ERICOPOLY

They might be doing it because it's easier to just hedge against the index than to try to wiggle out of all of their positions. Besides, what if they market doesn't go down after they sell, and then for some reason they decide to go back in? Well, if they had sold then they would need to pay a capital gains tax. Hedging is a means of getting out of the market without the tax bill. Only if the market drops and they book a gain on the hedges do they pay tax... but they only pay tax on the amount that the market pulls back. Selling your existing holdings might be a much bigger tax bill than the one on the hedge gains. So I bet you there are two reasons why they play this way: 1) easier to hedge against an index than to get into and out of big positions 2) potentially a big tax savings Defenders of Buffett would say that he didn't sell into the hugely expensive market of 2000 partly because of taxes, but that's a lame excuse given that he could have gone the route of hedging against the index.

I tore a tendon 3 years ago running on a treadmill, less than a couple of months after I'd quit my job. The problem is that my first metatarsal on my left foot protrudes dowward at too sharp an angle, so the ball of my big toe is on a plane lower than the balls of my other toes. This forces me to rock outward on my foot when I walk (supination) and that puts stress on the tendon (it's the tendon that always gets swollen when you twist an ankle). In short, it's a partial club foot. That was the first time I realized there was something wrong with my foot. So the doctor is going to clip and lengthen my achilles tendon to give it slack so that he can straighted (via cutting) my ankle bone. Then he is going to cut and redirect the angle of my first metarsal and also cut and feed slack to that tendon. Then he is going to stitch up the torn tendon and tighten some other tendon in that area. Six procedures. I should have had this done right away nearly three years ago but I didn't ??? Finally I won't be limping around anymore as I've been doing. Oddly enough I'm looking forward to getting this done and behind me.

Mohnish knows more than I do, but my RothIRA is now up 26,523% over the eight years since inception in January 2003. This proves what somebody said earlier about the importance of luck. I figure there are more than a few people who don't quite trust everything people say on the internet, but one of these days I'll make it out to the Fairfax dinner in Toronto and can prove it on my IPhone (my Fidelity account provides the audit trail through their "Personal Rate of Return" feature). Not this year though, I'm having surgery to fix my foot on April 4th (won't be walking for six weeks).

I have an 18% gain YTD. A lot of the portfolio is in large banks and SSW. I see those holdings doing well in the next 18 months with the coming substantial dividend increases. They are all historically cheap. Then I have a basket of Harry & Packer's picks -- also cheap.

In a sense, they are already implicitly bailed out by the Feds -- the special tax treatment of munis. How much of their borrowing costs must the Feds pay? Perhaps they wouldn't borrow as much in the first place without the tax subsidy.

I've been wondering what Berkshire will do here. I figure Buffett partially tied his hands when he insured all those munis? Can he load up as aggressively as he otherwise would have?

I think we differ in how inflation should me measured. To me the way BLS measures inflation seems reasonable. We aren't differing in how it's measured. I don't think they should measure it in a different way, because it would be nearly impossible to track in the way that I've describe it. We are differing in how we think of inflation. I think that if I hold cash, for example, it should buy more and more goods every year because of the productivity advances. But it doesn't. It buys less. And we should be able to buy more in a 0% CPI environment (with productivity gains), but we can't due to inflation.

Say you buy a car in 2000 for $20K without ABS. Now, if you can buy the same make, model car with ABS for $20k. Then you would say there was 0% inflation. But in reality, you had deflation, price did fall, if you had considered the quality improvement. This had been the case in many goods and services. Thus BLS uses hedonic adjustments to account for quality improvements when calculating inflation. When we calculate inflation, we need to take the quality improvements into account. We are increasing our standard of living every year. If you accurately calculate the inflation (without quality improvements) and only increase your expenses by that inflation measure, you would find that you would be falling behind the rest of the country in standard of living. Vinod The car perhaps should have been $17k though including the ABS (due to technology and efficiency improvements) but it is being sold for $20k (due to inflation). It should be clear that if commodities go up and wages went up (rubber, steel, aluminum, leather) then the price of the car is actually higher than it ought to be. However, it is officially counted as "no inflation" or "deflation" (for the reason you cited). Technology improvements should make things even cheaper than they've become. But it's not counted as inflation because the absolute price did not go up, and in many cases it fell. To use an extreme analogy, if a road costs a certain amount to construct via pick and shovel, and then several decades later it costs the same amount to construct using heavy machinery, then something is wrong! It's inflation, but it's not counted that way in the official numbers. Back to cars though... they once had chrome bumpers. I don't think a hedonic adjustment was made when they stripped out the chrome for cheaper materials. On that note, we could replace diamonds on wedding rings with cubic zirconia -- would that hold the CPI steady?

