Tim Eriksen

+1 I agree about the Fed 100%. I think short term history will be tough on W, but over time Greenspan will likely be seen as the biggest contributor. The real estate bubble was basically caused by the Fed's response to the tech bubble (along with Y2k and 9/11). Without the low rates the banks miscalculating the risk of a nationwide real estate plunge wouldn't have mattered much.

I can't vote for Republicans because they advance the agenda of the religious conservatives. Which leaves me with only Obama to vote for. I knew we would get to religion. :) Seriously. Clinton and Obama I were against gay marriage. Not that anyone with a brain believed Obama when he said that (it was clearly a lick your finger and see which direction the wind is blowing flip flop like Romney on abortion). Clinton had "don't ask don't tell" and even signed DOMA. Hard to believe that is the deal breaker. Does that mean abortion is the issue that prevents you from voting Republican? Even if the Supreme Court changed its opinion, which is unlikely, it would become a state issue, and remain legal in the first trimester in most states. Or am I missing something?

He doesn't have to choose one of the options, although he is not far from the first option. If Romney wins, Republicans will almost assuredly win the Senate too, so he will not have to reach a deal with Democrats unless they try and filibuster. If they do, Republicans may change the rules to eliminate it. The bottom line is the parties have two different views and are unlikely to reach compromise. It is the voters job to choose one approach or the other. By the way this will be fight #2. #1 will be repeal of Obamacare. IMO Romney gets you closer to Simpson - Bowles than Obama will.

Moore, The Republicans don't seem interested in taxing capital gains and dividends at the rate of ordinary income. That was the recommendation under the first Bowles-Simpson plan. The "Zero Plan". I believe the Republican's call this "rasing taxes on the rich" or "class warfare" whenever Obama suggests something of the like. What flavor do you see them supporting? I know you asked Moore, but I couldn't resist. Republicans like Democrats desire to tax dividends and capital gains twice and thus at a higher rate than ordinary income. :) The Democrats just want to do it at a substantially higher rate. The problem is that Obama calls for something different. He just wants to raise the tax rates on the rich, although he has proposed lowering corporate tax rates, while eliminating certain deductions. Simpson-Bowles plan was to lower income tax rates and eliminate deductions (Romney has broadly called for this too). If I am not mistaken, Simpson - Bowles calls for a corporate tax rate of 26% versus the current 35% and just three individual tax rates - 9, 15 and 24, versus the current 10, 15, 25, 28, 33 and 35. I personally think Republicans could support that assuming there was some seriousness from the other side about slowing spending growth.

First of all, it wasn't a budget session. The Democrat controlled Senate does not do budgets. Obama's was rejected 97-0. It was regarding the debt limit. The Republicans wanted no new taxes and spending cuts (actually reduction in growth) to begin to return us to spending levels of the prior twenty five years (including Clinton). Obama and the Democrats wanted additional taxes on the rich, and little to no cuts (reduction in growth). Both sides played hard ball and bullied their way. The Republicans got no new taxes and Democrats got no real cuts except to defense (which doesn't bother most of them anyway). It was a compromise. A lousy one, but don't blame Republicans. They can't help it if Obama is a lousy negotiator. The reality is that Obama lacks the political skills to win these types of debates. You also don't understand why Obama has a hard time with his own party. It is because they don't get clear direction from him. If you think he is center-right then you do not understand where the center of US politics is. Where are Obama's right positions, let alone center??? Clinton governed in the center-right (center socially and right fiscally). Bush was conservative on social issues but spent like a drunken sailor, as Reagan used to say. That is why the Tea Party rose up - they saw the Republicans as the same as Democrats. Obama is certainly not in the center on social issues (now that he is being honest). His tax policies are also certainly on the left. Highly Progressive and little concern over deficits. His foreign policy is in the idealist camp (versus realist), which is more consistent with the far left (although W exhibited a naive far right idealist approach). Yet Obama thinks he can use the same negotiating skills he used on Boehner to get Iran to forgo nukes. What a joke. If you think W started us on the road to deficits, then you once again fail in an understanding of history. Clinton was an aberration due to the convergence of favorable factors - full economy, peace dividend, internet/telecom bubble, conservative Republican Congress. Clinton lucked out on timing since the internet/telecom bubble burst just as he was leaving. With a huge tailwind, Clinton had a few surpluses. Once the tailwind left the return to deficits came. They didn't start with W, they started getting significant with Carter. I'm not going to discredit everything you wrote line by line. I easily could. It just isn't worth the time. I'll end with this. If you think I want change because I am impatient you are dead wrong. I want change because the trajectory we are on is unsustainable. Four more years of Obama and $4 + trillion of additional debt may make it too late.

