moore_capital54
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Posts posted by moore_capital54
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LOL EXACTLY PARSAD ITS ZERO......
And I had this same argument with one of our LP's who has $5 million with Kynikos, hes had that $5 million with him since 1999.
Being a cynic is not how you make money in the stock market, unless you take concentrated short positions and construct a net short portfolio. Problem is being net short is extremely risky with the downside much higher than the upside (ask Elliot Management about shorting Volkswagen in 2009).
CDS's and other derivatives provided the asymmetry to be short a large amount of risk for very little down, but we now know this was only due to a flaw in the system (AIG).
For these reasons, the best way to make money as an investor in the stock market is being net long over time, equities, and being the most long when the cynics are out in full force. That is all contingent upon good research of course zeroing in on businesses trading at a fraction of their intrinsic value.
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The way I look at ZH is "Glass half empty at best"
Btw do any of you know what Jim Chanos's long-term returns are? As a master cynic you always see him looking at the world glass half empty.
I will leave it to you guys to try and find out, if not I will post the answer.
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http://www.cnbc.com/id/45748250
Well it now appears the entire European banking system is on ECB support. Sovereign bond holders are enjoying the warm fuzzy blanket of hope that institutions leveraged 40 to 1 will bail them out by sending the:
Italian 10 year yield up 3.41%
Italian 2 year yield up 5.57%
Spanish 10 year yield up 3.88%
Spanish 2 year yield up 6.5%
Let's continue to fight debt with debt and impose harsh austerity in the middle of a recession. Beautiful.
Please name the institution(s) that are leveraged 40 to 1?
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Peter Burke speaks the wisdom of an investor that has been through several cycles. I couldn't agree more.
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Maybe warrants, but Buffetts 700 million shares convert far below tangible book. I am not sure about the other preferreds
the obsession with tangible book is transitory. someday US Trust Merrill Lynch will be valued at ~ 2 x TB. Someday the deposit gathering system will be worth more than tangible book. So this obsession with tangible book is really a ZH/CW "phenomenon" that will someday not matter. It's a function of confidence.
Well said!
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I am very familiar with this business,, so much so that I can say its a complete waste of time for Fairfax...
It wont even move the needle, and the sporting goods business model is not one that makes sense to scale under the brand "Sporting Life", at least William Ashleys has the potential to become the next "Williams Sonoma", but Sporting Life does not offer anything unique, and the prices are markedly higher than other good sporting stores.
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Anyone know what they reserved for this? Good news for longs!
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When TARP was about to be launched, it was not as obvious as everyone may think. Most market participants were extremely pessimistic about it's prospects or success, only after the fact did investors look back and mark the bottom the date when market partcipants re-entered the market due to Geithners announcement of the PIP as part of the TARP.
On February 10, 2009, the newly confirmed Secretary of the Treasury Timothy Geithner outlined his plan to use the remaining $300 billion or so in TARP funds. He intended to direct $50 billion towards foreclosure mitigation and use the rest to help fund private investors to buy toxic assets from banks. Nevertheless, this highly anticipated speech coincided with a nearly 5 percent drop in the S&P 500 and was criticized for lacking details.
On March 23, 2009, U.S. Treasury Secretary Timothy Geithner announced a Public-Private Investment Program (P-PIP) to buy toxic assets from banks' balance sheets. The major stock market indexes in the United States rallied on the day of the announcement rising by over six percent with the shares of bank stocks leading the way. P-PIP has two primary programs. The Legacy Loans Program will attempt to buy residential loans from bank's balance sheets
Looking at the LTRO history doesn't always repeat itself but sometimes it rhymes:
http://ftalphaville.ft.com/blog/2011/12/20/808151/a-e360bn-ltro/
Everyone knows where I stand, I am massively long, so I am just looking for more reasons to confirm my bias, but I have been hearing some good things about LTRO last night and today from my friends who have been on the sidelines. More tidbits from my network, most of the fund managers I know are 20-30% Net long at the moment and have experienced redemptions of less than 10% of AUM as of last week.
Italy has had the same debt to gdp level for nearly 20 years, there was no change in fundamentals, rather bond vigilantes driving yields up unwilling to lend. Spanish Bond auctions last few days confirm that to a certain extent, sovereign debt markets serve a purpose as a safe harbor for capital, and if the LTRO helps reduce yields and bring back normalcy into markets, I believe we can see risk capital return to equities.
