Uccmal

Can anyone enlighten me as to how much of the total debt in Sears ESL holds? The obvious route to take is bankruptcy, as per the one article above. The longer I think about this situation the graver it becomes. My wife's mom gives everyone Sears gift cards for X-mas and she sent out a note today to everyone to use their cards quickly. If lay persons are thinking like this then you can watch the entire business take a further hammering on today's news. The gift card and points businesses will get killed.

Only anecdotally. Sears used to be my first stop for small appliances, christmas gifts, and clothes for myself. About 3 years ago, coincidentally as sears us was consolidating control, I went through the coffee maker debacle. Went through three coffee makers before giving up and buying one elsewhere. Then cam the clothing problem. I was trying to buy pants and couldn't find a change room - they were all taped up, and once I found one a couple of hundred yards away, then I couldn't find an open cash desk. Then the shirts that shrank dramatically after washing the same way I had always washed. This Christmas I wanted to buy a Jewelry box as a gift. Sears website had stuff on it but when I went into the Sears store, there was nothing, and the Jewelry section had shrunk to about three small desks. Now correct me if I am wrong but Jewelry and clothes are fairly high margin items. Oh, and there was the bassinet two years ago. Sears has a substantial baby section. There was a nice bassinet for sale on the floor. We told the sales person we wanted to buy one, she checked inventory and couldn't find one - now there was this one on the floor. A retailer on the ball, such as Nebraska FM would have sold me that one at a discount - but not Sears. They wanted to keep it on display to show everyone a product they didn't stock. Went to toys r us and bought it for the same price. The store I go/went to is an anchor of one of the premier indoor malls in Toronto. I don't know what has happened but I suspect it has to do with inventory and management 'savings' edicts coming from Hoffman Estates. To me, it looks as though SHLD has accidentally killed their company in their zeal to generate free cash flow and buy back shares. In the brief recession of 2009 while other retailers were investing in their futures Sears was busy killing the company. Anyone who thinks the label brands have value at this point, under present management outside of Sears, is nuts. Gross incompetence is what has happened. What good is owning SHLD shares if the company is ever shrinking? The worst part is that ESL may take it private one day, and freeze out those who have waited all these years for Eddie to make his big profitable moves to turn it into the next Berkshire. Eddie is not Warren. WEB quickly deployed Brk cash into unrelated, cash generating industries. WEB also signaled his intent by closing his outside partnership and focusing on BRK and it's subs. ESL has not. As I said above, I think he is going to take this monster in house eventually, and holders who bought the stock along the way will be frozen out. Have held SHLD stock in the past and read a couple of annuals. Gave up years ago.

Sears Canada has massively deteriorated in the past two to three years. I used to shop there all the time. Now I don't even set foot inside. They don't stock anything I needor want and I am hardly a virtuoso shopper. Lands End QC is abominable, as are all their proprietary products. If I want to buy this garbage I can pay a fraction of the price at Walmart. However, the Sears Homesense here seems to do better, with furniture and appliances. But the markup on this stuff is tight. IMHO, management out of Illinois, whatever their agenda, has destroyed a former cash cow in Sears Canada. It was their battle to win, but they ruined it through their aggressive cutting, at the staff, and product levels. In effect, Eddie has ruined a very successful company. You couldn't pay me to invest with him in this monster.

That sort of describes my sentiments. Moore, last I checked, after the financial crisis, Chanos multi-year returns were zero. Al.

So to all of you who play video games or have kids who play them, I need some advice. My son's 8th b-day is coming up in mid january. What's better: X-box, or Nintendo. Can you download free games to play on either of these? My son is trashing our PCs playing video games that he downloads and it is time for something a little more robust. I have an old colour TV and an extra monitor kicking around that he can use. I just need the console. So far he likes conventional games along the lines of Mario Bros. and NHL hockey. I am totally ignorant of the offerings today having grown up with Space Invaders, Asteroids, Pengo, and Pac Man, and graduated 10 years after to Masters of Orion, and Civilization.

Don't follow the crowd! It's obviously going to go down now. lol. I have been growing my position all fall, slowly. Combination of Leaps and warrants. 5-7% total assets. Berkowitz thought this was a deal in the mid teens.

