twacowfca

Was he still holding it when it became nearly worthless? I remember seeing an interview of Prem and somebody asked Prem if Ben still held the bag and Prem didn't know. Is there a public record of this? The price of the stock got down to $2.00 a share through mismanagement, but the intrinsic value of the business was still intact, although the balance sheet was shot. Warren got it recapitalized and the shareholders took a 50% or so haircut. Then, it popped up to $10 or so, about the time Ben Died in 1976. I'm fairly sure Ben's estate got more out of it than the low point price. If I had to hazard a guess, the stock may still have been about a 50 to 100 bagger by the time his estate was settled. Why don't you ask Warren? He was the executor of Ben's estate. :)

The actually time held has nothing to do with it. My interest is to know whether or not he (and others) really picked stocks at a price that represented a discount to intrinsic value. Enough time has passed since his last purchase where a graduate student could look at each and every one of his purchases, the price paid, and see whether he indeed bought at a discount to intrinsic value. He has been dead more than thirty years -- surely the long term business results are known well enough to say if any one of his picks was actually purchased as a 50 cent dollar, or as a 90 cent dollar, or a 120 cent dollar, etc.... Then you can see how he did "on balance", by looking at all of them and then taking the average. What if on average he merely bought stocks near their intrinsic value and made money on volatility swings? Okay, that doesn't mean it's a losing strategy at all, but it would be interesting to know if the guy that wrote The Intelligent Investor was really able to accurately determine intrinsic value himself. We know that Warren Buffett can because Berkshire has grown mostly from keeping the holdings "forever" -- the long term weighing machine is producing results, not the volatility and skillful trading. Graham was aware that balance sheet bargains that were good companies were higher conviction purchases than ones that were not. He preferred solid companies, even if he flipped them after they went up 50% or so. When he was 18, he dropped out of Columbia and worked with a company that had a big analytical project that necessitated using Holerith Machines (punch card sorters and counters that were the forerunner of computers). When his boss quit, Ben was put in charge of managing that project as he was the only one who understood it. He developed some of the basic sorting routines that eventually morphed into computer sorts when the manufacturer of those machines changed its name to IBM and moved to electronic computing. Ben recommended Computer Tabulating Corp. to his managing partner in his first job on Wall Street as he knew their competitive strength, but his boss set him straight and put the kabosh on that idea. Ben continued to follow IBM all his life, but it never got cheap enough for him to buy because his fund was set up to generate regular profits that were distributed yearly to his investors. Holding a great company for many years was not part of his operation. However, he was eager to put 25% of the assets of his closely held other fund in Geico when it became available for outright purchase of a controlling interest. He recognized that it was an extraordinary company with great advantages, and he was willing to pay a little more than book for it. He retained his interest after Geico's IPO a few months later. 26 years later, his stock was worth more than 100 times what he paid for it. :)

LRE is up (including reinvested dividends) in our accounts that are non taxable about five times what we paid for it from the summer of 2006 through the fall of 2008 (actually more in some holdings that used some nonrecourse leverage. Most of that gain was real net asset value gain. Remove the gain from P/B expansion and the current value of the holding would be about 62% of the recent price. The tangible net asset value of our original purchases with reinvested dividends has increased about three times. The company did that not through some fluky luck, but simply by blocking and tackling: good underwriting, nimbleness in exploiting opportunities when others are fearful or exiting mediocre lines, quick quotes to clients and brokers by a lean staff that works long hours, conservative investing and intelligent capital management in a tax favored domicile. :) :)

Property is less of a black box than casualty because claims develop relatively quickly, within about 18 months or so for Bermuda and Lloyd's companies from the time the claim was incurred until paid, on average. Property claims are paid faster usually by primary insurers. Claims from super castrophes take longer to develop fully than ordinary property claims and are subject to loss creep. Property rates have increased in recent months. This augurs well for profits as claims develop in the future. Casualty is it's own can of worms, even for those with much experience in claims estimation. Premiums paid for casualty policies may prove to be woefully inadequate if inflation pushes up the cost of future claims as some types of casualty claims may take many years to develop and be paid.

