Kraven

I have to agree with those who have posted saying who knows what this all is. I mean come on. A few days ago everyone was crying about how the world is ending and now this is the start of the next bull? I would love for this to be dawn in America again as much as the next guy, but I don't think you can tell from today.

Yes, thanks for posting. It is amazing how much of a visionary he was. I was not a tech guy back then (and am not now), but remember being fascinated with him and Bill Gates. I mean how could these 20 something guys have made so much money? I recall that when I was looking at colleges one possibility my mother mentioned was Cal State Chico which was supposed to have one of the best computer programming departments in the country (I have no idea whether that was in fact true or not, but it was what was told to me at the time). I remember thinking that's great and all, but what does someone actually do with that degree? Ah, the problems with youth.

Yes, it's called Confidence Game. It's a very good book. Enjoyable. Some decent background on the financial crisis as well.

RIP Steve. You changed the world and did it your own way.

Thanks for posting. This was a great article. I too consider everything Michael Lewis writes to be must read. He paints a very scary picture of the financials at the state and local level. California is a disaster. I grew up there and much of my family is still there. When I was young California was a state with adundance. I've heard from friends in wealthy counties that there is zero money for the schools. They have to raise funds just to supply the classrooms with basic essentials like pens, pencils, paper, etc. It's very sad.

Saw the movie. Thought it was great. I highly recommend it. They did about as good of a job as they could translating the book to film. My wife enjoyed it as well and isn't a big baseball fan and really doesn't know that much about it. It probably doesn't hurt that a very fit Brad Pitt is in nearly every scene. My only criticism would be that it's probably a bit too long. A few parts could have been slimmed down a little bit.

By the way, the movie comes out pretty soon (this Friday?). I haven't heard anything about it, but hopefully it will be good. I thought they did a pretty good job with The Blind Side.

I finally got a chance to watch this. I thought he did a very good job. Sure, he didn't say anything new, but there really isn't anything new to say. The thesis is what it is. She asked some tough questions I thought and he handled himself very well.

I am a big baseball fan and loved the book. It is one of my all time favorites in both the business and sports categories. Michael Lewis can write just about anything and make it enjoyable. Another book in the same vein is "The Extra 2%" by Jonah Keri. It's similar to Moneyball and tells how a couple former Goldman Sachs colleagues took over the Tampa Bay Rays and using Sabermetrics (the topic of Moneyball) they took the team from from worst to first. They even made the World Series although were decimated by the Phils. There is an interesing little forward from Mark Cuban on how he did similar things with the Dallas Mavericks.

It's a terrible idea for all but a very few people. You have to be disciplined and good at investing. Borrowing against your home in order to invest and leverage yourself sounds great in theory, but if something adverse happens not only do you lose your money, you lose your home. Has anyone ever heard Ric Edelman? He does a weekly radio show and has written numerous personal finance books. He is a big advocate of doing this. It has always struck me as very bad advice for the masses.

It was great seeing Geithner under a "Delivering Alpha" sign and being interviewed by Cramer. This is what the world has become.

Sorry if I misunderstood your point. I thought you were commenting on the silliness of including Y2K as a risk factor to begin with. Seems as if I missed your point.

The concern led to a lot of testing of software, a lot of code reviews, a lot more testing, and this led to a lot of fixes to bugs that would have caused problems, and that led to a smooth transition period. The panic and hype provided the motivation to get companies to dedicate dollars to ensure the transition was well prepared for. Agreed. Remember too that the purpose of risk factors is simply to list out possible things that could impact the investment. It isn't to make a judgment on the liklihood of occurrence. One of the major concerns of issuers as it relates to disclosure is an adverse event occurring which isn't specifically discussed in the prospectus/offering document. Of course, there are always "catch-all" risk factors which are essentially "there are any number of things that can occur which could impact your investment, not all of which are set out, and any of which could cause you to lose all your money". And once someone drafts in a risk factor, usually everyone else copies it in, often verbatim.

In fairness, while I think hindsight shows that it was a bit ridiculous and overblown, in the late 1990s it WAS a real risk. It was an unknown. You will find that that risk factor, or something like it, was in virtually every prospectus or offering document after about 1998. I am not sure that it really tells us anything to be honest. Some risks occur, some don't. There were plenty of risk factors in the mid 2000s that described how mortgage data isn't perfect and there are no guarantees that the future will be like the past. If the financial crisis hadn't occurred, that would have been crazy too. Perhaps the better lesson is simply whether or not risks occur "this too shall pass".

Harry, you are a gentleman and a scholar. With your mystery returns, I proclaim you the greatest investor on this board.

