longtermdave
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Posts posted by longtermdave
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Does anyone know if Grantham was ever as specific on timing the market top as he is this time around? From what I've heard in a few interviews, he's putting the top in a few months to sometime in the summer. Was he ever that specific in 2007 or 2000? If so, did he get the timing right?
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This seems crazy, but looking at the survey:
1. This is an online survey, and people regularly lie on surveys.
2. It implies 92 million adults in the US bought one of these stocks on the basis of surveying only 1089 people. That doesn't smell right.
3. "Half (53%) of this group invested $250 or less in viral stocks while only 15% invested more than $1,000." This is lockdown boredom gambling with small sums, which seems contained to a small number of low float stocks currently.
4. "One in five (20%) also invested based on the advice of a financial advisor." Who are these "advisors"??
5. 60% of the respondents claim not to have a brokerage account. How are they trading???
I agree with the general sentiment that excesses are growing larger and more widespread, but this article and survey look worthless to me.
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There a certain age bias in this current situation , both on terms of health as well as financial risk. Zell has a lot more to lose than to win at this Point than let’s say a 30 year old private equity guy.
First, he has a much higher chance to get killed by this disarrayed, second with this being an unprecedented situation l he really doesn’t know how this plays out economically. So he won’t play until he sees it, plain and simple.
Compare this to a 30 year old private equity guy who probably is willing to roll the dice with other people’s money and if it doesn’t work out, he is just going to try again a couple of years later with a different shop.
The different starting situation and incentives lead to different decision making bias.
Does the 30 year old not have significant career risk in doing that? I think Buffett and Zell have been relatively straight shooters (particularly Zell) about the opportunities they see at any point in time. I don't think they would have any reason to waver now unless they truly saw a wide range of outcomes. Also, Buffett was about 78 when he went through the Great Recession, so taking his comments and assigning some risk-averse age argument doesn't hold water to me.
It's kind of interesting Buffett's comments about $137 billion not being that much in the context of worst-case outcomes. That is a way different tone than his "we only need $20 billion to survive even the worst catastrophe" , and suggests to me he thinks coronavirus will be a huge issue for insurers, not dissimilar to what Dupperrault and others have said.
Maybe these guys are simply operating in areas (insurance and real estate) where there is close to maximum uncertainty right now about how things play out. During 2008 perhaps Buffett could pick up bargains because he knew his insurance subs were not as exposed to 2008 risks as the current insurance business is to the fallout from the pandemic?
I’ve been thinking and talking to people about this a lot. If you look back a few decades ago, both Warren & Charlie groused a lot about what they called “social inflation” in insurance. Things that weren’t covered became covered because it was politically palatable to do so. I suspect they are worried about some pain sharing that the politicians might inflict on insurance carriers.
I have a friend at Swiss Re who says social inflation is a huge problem for them in the US. He said it almost doesn't exist anywhere else. It's troubling to hear people describe the country as being governed by the rule of law, when in practice you see the law being flouted when it's politically expedient.
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I reported my identity theft to the local police, who also had me file reports online with FTC and IC3. Because so much information has been stolen about me everything has to be frozen, secured, and constantly monitored. Both I and the thieves live in Texas, but in different cities. I didn't know who they were until a couple years later when I started getting emails from the Victim Notification System of the US Department of Justice telling me the progress of three people going through the court system. They went to prison for 2-5 years.
Because this case involved a lot of data and victims I think it got more attention than one that might be someone going through data files and ripping off individuals or small groups. Even after these people were imprisoned and I put a fraud alert on my credit report, I've had a rental car stolen under my name, credit cards and bank accounts opened, and purchases of all kinds of things that end up at my house that I have to take time to return. It has been an unending PITA.
Definitely freeze your credit and put 2FA on everything important if you don't already. It may eventually get worse for you like it did for me if you don't act to secure and monitor your information. I keep records of everything that seems illegal/unusual and force outsiders to communicate with me in writing. In Texas I can record phone calls, and I do if something doesn't seem right. But mostly I ignore unknown calls and keep the voicemail. I've had threatening letters from creditors, but they back off quickly when presented with the data.
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I have a pricing question I hope someone can answer. Any idea why FMCCI would be so much cheaper than the other FMCC* preferreds? It's normally a bit cheaper, but the spread seems unusually large now.
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I'm not a lawyer, so I can't tell if this would apply to Berkshire the same way it is supposed to apply to entirely passive funds. It is temporary to 2021, and the limit is 15% rather than the 25% limit proposed last year.
