goldfinger

The problem is that sometimes they have to repeat it for years before it truly happens.

What about the end of a credit cycle also (in the west)?

True. Im probably not the best guy to listen to. I went into the last crisis on margin after 2-3 good rookie years. I want to have excess capital on this next one. I dont know if something massive will happen, I just know there isnt much to get excited about. I would rather hold the cash, though I will likely pickup a few large cap leaps. There have been people who have been doom and gloom since 2008. They have been early or wrong (basically the same). I have ignored them because there were deals which suited me. Now its not much out there...... I will probably only get to 30% cash though. A major bear market may come back (will come back) but it may take a few more years. My experience is that 2003 to 2008 was a period full of "it is going to crash again" and it took 5 years to get there. When it happened, I actually made money on CNQ while stuff was already crashing all around. And by being in BRK and some other undervalued large caps I could turn around at minimal cost and go for more undervalued without taking almost any mid-term loss. But I would tend to agree that if this catches us now, cash is #1!

Bingo. Well said. Very well said, I am raising cash which is something most of you know I dont like to do. At 10% real rates, most Americans will be quite happy having money in the bank earning interest. Hell 6% real rates would be amazing right now. I think after rates rise and stock prices fall insurance will be quite interesting. I am not sure though if there will be inflation or deflation, I do know that outside of large cap tech and a few things here or there - there are few values which is why I am raising cash. I still prefer the 12% to 15% rates certain large caps bring me at current valuations.

Leo comes from a company SAP where there is 2 CEOs not one. He must be accustomed to power/responsibility sharing I do not think he has to restructure the company either. It is a matter of tweaking and putting the focus on the right directions.

Ok we are in full agreement!

Forward PEs of less than 9 for MSFT and less than 7 for DELL and HPQ: isn't that absurd already? At what point do you consider them that severly undervalued?

I am delighted to know that Sanjeev. Always good to know you are not on the other side of my trades. Except that I believe MSFT is not the only large cap that ridiculously undervalued in tech.

Possibly both!

May be a lot more profit/revenue is generated by: - laying off here and hiring in emerging nations. - doing business with/in emerging nations (they are the growth engine at this point). If that's the case we need to understand the consequences of: - a major recession hitting emerging nations (China in particular). - currency readjustments. China cannot afford the peg anymore...

Agreed! Where is inflation at this point however? Everyone talks about it but I can't see it in the numbers (I agree that it depends on how you count it). To me you need to have continuous money printing exceeding deflationary trends/money-credit destruction, wage inflation accompanied by spending/velocity/credit increase or a combination of both in the long run to get to inflation.

That's why I talk of "only" a few more years. Levels of debt seem still pretty high to think that a bit more is in the card at least. If I look at the people I know, hals of the ones that were in trouble when the shit hit the fan are still in deep doodoo!

If you look at the level of debt in the private sector there should be more de-leveraging to go (at least for a few more years). If the government goes for austerity then there could be a wave of deflation. Wouldn't you agree?

If HPQ gets to 7$ earnings per share by 2014 (and as you commented they need almost no growth to get there if current buybacks continue) we would be at a PE of 5! If one reviews earnings by division at HP and listens to Leo's plans, we are not talking about restructuring things or whatever. We are talking about putting focus on higher value added products at the service division and ramping up cloud efforts. Technologies and infrastructure to get there already exist at HP. Many analysts that had a 50+ price target on the stock simply say: hey it still is a very good business but I still downgrade it to 40 or so (so that I fit with the rest of the street).

Eventually money talks!

http://finance.yahoo.com/video/cnbc-22844419/hp-cuts-full-year-outlook-25255464;_ylt=Av252cYo1WdrFJqA18FLbyi7YWsA;_ylu=X3oDMTExaGRpOWNiBHBvcwMzBHNlYwN2aWRlb3MEc2xrA2hwY3V0c2Z1bGwteQ-- I found interesting in this interview that Leo Apotheker explains that he believes that the PC will remain the main device out there (off course HP being the leader in PC sales, he has to be buyest, but still...). Commercial PC sales are strong and he believes that we are in the middle of the cycle for businesses. Their tablet strategy doesn't look that good to me either...

Interesting analysis on future all liquids production world-wide: http://www.theoildrum.com/node/7909 and http://www.theoildrum.com/node/7785. Oil depletion may not be as steep as originally feared by most peak-oilers but the production plateau seems to have been reached and we may get into 3.5% decline rates later down the road (by 2015 and then increasing). It may give us time to adapt but also may bring lots of volatility.

Should we buy all the .co domains ahead of schedule? In the past some people made tons of money with .com. ::)

TxSoftLaw ;D

Yeah, this is what I keep talking about. These strategic decisions that tech companies have to make are never understood by the Street, or most value investors even. They only look at numbers in front of their eyes and then criticize ad nauseam. DELL/HPQ/3Par/Compellent INTC/McAffee MSFT/Skype All examples of the Street not understanding that there is a difference between being a business man and being an investor. Well spoken (especially with Software technologies).

It seems that Bill was a strong proponent of the Skype deal which isn't surprising. http://www.bbc.co.uk/news/business-13434352

Congrats on DELL it is a big position for me too. I actually read your posts with lots of interest a while ago. So thanks for your precious input! I am accumulating some HPQ now as the price gets crushed. In a while it could look ridiculously undervalued too...

Is HPQ in runoff too? ;D HPQ is now getting pounded during the day. What do you think of their strategy Myth? LOL Val. Aside from all the jokes. Honestly I have no idea. I see where HPQ and DELL are going, but I am in no positions to really analysis any of these giants, and in no condition to buy with convection / confidence. This sector is quite interesting. All of it is trading below a PE of 10 (if you net out cash), and all of it is growing to some degree. You also have the fact that 50 billion and 100 billion market cap stocks wont stay cheap forever. Maybe not a PE of 15 - 20, but at least 12 - 14 makes sense. DELL and HP suffer from the same thing, though it seems as though DELL is a bit further along, and cheaper if we do our cash magic. It seems like everyone wants to be IBM. So many product lines, so competitive, and so much trapped cash (with the exception of HP), makes it tough for a guy to get to the bottom of these giants. I will likely eventually take a shot gun approach and buy small stakes (2%) in 4-5. My brother works for HP in the large servers devision, I plan to have a beer with him tonight, though he is quite low in the organization so I dont think it will be very fruitful. Funny enough I asked him why they were trying to create an OS and why they bought Palm, he was like we are HP. I think they will fail and end up with Windows or Android. Times have changed, inmo consumers dont like relearning new OSes. Good thoughts!

Sharp man!

They repurchased 64 million shares for 2.7B$ (around 42.50$ a share). I like their focus on reintroducing focus on innovation and looking for margins in services. Would you agree?