ERICOPOLY

What the hell does the market price have to do with his being right or wrong?

No it isn't different. Look at what the bears said about banks back in the early 1990s.

To be more precise, do you know of any 'superinvestor' that used margin on a personal account (not float in a company or whatever) when they were young? I can think of many leveraged companies, but I'm drawing a blank when it comes to these investors borrowing in their name to invest. I'm sure some did, though.. I read The Davis Dynasty. It claims he used the "maximum" amount of margin.

Well Buffett and Watsa still use leverage. It's called float, but it's leverage. They are rich enough to just sit in their underlying equity portfolios without any float to juice it. Why reach for that extra couple of points? Well, they like it I suppose.

I'm reading this WSJ article and wondering how much more unhappy the Greeks are than the average US citizen: http://online.wsj.com/article/SB10001424053111904199404576538261061694524.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsSecond Suicide rate (now): Greece: 6 per 100,000 (doubled recently due to austerity/collapse) US: 11.1 per 100,000 Are things that much worse in Greece? What's really important in a society, when it's so bad you kill yourself? They have 16% unemployment. Some say we have that too (counting underemployed and those who have given up looking).

At the top of page 84, it appears that the base case for normalized earnings is calculated based on a 15% return on tangible common equity. Tangible common equity as of Sept 2010 is listed as $114 billion. So that gives a normalized net income of $17 billion, or $1.70 per share. We bought a ton of BAC in March, 09 a little above the bottom and sold it a few months later for more than a double. Our back of the envelope calculations then were something close to the value above or a little higher. However, we may be approaching a time when their spreads are squeezed. Therefore, it may be sometime before their IV is reflected in the market. Their stock looks interesting for patient value investors. :) Yeah, I don't know about such methods of valuation. I'm looking at page 8 of their presentation from 9/12/11: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-presentations They made $10b in the first 6 months of 2011 if you ignore their real estate problems. That's $2 annualized per share earnings. So in a year when they make money in real estate? It ought to be more than $2 I reckon.

Personally, I don't believe stimulus will fix it, but I feel it will make things more pleasant until final demand returns. Robert Shiller believes in tax and spend (stimulus) as a way to get things moving again. He doesn't see why people believe that stimulus spending implies deficits.

Thanks.

I just finished reading the Oct 29th 2010 issue (free link). Using the closing stock price of BAC on the day the issue was published ($11.45), and the stated valuation of BAC in the publication 6.7x normalized. I guess the author came to the conclusion that BAC will earn $1.70 per share in a normalized year. Is there any chance the author can explain how only $1.70 is calculated to be the earnings power of BAC in a normalized year? Berkowitz was this past week saying $3 is the earnings power.

Depends. They might just be laundering the dividend as a capital gain for tax reasons. In which case, it actually is value enhancing on an after-tax basis. Buffett wouldn't agree though, as Berkshire pays 5% dividend tax on many of it's holdings vs 35% capital gains tax.

(Unless you guys are planning to continue to hold the shares after they become overvalued) why do you care if the manager is overpaying for the shares you are selling back to him? They seem to be working in the best interests of value oriented shareholders who buy cheap and sell dear.

Aren't those two completely dissimilar measurements of performance? Why not instead measure Berkshire share price performance vs the book value growth (+ dividends) of the S&P500 companies over that period? Berkshire's price gained 5.5% annually. Did the S&P500 book value growth (including dividends paid out) do better than this?

Speaking for someone who is 38, you describe it as I remember it. I'm not sure 12 more years (to 50) makes much difference. The world is still cruel to those who aren't born bright and/or don't plan carefully for the future. Damn I hope I am retired at 38, lucky or / and smart man........ Also agree about the world. At least it's not 1997 when you left college. I started working on Aug 4th, 1997. The S&P500 was about 900. You have a huge advantage. My generation got the SHAFT!

Speaking for someone who is 38, you describe it as I remember it. I'm not sure 12 more years (to 50) makes much difference. The world is still cruel to those who aren't born bright and/or don't plan carefully for the future.

