Richard Glenn

What Buffett's Burlington Northern Buy Really Means

Your point about China's rail is well taken, but I would still ask you -- how much do you think it would take to build BNI's rail system from scratch today? If you think you could do it for under 200 Billion I say you are crazy. (and that's ignoring the permiting nightmare that would await a prospective railroad baron.)
As for book value, that's an accounting fiction. In many cases it bears no resemblance to the value of assets owned, and I think this is one of those cases. The capital costs of building out the rail network were likely long ago written down to zero.

Short Amazon: Risky Investment at Current Price

Shorting stocks based on valuation is a sure fire way to end up broke eventually. Yes, you may be right in the long term, but without very deep pockets there is a good chance that you will be busted flat before the "inevitable" decline.
If you want to bet against Amazon, use options -- here's one way: seekingalpha.com/artic...
For a more complete rebuttal, see my article on Amazon here:
seekingalpha.com/artic...

Barron's' 'Miller Time' Completely Misses the Math - and the Mark

Amen. This kind of shill reporting is just sad. Barron's used to be an OK publication. One more reason to avoid the MSM financial cheerleaders like the plague.

Why Shorting Amazon Is a Bad Idea

Eric, by "easy" I did not mean plentiful but rather that it does not take much digging to identify them. While you are certainly correct about the law of large numbers and mean reversion working in your favor in the long term, how long can you afford to wait, and how much pain can you take on the upside? The reason that I mentioned the fact that AMZN is a large cap is that big companies have access to resources that small companies don't. With an unlimited pool of capital, a short like AMZN very well might work out from these levels eventually, but I would guess that few shorts in the real world will be able to take the pain that may be necessary to get to the promised land. And that's assuming that AMZN does stumble. What if the kindle takes off, or cloud computing and AMZN hits it's growth wall five years from now after doubling it's earnings?

Stress Test: It's Time for Transparency

The only way a stress test will have any credibility is if they fail one of the big banks and nationalize it. That would enable them to claim the others are fine, but without that pound of flesh the market will not believe them no matter what "data" they present. Just my two cents.

Why China Can't Dump U.S. Treasuries

It seems like the author has some fundamental misconceptions. First, China does not buy dollars to keep the Yuan strong (as the article states), but rather to keep it weak, so that it's exports look cheap to the rest of the world. The reason that China does not simply invest in some other asset is not because there isn't a deep and liquid enough market out there to put it to work in, but rather that once it spends it's dollars they are once again out in the international market where they push down the value of the dollar and in comparison make the yuan stronger, and this is exactly what China is trying to avoid in the first place.

The Coming Network Revolution

Mr Ness,
If you had to pick one company to benefit from this coming trend, which one would it be? Cisco? Who has the most leverage if they get it right? Thanks.

In a Beaten Down Market, Bad News Is Blown Off

Is this the final bottom? The buy hold and forget bottom? Perhaps not, but for the last couple of months the market has refused to follow through to the downside, and it's worth pointing out that many of the best stock market rallies happen during bear markets. For the nimble, there is a lot of money to be made. At the very least you may want to hold off on placing your short bets just now, until Mr. Market leans over and whispers "I don't feel so well. . . "

U.S. Government vs. the Stock Market

The drumbeat of dire economic data is nothing but bad, there is no arguing with that, but in spite of not a single piece of good news the market has refused to roll over for almost 2 months now. It has had some down days, yes, but so far it has managed to find a "reason" to quickly bounce back each time. I think we may still go lower, but I would caution against ignoring short term price action. Some of the best rallies happen in bear markets, and traders who don't listen to what the market is telling them will miss out. Right now, it seems that the market is whispering, "psst, i'm done going down. For now."

Buffett's S&P 500 Puts: Big Blunder?

Good article. Insurance is exactly what these positions are. Buffett is very wisely using a huge error in Black - Sholes pricing models which cause an option price to increase as the expiration date goes further out. This works in the short term, but in the very long term it leads to some crazy pricing of puts, as long as we assume that inflation is not dead forever. Think about it this way: what if instead of 15 - 20 years, the options were good for 100 years? How much would you pay for an SPX put option at 1500 that you can't cash until 2109? The implied value would be huge (using standard Black - Sholes), but any sane person can see that it's almost worthless.
The story would be very different if these options were "american style" and his counter party could excersize them at any time. But they can't. And that's what makes the 4.5 billion that Buffett got paid the closest thing to free money that I have seen in a while.
I have to take my hat off to the master on this one, and hope that one day my credit will be good enough to write such sweetheart deals.

Exxon Apostasy: A Closer Look at the Oil Giant's Real Valuation

Thanks for a well thought out argument. The comments above are exhibit "A" for religious attitudes toward some stocks. XOM is indeed a very well run company, but even a good company can be overpriced. And what do you think will happen to the price of oil once someone develops a battery capable of easily powering a car? My guess is $5 / bbl, as the only place it will be used is jetfuel and chemical feedstock.