rranjan
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Posts posted by rranjan
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Howard Buffet- Warren's Father on Gold as Money and the dangers of Fiat Money:
I am not commenting on Howards Buffet's view here but the truth is nobody, including you, would have bothered to read what Howard Buffet's views were on this topic if he was not Warren Buffet's father.
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I can not tell you exactly what to do in this situation but I will try addresing few things.
1 - First of all, great timing to start a brokerage account and it's good that you realize it.
2 - Two years in mostly going up market is very little time in my opinion to feel comfortable with anything.
3 - Not being married and no kids is good for trying to do something different than your usual job.
4 - You mentioned that you have savings for couple of years but not enough to live with on it for long time even after 10-20% returns. I don't know how to interpret it without having more information but there is huge difference in 10% and 20% annulized returns in long term. If you can not live with even 20% returns then I think you don't have enough savings or your expenses are two high.
5- Joining Lynch or Edward jones as financial advisor might work for selected few but for most people it will be very dissapointing experience. If you want to learn anything about investment then I don't think you will really get time/oppurtunity to do so. If you are sales person then you are more likely to succeed in that set up.
For whatever it's worth, I will suggest spending more time with your personal investment to see how you do/feel when tide is not helping you. Aty the same time, you should continue doing some job to not use your savings. That way, You will make better decision down the line whatever it might be.
I started with thinking that I can not tell you exactly what to do but ended with telling you few things. It's just my opinion and you don't need to necessarily follow it. I was simply telling you what I would have done if I was in your shoe( based on what I understood)
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This thread will be an interesting read in one year. If you skip the analysis and just glance at the financials the whole tech industry looks cheap:
Using figures from the last 10-Qs and last year's GAAP earnings:
HPQ - -$1.8B net cash and investments, $8.8B
DELL - $8.5B net cash and investments, $2.6B
CSCO - $28B net cash and investments, $7.8B
RIMM - $2.4B net cash and investments, $3.4B
AAPL - $67B net cash and investments, $14B
$546B combined market cap to $36.6B last year's earnings plus $108B net cash and investments. Value traps, or just crazy undervalued?
RIMM might be a value trap here but not sure. AAPL is not a vlaue trap but I don't find it attractive enough risk/reward equation there. I think HPQ and CSCO are not value trap for sure and both are good risk/reward scenario. HPQ looks cheaper than CSCO even though CSCO might have bit higher moat. Over all HPQ looks better risk/reward scenario priced around $31.
DELL is up there in middle somewhere. They are cheap and might do very good but I don't have firm opinion on them.
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But certain businesses require a sense of macro conditions. In the most recent interview with Charlie Rose, Buffett suggested that months sold in housing might be overstated (he actually just referenced inventories but I am making the leap) and that improved residential spend and home prices would lead to greater than anticipated growth. To make that statement, he probably has some estimate of mortgage roll rates, cures, and other factors related to the speed of the wind down of the shadow inventory.
I am not denying that Buffet does know about these more than most people but I was simply replying to examples quoted above. Just to elaborate.
2000 Tech Bubble - He did not make any macro call. He simply did not buy because he can not predict tech realted business outcome for the next 15-20 years.
Returning money - It was not a macro call. He did not find any cheap stuff so he returned money rather than sitting on cash or buying not so cheap stuff.
2008 buying due to keeping some cash being macro call - Buffet always kept some cash above certain limit in Berkshire. He has never been low in cash after getting into the insurance business. Infact he sold JNJ to raise more cash earlier. Clearly being able to buy cheap in 2008 was not due to any macro call.
Can not comment much about him directly shorting US dollar though.
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Do you feel confident enough as an investor?
Do you have any person/firm in mind who you want to work for?
Do you have enough financial cushion to lead a normal life without any income for few years?
You did mention that you spent last three years learning about everything, how about practicing?
Have you thought about managing money for others directly? If yes, have you done it for your friends or family members?
I know I am throwing more questions rather than answering. Given that this is your first post, without knowing more about your situation it's difficult to give even decent suggestion. Mine or some one else's suggestion might be way off the target but at least it will be bit more informed.
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I think Sam Mitchell said it best a couple of years ago at our AGM: "You just can't ignore the macro in some cases!"
Despite what has been said about Buffett ignoring market timing, there have clearly been times when he has made macro calls - when he returned money to Buffett Partnership investors; at the start of the long bull run in the early 80s; the tech bubble in 2000; shorting the USD. In 2008 when he bought heavily into the market, he would not have been able to do so if he had been fully invested so he must have made a bearish call of sorts prior to that even if he did miss the housing crisis.
I don't think you can clasify these examples as making a macro call. I think it was simply the case of buying only when things were cheap. If he could not find cheap stuff then he did not buy or was not able to buy. Thats the way I see it as far as above examples are concerned..
