prunes

I'm thinking from the perspective of an end buyer. The end buyer is going to be wary about buying a home in a complex where the home owner's association is being propped up by the developer, and where the potential exists that the developer might stop funding maintenance. Hence, a 50% haircut might actually be a fair discount.

Honestly, as a potential buyer I would be worried about the common areas falling into disrepair. I imagine it takes a lot of money to maintain them and if the lots aren't sold, the developer has to continue to dig into its own pocket to fund the difference.

There is no "they."

[amazonsearch]Expected Returns: An Investor's Guide to Harvesting Market Rewards[/amazonsearch] Has anyone here read this? Please share your thoughts!

I guess this means I won't get a chance to buy BRK-B at $65?

The AIG thread is dead these days so I figured I might cross post my question to the broader forum. A common criticism of AIG I see is that it historically underpriced and underreserved its property & casualty business. It is true that the company's initial estimates of reserves were inadequate. However, this appears largely due to its exposure to business lines with long tail risk and that are difficult to price: excess worker's comp and casualty, D&O, etc., in addition to continued payments owed on asbestos contracts written some 25 years ago. My question is as follows. Assuming it is true that AIG is shifting to business with less tail risk (and assuming that it reserves its remaining lines properly), eventually you should see the numbers begin to improve as the losses associated with this tail risk phase out. How does one determine the "half life" of these bad contracts AIG wrote? I checked the financials but didn't see a disclosure related to this (although it is likely I might have missed it).

http://www.washingtontimes.com/news/2011/sep/6/white-house-mum-labor-leaders-fiery-war-threat/ http://news.yahoo.com/longshoremen-storm-wash-state-port-damage-rr-144921214.html Hoffa's comments came on Tuesday. Today, a Longshoreman union stormed a port, angry because it was employing a rival union. I love that. Isolated incident, or a sign of things to come?

I eat a relatively low carb, relatively high saturated fat diet and am thin as a rail. I'm also 26. *shrug*

My BRK order got filled at $70 ;D Next up $65

Today was exciting. I held off in hope of lower lows tomorrow. I saw an interesting fact today noting that the average mutual fund cash balance is only 3 - 4%. Doesn't seem unreasonable to think that redemptions will cause forced selling in the near future.

Michael Burry's advice to get a Canadian bank account seems prescient ;D

Parsad, where do you stand on the debt deflation issue? Have you read Mauldin's book / the piece Ray Dalio had in the CFA Journal?

I have a tiny voice in the back of my mind whispering that when people manipulate stocks it only makes their prices more inefficient for the benefit of people like us.

My takeaway so far is that the only way to truly make it big in this business is to sell your soul to the devil ;D

Just started reading this. The allegations are definitely wild. How credible is any of this?

A little off topic: Government obviously isn't like a business but in many regards businesses are held to higher standards. Compare government accounting vs. business accounting, the legality of insider trading for members of congress (and their refusal to make this illegal!), etc.

A lot of the major banks actually have websites setup with their REO inventory available in a searchable database. Example: https://servicing.chase.com/reo/property/FeaturedProperties Is this similar to what you are looking for?

He sounds like he would be hell to work for.

Per Marginal Revolution: According to the report, between 1990 and 2006 — the year in which issuance of Asset-Backed Securities (ABS) peaked — assets with the highest credit rating rose from a little over 20 per cent of total rated fixed-income issues to almost 55 per cent. Think about it. More than half of the world’s debt securities were, for all intents and purposes, considered risk-free. In 2006, that was nearly $5,000bn of assets. The financial crisis had a lot to do with triple-A ratings being slapped on to subprime securities which didn’t warrant them, we know that. The report says between 1990 and 2006 ABS accounted for 64 per cent of the total growth in the amount of AAA-rated fixed income, compared with 27 per cent attributable to the growth in public debt, 2 per cent to corporate and 8 per cent to other products. But watch what starts happening from 2008 and 2009. The AAA bubble re-inflates and suddenly sovereign debt becomes the major force driving the world’s triple-A supply. The turmoil of 2008 shunted some investors from ABS into safer sovereign debt, it’s true. But you also had a plethora of incoming bank regulation to purposefully herd investors towards holding more government bonds, plus a glut of central bank liquidity facilities accepting government IOUs as collateral. Where ABS dissipated, sovereign debt stood in to fill the gap. And more. It’s one reason why the sovereign crisis is well and truly painful. It’s a global repricing of risk, again, but one that has the potential for a much larger pop, so to speak. http://marginalrevolution.com/marginalrevolution/2011/07/sentences-to-scare-you-the-most-important-blog-post-in-the-world-today.html

I don't think anyone is seriously worried that the US won't repay its creditors. I think you see this reflected in the bond markets. Much more worrisome is that the US would try to stealth default through money printing. Note that the current theatrics in congress right now potentially help avert the latter scenario in the future. Also, if you have to ask whether someone's credit rating is AAA, it probably isn't. Finally, Stan Drunkenmiller had a good OpEd in the WSJ a few weeks ago on this topic.

I just read Accounting for Value by Stephen Penman. This is a fantastic book that addresses the intersection of valuation and accounting, with its foundations in the Graham method of investing. The book gives extended treatment of how to account for growth, leverage, and risk in one's valuation. It also spends a good portion of the book discussing the perils of fair value accounting.

Related: http://www.zerohedge.com/article/birthdeath-adjustment-was-responsible-over-50-payroll-gains-past-year

To anyone's knowledge, is there a good book out there (or perhaps blog source) that gives a comprehensive discussion of the controversial adjustments that the US government applies and historical changes that have been made to the various economic datasets it tracks. E.g. the NFP birth/death adjustment, CPI hedonic adjustment, the emphasis of core CPI over long periods of time, etc. I know that there are blog posts that criticize each of these things and tracking that down isn't difficult, but I'm more interested in a) perhaps a more balanced argument and b) what other adjustments I might not be aware of. Thanks

Some great discussion of house prices and the AUS bubble in this youtube video as well: h/t Value Investing World

I don't like Einhorn, and I'm not particularly fond of Ackman, but the last thing I would describe all three as is as "average investors." They are anything but and their records show that. Cheers! Why no love for Einhorn or Ackman? I love those guys.