bearfund

Comment Stream » BRK.A

Comment Stream
Filter comments by:
Highest rated Latest comments
Or filter by symbol:
AAPL AB ABK ABX AC ACF ACFN ADRE ADVNA AEM AET AFL AFN AGG AGO AHBIF.PK AIG AIR AKS AMR APA APC APOL ASTE AUY AWC AXP BA BAC BAIRY.PK BBI BBT BCS BG BGU BGZ BHI BIL BK BKC BLK BMI BMO BND BNI BNS BNZ BP BPO BRK.A BRK.B BSC BSV BVN BWX C CAKE CAL CAT CCC CCJ CCTYQ.PK CDE CDR CF CFC CGR CHK CI CLC CLF CLR CMA CMG.AX CNI CNQ CNX CNY COF COG COP COST COW CSCO CSX CUD CUT CVS CVX CX CYB DAL DB DBA DBB DBC DBO DBP DBS DBV... 
[+ show more]
  • 5 Things the Treasury Should Clarify Now
    Actually, there is a way to figure out the hold-to-maturity value of these securities. Step 1: Mark the collateral to market. Step 2: Assume that every debtor who owes more than the collateral is worth will default. Step 3: Assume that every insolvent (liabilities exceed assets) debtor will default. Step 4: Assume that the remaining securities will perform in line with historical norms. Step 5: Add up all the numbers.

    Oversimplified, certainly, because of the difficulty of computing the cash flow from CDOs based on the cash flow from the underlying loans. But none of these steps requires much guesswork and the approach is clearly reasonable. Given that my money is to be spent buying toxic paper (a use of it which is outside the legitimate scope of government and unconscionable in any case), I would not object to the prices paid being based on this approach.

    The biggest problem is that tens of millions of American households are insolvent and any who purchased a residence in the past 5 years is likely to have negative equity. The collateral is likely worth less than two-thirds of its appraised value at origination. And thanks to ultra-loose Fed policy and mortgage rates artificially depressed by Frannie, most of the coupons are at rates well below inflation. So the true discounted hold-to-maturity value of the underlying mortgages might well be no more than 40-50% of par, making most subordinated paper ultimately backed by these loans worthless. And in any case, the more inflationary the bailout, the less valuable these long-term fixed-income securities become. It seems unlikely that giving the banks anything resembling an objectively fair price for this paper would actually improve their solvency. So any reasonable observer is forced to conclude that the intent of the bailout, indeed its purpose, is not to provide liquidity to holders of unmarketable securities but a simple and permanent transfer of money from the Treasury to the banks. If the eventual discounted losses are less than half the amount "invested", it would be a pleasant surprise. There is simply no possibility that any reasonable model-based pricing strategy would result both in full recovery of value and an improvement in bank solvency, although by sufficiently understating the devaluation of the dollar for a sufficiently long time, it may be possible to come close. No doubt this is their plan; indeed, it's the plan they've been executing for decades already.
    Sep 25 11:31 am |Rating: 0 0 |Link to Comment |View article
  • Buffett: I Was Wrong on Anheuser-Busch
    granger, Owen, et al hit the nail right on the head. Nobody ever went bankrupt taking profits, and he even kept some skin in the game in case he was wrong. His shareholders made money; when you're in a position in which you win big if you're right and win even bigger if you're wrong, you've done your job very well indeed.
    Aug 27 00:11 am |Rating: 0 0 |Link to Comment |View article
  • Following Buffett's Railroad Tracks
    irisatrx has it just about right. Or rather, I don't believe this is what Buffett intends to do, but it's what happens anyway. I agree with RightinSanFrancisco that CNI has an excellent business and is undervalued. I keep wanting to buy BNI but CNI is so much cheaper by just about any metric that I can never bring myself to do it. It's a good company, it's just too damned expensive. I blame Buffett for that 100%.
    Aug 12 23:39 pm |Rating: 0 0 |Link to Comment |View article
  • Yet Another Reason Not To Sell Your Berkshire Hathaway Shares
    I saw a similar thing with new and thinly-traded PST a couple days ago. It appears that someone placed a market buy order at open with no active trades occurring; the best ask was 399.99 for a share worth maybe 72. Either 200 shares changed hands at a price more than 5x fair value or this was a bad print. Either way, these anecdotes serve as reminders to investors to be wary of market orders - and market data - in illiquid issues. I find it hard to believe an experienced trader would ever fall victim to such an error but one never knows.
    Jun 05 12:11 pm |Rating: 0 0 |Link to Comment |View article
  • Buffett Reflects on Great Businesses: Raising Prices
    Pricing power is a wonderful thing, and in places like Brazil and China where people have real wealth, it would be a powerful attraction. But in poor countries like America, I'll stick with commodities. Nobody there has any pricing power, but you can have all the pricing power in the world over your candy or your white plastic computers and it won't do you a bit of good if your potential customer just maxed out his credit card buying a loaf of bread and a tankful of heating oil.
    May 17 00:08 am |Rating: 0 0 |Link to Comment |View article
  • Buffett's Advice to the Berkshire Faithful: Buy Index Funds
    Skjellifetti, you may or may not "do fine" - each of us has his own goals and horizon when trading or investing, and those index funds may or may not generate the returns we need or want. More to the point, however, they are not going to "outperform" the market; in fact, they are going to underperform it by margins I would expect to be virtually identical to their expense ratios.

