JEast

giofranchi -- Tongue in cheek but I understand that Italy has been in decline for nearly 2000 years but I have a belief that Italians are doing just fine these days irrespective of what the press or macro economists are saying :)

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

Nearly 99% of us on this board are attempting to find good/great and cheap companies to purchase that will assist in capital growth and (if we are a little lucky) exceed our selected index. Admirable goal, but have you ever thought about how hard it is to underperform an index (invert like Jacobi)? Not underperform for an individual stock, but for a constructed portfolio. If you have a concentrated portfolio (say 25 or less), how hard is it to build a portfolio that will underperform your index by 4-5% on purpose? I suspect the effort of constructing such a portfolio is much harder then one would naturally ruminate on. It surely is not a random effort as the dart throwing monkey always seems to outperform on the upside versus the full time advisors. Maybe come the first week of January 2014, let us consider a contest to see who can perform the worst, on purpose! Guidelines would be to construct a portfolio of at least 15 securities (no more than 25) and all equal weighted to keep it easy. The comparative index would be the MSCI ACWI since this is a global board. Start ruminating. Cheers JEast

are there UBTI implications? Of course there is, but usually not. Is investing IRA assets into a partnership that you control a prohibited transaction? No. Does the distinction of investing the assets into the LP vs. GP units matter? Consult you legal advisor, but my 2¢ would be to use the assets as an LP.

Where did all the US dollar bears go? I recall many members pounding the table of how bad the US dollar was and will continue to be. Of course I agreed with all the discussion points, but I only had one question. The question was US dollar bear -- compared to what. Fast forward from 3-4 years ago, it appears that the only thing that has worked was compared to the Yen!! From the movie Chronicles of Riddick, and to paraphrase Aereon of the Elemental race (based on mathematics/calculation) near the end of the movie she says "what were the odds of that happening." Cheers JEast

Sorry for the self bump, but the financial porn just seems so interesting. I only have a very small amount of Japanese investments currently as most positions were closed earlier this year. Irrespective, I still keep an eye on the JGBs and Yen as it is high drama for me. Noticed that the JGB yield is back to where it was three (3) years ago even after the recent pumping. Nearly a 35-year bull and counting. http://www.imageurlhost.com/images/8jsgfddv1423yntutw3_thumb.png

The Strayer 8.6xBV is from the current 10-Q. The 12xBV is my conservative margin-of-safety back of the envelope adjusted BV. For example, they have a very nice building in my area but the parking lot is mostly empty on the rare occasions I have driven by. Do they own it or lease it - I do not know, but the value of the property/lease is surely not stated BV. Just an observation. When some respected folks say it is the best in the business, then I am going to look as I like the space in very selective areas. On the other hand, more than happy to step aside and let the owner operator herd pass by and spend the extra time refreshing up on Graham.

?? How does a value investor consider a company selling at 12x book value an undervalued investment. I asked this rhetorically in the case of Strayer. I also asked this specifically to Michael Shearn back in May as it looked more of a short than a value candidate at the time. I guess I am just too old school for the owner operator herd these days :) Cheers JEast

The madness appears to be continuing as the more yen that is available the more it is wanted. How is it that you produce more and more of something and the price continues to go up?? Is it possible that demand will always outpace supply as it has for the last 40+ years? Maybe instead of looking at economics for solutions we should look at the illegal drug cartels as an example of more supply just increases prices.

I have noticed that some companies are reporting lower liabilities (some meaningful) on their pension plans due to this year's introduction to the International Accounting Standards Board revised standard 19R. Is this just the catch-up of past actuarial gains/losses and plan service costs versus the strong markets of the last few years? Any CPAs care to enlighten us on the matter :) Cheers JEast

Is this inflationary or non-inflationary? I wonder if Jeremy Grantham still thanks the phosphates play is still a major theme -- probably so. Cheers JEast

Some may want to browse a recent WSJ ad. http://qz.com/108990/ceo-mocks-steve-cohen-in-bizarre-full-page-wall-street-journal-ad/

When are we ever going to get a book that instead of telling us 'What We Have Taken from Nature' ask the question of 'Why Has Nature Provided Us With So Much'. Malthusian books seem to be a dime a dozen these days.