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Berkshire Yen notes offering (~$4 Billion USD)
https://www.sec.gov/Archives/edgar/data/1067983/000119312519239290/d779071dfwp.htm
Am I reading that right; they'll pay less than 1% on average annually for those notes?
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There's a chart as part of the proposal that lists the requirements to get to the 25% threshold (attached). I doubt Berkshire would violate any of those currently, but I can't be sure about the 2% of revenue/expenses criterion. Does anyone know if they could violate this for a smaller bank, like USB?
Can/Will Berkshire request suspension of requirement to be below 10% for WFC and possibly BAC till this regulation is finalized?
Can shareholder give up voting rights completely or some part of it to limit their voting percentage while holding larger economic interest in total equity? Kind of like dual share voting structure but more ad-hoc. I believe Berkshire had deal for Washington Post to give voting control of shares to Graham family.
If I remember correctly, they already asked to exceed 10% once and were denied. I doubt they’ll risk being denied again when a reasonable proposal is currently being considered.
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There's a chart as part of the proposal that lists the requirements to get to the 25% threshold (attached). I doubt Berkshire would violate any of those currently, but I can't be sure about the 2% of revenue/expenses criterion. Does anyone know if they could violate this for a smaller bank, like USB?
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An interesting example for this process (insight from data) is when (I can't find the exact reference and the details may not be exact) an air force (UK?) was recruiting pilots during one of the major wars of the early part of the 20th century. For obvious reasons, many pilots did not come back from their missions and there were restraints on time to select and screen candidates. A screener had found that an answer to two simple questions increased significantly the chance that a pilot would come back alive with the plane after a "successful" mission. The first question: Did you ever ride a motorcycle? The second question: Do you still own one? The best results were obtained when the answers were yes for #1 and no for #2. I can't explain this but maybe AI can.
I can answer those questions "yes" and "no", as can my brother and father (a dirt-track racer before I was born), and here's my explanation:
#1) I know what it is to face danger, my limits, and those of the machine. I can control my emotions and behavior in those situations.
#2) I'm mature enough to not intentionally put myself in those situations anymore or take undue risks.
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A great man
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I took viticulture at UC Davis many years ago. I don’t recall much from that class, but one memory stands out clearly. The instructor mentioned he was frequently asked what is the best wine. He told us that “the best wine is the cheapest wine that you like. If you drink anything else, you’re drinking your ego.”
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You all pay too little for milk:
https://www.amazon.com/Tuscan-Dairy-Whole-Vitamin-Gallon/dp/B00032G1S0
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Another step back from his many activities. He'd been meeting with students from 40 different universities.
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I imagine the trucks in these convoys would have some kind of anti-collision logic dictating their behavior. What's to stop people from simply "bullying" the convoy when they want to take the lane? Drive at the convoy quickly or get too close and watch the trucks back off. How much of this behavior would negate the benefits of the convoy? What's to keep convoy bullying from becoming a sport for newly-licensed teens? How hard would it be to stop the whole convoy and steal the merchandise?
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A very large number of stocks that Mr. Market seems to view as basket cases have fallen a lot in one year.
A few examples:
- Supervalu -80% - many value investors seem to have owned/bought SVU all the way down
- RadioShack -83% - net-net stock
- Alcatel Lucent -80% - ValueLine likes this one
- Diamond Foods -78% - potential delisting, but how much would that hurt the stock?
- Green Mountain Coffee -80% - David Einhorn shorting, patents expiring.
- Arch Coal -82% - Cheap natural gas, China slowing?
- First Solar -88%
- Targacept -80% - Seth Klarman...
- Netflix -77%
- RIMM -74%
- HP -50%
- Sony -58%
- Terex -42% - Mohnish Pabrai seems to trade in and out of this one
- Portugal Telecom/Telefonica -56%
I'm not for diversification, but it seems that selling safe stocks (JNJ, BRK, KO, etc) and buying a basket of stocks (e.g. 5-10, not necessarily the ones above) would perform very well in 3-5 years. However, this would go against Warren's and Charlie's "it makes more sense to buy a wonderful business at a fair price.".
Personally I would consider selling BRK, JNJ, etc to buy e.g. Portugal Telecom, Terex or Arch Coal when they fall to multi-year or multi-decade lows. I just don't think were there just yet.
Any thoughts on this?
