Eric50

Great short article on how Buffett sees cash as a call option with no expiration date. http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/for-warren-buffett-the-cash-option-is-priceless/article4565468/

Thanks, I hope your friend is right!

I believe you are mistaken if you believe that smart hedgies are for the most part democrats. My experience is that an overwhelming majority are republican. Many hedgies jumped on the Obama bandwagon in 2008 IE: Loeb but have since realized that was the biggest mistake. In my experience, 9 out of 10 successful people I know are conservative and/or republican/libertarian leaning. I generally don't like ZH because they are too negative for me and I find influence people to be bearish on markets. But yesterday I was sent a very good piece from ZH: http://www.zerohedge.com/news/what-mitt-romney-also-said-glimpse-endgame This situation may have reached the tipping point where it cannot be reconciled without massive inflation. The most ironic part of all this is that in the end the nannystate will have punished the lower classes more than anything as the price of their basic goods/services/energy will rise in real terms to levels which don't correlate with their levels of productivity. The rich will have no problems buying groceries when prices double... The Romney quote in the ZH article is quite interesting. It means he understands the issues the USA is facing. Sadly, I believe the odds of him being elected are pretty low now. Probably 10-20% max. There is a huge correlation between a strong stock market in Sep-Oct and the incumbent being reelected. QE3 might have been the trigger in favor of Obama in this campaign. Romney has said before that he would not reappoint Bernanke. This might have been a huge mistake: Bernanke started to print a few weeks before the election date.... I'm not saying the election is rigged, I'm just wondering.... It's easier to leave a legacy if your term lasts longer.... Maybe it was not even conscious from Bernanke; he just did not have a good incentive not to print...

I read his daily letter. He is one of the best to help us understand the macro picture and what the central banks are doing. He also shares some of his investment ideas. Not on the board of PAAS anymore. He is close to Hickey, Jim Grant and Kuppy. A must read in my opinion.

This is what they call sterilization: for every euro worth of bonds that they buy, they sell an offsetting amount of an asset that they already own. Hence the ECB balance sheet does not grow. That's the theory. But it does not work in practice as there is a lot more problem debt to buy as they will be able to sell... So that sterilization can't really happen... It's just a game of pretend so that the Germans think that they are not printing. In reality the ECB is becoming like the Fed and is about to start a massive monetization of the debt.

Thanks guys, I've enjoyed reading this debate. A couple of comments though: You've barely mentioned the Fed (and Greenspan) as responsible for the crisis. I've no doubt that it is the main culprit of the tech bubble in the late 90s and the real estate bubble of 2002-2007. Low rates fed the speculation. With that kind of monetary policy a crisis would have happened whoever was in power. Sadly, the Fed is still reckless... I grew up in France and was a teenager there in the mid-80s. I saw firsthand the impact of socialism: Mitterrand was elected President there in 1981 and 25 years later we can still see the impact of his entitlement philosophy (I've been living in the states for 12 years and just spent 3 weeks there). When I hear Michelle Obama saying every American deserves a house and a job, that scares me a lot... You do not want the US to become Europe...

For those interested in gold and who believe the deflation fears are over, here is a great interview with Frank Giustra. I had never heard of him before but he is very insightful, has great perspective and seems to be a great human being. http://ceo.ca/frank-giustra-long-form-interview/

Countries in Southern Europe becoming more competitive with lower unit labor cost and shrinking current accounts. http://www.spiegel.de/international/europe/german-report-crisis-hit-countries-have-become-more-competitive-a-852813.html

Great NYT op-ed on elites and why they are becoming less virtuous. http://www.nytimes.com/2012/07/13/opinion/brooks-why-our-elites-stink.html

Good perspective on the current crisis with an octogenarian that Byron Wien sees as the smartest guy in the world. Key quote: “The problem is that most investors think incrementally. They don’t step back and look at the whole landscape, which includes how we got here and where we might end up." http://www.blackstone.com/news-views/market-commentary/blog-detail/byron%27s-market-commentary/2012/07/02/the-smartest-man-is-a-firedancer

Interesting article on the long term decline of MSFT: http://www.forbes.com/sites/frederickallen/2012/06/19/thats-all-folks-why-the-writing-is-on-the-wall-at-microsoft/ And, for those interested, a detailed review of Windows 8. It is going to be a huge shift that could impact productivity for corporate users and lead to a market opportunity for competitors. http://mobileopportunity.blogspot.com/2012/05/fear-and-loathing-and-windows-8.html

looks like it's a tablet... http://www.forbes.com/sites/ericsavitz/2012/06/18/microsoft-live-from-hollywood/

