zippy1

Wow! This even makes it to NPR! http://www.npr.org/2013/01/11/169172202/hedge-fund-titans-bet-billions-on-success-or-failure-of-herbalife

Low propane and ethane prices may finally curtail the oversupply of natural gas. http://online.barrons.com/article/SB50001424052748704723404578207760445809162.html?mod=BOL_twm_mw

Happy New Year to everyone. May you have a prosperous year in 2013! May you be happy and healthy in this year!

Ha! :) Good one! I know we still have quite a few "cheap" stocks around to be had. However, normally people would be worried about debt ceiling, no? It does not even seem to be getting any attention. I do wonder why... Anybody can share their insight why there is this lack of "concerns" about the upcoming debt ceiling fight? Or that is going to be a non-event?

Richard, Thank you for the thoughtful comments. The above is very well said. It would seem that some of the people do exhibit the above. Another aspect of this is actually how one "defines a problem." Sometimes, it is the root cause of a problem itself that offers a wonderful solution for some other problems. A good example is the invention of non-volatile memories. So my typical interview quetions are like: "What problem were you trying to solve?" "What was the nature of the problem?" "How did you go about to solve it?" "If you were to do it again, would you do it any differently? If you would, how and why?" "Why do you think this problem is an important one to solve?" I found that many graduate students are not ready to answer such questions. I even had a few telling me that they need to check their dissertation. ::)

Ha! Ha! True. Although sometimes there are other reasons. I have a friend whose father was a small town pastor in Georgia. My friend was going to get a job after high school. My friend was told by his father that he is "going to college." My friend then asked his father, the pastor, how they could pay for the college. The answer was that "You are going to earn it." I think my friend spent 6 years and worked part time to get his college degree. He then worked for Chrysler for a couple years and saved enough money to get through graduate school. A truely self-motivated and talented person.

Scott, I am not sure whether the above is addressed to me or not. Assuming it is, I actually don't filter out people "automatically." What I want is to have "evidence" that my potential hires are self-motivated and have basic skills to be trained in reasonable time to contribute in their jobs. I have also found that "top-ranked" graduates from second-tier schools often are every bit as smart but "harder working" than average graduates from the first tier school. Many chose the so called "second-tier" schools for family or financial reasons. Many of my fellow managers would go for the top-tier school graduates. The way I do it, I actually get to choose people without so much competition. I think that, for most people, the advantage of working for a "master" is that it orients you towards going after important problems and also let you see in real life how a "master" operate. For this reason, it does increase one's chance for successes. An example is that so many people worked for Ben Graham ended up being successful investors. Some of them are very smart and formally educated as Buffett and Tom Knapp but others being of reasonable intelligence are also quite successful such as Schloss. Having a degree from a prestigious institution, like you said, does open certain doors for you. However, once you get into the "door" you still have to deliver. I have seen my shares of Ivy League PhDs fell flat on their faces after they "got into the door," so to speak. I also agree with you that for truly great people, with their determination to be successful, they will be successful anyway in whatever they choose to do. A good example is Ted Williams, the baseball player. Everyone knows that he is a baseball all-time great. I read his book about hitting. Judging by the way he approaches hitting, I am quite sure if he wants to be an engineer, he would be a truly great one. Oh, he was also a fighter pilot during Korean war and was the wing man of John Glenn, the astronaut. Just my 2 cents....

Richard, I think what you said are all true and very well put; except that it is not clear to me why being smart and being hard working are mutually exclusive. I am also in Tech, specifically in semiconductor devices. When I was in graduate school, I worked for a guy who led a team to build the semiconductor process for the CPU of the original Mac in the 1980s. The guy was extremely smart; yet, at the same time, extremely hard working. He was my first boss and at the time, I thought he was just an aberration. After I joined the industry, though, I noticed that, in general, it is the "smart and hard working" types that accomplish big things. For example, I met this old gentleman, who had won the highest honor from IEEE for semiconductor devices, but he would come in on weekends to do his work for "fun." Oh, he got his PhD from Rice, was an All-American college football player before going to graduate school and was drafted by NFL in the first round back in 1950s. A very interesting combination to say the least. Now I myself manage about 20 PhDs, including a few from Ivy League schools. In general, they are all pretty smart compared to the average. And I wouldn't bring in average Joes for their jobs as average Joes probably can not even learn the trade in the first place. However, what I found is that the top performers in my group tend to be the "smart and hard working" types. The "smart but lazy" types really can't compete with the "smart and hard working" types in the high pressure environment. So, in my humble opinion, there is really no need to think that being smart and being hard working are mutually exclusive.

