opihiman2

Google tried selling themselves to Alta Vista, Yahoo, and Excite for a million dollars back in the day (1999). Of course, hind sight is 20-20. I don't think it's helpful to look at what-if's. Blockbuster has many challenges. I hope it survives after the pre-pack Ch. 11.

When I first bought Fairfax many years ago, I decided to put all of my money that I saved up before I went to medical school into that one idea. So, at one point, it was 100% of my portfolio. I haven't added to it, but I have bought protection recently to the downside. Including Google and AEO, it's now roughly 50% of portfolio.

I very much agree with this point. I think it's the most important metric in valuing a home. However, there are some other variables that should be also be considered in conjunction with this metric; e.g., the $/sq ft for the total lot size and for the house size, the age of the home (this is important since old homes need much more maintenance), and the usable lot size (i.e., is part of the land on a hill?). Finally, if you believe median incomes are going to stagnate in the U.S., then you should adopt the view that housing prices should not increase. I believe median incomes will stagnate, as they have been, in the years to come. Why? Unemployment should lead to wage pressures as supply is mopped up. Also, overseas outsourcing will likely increase wage pressures for certain industries like I/T, customer service, manufacturing, etc.

I don't know that I can refute the numbers in that article but it sure seems to me like they did some cherry picking to try to paint the rosiest picture possible. They talk about the tax credits like they were such a good thing but fail to mention what most everybody acknowledges, which is that all the tax credits did was pull demand forward and now that they're over we're seeing prices plummet. I don't monitor the whole state but I have definitely seen a good number of houses in my market (far NorCal) fall significantly just in the last two months, like from $329K in July to $279K as of last week. I see more and more houses on the market all the time and I'm not detecting a whole lot of movement. Commenters at the end of the article indicate the same thing is happening in upscale coastal markets north of San Diego. The elephant in the room of course is the HELOCs, which got not even a mention in that article. With unemployment still hovering around 10% and the affordability index (ratio of house prices to annual incomes) at historic lows, who exactly is buying? I concur. Prices around here in California have actually begun dropping again since Federal tax credit props were removed. Also, the new California tax credit is overburdened with restrictions, conditions, and all sorts of non-sense to be meaningful or helpful. I've been in the market for a home for over a year now, and it's a mess. I'm pretty turned off by what the governments are trying to do by propping the market. Not so much in the way of price discovery, but the mental dysfunction it has caused in the marketplace. First, I had to deal with aggressive realtors hoping to land a buyer. Then, I had to deal with stand-offish realtors as prices were coming back. Now, I'm dealing with desperate realtors trying to prop up their sales again. It's basically a bipolar marketplace, and I'm pretty unnerved by it. I'll give it some time, because I believe home prices will stay flat for a long time to come.

I would also be concerned with the growing disparity between the rich and poor in America. Poverty here has hit a new 40-50 year high. And we all know about the faltering middle class. Will the trend continue? That depends on the economy, obviously. What's interesting to me is even with the contraction of credit, the economy has posted gains in real GDP. This is impressive to me. In the past recessions, GDP increased along with credit growth. So, if credit can be expanded, I believe the U.S. should see significant gains in GDP. And credit expansion has seemed to turn the corner.

Whoa, thanks for all of the responses!

is watsa_is_a_randian_hero really that confusing with watsa? my handle is a tribute to him - I am saying he is akin to a randian hero for the battle he has gone through the last decade with hedge funds. I dont think its that hard for people to copy the full name when referring to me - or do something like hero - i've seen that. Either way, I don't really care, if Parsad wants me to change it I will. I'd rather devote time/energy/discussion to things that matter... I've been meaning to ask, but what is a randian hero? It's a most interesting handle. Ayn Rand was a precocious little Jewish girl who grew up in St. Pete -- Petrograd during the Russian revolution. She saw the horrors that occurred when collectivist ideology developed to its logical end: from the subordination of the individual to the altruistic welfare of the socialistic collective and then to the enslavement of everyone to the state. She escaped to the US when she was about twenty, and stayed with a relative who owned a movie theater where she watched hundreds of films. She had written a short biography of an actress that was published while she was in Russia. Then she moved to Hollywood to become eventually a screenwriter. Her novels and some of her screenplays celebrated the individual over groupthinking manipulators and capitalism over socialism. Her Randian heroes stood away from the crowd and were true to ethics based on honest exchanges of value, despite many attacks and trials by those with a collectivist mentality. Ah, thanks for that. I was extremely confused by the handle. Watsa is Canadian, and I thought randian hero was some sort of word play on that. Does anyone know if Watsa subscribes to the libertarian philosophies of Ayn Rand?

is watsa_is_a_randian_hero really that confusing with watsa? my handle is a tribute to him - I am saying he is akin to a randian hero for the battle he has gone through the last decade with hedge funds. I dont think its that hard for people to copy the full name when referring to me - or do something like hero - i've seen that. Either way, I don't really care, if Parsad wants me to change it I will. I'd rather devote time/energy/discussion to things that matter... I've been meaning to ask, but what is a randian hero? It's a most interesting handle.

Ahhhh slow modems! I'll have to ask my bro because I cant remember exactly but i'll bet we were on something slower than that! Let me check! I started frequenting BBS'es way back in the day--around 1985. My first modem was 300 baud max. It would take forever to download software. Then I upgraded within a year to 1200 baud. It was amazing to see the huge drastic speed improvement. Then I got a 2400 baud modem, then 14.4k bps. US Robotics was THE modem manufacturer to go to. Their modems were head and shoulders above and beyond the rest at the time. It's very interesting to see that in technology, moats can erode very quickly. I think US Robotics is still around, but they are a shell of the company they used to be. I wonder where Cisco will be in another 25 years. Anyways, that's another discussion altogether. Also, I've never heard of handles ever being mentioned anymore. Nearly every site I go to asks you to enter a user id. Back in the day, every BBS prompted you with handle: password: then some ASCII art and menu system. Man, those were the days.

