seshnath

Isn't there a few pages in there about a guy named Sanjeev Parsad? ;D

[amazonsearch]Where Are The Customers' Yachts[/amazonsearch] I read this book last year and here is the review from my blog:- Recently, I was going to travel and wasn't really looking forward to it due to the connections and the quality of the immigration/customs service and the airport. I wanted a read that would keep me sane during those 12 odd hours. "Where Are the Customers' Yachts?" was staring right at me. Oh!! what an interesting plane ride it was? (If you saw a passenger in a Jet Airways flight chuckling to himself reading a book, you now have the mystery unraveled.) The book provokes thought at the same time it makes you smile. After reading this, I walked away with a much better understanding of the French expression, Plus ça change, plus c'est la même chose (the more things change, the more they remain the same). The title of the book comes from an almost apocryphal sounding story of William R. Travers who after admiring the rows of beautiful boats owned by the rich brokers by the shores of Newport, Rhode Island is reported to have asked wryly "Where are the customers' yachts?" Now to the Fred who?. Fred Schwed Jr. was a professional trader who after having lost a bundle in the 1929 crash quit the Street for good. He is also the author of "Wacky, the Small Boy" a children's book. (After meeting some of the characters in the Street, I should probably say that Fred wrote about his audience in 1940 after writing the children's book in 1939). After reading the chapter on Short Selling, you would think that the book was written just recently and not 70 years ago. If you thought Ben Graham has the best distinction between speculation and investment - read this "Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investing is an effort, which should be successful, to prevent a lot of money from becoming a little." If you are the kind that invests in mutual funds or takes the help of an investment adviser, read this:- "Some of these other gentry allocate the funds between themselves and their clients in the ancient classic manner, i.e. at the close of the day's business they take all the money and throw it up in the air. Everything that sticks to the ceiling belongs to the clients." (Reminds me of how Lucy decides which bills to pay.) Here's another mystery solved regarding pay in Wall Street:- "...how much do they pay these fellows? Since this subject is nobody's business, everybody is interested. As the man said after he had had the subject of relativity explained to him in a few unsuccinct phrases: "And from this Mr.Einstein makes a living?" On forecasts:- "Concerning these predictions, we are about to ask: 1. Are they pretty good? 2. Are they slightly good? 3. Are they any damn good at all? 4. How do they compare with tomorrow's weather prediction you read in the paper? 5. How do they compare with the tipster horse race services?" Quoting Major Lawrence Lee Bazley (L.L.B.) Angas on Charting:- "All of these theories are true part of the time; none of the all the time. They are, therefore, dangerous, though sometimes useful." On margin trading:- "Like all of life's rich emotional experiences, the full flavor of losing important money cannot be conveyed through literature. Art cannot convey to an inexperienced girl what it is truly like to be a wife and mother. There are certain things that cannot be adequately explained to a virgin either by words or pictures." (Mind you, this was written way before internet and the smut that gets offered through it) Further about the customer who is in for the ride on margin:- "I have heard an old-line broker describe this common occurrence. He explained, "They got on the Twentieth Century Limited at Grand Central Station. They only intended to ride as far as 125th Street, where they would get off and visit Grandma. But the first thing they knew they were making seventy miles an hour through Fort Wayne, Indiana."" Quoting John W.Pope's letter to his investors:- "His statement of condition as of Dec 31, 1930 was extremely simple. All the money was in cash and call loans, which, strangely enough, was precisely where it should have been. This statement also contained an incredible sentiment (I quote from memory), to this effect: "It is the belief of the management of this corporation that a diversified list of carefully selected securities, held over a period of time, will not increase in value." " Here's an aptitude test from the book:- "1. Do you perceive quite clearly what is the objection to playing a roulette wheel that has two zeros on it? (If not, don't bother to be a financier; be a roulette player.) 2. If a man has tossed a coin "heads" four times in succession, which do you think he is more likely to toss the fifth time, heads or tails? (If you think he is more likely to toss either heads or tails, look into the interior-decorating game. You have that instinctive type of mentality which might do very well at that.) 3. When do you consider that it is a good purchase to draw one card to an insight straight? (Answer - when you are playing for soybeans.) 4. If you have answered #3 correctly, do you find that when you are actually playing poker for money, you can always resist making that draw? (If not, stay home with your money and start practicing being a miser.) 5. If a stock which is not paying any dividend is split two for one, how much good does that do the stockholder? (If you think it does him any real good, come down and join our sales department but steer clear of our trading department.) 6. What is the primary purpose of a business enterprise? This questions is specifically for young men considering entering the banking field, where they will have a constant parade of business propositions passing before them, and they will be required to plump for a few of them and say "no" to the others. The answer is elementary and obvious: the primary purpose of a business is to make money. Almost anyone knows this with the top part of his brain. But there are only a few valuable young men who also know this all up and down their spinal column. Most businessmen imagine that they are in business to make money, and that this is their chief reason for being in business, but more often than not they are gently kidding themselves. There are so many other things which are actually more attractive. Some of them are: to make a fine product or to render a remarkable service, to give employment to revolutionize an industry, to make oneself famous, or at least to supply oneself with material for conversation in the evening. I have observed businessmen whose chief pre-occupation was to try to prove conclusively to their competitors that they themselves were smart and that their competitors were damn fools - an effort which gives a certain amount of mental satisfaction but no money at all. I have even seen some whose chief interest lay in proving this point to their partners. So give yourself a real good mark if you know that a business should make money, but only if you really know it."

