twacowfca

Absolutely not! I will just write something like this: Recommendation: Buy this stock below this price, or Sell that stock above that price. Readers will then have to place their own orders with their own brokers. Actually, I have always thought that a simple disclaimer, like the one Agora Financial uses (see attachment), might be enough to prevent any legal issue… But I am going to delve deeper into this and make sure I won’t run unforeseen risks. Thank you very much! :) giofranchi Interesting statement. If I read it correctly, they prohibit outside writers and consultants from having a financial interest in any company they write about or recommend, but not employees of their company or its affiliates. These, apparently can trade any security after waiting 24 hours from the time the initial recommendation was posted on the Internet. I'm not familiar with how they do this in practice. How big is their recommended list across all their publications? Do they write follow up articles on the stocks they recommend?

Very good opposing view. Mr. Market has undergone a personality change. He's steady Freddy. Maybe he's on lithium and his true character will come out before long. For now he shrugs off things that used to make him fearful or overly exuberant and keeps plodding along up the hill more like an ox than a bull.

Could you please give some examples? Does that include American airline? USG , Nextwave M.Maddux & (very similar legal situation) F&F Preferreds . In all these, the value of the equity was increasing in Cpt 11.

Up, up, up the easy money policy drives the WSBASE- WS_Base_10.09.2013.pdf

The good news for us as investors in the private preferred is that with greater than 4:1 odds, we will have lots of entry and exit opportunities over the long time period it takes to work through the court system. Yes, as mentioned, we have had three multibagger round trips in these since the US takeover, plus numerous trades arbitraging the differences in prices of the various issues. :) Interestingly, our most highly successful type of investment over the years has been buying the common of increasingly solvent businesses in Cpt 11. F&F are not unlike those companies. Simply think of "conservatorship" as being like "Chapter 11 protection". :)

Here's my two cents worth about the future value of the public's preferreds. The margin of safety continues to be the same as outlined in the original post and subsequent posts. There are powerful reasons why F&F will not be completely taken over by the US or replaced with a new scheme, not the least being the bad appearance of taking their liabilities onto the official balance sheet. Therefore, they should eventually be able to earn their way out of the hole using the strength of their franchise. Recent results suggest that this may happen sooner than later. I agree with the consensus that the original takeover and conservator ship very likely will not be deemed a "taking" by the US Court of Claims. But, It's hard to imagine that the recent expropriation of all these GSE's profits would not eventually be ruled an impermissible "taking" by the courts. Those who are interested in investigating the strength of the claim may want to study the various US Court rulings involving litigation tracking warrants issued to S&L shareholders in the 90's and 00's for the purpose of spinning off claims against the US that were valued at zero by Mr. Market. (Disregard Chapter11 rulings, bankruptcy courts are inferior courts that make all sorts of strange rulings that are ignored by higher courts). In the 1980's the US wanted solvent S&L's and other regulated Thrifts to take over insolvent Thrifts. Therefore, their regulators allowed goodwill to be counted toward regulatory capital, contrary to previous practice. About 1989, Congress passed a law that goodwill would no longer be allowed to count as regulatory capital. This caused no end of distress among institutions that had taken over the insolvent thrifts at their regulator's urging. They suffered balance sheet losses, had to raise very expensive capital and lost out on M&A deals that would have helped their shareholders. The loss of economic value was deep for these savings institutions. The marketplace gave no allowance for the possible value of these claims, and this affected the economic value of these businesses as well as their stock prices. Some of these claims worked their way through the US courts, eventually being judged by the US Court of Claims with the logic of those rulings affirmed by the US Court of Appeals. The final rulings were liberal to the claimants. In a particular case, the appeals court suggested to the US Court of Claims that it should go even farther and award even more damages to the claimant than it had. This is a big plus for the value of the claims F&F preferred shareholders have as a consequence of last year's taking. However, the earlier Thrifts' claims, that originated with the US's reneging on their pledge about how regulatory capital would be determined, took more than a decade to work their way through the courts. In short, there seems to be light at the end of the tunnel, but the tunnel may be a long one. :)

