enoch01
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Posts posted by enoch01
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Here's a piece of good news:
http://finance.yahoo.com/news/Fund-Withdrawals-Top-Lehman-bloomberg-4228473188.html?x=0
“When we’re getting close to a market bottom, the phone starts ringing off the hook and our clients want us to sell everything,” Bruce McCain, who helps manage $22 billion as chief investment strategist at the private-banking unit of KeyCorp, said in a phone interview on Sept. 14. “Market bottoms are less about an improvement in the fundamental situation, whether the economy or outlook for earnings, and a lot more about getting rid of all the anxious investors.”
I know many on this board, myself included, have been providing liquidity to such investors recently. We'll see where we are a year or two from now.
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Do you need to know anything about baseball to make sense of this book? I wanted to read this book for a long time but I have next to no knowledge of baseball.
Thanks
Vinod
A basic knowledge of baseball is helpful, but it's not essential to understand the thesis. I highly recommend the book.
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Dell shares: get 'em before they're all gone.
http://finance.yahoo.com/news/Dell-Board-Authorizes-bw-3282358519.html?x=0&.v=1
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I respectfully request that conversations about the origins of life draw to a close. There's lots of places on the web to discuss such topics. Let's not make this site an also-ran in a subject that is both heated and unrelated to the site's mission.
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The 10 year yield is shocking :o
If the world doesn't end, there are going to be some springs uncoiling in a hurry.
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Thanks for the article! Some things are crazy cheap these days...
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...I have made some very specific suggestions for the discretionary value investor:
I. There is a probability that discretionary value investors could be right about seemingly mispriced large-caps--or they could be eviscerated the way many were with HPQ.
II. It is naive for discretionary investors competing against bots to assume that the bots do not use value based methods. Many do, which narrows mispricings and the margins of safety in many securities.
III. Many of the bots are only let loose on certain universes of securities meeting certain size/liquidity thresholds.
IV. This means, rationally, that discretionary value investors, if I am correct that bots are often only let loose on securities meeting certain size/liquidity thresholds, should be focusing most of their time on nano-caps and micro-caps where the level of bot competition is minimal.
Proposition I is superfluous to your argument. In fact, Proposition I is consistent with your conclusion and its contrary. You don't even mention what the probability is.
Part of me is eager to see you prevail in getting people to ignore undervalued large caps, Harry. That way I'll be able to buy more of them. I just wanted to point out the irrelevance of Proposition I to your argument.
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I think it says more about the value of Buffett's franchise than BAC's.
Agree 100%. I continually underestimate Buffett's value to Berkshire. Disclosure: I'm long both, about equally.
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Ben,
Hard to disagree with what you said. I think partly they are willing to pay Buffett because they want the regulators' confidence. That could be of decent value to BAC.
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What an utterly rational move by Buffett. Not surprising at all.
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Great job guys - the new site looks and works great.
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S&P earnings would have to collapse by roughly 78% from their current level and stay there for 10 years to match the current U.S. 10 year treasury yield. This is fear at its extreme guys. I am convinced that many will look back at this period and wonder wtf they were thinking.
Waiting to buy the many bargains out there is simply trying to squeeze more returns. It is as risky as not knowing exactly when to cover a profitable short.
Very well said.
Berkshire and Burlington Northern eagerly issuing debt currently is another data point worth pondering.
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Microsoft has gotten some press lately, since Einhorn and Klarman have filed their holdings. If it isn't a fat pitch right now, I don't know what is. For perspective, I think it's worthwhile to revisit Viking's post that kicked off this thread. From a mere 15 months ago:
I established an initial position in MSFT today. I think it has become a very boring stock...
Price = $26.00
2010 Earnings = $2.05 to $2.10 (lets say $2.07); PE = 12.5
2011 Earnings = $2.20 (could easily come in higher should the economy continue to stabilize)
Dividend = $0.52 = 2%
Cash on hand = $5.00 per share; No debt to speak of. With earnings buying back meaningful amounts of shares and I would expect the dividend to continue to increase.
Can$ = $0.95 (relatively high, which is important for a Canadian investor)
Shares were trading at $31.38 in April; down almost 18% in a month.