Titan to Withdraw Money From SAC http://online.wsj.com/article/SB10001424127887324731304578193874156975406.html?mod=googlenews_wsj

What's worse is that here in Taiwan, 12/22 is a makeup school day. All the kids are disappointed that they have to go to classes.....

Japanese government actually contracted a girl band to sell its bond. I can't stop wondering whether they have run out of buyers. oh, hope you enjoy the video

Gio, Thank you. It is very interesting!

Deepest condolence to the families of the staff members and children gunned down. https://www.facebook.com/pages/Sandy-Hook-Elementary-School-Massacre-Memorial-Page/142591449223701

At the same time, in Henan Province, China. A madman got into a local elementary school and attacked school children with a knife. 22 children and one woman were hurt. I wonder if China has the same gun control law as US, there would be 22 dead children and one dead woman instead. http://www.scmp.com/news/china/article/1105731/knifeman-henan-attacks-primary-school-children

So has communications/publishing. Does the 1st amendment not cover what you write over the internet? The founders never imagined that you could write something and have it viewable by anyone on earth 5 seconds later. The revolution was won because of the fact that the colonists had access to the same weaponry as the British. This is sadly not the case anymore. The only way a government will fear its people is if the people have access to the same weapons as it does. The armed aerial drone or the attack helicopter is the modern equivalent of the mounted knight in full armor riding through the medieval village. Had the crossbow, then the firearm, never been invented we'd be living in the middle ages still today. If we don't want to go into another period of violence and stagnation what we desperately need is something to once again even up the power discrepancy between the rulers and the ruled. So, weapon has come a long way. Does "the right to bear arm" include nuclear weapon in people's view? The rulers obviously have nuclear weapons nowadays. If you want to een up the power discrepancy between the rulers and the ruled, isn't that the way to go? Should everyone get one? Would you advice that? Or a M1 tank will do? Maybe a machine gun should be enough? a handgun? a shotgun? or a knife? I am not trying to take away your right. I am just curious about how people think about this.

I think you can get the performance figures from the section about Walter and Edwin Schloss's partnership in Prof. Bruce Greenwald's book. I happened to lend it to my co-workers. Anyway, I happened to have an old 1989 copy of Outstanding investor Digest, which has an interview with Walter Schloss and Edwin Schloss. There is a performance figure table up to 1988. I noticed the 1984 figures are different than yours. I assume the numbers that Buffett published for year 1984 is not the full year figure. Below are the figures for years 1984-1988. Year Annual return 1984 +8.4% 1985 +25.0% 1986 +15.9% 1987 +26.9% 1988 +39.4%

I don't think it is just the size of portfolio. When I was 30 just started working, I had a 2K portfolio and I am ready to risk it all. Now that I am 45, I don't feel comfortable risk 100% of my portfolio any more.

I vaguely remembered that this idea was tried once either on this board or one the previous board. It did not work for one reason or another. At that point, my guess was that it just seems too hard to find people with Parsad's temperament. Some other board members may still remember this. Or am I dreaming?

I found this story about how the crop insurance is being sold quite interesting. Also, one cannot compete on "price." http://www.npr.org/blogs/money/2012/08/17/158933382/competing-against-the-nicest-guy-in-town

I wonder whether from the political point of view, saving an insurance company, return it back to the private sector, and make some money for tax payers is acceptable; while saving FNMA and FMCC and returning them to private sector, and making some money for tax payers is not acceptable because some people believe that "government should not be in the mortage business in the first place?"