The way I think inflation is hidden is that some prices have not gone down like they should have (due to lower labor costs in China (vs US), advancements in manufacturing, and shipping for example). I think the term for that is "productivity" gains -- why don't prices fall every year if there are truly productivity gains? So, if a manufactured good doesn't fall in price despite it being produced for less costs, that's a form of inflation (when it is happening all over the place). But in other things (like commodities), it's not as easy to hide the inflation from view. But no, I don't think there is 10% cost increases right now for the typical household. More like today's basket of goods that people purchase is different from how the CPI was weighted in 1979.

Margin of safety limited to tangible book value -- he probably means that historically they trade below tangible book for only short periods of time. In other words, as going concerns they will most likely trade well above tangible book in the future. Translation: there is little risk of P/B compression because the crash already came and capital was already raised (in his mind anyway).

http://www.drmirkin.com/diabetes/9897.html The researchers found that taking caffeine causes blood sugar and insulin levels to rise even higher after meals. If your blood sugar rises too high, sugar sticks to cells. Once sugar is stuck on a cell membrane, it cannot be released and is converted to a poison called sorbitol which destroys that cell. High levels of insulin constrict arteries to cause heart attacks and act directly on the brain to make you hungry, on your liver to make more fat, and on the fat cells in your belly to pick up that fat.

Buffett said that the government saved Berkshire Hathaway from falling.

It was easy to get wiped out in the late 70's as interest rates soared trying to get inflation under control. In boomtime economies like Alberta, the pain was huge and widespread. Provinces/states (like Arizona) where homebuilding and all its support industries were the leading employers, it was a double whammy. I don't have any real estate (don't plan to either). Maybe FUR or something like that, but that's all. Your comment on interest rates -- they don't matter if you are cash flow positive and on 30 yr fixed. So stay away from short term or adjustable rates, and stay away from areas where the business of building homes is key to employment. Seems like sound advice that is easy enough to follow. Anyhow, the question was about the 1970s and I was merely answering his question. This time around you might be right with regards to rents.

For example, it would be instructive to find out what happened to real estate values in the 1970s when inflation was a serious problem or in Turkey or the Latin American countries when they had their inflation problems. My concern is that all asset prices fall in response to a rise in long term interest rates (which are in turn a response to higher inflationary expectations). I have a copy of Schiller's Irrational Exuberance, Vol II at home. He points out that real estate rose in the 1970s, but in some years the rise was say 7% vs a CPI of 9%. So it rose at a slower rate than CPI part of the time. However, if you have 50% equity in the property, then your ROE is 14% vs 9% CPI. So a real gain of 5%. Were the inflation rate to be 0%, then there would have likely been no real gain whatsoever. Inflation is good for the levered. Not to mention it's good for cash flow (rents going up and interest expenses are fixed). Could be different next time, I don't know. But in the 1970s it was hard to do poorly in real estate.

I was looking at that earlier today. Once the salt comes down, the sugar will follow (or it will taste too sweet). The salt industry spokesperson said that the government shouldn't make the choice, that people will just add more table salt to it. The first thing I thought of was: "Great! So then nobody will miss out, right?"

That's a major strike against the privatization of basic scientific research. The studies that get done are the studies that get funding. Would the drug and food companies willingly fund studies where the thesis is based on something that would put them out of business?

