rranjan
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Posts posted by rranjan
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Is he a "good investor and good professor" or "simply good professor"? He might be very good investor as well but i don't know much about him so simply asking pretinent question.
If he is not a good investor then how much weight anyone can give to his views about investment. I remember one EMT guy was invested with Buffett while preaching about EMT. Not related to this but I always get a chuckle while remembering about that guy.
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Some people want to make money at all cost. All cost for this guy means -- make a promise to get support to get done something and as soon as you don't need the support, break the promise. Rinse, repeat and keep taking money from shareholders. Given his history, how anyone can trust anything this guys has to say is beyond my comprehension.
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This year, right?
:D :D
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"I kind of like the Kelley bet, which is 2*conviction - 1 for how much to bet/invest. e.g., an assigned 60% chance of success gets a 20% position (120%-1), though I might set the bar a little higher in general"
I'm not sure how correct this formula is in the real world. Conviction = 100%* 2 -100 = 100%. But this is crazy, the amount to bet in this situation in a margin account should always be > 100%.
Another point to note -
Card game is closed loop where you can calculate probability and apply this formula but stock market might not work same way. In my opinion, it can be used as reminder to bet more in proportion, based on probabilistic approach. Since probability is only an estimate with outside factor influencing it, following the formula blindly might not work so well.
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DC metro area
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Too much psychoanalysis!
In my opinion, that's the main problem here. Looking at human Buffett is fine but focus is too much on psychoanalysis and that's in poor taste.
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What you said is true but smaller banks can fail without creating huge risk for whole financial systems. These TBTF banks had their hands in too many things, creating too much dependencies with financial system as a whole. It will be difficult to imagine the impact if they fail and not too many people are interested to find out the impact in reality. As result, we got this name - TBTF.
FDIC taking some hit is not a nightmare scenario. Also, as you explained , BAC as a whole might have higher chance of survival. But price of failure is too high even with smaller chance of failure. I think the focus on them comes mainly due to this reason. I personally don't think we can get rid of TBTF scenarios.
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Lol I thought I was nuts for having a 27% common position in BAC. Guess not! Gratz guys. ;)
(I was up 8.5% in 2011 and now around 30% for 2012. No leverage of any kind. Small portfolio.)
Those are extremely good returns. I have been sick with volatility. Hopefully I may not find myself in such a deep hole again.
Based on your posts, the impression I have that you take big concentrated positions more frequently. Volatility is bit difficult to avoid if thats the case.
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this thread makes me nervous :)
i personally dont like to cheer until the profits are actually booked. i own truckloads of bac and im not cheering about it.. yet.
There is a separate thread for cheering which you can join after you sell :). Business had turned around a while back but due to possibility of regulators forcing BAC to raise equity, it got stupid cheap from being already cheap. I am not in cheering mood yet, it will happen when it reaches close to fair value in due time.
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It is hard not to let the price chart influence the decision-making process. This is a 50 cent dollar at the current price. Everybody now: "fortress balance sheet".
You are right, they are almost there. Just need to continue doing what they have been doing. Moynihan has right attitude for this job.
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Now, we are talking. Congrats - that's a quick 40%+ YTD for u . I have maybe 3% position on this. Similar position in C. Can't complain.
I think this YTD is kind of useless figure. Annualized returns are even more useless. What matters is the long term returns over inflation. There are many ways to do this and I know some people who do it very well with 20-30 ideas in their portfolio. I can't find that many ideas to get comfortable with so normally I stick to maximum 10-12 ideas( 3-4% to 10-15% position size). For fund managers , it will be difficult to take that big(30-40%) a position without any lock up unless it is in separately managed accounts.
I also don't put 40% in one position all the time. Last time I put more than 25% in one idea was with AXP in 2009. At both times, I was not planning to put that much but as they got cheaper I kept swapping the positions and base position kept getting bigger. I did not have any hard target figure. Only thing I keep in mind is to never put close to 70-80% in one idea because if it blows up then it will take long time to get back.
We have plenty of folks in this forum who do it very well with different ways. I feel everyone should stick to what they feel comfortable with, otherwise it's difficult stick to it for long. I am comfortable with risking 30-40% in one idea as long as risk reward is very favorable but I won’t risk 70-80% ever. Hopefully some usual suspects don’t start lecturing me after seeing my position size that banks are black box and no one can invest , it all speculations etc. I took that size because I was comfortable with their improvements from 2008 till now and they got too cheap.
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I don't have much BAC and I don't have very high conviction on it.
I am surprised how little u guys put in given how bullish u guys seem..
like what percentage u guys put in?
I am surprised how little u guys put in given how bullish u guys seem..
Or
like what percentage u guys put in?
Which is the correct one... just pulling your leg.
I had around 35% in warrants when they were in $2-2.20 range. I had 2% in leaps as well. I don't think that everyone will have that high concentration but most people, who were bullish on this, will have decent size position. But again decent size position or big position will mean different for different people. I meant if normal position for some one is 2-3% then even 5% will look like like a big position. Some guys are holding more than one bank so concentration will be less on BAC but they have large exposure to banks.
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But it will affect the basis of the shares, right?
