issue for uneducated has been in making for a long time, only the .com & housing bubble masked it for too long. It has to pop up finally. The boat A, B & C is rocked by tough global forces and it punishes the uneducated, illiterate, & the clueless. The boat was in calmer waters for too long and has entered the rough global seas. There is no turning back. The C may complain all they want, but remember that C is enjoying cheap chinese goods (thanks to pegging). C is enjoying a good job. Now C can't have it both ways (cheap goods and high savings). Something got to give. FYI, i'm part of C too.