I have read both. Good reads.

If yours is a conforming mortgage, it might very well be packaged with Fannie or Freddie and the small bank may be using Wells to service it. I believe you can check it at Fannie/Freddie websites with your home address. (I checked mine a couple of years ago.) It will not give out details - it will tell you if the loan is with them or not.

May be, this is part of the ethos that Buffett is talking about. Makes sense to me, would you rather your customer re-fi with you or with someone else and have to deploy the funds with an unknown risk or not deploy the funds at all? Now, they have a happy paying customer and portfolio is intact with no prepayment.

It is the mad man himself. Yes, it definitely is. http://www.deepcapture.com/jim-cramer-is-a-complicated-man/

Here you go:- http://professional.wsj.com/article_email/SB10001424053111904265504576566933743013152-lMyQjAxMTAxMDEwMzExNDMyWj.html

Well, it is not 30k according to the Albemarle County. Here's the assessment info:- Infrastructure Improvements Copper Gutters .....2624 SQUARE FEET Well / Septic .....1 TOTAL VALUE Wet Bar .....1 EACH No Service - Jurisdictional Area Designation Primary Building Additions Garage, Attached Brick.....608 sq ft Porch, Bluestone Floor.....1267 sq ft Outbuilding Improvements Shed, Equipment.....160 sq ft Living Area Over Outbuilding.....1,000 sq ft Porch,Outbuilding.....300 sq ft Garage-Detached Brick.....1,000 sq ft Primary Building Details Comm. Section N/A Card Level Use Code Single Family Year Built 1890 Year Remodeled 2007 Condition Good Grade A+14 Number of Stories 1 Story Height (ft) N/A House Type 1 Story Finished Sq. Ft. 3,224 Basement Type Furnace Room Basement Garage Doors 0 Bsmt Fin. Sq. Ft. 0 Bsmt Tot. Sq. Ft. 0 Attic Type N/A Attic Tot. Sq. Ft. 0 Roof Material Slate Heating Heat Pump Cooling Central Air Fireplace(s) 3 Fireplace Type Brick Wall Framing Wood Joists Exterior Covering Solid Brick Bedrooms 1 Dining Rooms 1 Family Rooms 1 Full Baths 2 Half Baths 0 Total Room Count 8 (Every unit assumed to have kitchen and living room. Bathrooms are not included in total room count.) If you are interested, there is also a sketch as of Aug 2011. http://gisweb.albemarle.org/GISWeb/ShowImage.ashx?t=s&f=S0000059\S0029128 And also, there is a photo of the finished building in the same site.

Zillow says 3224 sq.ft. house and 37.75 acre lot - not 30T and 100. Are we seeing the same thing? Charlottesville is not Omaha - I was there about a couple of months ago on CFAI business and our local driver took some of us on a celebrity de-tour - showing us houses/driveways including those of John Grisham and some hollywood types, to name a few.