As most wealthy folks are learning or have learnt, it is usually much harder to provide philanthropy than it was to make it — oh so many pitfalls and speed bumps. On a somewhat related topic, some may want to review 'Toxic Charity' by Robert Lupton. http://tinyurl.com/lrwtcqt

Look for our friends in Toronto to participate in our current holding sometime in 2014. Still needs to be approved though as this is about the third time parliament has considered it, but looks like more political backing now instead of just outside interests. http://www.reuters.com/article/2013/07/17/us-india-economy-fdi-idUSBRE96G0BM20130717 Cheers JEast

Maybe I was not 100% as clear as I would have liked on previous posts, but I was (and still) more in a non-inflationary camp which is bullish for stocks. For almost the the last 5 years I have been 90%+ in equities. I have also pressed/challenged some of our astute contributors as to why they were holding so much cash given the values present at the time. Didn't know anyone still knew Charles Allmon. I loved his commentary. Though he was super conservative and nearly 100% wrong on his overall market direction for years, he put up some amazing risk adjusted numbers provided he was nearly always 70%+ in cash. One hell of a stock picker in my view. Cheers JEast

http://www.bloomberg.com/news/2013-07-09/ruble-to-real-roiled-with-no-brick-in-brics-13-9-billion-lost.html It's not the end, but one of the reasons why I was not so down on the US dollar a few years back. Is it a small sign of the beginning of a US bull market? Hang on boys and girls as either the turbulance is coming or the blast-off is. Cheers JEast

Given that the Rupee is getting hammered against the US dollar, what say our Indian investors. On the one hand it hurts Thomas Cook (more expensive to travel) but maybe it helps Fairbridge Capital's efforts with comparative Canadian/US dollar strength. http://www.financialexpress.com/news/bse-sensex-falls-77-pts-as-indian-rupee-plunges-to-alltime-low-bharti-airtel-shares-hit/1134149/0 Cheers JEast

True, but I believe these remaining long duration bonds are, more so, held to a maturity type of position unlike the much larger position of a few years back that were sold at a very large profit. It would appear, to me anyway, that the portfolio is in a somewhat win-win situation now. For example, if spreads widen like they are doing now then the economy is doing better and WFC, JNJ, BIR all do better and probably have alpha against the hedges. If the economy sours, then spreads flatten back out and the losses on the hedges and bond portfolio are mitigated somewhat. Call me naive, but what is the downside with FFH today? Cheers JEast

Agreed, but what if we live in an irrational world? This may be the stuff that Warren talks about that he wants whoever takes over to think about stuff that has never happened before. To Bass' point, if I could put 2% of my portfolio in this trade -- I would, but I can't and it appears no one else can either as the trade is not being rolled over. At least from my reading between the lines.

Devils Advocate: No disagreement with the facts as I am definitely not one of the 80 smart guys at Bass' ranch, but just a couple of thoughts. [*]The other side of the trade is the central banks of the world (not just Japan) and the money centers, they will put up a fight, [*]Does any Asian country besides China really want to see Japan implode, any currency advantage would subsequently dry up, [*]Who says the US will not back stop the Japanese Central Bank like they have other European banks, [*]Something will happen but difficult to see it in 18 months where Bass has mentioned/hinted before that no one is taking the trade more than 2 years out (is this the reason for the large public push the last 6 months), [*]Who the hell is buying Yen now given these facts and the new policy (Yen back up to where it was in the year 1995!) [*]In this topsy-turvy game we are playing, can the inmates run the asylum longer than we can stay liquid? Cheers JEast Disclosure: One (1) Japanese equity holding.

Dean LaBaron wrote a book in 2002 comparing investing in both China and Russia called 'Mao, Marx, and the Market' with a subtitle Capitalist Adventures in Russia and China. When I spoke with him about 7-8 years ago he said that it would be highly unlikely that he would invest in Russia again. My own very dated experience indicated that as soon as the Russians signed a contract they would want to renegotiate. What -- we just signed the contract? Reply: Well if you signed the contract you must be taking advantage of us so we want to renegotiate. Hard to adjust 70 years of DNA molding :) I say just buy an index after it is down 60%, or more, from the previous peak if you want to play the Russian market. Cheers JEast

Is the bond bull market still on? The 10-year is now back below the yield it was a year ago. The drama of watching central bankers versus speculators is fascinating.

The only way that a ponzi scheme works is if you have collusion among several players. The third party players in the hedge fund or family office space may not realize it is a ponzi scheme, but they do not ask the tough questions because they are getting paid handsomely. Nevertheless, in the hedge fund or family office space, it seems almost impossible to run a scam unless you are forging documents which Madoff (and others) end up doing. Even then, if a fund is using a public broker, the broker has to confirm at least the asset value of funds held with them to the reputable auditor. I guess the question is about the unknown, unknowns, but the normal fraud type of stuff that gets by the auditors are valuation items for hard to price holdings. One always runs the risk somewhat, but the risk seems to run many zeros to the right of the decimal point based on my experience for somewhat prudent man investing.

Thanks for the feedback guys and thanks to John Mihaljevic for reaching out. One must be honest with oneself though and recognize that any achievements are not mine alone and should really be directed to the many contributions, friendships, and ideas discussed with the support of Zion (my reference to the 3rd version of this community). Without this sharing and debating of ideas for these past 10-years on this forum, previous versions of this message board, and our FFH meetings, I personally would not -- and could not have done as well. Cheers JEast