TwoCitiesCapital

Buy what's cheap and sell what's expensive. EM is particularly cheap. Europe is relatively cheap. The U.S. is incredibly expensive. Don't worry about where/what the crisis will be - worry about the price you paid going into the crisis.

I like this line of thinking - you lawyers are some smart folks.

+1 Additionally, how do we screen people for affiliation with terrorism? Who the hell is going to admit that they are with ISIS? Rather, the opposite happens. The 9/11 hijackers kept shaved beards, short hair, and partied at strip clubs in order to blend in. Finally, none of this does anything to stop homegrown terrorists. The Orlando guy was born in Queens to Afghan parents who immigrated 30 years ago! Call me crazy, but you could stop lobbing bombs all over the world ... for a start. +1 Our foreign policy has created an entire generation that hates America - not because we have freedom, but because we viewed as acceptable to kill tens of thousands of innocent people as collateral damage for our true goals in the area. They hate us because we can bomb a Doctors Without Borders facility and kill innocent patients and doctors to get at a single suspected target. They hate us because we pretend they're sovereign nations until they do something we don't like and then we strip them of their sovereignty. They hate us because economic development in that part of the globe has moved backwards for the past two or three decades because we've chosen a state of constant war as part of our foreign policy. They hate us because we arm and train rebels to fight U.S. funded/placed/supported dictators and then they turn those weapons on the people in the name of ISIS. Yea - I'd hate us too.

This is exactly right. America has decided having tens of thousands of innocents die every year is worth it in order to continue to own guns. It's a reasonable decision--even in America the odds of you or someone else killing your kids with a gun is pretty low. So, if you really like guns, there's far less than a 1% chance of your kid being the one that gets sacrificed so you can keep your toys. I wouldn't make that trade-off because I like to reduce even the small chance of my kids suffering a bloody death, but I can see why others would decide it's worth the risk. The analysis isn't between thousands of dying and 0 dying to have guns. The data suggests that taking away firearms reduces gun-related violence, but violence overall increases. So the real evaluation would be the thousands that die every year from guns relative to how much of an increase in those who will be killed by other means once guns are banned and whether the other things given up by giving up guns is worth that sacrifice. "Freedom isn't free" applies to more than simply the military men we send over seas to die, but this is the evaluation that must occur to determine if getting rid of them is "worth it". Obviously, people will come to different conclusions. LOL, do you actually believe this? That if the government went all tyrannical (heck, rkbabang might think they already are) guns will provide the means to stop them? Has there been a single time in the last 50 years where a bunch of Americans with guns decided to fight the US government and won? (Or is this more of a "this is a cool quote, so I don't really care if it actually would work in real life" thing.) Show me a time when the gov't went all tyrannical in the past 50 years, or does your time frame totally miss the comparison? The last time we had a tyrannical government that tried something that a large number of people disagreed with and were willing to die for was the Revolutionary War - and you can be damn sure guns made a difference. The other consideration would be would other tryannical governments made the progress they made, or caused the damage they caused, if the populace had been armed. This is a harder question to ask as its hypothetical, but it was illegal to own firearms period in Germany after WW1 all the way through 1928 in which guns were allowed to be purchased under strict permitting requirements. This was amended in 1938 to reduce the restrictions on handguns, but made it illegal for Jews to obtain permits to purchase handguns. Would Hitler have had as much success systematically murdering 6.5 million individuals had those individuals been allowed defend themselves by purchasing arms? Would he have had as much success conquering Europe if citizens in occupied countries did not have the firearms confiscated? I don't know if the people would have been successful in stopping him had they been armed, but I think we can at least admit it would have made it a lot more difficult and would have required a far larger body of soldiers to maintain (less fighting bodies for invasion) than it did.

They should put a leader board on their website and list the most generous gifters in order (without saying what they gave), get a competition going for people to move themselves up the list. Email the top 10 to the whole wedding list every day. "Honey can you believe even Great Aunt Mildred gave more than we did? How embarrassing. We have to send them some more." They should put a leader board on their website and list the most generous gifters in order (without saying what they gave), get a competition going for people to move themselves up the list. Email the top 10 to the whole wedding list every day. "Honey can you believe even Great Aunt Mildred gave more than we did? How embarrassing. We have to send them some more." Wow rkbabang thats genius! Why limit it to the top 10? I imagine the motivation to not be last on that list would drive more donations from each person that ended up in last each day...lol

I think it depends on the state. In CA if you provide advisory services to anyone for compensation you have to register as an investment advisor. Other states may be different. I think there's generally an out for number of clients/LPs/investors though, no? At least, I thought that was the case. Something like having fewer than 20 clients/investors all living in the state you are operating keeps you small enough to be under the radar or something like that.

basically right. my view is that the risk of having lamberth alone running things on remand is no longer there since other cases continue under other judges (ie more reasonable judges). while dc app ct's rejection of fhfa's main argument would not be binding in other courts, it should be persuasive. I'm only surprised that the equity/preferred's haven't rallied more on the news. I've been adding on the recent developments because these things traded at this price a few months back before any of these developments.

