claphands22

mhdousa, Thanks for posting the letter - Peter Lindmark is now on my must read list.

I can't help thinking this is a band-aid covering a bullet wound. California still taxes real estate based on it's purchase price right? They still have the ballot initiative system that allows voters to get things without a to pay or them right? I wish I knew more about the situation, it seems really interesting. I wonder what Munger has to say. Jon Stewart did a funny special on it with John Hodgman. http://www.thedailyshow.com/watch/tue-june-9-2009/you-re-welcome---california-budget-crisis

Shades of west is an understatement. I'm with you link01, I think Biglari has all the personality traits to make west a great capital allocating machine like brk. He knows the playbook; standing on the shoulders of giants should help. My two reservations are these: 1. Does he love money or does he love business? It's ok if he likes the money, but he has to love the business...malcolm gladwell type of love. This is hard to measure. 2. Will west have the same capital allocating opportunities as brk? Brk invented the game which spawned lots of competition for west. I doubt west will be as lucky...but predicting the future is probably trickier than understanding sardar's personality. Great post link01. Buffett letters are always a good read.

Hayman Advisors's fund is managed by Kyle Bass. Kyle Bass is the guy who had credit-default swaps on subprime loans. Here is an article about Hayman's current thoughts on Japan, and Sovereign Debt Issuance in general. http://itulip.com/forums/showthread.php?t=10817 [pdf of the article is also attached; which is much cleaner] Noise Free Investing also found a good CNBC documentary called "House of Cards" http://www.noisefreeinvesting.com/blog/2009/06/house-of-cards/ Kyle Bass is toward the end of the documentary. There is at least one more letter written by Kyle Bass on Scribd, if you like his work.

Nice find Sanjeev. I dug up the actual letter the bloomberg article was discussing. [actual pdf article attached] Dear Secretary Geithner: I am writing to urge the Administration in the strongest terms to address the critical situation facing CIT Group Inc. and to ask that you provide all possible government assistance. Allowing yet another major financial institution to go bankrupt would only exacerbate the already severe situation faced by the retail industry and our nation’s economy. By way of background, the National Retail Federation represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees – about one in five American workers – and 2008 sales of $4.6 trillion. CIT is one of the very few lenders who act as a “factor” for the thousands of small and middle-sized vendors who supply U.S. retailers with much of the merchandise sold in their stores. As you know, a factor provides the short-term financing that allows a vendor to produce goods once an order from a retailer has been received. Without factors, suppliers could be forced to shutter their doors or retailers would be required to pay up front and draw down on their own credit lines at a time when credit remains difficult to obtain. If CIT were to fail, a chain reaction would be set off that could very well leave retailers with a shortage of merchandise during the crucial holiday season this fall. If the criterion for whether a financial institution should receive government assistance is whether it is “too large to fail,” CIT is most certainly too important to the retail industry to be allowed to fail, and the retail industry is too important to the economy to be placed under additional stress. A failure of CIT would impact thousands of retailers and, consequently, the consumer spending that makes up two-thirds of our nation’s economy. That cannot be allowed to happen at a time when retailers are already struggling to survive the national recession. I strongly encourage the Treasury Department to take a very close look at the role CIT plays in the retail industry and act appropriately to ensure that this essential lending institution remains economically viable. The jobs of countless hard-working Americans are at stake. Sincerely, Tracy Mullin Here is the website where I found the pdf. http://nrf.com/modules.php?name=News&op=viewlive&sp_id=761

Video clip from The Daily Show about the rise and fall of Lenny Dykstra. http://www.thedailyshow.com/watch/tue-july-14-2009/lenny-dykstra-s-financial-career

Ah...so Patrick Byrne did help out The Daily Show. I wonder if The Daily Show and Patrick will work together and do another piece of naked short selling.

Using the freight train index, to measure economic activity, is a great idea: solid numbers and a great pulse. Yet, I wonder why it would be a bad idea..what would be the fault of using the freight train index as a measure of economic activity?

http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm 2002 New Yorker article, written by Malcolm Gladwell, discusses Taleb's trading philosophy versus Niederhoffer's. The article does a good job discussing loss aversion and problems of uncertainty. My respect for Taleb definitely grew after reading this article.

What is your portfolio allocation method?

Great book, I posted some of my crappy thoughts about it before. http://cornerofberkshireandfairfax.ca/forum/index.php?topic=79.0 Yeap, I agree with ya there. One of the other things I found fascinating was the amount of luck you need. The formula for an outlier is 10,000 hrs + luck factor. I'd say Warren Buffet had the luck factor because of birth place/time, mentors, and family occupation. I'd also say you don't know if you got the luck factor until you've become an outlier and you are looking back on your life.