Berkshire CEO Warren Buffett completes cancer treatments 2012-09-14 18:08:13.676 GMT http://www.omaha.com/article/20120914/MONEY/709149884/1697 Berkshire Hathaway CEO Warren Buffett said Friday he has completed his final radiation treatment for prostate cancer. Speaking to a group of executives from the newspapers he's acquired in recent months, Buffett said, “It's a great day for me. Today I had my 44th and last day of radiation.” Buffett, 82, had disclosed in April he was diagnosed with Stage 1 prostate cancer. At the time, he said his case “is not remotely life-threatening or even debilitating in any meaningful way.” Buffett started daily radiation treatments at the Nebraska Medical Center in mid-July. He said they would hinder his travels for about two months. The diagnosis was a reminder that the day will come when someone else will take his job leading Berkshire, and it prompted some calls for him to be more transparent about his succession plan. At Berkshire's annual meeting in May, he said his four doctors (all Berkshire shareholders, he pointed out) laid out the treatment options and give him a 99-plus percent chance of living at least another decade with the disorder. “In all seriousness, it is a non-event,” Buffett told shareholders. Stage 1 prostate cancer does not cause symptoms, according to the American Joint Committee on Cancer. It is estimated that half of 90-year-old men have it. One study showed that men diagnosed with early prostate cancer have a survival rate of 87 percent after 10 years and their overall survival rate is about the same as men without prostate cancer. Buffett joked with executives about planning live to be the oldest man alive. He expressed relief to have completed the radiation treatments. “I'll be feeling the side effects for a few weeks yet, but I am so glad to say that's over,” he said. The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.

+1 Sure, just give me the $1,000 fee for the Option Investing Congress where I'll reveal the secret to turn all of your losing options trades into winning ones! Money back guaranteed! Okay, here it is for free: 1) Whenever you go to buy a put or call, write one instead. 2) Whenever you go to write a put or a call, buy one instead. I guarantee your success will turn around 180 degrees. No, I don't have any books to recommend. LOL your sure fire formula for turning poor results around 180 degrees. :) But wait a minute. Let's take a deeper look at what you have said. Most people buy puts or calls. They don't write them. However, most of the time the consistent profits are in writing options, not buying them, because the writer has to accept the risk of a large loss if there is a big move, while the buyer wants to profit from a big move upward or gain protection from a big move downward. It's like what my favorite insurance company does in insuring against catastrophes. They make about 20 % per year on their capital on average, by jumping in and writing extra business when rates spike after a big disaster when other insurance companies are licking their wounds and refusing to take on that risk cheaply anymore. But eventually they will have a bad year, and they and their investors need to be prepared for that. These writers of options or insurance are profiting from the only virtually sure thing in finance: that volatility will always regress to the mean. ( except when the world ends or the asteroid the size of Manhattan actually strikes Manhattan ). Those who take on large risks try to lay off their bets in some way by diversification into (hopefully) non correlated risks or hedging, like Eric sometimes does. The most successful will buy (an option) low (when implied volatility is low or when the potential move in price is very great) and sell (write an option) when the implied volatility is very high or the potential adverse move is very low. They will also hedge as much as possible cost effectively. By the way, the term, implied volatility, is a misnomer. It's really a fear factor. For example, the S& P 500 recently rose about 2% in one day. Yet the implied volatility of index options actually went down dramatically that day instead of up as the historical volatility of the index increased. However, if the S&P 500 had gone down a large amount instead of up that day, the implied volatility of its options would have certainly increased.

