ERICOPOLY

BAC has lost $49B in market cap over the past 5 days. I doubt their discounted earnings come in $49B lighter due to a virus. How about just calling this a selloff with Coronavirus being the fuse?

Is that strictly passive? Or time intensive which equates to an imputed income?

This article instead makes the claim that the Chinese Supreme Court believes that rumors are good because they encourage people to wear their masks and take other precautions: https://www.japantimes.co.jp/news/2020/01/30/asia-pacific/science-health-asia-pacific/chinas-top-court-rebukes-police-virus-rumor-crackdown/#.XjhzWCSIYlQ

Hypothetically, if you have 100 infected and the number of infected grows by 30% per day, you'll have 4,000 cases in 14 days. And none of the new cases will tally as deaths (yet) if the incubation period is 14 days. The reports that I've seen haven't broken down the number of asymptomatic cases included in their reporting.

The teacher asks, "Flora, what part of the human body increases ten times when excited?" Flora blushes and says, "That's disgusting, I won't even answer that question." The teacher calls on Johnny: "What part of the human body increases ten times when excited?" "That's easy," says Johnny. "It's the pupil of the eye." "Very good, Johnny," responds the teacher. "That's correct." She then turns to Flora and says, "First, you didn't do your homework. Second, you have a dirty mind. And third, you're in for a BIG disappointment."

As I recall the hedges required them to post cash collateral on a regular basis. So they weren’t required to sell these holdings particularly, but they chose to. Again I may be wrong but I remember a lot of debate on the board at that time as to whether these sales had been motivated by the cash calls and it seems they were. And here is what they said in the 2013 letter -- no mention of a 'requirement' to sell. It has migrated from 'concern' to 'required': Given our concern about financial markets and the excellent returns we achieved on our long term investments, we reluctantly decided to sell our long term holdings of Wells Fargo (a gain of 125%), Johnson & Johnson (a gain of 47%) and U.S. Bancorp (a gain of 135%).

They said they were 'required' to sell these holdings --why required to sell these holdings?: Another cost of our hedging, and why it is extremely unlikely that we will repeat this in the future, is that it required us to sell some wonderful long term common stock holdings, as shown below: EDIT: Were these holdings in particular posted as collateral for the hedging?

In summary, I feel like they are sending mixed signals.

Do you think they have a lot of capacity to add equity exposure? I fear they’re close to their practical limit. The selloff they need is in corporate and long dated bonds. That wasn’t the point I was making. They said that they will try not to repeat the costly mistake. How else can they avoid further opportunity cost than to buy them back? They bought these equities initially and then stated something about how they had learned to hold high quality shares for the long term. Then they sold soon afterwards and now they say they have learned a lot about how much the sale has cost the shareholders. So if they don’t buy them back, what am I then to think? I understand your point. Mine is that to buy them now they’d likely have to sell something else they like. It’d be a two-part decision, not a one-part decision. Which makes it harder to make inferences and for you to decide what to think. The comment in the 2017 letter is somewhat bizarre if they both regret selling, and yet are at the same time believing that their current holding are more appropriate going forward. Why not just say they made the right choice? A year ago, one might have read their comments and wondered if the valuations were simply too rich for them. I'm feeling rather confident that valuation won't be the reason if they decide not to go back into USB and WFC at this point. Anything can be sold to reinstate those positions. It's either the right thing to do or it isn't. If if isn't, then what's up with their comments about regrets?

Do you think they have a lot of capacity to add equity exposure? I fear they’re close to their practical limit. The selloff they need is in corporate and long dated bonds. That wasn’t the point I was making. They said that they will try not to repeat the costly mistake. How else can they avoid further opportunity cost than to buy them back? They bought these equities initially and then stated something about how they had learned to hold high quality shares for the long term. Then they sold soon afterwards and now they say they have learned a lot about how much the sale has cost the shareholders. So if they don’t buy them back, what am I then to think?

Some of these holdings are attractively priced now... if they don't repurchase them, what will I be led to believe? This is written in the 2017 letter: While we realized $1.0 billion on the sale of these long term common stock holdings, these compound growth machines resulted in us leaving $1.4 billion on the table. A costly mistake we will try not to repeat!