Berkshire is adding a new PM. http://finance.yahoo.com/news/Berkshire-Hathaway-to-Add-bw-2421874366.html?x=0&.v=1 http://www.businesswire.com/news/home/20110912005483/en/Berkshire-Hathaway-Add-Investment-Manager September 12, 2011 08:30 AM Eastern Daylight Time Berkshire Hathaway to Add Second Investment Manager OMAHA, Neb.--(BUSINESS WIRE)--(NYSE: BRK.A; BRK.B)—In 2007 Berkshire Hathaway began a search to add as many as three investment professionals to manage a portion of the equity portfolios of Berkshire’s insurance subsidiaries. The search was intensified when Lou Simpson, who had long been responsible for GEICO’s equity portfolio, elected to retire in 2010. The first to join Berkshire was Todd Combs, who came to the company in 2010. Todd has proved to be an outstanding choice. Today Ted Weschler, 50, of Charlottesville, Virginia, has announced to his limited partners that he will be winding up his fund in order to join Berkshire early in 2012. These two investment managers will each have responsibility for a segment of Berkshire’s present equity holdings. Warren Buffett, Berkshire’s Chairman, will continue, however, to manage most of the funds until his retirement. After Mr. Buffett no longer serves as CEO, Todd and Ted – possibly aided by one additional manager – will have responsibility for the entire equity and debt portfolio of Berkshire, subject to overall direction by the then-CEO and Board of Directors. With Todd and Ted on board, Berkshire is well-positioned for successor investment management at the time Mr. Buffett is no longer CEO. Berkshire Hathaway and its subsidiaries engage in diverse business activities including property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B. Contacts Berkshire Hathaway Marc D. Hamburg, 402-346-1400

He did mention that in the last issue (Aug. 2010), but made it seem that was the reason for the long delay in getting that issue out (prior to that, latest issue was Mar 2009) and that they are now back on track. That was a year ago. I just posted the same thing in another thread.

The last issue I received was over a year ago, if I remember correctly. It mentioned something about death in the family of the publishers and the resulting delays. I wasn't sure if my subscription expired.

I have been using MS Office suites since the very early days - 3.0 is where I started and I am no techie. This was a switch from Lotus 1,2,3 and others. I have never had any major issues with Office per-se. I have had laptops and desktops crash all the while, but that's not an issue related to office. No data was ever lost - only about 3 months of work related emails due to some issues with back-up process at work at the time. (In fact, my wife was recently amazed/shocked when she found my personal budget worksheets from over 10 years ago). My back-up process is virtually copied from grandfather-father-son form and it has worked fine for the last decade or so, despite having moved across the globe 3 times. Only change I have added on top of that is now I have another back-up in a different location. So much for bragging rights. Google docs just puts everything online. I used to use yahoo briefcase to save really critical files in encrypted zip format and google docs to me is just a step-up from there. I love the collaborative editing features and generally, the editing features. I have been meaning to try office 365; just haven't had the time to do so. I will believe Google Docs' superiority , for instance, when vendors that use Reuters and Bloomberg data and decide to put them in "google docs" format. Right now, docs is something that is in fashion vs. utility.

I am not a fan of the Prince. I thought I would add a little local flair to the discussion. I recall reading about a conversation he had with Buffett that went something like this:- The Prince says to Buffett "People here call me Warren Buffett of the Middle East. I consider it an honor." Buffett's reply "I consider it an honor when people call me Al-Waleed of Omaha." I thought Buffett's reply was really funny. Here are some links:- http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3pNjAm3wGxM http://www.thenational.ae/business/buffett-of-arabia-changes-channels?pageCount=2 http://findarticles.com/p/news-articles/international-wire/mi_8131/is_20110722/interview-prince-alwaleed-bin-talal/ai_n57884781/ http://www.arabianbusiness.com/power500/entry/385482

Looks to me that market participants are pricing in eventual dilution of equity due to Dodd-Frank provisions on TRUPS. BAC has about 20 billion in TRUPs that need to be redeemed or replaced by 2013. (TRUPS lose their Tier 1 status at the end of 2013.) Check out this briefing. http://www.skadden.com/newsletters/Compendium_2011_011011_web.pdf To me, the way to play BAC is to invest in TRUPs yielding over 10% and wait for their redemption or replacement, collecting the yield. There are a lot of them past their redemption date inherited from all the acquisitions. Until this particular issue is resolved, BAC equity might continue to bleed, IMHO.

You are right, in a very convoluted way. Though, to equate market cap with equity coverage for lending is real nonsense. Let us say, there are two banks. Well Run and City Slickers. Both have the same size of balance sheet and lending. The only difference is Well has lent only to people with high credit scores and City lent to sub prime borrowers. Then there is a large scale default by sub prime and in the ongoing turmoil, people are selling shares in all banks at whatever prices they can get. Now, I place a buy order for Well on a day for $0.01 per share and a desperate seller sold it to me at that price to raise cash (because he was one of the subprime borrower, may be). According to mr. Denninger, Well is in deep doodoo because they cannot raise capital the next day except at $0.01 per share and hence they don't have adequate cushion against lending. The way to run a bank is not to need to raise capital when you are in trouble. That is why Wells Fargo (not to be confused with Well Run) and JPM are admired for their culture and Citibank (not to be confused with City Slickers) and BAC is not. The other key point that is missing in all the prior posts is the relation of loan loss reserves and actual charge-offs. Compare that metric over a period of time, especially before 2008 and after; everything will be clear. I don't really know if Denninger realises that the LLRs affect equity the way they flow through p&l each quarter. Now, two reasonable people can disagree about the adequacy of reserves. That is what separates men from boys.