I agree. And I strongly recommend reading “American Gridlock” by Mr. Woody Brock. Especially Chapter 1 “Dialogue of the Deaf”. “All this leads to an amplification of today’s Dialogue of the Deaf, in which there is neither an interest in truth nor a logical method for discovering it, if and when it is sought. But this is precisely where the opportunity lies. For the use of deductive logic leads to better and more compelling policy solutions than does today’s bastardized logic of induction. In particular, it leads to win-win solutions that have a much greater chance of gaining bipartisan support than the win-lose policies that dot newspaper headlines. But why is this the case? The answer is seductively simple. In applying deduction to topics ranging from public policy analysis to pure mathematics, the same two-step process takes place. First, it is necessary to specify a set of Basic Assumptions that, by their very nature, should be “transparently true.” In number theory, we must accept: “For any integer n, there is always a next bigger integer, n + 1.” Seems reasonable to me. Or in plane geometry: “Between any two points on a plane, there will exist one and only one straight line connecting them.” Seems reasonable. Or in health-care reform, “A satisfactory health-care system must first provide universal coverage, and second cause total health-care spending eventually to shrink as a share of GDP.” Don’t these two assumptions seem as desirable as apple pie and motherhood? Second, solutions to problems can often be deduced from simple axioms of this kind, and when this is the case, disagreement can be quelled. For if simple and compelling axioms logically imply a set of policies consistent with them, then who can disagree with such policies? If there is health-care system satisfying these two appealing axioms, who would reject it? What remains for the Right and the Left to bicker about? In accepting the axioms, you accept the conclusions. The Dialogue of the Deaf thus can be dampened. Indeed, the conclusions arrived at what seem like lessons from the syllabus of Common Sense 101. Whether mathematics is needed to proceed from axioms to conclusion, or not, makes little difference. What matters is the quality of reasoning involved, and whether the axioms are compelling to any reasonable person, regardless of his or her political leanings. Can this elegant approach work in the case of the real-world challenges identified previously? Yes – much more so than you might imagine.” Can this elegant approach work in the case of the stock market? Axiom 1: “Secular bull and bear markets happened in the past: during secular bull markets stock prices appreciated much, during secular bear markets stock prices fluctuated, but did not appreciate much.” Axiom 2: “Secular bear markets of the past always ended at historically very low stock valuations.” Axiom 3: “Today stock valuations are not historically very low.” Can those three “Axioms” be agreed upon? I don’t mean that they are useful for investing. Or that what happened in the past is relevant today. I just would like to ask you, very knowledgeable and thoughtful investors, if it is possible to agree on those three “Axioms”, as I tried to formulate them. giofranchi Disagree with your axiom about secular bear markets. It references survivorship bias. In historical truth many secular bear markets ( think Tzarist Russia or tulip mania for a more cyclical example ) went to zero or nearly zero. If market values survived, one could say that it was a secular bear market rather than a cyclical bubble that popped. Cheers!

:D The same happened in 2011.. FFH is starting to look better imo. Hedges will have lowered BV temporarly but I doubt that is going to last. I dunno. We're still about 145% long and LRE and BRK are about 135% of that and they continue to trade within 1%-2% of their highs. We lost about 80% on our first tranch of OTM S&P 500 puts,made about 300% on the next batch of those, and then lost 100% onthe final batch. Net result: a loss of about. 0.3% of the net portfolio value. I'll rationalize that loss by telling myself that the hedge kept me from paring down our core net long position.

Sanjeev. See what you've started. What's all this talk of homosexuality got to do with Bill Clinton? I'm out of here.

Gay people are born gays..they just realize/reveal it late because of social pressure..A straight person just doesn't become gay because it is allowed. Actually there is much debate about this. Pavlovian Conditioning in my view proves that homosexuality can actually be introduced into any person's sexual preference, think Jails or stranded islands. I think the scientific community's attempt to rationalize that people are born gay is totally baseless. I disagree. Jesus himself said that some people are born eunuchs, meaning without normal male genetalia or strong male characteristics. This means that some males may not be attracted to the opposite sex. But what we do with what we have been given as far as sexual expression is well within the power to control. Like Jimmy Carter, I may have lust in my heart for another woman, as the preacher in Hawthorn's story lusted after Hester Pryn. But that doesn't mean I have to express those feelings in a harmful way.

If you look at the evidence, it is. There are gay people, gay animals. It has evolved. It can either have evolved as a primary adaptation or be the side effect of another adaptation, but however it happened, it did. Otherwise we wouldn't find all these gay people and animals all around the world through the ages. You don't have to know why humans have exactly the variety of hair colors that they do (why not other colors? Why did evolution pick those?) to see that it's what we got. The 'why' might be obvious or obscure, but the end result is the same. Once you've got that, the question is: If you were gay, how would you want to be treated? Then treat gays exactly like that. In that hypothetical scenario, with only two humans in the whole world being of the same sex, it wouldn't have started. But I don't see how that's relevant since things didn't happen that way and it's not like that situation is likely to happen now. So. . . If this trait is inevitable, it must be heritable. By what method of reproduction is it passed on to future generations and selected as being reproductively fit?