Exactly. Everyone has the choice to save money by prepaying some mortgage, holding cash, or buying some investments. Somebody with no mortgage and no cash is the same as someone with a mortgage and stock investments that offset the mortgage. The way we view it is left up to psychology :) Personally, I think it is lower risk to have the mortgage and the investments, rather than no mortgage and no cash or investments. The scenario where you lose your job and need liquidity -- you can't tap your equity in your home when you have no job/income. So my personal believe is that it's lower risk to tap the equity and buy investments -- this way you have at least some liquidity when you lose your job.

The statute of limitations for dire macro forecasts has to be on horizons of less than 30 years. I think he was just wrong. And the current problems were not foreseen by Hayek, so I'm not giving him any credit for whatever malaise we currently have or how bad it will get.

I think that either you own the CDS for a big gain as interest rates climb, or you own the debt for a big loss as interest rates climb, but these large swings in valuation just cancel each other out if you own both. So no chance they own both is my vote.

To me it all looks like communing with the spirits and the stuff of superstition. Not the kind of leadership I'm looking for, I could have lived in Afghanistan if that appealed to me.

This is, in my view, testament to the slippage of education in the US. Education via Sunday School. Texas has even moved to incorporate a nonsecular curriculum in public schools.

Huntsman does appear to be far more moderate. "To be clear. I believe in evolution and trust scientists on global warming. Call me crazy," - Ron Huntsman

Michele Bachmann said that if she becomes President, the Environmental Protection Agency and the Department of Education will be shut down. http://www.examiner.com/conservative-in-spokane/michele-bachmann-promises-to-close-epa-and-education-department

They are a party of faith-healers talking in tongues practically. Not really of course, but that's what it looks like given the people they push to the top of the party to represent them.

Try listening for a few minutes from 18:40 in the presentation. The key question is why do people get fat? Why don't they eat exactly as many calories as they expend? I mean, he says that if you eat less calories than you expend, in the long run you'll be dead from starvation. And if you eat more than you expend, you'll be fat for sure. Ask yourself how you keep it in check? Do you measure precisely what you take in and do you carefully plan your day so that you burn off exactly that many calories? Taubes is a physicist, so the thermodynamics isn't a new subject to him. As he points out, he gets a chuckle out of the people who try to explain it to him. Look, I was a math major, so for me the calories in vs calories out seems completely logical. I changed my mind after hearing him out. Agree, you can't spend 90 minutes on every single nut on the internet that makes a video. But I found the 90 minutes spent on his lecture to be entirely worth it. Given your logical remarks (and they are logical), I think you'll be quite entertained for the full 90 minutes or so.

The people with the cold wait 12 hours or the person in the motorcycle accident waits 12 hours? I guess what I'm asking is, is that 12 hours just a statistic as to how far a non-emergency gets bumped when the real casualties just keep pouring in through the front door? Or is there a shift of guys with mops cleaning up the blood in the waiting room? I think I know the answer.

Did you get the chance to hear Taubes' alternative hypothesis? He strongly disagrees with the simple calories in / calories out. His reasoning makes sense (to me anyway). http://videomedia2.swedish.org/mediasite/SilverlightPlayer/Default.aspx?peid=cd8c7aa15bc94a0486f4ee9b66ef8f8f The argument is basically this: A diet that raises your blood sugar too high will trigger an insulin spike, and this insulin will signal your fat cells to store the energy in fat. Thus you are left feeling low energy and you tend to want to eat more. So the diet will dictate whether or not you will be able to control your eating to a level where you maintain your weight. The more fiber you get with your carbs (whole foods), the more likely you are to maintain your weight. The more processed the food (less fiber), the more you risk getting fat. The fiber slows down the rate at which the carbs hit your blood stream, thus reducing the insulin spikes. And of course the energy is there on a steady, slow flow until the next meal (vs a short term flood of carbs).