NumquamPerdo

Interesting article on the birth of central banking. It's funny how little things change - change the names and dates and this story could be today... http://www.theweek.com/article/index/95385/The_Panic_of_1825

Where are you staying, Sanj? How long are you in town? I'm not sure if I'll be able to drop by tonight after the other dinner.

http://www.nytimes.com/2009/04/10/business/10norris.html?_r=3&ref=business Another good contrarian signal for value investing? My apologies for linking a Floyd Norris article.

Wade is a great guy, and very knowledgeable. Word on the street is that, unfortunately, Peter Cundill has pretty fairly progressed Parkinson's disease. With Cundill, McElvaine and Burton I'm starting to wonder who's managing the Cundill Funds...

Common sense would be refreshing. Banning short selling on stocks that are down 10%?! How about just enforcing delivery, like they should have been doing for the past 10 years and not eliminating the uptick rule at the peak of the market based on backtesting the previous 10 incredibly bullish years. The SEC needs to be dismantled and rebuilt from scratch.

Here's what I would do: transfer the stock to your UBS account in Switzerland and sell immediately. The stock was obviously part of some hedge fund rumour-mongering scheme and the Feds are likely at your doorstep. Sell your house as soon as is practicable and disassociate yourself from your hedge fund buddies. Move to Guatemala; the current government is sympathetic towards North American white collar criminals and there is no extradition treaty with the US. Plus, Guatemalan women are beautiful and love gringos, especially ones with hedge fund cachet. May God have mercy on your soul.

I'm shocked! How could Cramer steer us wrong?

They've been a great contrary indicator in my experience.

Doom sells, especially now. So how big is the potential problem? To me, reigning in credit limits is only wise, especially when it comes to preserving capital ratios. Nobody needs $100,000 in credit card limits. The outstanding balance drawn is $800 billion. Let's say 10% of that becomes impaired, which I would think would pretty extreme. We're looking at $80 billion maximum to be written off over a couple of years, spread among hundreds of institution. After what we've been through, I'm thinking that can be absorbed pretty easily. When it comes to hurting GDP through lower retail sales, if only $800 billion out of $5 trillion is currently being drawn upon, why will taking $2 trillion of that unused capacity away hurt consumption so badly?

Very well researched on Stewart's part! I wonder if he's been speaking with Patrick Byrne...

So it was the lost of the uptick rule and not the over leverage and bad loans? What part of "It's not necessarily causal but it looks a little coincidental!" did you miss? Of course the lack of an uptick rule didn't cause the meltdown but I can guarantee you it made it worse. We might not have had the runs on Lehman and Bear Stearns without naked shorting and no uptick rule.

Society is rigged to the upside! Also, there is a downtick rule for corporate buybacks. Plus, it's much easier to drive the market down than up and people are more easily scared than excited. All reasons that the uptick rule worked well for 70 years. They removed it for a year and a half and look what happened. It's not necessarily causal but it looks a little coincidental!

Probably both!

I completely agree with you and am appreciate that she was giving Prem decent press ahead of others. However, I think the Buffett-bashing is just sensationalistic nonsense designed to generate interest, positive or negative.

Very articulate, Sanj, but I don't know why you waste your time with her. I think she's just trying to be sensational to get eyeballs.

Now that Cox has succeeded in further enriching a handful of already vastly wealthy hedge fund managers and misanthropes at society's expense, the geniuses in Washington think it might be a good idea to reinstate the uptick rule. What a concept! Combined with the good news out of C and the news about possibly changing the mark-to-market accounting, we might actually get a rally! Would it be too much to ask for them to guarantee stock deliveries too? http://www.cnbc.com/id/29616614

Another interesting article dispelling myths about the 1930's: http://online.barrons.com/article/SB123637914471857307.html?page=sp

So Al, does that mean that you're piling into the LEAPS again? If so, we're on the same wavelength. I think we had the same timing the last couple of times. However, I lifted the offer on some today and got filled on... 1 contract. So much for market makers adding liquidity.

Good point. I bet they sold some bonds and EPS will be $30+. Increase in BVPS might be twice that as of the end of December, but obviously down since then. However, you just never know what they'll do wrt reserving, commuting, etc. Purely pulling that out of my ass...

I'm guessing $30+. As of year end their gains on treasuries will dwarf their unhedged losses on equities. Come to think of it $30 is probably conservative.

Great letter - thanks for sharing!

Magna?! Farbeit from to me question their investments but man do I hate that company and family. Frank's line has always been that if you don't like the way he manages and/or gets paid then don't by the stock; so I haven't. Now am I supposed to root for them? I love the other choices. Is it just me or is it starting to look like a Berkshire portfolio?

I could see them doing something like this for Canwest to get them over the hump, if necessary.

The fact that SAC was long common at the time doesn't mean they didn't have a synthetic short position on. I remember it clearly: a huge cross would go up in Chicago at the same time as huge call and put trades. The options market maker naked shorted stock (via the Madoff exception - I love it) to SAC or the other hedgies in the cabal, while selling them puts and buying calls from them. I think it's called a reverse conversion. This left the hedge fund short calls, long puts and long stock, which they could use to pound the crap out of the market. The folks at Fairfax are well aware of this strategy and will make it clear to those in the courtroom.

I love these kinds of stats: The VIX, an index measuring expected volatility and therefore fear, hit an alltime high in November. • Significant margin calls and capital calls from various types of private funds have caused widespread selling of equities. • Advisor sentiment measuring bulls versus bears has fallen to the lowest level in over two decades. • The amount of cash being held on the sidelines by individuals has grown to a sum significantly greater than the total market cap of U.S. stocks. • Investors have bought Treasurys with no return, an indicator of the fear of other investments. • Institutional managers have held high cash balances in spite of acknowledging equities’ undervaluation. • Insider buying at companies has been rampant. And I especially love this line: • Warren Buffett and Prem Watsa, two of the best fundamental investors, have made significant moves into equities. Nice to see them mentioned together by another great!