TwoCitiesCapital

Noice! Hoping it stays where it's at for another 3 weeks. Anticipating selling CMG into any post-earnings rally (fingers crossed) and rolling the proceeds into more Pardee shares before since it hasn't participated in the rally like other commodity names. Sold CMG. Buying PDER.

I'm levered in my IB account, but the whole account is betting on a downward move in U.S. equities. Clearly, I'm biased, but I wouldn't be levering to the upside 7-8 years into a bull market. I just have holdings I'm not quite ready to sell yet and still want to place bets to the downside to protect myself from what I am convinced is sheer ignorance in the U.S. market today so I have a bunch of direct shorts and long puts that were funded by margin. Levering a small portion of my portfolio up 1.5-2x betting on downside seems alright and the most likely way of me getting margin called is if U.S. equities skyrockets which would likely mean the rest of my portfolio is doing ok as well. Of course, there is the possibility that the U.S. skyrockets while everything I own tanks...but that was 2014 & 2015 and 2016 has been the massive reversion trade so I'm comfortable maintaining the levered position at this point in time.

I think the problem isn't that there aren't going to be new jobs for humans that are displaced by technology - the problem is that technological change isn't happening on a linear scale. It's happening at the exponential scale and it's getting to the point where I think it's very probable that there will be larger lags between new jobs/opportunities opening up for a larger and larger number of people who get displaced. We aren't creating new jobs as quickly as old ones are being automated precisely because we're automating at a much faster rate than we ever have before. It's the pace of technological innovations that is threatening - not the innovation itself.

I think they will be - There was an article I read about this earlier, but can't seem to re-locate. It mentioned that when indices first started, they tracked the underlying movement in the stocks they traded; however, they've grown so large and so ubiquitous that the concern now is that underlying stocks are going up simply because people are passively plowing money into the index (i.e. tail wagging the dog). I don't view straight passive, "set-it and forget it" as being an intelligent option simply because if everyone did it then it would be a disaster for markets (indiscriminate buying of equities just b/c they're in the index as opposed to any fundamental reasoning/value anchor attached). I think in normal times when you have both active and passive investors, passive CAN be a decent option simply due to avoiding the fees; however, if everyone goes passive - I'd want to be the guy with the only active fund.

Also very curious about this. This can obviously be very profitable but seems legal risk is very high in a city adamant about cracking down on airbnb? The city is cracking down on hosts who rent out apartments they don't live in. I just get a bigger apartment than I need and rent out the additional bedroom to pay the entirety of my rent. This is not much different than having your friends/family crash on your couch from a legal perspective - I'm just getting paid for it and that isn't what would make it "illegal." I also never rent it out when I'm out of town to ensure that I'm fully on the "right side of the law" with this. Also, I've always taken the approach that it's better to ask for forgiveness than permission. If it's not written in the lease, sign it. They can't make up rules as they go along and a "sublease" is technically 30 days or more (which none of my guests have ever stayed that long). Lastly, I've done it both doormen buildings and walkups. Doormen don't typically care and I go out of my way to treat them well, learn their names, etc. so as to not make easy enemies. The risk is that the building finds out, doesn't like, tries to intimidate you into stopping, you stand up to them, and they refuse to renew your lease when it comes up for renewal. Has happened to me twice in 4 years now, but moving once every 12-18 months is well worth living for free in the city.

I live in NYC and airbnb the second bedroom in my apartment as my side gig. I spend 10-15 hours a month cleaning, entertaining guests, responding to messages, etc. and it pulls in 3-4Gs/month which basically covers my rent in a nice apartment. Not a bad return on my time, but I'm not able to legally scale it so this is probably the pinnacle of what I can hope to make from it (enough to live rent free in Manhattan in whatever apartment I choose). Looking to get into rental real estate at some point in the next 2-3 years and wouldn't mind buying a small business like an ATM route that would start the transition to being my own boss.

Agreed. Every time I think about solutions to this broken political system they all fall apart at the voter. We get what we deserve. We do not have an informed enough electorate, nor an electorate motivated enough to become truly informed, to have a political system that works on anything more than broken promises and mud-slinging to the ignorant masses who eat it up.

Sure. I was more posing the question and not really pointing out anything you said. I think that Bruce's thesis makes a lot more sense now than when people were originally talking about it. I didn't buy Sears until 2013/2014 after they had begun announcing sales of stores at an appreciable pace and were spinning off Land's End. At that point, I saw them moving assets and investing in new growth initiatives while leaving the legacy unprofitable legacy business behind (closing unprofitable stores en masse) and Bruce's comment above seemed to hold a lot of water. I sold because the rights offerings left a bad taste in my mouth. It seemed like Lampert was monetizing shareholders just as much as the assets and I wasn't comfortable increasing my capital commitment, at that price, to get the same assets I already owned even if it seemed like a lucrative deal at the time. Who knows - I'm just watching. Haven't quite decided if Bruce's comments hold any more water now than 8 years ago, but they seem to. I'd still be in the name had Lampert not demanded I increase my capital commitment at every turn to keep the assets I already owned :/ Maybe I'm better for it...