I wonder how the board view this news. If one becomes a shareholder, how can he be sure that the government is not out to "get" him? http://www.reuters.com/article/2012/08/17/usa-housing-idUSL2E8JH3J420120817?feedType=RSS&feedName=marketsNews&rpc=43

I checked my calendar to see whether this is April 1st or not. But burger joint recommendation probably will be worth it. In fact, information about when you will be going out for lunch will be highly valuable, based on my little experience. ;D

I am not sure whether there is a debt problem as in US. I just moved back in 2006 from US so I am not sure about how this one compares against the late 1990s. My guess is that this one is less severe than the one in 1990s. In 1990s, there was also a stock market bubble at the same time. For the last 5-6 years, though, people in general are quite pessimistic about the Taiwanese economic future. People appear to have enough cash flow based on current interest rate. However, if interest rate goes up to the 4-5% range from the current 2% range, I am sure plenty of people would be in trouble. The NTdollar exchange rate vs. US dollar appears to fluctuate between 28 and 32. Right now NT dollar is around 28 and considered on the high side. Most of the businesses would like to have NTD devalued as they are suffering from appreciating NTD. Many Taiwanese companies have cross margin of 3-5% so are worried about any NTD appreciation. By the way, in here, the "real" RE speculators, are very leveraged. Since land are expensive, new development projects tend to be 13-15 story buildings. These can take up to 2 years to build. When you buy, you put down 3-5% of the buying price, and over that period of 2 years, you pay maybe another 3-7%. This essential gives you an "call" option on the apartment. This "option" is transferable. There are "RE investors" just flipping apartment units this way. I didn't know that there are "options" like this before I moved back. At the time of the closing, that is the time you become "the owner", you pay the builder the rest, with loan up to 70%. Most of the speculators will not wait till this stage as amount of leverage will have to be reduced. Of course, there are also the landlord types, who buy apartments to rent out. Since Taiwanese interest rate is so low with mortage rate around 2% and one year CD around 0.25%. A 3-4% gross yield on the property price, appears quite high. Since the house price quotes are not available daily, people tend to think that prices are stable. If the interest rate goes up to the 4-5% range, "investors" with borrowed money will have cash flow problems, I guess. "Investors" without borrowing may move their money back to the bank also. Taiwanese Central bank actually has reduced the upper limit on the loan-to-value ratio recently and has issued orders that loan amount per square feet can not exceed certain numbers. It has also summoned heads of various banks for "coffee drinking" (a taiwanese term of moral persuasion) about the real estate loans. I am not so sure about what Mainland China is doing though.

There is probably a RE bubble in Taiwan also. Walking out my apartment, within 10 minute walking distance there are about 4 or 5 selling offices for RE agents. Here in Taiwan, due to the limited supply of land, RE prices has always been high in the Taipei area. People appear to be willing to spend more money (in terms of so many month's salary) than in US. But I am not sure whether we have really pushed it too far this time. A small apartment here in Hsinchu costs about US$150-200K. In Taipei, the price could easily double. To give you an idea about how affordable the prices are. Engineers with MS degrees typically make about US$25K a year. Teachers, considered well paid locally, proabably make about US$20K a year. Starting salary for college graduates is about US10K a year. Another way to look at it, I was renting an apartment for US$1K per month a couple years ago. The apartment owner wants to sell it for about US$330K. It would seem to me that the price relative to rent is quite high. In Hsinchu, where I live, I was told by several co-workers that there was a mini-bubble in late 1990s, when the science park here was expanding quickly. There was a crash following the burst of 2000 Tech bubble. It took 6-7 years to recover. So people do know that it is possible to lose money "for a while" in RE here in Taiwan. One thing may be interesting this time around is that here in Taiwan, one can only get "floating" rate mortgage. I have not been able to find any banks wanting to make loan with a fixed interest rate. I often wonder why people here are confortable with these large floating rate loan. I also wonder whether the low monthly payment is pushing the prices too high since the mortgage rate is around 2%. The property tax is less than 0.1%, as far as I know. Holding costs of a property is quite low here it appears. So many people seem to be willing to hold on to their properties.

I respect short sellers for they offer me opportunities to see my own possible mistakes. However, I just don't see why Hester has to drag Francis Chou into this discussion for holding a minute position in his fund. It appears to me that Hester is just trying to be spiteful and provocative. It says more about Hester than Francis.