I never use trailing stop losses. In fact, I don't really get the logic of why you would want to use them. If you estimate intrinsic value and only buy with a large margin of safety, why does it matter if it falls 10%. In fact, you should welcome it, if you have additional capital to invest. Nowhere in your question did you discuss intrinsic value. Did it hit your IV estimate? Sell. Is it close to IV? Reduce. Why have a position with a smaller gap between current price and IV make up a larger portion of your portfolio. If it is still far from IV then hold.

I second that. On the other hand, W had ethics but made many poor decisions. I believe O's ethics are on par with Clinton's, but unlike Clinton, his only talent is drumming up the masses. He is not a policy guy, just a community organizer writ large. Between the three, I'll go with Clinton. W nearly took down the entire financial system...he can stick his ethics where the sun don't shine. The U.S. also was the most hated country in the world for the better part of his tenure, and there was probably more crony capitalism under his watch then the previous 100 years combined. You can dislike Obama all you want for his policies, but the U.S.' global stature is back where it was under Clinton or Reagan. And the biggest problem for the last 40 years has been U.S. dependence on foreign oil...whether anyone likes it or not, and you can debate all you want around the exact reasons (economic, innovation), that dependence is decreasing under Obama's watch. W couldn't even do it after invading Iraq and taking over the oil infrastructure there. You guys were all still driving 9 mpg Hummers then! I've heard five speeches now from the conventions...Ryan, Romney, Romney's wife, Michelle Obama and Clinton. Only one, Clinton, had a speech that talked about respect for members of the other party and trying to work with them. I hope Obama takes that turn, because that's what he needs to do. Cheers! I obviously disagree strongly with your political views. I also disagree with your understanding of the facts. W did not nearly take down the financial system. Did the system get near the brink of collapse? In many ways, Yes. Was it W's fault? If so, how? What did he specifically do, or not do, that nearly took down the financial system? Tax cuts? Obama supported renewing all of them and still supports renewing 80+% of them. Medicare Part D? I have not heard anyone call for its repeal? Two expensive wars? While unwise, and budget busters, they didn't cause the recession. Budget deficits did not cause the recession. Crony capitalism? Your statement that it was worse under him than the last 100 years combined shows you do not have even a basic grasp of US history. How is this W's fault any more than Congresses? In fact Congress is the one that writes the laws. (Which is what I find ironic about Harry Reid criticizing what Romney paid in taxes. It is not Romney's fault, he followed the law, it is more Reid's fault). Even the phrase "crony capitalism" is interesting in that it ignores crony governmentism (public sector unions, grants, etc). It is a congressional problem and ultimately a voter problem since we continue to let it happen. Fannie and Freddie? The blame there is more (but not exclusively) on the Democrats in Congress who resisted changes. How is a President to prevent a housing bubble? Greed blinded the buyers, originators, and lenders. Was the crisis due to lack of oversight on banks? Not solely, but it certainly contributed. Did W repeal Glass Steagall? Nope, that was Clinton and the Republican Congress. Democrats are running around saying that the crisis was caused by failed policies of the past? And therefore we need a new course. Of course they don't mention many specific policies. Interesting. Well those basic policies (lower taxes and smaller government) were started under Reagan and continued through Clinton. They worked fine for quite a while, and can in the future. US global stature is not the best barometer. Wars will lower your support. That Europe likes Democrats who share their views is not surprising. As for oil production increasing. Come on. Do you actually think Obama is that focused on it? What specific policies did he push for in order to increase production? How is he helping unlock reserves in the Bakken? How is he helping offshore drilling? It was the private sector that did it in spite of the obstacles. By the way, Iraqi oil is Iraqi oil. Iraqi production does not reduce our dependence on foreign oil. Lastly, what did Obama do that saved us from the crisis? He stabilized the financial system. That was done through implementing TARP which was passed at the end of the Bush presidency. Of course we still have a too big to fail problem which neither party has done anything about. He "saved" the auto industry. That too was funded under TARP. Of course he also did it through screwing bond holders and non-union pensioners. He passed a stimulus bill. Most recognize it for what it was. A handout to his constituencies, which greatly reduced its effectiveness. That you would like to see Obama talk about working with Republicans is nice. He has had four years. He chose not to. Look at Woodward's new book that reveals that the White House did not even have Boehner's phone number. He was the House Minority Leader. Obama doesn't even do a good job working with his own party leaders. Clinton and Reagan worked with the other party. When roadblocks occurred they went to the people and swayed them. Obama has done neither and shows no inclination to change. Time for change.