I've come back to this thread. As someone with a young child, I'm going to have to deal with a lot of what was discussed here (and, maybe, in the thread about retail) in the coming years. I was raised in a family that (over) prized academic outcomes versus both general sports results and "learning" and doing what you love. I won't say it failed for me. But, I didn't enjoy it. I was pretty good at sports and didn't mind losing. I liked teams much better than individual (I think for the right reasons). In any case, that was not prized in my family. I did well in school but I'd say I never figured out what I really enjoyed as the goal (the edict from above) was to get the grade. I didn't like to lose but I don't think I was a sore loser. The quote of me from above had to do, in my mind, not with Buffett (or yours truly) wanting to beat Michael Jordan. I feel the quote assumes you can't beat Michael Jordan (that's why he's a useful example) -- it's not about him, per se, but about something you might want to play (or do) but are facing a situation where you cannot win and would prefer not to simply be a lamb leading himself to slaughter but rather to fight on and try to win in another way or at another point in time. I agree with what rkbabang wrote in the rest of the missive. This is a succinct way of getting across the idea of "never giving up." In fact, eventually, you do often have to give up (or lose) but before that you will have achieved what Emerson thinks is useful about a hard-earned loss. It does make sense to play those games even if losing is certain. It might make sense to reward kids for participating in these situations. Some kids get better but won't if they give up because there are no rewards. I guess what I'm asking is: How do other fathers of young children feel on these matters -- both sports and academic? I know the way it was done when I was a child and I don't think much of that method. But perhaps I'm too quick to throw it away without some education on the alternatives. What do others feel they "should" do irrespective of what they (may) hope their child achieves? Or, are those things always aligned for most of you? I simply want my kid to figure out what he likes and pursue it. But, I don't want a sore loser or someone who quits before they have a chance to figure out whether they might like the activity. Thoughts appreciated but none expected :) -- Note: Edited for clarity We are all different, and our areas of giftedness become manifest in early childhood. What toughened up Emerson might defeat or destroy others. He was an "Invictus" kind of guy. Discover your children's tropisms, what they like to do and do very well. Then, you'll see how to facilitate the exercise and development of those gifts. :)

Did you mean to say that he bought puts rather than wrote puts ???

You guys are missing the point. It's all about the team. If not, for very winner, there are a bunch of losers. Most good that happens in life is accomplished through the team, work group, supporting actors, family and other affiliations through teamwork, including the use of many skills and gifts complementing the skills of others. :)

Scale in this business come with hundred if not thousand stores. Not with two dozen. You may be right, but there are disadvantages to scale as well. My friend's stations are clean, wholesome and well managed. I can't say that about large gas station chains that are beyond the span of control of an owner/operator. On the other hand, I have another good friend, also second generation whose fast food chain has about 2,000+ units with sales per unit that are double the much discussed SNS chain. The big edge that he has is that his units are also clean, wholesome and extremely well managed by operators that make most of their income through sharing the profits of their units. :)

I have a friend who has a chain of about two dozen stations built up over four decades from a smaller chain he got from his father in law. He has everything going for him: good locations including two truck stops at intersections of interstate highways, scale, including affiliations with major oil companies, locations in growth areas, etc. With all that going for him, he only makes a little over his cost of capital. In the early years his returns were lower. I know two other people who got started with stations/stores who had very high returns in their early years with their first station because it was in a great location, protected from competition, and they are good operators. On the other hand, my high school football coach bought a station in a poor location for almost nothing and still overpaid. :)

The question was how expensive the S&P500 is relative to the US stocks that are outside the index. That's not that easy... Could be interesting, but I doubt that ETF's have a huge impact because there are plenty of stocks outside the S&P500 that are also in some ETF. That said, with more money going to ETF's it almost must be that markets get less efficient. It's a form of kurtosis. Markets driven by ETFs should tend to make little distinction among good and poor prospects for many companies while becoming enamored of a few stocks that reach bubble valuations. (hyper normal for most stocks as the market rises, but near the peak a fat tail for the few favored industries and stocks.) Then, when the bubble pops, a fat tail on the downside with huge sell offs for over priced or low quality/value stocks.

This is a key point, Dazel. Taking F&F onto the US balance sheet would blow any sensible debt limit. They can't be wound down very much for lots of reasons. Therefore, they will continue to do what they do until something happens. The biggest downside has been more or less eliminated. Therefore it's like a Cpt11 with an increasingly solvent Debtor in Possession repairing its balance sheet while the creditors can't force a POR that would have them own all the the equity in the reorganized debtor. :)

Sanjeev is a mysterious character. But the investing public wants to know critically important things about his past! ... What was the name and location of the corner convenience store that inspired the naming of his fund? Just what was his favorite drink and snack? These are pressing questions that beg for answers. ;D Yes. And what does he munch on at night when he stays up late to watch . . . Uuh . . You know . . That hockey team . . . The one that loses the key games.

In S.C. (Not my state) there is a strung out judicial foreclosure process that can take a year or two. That state also allows a homeowner to pay off a tax lien that has been sold to a vulture investor within a period of up to six months, if I'm not mistaken. The attorney general of that state is also empowered to file suit or bring criminal charges against someone who may be guilty of elder abuse in exploitative situations.

I hope that it's only a matter of time. 8) Until then, are there any other rocket scientists around these parts? ;D It takes one to know one. :) Norm happens to be a physicist. :)

Lets go in the other direction. The limited liability corporation was the big change in economics that led to productive use of assets in capitalism. That was much better than mercantilism when sovereign states acquired surplus assets generated through trade and directed their use for nonproductive activities such as wars. The creative destruction of capitalism is dynamic. Surplus capital is directed to productive limited liability enterprises that have prospects of good returns as capital is pulled away from businesses with poor returns. The ability to throw off quickly the chains of debt that can't be repaid and reallocate the remaining capital is a very important wheel in the mechanism.

You're right. That's a huge advantage for the US/Canada. Commercial bankruptcies that allow fresh starts are equally important. There are lots of zombie companies that are on life support after a downturn in Europe and Asia.