So true.

Thanks for posting and writing this Eric. The more I think about it, long term call Leaps are probably one of the best way to achieve this. Long with puts could be similar. Options pricing does not take fundamental values into account and therefore on a long term basis this can be the inefficiency. To get really great odds though I think 2 things have to be present. 1. Extreme undervaluation 2. Low cost of the option premium. The upside is magnified returns vs unlevered long only. Downside is getting wiped out if the stock is down. So to be 100% invested in calls has wipeout risk. Yes, 100% invested in calls has wipeout risk. The 2006 FFH trade was to buy the calls in May/June and to deleverage after the hurricane season passed. Hurricane seasons don't last past November and the 2008 calls didn't expire for yet another 14 months after that. The theory was that their extrinsic value was artificially low due to the crowded short trade with short sellers using the options market maker exemption because there were not enough physical shares to borrow. Additionally, the time value component of the extrinsic value decays relatively slowly so this was the safest window of the holding period.

I was going to say that. The equity values of highly-levered companies acted like unhedged margin portfolios in 2008-2009.

Here: http://www.cornerofberkshireandfairfax.ca/forum/strategies/bac-leverage/msg245797/#msg245797 and It was talked about a bit here: http://www.cornerofberkshireandfairfax.ca/forum/strategies/warrants-for-leveraged-garp-investing/50/ It's all strung out because it generated a lot of questions and doubts.

The Boring Company to sell bricks for 10 cents each: https://www.teslarati.com/elon-musk-boring-company-bricks-price/ Musk noted that the bricks would be “interlocking with a precise surface finish,” which would allow the blocks to be stacked on top of each other without compromising durability. Musk even noted that the Boring Bricks would be designed in such a way that “two people could build the outer walls of a small house in a day or so.”

They have showrooms at the service centers (or at least they do at the Rocklin service center). They have a showroom in Rocklin with a Model S, a Model X, and a Model 3. There are a number of Tesla employee standing around to answer questions and to help you place an order online for a Tesla. You can schedule a test drive if you wish. Isn't that what dealerships provide to car buyers?

They saw the move to "browser based apps" and "software as a service" quite early on -- I had to sit through a lot of presentations. I was with the Internet Explorer product team (I took my job in 1997) and Microsoft had a hard time designing it's products the way it wanted to without the government getting involved and threatening to split the company in two. I feel as though the competitors utilized the government to distract Microsoft and their complaints were disingenuous. Seriously, can you imagine an iPhone or Chromebook today shipping without a web browser already configured and ready to go? That lawsuit was asinine. Microsoft was only behaving in a manner that made sense at the time and still makes sense today. Just ask Apple and Google as their browsers are both the defaults configured on their systems today and they now have the dominant share (on the smartphones).

"Huge" . "Bigly" . There is a subtype of narcissist with histrionic features. Pathological lying, affairs with exotic partners... Amorous narcissist Including histrionicfeatures. Sexually seductive, enticing, beguiling, tantalizing; glib and clever; disinclined to real intimacy; indulges hedonistic desires; bewitches and inveigles others; pathological lying and swindling. Tends to have many affairs, often with exotic partners. https://en.wikipedia.org/wiki/Narcissism

So according to you, he should simply "put an outrageously large one time payment together" (that likely represents a lifetime of saving+patience+discipline+foresight+risk taking+luck, that may or may not be repeated in the future) without thinking it through...just because...he's crazy smart and figure out to make money back in the future? And also because "kids are more important" ? Okay, I should just mind my goddamned business, but... The short answer to your question, is yes. My rough memory is that Eric had $15-ish mil a few years back, which should still be mostly intact. So, what does a divorced guy truly need? If he can get by on 33% of the family wealth and still has the talent to grow it, then maybe Dazel's viewpoint is not Bat-shit crazy. If offering her $10-ish mil makes the child custody thing go away, why would a guy not keep $5-ish mil and joint custody of the kids? When you get right down to it, what else do you have other than family? I'd say that Dazel has a legit viewpoint, even if the lawyers would shit a brick by even thinking about it. The other bat-shit extreme approach would be to threaten the wife that Eric could go for full custody and then move the kids back to Australia. It's the old Clint Eastwood question for the wife. "You've got to ask yourself one question: "Do I feel lucky?" Well, do ya, punk?" Wishing all the best to Eric in a shitty situation. SJ I spoke to my attorney earlier about making financial deals and she said it doesn't work that way. You can't buy your way into custody -- you can make a deal and they can come back again later and file a motion for change of custody. She already asked me if I'd give up 50% of my separate property claims in exchange for 50% of the kids. I later found this ploy on a "Dirty Divorce Tricks" website.