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Honestly, I don't trust the way Alice Schroeder writes stuff at all. As I recalled he had roughly $17 million in cash when he liquidated the BPL partnership. I have obviously been proven wrong but having a hard time believing Buffett spent down his entire $17 million cash wad into just BRK/Dr/and Blue Chip Stamps, there must have been some fixed income in there or other liquid securities, making it more believable that he was just fully invested and ran out of gas...
In any case, I cede to Bmichaud the win in this debate.
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He took his BPL cash and bought more BRK. Everything he had went into BRK post BPL liquidation. He then had to start his non-BRK net worth from scratch.
The circularity of this entire debate would be broken if we all read Schroder's WEB bio, the Snowball. All of this stuff - the shorting, the cash poorness - is in there. I guess I made the faulty assumption that the so called WEB experts on here have read it.
This is the first I hear that Buffett invested his post BPL cash in buying more BRK shares, Please enlighten us with this quote from the book...
My understanding was that he always maintained a significant personal portfolio , his initial BRK stake was roughly $7 million or so and that is the same stake that has grown to $40 billion now, his other $17 million or so is what is now worth $1 Billion or $500 million outside of BRK.
I believe you are mistaken but would appreciate being shown otherwise...
I will stand corrected if Alice Schroder is lying in the Snowball. I don't have the book with me at the moment, but will post the section tomorrow night.
He essentially went on a buying spree after the liquidation, buying BRK, Diversisifed Retailing, Blue Chip stamps etc...Then all of it was eventually rolled into BRK. There's a neat chart in the book that shows the massive web of companies he owned through BRK, Diversified and Blue Chip among others. The SEC dudes that were investigating him and Munger regarding a transaction involving a financial company in california (can't remember the exact details at the moment) couldn't believe the complex web Buffett had created. Pretty cool actually.
You see, you have been wasting our time posting and making assumptions and now you can't even remember what it is that you read.
Let me refresh your memory, Buffett, received a stake in BRK and some other companies as part of his share of the NAV in BPL, additionally he received a distribution of roughly $17 million in cash. This was not even in the book, but is known by investors who have followed Buffett and have calculated the value of BRK shares as part of the BPL portfolio and knew Buffets stake was $25m out of a total NAV of $106m on the date of distribution (roughly 26% of the NAV).
Buffett was never in a situation after BPL Partners where he was low on cash personally, he used some of that cash to invest in companies personally but most investments were made through BRK, eventually BRK acquired Blue Chip Stamps in which Buffett and Suzy gained more shares in BRK as did Munger, but your comments about Buffett being low on cash are completely wrong.
He had most of his net worth outside of Berkshire and it was substantial. This is the cash that grew to the $500 million he mentioned to Paulson in 2008.
A perfect example of your intelligent mind misunderstanding something, then running with it, and then preaching to the members of this board. It's quite analogous to your views on Macro as well.
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He took his BPL cash and bought more BRK. Everything he had went into BRK post BPL liquidation. He then had to start his non-BRK net worth from scratch.
The circularity of this entire debate would be broken if we all read Schroder's WEB bio, the Snowball. All of this stuff - the shorting, the cash poorness - is in there. I guess I made the faulty assumption that the so called WEB experts on here have read it.
This is the first I hear that Buffett invested his post BPL cash in buying more BRK shares, Please enlighten us with this quote from the book...
My understanding was that he always maintained a significant personal portfolio , his initial BRK stake was roughly $7 million or so and that is the same stake that has grown to $40 billion now, his other $17 million or so is what is now worth $1 Billion or $500 million outside of BRK.
I believe you are mistaken but would appreciate being shown otherwise...
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Moore that proves you don't actually read what I say. This was my exact quote:
"He was cash poor after liquidating BPL and pouring everything into BRK."
Not that difficult.
I am sorry bmichaud but I reread your quote and still don't understand. You say he was cash poor after liquidating BPL and pouring everything into BRK, from this I infer that you believe Buffett was cash poor upon closing the Buffet Partnership Funds, ?
The BRK position was a position in the BPL Funds which was distributed to BPL Limited Partners Pro Rata as part of the NAV of the fund. Buffet and Suzies stake of $25 million at the time from the total $106 million in NAV was distributed to them as follows:
Roughly $17 million in cash, and the rest in the form of shares of BRK and I believe the Bank of Illionois, and possibly one other one I can't remember.
So when was Buffett Cash poor?
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Great Post, Burke, and I fully agree with you. Bmichaud will not benefit from these low prices with the way he has constructed his portfolio...
