beerbaron
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Posts posted by beerbaron
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Oh, and Stella Jones (SJ). In BC we have enviable timber, and many lumber companies, yet this small montreal firm seems to dominate the treated lumber business.
Well, SJ was one of my error of omission, I read 10 years of financial statements in 2009 and did not buy around 19$ because I could not determine if I was buying at the high of a cycle and what the moat was. I still don't have any answers on both of those points tough...
BeerBaron
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Not Quebecois, (Lotusland, high school french). However impressed with some quebec based comapnies such as MTY, Richlieu, Alimentation Couchetard, Power Corp.
First time I hear someone on this forum talk about Richelieu except for me. It' a big chunk of my portfolio since 2008. They always seem to operate better then most companies. Sadly it is rarely cheap...
BeerBaron
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Here is the web version:
http://moneyinstereo.blogspot.com/2012/10/bruce-berkowitz-on-wealthtrack_12.html
For some reason I can't see it when I go to the site. I just see an ad for SmokeyBear.
Try with a different browser. It did not work with Chrome but seems to work fine with IE.
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Jeff, il ya juste beaucoup de personne sur ce forum...it quite surprising the geographic diversity.
I'm in Lemoyne/Longueuil too.
BeerBaron
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Heh. I always forget when I suggest these things that 90% of the people will be close to Montréal, so of course that's where the meeting would be, and I don't feel like driving 2h and dealing with MTL traffic... :P
But this year I will make a big effort and try to go to the Fairfax annual meeting...
Liberty, get your ass in Montreal. The ladies are much nicer over here then Toronto. ;D
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Personally, I think he is very divisive and I really don't like the wind of class warfare that he has pushed around the world. What the U.S. president says or do has an impact around the world and I see the impact in my own province, dear old Quebec. It is ugly I tell you, not something that you ever want to see in your state or province and we are not at all in recessionary conditions! We have 3 leftists parties out here and the one that got elected is akin to Chavez.
I'm in Quebec too. Seems like there are many of us on this board...Maybe if we have critical mass we can have a meetup to cry in our beers or something.
My first language is French, but I still find the political and economic situation in Quebec pretty depressing (not that the language that you were randomly born into should be used to define anyone, but I just want to point out that it's not only Anglos who are frustrated by how things are here)...
We should organize a get together one day. I'm up for Beers...
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Look at their webcast. He still uses the same updated chart showing redundancies VS rates. He seems right based on the graph.
BeerBaron
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So far Ray Dalio has the best explanation for QE or credit creation. He basically says:
"Credit can be created by anybody, when someone comes and paints your house and you say I'll pay you in 30 days, you are creating credit. The FED does the exact same thing when she buys bonds, except that there is no claimants for the liability."
BeerBaron
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Yes, invest in originators that know what they are doing (Altius for example). In the junior miner sector it's a mess that I would not invest directly unless I wanted to lose my money.
BeerBaron
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SJ, don't judge a book by it's cover.
"We had no role; the U.S. company is in fact our largest company, and they had business reasons for doing it, but we played no role at all,"
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It's a different Buffet then what we are used to. I guess he change it's speaches to a more mainstream approach as he got older.
BeerBaron
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I am not as knowledgeable about this as some of you. I am curious to know how does this internal leverage generate high returns? Is it essentially buying up businesses with low RoC and low risk with the float?
Getting free float brings down your cost of capital. Hence reduces your discount rate as well.
Now, try to do a present value of an an infinite number of periods above the discount rate and see which number it gives you.
BeerBaron
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I use a 3d System rapid prototyping at work, and it's a great tool. But I'm very sceptical when I hear that it's going to be as big as the Internet.
First, I don't see a rapid prototyping machine printing any electronic device. An IC mask is precise to the nano-meter, I can't think of any non-high tech lab equipment precise to the nano meter.
Second, there are varieties of materials in all products. Take a look at the amount of polymers on the market, each has it's speciality. No consumer could afford to have 50 cartridges to build stuff.
Finally, it might seem efficient but it's not. It's a very long process to 3D print and it requires that the machine does not stop in the middle of the printing.
