nickenumbers

I am about 50% of the way thru the interview and it is a very good one! He is a smart, logical, experienced and interesting guy. I smiled a bit when he threw some shade [criticized] on Ray Dalio's Beautiful Deleveraging concept. Druckenmiller was like "I don't know what the hell Dalio was talking about." <-- Not exactly, but pretty much. I wonder what 2 Economists' fighting looks like?? Thoughts?? I don't know enough about Druckenmiller's present holdings to know if he is hoping to profit from his opinion, and is out beating the bushes in favor of his positions. I don't know him like that. But, I do think he is very interesting to listen to.

Who thinks BRK is repurchasing it's own stock today?

All, I am looking for book recommendations on modern railroad operations like the Class 1, and perhaps the Class 2. I'd like to learn about the drivers, competitive dynamics, strategy, etc. All that cool ins and outs of what it takes to be successful wand what are the killers. Metrics for success and failure. If there was an analysis of trucking vs. rail, vs barge... that would be the cat's pajamas! I am planning on starting my own railroad and I am doing a little background investigation. KIDDING.. I like the transpiration industry! Thanks in advance.

Ninety Percent of Everything: Inside Shipping, the Invisible Industry That Puts Clothes on Your Back, Gas in Your Car, and Food on Your Plate by Rose George. This was a good book. She is a great writer and she goes thru pains to really make you feel like you are on the ship with her. I would give the book 4 out of 5 stars. It is well written, but it is a longer book than I expected. The ship owners competition, cost pressure and treatment of the rank and file crew was unexpected and eye opening! If you want to get a great feel for international shipping, sea containers, the boats, ports, and crew... it is a great resource!

So True John Hjorth!!! Well said. I will wait patiently and watch..... :o

What do you all think the FED SHOULD do with Interest rates on Wednesday 12/19/18? vs. What do you think they WILL do on 12/19/18? Perhaps I am being selfish, but I think they should take a break on raising interest rates, and leave them unchanged. Markets have significant volatility, and have close to zero return for the year. I know that the FED is monitoring inflation closely, and it seems that the pace of increase has slowed in 2018. I believe that they are happy to have an economy continuing to grow within their limits, vs. one that starts to stall with a potential impending recession. If I were them, I would wait on this month's increase, as you can always increase at the next meeting.

After everyones thoughtful and interesting input I have run a Quantum Calculation on a NASA super computer and I have determined with a high level of precision that there is a: 93% likelihood that WEB/CM would- a. never receive the call, b. would not answer it if it were to happen, and c. if they were to be receive and answered the advise would not be given freely/without charge, AKA- "Go figure it out for yourself, that is what you are paid highly to do. If it is too complicated/difficult for you, we will buy your problem from you at a price that we set." 7% chance of goodwill and free billion dollar advise given out Gratis That is an interesting conclusion on capitalism also- the process is competitive and the outcomes can be [should be] absolute.

GlobalFinPart- This is a great article. Thanks very much for sharing it. I am learning and lot from Matt Rose and enjoying the heck out of it.

Do you think WEB and CM would offer their advise or input if they were solicited for it from a humble CEO? I know that they don't want to be bothered with 100 CEOs asking 100 basic questions. No. But, if they were asked for their genuine opinion on something would they provide it. I was thinking about it because GE is in quite a mess. And the GE brand is iconic. If I were the new CEO I would do everything under my power to save the brand and right the ship on behalf of all of the stakeholders and myself. That might include a call to WEB and CM to get their thoughts and input. On the back end of it, I have hear CM give the example a couple of times to people asking for input or advise. One man came to Mozart and asked him how to write a symphony. Mozart replied, “You are too young to write a symphony.” The man said, “You were writing symphonies when you were 10 years of age, and I am 21.” Mozart said, “Yes, but I didn’t run around asking people how to do it.” What do you all think?

Great info and answers everyone. Thank you. I have started to read thru Scott Grannis's blog postings, etc. Great info. I am a banana eating monkey, and I am getting smarter by the day!

I would like you smart people to put the concept of an inverted yield curve into 1 Banana terms. 1 Banana= easy/simple 2 Banana= challenging 3 Banana= makes a monkey wanna scream cause it is so damn hard Einstein said that the Order of Intelligence in ascending order is "smart, intelligent, brilliant, genius, SIMPLE." Reducing the complex to simple is BEAUTIFUL!! I know what an inverted yield curve is... but there are lots of ways to think about it. Does it mean that there is no demand for 2 yr debt because everyone is in cash, and the result is that prices of 2 yr debt have gone down and yields have gone up? [My explanation is kinda wordy, and probably not the best characterization.] Give this Monkey a 1 banana explanation. Thanks.

