rb

Yea the guy who wrote that article is an idiot. But you drop some names and you get you idiot piece picked up by the likes of Marketwatch and drive traffic. Some members made some very good points here that competitive advantages are not the same as monopoly power, etc, so I won't delve into those things. The truth is that if there's one thing that Buffett understands is competitive dynamics and he probably understands that better than anyone else. Berkshire invested in companies with monopolistic, near monopolistic, or oligopolistic attributes (I'll call them monopolistic here for short). But what the idiot writer misses is that Berkshire didn't make money because of these monopolistic dynamics of these companies. Berkshire made money because they've bought them at a discount to intrinsic value. Furthermore they made money because some other idiot agreed to sell it to Berkshire below IV. I don't really understand what the author expected Buffett to do. Some guy comes to him and says I want to sell you this very profitable company with a great competitive position for half of what it's worth. Then Buffett should say no, I don't want that, I want to go out there and buy some piece of shit for a lot of money? That has nothing to do with capitalism, or any other economic system for that matter, it has to do with whether you're smart or stupid.

I got an itchy sales finger. I must sit on my hands.

I have to admit: Costco is a weird beast.

Nestle, AB ImBev, Google.

And their multiples have gone up.

Thanks for posting. I kindof forgot about the quality statistics that AAR puts out. Took another look now. Looks like things haven't been going so well for rails since 2014. I'm not sure their current valuations are justified.

Well finance has a lot to do with guys trading stocks and waving money around in a strip club or buying fancy cars.

Funny, I thought that was about baseball. Serious? Just a baseball movie? If you're a value investor you can draw some parallels to value investing in your head. But really it's a baseball movie, not a finance one despite the fact the fact that Michael Lewis wrote the book. What's next? The Blind Side as a great finance movie?

I think my buy target for BRK.B would be ~$165 or about 1.2x book. I don’t consider it in value territory yet, just fairly valued. I agree with Spekulatius though I'm not as greedy as him. I'd pick BRK at 1.3. P/B now it's 1.53. Although in reality it's probably about 1.6 if you mark it. At the 1.5-1.6 book level BRK is somewhere in the neighborhood of fairly valued. That means that long term you'll average around 8-9%. Now here's the thing: There's nothing wrong with a 8-9% return. Especially if you get it without headaches and BRK won't give you headaches. So as long as you're aware of these facts and you're comfortable with them there's nothing wrong with buying BRK here.

Funny, I thought that was about baseball.

The economy was anything but fine in 2002. The tech bubble had burst, the utility sector was in shambles, 9/11 aftermath and a decent credit crunch with high spreads (not as bad as 2008, but still significant). In 2002 the economy just came out of a mild recession and was picking up steam, house prices were going up, and the fed just cut rates by A LOT. Does that sound like a bad environment for equities?

I don't really know why the the state of the economy or what the government is doing is so relevant here. Can't stock prices go down just because stock prices are too high? The S&P took a 30% dive in 2002 and the economy was doing just fine.

Dow futures down 3%, FTSE futures down 7%. Looks like tomorrow will be interesting as well.

Does anyone have anything to report regarding how various brokers behaved today?

Some algos blew fuses at 3:10

rb, I am a little curious how you know this. Up until two months ago, there were historically essentially zero capacity related IT failures amongst the major Canadian brokers. We seemed to have experienced a few days of wildly excessive demand which resulted in some of their platforms failing while others appear to be business as usual. Do you have some sort of industry IT knowledge that one broker built a good or proper system and one simply cobbled together some spare hardware and slapped together a bit of code? That situation is quite clearly a possibility, but without actually having worked in one of the brokerages, it's not clear to me how one would obtain that knowledge. I ask this because I am genuinely curious about why some brokers failed to deliver the goods while it was business as usual for others. In December, it seems clear that some of the brokers fell short on capacity -- did they have 80% or 90% of the capacity needed to manage the spike in pot stock trading, or did they have 60% or 70% of the required capacity for that demand spike? IB seems to have had at least 100% of the needed capacity, but was there still some spare capacity? Could IB have handled 50% more volume, would the platform take double the volume in December? Can we instead attribute IB's success to the fact that they might not have a legion of 20 year-olds who vigorously trade pot stocks because most of their clients are more serious, experienced investors? I am quite curious about all of this because the next generalized market event could quite possibly involve considerably higher volume than what we saw in December. I don't generally panic and sell when the market goes down, but it would be nice to at least be able sell.... SJ I did work for a couple of the banks (not for the online divisions though) and I know that they were woefully under invested in their online brokerages. They're kind of a joke. The feeling is that whatever it is it's good enough for the retail investors. If sometimes they don't work that's just life. I also think that you're thinking about this capacity issue the wrong way. I'm not a tech guy (so don;t take me as an authority) but I know a bit about it. You can generally process huge amounts of traffic/data at data center level with relatively little equipment if it's well configured. But IB and the banks brokers are fundamentally different in how they run. With IB you use TWS which is stand alone on your computer and communicates with IBs servers using data streams over certain communications protocols. This is a (ralatively) simple and robust solution. Going about it this way IB may very well have the capacity to do 10 or 20 times their normal volume because that extra capacity would not be very expensive. The banks on the other hand use a web application to deliver the service. These apps are probably not very good to start - none of the bank tech is. It's also a much more complicated solution than what IB uses. Put it under stress and it craps out. You can't know for sure what happened unless you were there but if I were to bet, I would bet that it was user application that crapped out and not their trading engine in the back because it ran out of capacity. Oh and regarding a market crisis, they're guaranteed to not work. They weren't working on volatile days in 2015 when we had that pullback and those were not that bad historically speaking.

There's also Trader a documentary about paul tudor jones

The wells stuff came out after close.

Too Big to Fail

As far as I know IB services are in house. They don't use any cloud service. This is not that complicated. IB built a proper operation. The banks also have reliable operations that don't go down... on the institutional side. The systems on the retail side are just shit. That's because they didn't care to build a good operation. As I said this isn't that complicated. Also if you choose to stay on the shit platform then you don't really have a right to complain. Edit: I also have some accounts at Questrade... and they're crap as well. But I don't complain because I know they're crap and made a conscious decision to have those accounts there.

I'm surprised nobody mentioned the obvious: WALL STREET. C'mon guys! Also Boiler Room.

Ok first off, the fact that long term output is driven by supply is consistent with Keynes and IS-LM. I also said in a previous post that if you get an bump in productivity would lead to lower rates and higher output. In your mythical example when people stop wanting to consume and stop working. That would translate into a decrease in long run supply and lead to higher rates. But if we spend time talking about mythical scenarios we should start debating what will happen to the 10 year treasury yield once unicorns start working in auto manufacturing and elves take over investment banking.

As far as I know IB's platform has never been overwhelmed by volume and we've been through some hairy times in the past. I don't know what spare capacity they keep. But their track record points to them as a good solution.

Output is determined by demand in the short run. In the long run output is determined by supply.

Why would output not change? Technological stagnation. Incremental improvements are not as groundbreaking as previous improvements. Take automobiles or farming for example. Why would resources be left idle? As a result of the above. We get so good at building a car, eventually Yes, we got really good at farming. We don't need a lot of farmers. But we don't have a huge bunch of idle farmers. Those people got to doing other things and we have higher output.