Congratulations! Second that. Congrats! (by the way, to correct something I said earlier, fat burning cycle doesn't happen when hypoglycemic in the presence of insulin. The insulin has to be first absorbed by the body's cells, only then will the fat burning cycle be possible. So in my case, I go to bed and progressively get more hypoglycemic as the night rolls on (so I'm not getting hot), but then eventually the last of my bloodstream insulin gets absorbed and then the fat burning cycle starts which cooks me and makes me sweat. I wake up feeling relatively okay because my blood sugar has come back from the fat burning cycle).

I agree. Keeping people sick to grow GDP, and make it easy to win their votes (their cognitive functions are in a semi-hibernative state from the very insulin spiking that is making them fat). I'm convinced this diabetes is a hyberation trait -- insulin spiking from refined carbs slows you down physically and cognitively, to conserve energy in the winter when food is scarce. The low blood sugar makes the fat burning cycle easy to attain because a minimum of effort (even sleep) depletes what's left of the glucose in your blood. So you stay warm because the fat burning cycle generates heat. I honestly can't think of any other mechanism through which you could conserve as much energy as possible while staying warm at the same time -- isn't that basically what hybernation is all about? It's in the winter when you eat the sugar-mush from the berries you gathered all summer. So a populace that eats a steady diet of sugar much will slip into a hibernation like state both physically and cognitively, ready to believe that even Palin is smart enough to lead us, and if they don't like something they lack the energy and motivation to organize and fight it. Other parts of the world where the diet is better must look at Americans and think they are genetically just really slow -- but it's just hibernation. Look at what happens to other animals Bears hibernate. They eat tons of food in winter and generate body fat. They have thick fur. Once snow accumulates, they stop eating and retire do their dens. Their blood sugar drops and they slip into hypoglycemia -- triggering the fat burn that will keep them warm steadily all winter. In order to make their fat last, they slow their cognitive function way down (brains use energy) and keep completely still (heavily lethargic). They just sleep. Not sure what wakes them up. Perhaps when the weather warms come spring they get night sweats and wake up drenched in sweat? I believe that with global warming I heard somewhere that bears were waking up early from hybernation -- it would mesh well with the night sweat theory. They don't sleep for a set amount of time, they sleep until they wake up drenched in sweat.

What do you think of this natural sweetener? It contains no fructose. Xylitol, or "birch sugar". It is not made in a lab or anything like that. They use it in chewing gum in Europe. It does not promote tooth decay. http://www.3dchem.com/moremolecules.asp?ID=306&othername=birch%20sugar Here it is described on a different page: http://www.ultimatelife.com/CatSweet.htm Third, in spite of the fact that it is a pure carbohydrate, it is metabolized very slowly. This helps prevent sugar "highs" and "lows" experienced by people who have diabetes, hypoglycemia, chronic fatigue syndrome, candida (yeast infection) or any condition caused by sugar imbalance.

lmgtfy click here :) Quote from first the link: "They grew pancreatic cancer cells in lab dishes and fed them both glucose and fructose. Tumor cells thrive on sugar but they used the fructose to proliferate." I wonder what would happen if they tried feeding ethanol to the cancer cell. Maybe one can get all the phytochemicals and antioxidants from drinking wine with none of the cancer-promoting fructose from drinking grape juice.

Does she have no cavities too? Interestingly, I never got cavities despite all the sugar I consumed. my father never got cavities. my grandfather didn't have cavities despite his sweet tooth. Evolved to eat heavy amounts of blueberry tar in the ice cave!

