Santayana

I think the opportunities will keep coming for a while here. Whether or not the reasons for it happening make any sense, I think BAC is going to be under some serious selling pressure for a little while here, and as long as they are dropping double digit percentages every day the rest of the market will get pulled down with them.

:D Great chart!

Bought some Dell at $14.15 today. On Friday I bought my first ever brk.b shares and BAC Jan '13 $5 calls. Looking to add some more Fairfax and LVLT. Or maybe I'll just buy the FRFHF and let Prem take care of my LVLT position.

That would presumably mean they were bankrupt, no? You are saying the common has no value at all? Either way, all else being equal the price of the common has no bearing on their capital ratios. If BAC issued and sold 100 shares of stock to someone for $6, they would have $600 in capital added to their ratios. It doesn't matter if tomorrow the stock is $5 or $50. Why would that mean they were bankrupt? A $0 price basically just means there are no bids. Just because nobody wants to buy a business doesn't mean that it is bankrupt.

Political operative??? Are people saying that even if a bank's common went to $0 that it would have no effect on their regulatory capital ratios?

Stupid yet true.

I think you're spot on Munger. Common stock valuation counts as part of Tier 1 capital.

Didn't he call pretty much all the finanicals a "generational buy" in April 2008?

How do the options provide more downside protection?

That is a great quote! I think it's going to become my new sig line. ;D

Of course the difficulty is determining how much is an "appropriate allowance" for those things, and it's much harder if you're talking about 1-2 properties vs. a larger number where you can rely on averages a bit more.

I've been out of the business since 2007 when we moved away from the SF Bay Area, so I don't have any specific insight to conditions right now. I just want to stress to anyone considering getting into the rental business to account for the fact that your property won't always be occupied, or even worse may be occupied by someone who stops paying their rent and trashes the property while they are there. Evictions are not always easy or quick, and are yet another expense to deal with if you engage legal counsel.

How are you calculating that 12-14% yield? It sounds like you may be assuming $0 for vacancy loss, management expenses, and maintenance costs. After 15 years in the rental business I can tell you that 1 bad tenant can wreck your numbers in a hurry!

I think the deflation argument centers around debt destruction and dollar demand. Not really dependent on capacity, or even supply and demand of the end products. We saw what can happen in 2008-09 when demand for dollars to pay back debts started to bring on deflation. QE interrupted that process, but I don't think it's done. I'm positioned very defensively right now.

I think in our current environment if interest rates rise, everything tanks, not just REITs.

http://seekingalpha.com/article/263227-fairfax-financial-part-i-underappreciated-insurance-holdings

And back on topic, I've learned more from Ericopoly than pretty much anyone else in my investing career.

LOL. :D What ever happened to the woman in the big hat who used to invite board members to call her so she could show them a really sweet place where they could deposit their assets? I increased my net worth 10x after following Amy's tips for just 6 months.

I was just wondering the same thing. Although aren't they callable this year?

I think that point about liquidity is great also. One of the real problems many people faced was thinking they had liquidity and then it turned out they didn't (oops!). Is anything really liquid besides Treasuries and FDIC covered amounts?

The NLY affiliation is that CIM's assets are externally managed by FIDAC which is wholly owned by NLY. CIM only has a handful of employees, all of whom work for FIDAC as well. I've been an investor in NLY for a while and believe that the management there is top notch. They recognized the problems in the housing market before they hit too hard and reduced their leverage to around 6x. With CIM I think you are taking a bigger risk on housing recovery as they are buying up all sorts of distressed MBS, while NLY primarily sticks with agency (FNM/FRE) paper.

Well today's runup is due to the fact that I sold some shares yesterday. ;) But in general I would guess that it's due to optimism around the q4 earnings.

Just because they can hold to maturity doesn't mean they won't have to take losses.

Hmm, just traded at $325. But there is no bid/ask. At least that I can see through Schwab.

I don't know anything about how futures work. Would you short the minis to hedge? The inverse ETFs have horrible slippage problems and don't perform anything like they should over periods of time. They replicate the daily change only. When you short SPY you have to pay out for distributions, so there's a premium there as well.