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IceCreamMan

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  1. It's a little weird that he's even commenting on the book value of an internet company. It's like talking about the weight of smoke or the height of a snake.
  2. Since you're discussing/analyzing free cash flow, you may want to differentiate between free cash flow to equity (FCFE) and free cash flow to the firm (FCFF).
  3. Yeah, this is a form of diversification that reduces the prevalence of extreme outcomes compared to just putting it all in one strike.
  4. Some folks might find this interesting: https://en.wikipedia.org/wiki/Kelly_criterion
  5. The more concerned you are about a market correction, theoretically the less ITM you should be buying the call option (i.e. the higher the strike). With the higher strike calls, you are paying a higher "insurance" premium, but you are more protected for the same notional exposure. The lower strike calls give you less leverage and save you insurance premium cost. In the extreme case, a call option with a $0 strike is the same as owning the stock. Another way to think about it: When you buy a call option, you're betting on high volatility and a high stock price. Higher strike calls are more of a bet on the former while lower strike calls are more of a bet on the latter.
  6. Although that used to be the case, the alpha from time travel option selling has been almost completely arbitraged away.
  7. Although his conclusion may be statistically correct, it looks from the chart like valuations tend to be highest when long-term rates are in the 3-6% sweet spot.
  8. Hussman concludes that low interest rates do not explain high valuations: Notice something. When interest rates have been extremely high (above 10% or so), valuations have been reliably low. But at rates below 10%, there is no reliable relationship between interest rates and valuations.
  9. Commissions on stock trades were eventually competed down to zero. Will this happen for crypto trading? Why or why not?
  10. It looks like he explains some of his reasoning in the middle here: BECKY QUICK: All right, this next question comes from Jason (Plawner) in New Jersey. “As both a Berkshire and Occidental shareholder I was encouraged to see your investment in the company, but with passing weeks, it became evident that your investment facilitated Occidental management’s ability to avoid a shareholder vote on the Anadarko acquisition, a very shareholder unfriendly outcome. “This deal proved to be irresponsible and expensive from an OXY perspective, and ultimately, very value destructive for OXY shareholders. In my view, it also permanently hurt Berkshire’s reputation in the marketplace. “Please comment on this unfortunate outcome and tell me why OXY shareholders and other market observers shouldn’t feel this way.” WARREN BUFFETT: Well, yeah. We said right from the beginning — although we didn’t certainly expect the degree of what’s happened — we said, essentially, when you buy into an oil — a huge oil production company — you know, how it works out is going to depend on the price of oil to a great extent. It’s not going to be your geological home runs or super mistakes or anything like that. It is a — it is a investment that depends on the price of oil. And, you know, I — when oil goes to minus $37 — (laughs) — it happened the other day for, I guess, it was the May contract. You know, that’s off the chart, and — If you own oil, you should only own oil, if you expect these prices to go up significantly. I don’t know whether they’ll go up significantly or not. We’re in the transaction. Our commitment was made on a Sunday when the management of Anadarko favored Chevron. And Chevron had a breakup fee of a billion dollars and the Occidental people had been working on it for several years. And it was attractive at oil prices that then prevailed. And it doesn’t work, obviously — it doesn’t work at $20 a barrel — it certainly doesn’t work at minus $37 a barrel — but it doesn’t work at $20 a barrel. And everything the oil companies have been doing, whether it’s Exxon or Occidental or anybody else, it doesn’t work at these oil prices. That’s why oil production is going to go down a lot in the next few years, because it does not pay to drill now. That’s happened at other times in the past. But the situation is, you know, you don’t know where you’re going to store the incremental barrel of oil, and oil demand is down dramatically, and for a while the Russians and the Saudis were trying to outdo each other in how much oil they could produce. And when you’ve got too much in storage, it doesn’t work its way off that very fast. Now, you will have production of oil go down in the United States significantly. It does not pay to drill in all kinds of formations that paid before, and it doesn’t pay — it doesn’t pay to have paid the price that oil was trading at in the ground a year or two ago. And to that extent, if you’re an OXY shareholder, you know you’ve — or any shareholder in any oil producing company — you’ll join me in having made a mistake, so far, in terms of where oil prices went. And who knows where they go in the future.
  11. We have to account for the fact that he was probably maxing out his contributions each year, right? I wonder how much that changes the actual time-weighted return. Still probably extremely high. I'm curious what types of investments he made, i.e. typical market cap, typical holding period, type of situation/business, etc.
  12. You could try: Insert > Text > Text Box Drag the corner Or: Right-click a cell > New Note
  13. Nothing new here, but collects a few old quotes from/about John Malone, Warren Buffett, and Bill Gates. https://markets.businessinsider.com/news/stocks/warren-buffett-bill-gates-microsoft-stock-ipo-john-malone-liberty-2021-6-1030496996
  14. Yes. I don't understand whether you valued them at market or built a DCF for each equity holding. One method would be to exclude all investment gains, losses, and dividends. Then value the equity portfolio at market value.
  15. I'm guessing businesses that advertise on Facebook would consider alternate channels/networks to be significantly inferior (i.e. not suitable substitutes). Maybe users, too, have a similar feeling. But, I have no idea.
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