seshnath

My investees want me to beat the market by a particular margin on average over time. If I think we are in a secular bear, we're entering a recession, AND the environment is unlike anything we've seen since the Great Depression, then something like the banks are not going to perform well through that environment. If the market goes down 20% and I'm holding something that goes down 35%, I need to return 54% to break even while the market needs to return 25% to break even. So ya over time my investees will break even, but unless I'm cranking on the upside, I'm better off holding something that will strongly outperform in a flat to down market than something that is highly sensitive to economic movements, then when there is blood in the streets and the marketplace is being put up for sale I want to buy banks, industrials and materials (banks are pretty close to that point, but I believe asset values are overstated and liabilities are understated and we have a lot more pain to go through). It sounds very much like timing, but it is very much valuation. Banks' "normal" earning power is being overstated by the marketplace as a result of investors treating this recession as a post-WW2 recession. We're going to be awhile before getting back to normal, and there will most likely be more pain between now and then - thus I believe I will be able to buy the banks at a better discount to intrinsic value than currently available. Similar with cyclicals (peter burke mentions this above) - CAT appears cheap, but earnings are not at mid-cycle earnings right now, they are well above and HEAVILY reliant upon China. Look at Deere and Mosaic - both look cheap based on current earning power but current earning power is above mid-cycle levels and again dependent upon a commodity boom. If your belief is that it is a secular bear market, why not just hold cash ? you will come out smelling like roses. (assuming you haven't committed to be invested all the time.) Also, aren't you better off just turning down that kind of investors who chose their time frame rather than yours?

(1) What the heck is a mortgage pass through? CDO? Mortgage pass through or Mortgage Backed Security (MBS) is just an undivided interest in a group of mortgages. (think of land ownership if you own a condo.) CDO (in this case, called a Collateralised Mortgage Obligation or CMO), on the other hand, will have a structured payment obligations in tranches. In short, MBS or pass throughs are less complicated than CMOs. (2) Anyone know anything about this trade? It sounds interesting. Here's someone who markets these. (not a recommendation of the product or the company) http://www.davidlerner.com/collateralized-mortgage-obligations.aspx

So why the restrictions? He basically laid out instructions on (a) the actual price floor and (b) the cash that is required to remain at Berkshire at bare minimum. That is very unlike Warren. Those look more like instructions to a third party. Why wouldn't he just have the board approve of a boiler plate buyback and buy opportunistically? Maybe he wants to be transparent in order to treat all shareholders fairly? But this seems unusual to me. It's all speculative of course. I think you may have hit the nail on the head. WEB has been giving more and more information to shareholders in a very in front of your face way to let them determine the valuation of BRK. This year's annual letter is an example of this. It's possible that being included in the S&P 500 index also has impacted his decision on disclosure. Well, the rationalist in him must say that at his age, the actuarial probability is closer to 8% that he will die this year and it worsens by each years' passing. I think the resolution is worded for that. http://www.ssa.gov/oact/STATS/table4c6.html Also, think about the largest seller in this market - BMG Foundation. WEB donated the shares and how would it look if BMG gets less than book when it sells (assuming that is their clear strategy to fund the goals.) I think this may have played a role as well. Though I would have loved to buy more BRK, makes a lot of sense in the larger context.

I looked at them during the Fukushima troubles. It stood out because of the earnings. I initiated a small position back then and has gotten a little cheaper on OTC ever since. Also, recently according to their press release, they bought back about 6% of their stock about 3 months ago. They have cut the interim dividend though. (I am not pitching the stock; just sharing some info.)

Both are already on the balance sheet.

What do you think of monex group?

"In the long-run, we are all dead" is something that comes to mind. No question that over time, we will be fine. I am an optimist. I like the wealth tax idea. I always wondered why there was no such thing in the US and instead has an estate tax. Seems that you can't escape taxes by dying. Also, wouldn't the wealth tax put a downward pressure on GDP and other income taxes. (The model in India is that wealth tax is not tax deductible for income tax purposes.)

3. You can't really go on the offensive (meaning, violating rights of other nations) with the strongest military anymore in this 21st century world. It is more of a white elephant. (Don't get me wrong, I am all for the individual soldier who is&/willing to sacrifice/ing his life. We are talking about more than defense collectively with military). US can get concessional treatment for its companies (may be) from countries it helps out (say like Libya, Iraq); but it is more like sales and marketing expense for a business than cost of sales or capex. 4. Constitution, as far as I know, still exists - as it has in its present form since the last amendment made. Enforcing it, is where failures are there. Besides, how would that produce income or reduce spending?