It might make it's path in some specialities, for example handyman work, artists and such. But not at the levels the Internet did.
BeerBaron
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I'm with Qtrade. Last time I checked the conversion fee was about 1%. So for $10,000 or more, using dually's is worthwhile for me.
Yeah I was facing the same dilemna last year. I was with Questrade and I had something like 30K that I wanted to convert to USD. 1% of 30K met 300$ or put differently, 2.5 years of IB monthly fees. So I switched to IB.
BeerBaron
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I liked the book but I also liked Greenspan's book both from a historical perspective so take that for what it is worth. I always thought Hank Paulson was someone that stood out in govt b/c he knew what he was doing, you believed would do the right thing in a very dark hour and maybe you could even say was worth being trusted.
Regarding bond dumping - This is S&D 101, if you dump your bonds at a certain scale you create a price depression thereby raising the yield. If that higher yield necessary to attract new buyers raises the cost of debt things can get ugly pretty quickly as the mechanism obviously is circular.
This morning, the Japanese announced they would buy more of their own debt. Most of the writers I saw were saying this was a move in support of global easing, I think it was rather about showing China that there is a bid for that debt. The problem is and the Chinese know it, and have a bevy of things working in their favor which I'll highlight below. Lee Cooperman has called this 20 year "trade" a widowmaker and he has been right but I struggle to see how economics don't ultimately eliminate the current Japanese Govt distortion which is how I am positioned in full disclosure.
Concerns:
-Price of cds doubled in past year
-Japanese public pension(largest in the world I believe) said they will be net sellers of govt bonds this year, owns 10% of all jgbs. The electorate will get their checks.
-Trade defecit for the first tine in more than 30 years
-Debt/gdp ~240 %
-Each citizen owes 86200 to Japanese debt holders.
-Avg maturity 6 years, next 5 years 60% needs to be rolled over
-Zero net immigration over 10 years
-Lowest birth rate in the world at 1.2%
-Bank of tokyo-mitsubishi says household savings cross into negative by 2015
-Debt service as a % of tax revs exceeded 57% in 2010 according to soc gen and int expense 27%.
-50% of Japanese budget financed by debt
-Sales tax going from 5% to 10%.
-Foreigners only own 6% of JGBs but the consumer is tiring of these bonds, Link Below.
So what happens to exports when the central bank of Japan becomes the buyer of those bonds? How' s their currency going to be affected?
The answers are simple and China has no advantage to lower the cost of producting goods in Japan...
BeerBaron
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Just use IB, last time I did a transaction the currency conversion came to something something like a lunch a McDonald's.
BeerBaron
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Its interesting you mentioned FFH is a "great business". No doubt Watsa is a legendary investor, but don't you think FFH is really a "great hedge fund" in that if Watsa (God forbid) something were to happen to him, FFH will problably (saying that with tongue in cheek) not repeat its historical performance? Certainly FFH is not like a BRK where the underlying businesses themselves are industry leading with great moats (perhaps I'm wrong).
From what I see, their insurance operations appear "decent" but not really outstanding per se on the level of a Chubb Corp.
I have met a few value guys here in Canada this year and a few of them actually have FFH as their biggest holding.
You certainly can do much worst than FFH.
Take a look at their bond results, managed by Brian Bradstreet. Watsa is not alone in this he's got an amazing small team!
BeerBaron
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If you read Hank Paulson's book you'll know the Russians allegedly approached the Chinese about a similar strategy in the depths of the crisis about an attack on the US. At the time the Chinese decided against this path but it seems they are looking(according to the telegraph piece i'll link below) at this strategy in regards to Japan.
http://www.telegraph.co.uk/finance/china-business/9551727/Beijing-hints-at-bond-attack-on-Japan.html
That sounds like a story from a bad thriller. If China would do a financial attack on Japan, the central bank of Japan could easily buy all the Japanese government bonds. The rising sun country could actually benefit from a devalued currency.
BeerBaron
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So, if QE2 didn't produce the expected results why is QE3 suppose to do a better job?