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Which brings me to the next point, the infamous Buffet Cube point that Sanjeev brought up. This point too is so inaccurate and was crafted tongue in cheek, by buffet who knows better. In an economy we must use a medium of exchange (currency). Now either you believe that the value of that currency should be centrally controlled and erode over time (Keynes/Johns Law) or you believe that currency should have intrinsic value and retain that value over time. History has proven, unequivocally that centrally controlled fiat currencies always erode in value and never work over time, relating to Johns Law I suggest the book: Popular Delusions and the Madness of Crowds, to learn more about the kind of bs John Law was up to :)
You are comparing gold with fiat currency as medium of exchange. Buffet did not argue against gold while taking about medium of exchange. Buffet was comparing merit of gold vs quality businesses as an investment. How it was tongue in cheek comment?
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Rebuttal seems weak and wrong. Author is suggesting same stupid argument of sending check to Treasury. One person sending check will not solve this issue. Problem is not that only Buffet has lower tax rates than his Janitor. He has been using himself as an example to describe a weird tax structure and that tax structure is problem here.
Another very stupid argument I hear is that rich already pay more than so and so % of total tax. Does it really matter? Someone earning Millions and paying less tax rate than a person earning 100K is not fair. Total amount of tax paid is irrelevent.
In general, rich will keep getting richer but last 10-15 years this weird tax structure has made it even more skewed. Payroll taxes are only part of it. Why a hedge fund manager should get 15% tax rate on long term gains when it is essentially an earned income? Same with holding future for few days. Similarly there is no good reason to keep long term capital gain or divident tax rate lower than the tax a regular guy earning 100K has to pay especially when rich derive all their income from capital gain/dividend.
Talk about using fuzzy logic with mixing corporation tax rates with individual income tax rates. No matter what the tax rate is for a corporation, divident and capital gain, which is almost full income for very rich guys, are taxed at lower rates.
How much revenue will get added by making a fair tax structure should not be the point of discussion. It might add 10 Billion or 1 Trillion, who cares. Just make it fair for everyone.If everyone was paying similar effective tax rates then increasing tax rate across the board can be made conditional on something but right now it's a pathetic excuse.
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Thanks guys,
I mainly use Chrome. Safari sometimes as well. Not sure why anyone would use IE other than being forced to use it at work.
lol, thats what everyone was saying to me.
So, do I just download one or the other and go? Do I keep IE 7 installed but not used? Do I have to reset anything else so IE7/8 doesnt run? Sorry for the elementary questions.
Download anything and set it as your default browser. You don't need to to uninstall IE. IE7/8 are not going to run unless you open the browser so you can keep it but don't have to use it.
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I have never done rollover of options from one broker to another but I was able to do Traditional IRA to ROTH cobversion which involved some option transfer. I thought if conversion allows it then roll over should allow it as well.
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You should be able to transfer the positions entirely without selling anything. You don't need to close and open it. Closing and opeing it going to cause you extra cost without any benefit.
If you are transferring from one broker to another then just make sure that receiving broker can take option transfers. I don't think any major brokers will have an issue with MSFT options. Basically your whole holding gets trasferred from one to another account.
I don't understand why you want to have a broker placing the order for options unless you are dealing with huge quantity.
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Dont do it Sanj. Functionality creep is dangerous to stability of site.
I have a strong techy background. Investorvillage is a site used by many here and is a classic example of what can go wrong. The site has gone from bad to terrible as the owner started adding functionality and now they are in the midst of rewriting code and the site performance is exceptionally bad.
Stability and Performance are paramount. ADD ONLY SMALL FUNCTIONALITY THAT IS UNLIKELY TO SCREW UP STABILITY OR PERFORMACE.
Agree to some extent. Keeping it simple and effective is best way to go. Adding some fundtions will be a good idea but it should provide biggest bang for buck in terms of utility else it better to not add many things just because we want to add.
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Thanks for posting.
Enjoyed it.
These guys sound like some of the posters on this board.
All their holdings are items discussed + favoured by the guys here e.g. MSFT, GOOG,,HPQ, BRK
I don't think it's limited to members here. You don't need to spend much time to figure out favorable risk/reward scenario if they come within your circle of competence. Some people might not want to own these companies rigth now due to finding better risk/reward deals but these companies are very good risk/reward option going forward. I don't think GOOG is that cheap but they might make up for it with their very wide moat.
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Can someone explain a short sale? I understand that the person who sells short believes (hopes?) the stock price will go down, but isn't there a REQUIREMENT that you own (or is it borrow?) the stock first? Or is that Naked short selling, which I thought was already illegal, but is never enforced (I have no idea why that is, or if it is true).
I don't know if it is a serious question given that you seems to be familiar with naked short selling also.
Anyway, a very simplified version ->You borrow the stock at certain cost, sell the stock and hope that the stock goes lot more than the cost of borrowing the stock. Then you buy the stock back when it's down and return the stock to original owner you borrowed from.