    "Ordinary people" with no knowledge of finance or economics and no desire or ability to do even basic research should not be "investing" at all. 99.9% of such people would benefit far more from paying off their credit cards, learning to budget, and not spending more than they earn than they would by putting a few dollars here or there into index funds. If they have money left over, it should be put into an insured savings account or - depending on tax advice - a muni money market account. Any investment more complicated than those, including index funds, simply requires more knowledge and effort than most people will muster.

    The S&P 500 is not just some number that goes up and down, mostly up, and over a long time goes up more than other equally mysterious numbers. It's shares in 500 separate companies. Some of those companies are good, most are garbage. Some are undervalued by the market relative to their value creation potential, most are overvalued. Except for spike tops at the height of manias like we had in 2000, it's likely that this is more true right now than at any time in living memory. Regardless of current economic conditions, though, if you're contemplating an index fund, you should be asking yourself whether you want to own each of that index's components. Do I want to own C? FNM? MBIA? Do I feel BNI is fairly valued right now? What about USB? GOOG? X? Am I comfortable with ADM's near-total reliance on a dubious subsidy regime? Do I believe in MOT's ability to turn things around? Does S have any future at all? Can I in good conscience own XOM (almost 4% of the index!)? When you buy an S&P 500 index fund, you're buying all of those and 489 other companies. Are you so sure that you can't pick at least one winner and one loser out of those? Really?

    Index investors are supporting a lot of losers and damaging their portfolios in the process. As even Buffett admits under duress, broad diversification of this type is really useful only to help people who don't have a clue avoid being manipulated by "advisors" with agendas, following bogus tips, chasing hot money, or picking obvious losers out of sheer ignorance. It necessarily entails diluting the gains from your winners with losses from obvious stinkers, securities you knew or certainly would have known in advance had you done even cursory research that you did not want to own. If you simply must index, you should at least hedge some of the junk to avoid unwanted risk. But frankly, most investors with less than a million dollars don't need more than a couple dozen positions open at any one time. It's hard enough to find that many winners and wait for the right entry points, and I see little reason to buy anything that's not a sure winner. If you just want to gamble, visit a casino. But please, don't just blindly buy broad indexes. The tide does not always rise, and while it may float all boats when it does, it will surely ground some when it inevitably goes out. Avoid buying those and you really will outperform.
    May 04 22:36 pm |Rating: 0 0 |Link to Comment |View article
  • Buffett's Advice to the Berkshire Faithful: Buy Index Funds
    Notice that he didn't say what indexes he'd buy. This is either a classic case of "do as I say, not as I do" or he's expecting the savvy investor to choose his exposure wisely. After all, buying the broad indexes makes it impossible by definition to outperform, which he says he's confident he would. So, which sectors or geos would he like?
    May 04 18:04 pm |Rating: 0 0 |Link to Comment |View article
  • Ten Comments on Housing
    “The prudent will have to pay for the profligate.”

    I refuse, sorry. Their misbehaviour did me too little good, I'm too young, and the bill is too large; stick me with it now and I'll never recover. If you insist, I'll buy more gold. If you keep insisting, I'll put it in a briefcase and leave the country with it. If you can't handle that, I'll arm myself heavily and smuggle it out. A nation of looters has no chance and I'm not going down with your ship.
    Apr 06 21:46 pm |Rating: 0 0 |Link to Comment |View article

bearfund is a Top 100 Commentor

  • 547 Comments, 73 , 17
  • Total Comment Stream rating - = 56