Harry, it's not your sytems that make me laugh. It's you. You remind me of a kid I went to grade school with named Fred. Everyone has a Fred in their school. This was a kid who probably meant well, but always did and said the wrong thing. For example, Fred would commit crimes against humanity such as asking what airline Air Coryell was or showing up to school wearning Mork rainbow suspenders. Perhaps the biggest offense was when the teacher sat the class down one day and said that Fred had an announcement. Going forward he no longer wanted to be called Fred, he wanted to be called Fritz. You see his father had been stationed in Germany for a year or so and that was where Fred was born. So even though they weren't German and his given name was not Fritz, he wanted to return to his roots I suppose. Perhaps today in these more enlightened times this would be seen as a true testament to his spirit, but in those less enlightened days in the 1970s he might as well have walked in with 2 heads and announced that he only followed communist ideas. So what does this have to do with you, Harry? Periodically you espouse some philosophy of yours and expect everyone to bow down to your brilliance. When there is opposition, both to the ideas and the way you present it, you get upset, take your ball and go home. People are neanderthals, they're bullies, etc. They just don't understand you and how enlightened you are. After all, you can seemingly discuss value principles, so why can't everyone just discuss your computer-based systems? Harry, just as you don't walk into a room of grade schoolers and announce you would like to be called Fritz instead of Fred, you don't come onto a value investing board and tell people they don't get investing since they won't discuss your computer systems in a way you find appropriate. It's both the message and the medium. Food for thought, Harry.

I like you Harry. You make me laugh. ;D

I believe I read that the upcoming month is the deadline for filing these lawsuits (something akin to a statute of limitations). If that's correct, it explains the feeling that they just keep coming every week. They have to file just to keep their foot in the door (or lose their right forever), and later they can decide what they want to actually do with the lawsuit. I think that this is exactly right. The deadline for filing was next week I believe. I understand that the parties have been in negotiations for quite a while. However as a legal matter, they need to file in order to preserve their rights. It really doesn't alter things too much although it's usually better to resolve these types of issues outside the courts. It tends to get much more contentious once negotiations are conducted via the legal system, although it could be a catalyst for resolution too.

To some extent isn't this the same discussion that could be had with respect to any of the other old tech guard such as CSCO, MSFT, INTC, HPQ (do they still count?), etc. They are all cheap on a quantitative basis and if the future looks anything like the past. But there does seem to be some risk that they are all value traps at this point.

I don't know specifically in the prospectus for these specific securities it would be, but try searching for a term like "Special Event". Typically in a trust preferred "Special Event" is defined as a tax event, an investment company event or a capital treatment event. These are all things that allow an issuer to redeem the security early and usually without penalty. Tax event is what it would seem to be. An investment company event is one which would lead to possible need for registration of the vehicle under the Investment Company Act. And a capital treatment event is one in which there is a change in law, regulation, etc. which causes a risk that the principal balance of the security will not be able to be treated as Tier 1 capital. These terms are pretty standard across all trust preferred securities.

He was a pretty big fan of their management so MBIA seems like it would be a definite possibility.

This seems to make sense if you are passively indexing, but I'm not sure what I would do with this information considering my portfolio is 100% equity and has ranged between 3-9 stocks so far (I'm Mungerian that way)... My recollection of Swensen is that he's a hero of the indexing crowd and that groups like the Bogleheads love him. I could be remembering wrong, but he's kind of the patron saint of those who manage large pension funds, endowments, etc. for moving away from generally a strictly fixed income portfolio and small "blue chip" bucket to include other major asset classes. I don't recall whether he strictly is a passive investor through indexes and the like, but I believe he is. Could be wrong about that. His views have generally been taken by this crowd to fall into the when one asset class is down another is up and what do you care as you've got them all covered!

The primary difference, at least with respect to Worldcom, Tyco and Global Crossing, is that those were US companies where US laws applied. Their primary assets were also in the US and there was (presumably) a valid and perfected security interest in certain assets. So one could simply count up the liabilities, value the assets and voila. In the Sino case, you aren't sure what rights you have at all as it related to a security interest and you aren't sure exactly what the assets are even if you did know what your rights were. Completely different animals. That's the only difference? Shit. I should take a look at these! Ah, yes. I did say "primary" and was thinking solely in terms of security interests and collateral. But I can see where my comment might make Sino's debt seem pretty attractive. Just like the oil guy who rushes from the gates of heaven to hell because there's a rumor that there's oil there, I might take a look at these now myself!

The primary difference, at least with respect to Worldcom, Tyco and Global Crossing, is that those were US companies where US laws applied. Their primary assets were also in the US and there was (presumably) a valid and perfected security interest in certain assets. So one could simply count up the liabilities, value the assets and voila. In the Sino case, you aren't sure what rights you have at all as it related to a security interest and you aren't sure exactly what the assets are even if you did know what your rights were. Completely different animals.

This is not like buying bonds in a US based company. Good luck! LOL Agreed. In addition, the amusing part is not only is there an issue with the ability to realize on any kind of security interest, it is unclear in fact what the "onshore assets" even are. So someone investing in these bonds has an uncertain security interest (or lack thereof) over uncertain assets. Sounds like a fantastic deal. I can see why people might be interested.