Because the benefit is concentrated and the cost is diffuse. Anytime the cost is diffuse and spread so thinly across multiple people where no individual is given an incentive to care, you get systems in place like this. This explains wasteful government programs, lobbying, persistent devaluation of currencies, etc. etc. etc. Savings millions of dollars in a multi-billion dollar enterprise might add a few pennies to each share of their investment. Not anywhere near the impact of other actions they could be taking. Further, now that the system is ingrained, it's hard to change. Maybe there are talented people who could do it for less...but would they if a competing company offers them 50% more?

Actually, perjury is not a serious crime and is rarely prosecuted. Plus, given the topic he was lying about, should we as citizens really care? Personally, I think whether a President is good or bad is decided by his use of policy to achieve the American public's interest, and only that. I could care less of how "serious" the crime is deemed. Lying in front of Federal Court is a federal crime. If someone had pursued that and convicted him, he'd be a felon and wouldn't even be allowed to vote. Of course, you see this dynamic with white collar crimes all of the time. Breaking laws only matters if you're poor - if you're rich and powerful (say a President, a General, or a Secretary of State), you can break them with near-impunity. Secondly, the topic that he lied about doesn't change the fact that he lied to a Federal court AND the American people. The topic doesn't really matter - if you're President and lying to courts and to the American people, you're not fit to be President. Period. The topic of the lie doesn't change the severity of having lied to 330M people under oath. But yes, in general, I would agree that President's should be judged on their policies and not their personal lives. Bill Clinton's policy of lying to the American people and to the Federal courts is where my problem lies. I'd have a lot more respect for him had he just said "yea, we did it" and then gave a thumbs up then the route he took.

1) Who a president sleeps with has no bearing on their ability to be president or the decisions they make as president. Bill wasn't a good/bad president because of his actions with Monica Lewisnky. Bill was a bad president because he lied under oath about it which is a Federal crime punishable by up to 5 years in prison. Of course, if you're a felon in this country, you can't vote - but you can remain president with nearly 0 consequences and still be a "respected" statesman afterwards and have the opportunity to hold a high-gov't office again. Go figure. 2) Obama has been a likable president. I don't think he's been "great" by any means. His foreign policy was largely an extension of the same mistakes Bush made: invading sovereign countries, getting involved in their civil wars, arming and funding rebels that later become our enemies, and drone-bombing weddings and hospitals wondering why we just can't seem to win over the hearts of the citizens in the area... Further, the wars and the domestic spying on citizens have been largely unconstitutional, but nobody seems to care - least of all the president who swore to uphold it. The most "transparent" administration has been largely opaque while being pretty hard on whistle blowers like Edward Snowden but pretty easy on information leaking Generals and Secretaries of State - one of which is running for the highest position in the "free" world. Lastly, despite the robust recovery he keeps talking about it, it's been the slowest post-WWII recovery despite the staggering amounts of deficit spending and stimulus used to achieve which is going to be paid back by future generations who received 0 benefit in return for being born into debt. So yea, Obama is likable and has been a better "face" of the country than was Bush. I imagine I wouldn't mind shooting a few hoops with the dude or a round of golf. But as a president, I'd say he's done a pretty poor job.

What? His net worth is 10+ Billion. Not gifted enough in business or economics? Or so he says. Forbes says he's worth $2.9, I'm inclined to side with Forbes. He's also had a nice boost from his wealthy dad. Well Trump's net worth can fluctuate from $3 to $10 billion depending on his mood. Trump, by another name, is Mr. Market.

Yea - an unfortunately, as the reserve currency of the world, the U.S. will generally always run a deficit. To be the reserve currency, other people have to hold our currency for use in global transactions. How do foreign countries get that money? Either via trade deficits OR lending. American's don't save enough to satisfy their dollar needs AND the dollar needs of other countries so it has to be via trade deficits.

Purchase more SPY puts at a strike of 110. Now I have LEAP strikes ranging from 185 all the way down to 110. Obviously, there's more money in the nearer-to-the-money options, but will roll down if markets go through a big decline. Just would be odd to have bets at 140 and 110 without really profiting if it hit anything before that. Also, pretty much maxed out on straight shorts and puts that I'll allow myself to hold, so also sold some of my energy exposure and rolled it into ZROZ (25+ year zero coupon bonds). At this point, I'm probably done with my bearish positioning and will play "wait and see" until things start moving dramatically for or against me.

