Mephistopheles

Those are awesome stories. What was Bill Gates drinking?

I know the color of my bedroom carpet and Alice schroeder's hair. I must suck as an investor :(

Don't they have plenty of cash to buy back as much as possible without moving the price AND buy VZ and CVX?

Nice, what dates? I sold some Nov $4.50 and July $3 last week. And then some July $.50 for $.05 which I think is a steal. What are your thoughts on valuation? Unless it goes bankrupt I think those $.50 ones are easy money and a 10% return on notional in 6 months. Was also doing this last week. Got .10 for the July $1 strikes. Nice. I want to put on bear put spreads but the IV and the premium differentials between various strikes is still really high. Can't figure out how to make big money on this, other than the small amounts made with these abovementioned trades.

Nice, what dates? I sold some Nov $4.50 and July $3 last week. And then some July $.50 for $.05 which I think is a steal. What are your thoughts on valuation? Unless it goes bankrupt I think those $.50 ones are easy money and a 10% return on notional in 6 months.

Bear Stearns...Lehman Bros. It's not that two parties are making a trade. If the parties are large enough or have enough fire power, they could take down a major financial institution...and then dominoes fall. Now when I say two parties, I'm not referring solely to the WSB crowd, but even rogue hedge funds, private equity funds or any other fund of size. If parties are acting together, they should be filing their positions together...such as proxies, 13D's, etc. Personally, I'm pleased that hedge funds got a taste of their own medicine, especially anything involving Cohen, but the system has to have disclosure, transparency and rules to create a fair playing field. Cheers! I guess what I meant to say was. Say 2 parties: a retail investor at TD Ameritrade and an Hedge fund client at Goldman make a trade. The retail buys $10,000 notional value of calls from the Hedge fund. So now the fund has a $10 k liability which may be naked or hedged against the stock. At this point, why are either of the brokers involved or have any risk? Doesn't the risk belong to the investor on either side? Granted, assuming the brokers require decent margin requirements of their clients. But why does trading need to be restricted at this point? Why can't the brokers just ensure that the margin requirements are aggressive enough? I noticed a bunch of them raised the margin req to 100% for these stocks. At that point, what is the risk to the system? Now the step I never appreciated was that there is a market maker in between all of this. They sell you the option to make the market and then find a party to take the other side. In order to lower their risk, they buy stock. So the way I understood the gamma squeeze was that a whole bunch of retail piled on buying calls that the market makers sold way too much risk that they couldn't sufficiently offset just because 1) there aren't enough shares available and 2) the float is so thin that the stock needed to hedge just shot up 50%. Because the position only gets bigger as it works against you, the Market Maker's liability kept growing which contributed further to the squeeze. Is this a good description of the risk to the MM? But again,, even in that case, why can't the MM just stop selling calls? Or why can't they just limit the amount of risk they take?

Buffett "bailed out" Goldman and BAC during a controversial era as well. He won't let a good opportunity pass here.

I am so angry about all of this. Can someone explain why if two parties want to make a trade it should not be allowed? I don't get it. I don't get the gamma squeeze thing either. Like the market makers took the risk to take the other side of the transaction by selling calls, did they not? So then they had to go buy stock to hedge but again, is that not part of the risk???

I think the political route is dead. Mnuchin/Trump, for all their incentives, and big donors being pref holders, were not able to privatize the companies in 4 years. To me it means there are so many internal road blocks that even the Sec of Treasury was unable to pull it off. Now we have a President and new team that have stated that they are in no rush to privatize. These are the same people who implemented the NWS in the first place. I give it zero odds for them to make any deal. So now all we have is the Courts and it's above my pay grade to analyze that.

https://www.dailymail.co.uk/news/article-9148933/Cuomo-allows-indoor-dining-state-apart-NYC.html Cuomo opens up indoor dining all over NY again, except NYC, even though NYC has the second lowest positive rate in the entire state. His reason is NYC is too densely populated. What a POS. He destroyed a majority of restaurants and bars in NYC but the job isn't finished until he kills 100% of them.

You may not have intended that to be funny but it made me snort ;) I did intend it

Moderator, please move this thread to the "Politics" section.

