ERICOPOLY

That's not entirely true. Florida does not have non recourse loans. They are full recourse in Florida. Florida had one of the biggest housing disasters.

Mohnish should have chosen 'OBAMACAR' for his plate.

1) On my laptop I found that I'm banned if I use Google Chrome, but not when it's in "incognito" mode. It doesn't ban my Firefox browser on the same computer. So it's not strictly an IP based ban. I've done the clear cache thing with Chrome, which I think worked for a bit but then it came back again. So I just go to incognito if I have to 2) On my iPhone I am banned. I deleted the web data on the phone but it doesn't help. I find that I can still read the site if I go to "private browsing". Oh well, at least that works. 3) In my Tesla I am banned and I don't know how to work around that. I can't find anyway to clear the cache from the Tesla browser, and it doesn't have a "private browsing" or "incognito" mode. I'm not sure how to get the IP address for the Tesla. Everything else is working well enough using private or incognito.

actually most people on this forum seem to have shorter term strategies. i guess trading is the new holding. I've noticed that too, but berkshire (and Fairfax) is about holding good businesses long term, I wonder how the board members can seem to agree with the logic but don't follow through in their actions.... Fairfax recently dumped their good businesses WFC, JNJ, etc... So I'm not sure they are about holding good businesses long term. Not that it matters, as long as their trading is working for them, which it has so far over their history. Or perhaps you meant people hold FFH the stock for a long term... which is just a stub for the trading that goes on underneath the cover. That too is okay. Buy low and sell high -- it's trading. I think a self affirmation (ala Stuart Smalley) is in order -- it is okay to trade. It's okay. You'll still be a good person.

They will probably produce cheaply made electric cars. GM may even produce a cheaply-made electric rolling sarcophagus :) Tesla will probably still generate top-rated cars -- no promise that they will be cheaply-made.

Rent is paid with after-tax dollars. The higher your marginal tax rate, the better it looks to buy. You earn tax-free imputed income by occupying your owned home. The calculator doesn't recognize this. In other words, owning a rental (as a landlord) is not as good of an investment as owning your own home. The rent on the former is taxed, and the imputed rent on the latter is tax-free.

It only takes a few percentage points of underperformance to offset the small state income tax benefit, so it might be easier to just put your own money into an index fund. Isn't the major benefit that the gains are untaxed if used for qualifying expenses? It also reduces your taxable estate, yet you can revoke the funds at any time. So it's sort of a nice way to start gifting them money while still being able to take the money back if you change your mind later on. You retain full control even though it's outside of your taxable estate. Then once you've died and the kids have the money, they can avoid the penalties even if they spend it on a house instead of education (however they would still owe the income tax). I think of it like a way to fund an IRA for my kids. Better, it would pay for their kids' educations tax-free.

I can't find the 2015 LUK puts listed through Interactive Brokers "option trader". The oldest ones listed are Dec 2014. How/where did you find them?

2011Q3 -10,000,000 0 $8.21 76.7% 2012Q1 +7,456,408 7,456,408 $7.93 83% That was the trade I remember (got the quarter wrong). He sold the last of it during that panic -- must have been August or September 2011 when Buffett was working out the arrangement for the warrants.

A lot of that is covered in Plan's post - a snippet" Tepper was able to buy Bank of America preferred shares at just twelve cents on the dollar and Citigroup bonds at just nineteen cents. As those stocks rallied by the end of 2009, Appaloosa raked in the billions. I think most of his BAC was gone by mid-2011: http://www.dataroma.com/m/hist/p_hist.php?f=AM He sold out of it completely in Q4 2011. During the fear. It wasn't exactly the kind of "getting greedy when others were fearful" behavior as depicted in the blog. So I wonder if he sold it and bought a European bank instead, or what. Did he just get scared? I've wondered about it since then. It was also the quarter when Ray Dalio's fund bought BAC common. Nygren I think also sold out of it during that time (he must have bought it back higher since then).

Didn't he sell out of BofA in late 2011 when Munger/Buffett/RestofUs were buying? Has he ever explained why he did that?

I figured out at Microsoft that some people are task-driven. I think those people do very well on a strictly-regimented system. Once they believe something to be gospel, and follow it religiously, it takes a lot of their own psychologically damaging impulses out of it. These people need to be tied to the mast of the ship so as to avoid the siren songs... So if you get up every morning and pray to a wailing wall or else some vain and vindictive god will strike you down So if you buy at 50% of IV and sell at 100% of IV So if you buy low and sell high then something good will come to you.

Time for a stroll down NWA World: http://www.nwaworld.com/lyrics/ Man, I can't even repeat the stuff that is sad over there. Way too culturally enriching.

Yes, and psychology.

The ones currently trading at 70% of IV present the same risk/reward to both investors. Both the man who bought at 50% of IV and still holds it at 70% IV on the way to 90% of IV. As well as the man who buys it at 70% of IV for the first time and will sell at 90% of IV. You are right, the winners need to recoup the losses of the losers. However, when it is currently at 70% of IV the actual cost basis on your shares is irrelevant.

Margin of safety is too small. Then it's too small to hold it all the way to 90% of IV. The rule should be "buy at 50% and sell at 70%". Or is 60% too small? "buy at 50% and sell at 60%".

