Mephistopheles

Yes, but GNP accounts for operations in other countries of U.S. companies. And the 2 numbers (GDP and GNP) are very similar. From the Gurufocus page: "GDP in Q4 2012 stood at $15,851.2 billion. GNP at Q3 2012 (the last data point available) stood at $16,054.2 billion." There's also a chart available on that page comparing GNP and GDP historically, and they are pretty much the same.

Does this concern anyone? The ratio is now 116%. http://www.gurufocus.com/stock-market-valuations.php

My parents are thinking of opening up a lead annuity trust. I was wondering if anyone here is familiar with it, and if you can be so kind to share your opinions on it. Key features: -You get to deduct 97.618% of the amount of funds you deposit (So if you deposit $100,000, you pay taxes on only $2,382). -Each year, 5% of the initial deposit goes to a pre-selected charity (So in the case of $100,000, $5,000 would be deducted every year). -1% of the total value of the trust goes to your broker. There are no other fees or commissions of any sort. -The trust will exist for 25 years, after which it will be transferred to your heirs, estate & gift tax free, with a *step-up in cost basis. -You can invest in stocks, but not options (although this shouldn't be a problem as the options trading will occur in other accounts). -My parents tax bracket is 33%. I crunched some numbers in a spreadsheet, and it seems like this is a good option vs. paying 33% taxes up front (and also accounting for the taxes they'd have to pay on the $2,382), assuming that it earns greater than 10%/year. 10% is roughly the break-even, at which point it doesn't make a difference whether you pay the 33% tax upfront AND the estate tax, or invest in this trust and pay the 1% fee + $5,000. The more over 10% I earn, the better the trust is vs. a normal scenario. I assumed a 40% estate tax, because based on the new law, this seems to be permanent going forward. My parents are eager to set up the trust before the end of the tax year. I am still cautious and want to do more research (I guess because of my value investor temperament). This is a long (25 year) commitment so I think it's important to really understand the idea. So any and all thoughts are welcome. *Our broker told us that the heirs get a step-up cost basis at the end of the trust's life, but it seems too good to be true so I am not 100% sure on that. Anyone have an idea? Thanks in advance for all your responses. :)

Why is "Bitcoin replacing gold" a forgone conclusion? Yes I get that there is ease of transfer, but you are saying that even if it's not used as currency, it will replace gold. But as someone else pointed out in this thread, gold has been ingrained in our civilization for thousands of years, and holds the confidence as a store of value for the vast majority of people around the world. So I think it's flawed to say as if Bitcoin should be $300,000, just because it's better than gold. And I wouldn't even say it's better than gold. Gold has other uses besides store of value and currency, bitcoin doesn't. If the whole system breaks down, or if the Government puts restrictions on the use of bitcoins, the ease of transfer doesn't work anymore; and then it doesn't have that advantage over gold. Gold you can store in your house, sew in your garments. As someone else pointed out, the government is not going to be able to check every single household. Everyone knows gold. Everyone knows it's valuable. It's shiny and pretty. It has the "share of mind" that Buffett talks about. Bitcoin doesn't have any of these qualities. Please read the source I linked to, than you'll agree Bitcoin is better than gold. It's simply because it implements the properties (scarce, fungible, uniform, transportable, have a high value-to-weight ratio, are easily identifiable, are highly durable, and their supplies are relatively steady and predictable) better than PMs. To respond to your last point: Bitcoin is also easier to store "in your house" with less chances of confiscation. If someone looks through your house they'll find you gold storage much easier to however you stored your private keys. Add to that that private keys can be encrypted. Crypto is taking over, simply because it's better :) What if the government says bitcoin transactions are illegal? Maybe they can't confiscate it, but they can shut down its use. Or what if shit hits the fan and the internet doesn't work tomorrow, and all we have is here and now? Also I added an edit to my previous post.

Why is "Bitcoin replacing gold" a forgone conclusion? Yes I get that there is ease of transfer, but you are saying that even if it's not used as currency, it will replace gold. But as someone else pointed out in this thread, gold has been ingrained in our civilization for thousands of years, and holds the confidence as a store of value for the vast majority of people around the world. So I think it's flawed to say as if Bitcoin should be $300,000, just because it's better than gold. And I wouldn't even say it's better than gold. Gold has other uses besides store of value and currency, bitcoin doesn't. If the whole system breaks down, or if the Government puts restrictions on the use of bitcoins, the ease of transfer doesn't work anymore; and then it doesn't have that advantage over gold. Gold you can store in your house, sew in your garments. As someone else pointed out, the government is not going to be able to check every single household. Everyone knows gold. Everyone knows it's valuable. It's shiny and pretty. It has the "share of mind" that Buffett talks about. Bitcoin doesn't have any of these qualities. EDIT: Just to put things in perspective about the power and mind share of gold: Stocks are a much better store of value than gold is. This is proven. Stocks pay you dividends while gold just sits there. YET, gold has increased in value over the years. Now we have bitcoins which pay no dividends, and don't represent any value besides what other people decide to value them as, and are not legally backed by any government. It will for sure not replace gold.

