twacowfca

Here's my experience. Had a Kenmore pop up vent on my stove that stopped working a week before the one year warranty expired. Called their toll free CS number and was put on hold 20 minutes. Voice mail message told me I had to call another number, contrary to the instructions on my warranty card. Did so, and was immediately disconnected. Repeated the same steps, another disconnect. Tried other techniques to no avail; more than one hour wasted. Started calling local Sears stores. Finally got a live person. She knew the ropes and she was able to give the secret CS number that would actually get through to a live CS operator. After that my problem was successfully resolved by a contract serviceman who came to the house and was able to make the fix after I figured out what was necessary to do as I asked questions. After the fix, I was asked to fill out a short customer satisfaction form. I gave the man a high rating in all respects. I'm sure that my response will show up in Sears statistics that prove that their customer service is the best there is. :P

Sharper, thanks for a very well thought out input, as you always do. Indeed, as I became more financially secured, I have become more willing to express my view at work. Knowing that I have a second set of skills do help. I am lucky in that when I came back to Taiwan, I was asked to set up an engineering department in a major company. Over the past years, I essentially staffed it with the top ranked students from the best local graduate schools and have coached them more or less the way I want. If I quit, I know that I will not have the opportunities to work with as talented a group of people. As you said that I can change the game but can't leave the court. That is really an excellent piece of advice. I think what I should do is to figure out what game I want to play if I quit my current job. Beyond investing in my spare time, do I try managing money for people? (Munger did not like it, though?) do I register in a seminary to study theology and become a missionary worker? do I join a non-profit organization to work on a cause that I am passionate about? Again, thank you for your excellent piece of advice. Zippy1 Suggest you get a copy of an out-of-print, skinny, paperback book, The Truth About You, by Arthur F. Miller. It tells how we were all born for a purpose. That vocational and avocational purpose is quite specific and often unique for each person. The late Dr. Miller became a well known, high level personnel consultant to corporations. After many interviews, he came to understand that each person has a specific set of motivated abilities, sweet spots so to speak, things he likes to do and does very well. Efforts to work outside of these sweet spots generally fail or are unsatisfactory. However, these "tropisms", the work and activities we enjoy doing, are where we are most productive and where we contribute the most to society. His book shows how to tease out our tropisms and understand clearly our giftedness.

The recent surge of the WSBase and the continued expansion of M2 is not bearish to say the least. http://i1109.photobucket.com/albums/h422/twacowfca/M220110225.jpg http://i1109.photobucket.com/albums/h422/twacowfca/WSBaseExcel0320110225.jpg

This is what we do when we make long term investments. However, sometimes we make a small investment in a company before fully understanding the history of its competitive advantage. For example, we made an investment in USG several years ago after it went into Cpt XI. I knew it was a good company, although cyclical, when we made our initial investment, but I wanted to find out why it was so good that WEB had bought 15% of their stock despite their asbestos liability (which turned out to be confined to only one of their subsidiaries ). The answer to the riddle of how they had maintained significant advantage in relation to their competitors was found in a privately published history of the company. Reading their 100 year history, helped me understand in a profound way why WEB liked the company so much. Gaining a deep understanding of all aspects of the company and their situation, gave confidence to load up on the stock near the low of their market price and hold most of the position as USG added a billion dollars of retained earnings to their balance sheet, enabling them with WEB's help to pay off the accumulated interest on their debt and their asbestos liability. Had we lacked understanding of their historical profit potential in an expansion of construction in the economy, we might have made a small profit, but not had the fortitude to hold most of the position for a ten bagger. :) The same attention to relevant history is integral to making other large investments such as our large holding of Lancashire. This process is merely an extension of Graham's reasoning underlying the P/E 10 concept to as much of the historical record as is available.

Happy anniversary, Sanjeev! Tim stumbled across the board early on while we were trying to find some useful info on the Yellowberkers (?) board. We were long term lurkers before I bit the bullet and started posting frequently in 09. The experience has been worthwhile. Lots of ideas, some good, and the opportunity to have excellent peer review in real time of our ideas. Don't grow weary in well doing. Keep up the good work. Cheers!

