rranjan
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Posts posted by rranjan
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Parsad - I just noticed that we have ignore feature in the forum now. I was just playing around with the setting under profile if I ever want to use it in future. Putting anyone in ignore list still shows the user post but text get hidden. Is there any setting where ignore makes it really ignore( I meant invisible to me).
Just curious at this moment because we don't have many people here who can potentially become a candidate for my ignore list in future.
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rranjan -- you (like other bulls) never come to grips with the reality that you have zero insight into the assets and the assumptions that underlie tangible book value estimates. To say otherwise is pure self delusion. Given this reality and the leverage, investing in BAC based on some assumption of "downside protection" ludicrous. There is no foundation to your "asymmetric risk/reward" assertion.
And how could you have blind faith in management assertions re BV when the only sample we have of those assumptions (FHLB -- see earlier post) are completely unrealistic? And what happens to BAC's own calc of BV if home prices decline next year instead of going up? -- there is no margin of safety in BAC's own assumptions in this regard...if you listened to the Berk conf call management acknowledged that their assumptions do not cosider a further decline in home prices or even a recession...crazy.
I did not asked you to take only tangible book value. In fact I did not even talk about tangible book value in previous post so I am wondering why you are using ONLY tangible book value to answer my post. I am assuming you simply ignored everything I pointed out and decided not to do any home work regarding current cash flow, current bad loan rates, bad loan reserve etc. Suite yourself. I thought you were genuinly interested.
If all you have to say is - don't trust the management, not going to look into any 10-q/10-k due to not trusting the management and Current cash flow is irrelevent then I have absolutely no point to present to you. Yes, I did listen to conference call and their assumptions( check which assumptions, go back and check again) were not based on double dip recession. If those assumptions are not true then take some hair cut and then see what do you get? They persented one scenario only. It's your job to think what other scenario will look like.
Assymtric risk/reward is simply based on doing some analysis which you simply fail to get involved in. Assymtric risk reward does not mean that you can not lose under any scenario.
Your argument of not having insight of every single loan and banks being leveraged etc are true for all banks in all environments. If thats the only thing you have to say then you should not be discussing banks with anyone because no one is going to refute those points.
Anyway, I realize that I have wasted enough time today so this will be my last post replying to you on this.
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rranjan -- you (like other bulls) never come to grips with the reality that you have zero insight into the assets and the assumptions that underlie tangible book value estimates. To say otherwise is pure self delusion. Given this reality and the leverage, investing in BAC based on some assumption of "downside protection" ludicrous. There is no foundation to your "asymmetric risk/reward" assertion.
And how could you have blind faith in management assertions re BV when the only sample we have of those assumptions (FHLB -- see earlier post) are completely unrealistic? And what happens to BAC's own calc of BV if home prices decline next year instead of going up? -- there is no margin of safety in BAC's own assumptions in this regard...if you listened to the Berk conf call management acknowledged that their assumptions do not cosider a further decline in home prices or even a recession...crazy.
I did not asked you to take only tangible book value. In fact I did not even talked about tangible book value in previous post so i am wondering why you are using ONLY tangible book value to answer my post. I am assuming you simply ignored everything I pointed out and decided not to do any home work regarding current cash flow, current bad loan rates, bad loan reserve etc. Suite yourself. I thought you were genuinly interested.
If all you have to say is - don't trust the management, not going to look into any 10-q/10-k due to not trusting the management and Current cash flow is irrelevent then I have absolutely no point to poresent to you. Yes, I did listen to conference call and their assumptions( check which assumptions, go back and check again) were not based on double dip recession. If those assumptions are not true then take some hair cut and then see what do you get? They persented one scenario only.
Assymtric risk/reward is simply based on doing some analysis which you simply fail to get involved in. Assymtric risk reward does not mean that you can not lose under any scenario.
Your argument of not having insight of every single loan and banks veing leveraged etc are true for all banks in all environments. If thats the only thing you have to say then you should not be discussing banks with anyone because no one is going to refute those points.
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It's amazing how it's gone from BAC needs to raise capital immediately to BAC is going bankrupt.
I'd like to hear the thesis on why BAC is going to have to file for BK.
Look at the stock price. I think I've made my point.
