Packer16

I feel Grantham is a modern day Malthus trying to predict something that has so many variables that it cannot be predicted. What is predictable is folks will adapt and historically have overcome the Mathusian limited resources arguments. It is similar to Howard Marks response to what he says to folks who ask him about how Europe will turn out, namely - I don't know, no one knows and if you invest based upon a prediction you will probably lose money. Packer

Thanks for the post I enjoyed his 5 characteristics he likes in a investment: 1. It is hated & cheap 2. It can be understood (in your circle of competence) 3. It can make a reasonable profit 4. It is run by honest/decent folks 5. It doesn't have too many variable for the thesis to work out He also mentioned how history ryhms with money center banks (it is like back in the early 1990s all over again). Packer

Does anyone attend the Brookfield annual meeting? If so, how is it? Packer

What RE investing blogs/books/resources have folks who invested in RE found helpful? I am more interested in passive investments versus purchase/rental active investing. TIA Packer

I think this is an area (moats) that can be affected by pereception as much as reality. Take local TV and radio firms as an example. The perception is that the moats are going away or gone the reality in many cases is the moat is still there but may go away if action is not taken. The longer the firms have to react the more likely the moat will remain. Cellular phones provides an example of an industry where moats were not damaged and incumbants were able to react and preserve their moats. The way I measure the depth moats is return on tangible assets versus WACC. Given the prcing of some of these firms the market expected duraion of these moats can range from less than a year to slightly more than 5 years. One thing I can say is the moats will last longer than 3 years and most likely longer than 5. Packer

This will be an interesting experiment but if history is a guide more upper-middle class folks will leave California with a higher tax burden on the remaining folks. These tax increases effect the rich in only a small way. It is the middle upper that bear the burden of these increases. What I find interesting is all of these Progressive taxes don't go after the rich but the class just beneth them. In essence, the rich have flat tax. If they were truly progressive, they would tax those folks with mutlimillion dollars of income in the 50 to 60% range or higher. The only reason California can extract such high taxes is due to Silicon Valley and Hollywood and the networking effect of historic wealth created there. We will find out how much in taxes in takes to have the golden goose wadle to a different state. Packer

Although goodwill is probably not directly useful in valuation there are alot of related disclosure that provides insight into managment's expectation of the business. For example, in the radio/TV industry the firms have to perform an annual impairment test of their intangible assets (or more often if an impairment event occurs). This test includes valuing each cluster with the key assumptions outlined in the footnotes. In addition, for aquisitions the goodwill acquired is tested for impairment in a similar way on a yearly basis. If there is an impairment, then the acquisition did not perform as planned. In addition, if there is a total disaster then the acquired intangibles can also be impaired. The typical way a tradename is valued is by discountuing a 3rd party royalty rate. In some industries (like apparel and consumer products) licensing is quite common so royalty rates are available. Packer

Based upon my experience, buying LT options is a lot more difficult than it first appears. This is because you are betting on both timing and undervaluation or over valuation. The timing is aspect is the most difficult to determine. When you own the stock you have an embedded option to extend which can be very valuable. That is why the TARP warrants are so attractive. I would only put a small percentage of my capital in any position due to the high number of losers versus value investing in equity. One question I always ask is who is one the other side of the trade why is this cheap. On average sellers of options are the winners so you need to pick you spots carefully. Packer

I think part of the allocation rationale is the higher potential return investments are typically higher risk situations (i.e. the downside is greater). Packer

Did you know this issue existed before the donation? I did not. Would you have paid as much attention if it was done under the auspices of any industry group? I would not have. It may be a way to at least make the issue known and part of the debate. Just some thoughts. Packer

How else are they suppose to defend to thier shareholders that are domiciled in a high tax area and not move to Bermuda? As I see it the alternatives are try to equalize the tax treatment and keep job and taxes in the US or move to Bermuda. I think this is part of the first strategy and will at least bring the issue to the surface so some meaningful debate can occur versus just moving to Bermuda and leaving the US with less tax revenues. Packer

I think the one thing Zell missed is the market may be at 9000 based upon what you can buy with US$s in the future or in real terms. So what we may get is a stagnant marketing with increased inflation and financial repression. Packer