As of today's close, the price is virtually unchanged, down a hair. TTM EPS is $2.69, an increase of 31%. P/E just under 10. Net cash per share is basically unchanged. Margins are holding.
Here's Value Line's current report: http://www3.valueline.com/dow30/f5905.pdf
Will they increase TTM EPS another 30% 15 months from now? If they do, where will the price be? If it remains unchanged, that will be a P/E of 7.4.
Either the company is winding down (they don't appear to be), or they are about to execute a huge, horrendous, value-destroying acquisition (certainly a risk), or Mr. Market is off his rocker. Any other guesses?
I'm long, of course.
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I think there's an easier to let HFT go down the tubes: don't cancel the trades when the robots go haywire.
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Now all we need is the ability to call the top in Gold.
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Eric/Txlaw/others,
Wondering why you bought the BAC call options today, rather than the underlying? On a day of panic where implied vol. has spiked to 62%, the option price is over two times the price at a normalized vol. of say 42%.
Right, good point. To clarify, I actually bought the common and the calls today, partly for that reason.
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Down to about 30% cash now. BAC and AIG prices got a little crazy today, no? If somebody only wants $1.10 for me to be able to take their BAC from them over the next year and a half at $10, it's a bet I can take.
Also liking the IBKR position with VIX and volume spiking. They must be minting money these days...
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Days like these are why I started a fund! We were buying like crazy. I think our partners will be happy within the year...I hope! ;D Cheers!
Indeed. Put a decent chunk to work today...a real puke fest.
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The founding fathers created so many checks and balances that getting ANYTHING sensible done in Washington is almost impossible.
First, maybe that's because the sensible thing is to not have Washington do too much. Or it's because they realized, after being careful students of history and governance generally, that if it's too easy to get "sensible" things done, then it's too easy to get "un-sensible" things done as well. The easy slide therefrom into tyranny was, and is, well-documented throughout history.
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I pretty sure Pabrai took his 17 year market cycle idea from Buffett.
Maybe. But then it seems like Pabrai's either didn't mention the salient point from Buffett, or isn't aware of it. It has nothing to do with specific time periods; the symmetry Buffett noted was simply a way of bringing attention to the underlying forces at work.
Here's Buffett:
http://money.cnn.com/magazines/fortune/fortune_archive/2001/12/10/314691/
"I concluded that the market's contrasting moves were caused by extraordinary changes in two critical economic variables--and by a related psychological force that eventually came into play."
The first variable he mentions is interest rates:
Interest rates, Long-term government bonds
• Dec. 31, 1964: 4.20%
• Dec. 31, 1981: 13.65%
• Dec. 31, 1998: 5.09%
The second economic variable he mentions is corporate profitability. Finally, the "psychological force" was speculative trading that gained popularity.
So to talk as if there is some kind of predictive power to the 17 year time frame (and it sure sounded like that is what Pabrai is doing) is to confuse the causes of market returns. He's either being obtuse or coy, I can't tell which.
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Wouldn't the fact that their fraud batting average is well over .500% make the odds that Sino is a fraud higher?
Isn't that like saying it's ok if a few innocent men receive the death penalty, since the bulk of them are guilty?
No. It's like saying that if the same process followed to correctly give the death penalty to 30 convicts also resulted in the conviction of the 31st, then chances are the 31st was correctly convicted. All else being equal. Nothing is said about it being "ok".
Anyway, thanks for the information. I enjoy John's blog, and he has absolutely nailed some recent frauds. I was just looking for an explanation of the "other" view of him.
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- The particular miscreants involved in some aspect or another (Herb Greenberg & John Hempton)
Could someone enlighten me on what makes Hempton such a miscreant? I don't want to go too far OT, but this is about the fifth or sixth thread here where I've seen him referred to like this.
Thanks in advance.
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This seems like it might turn into one of those divergent problems in which the structure of the problem itself almost guarantees that most people will not be able to solve it correctly.
Why do you think that?
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10% inflation means treasury rates of at least 10% which means bonds and most stocks get killed because their current earning power becomes less attractive compared to the risk free rate. Inflation is already priced into most commodities, what asset class provides the same optionality as cash?
Bingo. Well said.
Berkshire "Renews" Offer for TRH
in Berkshire Hathaway
Posted
Their reserve revisions are pretty ugly. I think book value is overstated right now.