Basis - strike price + purchase price of warrant.
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Ericopoly
Thanks for your very informative posts on options. I have a basic options tax question, if someone buys 5 dollar calls12 months out and then exercises the options and continues to hold the stock, is that a taxable event? Is it different if the option is exercised less than 12 months?
Thanks!
No, it's not a taxable event. 12 Months period is irrelevent here.
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When lots of people are thinking short term then they might get worried about any development which might impact the price temporarily. People are trying to outguess each other rather than focus on business over the long term.
If banks are required to hold more capital then they will have bit lower ROE but at current price returns will be still satisfactory over the long term. I personally prefer rock solid balance sheet and old fashioned banks business. Banks are moving in that direction and it's a good thing. Discount to book will disappear soon with banks continuing to improve their balance sheet. Regulators are just being regulators, nothing else but in this case I don't mind banks holding bit extra capital even though I think they hold enough capital.
Huge difference between European and American banks but some people still lump them together.
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There should not be any problem to find places where you don't need to pay tax and don't have any law & order as well.
Funny how you associate the word “law” with the word “order”. I’m sure you’ve also been taught to associate the word “anarchy” with the word “chaos”. When in reality those definitions are backwards. This is the very reason one of the most important things the state does (in its own opinion) is brainwash…I mean “educate” the youth. That it can do this right out of the funds it steals from the parents and convince them that it is giving them a “free” service is all the better. We all want order, none of us want chaos, and we’ve all been neural-linguistically programmed to think “law=order”, “anarchy=chaos”, but it is law I want to get rid of not order. I do not want to live in Antarctica where there is no state and try to survive on penguin meat. What I am trying to say is that institutionalized violence is not only not necessary, but is a significant impediment to a peaceful and orderly society. But when you are dealing with generation after generation of people who are convinced that without violence roads could not be built and we’d all turn into savages slaughtering our neighbors for no reason, it is a very difficult point to get across. Of course taxation is theft. It is theft by definition. Taking from someone something they own by force is theft. But if you are thoroughly convinced that without such theft your neighbor would kill you and the roads couldn’t be built, it is easy to dismiss what is obvious and staring you right in the face. Of course none of that is true. You wouldn’t kill your neighbor, nor would I. Roads would be built where they economically make sense and there was a demand for their use, but they wouldn’t be built otherwise (no “bridge to nowhere” in a free market). When you read something that is obviously true and yet you want to dismiss it out of hand anyway, you should at the very least try to examine why that is and think about why you are reacting in that way. It takes a lot research and a lot of self-examination to even begin the process of deprogramming your mind to use only logic, reason and evidence, and not rely completely on the neural programming you received as a child.
--Eric
(I see the fnords)
Law does have it's downside but due to human nature I doubt that you can get much of an order with 6-8 Billion people in the world. It's very easy to see the downside of current system but you are going in other extreme by ignoring all the upside as well.
Care to give an exmaple where your ideal world exist and you want to live there?
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"Taxation is theft."
I'll take my chances with the private criminals any day. At least I have a chance of defending myself against them.
There should not be any problem to find places where you don't need to pay tax and don't have any law & order as well.
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.....
This is a feature that I have always liked but never confirmed. Actually I did not even want to ask about it ... when you find something like this you do not want it to spread like wildfire. Berkowitz hinted at this feature in a recent letter so maybe it is time to have a more detailed discussion of the anti-dilution provisions.
Are there other non-standard features in the warrants worth noticing?
From AIG corporate site,
12. What type of event would cause an anti-dilution adjustment to the warrant?
The initial exercise price is subject to anti-dilution adjustment for certain events, including
(i) future stock dividends, distributions, subdivisions or combinations;
(ii) the issuance of below market rights, options or warrants entitling the holder to purchase AIG common stock for a period of sixty days or less;
(iii) dividends or other distributions of capital stock (other than AIG common stock); rights to acquire capital stock, debt or other assets (subject to certain exclusions);
(iv) per share cash dividends in excess of $0.675 in the aggregate in any twelve-month period; and
(v) certain above-market issuer tender offers for more than 30 percent of the then-outstanding AIG common stock.
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Buffett is an old man. He paid taxes from income for many many years. He worked all that time, saved, and has the luxury to live off dividends of investments. I don't think he should pay any tax at all on the dividends. The company issuing the dividend already paid tax on that income at a full rate. Even 15% is larceny. In Obama's quest to get every thin dime out of every dollar into his redistribution pipeline, he wants a full rate tax AGAIN on that same money. One dollar of earnings generating $.58 in tax. BRILLIANT!
It's very simplistic view. You are ignoring the enormous benefits the government is granting by allowing a corporation to exist as a free standing legal entity.
If a corporation produces a dangerous product or goes bankrupt then the investors receiving dividends are not on the hook. Investors share the risk of their invested capital but it stops there. Government is allowing transfer of all other risks from investors to society as a whole. This transfer of risk should not be free. Some price has to be paid and that price is corporate tax. I don't have any opinion on rate but it can not be free.
