ERICOPOLY

Actually, what I am looking for is a decent rollover IRA account. IB cannot lend out shares in IRA accounts, and they charge $7.5 per quarter, which is not big fee though. I think the only advantage for IB's IRA account is that its foreign stock trading is quite nice. By the way, in Merrill, if you sell a stock, would you be able to use that unsettled cash proceeds to buy a stock? I can do this in Fidelity cash account, but for IB, I must have a margin account to do this. What about Merrill? BTW2, What about Merrill's international stock trading? Do they have that? I saw you mention trading on "unsettled cash proceeds"... You might want to learn about "limited margin" for your IRA account -- yes, I did just use the words "IRA" and "margin" together. This is from the Fidelity website: https://www.fidelity.com/viewpoints/active-trader/how-to-use-margin Limited margin Limited margin allows a client to trade on unsettled funds without triggering certain trading restrictions, such as good faith violations in an IRA account. Good faith violations occur when an account purchases a position on unsettled funds, and sells the position before the settlement date of the sale that generated the proceeds. Limited margin does not allow for borrowing against existing holdings, account leverage, creating cash or margin debits, short selling of securities, or selling naked options. At Fidelity, limited margin is available only for traditional, Roth, rollover, SEP, and Simple IRAs. IRA accounts with an FDIC core are ineligible. So, if clients want limited margin, they may need to change their core for that account. Moreover, clients must have an investment objective of “most aggressive” and should be aware that all day-trade rules will still apply with respect to requirements and liquidations. This includes the $25,000 minimum equity requirement.

That's too bad. My kids who are gifted were correctly identified by our pediatrician :) Here is a video of the public elementary school where my kids go: Complete with narration by one of the parents (Billy Baldwin).

We already have public schools for all, but we're concerned that many of our gifted children are underserved. So can we identify the gifted children pre-K and send them to special schools? I know we have tests that can identify gifted children. What is holding this up?

I don't expect them to return 15%, I like to trade them like SD mentioned and I own some from the block I bought at 340s. PW's letter to shareholders from March 2013: Float is essentially the sum of loss reserves, including loss adjustment expense reserves, and unearned premium reserves, less accounts receivable, reinsurance recoverables and deferred premium acquisition costs. As the table shows, the average float from our operating companies increased 5.2% in 2012, at no cost (in fact a small benefit!). That increase is mainly due to internal growth. Our long term goal is to increase the float at no cost, by achieving combined ratios consistently at or below 100%. This, combined with our ability to invest the float well over the long term, is why we feel we can achieve our long term objective of compounding book value per share by 15% per annum over the long term. Emphasis on over the long term. Over the "short" term, they won't because of the equities hedge and these low bond yields don't contribute enough. The best way to ensure that 15% will be attained over your holding period is to wait to buy until the drop the hedges, and wait to sell until they put them back on. Well... still no guarantees, but I suggest the odds are higher than if you also choose to hold during the period when they are hedged.

Did you guys think that 15% book value growth would happen when 100% hedged? Was it a secret or something that they were hedged? So here we are, deep in the red from the hedges, and you didn't get your 15% -- who's fault?

The City of Toronto could purchase BBRY and change it's name to MarionBerry in an effort to take the headlines away from their crack smoking mayor: http://online.wsj.com/news/articles/SB10001424052702303661404579179822063873580?mod=WSJ_hps_LEFTTopStories

Not sure why FFH is being compared to Canadian GDP. Just take for example the total size of their US operations (Odyssey Re, Crum, etc...) and their Asian operations, investments elsewhere, etc... Maybe compare them to global GDP, but Canadian? They practically have nothing to do with Canada -- Northbridge is not that big a piece of their pie.

I want to US to give up it's freedom and go back under the rule of the UK. They approved a 20% corporate tax rate. These banks like WFC and BAC that earn most of their profits in the US will be paying in excess of 30% rates. That's 50+% more tax! If they hit the 35% ceiling it's 75% more. So perhaps there is additional room for ROE boost at some point, although it feels like waiting for Santa Claus. Does it make sense that the banks could take on more risk (wider credit availability) if they were able to keep more of the profit? Clearly you would make more loans at a 0% rate than at 100% rate -- there must be some impact between 35% and 20%.

