rranjan

;D ;D Why only BAC? Something on sharp price movements. I hope this happens with all stocks so I can pick my spots and wait .... http://finance.yahoo.com/news/why-bank-america-citigroup-080559149.html;_ylt=Aj5Ivuh8nis5aIinMavDCRWiuYdG;_ylu=X3oDMTQzcDUxZHBoBG1pdANGaW5hbmNlIEZQIEp1bWJvdHJvbiBMaXRlBHBrZwNjMWJkMTYxOS00MGJmLTNmMTgtYWM1Mi1iOTc0OGEyNWI4YTQEcG9zAzEEc2VjA2p1bWJvdHJvbgR2ZXIDNWVmNmE2YTAtNTNiZS0xMWUxLWJmZGQtZjcyMjJlZDhmYjU1;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3

+1

Seriously, that creeped me out too. It makes me distrust Berkowitz a little more. The same type of distrust I'd have for a CEO that insists on furnishing his office with expensive furniture and decor. He has some very good books, which happened to be leather bound, in his library. He did interview using that as a backdrop and that makes him pompous? I don't get the logic here. I don't think it was bit too much at all. As others pointed out, we can't expect to see Ikea furniture and poster of rock stars. He might have chosen the backdrop intentionally but that's fine with me. I think mutual fund structure is wrong choice for his investment style but he chose that structure knowing the pros and cons. Anyway, criticism should be focused on his ideas not about his furniture. You might try to use furniture, decor etc to draw some limited conclusion for someone unknown. He has long track record and also shared his thought process time to time. That should be enough to reach any conclusion about him without looking at his furniture and decor. Him being down 47%... Well if you can not tolerate fluctuations then stock market is not for you. He does not buy the market so he is not going to move in lockstep with market. When people say that he will do fine over long term, it's due to his long track record and the way he does things. Check his track record exactly at the end of 2011 even after one of the worst period for him and see where he stands among mutual funds. I have not owned his fund ever but going by some of the reactions on this board in last 6 months, I think mutual fund structure is wrong for him. Lumpy and bit higher returns does not suite everyone. At times he gets too concentrated for comfort for an average fund investor. He should invest with permanently locked in money.

Fantastic write up. Thanks for posting it.

I think it is wrong way to approach investment. If you independently came to conclusion about undervaluation and Prem/Wilbur happened to also share the ride then it's a good company to have. Discovering the ideas due to Prem or anyone else is fine but buying due to their purcahses is not the right approach. If you are putting so much weightage due to Prem and Wilbur then you need to ask one or two very important questions. Have they been wrong in past? Do they have 50% of their portfolio tied up there? I don't have any opinion on your holding though and you might end up making good money there.

Apple should return the extra cash to shareholders. Apple is a technology company not an investment firm. In theory it might sound good but I have very little faith in a technology company buying bunch of unrelated companies. Most tech companies have bad record in buying companies even in their related field. Shareholder's can use the cash to invest themself but Apple should continue doing what they do best.

Thanks for posting it here. Nice interview.

Can anyone give me an idea of the perception of the quality of the University of Waterloo education in Canada? Is the Waterloo area a mini-Canadian tech hub (ex-RIMM)? Perhaps FFH's interest is linked more to this phenomenon. If RIMM can attract the brightest Canadian tech developers, then over time it will find a way to compete globally. I am not from Canada but I think it is one of the top 3 university if not the best in Canada. My impression is based on my undergraduate batchmate's feedback who went there for their MS degree in Engineering. That was 10-11 years back so don't know if things have changed.

Personally I think this is a low risk investment with very high probability of doubling in next 6 to 18 months. So my position is likewise humongous. I still drive my car most days even though I've heard reports that people get horribly mangled in these things. I take mortal risks every day. It became my largest position when Warrants were trading in 2-2.20 range. I never get lucky with timing so it's too early. I also bought some 2014 calls. Obviously, I don't think that risk of getting wiped out is high here but if someone is worried about doomsday scenario then not only BAC but most investments will perform poorly. BAC still needs to continue improving their capital structure and I think they will do so. You are right about driving example but this probabilistic approach does not suite everyone when it comes to investment even though it's a right way to think. I think it's important for everyone to understand their comfort level and stick to that. Just my opinion.

