ERICOPOLY

His comment: If we are wrong about China, it wouldn’t be economic problems, but more due to social problems. Then there are his positions in Radian and MBIA in January 2008. He was buying up real estate and associated financials back then. He also wanted to invest in Bear Stearns as it was dropping but one of his peers at Third Avenue stopped him. I think "safe and cheap" sells fund shares, but it's harder for him to do in practice. There are a number of investors who stayed away from those financials in 2008, seeing risks that were invisible to Marty. He was focused on price to book ratios but that's not where the others were looking. He really got into it with Bill Ackman over MBIA -- did he apologize? Man was he wrong and extremely rude to Bill. I think he called him a "promoter" and said he knew nothing about insurance. It turned out that everything Bill said was correct and Marty didn't listen to any of it. Here's his list of bargain stocks in October 2007: http://archive.fortune.com/2007/10/16/news/newsmakers/bargain_stocks.fortune/index.htm

Unable to provide his wife with Alpha: "I was about to put some money into muni bonds for my wife, and instead put it into Third Avenue Value," he says. http://www.wsj.com/articles/SB120736223927391963 Perhaps he should try the pharma sector.

Just rent a U-Haul truck, park in a remote location, and cook hamburgers over charcoal in a Weber in the back with the rear door closed. Search on Google for indoor BBQ carbon monoxide poisoning -- it's surprising how many people accidentally kill themselves and others this way. So it's very effective.

Both internationally and between the states there is no positive correlation between suicide rates and either gun ownership nor gun laws. Look at the suicide rates in Japan for an extreme example. Yes in the US people choose to use a firearm when they kill themselves, whereas in Japan they use other methods, but suicide isn't a gun problem, it is a person who wants to end his own life problem. Sorry, but this is demonstrably untrue, and there are MANY studies illustrating this. The easy availability of guns tends to result in higher suicide rates. See here for example. I could cite countless other studies. http://www.economist.com/blogs/graphicdetail/2015/02/daily-chart Which is so strange. It seems a lot more appealing to put a garden hose in the tailpipe of a car (or just run the car with the garage door closed if you have a garage). Why do people use guns?

I'm not troubled by any hint of fraud. Look at the deeply respected people involved with the board. These are lightweights who don't turn over stones with tough questions such as yours? They would stake their reputations on this without better information than you've been given? “With three former cabinet secretaries, two former senators, and retired military brass, it’s a board like no other.” "We have former Secretary of State Henry Kissinger, former Secretary of Defense Bill Perry, former Secretary of State George Shultz, former Senators Sam Nunn and Bill Frist (who, it should be noted, is a surgeon), former Navy Admiral Gary Roughead, former Marine Corps General James Mattis, and former CEOs Dick Kovacevich of Wells Fargo and Riley Bechtel of Bechtel. There is also one former epidemiologist—William Foege, and, in addition to Holmes, one current executive, Sunny Balwani, who is Theranos’ president and CEO." http://fortune.com/2015/10/15/theranos-board-leadership/

You cannot say it failed to work. You don't know how much worse deflation would be in the absence of it. Therefore, how do you know? For example, would be perhaps be a roaring success if you achieved 1% deflation instead of an otherwise 4% number. And the same argument would apply to you - you can't say that it worked because you don't know what inflation/deflation would have been without it. We could have ended in the exact same place. But I do think it's clear that the results have not been what was targeted by any of the policy makers that implemented it, which is a better gauge of failure than people who claim it was a success have. Yet I don't argue that it succeeded. Nor do I argue it failed. I just know that we don't know.

You cannot say it failed to work. You don't know how much worse deflation would be in the absence of it. Therefore, how do you know? For example, perhaps it might be a roaring success if you achieved 1% deflation instead of an otherwise 4% number.

What if the market hardens when they are sitting on large hedging losses (like right now)? Doesn't that limit their ability to write more business (than otherwise) into the hard market?

I'm wondering if the comparison is fair. Money backed by gold where the threat of devaluation came from how fast it can be mined. Is that completely comparably to today's fiat system? Does the threat of devaluation feed into interest rates throughout history or has it instead been the case that interest rates are completely decoupled from devaluation? I don't know, because I haven't studied it. My initial instinct is to ask for a higher interest rate if the currency is created by fiat. However I wonder if it is supported by history -- for example, rates are low today and the currency is created by fiat. In fact people say you can't create inflation by fiat -- Japan has already tried, etc...

