JSArbitrage

http://news.businessweek.com/article.asp?documentKey=1376-LVDZC507SXKX01-53FDT6STR4PRVU9B7CRTDL62J0 King Crony Hank spilling inside information to a select group of hedge fund investors including Chanos. You can't make this stuff up. If that guy spills those kinds of beans over sandwiches, imagine the information he used to peddle at Goldman when get got paid to do it. The corruption between the government and Wall Street never ceases to amaze me. And now the SEC has egg on it's face by being publicly accused of a implicit form of collusion with Citigroup by a sitting judge.

Maybe I'm a bit paranoid about money but does anyone else find it silly to discuss trying to hedge such an outcome? What I mean by that is I can't see any other other viable alternative other than cash and lots of it. If we hit a TRUE depression, then most of the pros on here will have clients hit them with redemptions up the wazoo, in which case I hope you have tons of household savings (again, in cash.) If you aren't a professional money manager, then you owe a duty to your family to have the cash needed to survive such a downturn. In a true depression, you'll have to muster up everything you have (financial, emotional, etc.) just to survive. So I think trying to generate alpha in that period is a lost cause. It's no different than those e-warriors on the internet that make threads about how they would win a fight against a group of attackers. Let's face the facts: you either run or get your assed kicked. That's how investing in a depression really is. Pissing in a tornado and trying to stay dry. Good luck with that.

Divi rate not cap gains, excuse me.

I think the tax shield of the warrants is a very valuable part of the thesis. Assuming BAC normalizes by 2014, what you are really saying is that BAC will be spitting out $1/share in dividends per annum. Over the next 4 years, that's 60c per warrant you get to keep (that's close to a quarter of the warrant cost at these levels.) Then, you get a free option on the possibility of Congress increasing the cap gains rate.) At a 30% cap gains rate, you get an extra $1.20 per warrant. That's like getting the warrants half off!

It isn't that we expect them to be "warm and cuddly;" but we do expect some kind of professionalism. I've worked in two very large organizations in my life and I've dealt with various personalities. I understand the idea that sometimes a manager has to put their foot down or an executive has to control their perception in the workplace to be effective. But parking in the handicap spot every day at work? Really? Anyone here want to claim that Jobs couldn't do the same job from a normal person's parking spot? Or is that the cost of brilliance? No offense, but the idea that being an asshole is some kind of prerequisite for brilliance is stupid. There are tons of assholes that went nowhere in life and there are tons of brilliant people that a perfectly adjusted human beings.

They should just call off this CDS thing. If u own bond, do ur homework. Greece debt got cut 50% and it's not default and thus CDS doesn't protect the creditors at the end.. why bother. I feel this way as well but think they should just ban naked CDS. Either that or make them so standardized that they can be put in big, red bold font on 10-K's. Everyone always talks about how governments and regulators are deathly afraid of a Greece default because no one really knows the ramifications for CDS. Only in finance would people support the proliferation of weapons of mass destruction that can be hidden like this.

Speak of the devil.... http://www.businessinsider.com/steve-jobs-jerk-2011-10# And it mentions how he denied paternity of his daughter while she and her mother lived on welfare. And he had more money than he could spend in a lifetime. Who said he wasn't Scrooge again?

I think the outrage comes from the history of the business model. Remember, for most of the era of banking, the bank would PAY you for the right to hold your money. But now that banking is effectively an oligopoly that's propped up by the government, they are CHARGING you for the right to hold your money. 800,000 people left Netflix for less. I think it was a very stupid business decision myself. If BoA had maintained completely free checking while the other majors started charging, they could have started rebuilding their relationship with customers. A good marketing agency would have had a field day on this. For a bank the size of BoA, the cost to hold these "marginal" accounts is not very much at all. Banking is turning into Coke versus Pepsi: a market based on pseudo-collusion. Wells Fargo started doing this roughly 20 years ago and it worked for them. Starting to run it more business like instead of trying to be everything to everybody (Like the government) is what they should be doing. For the small marginal accounts there are plenty of alternative choices for their accounts ie; small local banks and credit unions. I am not saying it won't work; I am just responding to the poster that wondered why people were outraged. I think my point stands in that regard. As far as how it will effect BAC, I agree it won't. BAC is a government-backed player in a ologopolistic market. Their position is pretty darn solid regardless of the little tweaks here and there. I don't think these deposit holders will run to local banks or credit unions as much as I think they will simply exist under-banked by using pawn shops, payday lenders and check cashing places.