Interestingly, there was a great article recently (NYT?) about the growth of labor exchanges in Spain where unemployment among young adults is about 50%. Services are exchanged through hundreds of central registers hour for hour, regardless of nominal wages. Thus a hair dresser may gain a couple of hours credit after dressing someone's hair. Then she might ask a mechanic to fix her car in exchange for those same two hours of credit. Yada yada yada. It's a quasi devalued currency devorced from the Euro.

Is the obsessive interest in unprovable topics irrelevant to value investing such as the I miss this guy thread a sign of an inflated market with few good values to be found?

He most certainly does not think that. Being edited by a dishonest foe can yield weird results. http://old.richarddawkins.net/articles/2394-lying-for-jesus Thanks, alwaysinvert. That's kind of what I thought when I saw the video, that Dawkins was merely engaging in idle speculation. My strongest disagreement with Dawkins is his view that religion in general and Christianity in particular is a harmful influence. With a few glaring exceptions, History supports the idea that Christianity has been a moderating force in society. The most destructive tyrants in the 20th century, who deliberately murdered tens of millions of people such as Stalin, Mao, and Pol Pot have been doctrinaire athiests or, in the case of Hitler, someone who was captivated by Pagan thoughts rituals and symbols involving death and racial superiority.

I might be miss understanding what you are trying to say liberty. (please correct me i've been wrong and completely wrong many times before. The explanation is simpler without God and still works therefore there is no GOD. The explanation is simpler without God and still works therefore God's no existence is a possibility based on current information. Correct me if i am wrong berkshiremystery. Going to the moon Allocating resources of society that put people on a rock far away but multiple groups at the same time. While we could of allocated that resources in curing diseases, solving major societal problems or management our world better doesn't seem like a good investment. At least flying into buildings doesn't cost as much. Its a little late i am a little tired sorry for rambling again. Anyways in my world both can exist. The unknown and the uncertain is my GOD isee him ever day in the ever changing events of the markets and world. The uncertainty underlining everything every day. I guided through it with my faith in the margin of safety and the principle of value investing. Sorry about the bad writing You make some good points, green king. Dawkins, the high priest of science as a religion, has some weird ideas. For example, in Ben Stein's movie, Expelled, he expresses the opinion that life arose on the earth as a consequence of being visited by aliens from another world, a tautology of the origin of life if ever there was one. 50 years ago, the priestly class of scientists was locked into the steady state theory of the universe, despite much evidence to the contrary, because the Big Bang theory was too close to the account of cosmological origins in the book of Genesis in The Bible. 40 years ago, the scientific priests of climate change herded away from much evidence of a human influence on global warming toward the more alarmist idea then that the planet was headed toward another ice age. I make these comments in sadness as one who has jumped through all the hoops to get published in a major peer review scientific journal.

Is there a concise description/article on monetary and fiscal policy during the great depression anywhere? Try: A Monetary history of The US by Friedman and Schwartz. But make sure that your coffee table is sturdy. It's definitely heavy reading. However, it's got a nice pullout that's a good summary chart. :)

Moore, I am a bit confused by you connecting productivity and debt. As I see it, you could for example increase productivity by adding debt and reducing labor. Perhaps you are talking about household debt? Could you please elaborate? Consider the incentives to be unproductive when the government gets involved. For example, the first stimulus money made available to my state was directed to the university system so that the professors and other staff didn't have to forgo scheduled raises or face layoffs. This meant that the producers in the private sector in a small way had to suffer cutbacks disproportionately. That 's one little cut to the productive part of GDP. Add up a thousand cuts, and the economy is dragged down in a meaningful way. Multiply even more those cuts in productive enterprise squeezed out by subsidized non productive activity, and you have got the whole economy like a government work crew where one man digs a ditch while five other men paid directly or indirectly by the government sit around smoking cigarettes and criticize the guy doing all the work. Government debt works the same way for as long as investors will buy it. It subsidizes all the unproductive things the government does. However, the essential functions of government such as protection against people or gangs bashing their neighbors and stealing their property, are not only conducive for prosperity, but essential. :) How is the private sector forced to cut back disproportionately? If teachers receiving stimulus money turn around and spend that money into the private sector, thus benefiting the private sector, doesn't that then mean the private sector doesn't need to cut back as much as it otherwise would? Either way the deficit puts money into the private sector in aggregate - I'd much rather see the deficit in the form of a lower tax rate for me versus stimulus money for lazy state workers, BUT, either way the state worker or myself turns around and spends that money, thus preventing the private sector from needing to cut back as much as it would otherwise through higher revenue.... I'm not against the teaching profession. A number of close relatives are or have been teachers. Education engaging motivated students and good teachers can be a highly productive investment for the future. The point is that government largess will insulate the recipients at the nonproductive margins from entering or moving to other occupations that could be productive. An extreme example of this was the poverty and very low productivity of the disfunctional soviet bloc countries two or three decades ago. The saying there was, " They pretend to pay us, and we pretend to work." The fewer people there are in a society doing substantial, productive work, the poorer that society will become, compared to what it might become, ceteris paribus. However, necessary functions of government such as police to serve and protect us from bashing our neighbors to steal their property and rape their women are not only productive, but essential for prosperity.