I think the best thing you can do is to constantly deny that you know anything special and remind others that you have no idea how to consistently get even 10% returns. Otherwise they'll look at your past results and ask you for stock tips -- at that point if you indulge them you'll become their savior, and get swept up in it yourself until you start singing "I am the walrus". I believe John Lennon once wrote: "Superinvestor is a concept... by which we measure... our pain."

i would suspect that it is because most of zinc mohnish bought at very low Prices. around $3-4 per share. therefore i think it is growing to 15% ZINC stock chart suggests it hasn't traded at those levels since Feb 2009. It makes sense if there are other foreign holdings skewing the data -- however I thought these were notes from the meeting so it's a little odd if the meeting didn't present the data in a non-skewed manner. Anyways, doesn't really matter.

I don't understand how Horsehead could have started at the maximum size of 10% and have grown to 15%. It doesn't bother me if it's a 15% holding, I'm just curious how it got that way if the limit is 10%. Is it 15% of holdings but only 10% of fund size -- suggesting uninvested cash skewing the data? From the notes: "Pabrai currently holds: Fiat 42% of the fund , GM B Warrents >10% , POSCO ~10% , ~15% Horsehead Holding , ~10% Google" "He doesn’t invest more than 10% into one position but doesn’t mind when a position grows."

The corporation's legal privileges... Think about how many companies would never be started if there were not legal protections. Society gets much in return for these legal protections. Jobs, innovations, services. Society is definitely getting a positive return here. Put it this way... it's not like society is in a position to revoke a C corp's legal protections if company owners collectively all refused to pay the tax. That would be a lose-lose situation all around. Society is getting paid a double-tax is more or less gratuitous. I'd be in favor of taxing all income the same... which would mean nixing the double-tax so we are all taxed the same. And that would mean real income, so stripping out the inflation component from capital gains and fixed income. Equal taxation of real income -- that would be fair. There is also the issue that 1031 exchanges should be applied to all assets, not just real estate -- shifting your invested equity from one investment to the next clearly isn't income... but I believe one could easily call "income" any equity that is not reinvested.

But it's a very good culture based on sound reason and logic. The tax bill is lower if you go with the first option. The reason is that 100% of the dividend is taxed. So the dividend is the worse option. Only a portion of the buyback (the actual capital gain) is taxed when shares are sold -- that's because your cost basis is exempt from taxation. It's just a mathematical fact. Example: You hold a million shares that are going to pay a 5 cent dividend. That's a $50,000 dividend that will be fully taxed. Compare that to the company that repurchases $50,000 worth of shares on your behalf. All you have to do is sell $50,000 worth of your stock and you get the "dividend" cash in your pocket. Except you only have to pay tax on the gain, if you have any gain at all! Hell, you might even be holding the shares for a loss and be able to offset your tax bill elsewhere!

It's not just a double tax on dividends, but basically on all corporate earnings (unless you die before the shares are sold, in which case you avoid the double-tax here in the US). The alternative to paying a dividend is retaining the earnings, but you'll still get a second tax on those earnings when you sell the shares (retained earnings push up the share price so it winds up as a capital gain... which is thus double-taxed earnings the same as the dividend). Getting rid of the double taxation on corporate earnings would require one of the following: a) eliminating tax on dividends and capital gains. b) eliminating the corporate tax c) allowing shareholders to take a tax credit for corporate taxes paid (similar to Australia's dividend franking system, but applied to capital gains as well to avoid double taxation when earnings were retained instead of paid out). I think it will be a long time before we get rid of the double-taxation of corporate earnings.

Looking at the old prices when the last big fear event happened... I see $327.66 (CAD) for FFH on January 1st, 2008 and $233 on August 1st, 2008. Their hedges were doing great. Price happens. There's a T-Shirt idea for you Forrest Gump fans -- a big yellow smiling face on a T-Shirt where the mouth is a stock chart. Price Happens!

Perhaps at 70 MPH it docks directly with a driverless refueling tanker truck and therefore we don't necessarily need a refueling station ;D

I did eventually stop but it was at a higher threshold than $5m. Mostly because BAC just looked like the last time I'd ever have to do it (and I think it was).

