moore_capital54

Very good question Cardboard! To answer your question, ask yourself why my opinion would change? ;D The answer: I saw the problems with the PIIGS, and expected Portugal, Ireland & Greece. I didn't think Spain would get to the point it has...and I'm far more worried about Spain than Italy...but that could change if things degrade there with the speed they did in Spain. As soon as I recognized how big the problem was in Spain, and the scope of helping them, we started buying out of the money SPY puts...we then added the BAC puts. Not because we saw any issues with BAC or the United States, but that this was going to be a problem and we were going to see volatility probably worse than in 2011. The BAC puts are up well over 130% and the SPY puts are up about 25%...they were well out of the money. We've sold 35% of the BAC puts and none of the SPY puts. We don't work in a vacuum. I'm constantly reading and trying to put together information that I pick up. If the scenario changes where the risk/reward ratio degrades, I have to accept the new analysis and apply it to the fund...otherwise, it would be like floating in a boat that develops a hole in the hull, determined to reach your destination, and not patching the hole because you choose to ignore the new information...you may make it or you may not, but the decision to ignore could be very costly. Cheers! I seriously do not follow this logic. The only thing that changed with Spain between then and now is that bond yields have risen due to the vigilantes shorting them, the same goes for France and Italy, the Debt to GDP ratios have not changed at all.. Just because bonds rise and fall reflecting a higher or lower YTM does not mean the underlying fundamentals have changed. Ask Icahn who bought Lightsquared debt that.. he made 50% in a month...

Parsad, with respect, a calculation of bank assets to GDP is a novel one at best. All that matters is bank leverage ratios (Assets to equity) and then you need to simply add up the value of all the "non surviving member" sovereign debt held by the members of the "surviving eurozone". In every scenario you can assume say Spain exits, or even France, well then just look at the surviving members ie: Germany, Netherlands, Belgium, analyse those banks and on those balance sheets add up the value of the sovereign debt they hold. In the scenario I propose the ECB will simply create new money and either inject it in the form of a TARP or if there is enough equity cushion provide it against illiquid assets. Its fairly easy to ring-fence the banks belonging to the surviving euro zone with fiat money as has been proven by the americans. So, if Greece exits, and surviving nation banks have to take further write downs (which they don't currently based on my calculations) ECB would step in and create that magic number, inject it as either a discount window loan (against anything) or a TARP, if Spain or Italy left, the same would happen. Meanwhile the exiting nations would simply supplement their former currency the Euro with a new fiat currency which could be created at will to meet the nominal disequilibrium between their tax revenues and debt service... This would cause inflation of course (as I previously mentioned as the number one risk) So you see in all scenarios the Euro as we currently know it is actually worth quite more than is currently being reflected. Imagine a Euro anchored by just the top nations... The only way you lose in Europe under the scenarios I propose is if you are invested in the securities of the nations which you feel may exit the Euro, the PIIGS or what not... This is the reality we all live in now, a reality where money means nothing and where debts will be papered over to keep the system from gravitating towards its natural path of correction. Tomorrow we will all continue to contribute to the economy and engage in commerce, and both the kicked out nations and surviving nations will still consume the same amount of goods and services. If their currency does not afford them the same amount then you will see domestic companies pop up and correct the imbalance. A Parmalat for example has an advantage over a Nestle and Danone in Italy if it returns to the Lira... Bottom line: How this all affects BAC or BP or the rest of the companies in my portfolio? It doesn't.. its just providing a window of opportunity for me to buy more of these fantastic businesses at incredible valuations.

An unregulated toll-road. Like these ones: http://www.independent.co.uk/news/uk/home-news/the-5p-toll-bridge-is-sold-for-pound108m-1833601.html http://www.dailymail.co.uk/news/article-2088693/Couple-sell-home-buy-tax-free-toll-bridge-400-000-earn-100-000-year-fares.html

As you mentioned since the first discount facility announced in the face of 2008, whereby the Central bank resorted to creating new fiat money and lending it out in exchange for illiquid trash securities, I believe we are in the face of a new normal whereby central banks will not allow banks to fail in the classic sense or governments to default, again in the classic sense. What that means is that shareholders of banks will be allowed to lose their investments but you will never ever see a scenario where depositors lose money. Same with Sovereign defaults, you may see an orderly exit of a country from the Euro Zone IE: Greece/or Spain, in which case gov bonds may be devalued but in such a case central banks will step in, create new money, and inject it as new capital to the remaining banks that had to take a hit on the depreciation of the bonds from the kicked out nations. What all this means is that you won't see a scenario where the system breaks down or that there is any actual contagion of liabilities, really the only contagion is in the mood of the investor deploying and harvesting their capital more quickly trying to time the market. Investors in this environment need to understand that the biggest risks remain loss of purchasing power due to inflation. We live in a new world that is no longer subject to the classic rules of free market capitalism in the sense of to the victor go the spoils.