;D ;D ;D
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Munger - It's simply assymetric risk reward situation here.
Very good cash flow operations/assets.
Reduced leverage.
High quality of loans originated in last few years.
Lower quality loans originated during the boom period is reducing as compared to total.
Long term deposit advantage is huge.
Not being depending on short term credit market for wirting loans.
Check how much bad loans are still in the book and you can check whats the delinquency rate currently to write some portion of it to zero. Assume worst case scenario and then check how much bad loan reserve are already taken. Current situations in many financials are lot different than 2008 so comparison with 2008 is not warranted. More than bad loans , non-avaibility of short term credit was problem at that time specially when most financials were dependent on short term credit avaibility to finance long term obligations which was very stupid.
Next day some journalist( yes not analyst) can come and write that BAC needs to raise $500 billions and it's upto people judgement to take them seriously.
There is risk in making any assumption when you estimate a range of valuation but under most reasonable estimate some people are seeing assymetric risk/reward situation here. Risk is there in any investment and it's a matter of finding mispriced bet which you feel comfortable with.
You can check everything and if you can not form any opinion then just move on. There are many bargains out there and you don't need to agree on BAC. If you disagree then people are rightly going to ask you reasons.
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I use Scottrade (after some horrible experiences with eTrade). They're customer service has been very good, but their website is horrendous at times. It seems like all their technology was developed as a 7th grade computer class project.
I don't know how this large of a company can have such poor technology (down to their mobile apps). I frequently have to enter my loggin credentials 4-5 times for it to even let me log onto their site. I'd kind of like to switch to a different broker, but it seems like it would be a mess for tax reporting.
Make sure to check you are not entering your credential in some fake site and then getting redirected to actual site to enter your credentials again. Not that I like Scottrade interface much but just a thought.
On topic , I will suggest IB.
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Rranjan -- I didn't answer your question because I thought it was the height of ignorance. With the question, you come across as someone who just finished reading Buffett and Graham writings for the first time, believing you are now one of the few "enlightened" and couldn't wait to pounce on the "less enlightened" -- very funny.
So no -- I don't "think" that way. If I had a position in which I had full confidence and the stock price was cut in half in less than a month to an absurd valuation, I would buy as much as I possibly could at the new lower valuation.
Nope, my question had nothing to do with BAC at all. You chose to raise downside protection issue based on stock price being down rather than providing any valuation logic. You have told many times that you don't have any opinion on BAC so it's clear that you have no opinion on if BAC is worth $2 or $20. After admitting that you have no idea of valuation of BAC, you were dismissing some one else statement of downside protection based ONLY on stock price movement over the last few months. I just wanted to understand the basis of you statement. I did not want to make any assumptions so asked a direct question.
Based on your post above it seems you don't judge downside protection based on price movement but your earlier post was directly contradicting it. BAC might go to zero or go to $40 but you should not be talking about downside protection based on price movement. That's all I wanted to point out and it had nothing to do with anyone reading Graham's writing or Buffets past actions. That's irrelevent to this discussion.
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"No, it just shows how a value investor thinks. First, downside protection."
You are now down 50% -- so much for the protection.
50% decline in stock quotation in last few months is being equated to no downside protection? Do you really think that way?
Munger - You chose not to respond to this. Should I assume that you agree here?
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"No, it just shows how a value investor thinks. First, downside protection."
You are now down 50% -- so much for the protection.
50% decline in stock quotation in last few months is being equated to no downside protection? Do you really think that way?
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So let me get this straight---rich people are lucky, so they should redistribute their wealth to those who are unlucky(and thus poor)? What about the lazy, or those who make poor choices? Maybe they were lucky, but stupid and wasted their luck?
In my view, we determine our own fate, and luck has nothing to do with it. Work hard. Make good choices. Don't give more than your fair share to Obama.
Yes working hard and making good choices are absolutely required for being sucessful but not the only factors. If this same misterstockwell was born in Afganistan then chances of spending time in this forum would have been nil. More likely case would have been holding an AK-47 as teenager. Need for having a decent environment is often overlooked by lots of people when making statement about hard work/good decisions.