Actually, if I'm not mistaken, Eric has said that he doesn't have original ideas, but simply identifies the most compelling ideas that others have come up with. Apparently, good ideas like pointing out the merits of a whole class of stocks that are posted under the General category apparently won't make the list and shorts or stocks with downsides that are posted under investments may appear to be failures. Nevertheless, the results are interesting.

Sarkozy however was a lawyer and therefore not part of that elite you are talking about. Isn't there an elite apprenticeship program in France whereby the most meretricious students after a series of exams become the interns of the current French leaders and then wind up years later as the new leaders of both of the dominant French parties?

Yup. And the leaders of the two dominant French parties are elitists who generally graduated from the same top schools. Kind of like Bush and Kerry who went to the same IV League school and even belonged to the same elite, secret society. Do we live in democracy or only in the semblance of one?

There is hindsight distortion in what led up to The US Civil War. Two years before the war started, relations between the US States were so peaceful and congenial that there were less than 2000 men under arms in part time voluntary militias in all southern US States combined. Then, one of the anti slavery terrorists skirmishing on the western frontier with pro slavery terrorists led a small raid that captured a US arsenal in Virginia, an eastern slave state, and invited the slaves to join him in a rebellion against their masters. The horror of that act in the view of the slave states polarized opinion to such a degree that on the eve of secession of the southern states from the Union, there were almost 200,000 men under arms in the southern states. Here's a question only for the European posters on this board: Is there anything specific on the horizon in The EU that could lead to such polarization in the near future?

Here's my short portfolio: These are mid caps, and it is possible to short them, but you'll have to stand in line. Hold your nose before you look at them. Phew. AFSI MHLD

No not at all. A short seller normally cherry picks a few stocks or commodities and not an entire portfolio. There is a reason that there are not a plethora of short sellers around because it is bloody hard, and getting harder. From financial history, the worst looking stocks in a bear market usually perform fantastic when the bull starts to take the lead. Conversely, some of the best looking stocks in a bull market turn at the first sign of a bear approaching. Maybe not publicly here, but try to construct a portfolio that does 10% worse than your current portfolio (difference of 5% alpha and 5% minus alpha). I venture that over a 12 month period that on occasion your minus alpha portfolio performs better than your alpha portfolio just to spite you. No data to prove a hunch, but the minus alpha portfolio is attempting to go "non-correlation" which is tough these days versus 20 years ago. Cheers JEast Touché :)

What made you choose those 2 rather than some of the other beaten down stocks around that time? These were the two I felt I knew the best. There's a story, of course.....and it's etched in our family lore. Sunday March 8(?), 2009, the wife and I are at a car wash and I say, "look, I won't do this if you say no, but Wells Fargo and AXP are down to $10 and they are worth probably 3X that amount. The market thinks they are going under. I don't. I want to put 1/3 into each." She shocked me with an immediate "yes." So I was prepared to make the trade Monday morning....I didn't sleep well, and woke up at 3 AM. Absent-mindedly I turned on CNBC, and bam, there was Buffett. And he basically endorsed them both, you know, the way he tells you without actually saying 'buy the stock.' One thing he noted was their $40BB pre tax pre-provision income and how the company was selling for like 3 X that. Every once in a while we go back to that car wash and reminisce ;D P.S. Some one rudely pointed out later that if you just bought an index of small-cap stocks at that same time, you would have made even more. What would have happened, however if the market had really tanked in 09 and 10 as it did in the extension of the 1929 crash? I think it's very likely that the high quality stocks you bought would have been among the survivors, but many of the small caps, especially those with significant debt, would not. Your choice presented what Taleb calls convexity of outcomes, relatively good results under many prospective futures and resistance to failure in the worst circumstances. Congratulations on a fine risk adjusted decision that wasn't all that risky in even worse outcomes than what occurred. :) In my opinion there is a lot of hindsight bias involved in looking back at investments made in the post Lehman bankruptcy through March 2009 time period. At this point, almost 5 years later, it seems "obvious" that everything would be just fine. I like the reference to the convexity of outcomes. I think there was certainly a possibility that things didn't turn out ok and that everyone jumping into AXP, WFC, BAC, and many other financials and non-financials would have been burned. People forget that there was very real talk of nationalizing some of the banks. Would AXP and WFC just skated away if C and BAC, for example, were somehow nationalized? I don't know. It was a very scary time. The only thing that kept me sane about it was that while I didn't know what would happen or if it would all work out ok, I knew that the alternative was probably a change in life as we knew it. Maybe not guns, ammo and canned goods, but perhaps something closer to that. So either things got better or they didn't and if they didn't I wasn't sure that it would matter what your stock portfolio did. Good points. However, "if you don't know jewelry, know your jeweler" is apropos here. Everything Warren has bought repeatedly till it becomes a major position has that quality of convexity, although sometimes an entire industry like print media can be superseded by something new. With WFC, they would have been the last domino standing among the big banks, a likely survivor in anything other than a nationalization of the industry. AXP had relatively minor exposure to risky assets. The Taleb insight is key. We may not know as much about one of his holdings as Warren does or be able to predict the future, but knowing where convexity lies or betting on the jockey who rides the all weather horse when the course is a mud field is crucial.