You cannot pick out one paragraph which refers to S&P changing their baseline revenue assumption and use it to say they are blaming Republicans for the downgrade. That is factually incorrect, misleading, and thus a lie. No wonder people cannot agree on the facts. If you are going to use just one paragraph to summarize what they said, it should be one actually talking about why they downgraded not why they changed their baseline revenue assumptions, which is a related but different issue. This is what they said - "We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade." Reasons given by S&P (and my comments): 1. Lack of progress on containing growth in public spending, especially on entitlements. (The blame would certainly fall on Obama and the Democrats since Ryan and the Republicans have shown the courage to produce a plan that reduces the growth rate to below nominal GDP growth.) 2. Lack of progress on reaching an agreement on raising revenues. (This certainly falls on Republicans. It shouldn't be a surprise since that is what many campaigned on (compromise is difficult when it forces one to renege on your campaign promises). I would also note that all Obama has proposed is increasing taxes on the rich which would reduce the deficit by less than 10%. Not particularly bold.) Sounds to me like S&P is clearly blaming both sides.

The article is as poorly written and fallacious as the original article. It doesn't address how fact checkers have disproved each of the points. The items under the third point are especially ridiculous. It is a convention speech. Why would he mention those things. Four years ago, did Biden state why his positions were far out of the mainstream? No. Did he mention how he was wrong on every major foreign policy decision of the last thirty years? No.

I was referring to the (conservative) financial way he manages Berkshire, not how companies hire and fire.

You are missing the truth about Buffett (and probably Munger). Buffett has certainly called for higher taxes on the wealthy, but that doesn't materially change the situation. An extra $80 billion of revenue based on a static analysis of implementation of the Buffett rule when we have $1.2 trillion in deficits is not solving the problem. Buffett never names specific items to be cut (or to grow at a rate below GDP growth) nor does he call for large tax increases on the middle class. It will take one or the other or a combination of both. Any other solution is pandering. Buffett has said we can run annual deficits of 2-3% of GDP. Over time, I might agree, but the problem is that there will be recessions and there will be wars. If the average over time is 2-3% then we have to acknowledge that deep recessions and wars will send it to 8-10% (and a world war could send it even higher) thus in the majority of years the deficit has to be smaller than 2-3%. Occasionally we should run a surplus. I'd rather our government run more like the way Buffett manages Berkshire. We certainly aren't doing that today.

That is one of the poorest fact check articles ever written. 1. Ryan claims Obama siphons $716 billion out of Medicare. This is TRUE. That some prior House budgets largely written by Ryan proposed siphoning it for deficit reduction doesn't change the fact. 2. Ryan says stimulus was patronage, corporate welfare, etc. This is TRUE. That Ryan asked for some funds for his district doesn't change the fact. 3. Ryan said Obama said the plant would be there another 100 years if his policies are enacted. TRUE that he said it and the plant apparently closed after not before Obama took office. 4. Ryan says Obama did nothing with Simpson Bowles commission report. Also TRUE. That Ryan fought against tax increases such that there was no consensus doesn't change the fact. IBD ran an editorial noting how "fact check" articles need to be fact checked themselves. They are right. Ryan is not talking out of his arse.