She forced me into a vocational evaluation and I rresponded in kind. She has already had hers and has looked beyond upset lately. Yesterday I had mine. It has been 10+ years of retirement so my skills are considered 100% obsolete. I have a math degree with a specialization in business and there are primarily government jobs where I now live. She said it looks like 5 years of studying for a PhD in economics and then an entry level job making $50k-$70k. She told me that my wife can work right away as she was previously a realtor. Hah! Hah! Hah! It is always darkest before the dawn.

She is specifically stating to the court that I asked her if I could leave Microsoft to focus full-time on managing our investments. She says that I worked 40 hours a week at it and that she made this possible by taking care of the children while I worked. We have only lived on the west coast in Washington and California. There is no need for help from her because the markets open way before the kids get up from school and close before they come home -- it only takes a few minutes to make the trades before they rise and they can't be executed after school. Her only possible case would be if she can convince the judge that I was buried in fundamental research. Perhaps those of you who manage portfolios professionally can comment on how much time it would take you per week to watch over a portfolio primarily composed of just 1, 2, or 3 companies at a time. Would you need a nanny or a wife to manage the kids for you? Most of you do that in addition to your full time jobs.

Forgot to add: She is saying that I 'always' represent myself as 'working' I'm pretty sure I told this board that I am retired, and represented myself as "retiring" when I left Microsoft.

Hi, I have been going through a divorce since early 2016. She is trying to take primary custody of my children and wants spousal support arguing that I retired from Microsoft in early 2008 only so that I could busy myself full-time with researching investments. Sanjeev and Mohnish should remember that I contacted them around the time that I retired telling them that I was hoping that they would manage my money. I dragged my feet for years until 2014 but my contacting them should be evidence that I had no plan to make investing a full time "job". It was a hobby that made tons of money, but I repeatedly stated over and over again that I'm just a copycat that can't do fundamental research -- that's not a professional investor. I spent my time socializing on the board. My posts to the old MSN Berkshire Hathaway Shareholders board in early 2008 were all lost. Those posts explained how I retired in order to prioritize my life around focusing on spending time with my children while they are still young. That's exactly what I did until the day I separated from her in August 2016. Since then she has said "I did everything and he only focused on financial matters". Please write me an email explaining what I was posting to the board on this matter if you were on the board all this time. I also have said repeatedly that I just copy from other people and I don't do actual security analysis. I typically kept "bet it all" highly concentrated "portfolios" that require little time to maintain. I needed adult stimulation as being around kids all day can do to a man, so I would comment from time to time during the day on various topics. This board was a social water-cooler outlet for my daycare job. Investing was my hobby and I liked discussing it. I also made lots of off topic comments. Now is the time if you'd like to tell me that I didn't really contribute with any serious fundamental research that would have taken all day long alone in a room to produce. It's the truth and I need that truth to be told by other witnesses. She is also taking me to trial in July for primary custody. We are currently in a custody evaluation with a forensic psychologist and it matters who took care of the children day to day. The sooner the better if you can write me an email. Thanks old friends. I hope to be involved again when this is over. Eric

I remember an interview Prem gave in 2009 where he was favorably saying QE/stimulus had been working and he claimed he would be watching carefully for signs of protectionism, because trade wars made the Depression deeper/worse. Now we get the candidate that has all but promised protectionism and Prem gets bullish. Just an observation.