Isn't Bernie polling better vs Trump than Hillary? I'll probably vote third party again, but if I had to vote for one of the remaining main party candidates it'd probably be Bernie. I've always been right-leaning/independent, but the dude is one of the few politicians I've seen with integrity and I generally like the guy even if I disagree with his math/economics/entitlement stances. A Republican Congress would prevent him from doing much of the economic damage that I'm concerned he might do and I'd rather stand up for a politician who is trustworthy and has integrity than any of these other liars who might have better plans, but can't be trusted to actually follow through with anything they say. The problem with this election is that Trump is a caricature of the Republican party and Hillary seems increasingly likely to be a criminal. How did it come to this where we have to choose between a cartoon character and criminal for the highest office in the country?

Emphasis mine. Wait what? Source for this? +1 Even a cursory reading of q1 results suggests this is not the case. That was my take as well. As a matter of fact, in the Q & A they were probed on how they could be down on the hedges in a quarter where the Russell index return was negative and it was because they ADDED to the hedge near the lows. They're not reducing their hedges - they increased them!

That's the libertarian point of view on just about everything. They care about 3 people me, myself and I. ::) Republicans and Democrats must be so much more selfless in the ways that they spend astronomical sums of money belonging to future generations to fund whatever ideological bullshit they spewed to get elected...

Come on... it's ok to say it was over 100%. Fairfax Asia and Brit certainly didn't need their currencies converted. Ouch: I don't know why Prem said Canadian dollars here on Northbridge. It doesn't matter what currency its in, the combined ratio for Northbridge (or any other entity) is the same. Here, 98.6%. I was thinking the same thing. As a ratio, it shouldn't matter what the reporting currency is - the ratio will always be the same no matter how the numbers are converted because the numerator and denominator would change by the same factor.

Sold a few energy/commodity names after the recent rally. Probably reduced exposure by 20% or so to lock in profits. Purchased more SPY puts for 1/2017 maturity

Here's the deal - deflation is representative of overcapacity and malinvestment. That doesn't just go away when you print money and lower interest rates. Lowering rates and printing money simply attempts to make unproductive debt burdens easier to bear to stretch out the pain over a decade instead of feeling it acutely for a year or two. There's nothing that will repair the economy without allowing for the overcapacity and malinvestment to work their way through. That can be achieved through hyperinflation or deflation, but it still has to work its way through. So the question is - which ones will bankers opt for and how much control do they have over that decision. I think we know which one they opt for - but considering every major central bank is failing at it suggests they don't have as much control over it as we gave them credit for.

The hedges are Total Return swaps and are imperfect hedges to their equity holdings. It's possible at times they are over-hedged/under-hedged simply due to divergence between two. Also, there's generally a fee associated with terminating swaps before their maturity. He probably waits for a maturity/rolling of contracts to re-size as opposed to regularly pay fees to unwind/add to trades given regular fluctuations in the market and the imperfect nature of the hedge. Just my guess though. Also, he can always buy more or pay a fee to increase the strike/duration like he's done in the past. People thought deflation was a crazy concept when he talked about it in 2011ish. Now, everyone admits it's at least a possibility worth considering and are concerned by it, but the contracts remain cheap. At some point in the next 5 years, I imagine people will be once again impressed by his foresight and patience. The world is awash in trillions in stimulus and all that bought us was 5 years of disinflation, sub-2% GDP growth, and a declining velocity of money. If you aren't amazed by that don't think that deflation would have been a certainty without meddling, than I don't know what else I could possibly say to get you to realize that there is, at the very least, a non-trivial probability that deflation does in fact occur.

The hedges are Total Return swaps and are imperfect hedges to their equity holdings. It's possible at times they are over-hedged/under-hedged simply due to divergence between two. Also, there's generally a fee associated with terminating swaps before their maturity. He probably waits for a maturity/rolling of contracts to re-size as opposed to regularly pay fees to unwind/add to trades given regular fluctuations in the market and the imperfect nature of the hedge. Just my guess though.

The rally in all commodities since mid-February has been driven by a weaker dollar given the dovish Fed. The markets are literally pricing in 0 rate hikes for the remainder of 2016. Now, how many rate hikes we get is up for debate - I couldn't care less. The fact of the matter is that the U.S. economy remains in a much better position than either Europe or Japan from a growth perspective (even though growth here is pitiful). Our rates are also significantly higher than both countries making us even more appealing for foreign capital. My guess is that the U.S. dollar begins to rally again some time this year and we'll see additional weakness in commodities and emerging market currencies. That being said, I'm still heavily invested in them simply due to the value available and so I can still profit from being wrong to offset my U.S. equity market hedges. And, ultimately, it doesn't matter if see deflation in the U.S if it happens in Europe instead - which is the base case if the dollar remains where it's at or gets weaker. We have protection in both areas. The real question simply seems to be a matter of who bears the load of the deflation - does the U.S. import deflation via a stronger dollar and bear some of that load or does it remain in Europe/Japan.