BoA was the first account I ever opened when I started working in N.Virginia in 2003. I no longer work in that area, but I have it open. It is my primary checking account and the mortgage ended up with them through countrywide. I used to have no fees when I had direct deposit going into it. Then when I left to work outside US, they waived monthly fees for a year. By the end of that year or just thereabout, my mortgage came to BAC and have had no fees ever since even without direct deposits or bill pay. In addition, I have accounts with a credit union in that area and use Emigrantdirect for savings. I have tried Citi, not really pleased with them due to service issues.

Regarding immigration for investors, are you aware of the E class visas? The limit is lower (though not the same as green card). The only reason I have come across this is that every year I get spammed by a broker/lawyer asking whether I am interested. Funny thing is it seems even passive investments like limited partners qualify (according to those emails).

Don't know if it is the right place for this post. Here's a report that I ran across at American Contract Bridge League. What's Not to Like? by Peggy Kaplan http://www.acbl.org/news_archive.php?id=651 What’s to like about the Nebraska Regional? Just about everything! Superb playing site, free lunch and late night snacks every day, chances to win Omaha Steaks, expert guest speakers, tons of tables, world-class bridge competition and celebrity players like Bill Gates and Omaha’s own Warren Buffett. Bill and Warren are avid competitors, returning year after year to beat the best. Last week, Gates & Company had an awfully good run in the Hamilton KO. Playing with Bob Hamman, Sharon Osberg, David Smith and Arun Jain, Team Gates faced a tough expert pair playing with talented young Bulgarians. Their team survived to face a foe even more daunting: Garey Hayden and Nanette Nolan playing with one of the world’s top pairs, Polish stars Cezary Balicki and Adam Zmudzinski. Bill’s team hunkered down and vanquished! The juggernaut ended the next round when they lost to the ultimate victors of the event. Still – conquering Balicki and Zmudzinski is a feather in anyone’s bridge cap. As many know, Warren and Bill are big supporters of youth bridge. A group of young players from Iowa and Nebraska had traveled to the regional for a day of play. Bill, Warren, Sharon, David and Arun met with them during lunch to answer questions and expound on their favorite game. “What do you like best about bridge, Mr. Buffett?” one child asked. Warren answered as the red blooded bridge player he is: “Winning!!” As photographs were taken of the kids with Warren and Bill, world champ Sharon added encouragement and talked about the benefits of being able to compete online at her world-wide electronic bridge club, Bridge Base. The only thing not to like about the Nebraska Regional is this: it had to end! But, the good news is Nebraska Regional 2012 is less than a year away. We look forward to everything that co-chairs Cookie Hoberman and Jan Loftin and their magnificent crew of volunteers will have to offer. And – we hope that we will have a chance to beat the billionaires next year! Check out the scores for last year at:- 2010 Regional Looks like Warren either didn't play much or didn't score well :o. Here's this years' 2011 Regional He did much better. May be it is another quieter venue to meet the man!!!

No worries, Sanjeev. Thank you for hosting the site. I can't say that enough times.

Sanjeev - I think the bubble is forming. Lot of Indian channels my family watch these days (mother-in-law is visiting :-)), have discussions about gold. Last day there was one they were watching - two sides of all women participants, one with lot of gold jewelery and other with no gold - discussing and debating for two hours prime time. I am researching ways to short (initially, as a hedge against my wife's jewelery) and some time later as active position.

I have been in the markets since 1998 in a big way and been investing in equities since 1991 (when I was 15). After all these years, I know that:- 1. something is not worth some because the last traded price said so. 2. something is not worth X because someone is willing to pay X. I invest with this experience behind me. Last 3-4 years don't surprise me at all. These things happen in the market all along - I have seen it in 1992, 1995, 1997-98, 2000 and 2008. (I am not talking about US equity markets alone). These are opportunities to pick world class assets at bargain prices. Gold simply doesn't meet the 2 criteria there. I will say it again for the last time - the thought that gold is equivalent to currency is a big fallacy. The world and technology has moved away from it. And I am not new to gold as an investment - I have been reading all these arguments and more since 2004. My investment thesis is based on it.

