alpha231616967560
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Posts posted by alpha231616967560
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I can't comment on Southwest but MSFT introduced great business model innovation in the industry. While not much of a technology innovator, they changed the way software was developed and sold. Apple builds on other people's ideas - they don't introduce clones of competitor products. The iPhone looked and behaved completely differently from preceding smartphones even though it had many of the same features - making calls, browsing, calendars, emails, etc. I think Jobs's belief was that if they can't introduce a radical improvement, they wouldn't bother entering the market.
I don't think that anyone would argue that Apple doesn't have innovative products. They are masters at product design and marketing. And their primary source of revenue is selling products. My point is that this isn't a critical skill for a company like Google, for which the primary source of revenue is advertising. They can contract with lesser companies than Apple to mimic Apple's products (to some degree - though Droids do mapping way better IMO) and as far as evaluating the business goes, it matters not.
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One thing I'll give Microsoft credit for with Metro & Windows mobile is that at least it's not a blatant copy of Apple's iOS like Android is.
Exactly, Microsoft has been releasing some very innovative products like Kinect and Surface. Their Metro UI takes an active tile-based approach which is very different from the iPhone icon based approach. The Metro world takes simplicity to the extreme unlike the textured, eye candy world of the iPhone. They are completely different philosophies.
Google releases clones of competitive products with small changes - Android, Google+, Propeller, Google Offers and so on.
Yeah this was one of the concepts that was highlighted in "Great By Choice: Uncertainty Chaos and Luck—Why Some Thrive Despite Them All" by Jim Collins - the idea was that of the company that was able to "riff" on the successful idea of another company and execute the idea better than its creator (largely by applying the other concepts in Collins' book, which is very worthwhile). Memorable examples cited in the book were Southwest Airlines, Microsoft and Apple. The companies that master this skill are at a significant advantage.
As a consumer, I expect Google to reproduce some version of anything attractive that their competition provides, and they seldom disappoint.
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Well... if we're talking wasteful government spending with outcomes opposite the intended results, the prize would go to marijuana criminalization.
$14 billion is spent on marijuana enforcement each year.
http://www.cnbc.com/id/36600923/The_Cost_and_Benefit_Arguments_Around_Enforcement
A report endorsed by a large group (500 including Milton Friedman) of economists estimates the US could raise $10-14 billion in tax revenue each year if marijuana was legalized. http://www.prohibitioncosts.org
That's at least $24 billion each year (For comparison, a favorite GOP talking point is to eliminate the EPA, whose budget is $9 billion per year). This is before the cost to jail people convicted of marijuana related crimes.
This is also before the health care savings, which would be large over the long term, as some people would shift their recreational drug use from alchohol to marijuana. Weed is less addictive than alchohol (25% as addictive), has substantially less long term negative side effects, has a higher lethal dose to effective dose and thus no deaths directly attributed to consumption (Weed: 50,000 to one, impossible to overdose. Alchohol: 5-9 to one, 3000 alchohol poisoning deaths annually, 50,000 hospitalizations), and substantially less deaths from driving accidents, as it is safer to drive high on marijuana than drunk (States that legalized medical marijuana saw car accidents drop by 9% versus states that did not legalize http://healthland.time.com/2011/12/02/why-medical-marijuana-laws-reduce-traffic-deaths ).
Despite all the costs, the intention to stop marijuana use has completely failed. The US has the highest rate of marijuana use among developed nations. Compared to the Netherlands for example, which has extremely lax drug laws and is home to famous weed haven Amsterdam, the US has over twice the percentage of people who have tried marijuana and nearly twice the percentage of people who have used in the last month. (http://www.drugwarfacts.org/cms/?q=node/67 #12)
Of course defense and entitlement waste is huge on an absolute dollar basis, but at least some portion of the total spending goes towards legitimately useful things.
I am also an advocate for legalizing marijuana. I always refer back to the William F. Buckley article "The War on Drugs is Lost".
But for me, the other ludicrous portion of marijuana being illegal is that hemp (the workhorse brother of marijuana which contains no magic juju) is also guilty by association. This costs our culture a lot since hemp is cheap (requires no herbicide, little pesticide and generally is among the first plants to grow in a clearcut forest) to grow and its uses are manifold - paper, textiles, plastic, food. In fact the first American currency was printed on hemp, but the cotton lobby won in the end and it was made illegal.