Did all of the above names had issue due to only high leverage or liquidity was concern as well? How high the leverage was with Bear? Is BAC situation comparable to above names? Yes, there is risk here but making an argument about having 10x leverage will eliminate most finacials. If an instituation is leveraged 10 times and using their 100% of asset to make some bet then it's a different case. BAC has reduced their risk greatly in last few years. Liquidity is all time high and they are improving their capital structure each quarter. Question you would have to ask - under which circumtances they will be in trouble and chance of happening that? yes, there can be circumtances where they can get wiped out and you lose everything so position sizing should be based on how much comfortable you feel.

Uccmal - It is by Pat Dorsey. For anyone just starting to learn, it's very good book to read. Lacks the details at times but very good read for anyone just starting to learn.

;D ;D

I am not sure about your conclusion. Individuals finding undervalued securities might not translate to whole market being undervalued. I don't think the market is undervalued by decent margin even if it is undervalued. I would think that it is over valued a bit but you can find many large comanies selling at good price. Having said that, I don't use market valuation guess to make my investment decisions so take my opinion accordingly. I don't have any opinion about Shiller's P/E ratio but you can use one more ratio used by Buffett time to time. In his 2001 Fortune magazine article, Warren Buffett used the ratio of the market value of all US publically traded securities to Gross National Product (GNP) as a yardstick to measure the stock market valuation. He stated that "The ratio has certain limitations in telling you what you need to know. Still, it is probably the best single measure of where valuations stand at any given moment". "If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200%--as it did in 1999 and a part of 2000--you are playing with fire".

Good write up. I had followed RAIL in 2008/9 and discarded the idea ( I don't remember the reason for it right now). It was looking cheap then as well based on pent up demand for rail cars.

A general comment about the moat of big banks. Even though it is a commodity type business, In my opinion, the most big banks have decent moat due to switching cost involved. Switching cost is not the money but effort, time required to break the inertia. Very few people change their banks based on slightly better alternative available. I feel retail deposits have lots of stickiness. Just my opinion based on what I have observed.

Rarely you can predict their moves in advance. You can predict when they are adding to their existing holding but any new buys are not easy to predict. In my opinion, a bet on LUK at right price is essentially a bet on these two guys and they are very good at that they do.

Thanks for posting it.

Packer - You are right in thinking that poor in developing world are at different level. It would be much more efficient to raise their standard. If we spend the same money then more people will benefit but this kind of equation can be considered by only private foundations. Tax payers will not allow majority of money to be spent outside by any government. Country is kind of self contained unit in terms of set up and we should not have skewed system. All earnings should be taxed at same level and if we want to have different levels at all then I would think that money pushers can afford to pay higher rate than mine workers. Unfortunately , we have reverse situation right now.

Well, if they worked hard to earn the money and paid tax then they did nothing different than average Joe. Now if new money is earned by investing the accumulated money then why in the world new money should not be taxed at the same rate as average Joe income tax?Just because new money is not earned by doing physical work? Government is not going to tax again and again if money just sits there but if money is used to earn new money then it is new earning and it should be taxed. No, I don't think money pushers should pay 0% tax when mine worker is paying higher tax. I also don't think that having 30% tax in capital gain will stop anyone from investing because you pay tax only when you make money. You will still keep 70% of the gains. No one will start thinking that - ah, I am not going to try to make money in stocks because I get to keep only 70% of gains rather than 85% of the gains. I am immigrant in this country and I have absolutely no influence of either republican or democrats in my thinking. But I don't see the logic of mine worker paying tax but money pushers not paying anything. All this talk about billionaires working hard to earn their billions is fine but same billionaires can't earn their billions in Afghanistan. It is the system set up here which allowed them to earn billions. It is the system we have in place which allowed net worth of rich to become 4 times in last 15 years even though average Joe did not gain anything in same period. Even after that how can you make a case of giving more advantage to rich guys. In my opinion, the set up is already skewed and you are arguing about making it even more skewed. One of the strength of America has been huge middle class with decent income. Gap between rich and normal person has grown too fast in last 15-20 years. Any system which leads to majority struggling but rich getting super rich will not end well. I have very open mind so I am all ears for any arguments in favor of making 0% tax for already rich guys while mine workers continue paying income tax.

