rranjan

I my opinion thats the reason.

I found it interesting to see that the financial sector in the S&P500 is less heavily shorted than the average for the index across all sectors. Does this suggest that the market agrees with you? Presumably they'd be heavily shorted if the sentiment was that financial sector is shaky. You may be right but I wish they get heavily shorted ;D

Txlaw - I remember him saying recurring non-recurring expenses of PFE was the main reason. I don't know when so can not help with link.

I have no clue if we will drop more or not but today was heavy buying day. Just trying to swim best of the ability. Close to running out of ammo but if panic continues then selling stalwart and buying extreamely cheap stuff will come into the play. I think financials are very cheap at this point. People are still comparing it to 2008/2009 scenario which is apple to orange comparison in my opinion. It was for sure a Lovely Frickin' Day. Did not make use of it in optimal way but rough good decisions will work out fine. Happy hunting guys !

Thanks for posting. It was good one.

;D ;D ;D Packer - IBM might have done it but I will not feel so comfortable about all companies capacity to do so. Coming back to original question. Dell is trying to get into higher margin business. Dell wants to change from a selling commodity boxes into becoming a trusted enterprise solutions provider, same as with Hewlett-Packard or IBM. They want to push into data center technologies including servers and storage, which has greater switching costs and also provide consulting services. Problem is more than two thirds of Dell's revenue remains tied to commodity hardware (desktops, laptops, peripherals). Storage represents only 4% of revenue. They want to move so badly into services that they paid high price for Perot systems. They might not be able to replicate IBM because Dell lacks the relationships and high-end hardware offerings of IBM that often helps IBM to get many services agreement. I don't think dell has any moat. While I prefer software related moat if everything else is same but even a hardware company can have moat. For example, I think INTEL has a decent moat if not great one but I think DELL does not have any moat. I will love if someone can make me see the moat in DELL because it is cheap right now.

I never owned it but share the quoted sentiments.

Seriously, you did look at your YTD numbers? :) I don't know the numbers but taken together it's not down.

I think the content is more important than grammar and that seems good to me ;)

I think there can be some small companies with decent moat if the market size of product is fairly small. Gravel pit and some small/medium size German companies can be good example of having moat. Though it will be tough to find a company with wide moat if they are small. With bigger sizes they are easier to spot. If a product market size is huge then I do agree that any company having wide moat will become big in fairly quick time.

I must be the only guy on this thread to make any money so far on MSFT ;D I think the last laugh matters most ;D Care to share the logic why it's a good short? Let’s not take 5-7% price fluctuations in few months as logic. I will be interested to see if you have any rational argument for shorting this. May be I am missing something and it will help me. If it’s purely based on technical’s or charts or something similar then we are talking two different language and you can ignore my question.

The presence of insider buying confirms that insider think they will make money by buying. Absence of insider buying does not confirm that insider think it’s costly. Also, majority of time, the Insider’s selling does not tell you anything because most of the time the selling is done for various reason which has nothing to do with the valuation. Buffet and Watsa are very good capital allocator. You can not take their example and assume that other CEO's will have similar skills. Yes, it will be good to have insider buying but only as additional confirmation. If MSFT seems cheap then absence of insider buying should not matter. I don’t think moat is deep enough for 15-20 years but MSFT is not going to have their business destroyed in next 4-5 years. Last decade the Free cash flow multiple came down from 25-30 to 10. You can see the rate of share count reduction in last 4-5 years. MSFT does not need to do anything extraordinary to be a decent investment as long as they can keep doing what they have been doing for next 4-5 years. There is too much noise about market share but honestly I think they will make more money in next 3-5 years. Bigger pie( developing countries …) with fractionally smaller cut will still translate to bigger profit. Business is not only cheap but very good. They should make more money so they are not value trap by long shot. I tried to kill the thesis but I found it very difficult to kill MSFT for next 4-5 years. Can you present anything which kills the thesis on MSFT? I don’t meant argument like last decade price has gone nowhere or insiders are not buying etc. I will be really interested to hear why it is not good risk adjusted place to put money at current price. How you can lose money here and also why you will not make money? Do you think we will see MSFT at 25-30% FCF yield over the next 10 years?