This is a reply to a post from 2012....It's kind of amazing how well you would have done if you'd bought this list in equal amounts on the day he posted and held until today. I looked at this in a very quick and dirty way in 15 minutes, so I didn't count dividends, and counted anything where I couldn't quickly find the ticker in Yahoo as a zero. I still get about 30% annualized returns (XIRR in Excel). In my calculation, almost everything is driven by the huge run-up in Netflix. I was just wondering how a basket approach would do over the long term as opposed to a quick buy and then sell on the run-up, where you might retreat to the "safe" names after taking gains.
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gg & xo 1,
Sound sceptisism has never hurt anyone. There was a link to an interview with Mr. Buffett here on CoBF yesterday, where Mr. Buffett mentioned, that he was aware of that case.
Do you have some sources to share, to drag us all out of our ignorance?
Here is a link to a Department of Justice news release: https://www.justice.gov/usao-edtn/pr/pilot-flying-j-enters-criminal-enforcement-agreement
Here is a link to a local Tennessee paper with an update: http://www.knoxnews.com/story/news/crime/2017/07/25/whos-still-headed-trial-pilot-flying-j-case/506800001/
I live in Cleveland (where Mr. Haslam owns the NFL Cleveland Browns), so it was a very large story locally.
With respect to BRK investing in other ethically questionable companies, perhaps, although I believe Pilot is different than buying a publicly traded stock in that this will be a wholly owned subsidiary eventually and the case is still playing out. As best I can tell, the initial thoughts that criminal charges would reach the CEO and ownership are not going to play out. Perhaps WEB knows enough to say for sure. But that was the biggest surprise from my perspective - this could end up with BRK buying into a private business where it needs promptly to replace management and that I didn't see that discussed by analysts. And it could be that the risk is priced into the deal, but until we know pricing for the deal, I don't know what to make of that.
Haslam sounds complicit to me, listening to today's summary from the Knoxville News Sentinel reporter:
https://www.yahoo.com/sports/jury-fraud-case-hears-jimmy-183908147.html (follow the video update link)
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I'm in Spring, Texas (well north of downtown Houston) and we are getting absolutely hammered. We've seen 12 inches of rain in the last 24 hours and other parts of the city have seen significantly more. Fortunately the house and the neighborhood haven't flooded (yet). We're looking at probably two more days, or even more, of heavy rain similar to what has already come down. Every river, stream, bayou, and gully is past flood stage and many will exceed their worst-case historical high.
The government is overwhelmed, lacks sufficient resources, and is asking for private citizens to rescue their neighbors if they have any boats or trucks capable of driving through high water. A hospital has already flooded, lost power, and is undergoing evacuation. We didn't even get a direct hit from the hurricane. I can't imagine what is happening to the people along the coast who were directly hit.
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Thanks for sharing. The name is in the URL, so not as nameless as you might've hoped. Corrected.
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I agree he seems too confident. My impression is that he has been good at identifying the right places where problems are building and the consequences. But, timing is always the problem, and not just for him.
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"If I were still professionally managing money, despite my background of pain-and-suffering from being redeemed, my liquidity allocation would be north of 60% today."
Emphasis added.
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New interview posted today:
https://seekingalpha.com/article/4081459-interview-fairholmes-bruce-berkowitz
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The fishes; there’s variation in how it’s applied, but the messages are clear. Ultimately there’s a bounty, and a ‘permitted’ short position.
When it’s over both the target and the whistle-blower are no longer part of the organization, and the whistle-blower walks as an example.
10% commission. Reinterpreted as re-possession being nine tenths of the law.
This part was too opaque for me. Can you add some detail? How would someone short in a business like you're describing? I assume "walks" means "survives"? The commission goes to...the surviving members?
Much of the power to these things is in their brevity - imagination does the talking for you.
Were this a public market, the regulator would let the whistle-blower short the company - before he/she gave the dirt to the press. The expectation being that ultimately the whistle-blowers name will get out - but he/she will be so rich that they will never need to work again; the prospective profit on the short (and coming severance) being well above whatever bribe might be offered to remain quiet. The market solution to a market problem.
In their business - agreement that you will be your bosses replacement, there will be a blind eye for a period, following which you will retire with a monthly pension; and enjoy the organizations protection, while your children go to the best schools (Harvard, etc.). The other guys sleep with the fishes. Pretty clear message.
10% collection fee to whoever returns the money. The organization would like it back, and the more you steal - the harder it becomes to keep it. Whether it's by hacking an account, or a little more old fashioned; no questions asked.
I had the impression that it works very well.
SD
Thanks, that's clearer now.
FNMA and FMCC preferreds. In search of the elusive 10 bagger.
in General Discussion
Posted
Strange. I bought and hold a few of the jr preferred series in IBKR. I've never had a problem trading them.