Vish_ram

I think BYD faces significant challenges that wont end anytime soon. 1) From a perception of quality point of view, look at American car story. The detroit had deservedly low reputation for decades, but in last 15 years, they dramatically improved it and are almost on par with imports. But public perception of quality is an entirely different story. BYD can't escape this phenomenon. 2) The collective high IQ of engineers dramatically doesn't improve quality low level factory workers. This is process driven and it involves continuous improvements. It's like climbing a mountain, BYD lags a lot and has much to catch up. TATA has been in automotive for decades, and many of their competitors. 3) Auto mfg is all about economies of scale, with slashed salesforce & subsequent reduced sales, their margins will shrink 4) People make pure economic decisions and give a rats behind (the common ones) to environment. I don't pay extra 6K for hybrid camry. With so much power cuts in china, why would a typical chinese buy high priced electric cars? This situation is kind of similar to SHLD. you have some great brands (value) trapped in stinking biz. The stink is only worsening. What do you do?

here is a solution for BYD Hire Steve Jobs as CEO. He would come up with iCar (that uses iBattery). The IC engines will go the way of horse and buggy, newspapers and CD's. The car will feature a special radio linked to itunes. Everytime you do an oil change or any service, 30% of what you pay will go to Apple. one serious option for them is to focus on battery and technology, leaving car making to more established players.

I took the companies that Harry long posted and put them in finviz. I checked the past month performance (he has posted on jun 5th). A theoretical portfolio with 100$ each in each of 30 stock has returned $3095, so the short position has a loss of $95 excluding commissions & other fees. Pl see the attachment

bing sucks big time I've tried putting the same search word in both bing and google and got better results in google

I admire the passion of some of LVLT longs (i don't have a position in LVLT). Maybe a better forum for them would be "Front & Center of LVLT". For those who complain, you come with an intellectual begging bowl and complain what is being offered. you don't have to take everything that is being offered. And it is not as bad you make it.

The wealth accrued to shareholders of tech companies is minuscule compared to the wealth accrued to society and to the non-tech companies, by use of their technology. Let us take a company like Microsoft. The popularity and use of PC's exploded in last 30 years and brought efficiency, economies of scale to many businesses. Walmart would never be able to process information without the hardware and software from IBM, SUN, ORCL, MSFT etc. Coke can thank its increased market cap due to the better logistics, better back office operations, better supply chain etc The technology improvements in medical field have increased life expectancy, quality of life. I think Gates the businessman has contributed 100 times to society as Gates the philanthropist. Probably a great majority of this 3% productivity growth in US could be contributed by tech companies.

The way i viewed it was like bond YTM, you are reinvesting the coupons and in the end YTM equals inflation. The article talks about zero return on owned home and not rentals. But if i got an asset that throws off free cash and asset value goes up in only nominal terms, then its not a bad deal. You are ignoring the value of the cash flow. I guess a utility yielding 14% is not worth purchasing if the price gains are merely nominal? I mean, that's really the issue here. You are asserting that real estate is poor investment but not discussing the fundamentals. Just speculating on price movement.

For real estate, the twin effects of reducing home prices and rents can wreak havoc on prices. In places of high inflation, the pitiful rent is always overcome by rising home prices (india), in mild to moderate inflation, if home owners have fixed mortage payments, any nominal increase in home prices accrues to the home owner (transfer of wealth from bond holders to home owners). There was another post that said, the real return on housing is practically zero. that means given some inflation ,what ever home price appreciation we got is purely in nominal terms. Now if you are going to have deflation, home prices are sure to drop even more. The actions of treasury and Fed reminds me of the lead character in "around the world in 80 days", burning pieces of furniture and other wooden parts in the ship to keep it going. how long is it going to last? the wood being the credibility of the US$. What if structural unemployment rate is 10% in US?

I'm totally intrigued by fairfax's derivative position that is betting on deflation (I didnt see any discussions on this). Given Japan's experience with long term deflation, I would be interested in getting some feedback on what sectors, industries or stocks work well in deflation. It is obvious that Real estate is a bad place to be.