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Transcript from seekingalpha.com
http://seekingalpha.com/article/286691-bank-of-america-corporation-special-call
Thanks for posting the link.
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I think its pretty easy to find - if someone wants to donate, they will find it.
Still one has to look hard if he/she does not use tabs on the top like me. Or may be it was just me.
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Tab is kind of difficult to spot unless anyone uses the menu buttons.
Donation tab is located at " HOME HEALP ... CALENDAR DONATIONS LOGOUT" just below search box on Top-Left side in the forum.
The less obvious the better! ;D Cheers!
;D ;D ;D You cracked me up with this line.
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Tab is kind of difficult to spot unless anyone uses the menu buttons.
Donation tab is located at " HOME HEALP ... CALENDAR DONATIONS LOGOUT" just below search box on Top-Left side in the forum.
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Sanjeev might rather want to imitate Mohnish's Dakshana Foundation web page with a PayPal donation link as a tip jar (---> http://www.dakshana.org/donate/donate.asp ).
Did anyone tried solving prime problem mentioned in 2009 AR of Dakshana? It took me full 10 minutes, intuitively I was trying induction method to solve it and then had aha moment. i guess it can be solved in sev eral ways though. Anual report does sound like a company annual report and Mohnish has done a fantastic job with this. Anyway, sorry for going off topic.
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I don't think putting a subscription fee for joining any forum is good idea even if you keep 3 months free trial. Numbers of members might be more managable if you put a fee but I think most NEW people don't really bother with any forum if it has a subscription fee. Quality of forum is very good but it's better to not block any new member who might be very good contributor and can learn by interacting as well.
Thinking aloud, may be we can chip in to set up a seed fund and then invest it. Investment returns should take care of costs going forward. May be it's too complicated and Sanjeev's donation idea is good enough. In general this kind of problem should be easily fixed by the hosting company and forum owner should not have to spend time.
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Eric call was more function - How can market go down after I already made my huge adjustment :) Just kidding.
On serious note, it's too early to tell even though I don't hold too much cash. I went into the two big downdays with only 10-12% cash due to buying increamentally for last month or so. Yesterday it was a day for selling cheap to buy cheaper. Again back to 10% cash level and likely to deploy it in next few weeks.
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I think that the problems we're running into as a society is that methods that worked in a 50 year bull market (being largely long) may not necessarily work in less auspicious environments.
From what I've read, it's pretty clear that Buffett has shorted before. I am not sure where this notion comes from that he's never shorted before.
My statement had nothing to do with Buffet rather just what I feel comfortable with. Last 10 years has not been bull market exactly but buying at discount has worked just fine for me.
You are right that in some market long/short will work better but in shorts timing comes into the picture in very big way and I am not good at predicting the time frame. I want to keep things simple. I do admit that few people can produce higher returns over some period with long/short portfolio but I feel that will be last in that performance queue. Clearly the prospect of coming last the the queue does not feel very apealing to me so I chose to skip the queue.
It's not to discourage you because you might do very well with your long/short. I was talking about myself.
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I think this long/short vs pure long debate is useless. It's true that if someone has long/short then they will have something to brag about all the time. Even though Harry did admit earlier about being wrong on some shorts after fellow members prompted him.
In my opinion, only thing matters is long term returns without the risk of permanent loss of capital. Going with this I don't feel confortable with shorts because downside is unlimited but that's just me. Yah, you can do position sizing or something else to minimize the downside but I don't feel comfortable with it.
It's hard enough to find solid longs but once you find, you don't need to worry about fluctuations as long as they were bought as good discount. It almost ensures that you will make money over the years. I personally don't care what happens in one year or two year but I do want to make money with good enough returns over the years without taking a risk of total wipe out. Going long with discount works for me.
Everyone needs to pick their spot based on their comfort level and aim. All spots will have some pain( ?? lack of better words) time to time and it depends on which pain you feel comfortable with.
I know I am not saying anything new here. Good luck Harry with your long/short postions.
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Since government has the ability to print money, very few governments have long term credit worth anything. Companies have credit in so far as they can pay an interest rate to keep up with inflation, but their hands are tied as they can't print money.
Well goverments across the world also don't have the luxury of printing money as they wish and pay the debt because they don't hold the debt in their local currency.
S&P was simply wrong earlier and they are wrong right now. Based on the criterion they use for default, I don't know why USA is not AAA. It's not that I will hold long term bonds here but I don't see the logic behind S&P action.
What a Lovely Frickin' Day!
in General Discussion
Posted
If you buy cheap enough without short duration leverage then recession or no recession , you will come out well. I do have control over buying cheap so I will simply focus on that. If I have to make a guess then I would think we are not going to get recession but I am not guided by this while making purchases.