U.S. Senator Charles Schumer proposed legislation yesterday that would impose a capital gains tax on people who renounce their citizenship unless they prove their reasons don’t include avoiding taxes. Isn't that more lenient than the current "exit tax", under which you pay the capital gains tax no matter what your story is? Do I misunderstand him? I am very happy with Schumer and am quite surprised to see politicians for once being on top of their game. Saverin should not be allowed back to the US, EVER! and any investments he makes in the future should be taxed @ 30%.. What he did was disgusting and I am shocked the media thinks he only avoided $67mm.. I have it on very good merit that the valuation he used on his exit tax date was $18 per share. The amount is more in the realm of $400-500mm that he circumvented.

24%~ No leverage either

Great article RE: Saverin from the Bloomberg Editors: http://www.bloomberg.com/news/2012-05-17/the-facebook-founder-who-unfriended-america.html

Were only up single digits for the year now, we were up high 30's at one point. Does that mean we should have sold it all then? Absolutely not! I am not a trader I am an investor and if I were to get lucky that one time and incorporated it into my latticework who's to say I wouldn't time a buy wrong the next time. We buy when things go down, never when they go up. Even in a bull market I always buy on down days.... Were buying more every day.

I loved the piece about $896mm being pulled out of a deposit base of $200B. Or let's take it a step further, an Economy the size of $215B Notional will "leave the Euro", the only thing that would happen would be a new fiat currency who's main objective would be to nominally balance the budget. If we are talking numbers let's explore this thesis. If Greece Debt to GDP is X and their Debt Service is Y vs Tax Revenues of Z, all the new Drachma or whatever they will call it has to be is a ratio which reflects the difference. I have seem many people make projections of between a 30% devaluation to as high as 50% I have never seen anything higher than that. Keep in mind Greece is still a modern industrial society... So again, we have a $200B Economy which is threatening to devalue its debt load by the equivalent of a Facebook... How does this affect the purchaser of a home in Boise Idaho or a teenager buying his first electric car? How does it affect me spending $39 for new blades today or paying my gardener $1,000 for the job he did today or the poolman $250 for opening the pool! The economy keeps moving... We know that systemic risks are not tolerated in the new normal, they are simply papered over, as such you can bet your arse that if Greece is allowed to exit the euro, its ramifications have already been discounted as they relate to the interconnectedness of the financial system.

That's also partly the reason we do keep more cash than virtually all other fund managers to begin with. We have no lockup and we have a fiduciary responsibility to protect our investor's capital. We like cash...there is nothing wrong with cash. We don't hold it for years, but we hold it for periods where we think the market is ignoring fundamentals or obvious macroeconomic risks. Stocks were fair value a month ago, and they are only modestly cheaper. There is one stock that we are averaging into right now, but most are not cheap enough yet to risk capital and ignore risks. We like what we own and we have significant gains in some. Things just aren't cheap enough right now if we plan on providing outsized returns relative to the index long-term. Cheers! Sorry Sanjeev but it sounds like you are spooked and trying to time the market. How has your performance faired in this period? Could it be that you are being influenced by under performance? I am not trying to insinuate that I just find it funny that you view this period as any different from the Aug-November 2011 period. Fundamentally, things were much worst on a Macro level between Aug-November, now we know there is a thing called the LTRO and Greece has already devalued their debt load by 50%. The market moves cannot be explained unless done with hindsight. IMHO BAC is cheaper today at 7.10 than it was at 5.00 in December (it seems Pabrai agrees).. More uncertainty has been removed, the first quarter numbers were great and a bank run didn't take place (not that it would matter either as we also know the fed would step in and provide liquidity against illiquid assets on the bs). Other stocks mentioned here are way cheaper as well. I just think you are attempting to time the market... This is what happens with the low interest rate fed policy, as in Einhorn's Jelly Donut essay, when interests rates are 0 everyone chases higher risk assets for yield, problem is that capital doesn't belong in the higher risk category, as a result it escapes as quickly as it enters. Thats all that's happening here imho, it has nothing to do with the situation in Greece or Europe. German figures were better than expected, Auto sales are increasing very nicely... housing starts etc. Funny, when you were buying BAC in Aug-Nov you were mentioning all those positive pieces relating to the underlying economy even posting them as soon as they came out (rail car loadings)... I think you need to seriously re-evaluate your allocation and see if you are not being influenced by the fear of experiencing a temporary paper loss.