Also, Bmichaud claims Buffett was "cash poor" after liquidating BPL, I either I misunderstood or thats what he said? Well in fact Buffett had about $17 million in cash when he liquidated BPL, the other 7-8 million was his stake in Berkshire Hathaway and the Illinois Bank.
He was definitely not cash poor.
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Why would we posit that anyone would find it easier to hold gold for 40 years than a truly top class stock like KO?
Because gold was historically money, and can be viewed as an alternative currency. Gold should not be viewed as an investment, rather an alternative currency.
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I would like to add one more thing to provide some perspective.
The reason I believe it is so important to account for taxes, and the cost of living, is ultimately we want to have an apples to apples comparison of what 1$ in 19XX is worth in 20XX, and only then can we see if gold has done a good job of retaining its purchasing power.
Nobody wants to work forever, and nobody lives forever, also as human beings we are susceptible to disease and accidents, which can hurt our productivity levels. Whenever academics throw numbers and assume that it is a sure thing you would earn x or y, it is often lacking the simple understanding of the process required to obtain such a job, and incorporating the actual standard of living.
My argument and that of most older investors who appreciate gold, is that it functions as a store of value with very little effort required on the part of it's holder, and it functions as a major insurance policy if things get out of control.
With gold, one does not need to be an amazing stock picker, or a sophisticated tax planner, looking back to 1971, all you had to do was say, well gold might not be good enough for Nixon, but it will be for me. And many people did in fact do that especially here in Canada. Many did that in Germany as well and continue to do so today. We have a client who's bullion position appreciated to nearly 10% of his net worth while it was most probably 2-3% historically.
Most importantly, I think it is very dangerous for citizens to simply "trust the system" as academics would like, because the system is clearly rigged to reward the debtors and punish the savers and this is all because of a lack of discipline on the fiscal level...
It's your hard-earned after-tax wealth, and it is your job to protect it. Using hindsight to pick the best performing stock (Mcdonald's) is totally ridiculous..as nobody on this board would plow all their after tax wealth consistently into Mcdonalds for the next 40 years...
But if you treat gold as it once was (money) and simply acted post 1971 as though it was not demonetized, your cash money would have compounded better than Mcondald's... All while you would have still been free to redeploy into any other asset classes you believed in, such as equities or property, or debt. That sounds pretty good to me.
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Average salary in 1912 was $1,033 and currently the average salary is around $42,000 - that's a 3.8% CAGR over 100 years. So not only has the average person's salary nearly stayed constant with the price of a loaf of bread, their standard of living has compounded at a FAR greater rate than 4% over that time due to this wonderful economic system we have in the USA.
You can argue for the gold standard all you want but it's not coming back. Get over it.
You inherited a stash of useless gold from your father back probably in the 70's or roughly 40 years ago - so the rise from $35 per ounce before getting off the gold standard to let's say 1,800 per ounce works out to a 40-year CAGR of 10%. McDonalds on a split-adjusted basis sold for around $1 per share back then, and at its current price of $98, that works out to 12% per annum BEFORE DIVIDENDS. You'd have been better off selling your gold and buying a high quality franchise.
Who cares about gold or the gold standard? Buy a wonderful business, accept the system for how it is (there's aboslutely nothing you can do about it) and move on with your life.
This post was not on your standard at all, you are mixing and matching rhetoric, to form your argument.
Lets start with your avg. salary calculation, even in your calculation the average salary has grown at a rate of .3% less than the loaf of bread compounded, but again what you forget to account for is taxes, and the cost of living. The individual earning $1,033, or 43,000 is earning those dollars PRE TAX, post tax he is left with say 75% of that money, which then has to be used to pay for goods and services each and every year. You are making the terrible, or naive mistake of not accounting for the cost of living, each and ever year.
Back to that little .3% discrepancy, it amounts to roughly 13% of additional wealth lost, over the same period, so even if we don't adjust for taxes, and cost of living, the loaf of bread compounds way better than an arbitrary metric like "avg. salary", what happens if you are in between jobs? what happens if you get sick ? What happens if you decide to take a year off? Is it fair that your loaf of bread keeps costing more while your money is worth less?
Next, lets analyze your Mcdonalds analysis, you choose one of the best performing stocks over the last 40 years, and compare it to what is essentially the money in between all transactions? That is completely unfair as it would mean that an investor would have had to at all times be invested in Mcdonalds common stock from 1971, and pile in any additional income (immediately when receiving it) into Mconalds to achieve the same rate of return as just using gold as a basis for money, (which it historically was). That is a pie in the sky proposition.