Moore, I am a bit confused by you connecting productivity and debt. As I see it, you could for example increase productivity by adding debt and reducing labor. Perhaps you are talking about household debt? Could you please elaborate? Consider the incentives to be unproductive when the government gets involved. For example, the first stimulus money made available to my state was directed to the university system so that the professors and other staff didn't have to forgo scheduled raises or face layoffs. This meant that the producers in the private sector in a small way had to suffer cutbacks disproportionately. That 's one little cut to the productive part of GDP. Add up a thousand cuts, and the economy is dragged down in a meaningful way. Multiply even more those cuts in productive enterprise squeezed out by subsidized non productive activity, and you have got the whole economy like a government work crew where one man digs a ditch while five other men paid directly or indirectly by the government sit around smoking cigarettes and criticize the guy doing all the work. Government debt works the same way for as long as investors will buy it. It subsidizes all the unproductive things the government does.

You have basically answered your own question. We can only make assumptions based on what we know. I would have to believe if I was given reasonable evidence for doing so. This doesn't just go for a supreme being. If there was proof of fairies in the garden or leprechauns or the Lochness monster I would believe in them as well. My criteria is the same. If the only evidence is a mix of hearsay, tradition, fear, and wishful thinking. Well, I won't be convinced. I find this world and the universe we inhabit infinitely wondrous and fascinating just contemplating the things we do know. I feel no reason to make stuff up. One thing that bothers me about religion is that I think it demonstrates a lack of imagination and appreciation for the universe as it is, for reality itself. It's a form of escapism. Science fiction author L. Neil Smith said (I'm paraphrasing because I'm too lazy to look it up) that religion is for people who either can't handle death, or can't handle life. I agree, it is escapism either way. So to answer your question, short of god showing himself (or some other proof), I can't think of anything that would make me believe. I do respect the "god of the gaps" people much more than the born again types who think the world is 5000 years old and god put all this geological evidence of an old Earth, as well as fossil evidence of evolution, just to "test our faith". I mean, what a jerk. If I thought there was a god and he pulled a move like that, I certainly wouldn't be getting on my knees and worshiping him. Then I'd read in the bible how he hates women and gays, and indiscriminately slaughters people all over the place and I'd be declaring myself to be his enemy and joining the other side. What it comes down to is that I just can't imagine worshiping anything or anyone. If god exists and he wants me to believe he exists, he knows where I live. He's welcome to come for a visit. If not, hey, no skin off my back. But if he wants me to worship him? I don't care who or what he is, nor what he'll do to me....he's out of luck. He'll need to earn my respect same as anyone else. Hiding away in the gaps isn't something I respect. Making people doubt his existence or blindly follow what they've been told "on faith", isn't very respectful. Which leads me to conclude only two possibilities, either god doesn't exist or there is a god who went through the trouble of creating the whole universe, but he's a big irresponsible jerk. Occam's razor clearly points to the former. Take it from this once apon a time atheistic, evolutionist free thinking basher of Christianity: if you will read the Bible, you will be amazed at what you'll find. Don't limit your understanding to merely the history or a literal interpretation of the words. The most important parts are metaphorical and poetic, from the psalms of David to the parables of Jesus. Start with Genesis. If you are fluent in English literature, read a modified King James version. Otherwise try the easy to understand NIV Readers Bible. Genesis in Hebrew means Beginnings. The first part of Genesis is an almost perfect parallel with the modern scientific view of Cosmological and earthly evolution, except that occurred through an act of creation. I say almost because the old evolutionist in me thinks a couple of things are a little bit out of order, such as the order in which the fishes appeared. If you are minded to take every word in the Bible literally, that may bother you, but try to see the big picture the first part of Genesis paints which is pretty close to the scientific evidence. :)

