goldfinger

So are you loading up on cash or loading up on gold?

That's why I am asking Moore if he is ready to wait for a long time? However there could be a lot of turmoil in the markets if one day the FED stops buying even for a relatively short period of time and Buffett actually asked the question himself during the last CNBC interview.

So Packer, you think they could be doing so form of QEn for a long and continuous time or could we get into abrupt periods of change of direction in the way the FED does that?

But isn't there more to earn by keeping their capital strength and strong ratings at all times and then be able to increase the float when opportunities are good?

Precisely Eric. If anything the risk-free rates should be significant higher due to the fact that every nation runs a fiat based currency. And the date is not 100 years ago but rather 1971. That is the most important date to look at. Post 1971 and Pre 1971 when trying to understand these things. The crux of the matter is that since 1971, as influenced by the majority of the electorate, the politicians have been increasingly relying on the fiat money system to subsidize their lack of fiscal discipline (blaming both dems and R's here) each time PUNISHING the saver for the debtor. It has done nothing but created a long cycle in hard asset appreciation and significantly increased the real value of commodities - the essential ingredients that allow an industrial society to flourish. Did technology help soften these effects along the way? Of course it did, the most important of which was the ubiquity of the internet imho. But we have now reached the end of this experiment with all nations employing a fiat standard, all nations employing ZIRP, and all nations employing a significant transfer payment program as a percentage of global GDP. It doesn't feel like socialism yet because there was in fact a major deflationary event that is still in its final innings (since 2008 lehman). One of you posted a wealth video the other day. The primary reason for the asymmetric distribution is that savers have been marginalized leaving only those with large bases of capital (as a percentage of nominal GDP) to flourish and creating a situation where even respectable savers, prudent savers, find their way back to the lower quartiles when taking into account taxes, inflation, and distribution to heirs over time (splitting of the nest-egg). A risk-free rate of return has been one of the cornerstones of trust in the economy since the late 1600's. It has allowed for terms such as retirement and leisure to be introduced into what our view of capitalism should be.Unfortunately for savers today unless you have 8 figures you will be hard pressed to generate a risk-free rate of return which could cover your outlays. We talked about this before. I know many investors with $2-5mm that are reaching into their principal for the first time in their lives. This is a de-facto wealth redistribution. I am not sure how it will end but I have always chosen the contrarian route when making long-term investments. Right now the most contrarian route of all is to pile up unencumbered cash. Keyword: "Unencumbered". A lot of people have liquidity (cash) today but it is not absolute liqudity. They have taken on more debt in their business or have bought a more expensive house with a mortgage reflecting artificially depressed i-rates. Same goes for corporations, even Buffett's cash situation isn't what it used to be when viewing it through the prism of future encumbrances. I will use 2013 as the year to pile up unencumbered cash which I will use to purchase short duration fixed income assets (less than 90 days). A lot of what you say makes a lot of sense. But Moore, how long do you think you have to wait? It seems that the FED could keep that going for a while more... especially if things stay relatively muted like they have for years in the future, don't you think?

That's fine, but I urge you to watch the entire 1 hour Druckenmiller interview. As he says himself hed be somewhat long into this himself but waiting and watching every morning for the inevitable reversal. This cannot go on forever (artificially low interest rates + global currency debasement + ad infinitum growth in transfer payments). Some managers/investors are happy to play the game but we made so much money in 2012 we can afford to wait for the fat pitches. I sincerely look forward to under-performing the indices this year (as of now only +2% ytd) Druckenmiller seemed to indicate that it is when the FED stops stimulating that we will have to deal with weak fundamentals and disbalances. It seems Ben is still at it for a while. You may have to wait a while...

Thank you Sanjeev! The best board is here! 8)

120% long mostly common and warrants and options in BAC and AIG. I manage money for family so I have FFH in their accounts too as a placeholder for cash. I just cannot justify selling these financials way below liquidation and book value when their recovery has barely started. To me it is complete non-sense. Moreover there are so many catalysts and tail winds behind those companies. Regulation on AIG is going to be clarified very soon and results of stress tests is coming early march for BAC. So why even speculating on if I can get them a little cheaper soon or not? Thanks to the board for so much updated information on situations like these; it is invaluable. ;)

Got it! I just look at where I think the common should trade in a few years time (>25$, ~30$) without time value and it still is better return than common.

Why the warrants? They have 6 more years of life and are comparatively more undervalued than the common.

Only 100%?? :) It's the new normal. For you that's low Eric!

Happy new year to all of you. Thanks for the great board. Health, happiness and money in 2013! ;D

I am prepared for calamities. However I have never understood why the end of the world matters? :o

Happy holidays to everyone on this board.

+1 8)

Happy Thanksgiving everyone!

Exactly! ;)

BAC warrant thread has 177 pages. My guess is that some members have done their homework on BAC.

Who said that? It will happen sooner or later. I think we are just looking at the earning power and concluding it is worth 20$+. In the last few years BRK didn't move linearly either by the way!

But you are saying it is a 3 bagger? FFH at 80 has been a 5 bagger and Steak'n Shake even better even faster! I have a lot in BAC too :)

Paris, France => San Francisco, CA, USA

. Many industries, including oil are cyclical. When a cyclical downswing coincides with a secular downswing: Watch Out! The recent oil boom has largely been driven by China. If their economy rolls over, it's triple trouble. Where is the oil going to come from going forward for existing consumption only?

Didn't we have an extraordinary contraction in earnings during the financial crisis? Or is it? Take a closer look at the Shiller graph. It's based on a PE10, not a current, forward PE. The last time I checked the PE10 was about 23. With the recent decline, it should be between 19 and 20. The graph shows the midpoint of future gains over the next few years to be about 2% to 3% when the PE10 is at that level.

Look I do not believe in technical stuff but these two articles give a very interesting historical perspective on panics, crashes and volatility or fear in the markets: http://www.zealllc.com/2011/tradfear2.htm and http://www.zealllc.com/2011/spxbuy.htm ;D

You are right. But I can't see any consistency in management communications and decisions...