I'm sure he's still lurking on this board, so Bronco consider this my official request (rallying cry?) that you create a new account and return to active duty immediately. The value of this board is lower without your membership. +1 Unless I missed, I don't remember him using an offensive language.

This is pretty much what Buffett seems to have said at the AM. Question 29: Crowd- Questioner asked a question about goodwill, including goodwill when you calculate return on equity and write offs of goodwill. Buffett: The AOL-Time Warner goodwill should have been written off. In general, goodwill should be not amortized, but should be written off when necessary. Goodwill should also not be used in evaluating a business. What the management is doing and how the operating businesses are doing are what the most important factors. In this case, the focus should be on returns on tangible assets. But when you are assessing how well he and Charlie are doing in calculating return on equity, you need to include goodwill. Vinod It's been few years but if I remember correctly, there is very good example for this in "The Essays of Warren Buffet"

My bad. I was using book value and fair value interchangibly here. I should have been careful. I agree though that if you keep writing off the goodwill then it becomes extra work to check back how much they have written off over the years. On top of that if initial FV is way off the mark then having the goodwill number does not help much.

Bronco - I think goodwill is crap for seeing how good the business is because goodwill is not available for use. Having said that goodwill is important to evaluate how good a job the management is doing with capital allocation. If management made the decision to pay over the book in past then I would like to see the goodwill in balance sheet and also take account of goodwill while calcuating the returns(of business not stocks) in future to judge if management allocated the capital correctly by paying over the book in past. In short - To judge, How good the business is -> we don't need goodwill figure. To judge, How good the management decisions have been in past -> we do need goodwill figure in statements. Accountant job is to put all informations but our job should be to use the information to make decisions. I will prefer to keep the goodwill figure because it allows me to judge the management quality. Just my two cents

;D

I was using fat and lazy only as an example to make the point, not literally. LVLT should have dedicated section or by default should always appear on the 10th page for anyone interested ;D

Bronco - Can't we have discussion without calling someone fat,lazy etc? Is it too much to ask? I understand some people might not take offence but thats not true with everyone participating here. Why not keep it polite? Why not use a language which is all inclusive? I think we had roughly same discussion few months back. Then, I was trying to communicate to Harry that he can realize his dream of helping larger number of people by using bit toned down language. That way more people will benefit. Why not say the same thing little bit differently which makes it more effective. By effective I meant , larger set of people paying attention to actual message rather than getting turned off due to language. Sure when you know some one personally then during face to face exchange, you can call fat, lazy etc. But in discussion forum, where we have members from various backgrounds, I think it will be helpful to avoid such language. It's good that all of us can improve on what we already know but sometime chain of response is circular and it does not add any value. Also realizing that learning goes both ways is important else you might wrongly assume and start lecturing everyone thinking that everyone knows less than you. Anyway, talking about ideas should not be the excuse for not being polite. Since you raised JNJ - I think it is selling at 70-80 cents but with very little downside. It will grow 7-10% annually so with discount, especially if you bought when it was below 60, you can expect to get 15% returns with low risk. I used 15% because I do expect p/e multiple expansion of JNJ going forward. JNJ is much better than holding cash for sure. If it ever gets back to 60 again you can check 2 years out leaps (just out of money). They were priced very cheap in my opinion.

I somehow thought that it was already posted here so did not bother to post. I read it 2 days ago and it seems I can never get tired of reading or listening Buffet's interview even though there is not much new. Thanks for sharing with the forum.