We will just have to agree to disagree regarding Steve Jobs. I think great business men are just that: great at business. I think great innovators are just that: great innovators. It ends there for me. I don't try to warp who they are as human beings by "netting out" their personal behavior from their contributions to business or technology. My brain isn't wired that way. But I am also a quirky person. I would never be a business partner with someone that cheated on their wives. I would never be a business partner with someone that openly treated people harshly. I might end up poorer because of it, but that's how I'm wired.

It would be nice if everyone could be all things to all people. The reality is that we are all composites of good and bad. Rather than wishing for something idealistic that will not happen, why not be glad that we have people who excel in different things, character faults notwithstanding. We are infinitely better off in a world where Jobs, Churchill, Gandhi, Buffett, Mandela, Franklin, Princess Diana, etc focused on what they did best. The work of the great humanitarians would more than offset the pain caused by the "assholes." This would be certainly be a more interesting world than one in which Diana and Jobs wasted half their time doing things they were bad at, such as creating electronics and helping AIDS and landmine victims respectively. The Theory of Comparative Advantage works. I personally don't believe the Theory of Comparative Advantage applies to morality. I don't believe a man can mistreat others because he might be good at other things. I don't believe there is a cost of being a good person. There might be people that choose to overlook the bad if the good is good enough. I, and some other, don't. That's a well-traveled road to corruption. I am not trying to seem high and mighty, but when compared to a brat like Steve Jobs, who never felt remorse for swindling people (his partner Woz included), I think this is an important discussion to have. I remember as a kid, we all knew Ebeneezer Scrooge was a bad man. But in today's society, we take his good with the bad because he built a very successful business. Ebeneezer Scrooge would be a hero today. Money and power make people twist their views in ways they'll never quite grasp. Steve Jobs was an Ebeneezer Scrooge that sold gadgets. They were amazing gadgets (I own iPhone 4, iPad 2 and MBA) but I won't excuse his behavior for them.

I think the outrage comes from the history of the business model. Remember, for most of the era of banking, the bank would PAY you for the right to hold your money. But now that banking is effectively an oligopoly that's propped up by the government, they are CHARGING you for the right to hold your money. 800,000 people left Netflix for less. I think it was a very stupid business decision myself. If BoA had maintained completely free checking while the other majors started charging, they could have started rebuilding their relationship with customers. A good marketing agency would have had a field day on this. For a bank the size of BoA, the cost to hold these "marginal" accounts is not very much at all. Banking is turning into Coke versus Pepsi: a market based on pseudo-collusion.

Should we forget them? No. But it should certainly be a factor in how he should be viewed, particularly when it's in the context of his life (which is the entire point of a biography.) I don't think the world will ever forget Steve Job's positive contribution to computers. But people also tend to idolize great contributors by minimizing or outright forgetting their negative contribution to the world. It's human nature. But I think the world would be a better place if we all concentrated on being better people to our fellow human beings than trying to squeeze the last dollar out of an investment, the last drop of productivity out of an employee, etc. when it comes at the cost of openly demeaning/terrorizing inferiors in the workplace or treating people like stepping stones to personal gain.

No one is arguing that he wasn't a visionary; they are saying that it's sad that people idolize someone based upon professional success regardless of their personal failures. You might ask who cares in Einstein treated his wife like shit? I'd say his wife probably cared greatly. And probably his wife's family, her friends, her parents, etc. But hey ... if you can write fancy equations, go right ahead and treat people like shit. It TOTALLY balances it out. This is a major problem with humanity (not that it will ever change admittedly.) It's what I call the "rock star" fetish. Are you rich? Successful? Famous? Then you are given a blank check to treat people like insects. True story: I turned down an investment banking role in New York to stay in my hometown. I took a less prestigious job with less pay. I did so because I wanted my kids to grow up in a safe place, so my wife-to-be could be closer to her family and so I could look over my widowed mother. But apparently, it wouldn't matter if Jamie Dimon treated me like shit, because he's a rock star financier. Sorry, my measure of man isn't bank account, market cap or gadgets. And some people agree with me. This book about Steve Jobs is about the MAN. But who knows, maybe when Jobs gets to the gates, Jesus will be a iPhone lover and all will be forgiven. But I doubt it...