(I went to a doctor a few years ago after my wife complained about the sweating and was checked out for cancer CAT scanned. Aids tests, etc...) They have now gone away completely after watching the Gary Taubes and Prof Lustig videos and eliminated all refined carbs. My concentration, cognitive function, and memory has also improved. My energy is way up -- I feel more vital. I found some research from the University of Washington linking elevated insulin levels with poor cognitive function and impaired memory. I also found that hypoglycemic people get night sweats (the fats get metabolically active, just like if you've been exercising for 20 minutes). I think what happened is my blood sugar level spikes from all the refined carbs and my insulin gets pumped up so it all goes to the fat cells. Then I run out of blood sugar around 3am and my body decides it's time for a "snack" and starts metabolizing my fat, which generates heat (same as if I was exercising). So my pancreas is very sensitive to blood sugar apparently, so I can't tolerate refined carbs. Like the Pima Indians, except my pancreas probably gets too overly enthusiastic so my insulin likely spikes and my fat cells then gobble up all of my energy leving me hypoglycemic (the chronic fatigue) and thus I burn off the fat when I'm sedentary. My grandfather's parents being from northern Finland, this may be no accident of evolution. Can you imagine living up there before central heating and insulation in the dead of winter, long dark days where you are sedentary (you're not going to go walking around much without flashlights). So being designed such that excess blood sugar goes right to the fat cells leaving me hypoglycemic is a bit of an advantage, because that way I can stay warm while being sedentary in my cave! Diet of northern Finland? Well let's see... wild blueberries (high in fiber and not very sweet), wild game, mushrooms, fish. Not a whole lot of refined carbohydrates. But if you're sitting there with cache of wild blueberry tar or however they would have refined it for consumption during the winter, it would be great to be designed like this! And during summer when you eat in the non-tar form (with the fiber), you don't get this problem of being chronically fatigued. So, ironically when my blood sees more than a little pinch of sugar I get sedentary in my ice cave to wait out the winter, and when I cut way down on the blood sugar I get hyperactive (summer) so I can go gather more berries for the next winter. The refined carbs we're blasted with today would tend to make a person like me insulin resistant over time -- my grandfather, father, and uncle are all type 2 diabetic. Shazaaaam!!!! Nothing like a good narrative that makes sense. I might add this also might lead me to be better as saving money. I evolved to squirrel away blueberries all summer and make tar with it so that I could survive a winter covered in snow and ice with no food but what I saved. I have a hoarding instinct to survive a future of scarcity, and this transfers to accumulation of money in the modern society. I am afraid to spend -- frugal by evolution. The lower brain function in the face of refined carbs (high insulin) might be some sort of hybernation instinct to conserve energy in my ice cave, but when taken with lots of fiber during summer I'm very energetic because I've got a lot of blueberry gathering to do while food is abundant in order to make tar to survive the next winter in my ice cave (and I dare not eat any of the tar for fear I won't have enough). The chronic fatigue is also convenient if you are in hybernation mode -- you won't wiggle around much. You conserve energy this way. I should write a paper about my condition, and call it "Thirty Seven Years In An Ice Cave". Refined carbs (blueberry tar) causes me to go into a hybernating state: 1) chronic fatigue (movement wastes energy) 2) brain fog (brain activity wastes energy) 3) night sweats (keep warm while being sedentary) Semi-sweet blueberries taken fresh in summer with all the fiber 1) very energetic 2) high brain function -- I have my wits about me I can't eat blueberry tar in summer or else I go into a hybernating state and won't survive the next winter. So I've evolved to have a hoarding instinct, and in modern times I hoard money for a future perceived scarcity.

It's somewhat of a coincidence that I'm hearing more about Crohn's lately (after hardly knowing anything about it). Yesterday my neighbor was telling me that people are getting treatment by exposing themselves to hookworms, of all things. http://en.wikipedia.org/wiki/Helminthic_therapy There was an interesting first person account of using hookworm to treat severe asthma that was posted several years ago on Kuro5hin.org. http://www.kuro5hin.org/story/2006/4/30/91945/8971 It was a more controversial topic when this guy originally did it. It is pretty fascinating account to read. Apparently this approach works on many autoimmune diseases by giving your immune system something else to attack (instead of your immune system attacking its own body) Weird! I was just listening to a This American Life episode today called Enemy Camp 2010, where one of the stories involved a dude who cured his severe allergies by giving himself hookworm. The guy now sells hookworm that he collects from his own feces as a cure for allergies and other autoimmune ailments. He says he's astonished that more people aren't lining up to buy hookworm from him for things like Crohn's. http://www.thisamericanlife.org/radio-archives/episode/404/enemy-camp-2010 Regarding hookworms -- I just realized something today. On my mother's side (Scottish), my two uncles are both diagnosed with hemochromatosis -- too much iron in their blood. They have to go in on a regular basis to have blood drawn. Oh, and one of their children (my cousin Sarah) was recently diagnosed with MS. MS is an auto-immune disorder. Is it any coincidence -- do you see the genetic dependency here for hookworms?