I am not disocounting the impact of working hard/good decisions. I do admit that even in Afganistan some will perfrom better than others due to working hard/able to take better decisions. But majority of kids, who are hard worker and also able to take good decisions, will not fare too well.
Luck might be a negligible factor if everyone gets the same environment to reap the benefit of taking good decisions and working hard. In reality, you receive certain environment which is totally out of your control and thats called luck. How many of forbes Rich would have been rich if they were born in Afganistan? Or they were born in African-American family 200 years ago?
I took some extreame examples here but you can see the similar if not so extreame cases currently within US also.
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It lasted only around 30 seconds so by the time we were out of the house(DC Metro Area), it was almost over. I was surpirsed to not see other people coming out of their house.
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I'm thinking that many, many people worked just as hard, if not harder than the author. The difference is luck. Society has blessed him with riches it is his duty to pay more than his "fair" share.
Paying the fair share will be a start. Right now due to tax system it's not even fair.
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Packer -
Author did make this point "Today, top earners—the 250,000 people who earn $1 million or more—pay 20% of all income taxes"
This is as flawed as it can get because tax contribution in total pool is useless figure. A rich person should not be having less tax rates than a worker in coal mines under any circumtances. Why not fix this before author/anyone start talking about hundreds of different points. I don't even see these authors acknowledging that this is unfair system. Most of the time I see them diverting from main point by focusing on total contribution in tax pool.
No one will stop investing if tax rate on dividend/capital gain goes up a bit. Rich will always have 99% of their income coming from investments and if you have a system where Rich can get away by paying less than an average Joe then you have a systematic way of favoring the rich.
No matter how you look at it, the fact is an average Rich pays lower income tax rate than an average Joe due to majority of income coming from dividend/capital gains. Gulf between rich and poort has widen in last 10-15 years due to this unfair tilt towards rich. I am not arguing for tax rate increase across the board but only ensuring that richest guys in our society are not having less tax rates than an average Joe. I am not an expert but you could have anyone making over 1 Million pay higher tax on capital gain/divident etc.
If tilt has to be there then it should be towards an average Joe who works very hard for living not for rich. I am not even arguing for a tilt here.
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They could voluntarily write a check View Full.
Today, top earners—the 250,000 people who earn $1 million or more—pay 20% of all income taxes,
These arguments are flawed if anyone thinks logically. I see it being used to distort the main point. It is very simple, an average Joe, who might be working in very harsh conditions, ends up paying higher tax rate than those who earn more than $1 million. Amount paid by individuals in total tax pool is totally irrelevent. Only relevent point is , how much of percentage of their income goes in paying income tax.
It might be debatable if rich should pay tax at higher rate or people who can barely afford to eat should start paying some tax. But anyone holding a viewpoint that rich should pay lower tax rate as compared to middle class is ridiculous. Writing a check by few volunteers is not going to bring tax rate of rich and middle income guy at the same level. Rich not willing to pay income tax at the same rate as middle class untill Gov becomes efficient in using the money defies all logic.
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If you are saying trying, then definitely Biglari.
Or rather pretending.
+1
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Each of these companies have one ultimate goal...The wise distribution and reinvestment of free cash flows with the aim of constant compounding of book value.
I just want to get your idea of who most reminds you of a young Mr. Buffett of the following three men:
1. Einhorn
2. Lampert
3. Biglari
Answer is no one.
To add:
3. Are you sure about Bilgari ultimate goal being what you stated? His actions indicate that his ultimate goal is to get rich as quickly as possible even at the expense of shareholders.
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I don't have a long or short position on gold. Like the posters before me, I would rather invest in businesses that provide a product or service that is of value.
Many people who do not invest in gold believe it is pure speculation because it is an object with no cash flows and thus unmeasurable value. If that is the case, then wouldn't most everyday objects also be unmeasurable and speculative? How do you know that a bottle of Coke is worth $1 and there isn't a bubble in soda prices? If you can't place a value on a product that a company produces, how can you also place a value on the company itself?
Some of you might be thinking that soda provides a benefit to the consumers who buy it and has utility. How do you know that gold does not provide some sort of utility? To a person who does not drink soda, Coke has no utility. To a person who does not follow fashion, haute couture has no utility. To a person who does not understand the internet, technology has no utility. I might not understand why someone invests in a particular security, but that doesn't mean that person is wrong.
