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Ted Barac

 
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  • Avoid Paying Taxes The Warren Buffett Way [View article]
    There's nothing hypocritical with minimizing taxation for your shareholders while advocating for a policy of higher taxation rates for the wealthy. You have a fiduciary responsibility to do the former while the latter is a matter of broader fiscal policy in which everyone is entitled to their opinion.

    Furthermore, the notion that those who advocate for higher taxes for the wealthy should just donate more of their earnings to the government (as many suggest Buffett should do) is ludicrous. These people are advocating for a systematic change where ALL higher earners are treated the same and contribute more ...not a program of governmental philanthropy where the more generous high-earners voluntarily pay more and subsidize those high-earners that don't want to contribute their fair share.

    He's giving all of his money to charity and is advocating a tax policy and backing politicians that advocate tax policies that could cost him billions. Don't think his actions cold speak much louder than that. Meanwhile he should pay what he owes under the system and nothing more..donating to the tax system and effectively subsidizing other billionaires won't do any long-term good. For that, there needs to be a systematic change where all of the higher earners pay more. That's exactly what he advocates, even though it goes against his own personal financial interests. Admirable.
    Jan 8 07:23 AM | 36 Likes Like |Link to Comment
  • The Seductive Warren Buffett [View article]
    "He has stated that the insurance company model facilitates greatly limiting taxes. Nothing wrong with that except the hypocritical yapping about everyone elses taxes, including advocating higher estate taxes, yet he will pay only a sliver of the full tax bite on his estate."

    There's nothing hypocritical with minimizing taxation for your shareholders while advocating for a policy of higher taxation rates for the wealthy. You have a fiduciary responsibility to do the former while the latter is a matter of broader fiscal policy in which everyone is entitled to their opinion.

    Furthermore, the notion that those who advocate for higher taxes for the wealthy should just donate more of their earnings to the government (as many suggest Buffett should do) is ludicrous. These people are advocating for a systematic change where ALL higher earners are treated the same and contribute more ...not a program of governmental philanthropy where the more generous high-earners volunatarily pay more and subsidize those high-earners that don't want to contribute their fair share.
    Dec 4 05:52 PM | 32 Likes Like |Link to Comment
  • The Seductive Warren Buffett [View article]
    He's giving all of his money to charity and is advocating a tax policy and backing politicians that advocate tax policies that could cost him billions. Don't think his actions cold speak much louder than that. Meanwhile he should pay what he owes under the system and nothing more..donating to the tax system and effectively subsidizing other billionaires won't do any long-term good. For that, there needs to be a systematic change where all of the higher earners pay more. That's exactly what he advocates, even though it goes against his own personal financial interests. Admirable.
    Dec 4 06:09 PM | 18 Likes Like |Link to Comment
  • Surviving And Prospering Over The Next 4 Years Of Economic Darkness [View article]
    Thought I had accidentally stumbled onto the FoxNews website when I read this article. Wow, disappointing to see such a politically biased and insulting article (e.g. those that voted for Obama are, apparently, stupid) make it as an "Editor's Pick".
    Nov 7 09:35 AM | 15 Likes Like |Link to Comment
  • Microsoft And Apple Did Build 'That' [View article]
    Fox News meets Seeking Alpha?
    Aug 5 01:43 PM | 15 Likes Like |Link to Comment
  • A Plea To Amazon Bears, Apple Bulls, And Others [View article]
    Hi Palintologist,

    Definitely just meant to be a general rant and not a blog of any revolutionary insights. Sorry if it touched a nerve.

    I knew something on S.A. that could be viewed as somewhat critical of Apple bulls, Amazon bears, AND gold bugs wasn't gonna be met with the most friendly comments!

    Again, apologies if it offended. Just strirring the pot a little.
    Jan 27 07:19 AM | 12 Likes Like |Link to Comment
  • Ultra-Low Interest Rates Indicate U.S. Stocks Are Expensive [View article]
    Seems to be circular logic to me (i.e. treasuries are expensive, so stocks must be expensive, too -- or people would sell treasuries and buy stocks). Do low P/E ratios also indicate that stocks are expensive (they imply low earning's growth expectations)? Would buying at the peak of the internet bubble have been wise, since P/E ratios and treasury yields implied such optimism at the time?

    Yields were around 4.0% in 2008, before the massive stock market crash (by your logic, this would have been a good time to buy, since yields showed optimism)...they then fell to around 2.0% after the sell-off (a bad time to buy, because yields showed pessimism?). Faulty logic.

    Yields do currently reflect fear and pessimism, but your conclusions are the exact opposite of Buffett's to "be fearful when others are greedy and to be greedy only when others are fearful.."
    Jul 26 09:46 AM | 12 Likes Like |Link to Comment
  • The Fallacy Of A Bond Bubble [View article]
    I think you are defining a "bubble" completely differently from how most people use the word -- most use it to describe asset prices that become substantially disconnected from intrinsic value (for whatever reason... not just speculation...could be fear). So, by your definition, I don't think many would disagree with your conclusions, but this is just semantics given your unconventional definition (look up the definition of economic/financial/asset bubble and you will see what I mean) and not some difference in opinion on the situation itself.
    May 30 06:43 AM | 11 Likes Like |Link to Comment
  • Sprint: Bold iPhone Move, Fitch Affirms Rating, Outlook Negative [View article]
    "It appears that the leverage ratio being used its total liabilities divided by current assets, based on the numbers given by Fitch."

    Bank leverage covenants are typically based on net debt/adj. EBITDA and adj. EBITDA/interest (with different ratios for both senior/secured and total debt). When a rating agency refers to leverage covenants, in the manner that Fitch did, they are usually referring to former. In my ten years working as a corporate debt analyst, I can't remember ever seeing a bank covenant for total liabilities divided by current assets.