The ironinc part of Pres. Hoover's actions is that he had the right market approach but the wrong monetary approach - tieing the dollar to gold was the worse thing that could be done. You can see this today in Greece, Spain and Italy. No matter the fiscal policy these countries are tied to the "euro" standard and until either their debt redonimated in less costly euros or they leave the eurozone the result will be the same. The other aspect of his statement is the stretching of the pain which will continue until the clearing price is reached. In the US with a bankruptcy system that allows for quick resoution of over indebtedness, the overleveraged situations can be resolved quickly and folks can move on but the folks in charge now have circumvented this approach by stretching out defaults and providing the false hope of principle reductions. Packer

Sportgamma, Do you have recommended local broker who handels US citizens accounts. Thx. Packer

I have seen a presentation by these guys who claim they can find the factors that explain returns but these factors don't work in practice. Just look at their mutual fund returns in trying to do this analysis. They fail to do better than the benchmarks. The low beta strategy is based upon a measure that typically has low r squared. Packer

Based upon history there are three other non growth ways out: financial repression, inflation or default. The first reduces growth and the other tow have there own issues. Examples are shown in "This Time is Different". Packer

I heard the ref that called the paly works for Bank of America. I hope he has better judgement in his job than in his part time ref position. Packer

Probably not but this is the first time Obama and Ryan have agreed on most anything so hopefully it will get done. I really do think this becoming a safety issue as the refs seem to be hesitant to call defensive back penelties and the players and coaches know it. This is worse than the bounties from last year. Packer

My understanding is they will wind down the portfolios and continue as a gov't agency to provide the guarentee similar to what the fed gov't does for education loans. There may not be enough CF from the wind down operation for the preferreds to get paid anything and the entity will become a gov't provider of guarentees. The only "privitization" scenario I can forsee is if Romney gets elected and wants the gov't to get out of the remaining business. All of this is very speculative thus the pricing for the FNM and FRE preferreds. I actually purchased some preferred before the decision and sold quickly thereafter (after losing a good part of my investment) as the current admin does not want the preferreds to have any value and the gov't will continue to receive slush fund dollars as long as they control FNM and FRE in trying to recover the taxpayers bailout money. Packer

I think the jig is up. The gov't has in essence nationalized FRE and FNM by diverting all dividends to themsleves. Previoulsy, the gov't was being paid a 10% dividend and FRE and FNM actual had earnings after paying these dividends. By this change, they in essence have made FRE and FNM property of the US gov't with no compensation for preferred or common shareholders. You will most likely be able to make money on the back end if FRE and FNM are ever privitized again. Packer

The socnd part is the most valuable. You may also want to read "The Little Book that Builds Wealth" as it has a more refined version of the concepts. In addition, on the Morningstar sight there is powerpoint that describes the moat concept in more detail. Packer

The rivals he has named are not rivals but folks who he has similar views to. Hillary Clinton has similar views to Obama on many issues and the Senator Gregg from NH jumped ship when he saw what was going on. Charlie Rose had a good interview with David Brooks on Obama's communications/working with others issues. I think if he gets re-elected we are in for another 4 like the last 4. Packer

I think the Presidency is much more than thinking in probabilities. For a money manager, a businessman or professor and others who do need to work with others this is great as they can go against the crowd and succeed. However, the US system is not set up like a corporation or kingdom. You have to work with others and enjoy that process to really make an impact. That is why Clinton and Reagan succeeded and Obama has not. It doesn't matter if you have the best ideas if you can't work with others who think differently than you, you will be in constant battle mode. This cannot be fun and you can take for the team only so long. Packer

I think history shows that in the 1930s , Sweden followed a monetary policy similar to our QE and this prevented deflation. You can read about it in Irving Fischer's paper on debt/deflationary cycle. I think we muddle along as we are as there is no inflationary driver in wages which creates most of the persistent inflation and most prices in the developed world are comprised of wages. A deflationary trend exists however QE and our demographics will prevent it from turning into deflation. Another aspect of the FFH deflation swaps is they were able to be purchased at a low price. That is one of the reasons they purchased $ and € swaps and not ￥. Packer

I am not saying that middle income folks will not benefit from lower rates just that the benefit has to be balanced versus the loss of income from middle/low income savers. With the forced low interest rates, money is being transferred from savers to borrowers. In addition, due to credit standards, a portion of the low/middle income folks will be locked out of re-financing versus the wealthy. This trade off also has to be taken into account. I just think at some point the marginal decline in interest rates will be more beneficial to the wealthy than middle/low income folks. As to bond declines, if interest rates just return to the begining of 2011 rates 30-yr treasuries will decline 35%. I totally agree. Packer