Don't pretend like you can think 20 years ahead in technology. So you are saying in 1980, you were looking for Google? In 1990, you were looking for Facebook? Come on man. If you are trying to invest in 10 baggers for the next 20 years and you are running around in tech stocks, you're more than likely going to get crushed. There is a guy from my b-school who just got ~$100M in VC funding at a total valuation of over $1B for a damn online auction site. Yes, someone is valuing an eBay clone at over ~$1B. Everyone in tech chases the 10 baggers Good luck man.

You're taking Buffett too literally. Buffett also said he doesn't believe in debt. Buffett also said you should avoid leverage. Yet Buffett uses both debt and other forms of leverage. Buffett was just trying to make a point about being selective. Buffett himself has probably bought more than 20 different securities in the last 1-2 years, much less a lifetime.

Is there any evidence that there was more entrepreneurship under environments with lower capital gains rates? Because most entrepreneurs I know don't give a hoot about capital gains rates.

The "We are the 99%" movement isn't just about wealth redistribution or unemployment. I am employed, make an extremely good living (by my standards at least) and do not support massive wealth redistribution in this country. However, I consider myself part of the 99%. Why? Because this movement is about recognizing the fact that the top 1% in this country are basically 21st century aristocrats. They use their wealth to make changes for their benefit through government lobbying or market-rigging. They use their connections to avoid accountability and/or oversight. They have no allegiance to this country; if they don't get their way, they'll just go elsewhere (Jamie Dimon even said he'd just go to Singapore if Congress tried to regulate his hundreds of trillions in derivatives.) So, long story short, the 99% movement is about recognizing that the US is now a plutocracy. That's a fact and this country can only continue to delude ourselves so long.

Only Larry Summers can sit next to two hugely successful businessmen and pontificate on his experiences in business...of which he has none. The guy just can't ever say he doesn't know something, even if he clearly doesn't know something. He's the kind of person who would volunteer for a marine biology panel. He would just jabber on about how marine biologists have marine biology all wrong, nevermind that he has no experience or background in marine biology.

I wonder if Lampert had anything to do with this. The Gap does have very shareholder friendly management. Their record of returning cash is almost unparalleled in retail.

Just took a look at mine. BoA is offering me a $15,000 at 4% for 13 months (zero percent loan, 4% transaction fee) or $15,000 at 6% for 18 months (2% loan, 4% transaction fee.) So it very common.

This has been around forever. It's just balance transfer offers that you are allowed to deposit directly into your checking account. Citicards actually allows an EFT directly into your bank account. If you are patient and have good credit, you can find 0% loans with zero fees so it's a true no-cost loan. There is actually something called an "App O'Rama" where people gather like 10 loan offers and apply for all of them at once. If you get 8 of them with a $10K credit line each, you get $80,000 in 1-2 year loans. They then deposit them in high-yielding internet savings banks and earn the spread. There are entire internet forums dedicated to making the best use of these zero percent loans. Most people just use them to pay off their mortgage or student loans though.

I think Paulson is a good manager but, from my understanding of him, he was mostly a merger arb/event-driven guy who ran relatively small funds. Then he hit the jackpot on the housing derivatives and got tons of hot money shoved into this funds. Then he decided to run a fund that was so large he had to invest in areas outside of his expertise. I think the hot money that's now flowing out will be a good thing for him. He can get back to what he does best. He'll be just fine.

You mean like Schwarzman comparing Obama to Hitler over the possible raise of carried interest? There is no much crazy rhetoric thrown around, you'd never know tax rates on the wealthy were at historic lows. You'd think from the commentary they were at historic highs. It's just silliness.

So why the restrictions? He basically laid out instructions on (a) the actual price floor and (b) the cash that is required to remain at Berkshire at bare minimum. That is very unlike Warren. Those look more like instructions to a third party. Why wouldn't he just have the board approve of a boiler plate buyback and buy opportunistically? Maybe he wants to be transparent in order to treat all shareholders fairly? But this seems unusual to me. It's all speculative of course.

I thought the exact same thing. Considering this is the first buyback ever, I don't think this is a simple buyback due to general undervaluation. This is a purposefully built floor for something major. Maybe Warren reducing his duties; maybe a tax-free distribution of huge equity positions (KO, WFC, etc.) But I find it hard to believe Warren just decided to do a buyback after all of these years and with such explicit restrictions. Looks more like instructions than Buffett doing this for himself... Maybe this was an idea pitched by the new portfolio managers?