WFC's historical NIM was up in the high 4% (2006) or 5% range (1990s), not today's 3.5%. Here is a quote from their 2006 annual report: "Our net interest margin was 4.83% for 2006 and 4.86% for 2005." And that wasn't their best year -- they had NIM in excess of 5% in the late 1990s. In 1996 it was 5.87% and 5.86% in 1997 -- that's nearly 6% NIM! It shows it on that spreadsheet you attached. So they too are getting squashed and will make a lot more money down the road.

Something we knew ahead of time, years ago, is that Buffett likes the 1 foot hurdles, sticking to predicting the relatively most predictable. And Watsa likes them too but will also chase after the turnarounds that are higher hurdles, knowing that some will blow up but the rest will carry the average above the goal line.

All one has to do is look at all the 100% cash deals that were done the last few years by investors. Does anyone with 2 cents of brains in their head really believe these investors all wanted to be doing 100% cash deals? They wanted to buy all they could! But nobody would lend to them. Not at 25%LTV. Not at 50% LTV. Not at 75% LTV Not even at 5% LTV! Completely madness to believe there is no loan demand. exactly.. This is where the banks need to be brought to task. Explain to the Fed why they won't help encourage the economy by making sensible loans. I don't understand why they needed to turn me down. They could have offered me a 7% loan and I would have taken it. Even an 8% loan. After all, the difference between a 5% loan and an 8% loan is only 1.8%, not 3% (after I'm done paying taxes). But they wouldn't even offer that. There was no price at which I was worth the risk. QUESTION: Are they worried about getting sued if the rate is too high? Some sort of predatory lending liability? It seems they could make some really profitable loans here and there if they'd simply ask for more interest rate instead of turning us down flat.

My understanding of liquidity trap is that when rates are really low, you can't encourage borrowing any further because rates have already hit bottom. But this is different... I'm saying that lending is discouraged because there is no longer a safety net for the banks -- the Fed can't lower their funding costs any further, so there will be no NIM help when the next recession hits. So they have to tighten their underwriting to prepare for the next crisis.

So... what if jobs market improves, inflation ticks up and the Fed raises rates. The banks then respond by increasing the availability of credit during this period of rising inflation? I saw an interview of Merideth Whitney where she pointed out that the banks have been underpricing risk for a long time. I wonder if that started to happen when the Fed would bail them out by cutting rates at the beginning of every economic weakness. The banks were trained to understand that NIM would expand at the very time that loan losses popped up. They felt like they had a safety net. When the Fed initially cut rates to zero, they were mad that consumer rates didn't come down enough -- however didn't they effectively reach a policy interest rate where there was no longer a safety net? Then they decided to buy enough bonds to bring rates down... but that doesn't bring back the safety net. It just makes banks worry about what will happen to their loan books when rates go back to normal (not manipulated) levels.

In short, today you can't afford as much risk since the Fed can't come to the NIM rescue again. Thus, you restrict lending.

So getting full circle on the thread now, I am wondering if low rates are a disincentive to lend to anyone but the lowest-risk borrowers. Forget NIM for a moment. Higher-cost deposit environment (7% consumer loan rates for higher risk loans): Let's say you lend at 7% to a bunch of people that are collectively a bit higher risk... then the economy collapses and Fed cuts rates. Now your funding costs are lower and your NIM suddenly widens while dealing with the losses from this relatively more risky mix of borrowers. Lowest-cost deposit environment (5% consumer loan rates for higher risk loansa): Let's say you lend at 5% to the same bunch of people that are collectively a bit higher risk... then the economy collapses and Fed's hands are tied... they can't cut rates any lower. Now you suffer the same losses as before but your NIM can't widen because your funding cost is already at all-time lows. So in summary, when funding costs are at all time lows you need to starve the economy to some degree out of self-preservation. This is common sense.

All one has to do is look at all the 100% cash deals that were done the last few years by investors. Does anyone with 2 cents of brains in their head really believe these investors all wanted to be doing 100% cash deals? They wanted to buy all they could! But nobody would lend to them. Not at 25%LTV. Not at 50% LTV. Not at 75% LTV Not even at 5% LTV! Completely madness to believe there is no loan demand.

