seshnath

IMHO, the real question is not whether Gold or Silver or oil or diamond or whatever. The real question is exchange. You need a medium of exchange for goods and services. It should be uniform, should not disappear, portable etc. Historically, the problem was of storage without corrosion - iron, silver, bronze etc would not qualify. You could put gold anywhere and not lose its quantity and hence value of exchange. Then the problem became of weight - paper solved that technological problem. If you go back to gold, think what would happen to stored values at this point. You would suddenly have balance sheets of everyone (everyone!!!) decimated (centimated or millimated). When did humanity take such a decision ever!!!! This is the intellectual reason leads me to believe that gold bugs are just nostalgic. The technology eventually has to move toward a more portable medium of exchange. Really, the challenge now is sending paper currency across (not talking about the bits of data that you send from bank to bank). Can you really transport currency across great distance without really taking the risk of losing it - say theft, government confiscation, security charges? (Think back to the currency sent to Iraq in containers.) My best guess is that money is going to become more untouchable - wallets may become outdated in favor of a credit card holder or just a single number. (Parallels are interesting - think of shares and share certificates.) Extending those same thoughts, I also think that speed of e-transfers are partly to blame for the outsized balance sheets of central banks. Back when money transfer from coast to coast would take, say a week, Fed could afford to have so much paper currency out there. Relatively, adjusting for population and transaction volume, it may be outsized. (I would love to read a doctoral paper on this subject.) I would love to live in that future where intelligent people realize that value need not be touched, fondled, nursed, shining. Instead,goods and services are seen as a multiplier of effort of a human being. So much for my Utopian stream of consciousness.

I'm not a fan of gold in the slightest. Buffett said that all the gold in the world ever found amounts to a cube 65ft by 65ft by 65ft. It would be worth $7T! But for that same amount of money, you could buy ALL of the farmland in the U.S., 23 Exxon Mobiles and still have a trillion dollars left to do with what you want. Which is the smarter investment? I owned gold in my safety deposit box about 7 years ago when it was $300 oz. I sold a long time ago at $700-800 oz on average. That'a all I think gold is worth right now based on supply and demand from utilization in industry and normal jewellry demand. The rest is speculation and fear! So I would not be surprised to see a 50% correction in gold at some point. I have no way to really value it outside of that supply and demand. And I don't invest in things based on what other people may be willing to pay. So I will not touch it, and I warn everybody I know that they should be careful. I have looked stupid for a couple of years, and more and more people (family members in particular) are reminding me how wrong I have been...so I think we are getting pretty close to the top. Then again, I thought rap music was a fad, so you may be seeking advice from a fool! ;D Cheers! Sanjeev - well said. I owned gold when the first ETF came out and sold at a 50% gain - I thought I was smart!!!! Ever since, I have been scratching my head seeing the prices ::). No regrets for all the same reasons Sanjeev said. Unwittingly I added about a quarter kilo of gold to my family portfolio when I got married - all of it in the form of wife's jewellery. (I was marrying up ;D ) A constant pet argument I have with my wife is that we are paying about USD 15 a year to just keep it in the bank safe, while stock holdings (except Berkshire) pay dividends, real estate generates rent. The argument has not been that effective due to the price gains she has in her part of the portfolio. I just point out that it is all moot since she will never part with all that jewelery even if a gm of gold hit a million. The argument usually ends there. (We then kiss and make up, if any one is curious about the state of marriage.) As a practical matter, she is not adding to the holding. (Didn't I say I married up?) Short of all this anecdote is that we hold some gold - just like most middle and upper class households in India. I am ok with it since it is jewelery (durable consumer good).

The difference that Libya makes is in the marginal production of gasoline. Libyan crude is mostly sweet - less sulfur and more gasoline per barrel of refining. The newer crude discoveries are mostly heavy - higher sulfur content.

INFY Short is great. They have lot of headwinds since 2008 or so. Don't get the HDB short, though. It is one of the well managed banks in India that hasn't lost its head lending.

BRK all the way. I had sold all except one share, around 80 plus to raise some cash to meet some unforeseen needs with a lot of hand wringing. Now I am picking it back at 70s and 66+ - can't believe it can happen with BRK. Vintage 2011 for my Roth IRA is looking good. Planning to add more if prices remain at these levels. Looking closely at JPM, WFC, WMT, SNE, EXM, NLY

IMHO, another tax on stupidity. The article focuses on the winners - how about the people who contributed to the pot in this zero-sum game?

Carl - Ford may be "focus"ing on the passenger vehicle market. It is not really a threat to Tata Motors. TM has majority share in commercial vehicle market (2/3rd) and much smaller in Passenger vehicle (13% in 10-11). Maruti has about 3 times that market share in PV. Ford was one of the first movers in the market with Ford Ikon back in 99. Initially, it was one of the best selling luxury (!!!) cars - most businessmen had to have it, just for the brand name and novelty. (I used to work with Ford Kotak, the financier, as a consultant back then). After watching the market for the last few years, my observation is that it is hard to make a big dent in the market for Ford. Suzuki (through Maruti and otherwise) with Tata has firm grip on the mass market due to mileage, durability and cost factors, which is where the volume is. And the key factor in this segment is coverage of service centers. Suzuki and Tatas are way ahead. The cost will be too high for Ford to replicate that network in the current circumstances.

Agree. Especially, looking at the big picture - near zero GDP growth and the two stimulus tools are not available any more with interest rates near zero and fiscal spending as a tool being shut-out voluntarily.