I tore a tendon 3 years ago running on a treadmill, less than a couple of months after I'd quit my job. The problem is that my first metatarsal on my left foot protrudes dowward at too sharp an angle, so the ball of my big toe is on a plane lower than the balls of my other toes. This forces me to rock outward on my foot when I walk (supination) and that puts stress on the tendon (it's the tendon that always gets swollen when you twist an ankle). In short, it's a partial club foot. That was the first time I realized there was something wrong with my foot. So the doctor is going to clip and lengthen my achilles tendon to give it slack so that he can straighted (via cutting) my ankle bone. Then he is going to cut and redirect the angle of my first metarsal and also cut and feed slack to that tendon. Then he is going to stitch up the torn tendon and tighten some other tendon in that area. Six procedures. I should have had this done right away nearly three years ago but I didn't ??? Finally I won't be limping around anymore as I've been doing. Oddly enough I'm looking forward to getting this done and behind me. Eric, Consider prolotherapy before surgery. Check out caringmedical.com :) I enjoyed reading about prolotherapy tonight, thank you. Ironically I view this surgery as preventive medicine -- if the bones don't get corrected the prospects for re-injury aren't favorable. There is a huge margin of safety in trying prolotherapy. Practically zero risk of something going wrong. There was a study out of the Univ of British Columbia a few years ago showing that something like 26 out of 28 people with Achilles tendonitis were symptom free after an average of 3 prolotherapy treatments. Ross is the best MD in the world using Prolotherapy. Plus he's a marathoner with a special interest in injuries that affect ambulation. You'll walk away from a prolo treatment instead of hobbling in a cast for weeks. But, Hey! You've got insurance that pays for the surgery that will cost 20 to 40 times as much as one prolo treatment. Must be 20 to 40 times better. Right?

I tore a tendon 3 years ago running on a treadmill, less than a couple of months after I'd quit my job. The problem is that my first metatarsal on my left foot protrudes dowward at too sharp an angle, so the ball of my big toe is on a plane lower than the balls of my other toes. This forces me to rock outward on my foot when I walk (supination) and that puts stress on the tendon (it's the tendon that always gets swollen when you twist an ankle). In short, it's a partial club foot. That was the first time I realized there was something wrong with my foot. So the doctor is going to clip and lengthen my achilles tendon to give it slack so that he can straighted (via cutting) my ankle bone. Then he is going to cut and redirect the angle of my first metarsal and also cut and feed slack to that tendon. Then he is going to stitch up the torn tendon and tighten some other tendon in that area. Six procedures. I should have had this done right away nearly three years ago but I didn't ??? Finally I won't be limping around anymore as I've been doing. Oddly enough I'm looking forward to getting this done and behind me. Eric, Consider prolotherapy before surgery. Check out caringmedical.com :)

The one thing that really surprised me about Shelby Davis was that he really used a ton of leverage. If there had been a downturn towards the beginning of his investing career it could have been a very different story. Yes, but he was not always subject to inflexible margin calls because he became a broker/dealer and NYSE seat holder fairly early in his career. :)

Thanks for posting, netnet. That's a great example of WEB's careful approach to investing.

LOL Biglari holdings. Don't forget Fremont; it's in his favorite industry after all. :D

We closed out our remaining relatively small position in the preferreds a few days ago, keeping only a token amount to remind us to look at them periodically and assess developments. Comparing the market caps of the commons and preferreds, I don't see any way that purchase of the commons could be worth more than buying the preferreds if there is ultimately some value for the equity. The new plans all raise the fees they charge for their securitizations, but it may take more than that to get them out of the hole. Cutting the dividend on the Treasury's preferreds may be necessary to turn them around. If this happens, things could get interesting. Exchanging the Treasury's preferred for common would be even better, but that may be a long shot in the current political climate. Meanwhile, I still haven't figured out how to multiply by zero! ::)

Or perhaps there is merit to the assertion that their assets are not properly valued in today's market. A most uncomfortable situation for a board member. Food for thought. ???

Would the general partner's profits in the hedge fund have been sheltered to some degree if not taken out?

It's good to hear them tell it like it is. The speculation is that the Treasury Dept may be about to make a big change in the way these GSE"s are managed. If Fannie and Freddie transitioned to charging anything close to market clearing rates for their guarantees, they would soon be profitable. If the Treasury also cut the dividend rate on their preferred from 10% to 5%, they would soon be on their way to begin paying down the government's preferred stock. Clayton Rose is on the Board of Directors of FMCC. Recent news reports say that FMCC and FNMA have been lobbying the administration to cut the 10% dividends the US receives to 5%. If these reports are true, it is likely that the board members of these GSE's are behind the lobbying. Keep in mind that it was Hank Paulson, Bush's Secretary of the Treasury, who slapped them with such a high dividend rate, much higher than the rate that GS et al. had to pay on the preferreds the Treasury demanded in their bailouts. The severe treatment of Fannie and Freddie could be interpreted as payback for all the shabby dealings between their former officers and the Democrat Party. Geithner's recent statements indicate that the first of the two big ifs that could restore Fannie and Freddie's financial health will very likely happen with a progression of fee increases, to begin soon. The second big if about lowering the dividend rate they pay the Treasury is much more iffy. That may be too much of a political hot potato for now. However, if the Treasury did cut their dividend rate, these GSE's should soon be on their way to becoming profitable, steady Freddies, so to speak. Who knows, it's possible that they could once again become the fattest cash cow ever for the Democrat party. Fannie and Freddie used to be Barney Frank's biggest source of funds, and Franklin Raines, the former Chairman of Fannie Mae, was Chairman of Obama's campaign financial committee. Congress almost certainly will not be able to pass any legislation changing the structure of these GSE's, given the divided control of the house and senate. The initiative is entirely with the administration, and it looks like Geithner's plan has prevailed. Geithner says the Treasury intends to "crowd private capital into the mortgage market." The only sensible way for this to happen is for the US to charge much more for Fannie and Freddie's guarantees. We should know very soon if this will happen.