Im almost positive that is not possible. I run another forum myself and there is no provision for that. Personally, I dont see a problem with using "handles". That is how the internet works. I know I couldnt use my own name when i first got on the previous board because everything i wrote (at that time) for public consumption would have had to go through a compliance system. Wasnt worth it for me. I haven't heard anyone call userid's as handles in such a long time. That's way back in the old BBS days for me. Smazz, did you ever use the BBS systems back in the 80's?

Costco??? In what way? I'm thinking more like Ross.

A value trap? In what way? Price to book?

Really? It's the butt of all jokes on the gaming forums. Perhaps, but they're boosting prices for their live service. ($50/yr -> $60/yr) So, it can't all be bad. Yeah, I've read about it. I've been sensing a huge backlash from the Xbox community.

There is another interesting facet about the QE programs that I haven't yet heard on this forum. It's an interesting perspective to consider: one of the goals of QE is to stimulate the economy by blah blah (we all know the drill). What's interesting to me is there seems to be a dilemma here. As a gov't bondholder, why would I want to spend when I know the gov't will be trying to lower interest rates? I should just keep my bonds. This policy seems to favor the "rich", or folks who are savvy enough to buy bonds. If you believe that the gov't is in a liquidity trap, then it's apparent to me that there is no bubble in Treasuries.

Really? It's the butt of all jokes on the gaming forums.

I ignore everything Siegel says. It's also bothersome that he's a finance professor at one of the top business schools in the U.S.

Surprise surprise, the counterparties are our old friends at Citibank Canada and Deutsche Bank! I guess these guys learned nothing from the whole CDS thing. Maybe it's not such a good idea to sell instruments where you can lose a boat load and stand to gain a very small and capped amount. What the hell do I know though, I'm not a CFA and the highest math I got to was Calculus 2. ::) Q. What's the second derivative of stupidity? Zero.

You made a statement that says QE equals inflation and leads to wealth redistribution. This is clearly wrong, and the fact that you guys are still arguing for it is mind boggling. First, the statement that QE equals inflation is clearly false as the situation in Japan shows. If the statement is wrong, then you must alter your assumption or hypothesis. Perhaps QE alone does not lead to inflation when it doesn't stimulate lending or borrowing. Whatever the new statement or hypothesis is, it must accommodate this new observation or proof. Parsad makes at statement that it generally leads to inflation, and offers a reason why it may not. I can accept this. But to make the assertion that QE leads to inflation is preposterous. I just gave a counter example that proves it doesn't.

I read this in the Economist today. I thought it was pretty interesting: http://www.economist.com/node/16881727 What's interesting is the amount of shipping activity that has grown in the past 20 years. Not surprisingly, China dominates the list after 20 years of astounding growth.

Yeah, me too.

QE = Inflation (this is the whole point, search any source you'd like) A surprise or unexpected increase in inflation can create wealth redistribution from creditors to debtors (this is also obvious) No, it's not. You might like conjecture, but I don't. If this was the case, I would start believing in things like the Bible, Heaven and Hell, and an afterlife. Also, QE does not equal inflation. I think Japan disproves your idea of QE--which I believe has it's origins as a defined word in Japan during the 80's. And the idea that it's a form of wealth redistribution is absurd.

Munger makes very good points here. In terms of economic crisis, I believe comparing March of 09 to the Great Depression is like comparing apples to oranges. I mean, really, has anyone heard of people working for food in the past year? I can't say what the Great Depression was like, obviously, but judging by the stories from the people that lived through it, it seemed to be much more painful than what happened in the past year. Although, who knows, without the massive intervention, we might have seen people working for food in 2010. Also, QE is definitely not wealth redistribution. I need a citation from a credible source, Watsa.

Wow. That's a huge boat load of reading. The common theme I have seen for top performing money managers is that they all read a lot all the time. From that recent TV expose with Warren on his trip to Asia, he seemed to sleep very little and read tomes of information. I think that would burn me out quick. Parsad, do you sleep much? Also, what is Quantum? And why do you do so much, but your partner seems to do so little. Or, am I just reading that wrong.

That's a good point. Buffett did side-step the 70's carnage by liquidating and returning capital to partners. I forgot that Munger got swamped in that period. So, if Munger is your hero, wouldn't you stay fully invested? :) J/k'ing. Well, although I recognized two major asset bubbles, and avoided the ensuing carnage, I don't have the ability to see a clear theme that could derail equities going forward. In the case of the bubbles, I agree with you that there was a chorus from the gurus like Prem and Buffett, and even major media outlets, warning everyone about what was to come. Lately, I've read so much conflicting opinions, it almost seems evenly split: deflation, inflation, double dip, Japan, etc... I don't know. It seems to me that like you, I'll just have to take a side and wait and see.

:) Yes. Well, to be frank, I only a few companies: FFH (for a long time too), GOOG (since IPO), and recently AEO. Although, a lot of the large cap stocks offer decent returns with very little risk for the long term buy and holder like myself. I like JNJ, since Berkshire has been adding, and BDX has a long term track record for double digit ROI. I also liked Kraft, although the Cadbury purchase was questionable. I also liked INTC, but what is it doing buying McAfee? You don't see any large cap stocks that look good for long term buy and hold?