Uccmal

Oracle, What is 30% Contango

I keep it as simple as possible. I use the average exchange rate for the year for all conversions. Generally, I am neither buying or selling a whole position at once, but in stages, and sometimes selling some, and buying more back if it drops. To work out the exchange rate for every transaction would take a huge amount of time. I use the trading summary the discount broker provides and the average number that they provide for the year. I dont do any US trades with the currency in mind and keep all the US stocks in my US margin account. I have never worked it out but I suspect if I accounted for each transcation by the exact currency value on a given date, versus just averaging it, the difference would not likely be significant, and probably shakes out over time. Should I get audited at some point I will let everyone know the outcome. Something tells me that as long as I pay the huge amount of tax I pay every year RC is not going to care. Its if (when?) I start claim huge losses that I expect the audit.

Yep, Another Buffett myth blown completely apart. He has always used economic analysis particularly at times of great flux in the economy.

You know what Mandeep, It is probably not a good idea to ask explicit advice on a message board, even one as good as this one. Each individual has their own style and abilities and thier own way of applying them. It is better to spend the next ten years investing in the companies you think are the best in terms of value, reading, and learning everywhere (including here) to enhance your future performance. In 13 or so years of doing this I have probably spent at least 10000 hours reading and observing stock and business related stuff. You have got several answers from very skilled value oriented investors and they are all different.

Very interesting charts: Observations: - As you guys mention the earnings are badly skewed downwards at the moment due to the AIGs, Cs, etc. They make up a tiny part of the capitalization weighting but a huge part of the earnings. - The earnings are also badly skewed downwards due to the US dollar going up last year. So, The GE's of the world bought in less US cash, on conversion. A dropping US dollar will raise earnings in US cash by a potential 20%. - Just a normalization without the one time writedowns, and the currency, could bring things up 20-50% (a guess). - I personally thing that the earnings (2009) on an adjusted basis will probably be 20% lower at a maximum. So that would put it around 60-65 at a low. Back to doing my income taxes.

Arbitragr's tag line probably covers it: "worry top down - invest bottom up" We have know way of knowing what the stock markets will do going forward. Add Fairfax Financial (FFH); maybe BRK until 2017. The financials you have are IMO good long term prospects. That being said they are essentially not analyzable other than on the basis of their franchise safety right now. You may want to build those positions very slowly: AXP, WFC, GE, BAC (imo the weakest). As I said, at the present time, their balance sheets are mostly an unknown so you are buying the franchise and the hope they will not be diluted by the government (that is my concern with BAC). Dont know SWECY Others ideas: JNJ, KO (relatively cheap); SPY (index ETF) - maybe a good proxy for financials. I hold in various forms, small positions in AXP, WFC, GE, huge position in FFH, and SPYs (2011 calls) From this bottom tripling should not be too difficult in your time frame.

Too true, Buy twice as much of the ETF or leverage it yourself through calls.

So Eric, What are you holding right now? Mean skill, that toe tapping Parsad. I remember a co-worker years ago who decided to photocopy his face. Afterwards he stumbled around blind for half an hour. I settled for my backside.

Ericopoly, This thread was titled "what are you guys holding right now?" To me, it appeared not to be a thread that was designed to start another debate. Just a survey. Give us a little bit of a break, please. thanks, Al.

Well said Tariq, Eric, You do know how this works... Roughly speaking: - last week the press got hold of the bonus story - Congessmen, Senators etc. got hundreds of thousands of E-mails from a bailout exhausted public, many of whom undoubtably have had their pay frozen, or lost their jobs. - they reacted - There was no choice! - They crafted a bill that does minimal economic damage to the individuals involved - a handful might actually still get the untaxed bonus. The public is clearly burnt out from seeing the huge numbers they are going to be paying down for years, expecially with AIG. I lost count, but that company has been given at least its peak market cap in money so far - More money then they have ever earned in their 100 or 200 years of existence. So no bonuses - you still get a 250,000 dollar family salary. Populist yes, Symbolic yes, Fair - probably not - but then its not going to be fair when the taxes of all Americans go sky high to pay down this all down - Believe me, as a Canadian, I know how paying back a deficit works. This sends a very clear message to anyone receiving bailout government money whether they wanted it or not. IMO that is a good thing.

FFH Leaps: some 2010s, some 2011s; a few hundred FFH common Power Financial Common; IGM common MFC Leaps: 2010 Arc Energy Trust 2011 Leaps: WFC Leaps: 30 or so SBUX Leaps: 40 or so (these are mostly in the money now!) GE Leaps: 20 AXP Leaps: 20 Biggest Position - outside FFH SPY Leaps: 2011 with notional values in the range of $70-85 (Some in the money; some out) SPY June Puts: I bought them this past week on the upturn - cover half my Leaps - dirt cheap insurance against another meltdown Other of possible interest: WFC.pr.l - thanks to the folks on the preferred thread Orh.pr.a and .b

In my humble opinion I would be leary about taking his advise on options Do ya think? ;D

Well, Ben, It is probably time for all governments to stop reacting and start thinking about long term planning. They have mostly stopped the bleeding, and kept the patient concious. Now they should be looking at long terms solutions. The problem is that everyone wants to be seen to be doing something when perhaps the best thing is to do nothing at all for awhile.