Each spin is 48.6% black or 48.6% red, no matter what the preceding spins were. The odds of red 4x in a row is .486 x .486 x .486 x .486. The odds of red 3x in a row and then getting black is also .486 x .486 x .486 x .486. Thus, after the 3rd spin, it's equally likely you will get black or red. The odds of RRRB in that order are exactly the same as the odds of RRRR.

In this 5/21/20 Fireside Chat video, Pabrai discusses being banned from playing Blackjack at a Vegas casino. He says that it did not involve card counting but it was a winning strategy and that he made around $100k. I am very familiar with card counting but am surprised to hear there is another system? Anyone know what he could be talking about? Starts around 15 minutes

FYI, The $125 billion Apple stake is now 25% of Berkshire's Market cap. This doesn't account for the fact that Apple is likely overvalued. I really hope he's started selling. Assuming it's fairly valued though, you are paying $375 billion for the rest of Berkshire.

Doesn't answer your question, but I am really curious to see what the latest share count is per 10-Q. So far we have seen that Buffett bought back $5 billion of stock Q2, the most ever (I think), and now we are seeing huge purchases of BAC. Perhaps Buffett's outlook has changed, and he bought back at an even faster pace in July.

1) I think the successor will be more than one person, meaning, one CEO but several people doing capital allocation. I can imagine Ajit doing all the capital allocation in the insurance industry including acquisitions, and Greg doing the same within the energy space. BH Energy will have a lot of opportunities in capex going forward. Aside from that, I think Buffett himself is a mere mortal has had some prominent misses in the last 20 years. So I think a combo of Ajit/Greg/Todd/Ted will make for excellent capital allocaters, not any worse than Buffett in my humble opinion. I think buybacks will be ramped up significantly, which they already have. I think most people prefer buybacks at below or fair value, and I think that will happen instead of dividends. 2) Unsure about Apple

"Berkshire shares are down today as its (deferred tax) liabilities swelled by more than $1 billion overnight due to the massive increase in the value of its Apple position." :P ;D

But until the cap gains is realized, the deferred tax liability serves as an interest free loan that continues to be invested in the particular security, which otherwise would not be available to invest if the gain is realized. This of course only makes sense if the particular security itself is worth holding for that period of time. Here's my question. Why not just borrow against a stock, and hedge with puts that are priced appropriately in order to avoid realizing gains? Buffett can pull an Ericopoly.

I have not, but I likely will be in the future. Merrill is so easy since I bank with BofA, and everything is free. Of course I am not counting what I am losing with worse execution and more restrictions.

If he was doing spreads how did he lose 100%? I'm assuming he opened it on one end and was never able to write the covered call at the higher strike in time?

Thanks. Different strikes under the same security are not considered substantially similar? Interesting. This wouldn't show up as a wash sale as trades in IRA account aren't reported. It's a loophole for those that can afford to hold a naked call position in non-tax account. While it doesn't show up on the 1099, I believe it is against the rules to sell a stock for a loss in taxable and then repurchase in the IRA. Would cause problems if audited.

I think you may be missing the big picture, and that is picking the stock that will go up 500%. You don’t have to use leverage or try to save on taxes if you can pick stocks with high hit rate. Why the sarcasm? It's uncalled for. I think you well understand my concern about some sort of tail event short squeeze or technical glitch that would cause problems for a naked call.

Update: They didn't budge and forced me to cancel the short option trade. Edit: Upon further thought, what is the risk of shorting the higher strike call in your taxable while being long lower strike in your IRA? Assuming the stock is severely undervalued, does it not serve as an effective transfer of wealth from your taxable account to your IRA? The risk I can think of is if there is a massive short squeeze or reverse flash crash sort of event and the stock jumps up like 500% in a day and you get exercised in the naked calls. Of course you'd make a huge profit in your IRA but wouldn't have the liquidity to deliver the stock in your taxable. So then why not just buy a call in your taxable at a higher strike as a hedge against the naked call? At that point: 1) Your downside in the taxable account is limited. 2) You are taking a huge loss with your taxable funds and making it up and then some with your retirement funds, thus creating permanent tax free money. 3) You may not be able to take the tax loss right away because of wash sale but when all is settled you have that advantage as well. What am I missing here?

Yes, I was initially not going to add the broker name, but then decided to fuck it and throw them under the bus. So it's not like the trade is legally not allowed in retirement accounts, right? I'm hoping then that they come to their senses and allow it because it's their own agents that approved and I really want to sue them for lost earnings if they force to unwind.