    I also can't think of many things less attractive than shorting a stock like Sprint, showing very positive signs at the early stages of a turnaround, at these (still depressed) levels.
    Aug 8 02:53 PM | 10 Likes Like |Link to Comment
  • One Piece Of Advice For 2014: Be Skeptical [View article]
    Except the price of businesses are generally highly correlated with the market, even when considering the many price inefficiencies that can usually be found. For that reason, Buffett tends to sit on more cash during bubble periods and become more fully invested after panics. It's simply easier to find good opportunities in the later periods.

    I think that's one of the big misconceptions about Buffett. It's true that he doesn't try and predict short-term moves or time the market, but his investment allocations are actually closely tied to the market (as it impact the general pricing of businesses which impact the number of size of opportunities).

    His mantra "to be fearful when people are greedy and greedy when people are fearful" explicitly acknowledges this strategy to go against the sentiment in the market, when it's irrational (not to ignore the market).
    Dec 14 09:13 AM | 9 Likes Like |Link to Comment
  • The Seductive Warren Buffett [View article]
    I think you'll find that Berkshire's book value, over the long-term, correlates with the share price pretty well and Berkshire's long-term outperformance for both is substantial. Focusing on Berkshire's book value reduces volatility, but I doubt that it substantially improves performance metrics over the long-term (if someone has data to prove otherwise, please share).

    Also, please note that Buffett doesn't just buy-and-hold without adjusting his portfolio to account for changes in market value. Berkshire's cash balance can vary substantially based on the value that Buffett sees in the market. During 2009, when the markets were in panic, BRK's cash balance was as low as $25bn...it's now at around $48bn after stocks have more than doubled from the lows. That's how Buffet outperforms over the long-term.

    Daniel B nailed it. The reason that Buffet's long-term strategy works is because many don't believe in it and it's also very difficult to replicate. While some have the necessary common-sense, insight, and financial statement analysis skills, few also have the patience (both for the investor and their bosses and investors), conviction, ability to ignore short-term market psychology/momentum, and prioritizing getting it right over the long-term over short-term profits. If everyone acknowledged and tried to replicate his strategy, the value opportunities that he finds would be much diminished and his ability to outperform would be reduced. Thankfully for him, many still think he's lost it and/or never had it.
    Dec 4 05:01 PM | 9 Likes Like |Link to Comment
  • Here Comes The Pain [View article]
    The government won't be treating or managing the patients (another misconception)...that will be done through private insurance and the same existing health-care facilities. The efficiency comes from patients being able to get normal medical care and not have to wait until their medical issues get to the point where costly emergency-room treatment is required.
    Nov 13 11:05 AM | 9 Likes Like |Link to Comment
  • Sprint Needs An Exit Strategy [View article]
    Dana,

    Just because Sprint had a horrific investment record (e.g. Nextel), doesn’t mean that future returns on invested capital will be negative. Sprint expected that “Network Vision” will cost $4-$5bn with financial benefits of $10-$11bn over a seven year period…hardly negative returns on invested capital! NV is expected to provide 400-600bps in margin improvements with an additional 400—600bps in margin improvements expected to come from other operational improvements.

    http://bit.ly/RDK3Nd

    Combine those margin improvements with Sprint’s strong revenue growth and a you should see a completely different financial picture for Sprint in the future (and that’s what profitable investing is about…not looking in the rear-view mirror). Upside potential is still massive. Consider that AT&T –which basically offers the same product and services across the same geographies -- trades at a valuation 15 times that of Sprint. Not that I expect total convergence, but nothing even remotely close to that is required in order for Sprint to double.

    Also, just because the iPhone negatively impacts margins in the short-term, doesn’t mean that it isn’t value accretive. For a $400 investment by Sprint (their subsidy), I estimated that the iPhone delivers about $2,200 in revenues and $1,500 in gross profits over the 24 month contract. Using the gross profit figure, that’s a 367% ROI – also, hardly negative returns on invested capital.

    http://bit.ly/NgKBX5

    Finally, please share your own valuation estimates and the calculations for how you estimate that future returns on invested capital will be negative. That information would be very helpful to better understanding your bearish position. By comparison, here’s a valuation piece that I did before the recent blowout results (I would be more positive on the financial forecasts now):

    http://bit.ly/S5e8kM

    Don’t get me wrong, while I COMPLETELY disagree with your conclusions, I like to hear the bearish views and that’s what makes a market. Thanks for the article.
    Aug 9 03:24 PM | 9 Likes Like |Link to Comment
  • All Crowded, Speculative Trades Unwind At Some Point [View article]
    "Can you explain to me why a 1964 silver quarter will still buy a gallon of gas and a 1965 quarter won't buy a stick of gum?"

    No one is denying that cash/currency is a poor long-term investment, but that same 25 cents invested in the stock market (S&P 500) in 1965 would have increased 18 fold while also paying dividends over 47 years.
    Apr 16 09:38 AM | 8 Likes Like |Link to Comment
  • Here Comes The Pain [View article]
    What you don't seem to realize is that those costs for covering people under Obamacare (those who can't pay themselves) were already being paid by taxpayers through subsidized treatment in emergency rooms. etc.

    So that's a burden that taxpayers were already paying and now those people (previously uninsured) will be treated in a more efficient (lower cost) manner than before, when they had to wait until they needed to go to the ER for costly treatment.

    Also, consider the increased spending capacity by the millions that lose everything in medical bankruptcies (under the current system), but now won't have their life savings destroyed because of a lack of health-care coverage.

    The myth that Obamacare raises taxes, cuts federal health-care spending, AND adds to the federal deficit is mathematically impossible.
    Nov 13 10:29 AM | 8 Likes Like |Link to Comment
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463 Comments
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