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savant

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Everything posted by savant

  1. Thanks very much. Really enjoyed Sir James viewpoints and his articulation of them.
  2. What is the answer to why the experiment using the best idea of each PM every year did not work?
  3. Can anyone explain what he means in the 41.53 mark onwards when he is asked if it is time to short credit: "Its easy t short credit if you are long treasuries becauseif rates are going up I don't want to be short credit because they are an interest rate instrument and if I make money in treasuries its because the economy fell apart and they'll be a lot of good credit shorts. So 5-6% absolute nominal yields for stuff that would be 8 or 9 in an environment like this the risk-reward is just terrible in an environment like this, for credit" Thanks!
  4. 2% net yield on residential properties is very prevalent in India as well. With the logic being that historic inflation (at least for the past 4 - 5 years) of 7 - 10% along with 2% rental yield gives a reasonable 9 - 12% return. For comparison, the 10yr Indian Govt Bond currently yields ~9%.
  5. Thanks for bringing this up. Im based out of India. Used to be a big ICQ user back as a teenager. One day everybody moved to another program to chat and I remember even as a child back then - being amazed at how quickly people can switch from one social app to another. I have recently moved to Whatsapp but that is only because it is cheaper than SMSing. At some point, the mobile cos will either make messaging free or an app like blackberry messenger will come out as a free product for all cellphones. Isn;t there already a product called Viber that is better than Whatsapp?
  6. longinvestor - any suggested reading on Danaher that details the story of the Rales brothers? Thanks
  7. I plan on doing this. While the strategy is applicable to more than the automotive industry, I figure I might as well try it there since I'm considering investing in FIATY. Getting historic Value Lines is easy enough. My library has them going back to at least 1980, maybe earlier. However, I'm not well versed with all the automotive industry/GM books out there. Does anyone have any books they'd recommend? For what it's worth, I'm thinking *decades* of history here, not just, say, the last decade or since the financial crisis. And, while I'm not opposed to reading multiple books (say, for multiple/different decades), it would be nice to minimize the total books needed to be read. Thanks in advance! west Alfred Sloan's autobiography is a must-read for any student of business. With a ton of quantitative data/analysis and the story behind the numbers.
  8. you will have to look at the company level to make that determination. The 'market' is basically 30 top companies or 50 companies (NSE index), followed by most foriegn investors. However there are several companies in the midcap or small cap space, which savant mentions which have dropped by 50% or higher. These companies are domestic, not exposed to exchange risk and other than the economic slowdown, should do fine over the long term. the situation is like nov-dec 2008 in the US. question is how soon will the march 2009 happen :) ...though in all fairness, majority of the banks dont face that level of stress (other than the public sector banks) Yup. Plus quite a few smallcap and midcap stocks that have been around for 25+ years with no debt, significant cash on balance sheet, 5%+ dividend yield, are trading for less than cash on balance sheet even while the operating business continues to churn out cash flow. Their business model isn't one that generates 20%+ ROIC but the significant discount to cash on balance sheet and a high dividend yield provides an attractive alternative to cash. Things could get worse on the macro and keeping some dry powder makes sense, but to completely sit out waiting for cheap stocks to get cheaper is not for someone like me who is incapable to predicting the macro.
  9. http://themoneyconverter.com/exchange-rate-chart/INR/INR-CAD.gif They already own the largest stake in the NBFC India Infoline which trades at a discount to book. I usually stay away from financials because I'm not smart enough to discern lending practices. I believe it was Jim Slater who wrote in Return to Go that newly formed fast-growing financial companies have a high probability of going bust at the end of a boom cycle in the economy because they normally get to lend only to the worst credit.
  10. Yes, the people who have been crying about QE causing future hyperinflation seem to have disappeared. I guess Ben Bernanke isn't so evil after all. But more seriously, I think this falling Rupee is going to hurt India badly, mostly because of its fuel imports. There are two ways to solve it - fiscal answer and monetary answer. The monetary answer is to raise interest rates to shore up inflation, however the main risk is sinking GDP growth, as a result it is very unpopular. The fiscal answer is to steadily remove regulations, reduce the size of government, and instigate pro growth policies, but that is politically difficult. Both positions are painful, and given that India is heading into an election year, rising commodity prices is really going to attack the ruling UPA govt, given their "pro-poor" airs. If the government does nothing, Rupee will continue to be low, which will eat away at GDP growth, if central bank acts, it will raise interest rates, which will again hurt GDP growth. The answer has to be fiscal policy which resides with the government. I don't believe the government has the ability or willingness to act. I think all roads point to the economy struggling. Feel free to point out holes in my logic. I think it would be a mistake to dive in looking for "value". Actually the broader market (ignoring the Sensex) is already pricing in quite a few of the worries that you have mentioned. The midcap index falling 25% since the start of the year, complete lack of retail participation, losses on liquid and short-term debt funds, continuously increasing NPAs on bank balance sheets etc. are all the positive signs that point towards fear in the market. And if one is greedy when others are fearful it usually leads to decent stock returns.