Albert I agree with you and respectfully take the exact opposite side to Sanjeev's position. In no way shape or form do I foresee a 2008/2009 style crisis. The fed would step in way before that.

Wrong way to look at it If I made 3.6b I'd fork over 400 to uncle Sam. For those that think it has something to do with other than money you guys are naive...

Eric come on, you can't possibly compare using legitimate tax loopholes than renouncing your US citizenship. It's an apples to orange comparison. Relating to your "only a few hundred million" comment, as I mentioned that few hundred million wasn't even marginable. What made this strategy work was when the secondary market for FB shares became developed which was roughly 2010-2011, that is when he was able to borrow against his stake to payoff the IRS. If he was some rogue business man with operations all over the world or even a financial hedge fund manager I would be more sympathetic. But it so happens that Eduardo owes nearly all his success to a US company that was built in a US university and that he himself grew up a US citizen and enjoyed all the benefits of the US society. To give all that up for a net worth of $4.0B instead of $3.6B is disgusting. That is my point of view.

A couple of other points: 1) "exit tax" became law in 2008. Why did he wait until after it came into effect to move to Singapore and then renounce his citizenship? Insanity? 2) Assuming you are right about the IRS: isn't it better to take the capital gains hit now instead of waiting for the Bush tax cuts to expire? 3) What about the dividend that may eventually flow from FB shares? Does he want to pay US income tax rates on that which may be 35+% or so (who knows how high they will eventually go?). Does the "Buffett" tax motivate him to get out from under the US tax code? I guess I see it from the point of view of a dual-citizen. I understand your duty to pay taxes where you live, but where you don't live? Come on. 2008 is irrelvant in 2008 FB was only vallued at 5-6B his stake was worth a few hundred million, only in 2010+ did FB become a monster and did Eduardo become a billionaire. Only in 2010+ did the shares have a very liquid private market which allowed him to encumber his stake with debt from GS which makes the whole move worth it. He moved to Singapore to have another $400mm in the bank.

He renounced his citizenship in September 2011. Exactly he used the sharepost valuation of $35B for his "exit tax" date... Now his shares are worth x3 at the IPO date. Here is the Math: Eduardo Shares worth $1.4B @ September 2011, Pays 15% Capital Gains Exit Tax (No State income tax in Florida) $210mm cash needs to be paid, so he borrows $210mm @ 3% from GS backed by his FB stake... he uses that money to pay the IRS and hes out. Now he has $1.4B shares left encumbered by $210mm @ 3% to GS after hes paid his "exit tax". Those shares can now be sold as a Singapore resident tax free.. On IPO date those shares are worth $4.2B which he can sell with no tax paid. Assuming he sells the shares he pays off his debt to GS + 3% or $6.3 million so $216.3mm total. He has $3.984 Billion left. If he had not renounced his citizenship he would have been forced to pay 15% Cap Gains on the $4.2B, Uncle Sam would have received $630mm instead of $210mm and Eduardo would "only" be worth $3.57B Essentially Eduardo Screwed the US government for $420mm... Thats the bottom line. Given the figures involved I think Eduardo his conduct is disgusting. He owes everything to the US...

He is a US Citizen naturalized from Brazil, he grew up in Miami, where his family lives, studied at Harvard, and once FB was worth something conveniently moved to Singapore. His whole process was designed to avoid US Taxes.. I am just saying its very petty when considering the figures involved..

It's disgusting because he is using the US capital markets for his exit... Is it really going to make a difference if he makes $3.4B vs. $2.8B Eduardo Saverin should take a page from John Arnold.