ValueCarl - I am three months early than promised. Here is the paragraph from OPV:- "Buffett downloaded The Intelligent Investor word-for-word forever into his brain. Once, when he testified in the IBM antitrust case, an IBM lawyer said Buffett had contradicted a paragraph in the book. Buffett countered that the lawyer was citing the third edition, which had additional contributors, and that the paragraph was not in the first edition, which reflected only the work of Graham and Dodd (New York Times, June 11 2000)." OPV 2006 Literary Edition Pg 79. "Youth - A portrait of the artist as a young man" Here is the article from NY Times referred to:- Copyright New York Times Company Jun 11, 2000 Straight to the Heart Of Value Investing Warren Buffett is not a man given to emotional displays. But he appeared genuinely moved recently when Barbara Dodd Anderson, the daughter of David Dodd, co-author with Benjamin Graham of ''Securities Analysis,'' presented him with her father's own copy of the first edition, with his annotations. This landmark 1930's book on value investing has been the basis for Mr. Buffett's strategy. Mrs. Anderson made the presentation last month at the Columbia University Business School class on value investing once taught by Graham and then by Dodd, and now by Bruce Greenwald. Mr. Buffett, who lectures there every other year, recalled that Mrs. Anderson's father, a tenured professor at Columbia Business School when Mr. Buffett applied there, had helped him get in. To illustrate how the book had become ingrained in his thinking, Mr. Buffett recalled that when he testified in the I.B.M. antitrust case, a lawyer for I.B.M. said Mr. Buffett contradicted a paragraph in the book. Mr. Buffett countered that the lawyer was citing the third edition, which had additional contributors, and that the paragraph was not in the first edition, which reflected only the work of Graham and Dodd. Professor Greenwald said the idea had come from Mrs. Anderson, who lives near San Francisco but stays in touch with the business school through Catherine Murray, former director of development. GERALDINE FABRIKANT

Just read this article on yahoo. Compare this to the discussion on Dakshana - two totally different paths!!!

Biaggio - OOPS file!!! I love that name. In fact, I have something like it - sort of a trade diary of big decisions. I revisit it when I am in a contemplative mood. Sad part is I find wondering about how well structured my past decision processes were against the present and end up wondering "I was that smart". And I am not that old!!!!

That is inspiring!!! Thank you for sharing, Shalab

Sounds like something out of a 2000 report commissioned by the neocons. I am with you there, though. One of the reasons I am working in the Middle East these days.

One look at the Value Line page and my conclusion about Einhorn is - another hedgie obsessed with share prices. Here's a thought experiment - how much money will it take to have all the Windows/MS Office customers switch to another product? The answer is simple enough for me - it isn't just the cost of rolling out a new/innovative product. Think of retraining all the non-techies who grow up with MS products and having to do it without any cognitive dissonance. Simple enough for me.

Don't disagree with any of the analysis. One thing strikes me, though - is there a consumer preference (taste difference) between V & MA? If there is no real differentiation in the minds of the consumer, market lead can be eroded away. I guess what I am asking is where/what is the size differential of the moat? Besides, transaction volume increases are going to benefit both similarly - market share capture going forward and how they go about it may be what differentiates them. Or, do you see a snowball effect here with V? - sort of most people have V, therefore scale comes into play etc etc.

Looks like the "carnival barker" folded. http://www.bloomberg.com/news/2011-05-16/donald-trump-announces-he-won-t-seek-u-s-presidential-nomination-in-2012.html

http://www.bloomberg.com/news/2011-05-16/berkshire-hathaway-inc-holdings-in-1st-quarter-13f-alert.html Mastercard is a new addition. Obviously it is a Combs pick. http://www.bloomberg.com/news/2011-05-17/berkshire-takes-mastercard-stake-after-buffett-hires-money-manager-combs.html The ultimate royalty on an ever increasing base (inflation is coming and somebody else's sales and almost no additional capital required to grow revenue) as WEB was saying recently. Any other thoughts?

Thank you rijk and Ben for the posts.

Stark Raving Mad!!! hmmmm...

Myth - Isn't the transcript only for the Sokol part of the Q&A alone? Am I missing something?

Here's a link - courtesy Shai Dardashti. http://valueinvestingresource.blogspot.com/2011/05/2011-berkshire-hathaway-meeting-notes.html Looks like it includes Ben Claremon's note as well from Innoculated Investor.

Here's the relevant extract from Owner's Manual. "We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely. I should have written the “five-year rolling basis” sentence differently, an error I didn’t realize until I received a question about this subject at the 2009 annual meeting. When the stock market has declined sharply over a five-year stretch, our market-price premium to book value has sometimes shrunk. And when that happens, we fail the test as I improperly formulated it. In fact, we fell far short as early as 1971-75, well before I wrote this principle in 1983. The five-year test should be: (1) during the period did our book-value gain exceed the performance of the S&P; and (2) did our stock consistently sell at a premium to book, meaning that every $1 of retained earnings was always worth more than $1? If these tests are met, retaining earnings has made sense" Two years ago, I believe, someone asked him a question on this part and made him revise this part to what it is now.

Net - Try Gurufocus. I just saw the part-1 being posted. http://www.gurufocus.com/news/130616/berkshire-hathaway-2011-shareholder-meeting-notes-part-1

Not Emirates - Kuwait. Everytime an American fills up his SUV, I can hear the ka-ching here. ;D

ValueCarl - I just recently figured out how to navigate around the site. Hence, the delayed response. My copy of OPV and I are currently over a couple of thousand miles apart - 2258 to be exact. The next time we meet would be, hopefully in September. I will try to share the specifics from Kilpatrick's OPV, then.