The Reagan tax cuts were dynamite because for years the purchasing power of the middle class had declined as a result of stagnant tax brackets and rapid inflation. By merely moving the tax brackets, it was a sudden relative jolt in after-tax income for the middle class. They went out and spent it which led to a boom in consumption, thus output/hiring rose to meet this demand, and ever since the Republicans have been saying that "tax cuts on investment lead to booms... just look at Reagan". Oh, and they can say that because Reagan also lowered taxes on investment. So there's room for them to misattributed middle class tax cut economic growth as coming from tax cuts on investment. This was a convenient excuse for cutting investment tax to 15% under GWBush -- not much firepower was delivered to the middle class consumers, but just to the investors. So personally I'd be expecting Romney to have learned from all of that. But no, http://www.csmonitor.com/Business/Tax-VOX/2012/0830/Romney-plan-would-cut-taxes-for-the-rich-Romney-adviser-confirms It looks like he plans to raise taxes on people earning between $100k and $200k, and paying for it by cutting taxes on people making more than $200k. I fear that by raising taxes on the many and paying for it by cutting taxes for the few, we'll wind up with less economic activity as a large number of people have less in their after-tax pay. Romney has clearly stated that this will not happen. Most of the analysts who have come up with this conclusion have done so by making incorrect assumptions (Brookings I believe). The percentage of taxes paid by the rich will not decline. Tax rates will. Liability will not due to elimination of deductions. It is really a simplification plan. It is highly unlikely that the party of tax cuts is going to suddenly stick it to a major income group.

While I think it would be wiser to build infrastructure projects when times are bad since costs would be lower for both material and labor, I think your estimation of the beneficial impact on the unemployed is way too optimistic. Most of the unemployed have no construction experience.

I agree. Take the 35k, max your 401k. I would also get a $500,000 to $1 million term policy. The term life insurance would probably cost under $300 for the 500k policy and ~$450 for the million, per year.

10-Q is out and by my math it seems clear that newest holding is BAC. DJCO is up to $82 and has $60 of cash and investments, net of deferred taxes. First half of fiscal 2012 earnings per share of $2.72. Four times earnings net of cash and investments. If the US lowers corporate tax rates to 25% in the near future that would not only improve earnings it would reduce the deferred taxes amount. Double benefit.

I seriously doubt that WEB could raise a fraction of the money he got being Ben Graham's smartest disciple in today's environment. Massively more competition, and people that are as smart as him to compete against, makes today's situation far more difficult. Just ask any portfolio managers who operate on this board. He had the benefit of being in the right situation at the right time in history. I agree. The early years would have been more difficult. Especially if he tried the same approach of heavy concentration, illiquid stocks, yearly reporting of results, and no disclosure of holdings. Current auditors may have pushed for illiquidity mark downs too. He also had many investors that today would be deemed non-accredited. I also think that by the late 1960s he probably could have raised immense amounts of money.

I won't judge his motives but I will judge his arguments. Out of the whole interview what really annoyed me was the fallacious argument that if we don't pass the Buffett rule, and raise the $47 billion over ten years from the super-rich, it means that 47 million Americans will have to pay $1,000 each. It is not an either or situation. No one has called for raising taxes on the middle class. If I heard it right, Whitney's assistants taxes are higher solely due to payroll taxes (50% of her 33% versus just 1/2 of 1% of his 25% when including both employee and employer contributions). Since payroll taxes are all earned back by the payor if they live to normal life expectancy it is a different animal than income taxes and in my opinion should not be included. Over a lifetime Whitney will pay a significantly higher rate in federal taxes (income plus payroll) than his assistant just like Buffett will.