I love watching Larry Kudlow say, "They are going to run all that talent off and who then will run the business?" Yeah well, Seems to me any agency with basic computing skills and people trained in forensic accounting could clean up the mess pretty rapidly. Just ask Microsoft when the DOJ subpoened all their communications. Say, what about the FDIC, or the NAIC. Dont they have those skills that they put to use on a continuous basis?

I can see Buffett's point about shipbuilders in WWII -- they made millions in profits from taxpayer dollars, but we needed them to win the war. Yes but, you dont need the individuals or AIG to win the war. You only need to clean the mess up in an orderly fashion. A better analogy would be the Exxon Valdez, where uncounted volunteers, and some clean up companies (externally provided and payed for by Exxon's insurers), did the dirty work while Exxon staff stood by, or in one case were fired and CHARGED for negligence. Using the analogy of war... perhaps the AIG executives should be charged with Treason instead of getting bonuses.

At this point I think FFH is expecting to be a major owner of a debt free ABH when all the conversions are done, and the debt is eliminated. The company may well be privatized and equity holders wiped out. It is sure trading as if that were the case. Probably smart to get rid of outstanding shares.

I agree that Liddy is getting a bum rap. I am surprise he didn't just say: F-u, I am doing this to help out the good old USA. You, either want my help, or you dont. He should have shunted it back to Congress and said: You guys bought the company, not me.

I see nothing wrong with what congress is doing in this case. They are doing their best to correct an earlier oversight. If AIG had gone bankrupt then all of the bonus receivers would be out of a job, with no severance, no bonus, and no prospect of a job for the foreseeable future in the financial services industry. Buggers should be grateful to have a 6 figure salary right now. I for one dont believe that anyone is indispensible to an operation. You can be assurred that the rank and file at AIG have been taking hits to their perks such as free coffee, raises etc. You can also be sure that all of their workloads have risen due to hiring freezes. No one in any organization receiving government bailout money should be getting a bonus. I for one think the company should have been put into runoff, the same as Lehman Bros, rather than being bailed out. Then a proper house cleaning could have been done and the pain contained, without this ongoing bullshit, and perpetual begging at the government coffers. Interview of former senior CDS department person from AIG at ORH: Q: What is your greatest accomplishment in your former job? A: Well, We sold so many bad risks that we destroyed a 200 Billion dollar company over a 3 year period. :P

http://business.theglobeandmail.com/servlet/story/RTGAM.20090319.wabitibi19/BNStory/Business/home In for a penny, in for a pound. FFH is investing another 180 Million.

I read the third book "Money for Nothing" at Chapters in the fall. He talks all about selling puts. He then followed it up with an article in Canadian MoneySaver Feb/March- sorry not on line, which I also read at Chapters. The put selling strategy is basic and RISKY to be touting to lay investors. The followup strategy adds numerous riskier strategies to the mix. In it he adresses what to do when your puts go deep in the money (or is it out of the money for the seller - anyway) due to a dropping stock in a down market. Basically buy them back in and sell new ones at the below the new lower price. This strategy is risky. If you run out of available cash or margin you simply cant do it. So you need a war chest of cash to protect yourself. IMO there are much better ways to work a war chest of cash in this environment. Take it from a person with a high risk tolerance. IMO, his most recent book is irresponsible since, as stated above, there is no "money for nothing". There is money for risk, and more money for more risk.

1) Was Warrens debt investment in GE with the parent or with GE Capital? 2) Would he have reviewed the non-public books at GE Capital in determining whether to invest or not? Or is he betting on the jockey and too big to fail?

Sanj, I think the point I am making is that Chryser has no bargaining power in Canada. That they are exercising this threat, and apparently making a token effort in moving stuff out of Windsor plants, shows what incredibly desperate sleezeballs we are dealing with. Its real bad politics on the part of Chrysler and is not going to help their case. I think they thought public opinion would swing behind Ch against the CAW but this is not turning out to be the case. People figure we should just get rid of everyone at once and be done with them. We have very successful Honda, Toyota, GM, and Ford plants so who cares?

He discloses the Philip Morris trade in the first book. I didn't know he self published the book Norm. Thanks for the correction. In his second book he comments on his book revenues causing him to have to pay tax. If everyone did what he did, or course, no one could do it. His family takes advantage of the various social assistant things available to Canadians who can prove they are poor to the tax man (also disclosed).

Thats unbelieveable. I wonder if he's lost his marbles. He is around 73 - perhaps some early onset dementia or something.

Derek wrote his first book about 4, maybe 5 years ago. He billed himself as "Canada's Youngest Retiree" which is a good hook I guess. The book was quite good, but simple. He esposes frugality and investing as the means to reach his goal early. Basically, he finished a degree in commerce in his early 20s, got a few crappy jobs after that. He decided, like many on this board, that there is a better way and started investing a couple of a hundred every month very early. He also bought a Condo somewhere. A bit later he went to Korea to teach English for a couple of years at least and saved a large amount of money. He kept the real estate and rented it out. His wife is Korean. All the while he invested in stocks and income trusts that pay dividends and increase their dividends such as Royal Bank or Arc Energy. I read all three of his books (never bought any mind you). The first was a Non-fiction best seller in Canada which probably amounts to a check of 25,000 - $50,000. I would say he has now re-created himself as a financial advisor/author who lives on his investments. His most recent book talks about writing put options for income. I cant imagine that strategy has worked so well this winter. I think he practices what he preaches in terms of doing what he likes to do and frugality.