Time is a big factor. While the driver is sleeping, eating, going to the bathroom, etc. The merchandise is sitting in the truck not going anywhere. Shipping would be quicker if done by robot vehicles. One obstacle I see is that you would need full service at truck stops and some way to guarantee payment, because there is no longer a driver to get out, swipe a credit card, and put the nozzle in the tank. I think you overcome that obstacle by paying somebody minimum wage to occupy the vehicle during the entire journey. His primary job is to swipe the credit card and put the nozzle in the gas tank when refueling mid-route. His secondary job is to be with the vehicle so that it doesn't get robbed. Sounds less complicated than clerking at 7-11. So it's minimum wage. No need for commercial vehicle drivers license. I doubt that is the long term solution. Truck stops will likely accommodate robotic trucks with some type of easy pay system and more minimum wage staff to pump gas. Afterall there are less refueling stations than there are tucks, this would be many times fewer people. Also removing humans from the tuck entirely releases the design constraints having a passenger cab puts on truck design. Trucks can be designed without cabs, mirrors, etc. The engine can be put in its best position for stability and fuel economy. The same with the design/shape of the exterior of the truck. Just not having huge mirrors on the outside will save fuel. Putting a person in the truck defeats many of the gains of having an autonomous truck. True about the streamlining/aerodynamics, but the person doesn't have to sit in the front of the truck nor does he need mirrors if he isn't driving. Could be a rear-facing seat at the tail of the vehicle (although that doesn't fit with the existing design of trucks and perhaps isn't workable). I think you could keep the man riding upfront but occupying a center seat so that the nose could be more streamlined. Just a guess though. Eliminating the person entirely is more optimal still.

Time is a big factor. While the driver is sleeping, eating, going to the bathroom, etc. The merchandise is sitting in the truck not going anywhere. Shipping would be quicker if done by robot vehicles. One obstacle I see is that you would need full service at truck stops and some way to guarantee payment, because there is no longer a driver to get out, swipe a credit card, and put the nozzle in the tank. I think you overcome that obstacle by paying somebody minimum wage to occupy the vehicle during the entire journey. His primary job is to swipe the credit card and put the nozzle in the gas tank when refueling mid-route. His secondary job is to be with the vehicle so that it doesn't get robbed. Sounds less complicated than clerking at 7-11. So it's minimum wage. No need for commercial vehicle drivers license.

How much of the cost of trucking is the cost of the truck driver himself? Drivers need to stop to eat, rest, or perhaps sleep for example. He also needs to be paid. Would driverless trucking put pressure on rail traffic, or are railroads still much more efficient?

My book value per share is soaring when the portfolio is up huge. However I'll guide your eye to my impressive gains in intrinsic value per share when the portfolio's performance is unworthy of special mention.

Buffett would suck up all the money on the planet if he were immortal.

Are you saying GM isnt undervalued? Buffet doesn't seem to think so, Also as for dividends, when I am buying options are the dividend still an issue (sorry if its too naive). I know adds to the cost so thats painful I said: "I don't know which is more undervalued". To this you ask "are you saying GM isn't undervalued?". Buffett doesn't pay 33% tax on dividends. It's more like 14.5% (roughly) given that he holds them within insurance companies. Oh, and he prefers wholly owned businesses (where there is no dividend tax). It would be among the list of several reasons why wholly-owned is his preference. The dividend expectations of the market are (supposedly) priced into the option. Unexpected dividend increases hurt the value of your calls -- the opposite if the dividend is not raised as expected or is cut. Open another thread topic if you want to discuss this more -- this is supposed to be "What are you buying today?".

Thanks eric for helping out people like me. Dont you think its better to buy GM calls now? in other words BAC is undervalued but GM is probably better to load up as its more undervalued? I don't know which is more undervalued. One problem with GM is that the dividend costs me 150 bps annually worth of taxes. That costs something like 16% over 10 years. It needs to be undervalued for that dividend to make any sense given my tax situation. Anyways... And to anyone that says that dividends support the price and people will pay a high multiple for dividends in this low rate environment: exhibit "A": GM stock. exhibit "B": SSW stock. I just think that if you have a taxable account (especially in California), then the IV calculation needs some tinkering. It's no longer only distributable earnings that matter, but actual distributed earnings and in what form (dividend or share repurchase). How much do you actually own of those earnings is what matters. I care about how much I actually get to keep -- it matters to me if the amount of undervaluation is merely going to wind up with the government.... or not. But if you think you'll make a quick capital gain and be out of the stock before you get taxed on the dividends, well then that's different.