Well Eric, quite obvious what's going on. Everyone is using rail....lol.

He's probably known these guys, the William Ashley folks, etc for decades. Why not invest with them?

I like their store at Sherway gardens. Don't buy much there but the I am not much into shopping - sure you can relate.

I am probably not far off on suggesting that 20% of global military expenditures go toward preserving the oil supply. This would include Europe, UK, China, US, Canada, and others. The US was never alone in Iraq. The Persian Gulf is full of ships that would be wholly unnecessary if there was no oil there. The Chinese finance military in far flung places to ensure supply. Then there is containing Iran, and stabilizing Saudi with continuous Nato presence. The first gulf war was fought over oil and nothing else. I'll wager that the total dollars spent by world militaries on oil security, outweigh any profits ever made by energy companies. It is a ridiculous bet since we cant prove it either way. If I had the time I'd write a bestseller on the topic. My main thesis is that in aggregate solar is cheaper, than oil, now, when you factor in all externalities. So far solar's security, and pollution costs are negligible.

Packer, If you added back in the all the costs associated with oil would it still be profitable, in and of itself? That is the real question. I would say absolutely no way. It would be relatively simple to check. Add up all the cash flows from the worlds oil majors and subtract say 30 %of the money spent by the militaries, across the world, 5% of world health care costs (from pollution), and tack on all subsidies by all governments for oil exploration. There is no way that oil is actually profitable in this context. It is what we do with the cheap oil in terms of manufacturing that is profitable. As far as XOM and others. These are energy companies. If the grass gets greener elsewhere you can be sure the majors will be there but quick.

Jsarbitrage, Those "subsidies" didn't even occur to me but you are wholly correct. I am sure if one looked at all the externalities, O&g is comparable to solar. In fact I am certain of it. If you added up the real cost of oil there would be no need to subsidize solar. Even more interesting is that solar is in its infancy so costs will still come way down and efficiencies will rise.

Nwoodman, The existence of subsidies is a given. I am curious how direct subsidies of the solar energy would compare to the indirect subsidies the coal industry recieves, or the direct subsidies the O&G industry recieves. For example, the roads that coal trucks drive on; pollution related issues with coal. Alot of the infrastructure built for coal usage was built by society over time. O&G is subsidized during the E&P phase. Oil has been massively subsidized over time as well. The entire infrastructure favours oil usage. I am guessing over the next year ot two as expertise grows and prices decline that solar will quickly become competitive to all the others. This assumes that all subsideis for all industries are properly accounted for, something that coal and oil lobbyists seldom do.

It produces at capacity the same amount of power as a single large nuke. Of course a nuke produces power 24 hours per day. 1 nuke costs around 7 billion. Optimistically, the PV plant will produce the equivalent of 1/2 one nuke, which would cost 3.75 B. That of course does not include the legacy costs of nuclear which will be millions per year for generations. It doesn't include fuel costs which are cheap for nuclear but not near as cheap as PV. It does not include maintenace costs which are vastly higher for Nukes. Solar operating cost must be much cheaper than nuclear as well. You dont need nearly the hardware, safety, and security with solar, as with nuke. The only issue is consistency. All in all it suggests that solar is cheaper than Nuclear now, especially when one buys at the bottom of the market, as Buffett has. I would say this investment indicates that new energy paradigm has formed where solar is becoming cheaper than other sources of energy. This is especially interesting in the context where some jurisdictions have stopped direct solar subsidies. I would be curious how coal would stack up against solar if one counted all the indirect subsidies involved in coal production. I just find this whole investment intriguing. Buffett is not known for sanctioning money losing ventures.

What a lot of BS. The main reason Canada is not at risk right now is because we went through the deleverage cycle in the 90s. While the US was in the midst of the greatest economy in history Canada was in a 7-8 year recession. I lived through it. It was exactly like the US and Europe now. Our banks were in trouble in the early 90s; government was laying off and didn't hire till early 2000s; private sector was laying off; resources were at all time lows, oil $10 a barrel at one point. I personally got laid off and didn't work full time for 5 years. Hence the frugal living and value investing. When I got interviews which I had many, the companies would be interviewing 30 people, they had so much choice. Public sector employees in Canada have good pensions which they are generally eligible after 30 years or so of service, not 10 years. Like any other country Canada needs to watch its finances, but its noway even comparable to anywhere in Europe or Japan. IMHO George should stick to value investing and stay out of economics.

