Santayana

YES!!!! Honest question: And after that, what would have happened..? Exactly what, nobody knows. Lots of economic pain for sure. But it would have been temporary, and we could be back on track by now. We'd still have too many houses. People wouldn't have the down payment for houses. What would be different aside from who owns the banks? I'm not sure about that. I think one result would have been that the housing price collapse would have happened all at once instead of this slow decline that keeps going on (and that I don't think is nearly finished even though we're building a house right now). If prices were lower 3 years ago, more people may have been able and willing to buy then. Now you have a situation where I think many people are more afraid to buy now than they were in 2008. The banks that failed would have been replaced by new ones, or existing ones growing, essentially being rewarded for not over-leveraging themselves. Those banks would help jump start economic activity. Basically I think we've created a situation where there's not a lot of economic activity, and many people see no end in sight. If we had let things collapse on their own accord, the worst may have been even worse, but it would be seen as behind us and things would be moving forward. Does your new diet include beer, or have you given that up? Would love to have this conversation over a cold one the next time you are up this way.

My primary goal is to not lose the nest egg that I plan on carrying me through retirement (Warren's rule #1 and rule #2 guide a lot of my thinking). If being risk averse is seen the same as being a perma bear, I'll take the label. If others want to get "rich", or make a "fortune" more power to them.

YES!!!! Honest question: And after that, what would have happened..? Exactly what, nobody knows. Lots of economic pain for sure. But it would have been temporary, and we could be back on track by now.

YES!!!! Exactly! In 2008 they catered to the special interests, which is why 3 years later we are still dealing with the same issues.

If it did, it would volunteer to use MTM accounting despite FASB's favors They are being trusted with marking assets (FASB suspended MTM). Think they're doing an honest job? This isn't true statements. FASB 157 never eliminated MTM accounting. MTM has to be used where there is a liquid market. It allows other option for assets that do not have a liquid market. Who gets to define whether the market is liquid?

Well we agree that is a great book Moore :) Funny how we get different things from it. A few noisy bears aside, I would say the crowds are still as bullish as they've ever been. If we could see US equity prices rallying without a corresponding drop in the USD, then I'd believe it's serious buying.

And all because Germany and France now have a "plan". But they can't share the details until the end of the month.... Just like every other rumor lately I think it's causing short-term buying and will reverse as soon as the market realizes there really isn't a plan....at least not one that actually solves the problems.

Everyone who thinks these kinds of days have been lovely should really be happy with the way today is shaping up.

My concern with thinking the derivative liabilities are balanced by the assets is do you know whether their counterparty is able to pay the other side of that trade.

I sold Jan $65 puts this morning and used the proceeds to buy the $75 calls with a few cents left over. Had the idea last week, wish I had jumped on it then!

Rumors that Paulson is liquidating his entire GLD position. Add some margin calls to that and down we go. The real action today is in silver!

Ah, so you were just trolling ;D

I'm not a gold bug. But what on earth does a short term price move have to do with anything?

What's the easiest to solve sovereign debt problem? I'm guessing you think that it is printing. I don't think that's such an easy solution. What about default, that's pretty easy, doesn't require any action at all.

Inflation is the absolute least of my concerns right now.

I would say that the conservative investor isn't really worried about relative performance. It's all about the level of risk that you can sleep with. I've picked up some more MSFT over the past couple of days, but am still sitting at about 40% cash and am also holding SPY puts. Having my 2 biggest positions be cash and FFH keeps me from worrying about much of anything that happens in the market. If I miss some 30% runup, oh well, I know my financial plan is working out just fine.

What's the cash to debt ratio? I see Peter just beat me to it....

Greek 1yr yield up to 139% this morning!

Do plans for a "smaller" BAC have any effect on anyone's thoughts about their upside from here? Wouldn't a smaller balance sheet mean the earnings potential isn't as great, although the tradeoff is that you would also have reduced risk?

What a great thread this has become. I had been wondering where Mungerville went. I sure don't know what is going to happen economically, even if I could predict the individual events. But I do think that what's going on with EU sovereign debt and the EU banks is going to be a factor in where we go from here. Given how things are looking the amount of risk I see is way to high to be long without significant hedges. I may be passing up on some awesome future gains, but I sure do sleep better at night. For those who think it's not 2008 all over again, are any of you buying the Greek 1yr bonds yielding 80%? Or do you see a scenario where Greece can fail and the whole system doesn't implode again?

Not sure what moore_capital had in mind, but the Europe situation is weighing large in my decisions. Then you have the employment number today and what's looking like contraction in the various Fed industrial/manufacturing surveys.

Go long wheelbarrows! ;D

This could be an interesting development... Racketering? Securities fraud? http://www.bloomberg.com/news/2011-08-25/bank-of-america-citigroup-depressed-libor-rates-schwab-says-in-lawsuit.html

I agree that you said all those things Sanjeev. I mostly believe them myself which is why I'm long BAC. I just don't see how this morning's news confirms any of those points to the degree of warranting an "I told you so".

I'm really surprised at a lot of things being said by so called value investors in this thread. Starting with Really, what did you tell him? That BAC was going to raise capital? That a 20% pop in the stock price means it's a good investment? Or is it just because Warren buys that it must be a good deal? Preferred is just as risky as the common? 6% yield isn't worth bothering with? I'm long BAC LEAPS myself, but how can people not admit that this deal isn't what it's being cracked up to be.