I don't have any opinion about 90% or even 60% tax rate for rich guys. Only thing bugs me that why should we have a system where a rich guy pays less than an average Joe. I don't think taxing them at the level of average Joe should have any objection. I have not heard any good arguement so far. While I agree that few guys like Buffet will use the money efficiently to make a difference but that's not true for everyone. Lots of people might be good at accumulating money by using unfair tax system to their advantage but they might not use it for benefit of mankind. I don't hold any opinion about optimal tax rate or any fix number but I feel strongly about average Joe paying higher tax rate than some one who makes millions each year. If unchecked it is going to create terrible situation of civil unrest in long term. I don't have any problem if everyone is paying only 10% or 0% but current system seems unfair to me. rranjan We don't actually have a system where the rich guy pays less than the average Joe. Buffett has to use poor logic and ignore the whole picture in order to come to that conclusion. If you look at effective income tax rates it is progressive in the US. While there are exceptions, the rich pay a higher percentage than the poor or middle class person. That is a fact. Buffett has to include payroll taxes and ignore corporate taxes on his non-dividend paying stock ownership, dividend paying stocks, and any capital gains in order to get the numbers to match his conclusion. (Note I am not saying he is doing it on purpose because I do not know.) If payroll taxes are a tax, which is how Buffett looks at them, then social security and medicare benefits have to be what? A government handout/benefit. It cannot be the return of money you paid or else he should eliminate it in the calculation. Remember he also attributes not just the employee paid portion but the employer paid portion to the secretary. When Buffett's secretary retires, he/she will receive $25 to 30,000 in annual Social Security income plus likely significant Medicare benefits. If it was a tax when paid, then it is a handout or benefit when received. Does he point out that after age 67 his secretary will be largely untaxed and in fact a net recipient of what will likely be hundreds of thousands of dollars, if not a million dollars? No he does not. So he is using a snapshot to arrive at his conclusions when he should look at a lifetime. Buffett's argument is weak, misleading, and flat out wrong. Some one who earns 175K pays marginal rate of 33% and some one who earns 380K pays 35% without taking account for any state tax or SSN/Medicare tax. Now we are talking about rich who makes millions but don't really work for it. They get millions every year with capital gains or dividend. They pay close to 15% on average. Anyone making wages of millions does pay enough but argument is mainly for people who makes millions without working and pay 15%. There are issues in our tax system. Hedge fund manager's portion of earnings gets counted as long term capital gain, portion of future gains(held for less than 10 minutes) gets counted for long term capital gain, rich person who pushes capital rather than stoned pays very less tax. I think system is biased in favor of rch due to lobbying money available. Clearly, this tax system being progressive argument is not applicable here because we are not talking about families making 200K. I don't know if we should include corporate tax when we count individuals paying 15% capital gain/dividend. Someone can use an argument that if there is no corporate tax then salary will be higher so corporate taxes should be added for regular Joe as well when doing comparisons. I am trying to point out that we should stick to individuals net income each year and how much tax that individual pays. Corporate taxes are at legal person level but we should stick to natural person. Finally all natural person gets an income and I see no reason for people making millions by only capital gain/dividend paying less than regular Joe who works 40-50 hours. It simply does not seems fair to me.

I don't have any opinion about 90% or even 60% tax rate for rich guys. Only thing bugs me that why should we have a system where a rich guy pays less than an average Joe. I don't think taxing them at the level of average Joe should have any objection. I have not heard any good arguement so far. While I agree that few guys like Buffet will use the money efficiently to make a difference but that's not true for everyone. Lots of people might be good at accumulating money by using unfair tax system to their advantage but they might not use it for benefit of mankind. I don't hold any opinion about optimal tax rate or any fix number but I feel strongly about average Joe paying higher tax rate than some one who makes millions each year. If unchecked it is going to create terrible situation of civil unrest in long term. I don't have any problem if everyone is paying only 10% or 0% but current system seems unfair to me.

Pat Dorsey has written good book to get basic idea about different sectors. It is good read to get started.

If he puts his thought process behind buying AAPL here and it looks great then why not? :P

;D ;D ;D

I don't think that any one in this board will have problem with anyone stating that they manage money professionally or have significant capital at stake. Problems comes when anyone expects that words should carry more weight due to above reasons. I personally don't know everyone's background here and neither I care about it but after reading several of their posts I can make my own judgement about how seriously I should take someone. Seriousness does not depend on their AUM or personal net worth at all. And about you, I will not care even if you were staying in your mother's basement because I have read and found many of your posts having very good insight. While I might not agree with everything, your post's quality helps me to make up my mind, not your net worth or AUM. Anyway, we are going in circles and I have nothing valuable to add to what I have already stated.