It was the Bloomberg Expose that caused this. The hedge funds on the other side came together and leaked the story, when it came out Bruno was prevented from short-selling CDS ad-infinitum which led the CDS to rise, and as a result JPM's position collapsed. I agree that banks shouldn't be allowed to do this stuff. I am very disappointed in Dimon who just a few weeks ago spoke out against the Volcker Rule and/or its ramifications for competition globally. The good news is that I bought BAC @ 7.49 after hours.

A home is never an investment it is first and foremost a place to live. As you begin to accumulate wealth you will do so by being thrifty and saving most of your earnings. However, when you have saved enough to satisfy your investment portfolio needs, a home is a great way to keep a sizeable amount of capital safe and secure and over-time tends to rise with inflation. The key is to buy a home in the best area you can afford. High-end properties have compounded as well as Berkshire Hathaway in cities like New York, Los Angeles, and London/Hong Kong. Here in Toronto things are out of control they are already higher per square foot than most cities in the US with the exception of certain high-end apartments in Manhattan, but tangibly higher per foot than Miami/Los Angeles/Chicago etc. Toronto is projected to absorb an additional 200,000 financial services jobs by 2020 eclipsing London for financial services jobs. I believe if this holds true property prices in Toronto will reach London-like prices. Asians use Condo's in Canada as their RRSP's. It is not uncommon for a Chinese middle-class or upper middle class business owner to send his children to school @ U of T or UWO or BC and buy them a condo for $200-300k, in this way he is able to keep some money outside of China, and his son/daughter can live there while they study. These buyers mostly buy cash or with 50% mortgages. Here in Hoggs Hollow, a friend just sold a house he paid $3.2m for in 2009 for $6.2m - you heard it right...Moreoever, our currency the loonie is stronger than ever, which makes it even more interesting for sellers of Canadian real estate. Friends involved in commercial real estate here are selling, but everyone believe the high end neighborhoods will retain their value. I went a little off tangent, but my advice is, the first step is to be thirfty until you advance in your career or have built an investment portfolio which can support the next step. Ultimately, the decision between buying a home and/or investing is one you should make but depending on your skills as an investor, it should be easier to invest successfully over time than buying a generic home. If however you have accumulated enough money to buy a special home in the best area in town, and it won't affect your investment portfolio too much- go for it. In general overhead of a home should not exceed 3-4% per annum but you must remember that if one was renting there would be similar costs, finally a home is where you will share the best memories and so there are qualitative/intangible which are well worth those costs.

http://facebook.retailroadshow.com/launch.html What a performance Bravo!!

First of all, Sweden never was invaded by the Nazis and Estonia was occupied by Soviet. Secondly, you don't think that the easy occupation of the other ones has more to to with their small size than anything else? Or are you going to say that the oh-so-atheist France kneeled over for the same reesons? Thirdly, all these countries (with the possible exception of Estonia) were just about as religious as mosts of the Western world back in the early 40s. Yes I know that did you not read me say "4 of the 5 countries"??? Geez...

I see it differently, To sum up our debate I would present the debate in the following context: Moore: After watching the Munger interview and him discussing a loss of virtue in society, I agree, my feelings are that the new generation does not have the thirst for virtue, and is probably due to the decline in the institution of marriage and the lack of interest in religion (those were my words verbatim). The Rest of the Board: Oh no crazy Moore has done it again, made a sensational statement!!! Your crazy! and wrong!! Were all atheist, religion is for illogical troglodytes!!!@@ Hester : Who cares about religion and its thousand of years of positive influence on the structure, culture and improvement of humanity, the loss of this dated ritualistic and superstitious bunch of hogwash doesn't seem to have any effect on the world, look at Estonia! Viva la Science! Who wants to live in Congo!?!? The most religious place Moore: You are assuming that religion and poverty are a function of each other they are not. The point of the debate is virtue, not prosperity, I was simply proving that your list of most religious countries have very little in common (other than ranking very high on levels of suicide). The crux of the debate is virtue which you can read more about here: http://en.wikipedia.org/wiki/Virtue My position remains: a decline in religion has contributed, in a sense to a loss of virtue, but more importantly, a decline in the institution of marriage. Hester: Ummmm.......You and your crazy strawman arguments!!! Your nuts moore!