Bloomberg article : Bernanke Success May Come at Cost of Congress Curbing Fed Power http://www.bloomberg.com/apps/news?pid=20601103&sid=ak8IMu6zJJVw# If there is more regulation - would the effects of having more oversight of the fed be a good thing or a bad thing?

yudeng, I've been thinking along these lines; wish I was articulate enough to write them. I really can't see what new services will be created in the future. I guess Black Swans are by nature impossible to predict...just hope one appears soon enough. I actually see a huge service industry "about to" collapse because of new technology. This is going to sound quaky, but I believe the electric car, could possible cause a huge contraction in auto-service related jobs. Since electric cars need very little service (no internal combustible engine or brake pads) it will put 50%+ of auto mechanics out of business. Which is a shame, because it is a one of the few jobs you can do independently and is intrinsically rewarding. ....I wish I could connect a thought I have about the problem of Mediocristan and Extremistan with "All of man's misfortune comes from one thing, which is not knowing how to sit quietly in a room." - Pascal but...I can't figure it out yet. Maybe there is nothing there.

Good post yudeng; I'm happy to see you're sharing your thoughts again. Using culture as guide to the future of an economy is a good idea. As long as you are not the proverbial man with a hammer. In college (2003-2007) my friend used to tell me "When the history books remember us - they'll probably remark how forgettable we were. We've invited emo music and that's about it" I live in Taiwan now. When I first got here, I couldn't believe how thin and hardworking everyone was. People here are embarrassed if they don't know something. Most people here know 2-3 languages and within the next 7-15 years, the young people will be speaking English as well as a Hong Konger. As I'm writing this, my Taiwanese girlfriend is writing her thesis on cognitive science....in English. If people get the government they deserve; we are also going to get the economy they deserve. This is probably on of the reasons Jim Rogers immigrated to Singapore. I don't believe America is going to change either; we are are like a dog with a bone. -- I see some discussion on productivity capabilities. Any thoughts on how the economic landscape will change if we move from Mediocristan to Extremistan?

Welcome back ericopoly. Definitely missed your posts, looking forward to learning more from ya.

From what I've noticed. People confuse a rising standard of living with rising incomes. Globalization will probably give a rising standard of living (sans natural resource problems) but it will also inflate the world's labor supply thus putting pressure on rising incomes. That's assuming America can compete in a globalized labor market. There are still huge problems with energy, health care, education and immigration.

I've been waiting for Maida to update his online newsletter for ages. He has an amazing personality, if you read his recent 03/09 letter, he has averaged 3.3 investment decisions a year for he past nine years. It takes a remarkable amount of discipline to do this. Big congrats to Maida.

There's lots of ways of getting the 10K/Q, you'll eventually find the way you are most comfortable with. I use the RSS system on EDGAR with Google Reader. It doesn't cost any money and you get updated fairly fast. Of course reading off the computer isn't optimal but I can't deal with the hassle of paper or the cost of printing. Check out http://www.fwallstreet.com/resources/edgar.htm They do an excellent job making RSS filings easy to do. Of course, if I ever open my wallet I might buy the Kindle DX http://www.amazon.com/Kindle-DX-Amazons-Wireless-Generation/dp/B0015TCML0 which would be great for reading reports.

I suggest watching Who Killed he Electric Car. http://en.wikipedia.org/wiki/Who_Killed_the_Electric_Car%3F It took me a while to watch this movie because of my own biases. I eventually watched it and realized there were a lot of Munger-type biases that killed the electric car. After thinking about the movie, I believe electric cars have a high probability of succeeding in the next 6-10 years. If electric cars become the new norm, that means public utility companies will become the new gas stations. The most important component of the electric car will be the battery; therefore, who ever has the best battery technology will probably be a leader in electric vehicles. Charlie Munger has said Wang Chuanfu, the CEO of BYD, is the combination of Jack Welch and Thomas Edison. With Berkshire's stake in BYD and controlling interesting in MidAmerica - I wonder what kind of predictions do Munger and Buffett have for the electric car.

Great question, but I don't know what the Daily Journal Corporation bought.

http://www.sec.gov/Archives/edgar/data/783412/000114036109011512/form10q.htm Charlie Munger is the chairman of the Daily Journal Corporation. The company has sold off most of it's t-bills and bought a bunch of equities. --September 30, 2008 cash: 994,000 t-bills: 20,726,000 equities: 0 --March 31, 2009 cash: 2,807,000 t-bills: 7,705,000 equities: 24,713,000

How do you convince bondholders to swap debt for equity?

Are there any books or resources on understanding liquidations? Right now I'm basically doing: total liquid assets - (total liabilities + guesstimated cost of liquidation) = liquidation value If you know any resources or some good experience tips I'd appreciate it. I'm currently looking at LENS as a possible liquidation candidate.

Will FFH post the investor presentation? The inflation adjusted real estate prices was interesting. http://img12.imageshack.us/img12/5379/inflationadjustedhousin.jpg

http://www.ted.com/talks/view/id/487 Interesting TED video about the psychology of cheating. For those of you who watch it. I've always stated my year-end portfolio results honestly...I swear ;)