Just because you bought tulips at a discount doesn't mean you got a bargain or you have a margin of safety. I have a problem with supply demand numbers thrown up. The physical property of gold is that it is virtually indestructible. As a result, the supply for a year is whatever is dug up out of the earth already and is easily convertible. Gold bullions in vaults, jewellery etc are all supply since investment flows can turn into disinvestment flows when the price trend changes. Anecdotally, being from India, in our families, we always keep gold - at least I know three generations before me did. According to my late grandfather who was a rice retailer, half a sovereign (4 gms) of gold bought a sack of rice (about 20kgs) in the 1930s and 40s. Today, the same sack of rice (limited in supply based on production and perishable) costs about USD 10 in my hometown and the same 4gms of gold - about a tenth of an ounce is USD 170-180. This is despite the fact that unlike back then there are no paddy farms in the 100 km circle from that town. Regarding end of the world theories, they have been around since time immemorial and there is always new ones made every 5 or so years. It never made for a good investment thesis. If someone believes 2008 was a financial collapse, I would ask them to really go a check-in at a sanitarium. Just look at the GDP numbers to begin with. All we have now is a media day-in-day-out crying about a percent of percent change in GDP and decide we have financial collapse. In fact, the real economy is doing well - only difference is it is not in the steroids of sub-prime money and hence, cannot perform as well as before. The Central Banks who kept the interest rates low back then under lax regulatory environment are to blame, IMHO.

Totally agree. This is a problem with centralised planning, rather than anything else. Any economic policy has two sides to it - Broken Window fallacy applies. When Fed and central banks decide to keep interest rates low, they make the decision to rob the savers and enrich the debtors. To believe that Gold standard worked at some point in the past and hence will work in the future is also illogical.

Sorry I was not clear - looks like the morning coffee I was having didn't have the time to take. My point is that there is a technological reason historically why gold was a medium. The obsession with this long history without regard to recent technological progress is what makes people assign arbitrary values to gold. Just think, if you were starting today at zero, without the legacy of metal and paper currencies, would you chose gold? My other point is that unit denomination need not be called dollar, need not have any backing as long as it is limited. Say, you take all the currency in the world convert it to dollars or gold or your favorite currency divide it by no. of people and call it 1 unit of "money" or whatever. That can be your medium of exchange. So, if you need food, send some units of "money" to somebody in exchange for it. This is really the basic mechanism of any form of money. You can link the unit of "money" to population - which means you don't really inflate except for the pace at which the unit travels through the system. There is really no need for a physical presence to this unit, at all. We are really almost there - you don't really get to see "your dollars" in the bank - all they do is send you a statement. I will admit that gold has a value being a rare metal. I know that gold occurs less frequently on earth than say copper or iron. Instead of assigning cost of mining plus any profits supply-demand situation may throw up, a buyer today is paying an illiquidity premium since there are lot more hoarders. I really think that this obsession with gold from marginal buyers who expect to be first out of the gate when it goes the other way is just what is skewing that value to levels that don't make economic sense. Having an atomic number 79 really doesn't have any special place to command in the periodic table of elements and logically, in the economic world. Once you invert the logical questions about gold, you will find all the answers, really. Probabilistically speaking, the two likely outcomes are:- 1. World goes back to gold standard in one form or the other - do you think gold that you buy will be protected? First thing that any government will do is to confiscate all gold - like it did back in 30s. It won't be of use to you. 2. World goes further away from gold standard - that is the scenario I am trying to explain above. Gold would end up losing its premium as a historical obsession. All you would find are gold jeweleries and other industrial uses. You lose money. When these are the high probability scenarios and your expected value is a loss, why would you buy gold? And, did you really hedge any loss? And both these scenarios are betting on the actions of governments run by politicians. I think you should get the drift by now. Having said all this, I am also admitting what Warren Buffett said recently, the US currency is the problem. I don't like it a little bit how the fiscal issues are being managed there. I recently wrote a piece in my blog:- Compare this scenario against US Dollars (Feb 2011) - Currency - 928.7 Billion Reserve Assets - 134.7 Billion. Value of reserve Assets hide a very important picture - Gold stock valued at 11 Billion is valued at $42.22 per Troy Ounce. The value of gold in the market per troy ounce in Feb. was between $1,340 and $1,440. Revaluing gold would add another 350 Billion to the reserves. Still we have 485 Billion Vs 929 Billion of currency issued. To achieve parity, Gold would have to go up double from this (no, I am not making a prediction). USD at this point is a fiat currency without backing. Essentially, it means that one of the arms of government has mortgaged future claims on its people. To me that is clearly an inter-generational fraud. Since I am not a US citizen, it is something I can do nothing much about; but may end up suffering with others around the world. The issue of gold and the issue of USD are separate to my mind.