The good news is that it does seem to me that marijuana is headed for blanket legalization in the next decade or so based on the number of states that have been writing more and more accommodating laws for medical marijuana.
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It has been my observation lately that states that have high re-distribution (California) some common services like roads are worse than in states that have less re-distribution (Arizona & Texas). If anyone has driven in the Calif/Ariz/Nev region you know what I mean.
Packer
Interesting observation. I'm curious about what defines California as a state with high redistribution for you. Is it the state tax? Self employed tax? Rate of pay / pension for public workers? Something else altogether?
Cheers,
Paul
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I just finished this book. I liked it for its simplicity and for the quality of the people quoted. There are Darwin, Buffett and Munger of course, but also Richard Feynman, Albert Einstein, Sherlock Holmes, Confucius, Oscar Wilde just to name a few. All threaded artfully on a fairly consistent philosophy that can be described as insightful rationality, the power of systems, or similar.
I liked that the portions that pertain to investing were also concise and consistent along the lines of Warren Buffett's ideas, but supported and fleshed out by other thinkers.
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I get Value Line and Morningstar through the electronic database of our public library. It isn't limited in any way (I've subscribed to both in the past), and all of the different editions of VL are available. Worth a look if you have a good public library...
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[amazonsearch]Great By Choice[/amazonsearch]
This book was a fascinating profile of so-called 10xers - companies that achieved greatness despite very difficult operating environments. The book compares each 10xer with a "comparison case" of a similar company that had similar opportunities, but somehow didn't manage to capitalize upon them. For instance, Intel is compared with AMD.
The 10xer companies profiled are Amgen, Biomet, Intel, Microsoft, Progressive Insurance, SW Airlines and Stryker.
The book does a thorough job of comparing the companies based upon empirical data, and it gives many examples of where the 10xer company did something right, mainly due to their in-built culture. The authors also talk about the role of luck (inconsequential when it comes down to it) and the role of the three essential qualities of the 10xer management team.
Discipline, Paranoia and Creativity are the three quintessential 10xer qualities. As a small business owner, I found the book both inspiring and useful. The research was both meticulous and well-presented.
Paul
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I am a bit simple, but I have always just done my best to purchase the most attractive possible businesses at fair value or preferably much less and held them through whatever came up in the ensuing years. If nothing about the business changes, I stick with that through thick and thin. No hedges other than holding securities with some diverse correlation, very little 'dry powder' unless I can't find suitable investments to park it in. I don't need the capital for ten or twenty years. If I did, it wouldn't be invested in the securities markets. It seems like time horizon is the one place where I can control my own destiny. As long as I am willing to remove that variable from the equation, I will be fine.
I am always open to different approaches than this and I am certainly not above learning something new, but I've never heard a solid rationale for hedges, etc. for an individual investor.
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I recently drove from Texas to Oregon and listened to this Planet Money penny opera. It is quite entertaining and even fairly insightful with regards to Europe's economic history up to now, so I thought that I would share it here. I hope that you all enjoy it.
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I like how Klarman acknowledges the necessity of arrogance and humility coupled when buying a security (I know more than most who are selling, but... I could be wrong).
I also like how this charity that Seth and his wife support is all about history. It is an interesting comment on the intellectual underpinnings of success as a value investor.
Great interview. But how could you miss with Charlie Rose interviewing Seth Klarman.
Thanks a ton for sharing this.
Paul
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Seems to me that he is simply trying to increase the quality of information that an attendees walks away with. I can imagine that as the annual meeting increases in size each year, the questions get more random and maybe less focused on the business of berkshre hathaway. This seems like an attempt at refocus. I don't imagine that having analysts asking 1/3 of the questions will have ant effect on.the stock price either way.
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[amazonsearch]Boomerang[/amazonsearch]
This is mostly Michael Lewis' take on the events in Europe, but includes Iceland. It is a rehash of several of Lewis' published Vanity Fair articles. Having read widely on the Europe situation myself, and even having read a couple of the Vanity Fair articles previously, I still found this book hard to put down. Lewis has the knack for allowing his insight to guide the narrative to the place that is most revealing of the situation at hand. And it is fairly hilarious in spots despite the grim subject matter.
There is a chapter for each of Greece, Ireland and Germany. The author does well at getting at the pithy core of each country's woes / current situation and the crucial elements of the path that led them.