I am not a lawyer but have started a hedge fund in Washington state. If you are less than $25 million in AUM you will not be required, nor likely allowed, to register with the SEC. It will be on the state level. I cannot speak to NJ requirements. Every state is different. Some follow SEC rules exactly, others are more strict, some probably less. You need to find out NJ law. Six years ago it cost around $30 to $50k in legal costs to set up the partnerships and write the fund documents. You might want to call a reputable firm and ask for an estimate. Expect ongoing legal costs as well if the state is strict. What you describe has a performance fee which can only be charged to "qualified" clients. I'm pretty sure there are articles online on How to Start a Hedge Fund. Lastly, you said later that you would run it out of your home and handle the administration. That may or may not be doable. In my state you would not be allowed to self-administer. I must have a custodian, a third party administrator, a yearly audit, and an independent representative to authorize all disbursements from the fund. This adds to yearly operating costs. I know in other states you can self administer. Lots to think about. If it is overwhelming then it may be that you are not cut out for running your own fund. You end up being more than an analyst. You have to be an administrator and marketer as well. Thanks for the info. This makes me think that I should probably wait for some time until I've gathered enough wealth to be able to spend $50k in legal costs. Also, I would probably me managing friend&family money, many of them who are not "qualified clients". I think the whole "qualified client" rule is just ridiculous. Why do you have to be rich to be able to invest in hedge funds? I'll call the NJ Securities Bureau to find out state specific rules, but thanks for giving me a rough estimate. You could always forgo the performance fee, charge a 2.0% management fee. I would also look into Interactive Brokers. IB appears to have a fairly simple platform for a registered investment adviser to trade in a master account and allocate to individual clients.

I am not a lawyer but have started a hedge fund in Washington state. If you are less than $25 million in AUM you will not be required, nor likely allowed, to register with the SEC. It will be on the state level. I cannot speak to NJ requirements. Every state is different. Some follow SEC rules exactly, others are more strict, some probably less. You need to find out NJ law. Six years ago it cost around $30 to $50k in legal costs to set up the partnerships and write the fund documents. You might want to call a reputable firm and ask for an estimate. Expect ongoing legal costs as well if the state is strict. What you describe has a performance fee which can only be charged to "qualified" clients. I'm pretty sure there are articles online on How to Start a Hedge Fund. Lastly, you said later that you would run it out of your home and handle the administration. That may or may not be doable. In my state you would not be allowed to self-administer. I must have a custodian, a third party administrator, a yearly audit, and an independent representative to authorize all disbursements from the fund. This adds to yearly operating costs. I know in other states you can self administer. Lots to think about. If it is overwhelming then it may be that you are not cut out for running your own fund. You end up being more than an analyst. You have to be an administrator and marketer as well.

Don't know where they got that Walter Scott's father started Kiewit. It is Peter Kiewit Sons not Walter Scott Sons. Interesting article nonetheless

Lynden, WA It is a border crossing to British Columbia, less than an hour to downtown Vancouver BC. Beautiful when it doesn't rain, all five days a year. :)

Not necessarily. Take BAC. It looks like the fund had 0 shares at 9/30/11 and then it becomes an 11.4% position at 12/31/11. BAC closed the year at $5.69. It is now $9.85. If he chose to take profits on his gain is that a trading fund or good timing on buying something cheap and seeing it trade back toward fair value?

Brutal 5 years? The market is up 100% since the lows of 2009. Who knows if he was even invested in anything for 2007-2008. You can look it up on SEC Edgar. The fund's semi-annual and annual reports are all there. At Dec 2008 the fund was 13.7% cash. Wellpoint was largest holding (10%) and SuperValu was second (6.9%).

His returns are due to a very good 2009 and 2010. He did have a very small base those years. Not that I am one to criticize about that since I have the same issue. June 2008 $679,000 June 2009 $1.5 million June 2010 $4.7 million June 2011 $15.4 million Dec 2011 $14.6 million BAC fans should like that he had over 10% of the fund in BAC at year end. The next few years will reveal the truth.