The above story appeared on Bloomberg a few minutes ago. No link, but more info may be available by searching.

I was gonna leave this thread alone until there is further development, but I can't help responding again after reading your multiple posts that pretty much say CCME is a certain fraud. Could you briefly lay out your reasons why you think so? I don't see any specific points from you regarding the company, other than a link to a Barrons article that shows most Chinese RTO are fraudulent. No thanks. The point is that an investor doesn't have to be a Bill Ackman, dedicating a large portion of his life to uncovering and then proving that a particular company is a fraud. The point is that as in Buffett's no called strikes baseball game, all the prudent investor has to do is decline to play in a card game where the deck probably is stacked or even in a game where the deck MIGHT be stacked.

Yes, but those were apparently good companies, not very likely worthless ticking time bombs where the only value that could be received would be by passing the counterfeit to someone else before the time is up. There are more ways than stock price appreciation for a sound business to return value to shareholders: dividends, share repurchases, liquidations, take outs. Plus, no sucker is left holding the worthless bag as in the classic con game. If I buy something, knowing that it is likely to be a fraud, with the intention of selling it to someone else at a higher price, then I become an accessory to the crime.

There is a story about an oil driller who died and found himself standing at the pearly gates of heaven in front of Saint Peter. "May I go in," asked the oil driller? "Look at all those other drillers ahead of you, just inside the gates," answered Saint Peter. "You'll have to wait till we process them. Some big deepwater event." The oil driller fidgited for a minute, and then yelled: "Oil discovered in Hell!" When they heard this, all the other drillers jumped up and ran back through the pearly gates straight down to Hell. Saint Peter turned to the oil driller standing before him and said, "Well, there's no line ahead of you now. I guess you can go in." But, the oil driller turned away and started to follow the other oil drillers down to Hell. "Why are you going that way," asked Saint Peter? "I can't take a chance," replied the oil driller. "There might be some truth in that rumor!" This is an appropriate prelude to letting the board know that we took about one third of our Fannie and Freddie profits and bought their preferred stock once again on the recent pullback. :o

Exactly. You seem rather dismissive of any point raised. I think we just have to wait and see. Only time will tell. Eventually there will be an I told you so and a huge capital gain or capital loss. Prehaps, but there is no margin of safety here, just the suspension of critical thinking, replaced by wishful thinking that, like a prisoner on trial, the company is innocent until proved guilty, even though observed at the scene of the crime, performing the same actions as others who have already been convicted. This isn't a trial. This is like Buffett's no called strikes baseball game. Why would any batter concerned with having a good average even think about swinging at a pitch that looks like it could be a wicked screwball?

Here's the truth about real estate development. The farther out you are, the longer it takes to become profitable. There is a new town, now an exurb of a major metro area. It's a wonderful, planned community, one of the top ten places to live in the US, according to some surveys. The planning, promotion, development and management were superb. But, because of its far out location, the development company went through two bankruptcies and three decades of losses before it finally became profitable. Considering the bankruptcies, the project had negative returns, overall.

Smart observers of the market for shares of Chinese Companies that have acquired US shell companies say that virtually all of these are frauds. Therefore, the correct mindset should be: prove that one of these companies isn't a fraud. Proving a negative like this is practically a near impossibility, and an absolute impossibility using Popper's logic. Therefore, a prudent value investor shouldn't even kick the tires of these companies for the same reason that a mathematician should not try to multiply something that likely is a zero.

As I look at the supply imbalance developing for AIG stock plus the fact that they have sold most of their best businesses, I get the feeling that it would be unwise to touch them even with a ten foot pole.

Mostly agree, but the most important aspects of the future that can be disruptive most certainly do not develop in random ( stochastic ) ways. These fractal patterns are typically hypernormal for fairly lengthy periods and then jump off the chart for briefer periods. These regime changes cannot be predicted absolutely, but there are often warning signs, like earth movement before a volcano erupts, that indicate increased risk.

Isn't this ratio less valid than before since a lot of companies in the S&P500 are heavily active abroad? ex: Caterpillar have plants and operations in emerging countries that if I'm right are not counted in US GDP. That's an excellent point. I wonder how that ratio might be adjusted to account for the proportion of overseas business over time?

The appeal of this type of fund is the same as the appeal of short funds: inverse correlation with the market -- not the prospect of good to great returns. Taleb is smart despite his tendency to be disagreeable. This type of fund will be a loser in benign, slowly rising markets. It will do extremely well when markets become unstable and crash.