That's true I suppose. I should have instead pointed to the numerous times on this message board when people say they "missed the chance to load up". They seem to imply that they would be happy to continue to hold the stock at the present level but for whatever reason won't initiate a position except at a much lower price. That's rather bizarre. It's not bizarre that they would like a lower price, it's bizarre that they still won't buy any at the current price given that if they held it already they would continue to do so going forward. You see it with investors who claim to only buy at 50% of IV and only sell as it approaches 90% of IV. Well, if they didn't already own it, why wouldn't they buy it for 70% of IV and hold it until 90%? The part about it going from 50% already to 70% is water under the bridge. Yet they behave this way.

Bottom line is that a person who holds a stock likes it more than cash. Maybe he likes it more than cash because he doesn't want the tax hit. Maybe he likes it more than cash because he has fallen into some sort of psychological reason why he can't part with it. But he wants the stock more than he wants the cash. That's evident. So... if he had the cash instead (and no stock), why wouldn't he be a buyer? That's the longer version of the argument. There is longer of course, with more explanation and more example....

OK, well my final word (you'll no doubt be delighted to hear!) on this is that if your original post had included position sizing as a caveat along with tax and psychology, I'd have agreed with it. It didn't, so I erroneously assumed tax and psychology were the only caveats. P Similarly, you could have simply objected to the idea that a person who is bullish and wants to buy a stock doesn't necessary want a 100% position. I too agree with that, and it sort of goes without saying IMO so it's why I don't find it to be a necessary caveat. Wall Street has these "buy/hold" recommendations. I'm simply pointing out that they are the same thing, other than psychology and taxes. I'm not recommending people step out of their comfort zone on positioning. When Mike Mayo raises his recommendation from "hold" to "buy", he doesn't mean people who hold the stock should go 100%, and nobody confuses his message with that intent.

I thought you made exactly that claim, because I understood you to say that tax and psychology were the *only* reasons why, if I was bullish enough to hold, I might not be bullish enough to buy. Perhaps that's where the misunderstanding lies. We've been over this when I said that I wasn't discussing position sizing in my post. Your reasons #1 and #2 are a rehash on position sizing.

Incidentally, earlier you wrote: Taken to its logical extreme, your argument suggests I'd only ever hold 100% cash or 100% of my favourite investment. These two reasons you give here could have been offered in refutation. That's one of the problems with the "taken to the logical extreme" approach. Once I took your own buying to the logical extreme, you immediately came up with two reasons that quickly dismissed the logical extreme approach. However, you didn't do that when you yourself presented the logical extreme argument. Anyways, "logical extreme" approach is often just a "slippery slope" fallacy. They usually seem better reasoned to the giver of the argument than to the taker (who immediately can see how the situation is more nuanced than that).

That part was correct. I did indeed mean to convey that if you are bullish enough to hold, you are bullish enough to buy. How much of a position, that varies from person to person. Similarly, everything you hold today was at one point in time trading for a price where you were bullish enough to buy. However, just because you were bullish enough to buy didn't make you go overboard with your position size. You didn't go to 100% (the logical extreme) merely because you were bullish enough to buy. No, for two reasons: 1. I (nearly) always keep some cash for better opportunities later; and 2. I had other good ideas. I don't really regard either of those as tax or psychology related reasons. Likewise, I too do NOT regard those two reasons as being either tax or psychology related reasons. I have not made any claims otherwise.

That part was correct. I did indeed mean to convey that if you are bullish enough to hold, you are bullish enough to buy. How much of a position, that varies from person to person. Similarly, everything you hold today was at one point in time trading for a price where you were bullish enough to buy. However, just because you were bullish enough to buy didn't make you go overboard with your position size. You didn't go to 100% (the logical extreme) merely because you were bullish enough to buy. Think back to when you were last bullish enough to buy. Did that mean that you went 100% into it? I guess what I'm saying is that in your past history that was never the case, but you are raising it as a point in your arguing against me. So I'm thinking that if you go back and look at your own behavior you'll find that it wasn't relevant. Being bullish to buy has nothing to do with 100% or anything.

I originally wrote the following (what I "actually said"): Otherwise, it's all too easy to sell and go to cash. Just as easy in fact as having cash and buying the shares at the same price. No comment was made by me as to quantities. You jumped to the 100% extreme, and you don't like 100%, so you didn't like my comment. However you could have instead jumped to the 1% extreme -- in which case if you like 1% position sizes then there would be nothing to disagree with. Thing is, by not mentioning position sizing it was simply not even part of my message at all. Thus my message was changed when it was debated using an extreme position size (that was the straw man being knocked down). Essentially debating things that were off-topic. Had I been talking about position sizing, I wouldn't have minded your comment. As you say, taking things to their logical extremes can be helpful in thinking about things. As long as you aren't changing the topic! However, message boards can be like Rorschach tests (the ink blot tests) -- given that I'm "the 100% guy" on the board, I figure that when I make a comment people may innocently read 100% into it, even when it isn't there. I would probably do the same thing if our positions were switched and I was petec and you were ericopoly.

That isn't true. The first clue is that I didn't make such a statement (nor would I). I figure that whenever you have to stretch somebody else's statement, you've probably changed the meaning of what they are saying and therefore shouldn't do so. Your statement is no different from claiming that when prices are cheap enough (the price at which you buy at) you only take 100% positions. Now, is that what you actually do? Do you only take 100% positions when things are cheap enough where petec is convinced to buy a new position? You are making a straw man argument. We aren't discussing positions sizing at all. Instead, I am saying (for example) that if a 10% position is worth holding at $50 per share on the way back up (from the lower price where you bought it at), then it is also worth buying it at that price for the first time if you don't already hold it. The rest is psychology (and possibly taxes).