There's great blogs on being frugal. There's great blogs on "living richly." I read both and apply both. Instead of cutting back on latte's, I'd rather focus on getting that 10-15% raise at work OR increasing revenue in my side business. But, I take subways and buses instead of blowing $20-30 on cab rides. I also live in one of the cheaper parts of Manhattan and take subways 10-15 minutes anytime I want to go somewhere to save a few hundred a month on rent. It's a balance. Maximize your income, spend lavishly on the things that make you happy, and cut everything else out.

Looked at it, but it was a bit pricey and I attended the shareholder meeting this year so think I'll be passing on this.

-Bruce Berkowitz, 2008 (8 short years ago and right before one of the greatest times to deploy capital in modern history...yes, rear view mirror and all but still...) So the real question is - does Bruce's comments from 8 years ago hold any water going forward? If I'm not mistaken, it's only been the last 2-3 years where the bulks of real estate sales, store closures, spin-offs, and rights offerings occurred. I think we can all agree Bruce was early 8 years ago. Does that mean ultimately he's wrong or does his original thesis hold water going forward now that it appears the company has committed itself to monetizing/unlocking these assets where from 2008-2013 that wasn't necessarily the case?

I think the case for takings from the preferred is more clear given that we're paying dividends on the gov't preferred, but none of the others. There's also the contractually-owed par value and whatever minuscule chance of the concept of "accrued dividends" to be paid. The real value in the preferred shares for me is the optionality in the likely recapitalization where they would be converted into equity capital. If preferred shares are converted to common at par, you get the possibility to double-dip with preferred shares going up 10x, or more, and then converting into common at some fixed ratio. I imagine that the common will have a whole lot more gas in them following the clearing up of the uncertainty surrounding the recapitalization and what the pro-rata EPS wil be so there may be a good chance of supercharging returns on the common simply by owning preferred.

Fairfax hasn't been held in such high esteem among many members in recent years. Bets on Greek banks, short equities, and Blackberry have taken a lot of shine off the company in some people's eyes. I myself don't follow Berkshire much. Major positions by order of capital committed: Santander Fairfax PEFIX (Mutual fund that is long TRS index of value stocks in emerging markets and manages the collateral in fixed income. Heavy energy/EM exposure) Altius Minerals Sberbank Short IWM (several SPY put options owned too) PAUIX (heavy emerging market debt/equity exposure, also short the S&P for leveraged/non-correlated returns) Pardee Resources Fiat Chrysler Lukoil Gazprom FNMAJ/FNMA Chipotle Those names cover 50-60% of the portfolio. There's probably a dozen more individual stocks (mostly energy/resource exposure) and a few mutual funds that all represent <2% positions individually. I also hold about 15% in cash at this point as I've been pairing down EM/resource profits.

I don't think you get it. You are saying Buffet should keep funding the Hathaway mills instead of shutting them down, and you are saying that Buffet should keep funding Dexter shoes even after billions of dollars invested in it already went into the drain. It is all about personal reputation. Therefore Buffet should rather keep losing money on these investees than take the lose and move on? I am sure you will disagree on that, but when the same thing is applied to Trump, you demonize him and make he look like an evil? You completely miss my point. If the business isn't working, you pay your debts and shut the business down. You don't just declare bankruptcy, walk out and stiff your creditors like Trump has done six times. Just out or curiosity, why not? Isn't that exactly what ch. 11 is? you restructure the debts or default on them and leave the creditors with the collateral/assets? I'm just trying to understand the situation: if I own a company, it defaults, I declare bankruptcy and then give up all assets and cash to creditors, I'm not also going to work for the next 10 years slaving away to make those creditors whole. Maybe it's different if I had another company, but I also don't feel like I would be automatically compelled to use earnings/assets from the second company to pay off another one that was already been legally disposed of and settled. A related question: if you own a house and have a mortgage on it and property prices fall 50%, is it appropriate to just walk away from the house and let the bank repossess it? If not, why not? Is it morally wrong to operate within the confines of an agreement that both parties agreed to operate withing or is it still wrong to walk away from a house that you have the ability to pay for even though the mortgage agreement gives you that ability?

Haven't we thrown away much more than that in pointless foreign wars where we support one side in one country while literally killing them in the next? It's not about what makes sense or the cost associated with it. It's about what moves forward whatever agenda they have.

Maybe that's been the endgame? To steal all capital/profits throughout the conservatorship and then say "oh look, they can't stand on their own" and then switch to receivership?

Glad I'm not the only one. Haven't purchased the shares outright, but did sell puts @ $10 two days ago which seemed like an easy way to pocket a 5% premium to insure against a 20+% loss in a 1.5 month period. Now that we're basically there, there's a good chance I may be assigned before expiry.

Noice! Hoping it stays where it's at for another 3 weeks. Anticipating selling CMG into any post-earnings rally (fingers crossed) and rolling the proceeds into more Pardee shares before since it hasn't participated in the rally like other commodity names.