A quote that occurs to me (on the Greek citizenry): "It behaves as a collection of atomized particles, each of which has grown accustomed to pursuing its own interests at the expense of the common good".
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This is the link I was talking about. http://www.nytimes.com/2011/10/23/magazine/dont-blink-the-hazards-of-confidence.html?pagewanted=all
Fascinating article. I have often observed that my favorite people after which to model my own behavior are those with loads of humility coupled with above average results. People with the sense to be humble are often the ones who learn / adapt most readily even when they are highly accomplished.
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Financials and basic materials make up ~50% of his portfolio. This is his position listing as of 6/30 for those who are interested: http://www.gurufocus.com/holdings.php?GuruName=John+Paulson&sort=position
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Excellent interview with Michael Lewis on his new book (Boomerang). His perspective on Europe (like a lot of his writing) is very insightful.
Aired on Sept 30, 2011:
http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=140948138&m=141041912
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The Kindle is now (as of yesterday, I believe) allowing library books. Do you have a local library that you can get books from via the Kindle?
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One of my favorite parts of the Consuelo Mack interview -- "In February, I was a hero. Now, I'm a bum. So we'll see six months from now." ~ Bruce Berkowitz
Yes that stuck with me also. Value investing in a (somewhat abbreviated) nutshell.
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I think that Rand's writing is more relevant today than ever before. It's more about the human spirit and what is possible than any particular political ideology. She was an ardent supporter of capitalism, but because she believed that it is the economic platform that provides the best incentives and avenues for individual achievement, and therefore the best macro policy. Many of our governments leaders would do well to read her work!
That said, it is fiction, and of course it omits countless complexities of the real world. That doesn't diminish it in my estimation. I thoroughly enjoy her writing.
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I think that this person is a member of this forum. Check out posts from manual of ideas: http://www.cornerofberkshireandfairfax.ca/forum/index.php?action=profile;area=showposts;u=140
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I recently came across this article that lays out some scenarios for the European banks (including RBS) given what the author (Egan-Jones) deems likely outcomes in the each of the peripheral nations:
They actually estimate the RBS exposure at €105b and that 70% of that will eventually be written down.
This is one of the clearer summaries that I've read of the situation in Europe as it pertains to the Euro-banks.
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It would be strange for WFC to offer to refinance if they held the loan in their own portfolio. Why would WFC lower its interest income?
Now if WFC had sold off the loan and currently just serviced it, then it would be very wise for them to offer the refi since they can resell the new loan for a profit.
I thought so too. But they still hold the loan, and as I said they offered it twice. Go figure. I do have good credit, and maybe it was a reaction to the sub-prime mess. So now the question is how to get them to do it again ::)
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do you ever worry about why they would do that?
Just good business practice of taking good care of your customer?
Maybe there is some sort of incentive for your bank rep?
How does that compare to the variable rate?
I have certainly wondered, especially being a WFC shareholder. They actually just mailed me a letter one day saying that they wanted to refinance the property at no cost to me. No bank rep. I can only assume that it's a customer retention strategy, though twice in 4 years seemed excessive to me (not that I would turn them down...). Their ARM is currently 2.5%.
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I have a mortgage with Wells Fargo, and they have refinanced for me (at their suggestion) and for some reason they picked up 100% of the costs *twice* in the past four years. I believe that my current rate is 4.125. I am hoping that they'll do it again.
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Anybody has an exhaustive list of preferred trust. I guess some of those must have gone down quite a bit with the volatility. I'm interested by Trust Preferred because they won't count as Tier 1 capital pretty soon. So even if you are buying 30Y preferred you might get the principal back much sooner.
BeerBaron
There are trust issues intermingled here, and it is an otherwise useful reference for preferred shares: http://online.wsj.com/mdc/public/page/2_3024-Preferreds.html
Dimon: Impact of Greece Default on U.S. Banks Almost Zero
in General Discussion
Posted
Later in the article, he says "The real issue is Spain and Italy."
I think that he is just pointing out that Greece is small enough and baked into Europe's economic cake enough that it isn't going to cause any major ripples. Most investors in Greece have already taken some write-down.
The real problem (Italy, Spain default which seems very likely to be the beginning of a much wider domino effect if it happens) would definitely not be "Almost Zero" and I think that's exactly what he's saying in a roundabout way...