All entities are fine, 77 trillion in networth - How would US Government transfer those assets to its own balance sheet without suspending the bill of rights? For instance, how would Romney's houses become US government assets? (other than through the exercise of power of taxation)

Cost you about 400 per 25k miles, didn't it? Almost the cost of a ticket. Also, does it count toward status?

SETI's the grandpa, but there are now a ton. Many in the life science, astronomy, mathematics, etc. http://en.wikipedia.org/wiki/List_of_distributed_computing_projects Thanks.

Hasn't that ability reached its maximum already? It is very clear from the balance sheet.

BTW, netnet I am glad you like chai. You know, the stereotype of a Kerala communist is the guy who lives on chai and a spicy donut type snack called "parippu vada" "http://en.wikipedia.org/wiki/Parippu " http://en.wikipedia.org/wiki/Vada. Have you visited?

I had tried SETI as well. Haven't had spare computing power/net connectivity since that time to try other projects. Are there any projects out there like SETI now?

I was trying to do a bare back to the basics analysis of US Economy. There is lot of talk in the media that Fed is the problem - look at the balance sheet:- http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab9 http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab9c And drilling down into currency, http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab11 It will tell you that the currency is issued on the basis of Treasury, Agency and other obligations. (Arguably, gold stock is being valued at $40, so the backing is higher than it looks, so what?.) At least there is backing. Now, looking at US government itself, http://www.fms.treas.gov/finrep/finstmts/fr_fin_stmts.html Look at the balance sheet and statement of operations, 13 trillion in the hole end of last year!!! A loss of 2 trillion, just last year. Look at the statements of net cost - 4 trillion in cost - half between health and military. Offset by about 2 trillion in individual income taxes. Holy ****!!!!! was my first reaction. My question is not really about solutions to the obvious problem. My question is, am I missing anything on the positive side? Is there some hidden asset that can be monetized? I will start with the first answer:- 1. there is the taxing power. ::)

I don't know how this is so hard to get. He beat the market over a decade. The majority, actually the vast majority, of people don't do that. Therefore his performance is above average by definition. Actually I've seen evidence that with fees and taxes and transaction costs and slippage, less than 15-20% beat the market. This isn't even a matter of opinion. You can debate that Tilson is not a great investor (or superinvestor, which he is not) or that he is lucky or something, but it is a fact that his past performance has been above average. So it's not even that I disagree with you're opinion it's that you're lying. If you want to change the definition of terrible to anyone who's performance is out of the top 2% of investors that is fine, but you need to lobby Websters not me. Hester - I guess Moore's point is that beating the market doesn't make him superinvestor; he has to beat his peers. It is something like A-Rod beating my baseball score Vs. A-Rod beating say, Miguel Cabrera and other Major league players.

I hear you Eric50. I remember thinking after reading an article written by Greenspan defending gold as currency during the time he was with Rand and wondering about the direction he took in his life - first taking up a post as a regulator and then gradually undermining that position as regulator with the naive belief that people self regulate the best. I saw a big inconsistency in that behavior. Like Charlie Munger said, Greenspan was one of the few to express contrition. That redeems him in my books back to a normal level. I don't think of him as a Maestro or even an Ayn Randian, really.

Heard on the BBC Strand yesterday about the movie. Brad Pitt is playing Billy Beane!!!?

Exactly!!!! I thought Billy Beane was the Ben Graham of his craft.

Did just that a few weeks ago. Agree totally with you net.

Net - I am not talking about partisan politics here. Agreed, it is fiction. All I said was it changed the course and approach to life. Followers of Rand may have taken it to a ridiculous extent - especially, Greenspan. Let me see, if I can try to plot the course of seshnath without Ayn Rand's influence. First, I wouldn't be talking on this board - I wouldn't have invested in Berkshire - would have probably never heard of Warren Buffett and definitely never Ben Graham. Even if I did join this board - my language here would be peppered with terms like bourgeois and petty-bourgeois and exploitation and class warfare - the list is endless. I am with Munger when he said that it is a bad idea to overdose on Rand. (my addition to that is "and for that matter any 'ism' "). After this particular shift in paradigms, I have always tried to seek out the other side of the argument. This approach (somewhat like inversion) has helped me a lot with my investment thesis and life in general since that point of time.

I have it queued in my reading list. Picked the book up after reading his presentation at Jackson Hole a few years ago.

[amazonsearch]Atlas Shrugged[/amazonsearch] I was born in the state that democratically elected the first ever communist government. This book changed the course of and approach to my life.

Vinod - I know/knew nothing about baseball even after reading the book.

My views exactly. I thought this was one of his best books and I have an autographed copy (from 2008 CFA Conference in Orlando)