I certainly think there are merits to the buy & hold strategy, but I've been a far bigger believer in the market cycles philosophy of secular bull/bear markets depending on the trend in inflation/rates. I think the punchcard philosophy makes a lot of sense if you're in a secular bull market (where it pays to hold on for 20 years) or just really, really good at identifying the companies that will outperform over the 20 year period. For everyone else, I think it makes sense to buy what is cheap and sell what is expensive. I have core holdings I imagine that I will hold for years, but if the market offers me an opportunity to exit at prices I think are unreasonably high, I'd be a seller of any one of them and punchcard be damned. I imagine a lot of Buffett's advice is for "average" investors though. Just like none of us are going fully passive in index ETFs and bonds, I don't expect many of us to really follow the punchcard philosophy either.

If you believe we're at the beginning of a prolonged up-cycle in commodities, it's probably a decent time for long-term gains. I imagine most of the short term money has been made between January and today.

Do you really believe the analysis is level headed?? He claims Trump looks presidential and not scary.I am sure blacks and hispanics must be celebrating that he has "allowed" them in his golf club. And his coherent ,well laid out foreign policy must be scaring the hell out of ISIS , Russia and Korea. And his stamina..Oh boy he had so much of it that its coming out of his nostrils every fews seconds. And the manners take the cake.The guy simply looked like a nervous wreck and this was way out of his league. And how about Scott's analysis of Hillary's health? Apparently the hypnotist and the master persuader can tell that Hillary is not well by looking at her eyes. This guy has a great future in telemedicine. And this expert diagnosis is confirmed by his know nothing,20 something pin up neighbor Kristina!! I seriously think he needs a psychologist more than Men's rights association visits. The guy has turned into a complete wacko. No wonder that the wife wisely left him and now the world has to put up with his idiocy. I laid out exactly why I thought it was a reasonable thought process and that I also questioned his comments on her health (but that he'd been right so far), but it seems like you skipped over all of that to rush in to say something that addresses 0 of the arguments that were made and simply rehash your first post with more inflammatory language. I guess you still had enough time to remove those comments from your quote of my post though... I think I'll go back to ignoring the political threads now. They don't really seem to attract the higher tier discussions that I came to this forum for in the first place.

I don't think it is. I don't care what Trump's effective tax rate is. I don't care what Romney's is. Or Hillary's Clinton's is. Chances are, it's low because these people spend loads of money hiring accountants and lawyers to lower that liability for them. We do the same as investors to eliminate or lower our tax liability. I don't see why Trump should be demonized for legally taking advantage of option to do such like everyone else does. His income cohort (the dreaded 1%) pay nearly 2x the effective rate on income as the rest of the population. Sure their rates SOUND low, but the data suggests that they're carrying 2x the burden of the next 49% relative to their incomes. Further, Mitt Romney took a lot of heat for saying it, but the bottom 50% doesn't pay hardly anything in the way of income taxes. This is supported by IRS data and I've never seen someone take so much heat for mentioning an indisputable truth. So however low his (or any rich person's) effective tax rate sounds, it is very likely that they are still carrying 2x the burden relative to their income as the next 49% of Americans of income tax payers. If anything, I'd say we're probably approaching the relative peak in which the wealthy are willing to carry the burden for society and that taxes will have to go up on EVERYONE if we don't get a president/Congress who knows how to balance a budget... See the attachment from the IRS website. 2013 statistics (most recently available that I could find from SOI database) shows the top 1% making 19% of gross income and paying 38% of income tax receipts. The next 49% must then make 69.5% of the income and pays 59% of income tax receipts. The bottom 50% make 12.5% of the income and pay 2.75% of tax receipts. Use of the word "fair" has been thrown around in recent election years - it's hard for me to understand how paying twice the rate as half of society while the other half pays nothing is NOT considered "paying your fair share." Disclosure: I'm a 27 year old from a middle-class, blue collar family who never understood why this country hates rich people while aspiring to be rich themselves.

I dunno - As an independent who dislikes both proportionately, this seems like a pretty level-headed analysis of the debate with the exception of his comments about her looking unhealthy. I didn't see that, but he was also on that train long before her coughing fits and unconscious episodes so maybe he really does see more than I do in that regard. At least enough for me to not write him off as crazy for suggesting it. That doesn't mean his outcome will come to fruition, but I understand his argument. Clinton definitely seemed more composed and more prepared, and said things of greater substance. We all knew she would and it hasn't mattered the whole election cycle up to this point. I don't necessarily know why that will suddenly start mattering now. Trump's biggest flaws has been the question "do you really want his finger on the nuke button?" and his "racist" image among minorities. At least one of those was addressed in his performance at the debate while Hillary only told us what we already knew about her. Trump's starting from a lower base and his improvements are easier from here so it's easy to see him gaining in image and support even while "losing" debates on traditional metrics. Trump lost by any objective measure, but if Americans were objective in how we measured these candidates neither one of them would be in the position they're in. If we ignore that metric, which most Americans seem too, Trump probably gained more than Hillary did from his performance, which is all the Dilbert guy is saying.

I certainly hope this doesn't mean that he's all but given up on the case. It seems like this is his flagship fund. Are there other funds that Perry manages to sell the interest to so that he remains incentivized to continue with the case?

Woot!