It looks to me that moore_capital has done extensive research and is in a better position than most of us (myself included) to determine if gold is a good investment at these levels. The good news is that we don't have to invest in gold and can just wait for investments that we do understand and are comfortable with.
There is big difference in examples you used and buying Gold as an investment.
When you pay $1 for coke , you are not thinking about investment at all. Even if you are convinced that there is bubble in soda price , you will still buy Coke.
When you buy gold as an investment, you are thinking about it ONLY from investment perspective. If you are convinced that there is bubble in Gold price, you will not buy Gold.
Just some food for thought.
I don't hold any opinion on gold and good luck to anyone able to profit from it.
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I think his thinking that Software will become even more dominant is true. It will increase the productivity by transforming some old ways of doing things. But his talk about ignoring the valuation and only focusing on how software is changing the world is wrong.
We have had many new things( radio, television, airplane etc) bringing huge change and all of them were very beneficial for human society but that does not mean they were good investment at any price.
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All this has shown me that I dont know much bout tech, though I still think WD is a good deal.
Myth - This stupidity of HP management does not prove that you don't understand tech. This is a stupid decision and decisions like this can be made by management team in other fields as well. Though, In Tech field it seems we are getting more than fair share of value destroying capital allocators.
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Yes of course Rran Jan I use the Intelligent Investor and Security Analysis but it is not the ONLY thing fueling my investment methodology.
About gold mining companies, I don't think you understood, I don't buy PRODUCING mining companies, I buy non-producing developers that aren't profitable and have yet to produce any cash at all. They are developing proven gold deposits and essentially function as leveraged call options on gold, with no expiration date.
What I look for is an ore body or hydrocarbon reservoir that has been defined based on drilling and carries an independent estimate of mineral content or NPV.
Understood now.
Anyway - Since I don't hold any opinion on gold, I can not put any range of valuation. If I happen to do what you are doing then it will be pure specuation on my part.
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rranjan - I have provided in this thread several times the fundamentals of gold (Supply/Demand Numbers), and that supports my wanting exposure to it and believing it is not in a bubble. The Value investor in me chooses to buy gold at a discount by accepting the "risk" of time whereby it may take several years for the companies I own to develop their gold deposits, but the risk-adjusted IRR, in my opinion, supersedes that of buying Bullion @ 1859.
Owning gold mining companies are bit different than owning gold. Due to gold price swing it might not be always possible but you are also basically using the principle of Inteligent Investor and Security analysis in this situation. It's easier to predict the valuation range in case of mining comapnies.
My question was more pertinent in case of direct gold holdings because you can always find profitable mining companies which can be good investment at not so good gold price.
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Yes, management is weak spot here but HP is overpaying by spending $10B for Autonomy Corp. and lost more than that $10B in market cap today. So current buyers will have Autonomy corp free thrown with existing businesses. Around 5 times FCF , I think reaction is over done here. Jut my opinion.
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I think the problem is that a lot of value investors just read a copy of Security Analysis and/or Intelligent Investor and base every single investment decision through that prism.
I don't have any opinion on gold but how do you suggest people should make investment decision?
If it is based only on expectation of some one else paying higher price in future then wouldn't you call it a speculation? Speculations can be very profitable but it is still a speculation. Some people might be sucessful speculator but it is still a speculation unless you can put some reasonable valuation estimate.
Again, I don't have any opinion on gold but I would like to hear what argument you can make for an investment decision which is not based on copy of security analysis or Intelligent Investor. I also did not mean that if certain object does not have balance sheet then you can not anayze. I am mainly talking about the essence of security analysis or Intelligent Investor.
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Reaction is over done in my opinion. It's not as if they are forecasting a loss.
Using ignore feature
in General Discussion
Posted
I don't think anyone should use ignore feature for ignoring an opposite view point. But after seeing some one's post in many different threads, you might simply want to make that person dissapear.
Not having this feature is not a big issue because you can easily chose not to read some one's posts. Still having such feature will come handy when based on historical posts, you can be absolutely sure about not missing anything by making someone invisible.