twacowfca

I think it's going to be a tough slog to hold most above average S&P 500 companies for the long haul and get good returns. The current market cap/GDP is very high and the PE10 is 50% above the long term average. Interest rates will go up in the future ultimately in response to the recent easy money. When this happens, the Fed Model for pricing stocks will get a big jolt. Nevertheless, I'm from Lake Wobegon, and this doesn't bother me a lot. I think our investments will generate a lot of cash that will be available to buy bargains the next time the market goes south.

Had a tiny bit of their stock that was received as a result of their demutualization in the early 00's. Looked at their BS, and it was loaded with questionable MBS. Got rid of their stock. Looked at them a couple more times before the crisis. Same story. They reached for yield, and did not manage their investments prudently. Their annuities had tail risk. I'm surprised that they survived the financial crisis, but haven't looked at them in recent years.

Are you wanting a prediction about the future or the past? The former is "especially difficult", as the man said. ;)

And fiction used to be such light reading. ???

You are proving to be quite the value trader :). I am taking notes lol. If anyone wants to know more about when a certain kind of price action suggests a surge in price is about to pull back or a bubble is about to pop, may I suggest Didier Sornette's book, Why Stock Markets Crash. Don't let the advanced math scare you. Just read around any parts you don't understand. His ideas work especially well in markets or stocks where there is a lot of short selling and short covering without potential regulatory action interfering with price adjustments. :)

The Pepsi Challenge taste tests back in the 80's led Goizueta to do a foolish thing: replace sucrose in Cokes with cheaper, sweeter tasting high fructose corn syrup. People will generally prefer the sweeter tasting sip of comparable products in a brief taste test. But that doesn't mean that that will be their preference in the long run. The higher amount of sweetness, calorie for calorie in high fructose corn syrup, compared to sucrose, means that the pancreas will secrete more insulin in response to high fructose corn syrup than to sucrose. The delayed reaction from the excessive insulin secreted in response to the more numerous molecules in fractionated high fructose corn syrup than to an equivalent mass of sucrose, eventually drives the blood sugar down to a lower level than after consumption of sucrose, causing people to be grumpy or hungry. The reason this happens is that the smaller, more numerous molecules, gram to gram, in the high fructose product than in cane sugar attach to more sweetness receptors and stimulate the secretion of a greater amount of insulin. Therefore, the perking up effect from the lift to blood sugar will be less, briefer and ultimately less satisfying after consuming an equivalent amount of high fructose corn syrup than sucrose. The high fructose product is less satisfying in the long run. Were it not so, people would sweeten coffee not with cane sugar, but with fructose products; relatively poor mexicans would not pay much more for Cokes imported into the US from Mexican bottlers, made with sucrose, compared to Cokes bottled in the USA, made with high fructose corn syrup. And both Coca Cola and Pepsi Cola would not have seen their US soft drink profits decline dramatically, compared to profits from other areas. :P

Yup. This is an accurate take on his strategy. Once in a blue moon, he will make a big score that will more than make up for the small losses. However, after such a big loss event, a " smile " phenomenon developes where the way out of the money options assume a pattern that is less reflective of the supposed normal distribution. Then his strategy is less likely to work for a while until the market loses its memory of the black swan.

Thanks, Charlie. The correction is much appreciated. :)

EOY Munich Re results released today suggest the soft market may be starting to turn in Europe earlier than worldwide with the prospect of higher capital levels required for the weaker primary insurers under Solvency II. Munich Re's premiums in €€ up 4% in the peak period for renewals in January. Renewal pricing up 0.1 %. This contrasts with the 7.5% drop in January 2011 renewal pricing worldwide reported recently by Guy Carpenter. Q4 CR 96%. Full year 2010 CR 100.5%. €1B share buybacks on an equity base of €23B planned between now and their AGM in April. This should be quite accretive to value as current P/B is 96%. Dividend increased by €.50/SH to €6.25/SH. Profit at their consolidated primary insurance business, ERGO, doubled, but still a relatively small part of the whole business. :)

When's the admin's plan again? Feb 13th? No official date, but probably after the budget is presented the week after next.

The price action for the last few days and today was suggestive of a bubble, so we were able to sell most of our positions into the dramatically increased liquidity. If there should be a pull back, we may jump back in with all the apparently favorable developments behind the scenes suggesting light at the end of the tunnel. However, we may instead wait to see what the administration's plan is and how well it's received by congress before making a long term commitment. :)

Not necessarily. "Tis many a slip, twixt cup and lip." ??? Here's what's happening: Ralph Nader, of all people, says the US should cut the dividend rate on their preferred and let Fannie and Freddie earn their way out of the hole as they are transitioning to cash flow and earnings positive except for the exorbitant rate they have to pay on the government owned preferreds. The rate Fannie and Freddie pay is double the dividend rate the US required AIG, the big banks, et al. to pay. Financial Times reports that Freddie is lobbying the administration to cut their dividend, and that the administration is sympathetic to that idea. The administration is said to have decided to allow Fannie and Freddie to charge higher, appropriate rates for their guarantees and securitizations. The administration's nominee to head their authority has withdrawn his name, apparently abandoning the plan to draw Fannie and Freddie into letting deadbeats off the hook, as HUD and FHA are doing. Meanwhile, the short sellers, anticipating a possible buying frenzy when the Treasury's plan(s) is presented to congress, are scrambling to cover, a more difficult task with the often illiquid preferreds than with the common. Times are 'a changing! :o

Way up again today. Three times our Nov and Dec average price and two and one half times our average price including January purchases. :)

Quite a learning curve! The Newton into the iPad and going way back The clunky, slow, bulky, overpriced Lisa morphing into the first Mac under a dedicated team led by Jobs to address all its faults.