This is one of the things I question. I know there hasn't been enough demand from highest-credit borrowers to soak up all the deposits. But hasn't there been a class of borrowers shut off from credit that normally had access to it? In July 2011 I had a net worth in excess of $5m, and I couldn't get a 100k loan at a 50% LTV on a 4-plex in Sacramento with a 16% gross rental yield. My only other debt was my house mortgage -- less than 400k. They seem to be somewhat full of shit when they say they can't find anyone to lend to. Hmm..that's interesting. If you don't mind answering, what banks did you approach? The big ones, Wells Fargo, Bank of America, plus local banks (although in Sacramento they were in distress). I had a mortgage broker who was saying nobody was interested. Excuses were that I had no history as a landlord. My mother was here last week complaining that she can't get a credit card today. She is denied at Wells, BofA, and JPMorgan. She has never had a card before, always used my father's. They are married, never defaulted on a loan, house worth $3m and fully paid off. No debts! Over $1m in savings. But no, she can't get a credit card. My father was denied in late 2011 trying to get a $600k line of credit for his home. He wanted to use the money to buy out his siblings for the family Palm Beach cottage near Sydney. He was going to put $1.9m of his own money down, and use the $600k from the line of credit for the rest. So he would have total real estate of $5m with only the $600k lien on the primary residence. Nope, denied -- Wells Fargo. Then there is my sister and their husband -- more than $500k in liquid assets, net worth above $2m, both employed at USC, and their HELOC was frozen on them. Huh? Not sure what bankers are talking about when they claim there are no creditworthy borrowers.

This is one of the things I question. I know there hasn't been enough demand from highest-credit borrowers to soak up all the deposits. But hasn't there been a class of borrowers shut off from credit that normally had access to it? In July 2011 I had a net worth in excess of $5m, and I couldn't get a 100k loan at a 50% LTV on a 4-plex in Sacramento with a 16% gross rental yield. My only other debt was my house mortgage -- less than 400k. They seem to be somewhat full of shit when they say they can't find anyone to lend to.

Me too. I'm in no way an expert on any of this. But I had to start a dialogue so the experts could set me straight. Otherwise, I don't learn anything. Plus, I like it when people realize how little I understand -- sometimes I think people give me too much credit simply because I had a great 10 years which was due to cheating off of others' research. I like to be the underdog. What about their long term debt? That gets re-priced as well (to the benefit of the bank). In BAC's case, that's $258billion -- 28% of all loans and leases. Then there are variable-rate loans. I am trying to find that figure for BAC. And MSR rights go up in value when rates rise -- this is because they won't be refinanced.

Here are some of BAC's historical numbers which are considerably higher than today: Net Interest Yield: 2003 3.36% 2002 3.75% 2001 3.68% 2000 3.20% 1999 3.45% The business mix is different today (Merrill) and that might be dragging down NIM, but look at what BAC achieved in their Consumer and Commercial Banking: 2003 4.67% 2002 5.26%

A. Gary Shilling thinks we'll get full employment once the deleveraging is over. Less than 5 years from now.

Bruce Thompson put out a mid-$7billion figure for how much a 200 bps parallel shift in interest rates would benefit BAC. How could that be if not for the noninterest-bearing deposit base? The other deposits would rise in cost by 200bps. And what a coincidence, 2% of their noninterest-bearing deposit base is roughly the figure he threw out. So that's where I'm coming from with that. A couple of things that I don't presently have BAC's quantities for: their mix of adjustable interest rate loans proportion of their loans near maturity (to be rolled at higher rates) Regarding AOCI -- doesn't matter if we're just talking about 200 bps. The extra $7+b income that Bruce Thompson stated would boost earnings by 45 cents per share (after-tax, fully diluted). That's a $5 gain in the stock at 11x earnings. The book value has been $20 for quite some time, but not the stock. That's because of the earnings. Book just doesn't matter. Stock buybacks also eat up capital -- and they don't boost earnings the way Bruce Thompson is talking about. It doesn't make sense that people want stock buybacks but fear a 200 bps rise in rates. You get more earnings bang for the buck from the rise in rates.

And that's "usual" environment? Yes. I see, everything is east of Callifornia because if you keep going east, you get back to California! Similarly, everything is "post deleveraging" environment.

So an example. Take BofA: $363.962 billion in non-interest-bearing deposits That's 1/3 of their deposit base. The low rates are killing their ability to earn. Were the risk free rate on short-term money to rise by 2%, they'd get $7.2 billion more profit from those non-interest-bearing deposits.

And that's "usual" environment?