  11. Depends on what rates the companies can continue reinvesting. I would think that if A can continue to reinvest at the higher ROE for a longer period then it is the better business/buy irrespective of the macro given the difference in multiples.
  12. He hedged his position in Coke by exchanging Berkshire stock trading way over book value (even including market cap of value of KO stock) for GenRe stock along with its portfolio of bonds. He avoided having to sell a great business with hopes of getting it cheaper in the future and any pressure on KO stock that would have occurred if its largest stockholder began dumping the stock in the market. Plus, Berkshire's insurance business generates float at 0% cost (at worst) and holding a 2.5% guaranteed return growing at inflation is not a bad bet.
  13. Noida Toll Bridge Company in India (BSE Code: 532481)
  14. Would someone be kind enough to explain what CM meant by the above? He referred to how when the bought the small newspapers at very low prices, they got a free option that if there was a foreclosure boom they would get extra returns from the public notice advertising that goes with it. He also said they didn't buy those papers at the time with the embedded option in mind. It's something that they got lucky with. Essentially my read on his response was that they didn't consider that option at all or give it any value when they bought the papers. Interesting. Thanks very much for your response Grenville.
  15. Would someone be kind enough to explain what CM meant by the above?
  16. The problem with the NYSE (cash business not LIFFE business) is there’s nothing to close the loop. Cash equities are entirely fungible with the only differentiating factors being price and execution speed (at least for the HFT crowd). NYSE’s cash equities business may benefit at the margin from economies of scale and brand awareness (debatable) but I think they have lost the meat of their toll bridge. I may have misunderstood this but based on Sanjeev's article it seems that WEB's purchase of NYSE-Euronext was contingent on NYSE-Euronext getting rid of the derivatives business. From the article: "Bankers from Perella Weinberg approached "Company A" on November 25, the filing said. On November 28, "Company A" presented an offer that was less than the ICE bid and was conditioned on the sale of NYSE Euronext's European derivatives business for a minimum price."
  17. http://economictimes.indiatimes.com/markets/real-estate/news/why-canada-based-baron-bob-dhillon-is-betting-on-indian-real-estate/articleshow/17998738.cms Some folks may find the above interesting.
  18. It is up because of talks between the promoter and Diageo for a majority stake sale.
  19. SEC File HO-784 is often used as a reference in many Buffett biographies. Does anyone actually have this and willing to share? Much appreciated
  20. I hope (and I'm sure others too) that there are more international investors with a similar mindset. Would love to see some multiple compression as I've been sitting on cash for a while and looking to deploy.
  21. Funny - here in India the govt has asked all power players to stop developing gas-based plants till 2016 due to dwindling domestic supply. We are importing LNG at $14!
  22. 'Open' is a relative term. Compared to pre-1991 we are plenty open and continuously opening further. We have no choice, we have to open up the economy - we need FDI to support our deficit.
  23. Besides fact that number of lenders that are lending against gold have grown rapidly, they are largely funded by banks i.e. NBFCs in India are not allowed to raise deposits from customers, they get funded by banks thereby putting the entire banking structure at risk if they were to default. Besides, India is the largest importer of gold in the world (http://www.forbes.com/sites/greatspeculations/2011/09/20/china-and-india-stoke-global-gold-demand/) The govt recently raised duty on import of gold to curb demand as it is hurting our current account deficit. The govt rather see FX reserves being used to purchases oil, coal and nat gas as opposed to gold. Not only has the Finance Minister come out and said that the duty will not be reversed when gold traders went on strike but also more or less said that it could be increased if gold imports continue ot hurt our current account deficit. Perhaps the RBI took notice that when the largest importer of gold doesnt want its populace to keep importing the stuff the price may be affected downwards. Furthermore, I have noticed the RBI is more willing (as compared to the Fed) in tightning lending standards/rates where they see a possibility of a bubble forming.
  24. Out of question, what do these companies do? To me, irrespective of their industries, it is interesting that they have yet to go belly up. After all, if there is anything that we learn from capitalism, it is that all companies eventually fail... They are all conglomerates. Since business was concentrated in a few hands (the British left it to their favorite communities i.e. the Parsis and Marwaris and this continued under Indian Govt because they had policy of License Raj) additional capital generated from businesses was left in these few hands to invest in new businesses. Even today the Indian govt controls a significant part of Indian business. What has been the most successful industry in India over the past decade? - The IT business. Why? Because the clients are based out of the country (dont need to deal with old-established businesses or the govt as clients), the assets (people and knowledge) aren't allocated by the government and there is plenty of raw material (cheap engineers wanting to make money).
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