Interesting about the views of the Christian Socialists. It takes a certain amount of discernment to understand that responsible capitalism creates so much wealth that all benefit greatly. One minor quibble with the wiki account: I think the words, "under God", were added mainly on the initiative of a US Congressman, not Eisenhower. Very few Congressmen would vote against the change in wording. That was unfortunate as belief in God was certainly at odds with the views of some citizens.

Probably not through a legitimate broker. However fraudulent "bucket shops " would offer ultra low margin on phantom trades. Then, when some real or fake trade occurred at the margin stop, the naive client would be told , " sorry, you're wiped out."

The 20,000 • gain in price doesn't include dividends received. The dividends may have cancelled out the inflation of the dollar. A guesstimate of inflation adjusted returns would be about 12%+/annum compounded. That's a lot better than the bank did over the years. Yet Sun Trust is selling their Coke stock to "reduce risk" in the Alice in Wonderland world of bank regulators. I suppose this will enable them to carry additional less risky assets like the ones that blew up in 2008. Interestingly, one could have bought Coke for a small fraction of their initial placement price a couple of years later when inflation killed them on the price of sugar because they didn't have a cost escalator in their contract with their bottler. Factoid: Warren would sometimes buy Trust Company of GA stock instead of Coke stock when the price of the bank stock was attractive as they carried their hidden treasure of Coke stock on their books at cost. :)

The genius of the USA system of government goes beyond the concept of the universal rights of man to "life liberty and the persuit of happiness" in the Declaration of Independence, shared by the Whig Party in England/Great Britain. One can find lip service to these ideals in the Constitution of the former Soviet Union and the slogans of the people of France as they led the nobility to the guillotine. The true genius was the balance of powers in the US Constitution between the states and the federal government and between the Executive, the Judiciary and the Legislature. Another key to ensure that the ideas of liberty would be applied uniformly was the Bill of Rights including freedom of the press, freedom of speech and freedom of religion, including no religious test to hold public office. Plus practical safeguards such as not allowing ex post facto laws and having the right to counsel and bail. The idea that some citizens are entitled to benefits not shared by all has been a point of tension since the founding of the republic, when veterans of the Continental Army believed they should be entitled to a pension. The first mandatory health insurance scheme took effect over two hundred years ago in the John Adams Administration when US ship captains were required to withhold 1% of sailors' wages to fund hospitals and medical care for them. This scheme eventually became The US Public Health Service.

You make good points, giofranchi. If a monetary authority subsidizes a behavior, improvidence, that reward should stimulate more of that behavior. The federal system in the USA has discouraged bailouts of individual states. California actually paid some of its bills with IOUs a few years ago until it tightened its belt. That wasn't traumatic, just necessary medicine for the patient to get back on the road to health.

I can't vote for Republicans because they advance the agenda of the religious conservatives. Which leaves me with only Obama to vote for. I knew we would get to religion. :) Seriously. Clinton and Obama I were against gay marriage. Not that anyone with a brain believed Obama when he said that (it was clearly a lick your finger and see which direction the wind is blowing flip flop like Romney on abortion). Clinton had "don't ask don't tell" and even signed DOMA. Hard to believe that is the deal breaker. Does that mean abortion is the issue that prevents you from voting Republican? Even if the Supreme Court changed its opinion, which is unlikely, it would become a state issue, and remain legal in the first trimester in most states. Or am I missing something? The Bible thumping religious extremists support the Democrats because... hmm, I can't quite finish that statement, can you help me out? Interestingly, Obama states in Dreams From My Father (if it hasn't been expurgated from later printings) that he is conscientiously opposed to abortion as a matter of personal belief. Same with Jeremiah Wright, Obama's pastor. If I'm not mistaken, Wright's infamous,"god damn America" sermon rant was triggered by the notion of liberation theology that abortion is a plot by the wealthy white neocolonial oppressors to euthanize poor colored people in the name of eugenics. I can't say I entirely disagree with Wright.