Good One ;D Stahleyp, In all seriousness, yes you can call investment as intelligent speculation. It can be termed intelligent only if you can calculate the rough odds of winning. In fantastic example provided by given2invest, you can see that the logic of anything is a buy at certain price is flawed. You do not have to estimate exactly but in this case , it seems that value of CCME is anything from zero to some random number. It is also very hard to estimate the probability of value being zero or some number. So CCME being a buy at certain price is valid only if you can put a lower limit on their valuation. In my opinion, the lower limit is zero so it is not a buy at any price. Yes, some fund might make money by speculating but here you will be putting you principle at risk without knowing your chances of winning. In my opinion, there are many better options out there so why spend time on something like this. In some other thread, I saw discussions about Bigliar holding and with that also I share the same sentiments. Why you will get into partnership with known swindlers? I will have hard time doing so even if I get paid without risking my capital. Well, different people have different opinions, which makes the market. Some people might have made money and some people will make money by partnering with various known cheaters but I think giving your money to known swindlers is not a right way to invest. Odds are against you. Not knowing the character is different but in case of Bigliar, we have 100% certified swindler, who is likely to spend his time thinking different ways to cheat fellow shareholders. I did not mean to stop you to invest anywhere as you see fit. I was only voicing my opinion. My two cents...

Great pictures

Karl - If Buffet scheme is the best in all circumstances then what stops a manager to open 10 different funds without putting his/her own money and lever it 100 times. Using totally different bet in each, the manager can win big and collect a fat fee without taking any risk with his/her own capital. 9 out of 10 funds can go to zero and he does not have anything to loose. Does it sounds like a good deal to you. Buffet scheme makes lot of sense only if a fund manager can lose his/her money as well due to taking stupid risks. Potential loss of personal capital should be a substantial amount compared to what he/she will make by taking that risk. Otherwise nothing stops them to buy a bunch of lottery tickets with investors money. Incentive for upside should be balanced with equal or more penalty for the downside to make sure that money is not used for blind gambling. If that's ensured then I agree with you that the Buffet Scheme is better. Having said that , I will not give single penny to a day trader even with higher cut off for the performance fee but happily give 1% fixed management fee to Buffet if he wants to manage my money. Point is, the fee structure is very important aspect but not the only factor. My two cents.... Stahleyp - Clients overall returns will be higher in case of 1% management fee only if Lou performs better than 10% otherwise clients are better off with Buffet Scheme.

+1 It's very obvious. Copy everything, even the webpage. It does attract the crowd who want to find the next buffet. So far so good. Get their support and then reach to a stage where you might not need their support to work out pretty good gig. Then change the rule suddenly and start proclaiming that I am not Buffet or Wasta and I do do things non-conventional way. [ In another words: Mislead people to to get their support to help you to get hedge fund like fee, but with much bigger captive money, on top of getting a guaranteed big salary and then spin it as a non-conventional way ...... ] Well, I do have to agree that it's a non-conventional way. Not many people have been able to do it :) Yes, investing in BH might still work out well if you buy it cheap enough. But I fail to understand why anyone need to take chance with a person who has proven track record of misleading people and coming up with so called unconventional way to make money at the expense of shareholders. Reward must be lot higher than risk to deal with Mr not-looking-I-will-put-my-hand-in-your-Jar. Some time back, it was really amazing to see some one arguing that he does not own a big percentage so this will allow him to own bigger slice of this business to help align the interest with shareholders. Well, why not simply write him a check as donation with condition that he can only use it for buying the BH shares. Quickest way to align the interest. Only problem would be that your check might be still not enough and you might still find his hand in your pocket. :) For me, the Bilgari managing this is not a positive rather a big negative. Him being not dumb and proved track record of so called unconventional way of doing things is a deadly combination for my comfort.

I think we should post any new ideas on Investment Idea section only. Not a criticism but if I understood it right then in case of spin off, the receipt of the new Petrominerales shares are expected to be treated as "qualified dividends" for US investors. So for a taxable account you give back decent chunk to uncle sam.