Hester, Your previous posts are very unconvincing in my eyes. Here is my response: What you did was choose the the poorest nations in the world, and/or states, who's poverty in all cases predated their religiosity, and then drew a conclusion that as a result of their religiosity they achieved their respective levels of prosperity. It is completely unfounded and demonstrates your lack of understanding of the positive impact of religion on society. The facts are that none of the states or countries you mentioned with the highest rate of religious citizens ever achieved a level of prosperity that was any higher than their current level (with the exception of Egypt in the days of the Pharao's). They have always been poverty stricken for a multitude of reasons, some of which can be easily explained and some of which are more complex. But to say that Alabama and Arkansas are a comprehensive representation of societies with a high penetration of religion is insane. Here is how things work in the real world. Historically, societies that embraced religion, democracy, and free-market capitalism, began to prosper, through several cycles, prosperous societies and their offfshot generation became more and more intelligent incorporating science as a means to explain the granular workings of our physical reality. As more time passed capitalism (or money) and knowledge have become more important pillars of society than religion historically and that is where we are today. People are more interested in making money, and explaining everything, and less interested in compassion, temperance, and justice, this trend is obvious to anyone living in the western world today. Hence my comments relating to Virtue. The facts are that as societies experience more prosperity they become less religious, but there is absolutely no proof that being less religious leads to more prosperity. Societies that are most poverty stricken, naturally tend to clamor to anything they can which may provide them with hope, the fact that some asshole is able to manipulate millions under the guise of religion is sad, but is not indicative of the fallacies in religion, if anything it is indicative of the lack of compassion in the rest of the world, whos inhabitants should treat each other as equal humans and get involved more rapidly in such situation, but again I am simplifying these cases (and I have some experience as my Father spent alot of time in Africa). Certain societies have ingrained in them traits which lead to them constantly being under dictatorship... Bottom line, the modern intelligentsia will have you believe that science, with its clear and concise logic, the best foundation for societal advancement, and that embracing science is the best path towards prosperity. The problem is that not all human beings have the propensity or natural intelligence to understand that science and logic are only one component of being a virtuous human being (IE: reading spinoza on the side). And when you take a society as a whole and inject only science you are creating a society that lacks certain of the attributes which makeup what most would view as a virtuous human being today.. In closing let's take at look at your 5 least religious countries in closer detail so I can prove that religiosity has nothing to do with their standing as a prosperous society: 5. Czech Republic - 4. Norway 3. Denmark 2. Sweden 1. Estonia When I look at these Countries, I see absolutely nothing special, with the exception that 4 of them were some of the easiest Countries for the Nazi's to occupy with almost no resistance (that is another thing too, atheist societies tend to have less heart in battle, because war is so illogical isnt it?). I see absolutely nothing special economically with Estonia for example (your first place winner) having less GDP per capita than Greece... and Norway as you know does not belong in any comparison due to their hydrocarbon endowment. Oh yeah I found another common denominator, all 5 of your "Intelligent/non-religous" countries rank in the top 20% of countries in terms of suicide rates. On average 20% of males commit suicide in those nations (21% in Estonia!). So it doesn't look like all this logic and science is contributing to them being happy, if anything it almost seems like they are desperately trying to test their own theories by killing themselves prematurely :o Don't understimate the power of religion, which on the whole is a very positive power on humanity and I say that with regards to almost all religions out there from Budhism to Islam. Religion is very important for humans, whether they have a high level of intelligence or not. And if you are someone who does not require that conditioning as a youth and as you mature, that is totally fine but don't extrapolate that the athiest way would have produced the same results, as I have seen no indications of such. The biggest issue I see is that ironically, and as proven by this thread, it is the atheist who spend more time proselytizing nowadays, and that is something which will surely guarantee wider adoption over time. This will contribute towards the trend I mentioned in my opening post on this thread, a loss of virtue over the ensuing generations.

Gents as often seems to be the case, you have taken my statements out of context. If you re-read what I said, it was "to a certain degree the lack of interest in religion" - I myself am not a super religious person. But you all jumped on it as though I was the next Glenn Beck. Religion has both good and bad aspects, but the key tenets underlying the abrahamic religions have been extremely important to the development of compassion and a sense of community in societies. And this has been lost by the new generation. I will agree that marriage is a more important factor, but you must remember that the institution of marriage derived from the abrahamic religions. I apologise if I offended any of you...

Virtue, is something that has been lost on this new generation. I blame it to a certain degree on the lack of interest in religion. Religion, and the institution of marriage are key pillars that helped build great societies and both are in decline.