Matt Taibbi's another great piece on GS http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511?print=true

thanks for the link. appreciate it. FAIRX is the only fund I own and when I started investing it had less than 100MM. the only reason I invested at that time was it had high % of assets in BRK. I'm happy with the returns, but surprised that he hasn't reduced the fees. I have the highest regards for Bruce Berkowitz for his ethics, patience, humility and lastly the returns.

(If true) I'm surprised Buffett is bullish on MSFT. The fact is MSFT is rapidly losing mind share amongst consumers. This is reflected in declining sales of windows. Every one from fortune to NY times has cataloged their foibles. The biggest issue with MSFT is the present management culture that doesn't foster innovation and the change in the business model of delivering software. On windows, it is so buggy, virus prone that everyone hates it. they will survive for a long time in corporate america. Everyone I know wants a mac and is not rooting for a windows. On office, once you have open format, the proprietary msft format will slowly die and the moat of office will be mostly gone. The new generations ipad and playbooks are going to get more and more powerful and will come up keyboard and other stuff to pretty much replace laptop/desktop. what is now looked at as consumption device will become a device for creating content. what made msft a formidable competitor? it is the bundling. they added all the stuff and gave a single price that pretty much made competing impossible. Now who wants to buy the bundle? Unlike oracle that makes business software, the switching costs of msft products are very low (at least in PC world). The moat is not that strong. In technology, don't ever think of a gradual decline, things will be swift and will move in lightning speed. If WINTEL got economies of scale in yesteryear's, don't you think same thing will happen for new breed of computing. its already happening. Read articles saying how APPL is making ipad cheaper than competitors. Market is way too smart, it is pricing ahead. Maybe there is a 20% chance that market is wrong. The only bright spot is emerging markets and corporate world. In tech area, if models change (paradigm shifts), the incumbents always end up in the losing side. The companies that MSFT/Intel sent to graveyard can attest to that.

My two cents; forget schweser & study notes Get the CFA books, read them line by line, take summary notes. mark important sections. CFA is awesome for someone who is completely new to finance, economics etc I would say 30% is useless as it talks about MPT, beta etc rest are great

My Wachovia account was transitioned to wells fargo. It was a nightmare to setup auto pay of mortage from checking (both accounts were in wells fargo/wachovia). They messed it up twice. I had to make 4 calls to customer service to get it right. they transferred from diff accounts (which didnt have balance and charged fees for insufficient funds) Also in our local branch, our ATM cards didn't work for a few days.

Lots of great posts and an interesting discussion. The wild card really is inflation. What would a retiree in Zimbabwe (who retired 10 years back) be doing now? His 1 million $ portfolio in zim$ may buy him a dozen peanuts now. No one can predict what inflation is going to be in next 30 years. Any one using a benign rate of 3.5% may be in for a nasty surprise. I'm sure everyone in this board would have read Buffett's thoughts on how inflation impacts market values. Even a company like KO can trade at 5 times P/E if inflation runs very high. As Buffett says, risk comes from not knowing what you are doing. How many have stress tested their portfolio with inflation of 10% or more? I think the only thing that handles inflation well is having "employable/employment creating skills". what one needs is plan B in retirement. Inflation can skyrocket due to these 1) failure to contain medicare/medicaid expenses 2) failure of federal govt to reduce expenditures 3) $ losing global currency status 4) failure of US to innovate There are also other risks What if yellow stone erupts, what if an underground quake creates a tsunami that sinks 10% of US..... Any one depending on equity market as a sure way to get income is dumb. I had an interesting conversation with my dad. I asked him why would anyone buy an apartment for 1 crore (10 million rupees) and get 1.6% yield and with capex of 0.3%, with net yield of 1.3% in India. He said, i can handle inflation better. In 5 years, the same apartment will be selling for way more than 1 crore, and giving same % yield, but if are renting with fixed income, you are hosed.