Well, it doesn't let monitor man, or Brogalboy, off the hook yet. Cheers,

Hi Racemize, Selling naked puts, as Cardboard has mentioned, requires you to hold alot of cash/margin. Selling puts has been a disaster for me, so much so that I have removed it from my strategy forever. Each time I have sold puts I have been hit with a downtrend in the stocks I have sold puts on, simultaneous with a market downtrend. The result has been buying back the puts at substantial losses. They eat up your cash and then your margin as the stock drops until you are the proud owner of a stock that continues to drop further. The problem with this is that other things tend to go on sale at better prices than the stock you have just bought from your puts. The few percent a year I can earn is more easily made elsewhere as dividends or deep value with alot less opportunity cost. It just doen't work well with my style. If I make good calls on value stocks I easily exceed 15-20% per year which is better than I will ever make writing puts and tying up my capital. I can see their place in moderation, just not for me. Put writing has probably cost me -30% over the past 4 years. Obviously other members are better at it than I am. I do much better with Leaps as far away timewise as I can get. IMHO.

Comparing morals to legality is crazy. Is it okay to jam someone into a high fee variable annuity within an IRA because it's legal? ??? OMG, how do I get into these discussions. Your really serious about judging people's morals? By the time you get to my age, you have seen nearly everything, I should hope. People, simply put are not perfect, and never will be.

This is ludicrous. Cheating on your wife = legal; Cheating on your taxes = illegal; I dont recall Buffett ever pontificating about how people live their personal lives. He has advised people only to do things that make them happy and add to society. He has advised his companies to stay above the line in terms of legality. Lets ask Newt his opinion on what's moral, or amoral...... :o

Penthouse Letters & 101 Nights of Amazing Sex uhh sorry: Buffett - Making of an American Capitalist - so many times I dont need to anymore

Good luck on this. Unless you happen to know an under 40 reincarnation of Buffett. You have to factor in the multiple years of weak market performance and whether you can stomach it. Ffh has been exactly a zero bagger for the last 12 years or so, based on stock price.

I wanted to add that the reason Berkshire doesn't hedge is likely because Buffett has reams of cash coming in from the wholly owned businesses that will more than offset even the worst insurance losses. Ffh doesn't yet have this same luxury.

Hi racemize, Have you read through the entire message board here. FFH is a complicated entity and the people here are the real experts, outside of management itself. There is a base of knowledge here that is second to nowhere else. Once your done reading every post try Googlng Berkshire Hathaway Shareholders message board for the old board's archives. Try Berkshire Hathaway Shareholders - FFH. FFH is positioned for an upward bound economy. The equity hedges are to protect the insurance float, as are the deflation hedges, in addition to a bit of a macro bet. Aside from the highly publicized equity hedges they hold alot of stocks and a few small businesses now. The biggest US holdings are listed in the 13fs that members generally link. They also hold alot of Canadian stocks that we only learn about when they exceed insider requirements, and stocks all over the world. Then there are rapidly growing businesses such as Kennedy Wilson, and consolidators such as ABH. I wouldn't likely buy any at this price but then at the moment FFh makes up about 40% of my holdings. There is nothing else I would ever allow to be at 40%. So maybe if my position was smaller I would buy some. Not a deep value play but also not likely to go down due to the hedges. I wouldn't get hung on on the high profile bets. That is not likely where the bulk of their future cash will come from. Surely you guys in the states can find brokers that do international stocks. My broker does 8 countries in addition to Canada and the US. I have always been able to buy US stocks on a discount basis, online, for 15 years.

I am still laughing. I cant believe the officer said that. Apparently Ferrari needs to offer driving lessons with their vehicles!

The tax losses have no value unless someone can buy the entity and make use of them somehow, or unless the company can shield some future taxes as the unwind. This is the sort of thing that Berkadia does. You really need a tx expert to assess any potential for you.