Investors can form partnership and avoid paying tax at corporation level. Corporate status is voluntary and investors consider the benefit of corporate status to be worth the price. It's not double taxation. Tax is paid by two separate legal entity. If Investors are not getting enough benefit by having two separate legal entity then they are free to keep only one and assume all the risk. It is understandable that investors would want to get benefits from the government at no cost but it is not practical.
Pass through entity having legal status is recent development but this double taxation argument is very old one.
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I would gladly talk about higher (Clinton era) tax rates for the wealthy. But cut the spending first!
This line of thinking does not make sense to me. Right now the situation is where a Bilionair pays less tax than a middle class person. You want this situation to continue till spending gets cut?
Buffett argument is not about increasing tax for everyone. Buffett argument is not about increasing tax for some one making even millions in salary. His argument was not about having higher capital gain tax for middle income family.
His argument was to make sure that people who earn millions by pushing money should not pay less tax than a person working in mines under harsh conditions. Nothing more , nothing less. Now if you says that precondition for rectifying this stupid situation is reducing the spending then I have nothing more to say. I don't have any opinion about tax rate but I strongly feel Billionairs can afford to pay at least same tax rate as a peson working in mines.
By the way, Buffett did advocate reduction in spending. I don't see media highlighting that. But reduction in spending is a seperate issue. I will undertand if reduction in spending is tied to a tax issue which impacts everyone but reduction in spending should not be linked with Buffett's argument.
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In 4 years I had chance to interact with thousands of students there. I met only 3-4 students who grew up with
decent amount of money. I hardly met anyone whose family had tough time putting food on the table. More than 99% of the students came from a background where they had enough support but not exposed to too much money. Now looking back it seems obvious that if you have been exposed to too much money while growing up then prospect of studying 6-10 hours each day for year or two only to pass one entrance exam is not very enticing.
Are you referring to a third world country in your sample set? A capitalist would like to hire these folks who work a lot of hours for a pittance.
Yes, a third world country although I prefer the term developing countries. BTW, Capitalist find the folks I am referring to not so cheap to hire. Few years back I checked with some of these folks. Most of my classmates were getting 75% of the compensation an average person might get in US with similar degree. That is not cheap when considering the difference in purchasing power. They were working longer hours though.
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Lots's of people subscribe to the view that if upbringing is good then kids will do fine irrespective of how much money you give them. I think it's wrong. Few posters gave some examples but you can not draw any conclusion based on few examples.
1st Scenario: Don't help them even with education. ---- Worst option.
2nd Scenario: Help them only with education. - Best option.
3rd Scenario: Give them lot's of money early with all other things. -- Second best option.
In third scenario, kids don't have enough incentive to utilize their full potential. Yes, there will be some cases where having enough money will not make difference but in average case, it will make difference. It is a human nature. If you don't have any incentive to work hard then you are less likely to work hard. It is less likely not guaranteed outcome.
On other hand , I think kids should get enough support to receive best education without getting saddled with big loan. But it should stop there. Some of my family members had stupid notion that a person can do whatever as long as he/she is good. They point out few examples of success but they forget about thousands of failures of very bright kids due to not getting any support. For one success there are thousands of failures in case of no support. With good support this success and failure ratio changes dramatically.
I don't have advantage of huge survey to draw a conclusion but I will throw one of my own observations with sample size of thousands. I went to a school which was tough to get into. Usually you have to slog like a dog for few years and enjoy the subjects a bit to make the cut.
In 4 years I had chance to interact with thousands of students there. I met only 3-4 students who grew up with
decent amount of money. I hardly met anyone whose family had tough time putting food on the table. More than 99% of the students came from a background where they had enough support but not exposed to too much money. Now looking back it seems obvious that if you have been exposed to too much money while growing up then prospect of studying 6-10 hours each day for year or two only to pass one entrance exam is not very enticing. Also, a family struggling to put food on the table is not going to be an ideal scenario for kid's education.
Just my observation. I think giving enough support to equip the kids to deal with the world is best option. If working hard is not going to make much difference in their life then one big incentive is missing. Most kids will not have drive to go for something big if they don't have incentive. Off course, I am talking about an average case here and kudos to posters here who managed to raise kids with drive despite exposing them to big money early in their life.
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He was very irresponsible. Taking a chance that he might go to zero is one thing but taking a chance that his parents might be homeless is height of stupidity.
On personal level it is ok to take that kind of risk when starting amount is very little.
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Go! Go! Go!
;D ;D Why only BAC?
It's my only long position. My only short position too (short term put hedges purchased recently).
I knew you were concentrated here but did not think BAC as your only position. As long as you are fine with unlikely event of BAC going to zero, it's ok. Don't you think that making this kind of bet when you were in MSFT was fine but right now risk doesn't justify the reward? Well, you said you still have 20% left and you are comfortable with that.
Having said this, I don't think there is any problem with this approach as long as both of you are comfortable with 20% leftover money.
Resolute Forest Products Commences Takeover bid of Fibrek
in General Discussion
Posted
Did FFH had higher offer from anyone else before agreeing for the lock up? If they refused higher offer then it means they simply did not want to get out. They had some other ideas to maximize values for them even if minority shareholders get a short end of the bargain.
If they did not have any higher offer then we can not fault FFH here for agreeing for the lock up.