One thing that bothers me, and frankly this happens on all message boards, is when a poster really likes an opinion posted by someone else, perhaps in a heated thread debate, and he quotes that message and replies simply with: "This." I don't mind someone replying with "+1", but "This." is so god damn annoying!

58% YTD Was 82% a few weeks ago before SHLD came back down :(

Or $5. :)

They aren't going to be around too much longer, yes. What does that have to do with people underestimating their investing capabilities?

And worse is that if this guy claims he is a follower of Buffett, he should know better than to look at charts.

Is this cash that you are never going to invest? Or would you buy something tomorrow if you found. I leave my cash in the brokerage account earning 0 just in case a stock I like crashes and I need to quickly buy

"That suggested to them that Buffett’s returns are due more to stock selection than to the pressure he puts on companies he has stakes in to improve their management." lol

Buffett said that Ajit Jain has added more value to Berkshire then he himself has. So perhaps National Indemnity is one the biggest value contributors.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaagOLYMd4yg Remember, he wrote the book after everyone found out what had happened. Good find. He's a great writer, but I always found him annoying with a "holier than thou" persona.

What about an artist who takes a job in medicine or engineering because it's extremely hard to make a living as an artist? You need to have talent to be a good artist, but being a good scientist can be taught (I'm not talking about being a Bill Gates). Now if Buffett decides to hire 10,000 talented artists to paint pictures for him, that may bring those 10,000 people into the field whom otherwise would may have been working in something like medical research.

I have a friend who's a bit of a fool. He claims bitcoin is in a bubble, yet still is bullish. He said the bubble will grow larger and won't pop for another year. He's also been getting extremely defensive whenever I bring up the risks or reasons why bitcoin may not be a good investment. He's planning on opening a wallet and investing soon. He has little to no knowledge and experience in investing, and he he thinks he's the smartest guy in the world because he became bullish on bitcoins when it was $600 a few weeks ago, and it has doubled since. Based on this experience, it sure feels like a bubble.

Happy Thanksgiving to all. I am thankful to Parsad for having this board. Also I appreciate the vegetarian photo. :)

Because it's properties make it the best form of money to have ever existed. So it's cheap at $1,000? What if it goes to $2,000? $10,000? At what point is it not a good buy?

Just out of curiosity for the tech savy people: why has mining gotten harder over the last few years?

In a speech once (I think at University of Florida - it's on YouTube), someone asked him this and he compared KO and MCD. He said he likes KO better because it has better pricing power. He said MCD has to give out prize goodies (such as happy meals) in order to drive customers in, and to that degree Burger King has to do the same, and in that way they are very competitive with each other. In that same speech he mentioned how Cola has no taste memory. EDIT: Here's the speech.

That would make sense, although I'm not sure what the exact terms were either. Didn't Buffett also have a fee structure where he took some of the losses? I think he got 50% of profits above 6% and took 25% of losses or something. Or rather he guaranteed a certain %.

I guess that is pretty much close to the position size he wanted. He also said he wanted to invest about $10 billion in IBM and I think he disclosed the position once he got close to that limit. Vinod Yea I guess so, but I'm wondering why that would be the case given the very limited universe of ideas there is, and less than a handful of those that Warren "understands, with a good management, and good price". Also he doesn't like to diversify; and this is less than 1% of Berkshire's assets. Just curious of course; I'm sure he has a good reason.

I wonder why he disclosed the position at $3.7 billion instead of keeping it a secret. Given all the talk about size, and since he doesn't believe in making small investments, why not build it up secretly to $10-20 billion?

Interesting to see Ackman build 10% positions in both Freddie and Fannie common stock. He was buying heavy at $3 at least in Fannie. http://www.sec.gov/Archives/edgar/data/310522/000119312513443212/d630953dex992.htm http://www.sec.gov/Archives/edgar/data/310522/000119312513443212/0001193125-13-443212-index.htm The article says 10% stake, not 10% position. :) I'm confused though because a 10% stake in FNMA would be nearly $2 billion, and in FMCC would be $1 billion. According to Fannie's 10-Q, there are 5.8 billion shares outstanding. http://www.sec.gov/Archives/edgar/data/310522/000031052213000205/fanniemaeq30930201310q.htm#sBE5B9CCD847B2587CC9B7E4F6CD88837 But according to Pershing's 13D, there are 1.2 billion shares outstanding, which if so would make the 115 million share stake a 10% position. http://www.sec.gov/Archives/edgar/data/310522/000119312513443212/d630953dsc13d.htm Am I missing something here? Just realized that the 5.8 billion outstanding includes the Treasury warrants.

Also a couple of beginner questions: 1. I asked this before but didn't get replies so I'll just ask again. How can we check Congressional stock holdings? I am wondering if members of Congress own either the common or the preferred. 2. The risk for both the common and the preferred is that the government will take all the money and they will go to $0, correct? But if shareholders win the lawsuits, then the money will flow through. So in that case wouldn't the common offer a much higher return at nearly the same risk? EDIT: Just saw your reply txlaw. This seems like a binary sort of event in which if the judge rules in the shareholders favor, there would be plenty of money for all shareholders, and in which case the common would offer far greater returns than the preferred. On the other hand, they can all go to zero.