I am a hybrid 50% Scottish (my mother's family settled in Australia after leaving Scotland) and 50% Northern European (my last name is Swedish as my father's father was born in Finland as was his wife (a Swedish Fin). Blueberries (high in antioxidants) are wild there, but they are not that sweet and they are tough (full of fiber). We went there to visit relatives when I was in 4th grade and I had the worst diarrhea after eating a "normal" sized portion (because I am accustomed to eating what comes from grocery stores). So... my father now has pre-diabetes, his brother is type 2 diabetic, and their father was type 2 diabetic. None of them are fat! What does that say about the link between obesity and type 2 diabetes? Remember my night sweats? My theory is that my night sweats are inherited from my father's side. Far up north in Scandinavia the days are short in winter and cold as hell. So while sleeping, to prevent hypothermia, it makes sense that our genes evolved to metabolize fat no matter what to stay warm. However I ate enormous amounts of junk food (my father did not, nor did his brother, nor did my grandfather) so I had the most energy in my fat cells going to bed at night and thus I'm the one who gets the night sweats and they do not. The Pima Indians likely (being from the Southwest) did not evolve with such long and cold nights, as they have longer light in winter. Even summer nights in the Southwest are warmer than summer nights in northern Finland. I don't know what the hell my ancestors did up in northern Finland in the middle of winter, where daylight only comes for a short period of time each day. Probably a lot of huddling, as they didn't have flashlights to go walking around at night. So ironically, perhaps it's evolution in the sedentary lifestyle of far northern Finland during frigid winter temperatures that causes me to stay slim. Yet people accused the Pima of being sedentary! How funny is that hypothesis? So one of the big problems with having my genes, is that I have been putting myself at risk of type 2 diabetes without realizing it, because I haven't been obese which is the canary in the coal mine. My body hides the problem, so it's not obvious that there is a problem going on. This gives me a false sense of security so I go on eating my junk food. Norwegian women tend to be thin -- are they cooking off their fat at night? Any guys with some experience on that care to share a testimonial -- are they hotter?: How about the Beach Boys: "And the northern girls with the way they kiss, they keep their boyfriends warm at night". Well, what if it wasn't the kissing that is keeping their boyfriends warm at night?

BTW, I've lost 18lbs in the last two weeks You must be losing a lot of fluid? Are you bleeding? Fat has about 3,500 (working from memory) calories per pound. In 14 days, you haven't lost 18 lbs of fat. I never said it was all fat. The first lbs that come off easily on any diet. Low carb or low calorie are always water, not fat or muscle. I will not loose 18lbs in the next 2 weeks. --Eric Sorry for my comment. You might just very well have lost a ton of fat. I didn't understand this all that well until watching the Gary Taubes presentation. I never got fat and ate heaps and heaps of refined carbs. But lately (past week) I've stayed completely away from refined carbs and I'm feeling very energetic despite eating far less (I'm staying away from sugar completely, and I'm eating my salad AFTER I eat the meat portion). And I don't feel hungry. For years I've suffered from night sweats -- literally waking up soaking wet at 3 in the morning. Our white sheets quickly get discolored on my side of the bed from all the sweating, so it's quite disgusting too. Now I've finally solved the riddle. My doctor by the way was no help at all on this. It was this message board! The Gary Taubes video talked about how fat cells are metabolically active. What's been happening to me for years is I overeat refined carbs and put on more fat during the day, and then my fat cells get activated at night trying to burn off all that fat -- probably because it's difficult to be a hunter/gatherer if you're confined to one of those golf carts that obese people drive inside the store no less when shopping at walmart because they can no longer walk. I'm just lucky that my body is designed to burn off the fat during sleep! People who aren't designed to burn quite so much at night would pack on the pounds cumulatively. The SeattleTimes ran an article last summer on night sweats: http://seattletimes.nwsource.com/html/health/2012221342_sweats28.html They have no clue whatsoever. Useless, just like my doctors who could offer no explanation for the night sweats. This Berkshire board has made me wealthy and healthy, now I might live long enough to be wise. Healthy, wealthy, and wise!