With all due respects to Sanjeev, I've to respectly disagree. A. Citing berkie and fairfax against macro focus is misguided at best. Buffett and Watsa have a built in macro meter that guides them well. They follow the "be greedy when others are fearful really well". Why in the world did prem buy CDS at the time he did? Do you think he had no idea of macro and the housing bubble? Why did buffett sell those puts? A belief that fed wont let market go to zero. Being in insurance biz they are tuned to going against grain, ie writing policies when times get tough and pulling out when ez money is in. They are experts in mean reversion. B. Lets take pabrai, he lost his shirt in delta financial. DFC was cheap on P/B , growing etc. not many could have predicted their demise. Fact is, they depended on outside funds for survival. DFC is like a strong man inside an oxygen chamber. The chamber is the macro. When O2 os great, DFC thrives. Anyone only paying attention to DFC and not the chamber would have lost the money. The prudent thing is to monitor the level of oxygen, as some biz dont generate their oxygen. Heck, pabrai's holdings are all in commodities that are subject to boom and bust. These co's depend on macro more than ever. I like the saying on some poster, "worry top down, focus bottoms up".

I think this whole Taleb black swan is bogus when it comes to making money. or at least for individual investors. It is a great mathematical concept that has practical relevance in some fields like engineering, national security etc Where are his last 20 years of returns? why is he not a billionaire yet? I can make a bet that he made more money off his books than his returns. there is so much controversy over his returns http://www.businessinsider.com/wait-before-you-invest-in-nassim-talebs-new-fund-2009-6 what he is trying to sell is this. An inverse correlated returns with the market. there are lots of suckers for this kind of fund.

uccmal is right. it is the refined food that is the problem I recommend folks to watch this video by Dr Robert Lustig The coming obesity epidemic has lot of ramifications. Berkshire may even sell KO stake in not so distant future. The recipe for disaster is this, productivity, over production, portions increase, over consumption, lethargy, addiction to video games/facebook/modern technology, hawking of junk foods to kids, lack of exercise, stressed/overworked parents, modern convenience/comforts, govt policy a.k.a conspiracy (subsidizing food costs, making fresh grown vegetable 5-10 times more expensive than soda/chips), fat parents spawning fat kids... vicious cycle repeats fact is, there is no easy solution. one side there is talk of freedom to choose, other side there is talk of nanny state. I was talking to a group of doctors and one said, the sad truth is, you can let a man die in cold under a bridge of hunger. but if he is sick, he can be admitted and get treatment for free. So overweight/obesity is like finance, private profits , socialized risk. Bravo. As a Berkie shareholder & WEB/Munger fan, I'm ashamed that Buffett will drink 6-10 cans of coke and eat chocolates in front of adoring fans. Is he setting a right example? No one knows the exercise he is doing to burn those calories.

here is the 139 page presentation http://cache.dealbreaker.com/uploads/2010/10/VIC2010Presentation.pdf

Dont forget MIT http://ocw.mit.edu/OcwWeb/web/home/home/index.htm

She was probably a wrong pick when she made her intentions clear. I remember reading a quote from before the book was written, saying that she wanted to focus on Buffett "the person", not much on Buffett the capital allocator. Buffett picked her thinking she is good in analyzing insurance companies and is a better in writing about his compounding machine. Both had different agendas. Shroeder also quit her job and focused full time on this, so her opportunity costs were high. No wonder when Buffett refused to put his weight to influence the sales, she had to resort to these. At this time, when Buffett is standing tall, it is a sad spectacle to see her do these things.

Lot of articles about Pabrai are misleading. I do understand the need to be in news cycle but where is the balance and fairness in those articles. 1) You can not cherry pick returns from a single portfolio that Pabrai is managing. One of his portfolio has underperformed market for last several years (as per Jan -09 letter) and no one talks about it. A better approach is to show a composite return. 2) Pabrai has used options, he has bought PNCL options etc. 3) Why is the Bloomberg article showing returns only till 2006? 4) By changing strategy, he talks about reducing risk. Why there's no talk about potential reduction in returns? I do have a lot of respect for Pabrai but his PT Barnum side sometimes gets the better of him. Or it is possible that the folks writing about him are inclined to flatter.

http://www.leucadia.com/C&P%20Letters/C&P2008.pdf

Bernanke and Paulson played hardball with Lewis. They said if you dont buy Merrill, then we wont be so friendly if you come to us for any funds later. I think they also said they may ask for management change.