An average investor would have kept some money in cash some money in bonds and some in equities, of which Mcdonalds may have been one position and Kodak may have been another (how has Kodak done?) and what about real estate? And what about those loafs of bread that he would have purchased every day or week to feed his family? Well those loaves have been digested and the funds used to buy them gone.
I haven't done anything, have just kept my gold bullion sitting exactly where it is, and it has done a better job than all the hindsight investing you claim to have done. And that is what it is supposed to do.
Not getting back on the gold standard - NO DOUBT about that, as there are way too many academics in government, who believe that it is ok to subsidize the lack of fiscal discipline, but that doesn't mean I cannot be my own central banker? And work as hard as I can to retain the purchasing power of my assets.
Finally, the rhetoric about America and the quality of living, that is just a complete load of bullshit as who are you to say we are any better off in terms of quality of living due to being on a fiat money standard than being on a gold standard. I would argue that there are more people today living the rat race than ever before, having a significant amount of money run through their hands, daily and monthly but not able to save it due to the increasing costs of living and maintaining that ever so incredible "standard of living" you so love.
I have posted before the cost of Sears Homes from 1906 to 1971, that was when a house was a home, not an ATM machine or a stimulus tool used by central bankers.
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Prices always and will forever go up in a credit-based economy. A loaf of bread costs about $2.78 now versus $.05 in 1912 - that's 4.1% inflation over a 100-year period. Who cares? Are you not better off now than back then? Can you not trade a stock in about half a second now as oppose to an hour back then?
Prices are not skyrocketing out of control by any means across the board. There are pockets of high inflation particularly in the commodity sector as a result of hoarding, institutionalization of commodities as an "asset class", and supply shortages (GMO has a phenomenal paper out on this, see attached).
Bmichaud, with the utmost respect, is it, naivete, or your age? or a combination of the two that allows you to believe that it's so easy to compound your wealth after tax over time, after taking into the cost of living, at a rate greater than 4.1%..
It is my humble opinion, that your argument ends when you essentially say that it is ok for people who actually work for their money see it erode at a rate of 4.1% per annum because we can all trade stocks in half a second...
Peter Burke, great comments and responses.
I always love seeing these academic papers like the one in this thread that go on to explain why the gold standard caused the great depression while failing to make any mention of unprecedented expansion of credit and paper money (not backed 100% by gold) due to the introduction of fractional reserve banking, amongst many other reasons for the collapse. Its always funny to see the term "hoarding" as well isnt money always being hoarded? Why is it that this term is only used during recessions, even during boom times people are hoarding, by definition money is always being hoarded by someone, somewhere.
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I have a core bullion position that has been acquired over my adult lifetime, and was inherited from my father. Think of that as an insurance policy. I don't and have not bought any bullion over $1,200 an ounce...
Since about 2005 we have been investing in gold through the shares of miners and developers. Think of gold as a moving marker for intrinsic value, which you can use to analyze miners and developers.
By investing in miners and developers you can buy exposure to gold for a fraction of it's bullion price.
Here is a small example of one we own:
Simba Gold (SGD-V) has about $.10 a share in cash and is selling for less than cash. They have a non-43-101 historic resource of about 400,000 ounces of gold and will be conducting more drilling shortly
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Geez, the audacity on this guy to tell shareholders in the letter several times to "sell their stock" if their unhappy with this or with that... The guy only owns 2-3% and is redeploying a base of capital that was accumulated under previous management and owners and he dares to tell people to sell the stock if their unhappy?
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But I thought that was only 84 million where did the other 50 come from? Is he selling long-term properties wiht leasebacks and freeing up cash or was the rest derived from operating earnings...
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What is up with Biglari's ego? This has to be the most egotistical annual letter I have ever seen...
As I do not follow BH at all, can someone give me a quick run down of how he increased marketable investments from 118 to 252 if his gains were only 7 on investments in 2011?
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LOL this sounds like me lately :(
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Yes Michaud another great one. I have been reading Hamilton since 2000 and we subscribe to his newsletters. He is by far one of the best market watchers in the world.
Get ready to lose money on BAC!
in General Discussion
Posted
Another thing about ZH, I lost a lot of respect for the guy when he started letting Doug Casey write guest posts, or when he started quoting Doug Casey.
For those that don't know about Doug Casey he is the type of human being that I believe was personified almost perfectly in the most recent Mission Impossible Movie as "Hendricks" the swedish physicist who wants to cleanse the world with a nuclear weapon.
Doug Casey has built a resort in Argentina in anticipation of the end of the world, he is absolutely crazy.