Forecasting is a difficult and perilous exercise. Great perspectives on world trends in the JOE (Joint Operating Environment) 2010 report. http://www.fas.org/man/eprint/joe2010.pdf Some interesting extracts... "Strategic Estimates in the Twentieth Century 1900 - If you are a strategic analyst for the world’s leading power, you are British, looking warily at Britain’s age old enemy, France. 1910 - You are now allied with France, and the enemy is now Germany. 1920 - Britain and its allies have won World War I, but now the British find themselves engaged in a naval race with its former allies, the United States and Japan. 1930 - For the British, naval limitation treaties are in place, the Great Depression has started, and defense planning for the next five years assumes a “ten year” rule – no war in ten years. British planners posited the main threats to the Empire as the Soviet Union and Japan, while Germany and Italy are either friendly or no threat. 1936 - A British planner now posits three great threats: Italy, Japan, and the worst, a resurgent Germany,while little help can be expected from the United States. 1940 - The collapse of France in June leaves Britain alone in a seemingly hopeless war with Germany and Italy, with a Japanese threat looming in the Pacific. The United States has only recently begun to scramble to rearm its military forces. 1950 - The United States is now the world’s greatest power, the atomic age has dawned, and a “police action” begins in June in Korea that will kill over 36,500 Americans, 58,000 South Koreans, nearly 3,000 Allied soldiers, 215,000 North Koreans, 400,000 Chinese, and 2,000,000 Korean civilians before a cease-fire brings an end to the fighting in 1953. The main opponent in the conflict is China, America’s ally in the war against Japan. 1960 - Politicians in the United States are focusing on a missile gap that does not genuinely exist; massive retaliation will soon give way to flexible response, while a small insurgency in South Vietnam hardly draws American attention. 1970 - The United States is beginning to withdraw from Vietnam, its military forces in shambles. The Soviet Union has just crushed incipient rebellion in the Warsaw Pact. Détente between the Soviets and Americans has begun, while the Chinese are waiting in the wings to create an informal alliance with the United States. 1980 - The Soviets have just invaded Afghanistan, while a theocratic revolution in Iran has overthrown the Shah’s regime. “Desert One” – an attempt to free American hostages in Iran – ends in a humiliating failure, another indication of what pundits were calling “the hollow force.” America is the greatest creditor nation the world had ever seen. 1990 - The Soviet Union collapses. The supposedly hollow force shreds the vaunted Iraqi Army in less than 100 hours. The United States has become the world’s greatest debtor nation. Very few outside of the Department of Defense and the academic community use the Internet. 2000 - Warsaw is the capital of a North Atlantic Treaty Organization (NATO) nation. Terrorism is emerging as America’s greatest threat. Biotechnology, robotics, nanotechnology, HD energy, etc. are advancing so fast they are beyond forecasting. 2010 - Take the above and plan accordingly! What will be the disruptions of the next 25 years?" ..... "The Fragility of History – and the Future... The patterns and course of the past appear relatively straightforward and obvious to those living in the present, but only because some paths were not taken or the events that might have happened, did not. Nothing makes this clearer than the fates of three individuals in the first thirty plus years of the twentieth century. Adolf Hitler enlisted in the 16th Bavarian Reserve Regiment (the “List” Regiment) in early August 1914; two months later he and 35,000 ill-trained recruits were thrown against the veteran soldiers of the British Expeditionary Force. In one day of fighting the List Regiment lost one third of its men. When the Battle of Langemark was over, the Germans had suffered approximately 80% casualties. Hitler was unscratched. Seventeen years later, when Winston Churchill was visiting New York, he stepped off the curb without looking in the right direction and was seriously injured. Two years later in February 1933, Franklin Roosevelt was the target of an assassination attempt, but the bullet aimed for him hit and killed the mayor of Chicago. Can any one doubt that, had any one of these three individuals been killed, the history of the twentieth century would have followed a fundamentally different course?"

...it would form a cube about 74 feet per side. If you stacked the money seven feet high, you could store it in a warehouse roughly the size of a football field. The value of all that cash would be about a trillion dollars. In a hundred years, that money will have produced nothing. In a thousand years, it is likely that the cash will either be worthless or worth very little. It will not pay you interest or dividends and it won’t grow earnings, though you could burn it for heat. You’d have to pay someone to guard it. You could fondle the money." Einhorn latest letter... :-) http://www.scribd.com/doc/95291566/Einhorn

Great interview with John Mauldin with good insights on the European crisis and the current volatility of the markets. http://seekingalpha.com/article/568401-john-mauldin-interview-the-end-of-the-debt-supercycle-draws-near?

Moore - Can't people be virtuous without being religious?

that's the speech he made at the Grant's conference a couple of weeks ago.

FWIW, last summer I had my 15 year old nephew from the Netherlands staying with us. He had a Blackberry and would not have changed for an iphone or an android phone. He said the BB was much better for texting his friends and that all the teenagers there wanted one and did not care about having a touchscreen... I suspect it's going to change over time... But this might be an area for growth that RIMM is targeting...

For those interested, the Seattle Times recently ran a few stories on the culture there. http://seattletimes.nwsource.com/html/businesstechnology/2017901782_amazonwarehouse04.html http://seattletimes.nwsource.com/html/businesstechnology/2017889877_amazonpublisher02.html http://seattletimes.nwsource.com/html/businesstechnology/2017883663_amazonmain25.html

For those interested, good article on Ray Dalio in this week's Economist. http://www.economist.com/node/21549968

Can you elaborate on the downside protection for CDH. Trapeze has made this argument, but they've made the wrong call on this one before. Cash position is only $7m, how long can they keep the lights on? What's the likelihood of potential upside working out in your view? Their producing asset, McCully is worth alone more than $2 per share. More than twice current price. You get free options on Frederick Brook (potential 60 tr cft of NG), Anticosti Island shale oil (real estate there worth $100m or more than $1 per share) and Old Harry (potential 2b barrels of conventional oil). Could be a 10 bagger or more. Don't know the odds of that happening. It's a tail I don't lose much / face I have a huge upside story. It's a simple thesis. Do your homework and make up your mind on your own. Eric

Corridor Resources (CDH) is very cheap. Incredible potential upside with strong downside protection.

I really like this guy - very measured, lots of balance and common sense. A really good interview. http://www.bloomberg.com/news/2012-02-22/cooperman-shuns-treasuries-favors-stocks-transcript-.html

Hilarious - all HF managers and investors should read that. lol http://www.economist.com/node/21547809

I might not agree with everything, but here is an interesting and challenging viewpoint on Buffett. http://reason.com/archives/2012/02/09/warren-buffett-baptist-and-bootlegger