Great continued input. Just for the record, I had to google the definition and pronunciation of Leptokurtic. ;) ;D Learning something new every day.

The cartoon of the giant pig bank eating money, and all of us hoping that rolls of money are going to pop out the south end of the pig is just FUNNY! It makes me laugh like a little school girl.. hehehehehehehe ;D ;D

Great discussion everyone. You have exceeded my expectations. Everyone gets 6 Golden Unicorns for participating and/or reading [scratch that, make it 7, you all deserve 7 Golden Unicorns! I am being generous.] Seriously now, does anyone have a recommendation for a software or a website to run some Monte Carlo simulations? Please tell me that I don't have to be a Computer Science major in order to make it work. I would prefer it to be easy enough for a dumb American from Virginia to operate. Thanks in advance!

All, From what I have read, one of the best ways to understand a nation's debt is as a ratio of GDP. http://i2.wp.com/metrocosm.com/wp-content/uploads/2016/02/us-national-debt-history.png

I know this is not the original direct question, but Central Banks [uS, UK, Europe] and Government Balance Sheets will never get back to the point that they were pre-great recession. It was a shell game experiment executed by Bernanke [student of the great depression]. One of the alternatives was straight printing money without the offsetting government debt, but the psychology around the 2nd option [printing money] just would cause mass hysteria and diarrhea. So, the former was determined to be the best alternative by Bernanke. WEB and CM know that it was a world of very bad options, and this [cash + purchase of government debt] was one of the best of the bad options. And there is this vague promise to "pay down that troublesome debt in the future." <<rolling my eyes at this mock notion.>> Do we remember the story about the emperor that had no clothes, and everyone had to pretend and play along, and say how nicely the emperor was dressed. That is our same global monetary and national debt reality. All of the central bankers know that the arithmetic doesn't enable the repayment of the debt, but they also know that we are all still living in our houses and drinking our Starbucks. The numbers are so big with so many zeros, most of the world would rather have a beer and watch a sitcom instead. So rather than ring the alarm bell for the mass population, risk revolution by the population, central bankers are more like "Meh... I will play along if you will." The US FED will attempt to show a small pay down of the debt, but when the next recession comes they will be forced to further stimulate/inflate the economy/debt. PS- I don't have a better idea by the way for this problem. I don't want to sleep under a bridge or eat out of a soup can from an open fire.. I am just semi-aware of the reality.

LC, thanks for sharing that. Great, great visuals. Keep scrolling down and it continues to change the map and ask/answer different questions. Very cool!

As always, the collective input is outstanding. Thanks for your opinions.

All, I wanted to get a sense of what you guys think about what value to use as your discount rate in a DCF valuation? I have been using between 9-10%. I was listening to a BRK annual meeting from 2003, and WEB and CM get a similar question and the answer that they gave was that they use the rate of their next best alternative for the money. So, that got me thinking, and I wanted to get your input. If we say that a risk-free Treasury is around 2.5 or 2.75%. I understand the concept of the Equity Risk Premium. But, what is my next best alternative of the money, and what rate of return is it earning? Because of PEs, my Rate of Return might be 7.5% over the next 12 months and it might be less. What do you all think and what do you guys use as your discount rate for a DCF, and why?

Has anyone found value in using Monte Carlo simulation? Is there a use case for Monte Carlo simulation in our analysis? Thanks.

It was a good interview. I like how he identified that it is a shame to have all these talented young minds bypassing medicine, in favor of financial markets and computer science. He is a smart dude.

All, Excellent information, I need to read and review it and work thru it all over the next couple of days. Thanks!

I finally watched this movie after all these years and hearing about it. It is an older movie, but very well done. The concepts of competitive people, personal incentives, Analytical Ignorance and greed are timeless.

Great info everyone. Thank you. Cigarbutt- Thanks for that detailed answer. It shows that I have a lot more to learn.. I am going back to Options school! ;)

I have seen where Buffett is not a fan of using the Black Scholes model for valuing options that are long dated. I believe that his issue is with the volatility input as the long dated nature of some options make the volatility a little less relevant. Has anyone seen a model or a calculator for long dated options that Buffett prefers? I am a little fuzzy on this next comment, but I think Buffett said that the valuation of PUT options over the long run was more wrong than the value of CALLs but, I am not 100% on that. Thoughts, input, opinions? :-* 8) :P