Oops! Many thanks to txlaw for posting the full Jobs interview on the general discussion section.

Steve Jobs & Aristotle FROM --Steve Jobs interview: Feb.1, 1985 Obviously, one of the great challenges of an education is to teach us how to think. What we're finding is that computers are actually going to affect the quality of thinking as more and more of our children have these tools available to them. Humans are tool users. What's really incredible about a book is that you can read what Aristotle wrote. You don't have to have some teacher's interpretation of Aristotle. You can certainly get that, but you can read exactly what Aristotle wrote. That direct transmission of thoughts and ideas is one of the key building blocks of why we are where we are, as a society. But the problem with a book is that you can't ask Aristotle a question. I think one of the potentials of the computer is to somehow ... capture the fundamental, underlying principles of an experience. Here's a very crude example. The original video game, Pong, captured the pinciples of gravity, angular momentum and things like that, to where each game obeyed those underlying principles, and yet every game was different -- sort of like life. That's the simplest example. And what computer programming can do is to capture the underlying principles, the underlying essence, and then facilitate thousands of experiences based on that perception of the underlying principles. Now, what if we could capture Aristotle's world view -- the underlying principles of his world view? Then you could actually ask Aristotle a question. OK. You might say it would not be exactly what Aristotle was. It could be all wrong. But maybe not. . . . .

I wonder what would happen if they tried feeding ethanol to the cancer cell. Maybe one can get all the phytochemicals and antioxidants from drinking wine with none of the cancer-promoting fructose from drinking grape juice. They would get drunk and have promiscuous sex with all of the other cells.... Thus validating the advertising mantra, "sex cells". 8)

Xylitol is a rare sugar. People seem to be able to handle small amounts OK, but it might be unwise to over do it because our bodies aren't used to it. It does do weird things such as cause "black tongue". :o

We're in the same direct marketing industry as Overstock. We collect and remit sales taxes collected from the residents of the state where we are domiciled, consistent with our state's law. The US Supreme Court has ruled that businesses only have to collect and remit sales taxes in states where they have a presence such as an office or other facility or resident employees in a state. Having a presence in a state means that a business is deriving a direct benefit from that state such as police protection, state highways, etc. Virtually all states with sales taxes require their residents to pay sales taxes on in state and out of state purchases. In state retailers that derive direct advantages from the government of such states are required to go to the extra expense of collecting and remitting those taxes on behalf of their fellow residents of the same state. The US Supreme Court ruled that states may not place the burden and expense of collecting the taxes their residents are required to pay onto out of state businesses that derive no direct benefit from the taxes collected.

Bravo! Let us know when the Chou funds are available through Fidelity. We would like to offer them through our selective 401K options. :)

That's very interesting that cancer cells can't propagate without fructose. Do you have a reference for that? Thanks.

Does she have no cavities too? Interestingly, I never got cavities despite all the sugar I consumed. my father never got cavities. my grandfather didn't have cavities despite his sweet tooth. Evolved to eat heavy amounts of blueberry tar in the ice cave! You could spread some of the blueberry paste on another northern delicacy, bird cheese (don't ask). Then you would have an extra special treat!

Eric, your narrative resonates with my wife's experience. She has to watch her consumption of carbs and avoid eating more than a small amount at a time or bad things will happen. She hyper secrets insulin. She once had a six hour glucose tolerance test. Her fasting blood glucose was low, and her blood glucose never got above the normal range during the challenge which was drinking a big glass of glucose solution. When the test was over, she could hardly think straight -- major emotional and cognitive disfunction. Later, when we got her readings in graph form after the test, we saw that the reaction to the glucose challenge eventually drove her blood glucose down to the extreme hypoglycemic range, almost bordering on insulin shock.

FNMA and FMCC preferreds continued to increase in price today. Attached is a spreadsheet showing today's increases.

D day will definitely be an inflection point. The sensible prediction would be for the prices of the preferred to go up a lot or go down a lot after the administration's announcement, but maybe not. WSJ says the administration will present more than one option for congress to consider. One plan would be to put Fannie and Freddie into runoff and then start subsidizing bank cooperatives to start insuring mortgages. However, such new organizations would create uncertainty that would dampen the market for mortgages and almost certainly require a greater government backstop than continuing with Fannie and Freddie. Plan B would be to continue to support Fannie and Freddie for several years until they can stand on their own. During that time Fannie and Freddie might let the private market handle some of the more expensive mortgages without government backstop when and if the private market is able to do this. In either case, their regulators are said to intend to allow them to charge much higher rates for their guarantees and securitizations. :) Plan A looks like a nonstarter to me. If plan B is the one that goes forward, it will be interesting to see if the plan has details about how the US will eventually exit. In that event, it seems logical that the preferred in the public's hands should have much more upside than the common. At the close yesterday, the market value of the common was about four times the market value of the public preferred.