Former Federal Reserve Chairman Alan Greenspan calculated that as of July 2012 there was "very little impact on the economy" and noted "I'm very surprised at the data.
http://finance.yahoo.com/news/alan-greenspan-sees-two-separate-161122638.html
The definition of foly is doind the same thing twice and expecting different outcomes
Albert Einstein
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By the way, the term, implied volatility, is a misnomer. It's really a fear factor. For example, the S& P 500 recently rose about 2% in one day. Yet the implied volatility of index options actually went down dramatically that day instead of up as the historical volatility of the index increased. However, if the S&P 500 had gone down a large amount instead of up that day, the implied volatility of its options would have certainly increased.
I've noticed that too. Actually, when volatility was peaking in 2008/2009 I started to reason that it wasn't fear, it was greed. Nobody in their right mind wanted to blow that opportunity to buy things so cheap by tying up their capital writing puts. Even though the premiums were the best ever, why would you do that when the big money was to be made riding the shares back up. And what sort of an idiot writes a call at the bottom when he can buy a call instead. So that drives up demand for the calls relative to supply and makes them really expensive.
I think you guys are right. If I remember properly it was the bet LTCM had made when it went bust. The market went up, and most of the the time if the market goes up, volatility goes down. The wrote a bunch of put betting the volatility would go down. External events made it happen otherwise.
BeerBaron
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Soros' article is the epitome of MMT - Europe needs a fiscal union, and as Soros points out in the article, while the ECB's recent move ensures the Euro stays intact, it does NOTHING to solve the debt trap that a fiscal union and deficits would provide.
Congrats Europe - continue to follow the Great Depression template for how not to deal with deflation!
5% Inflation would solve some of that debt trap. Not the structural imbalances tough.
BeerBaron
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I wonder if Soros, still believes it holds true after the ECB comments. My guess is it's less likely.
The European Union that will emerge from this process will be diametrically opposed to the idea of a European Union that is the embodiment of an open society. It will be a hierarchical system built on debt obligations instead of a voluntary association of equals. There will be two classes of states, creditors and debtors, and the creditors will be in charge. As the strongest creditor country, Germany will emerge as the hegemon.The class differentiation will become permanent because the debtor countries will have to pay significant risk premiums for access to capital and it will become impossible for them to catch up with the creditor countries. The divergence in economic performance, instead of narrowing, will become wider. Both human and financial resources will be attracted to the center and the periphery will become permanently depressed. Germany will even enjoy some relief from its demographic problems by the immigration of well educated people from the Iberian Peninsula and Italy instead of less qualified “Gastarbeiter” from Turkey or Ukraine. But the periphery will be seething with resentment.Also, would'nt it be fair to say that creating a 5% inflation environment by the ECB would be the equivalent of Germany transferring money to the debtor states?
Regards
BeerBaron
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Please tell me if my logic is OK:
If a trade imbalance happens for a long period and the currency cannot fluctuate. Then money must find it's way back or else at one point the spending country will end up with 0 dollars. Now there is only one way that I see the equilibrium between the two nations happening.
-The thrifting country must give money away to the spending country.
When we are talking about a single country it makes sense, Canada sends Billions from Alberta to poorer provinces. USA probably does something very similar. This is how the system maintains. For Europe I don't see why on earth someone would accept such a deal.
If there is no redistribution happening, then two things will happen in the spending country that will delay the day of reckoning:
-Collective debt is increased
-Debt is transferred from one sector to the other (moving the pain)
Now from what I read from ECB statement is that it's moving the pain, maybe Moore is right and that it's just another step in front of full flegde printing, but at this point buying securities of a troubled country to sell other securities.
It also sounds like a great way to make money, being long the spending country's debt and short the thrifting country. So how does ECB avoid hedge funds from making a ton of money on this?
BeerBaron
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Can someone explain how it can purchase bonds of troubled countries but at the same retire money? Does it mean countries will need to put funds into the ECB?
BeerBaron
Debt Service and Debt to Income ratios
in General Discussion
Posted
The graph of the decline is quite symetrical, just a quick look shows about 3 years to bring the debt to income to 2000 equivalent and 6 years to get back to the 80's. Why oh why would someone buy 10Y and 30Y bonds?
Anybody has the equivalent for Japan?
BeerBaron