1) Is December 1928 that far off from October 1929? (This is an inappropriate analogy btw - 1929 ~ 2000.) 2) Do individual stocks exhibit the same phase as the averages? Do sectors exhibit the same phase as the averages? Is it even possible to recognize a stock/ sector/ index bear market from a chart except with a multi-year retrospectoscope? Have investors, historically, continued to buy each dip from the top until near the bottom? 3) Consider the pros and cons of a long/ short portfolio of stocks vs a long/ short portfolio of LEAPS in 1928. Then repeat for 1927 and 1926. How could certain bad outcomes have been avoided? Which were unavoidable? 4) What is your portfolio and why? Do you have a long or short bias? What is your cash position? What is your bond position? How likely do you think it is that your portfolio with be >15% up vs >15% down in 2 years. If you are not confident in your view, what are you going to do about it? Good luck, Graham I think the point is that there were multiple episodes where bears would have been discouraged. The timeline of events is as below which would ignore many more intermediate sized fluctuations: 1) DJ starts year ~200 2) Rallied to 220 before falling back to 200 mid-year (bears start feeling vindicated) 3) Stocks rally from 200 to 300 by November (bears crushed) 4) Stocks crater by 13% in a matter of days (bears feel vindicated) 5) Stocks recover and hit new highs of 325 in February 1929 (bears crushed) 6) Multiple up/down fluctuations of 5-7% between February and May where stocks again end at 325 (multiple feelings of up/down for bears) 7) From May lows of ~300, stocks rally to 380 by end of August (bears crushed) 8) Stocks crater 50% in two months ending in mid-November (bears vindicated) 9) Stocks rally 50% through April 1930 ending near 300 (bears crushed). 10) Successive ups/downs followed, but DJ was generally in a downtrend from 300 to June 1932 where it ended near 50. (bears vindicated) I think the point is that even though the bears were eventually right, there were many very painful episodes to have bet against the market even if you believed the fundamentals didn't support valuations. Stocks do not perform the same as the index as can be seen from last year where most stocks ended the year well off their highs, but a few stocks held up the whole market. Ultimately, you likely either want to be short the index itself and possibly high beta, high leveraged cyclicals. I think there's a point where investors stop buying dips which is where you see 5-10% declines in a single day because of a lack of investor courage. That's probably a good time to be buying. If you shorted stocks, you probably did quite well if you were able to manage the ups/downs during that period (i.e. not overextending yourself with leverage). If you had been short options, there was the possibility of doing significantly better if you were able to actively manage the position and manage the risk (reduce the leverage as indexes fell, increase the leverage as they recovered). Heavy in EM, commodities, and Europe. Admittedly, these will do terrible in the event of a global recession/deflationary environment/market crash but I do believe that valuation is the #1 most important factor in investing and these things are cheap where as what I'm shorting is relatively expensive. It also helps that outside of my low P/B portfolio I mostly own companies with conservative balance sheets who might be able to ultimately benefit from a tough environment via consolidation. I own almost nothing in the U.S. and am currently short the Russell small cap index, SPY LEAP puts, and some high beta individual names (like NFLX and TSLA). I have been trying to manage the risk of this position to better be able to last through the vicissitudes. When markets cratered in August I sold my puts at a large profit and replaced with a much less leveraged position in being short SPY shares. As markets came back into November/December I repurchased those shares at a loss (but much less of a loss than holding onto the options) and replaced them with being long puts again to increase my short leverage. When markets cratered in January/February I sold those puts at large gains and replaced with being short the SPY shares and puts that were further out of the money while keeping some profits off the table. As markets have risen again, I have rolled out of all my of SPY share shorts and added LEAP puts again at higher strikes than were on in August/September and have added higher beta share shorts like the Russell small cap index, TSLA, and NFLX. Having booked profits from the last two round trips means that I'm about neutral on my entire short position as my realized gains almost totally offset my current realized/unrealized losses from the most recent rally. I'd point out that my gains would have greatly exceeded the losses had I not been increasing the size of my short position during the most recent rally as well (and if TSLA hadn't rallied 35-40% as I was building my short position in it). I am now significantly more short at higher strike prices in higher beta indices than I was rolling into August with about a neutral profit/loss to show for it. The hope is to use these smaller fluctuations to my advantage as opposed to being discouraged by them, but I can definitely see what he meant by saying it takes an "durable sense of doom." I've been fortunate in my time of rolling out of puts so far, but I can see how you could be whipsawed if you were a little more greedy than I was.

+1000 Lol

Next year - i vote that we put our screennames on the name tags so I know who everyone is haha I was sure I knew several people in the room - just didn't know which ones I knew.