tkenyon

16 Comments

    • GM Calls the Top for Oil [view article]
      Let's be honest, Americans don't want small cars. They are panicking out of their SUV's and into small cars or over-priced hybrids, and so are the manufacturers. As soon as the gasoline sticker shock wears off or gas prices go down and stay there for a bit, it's right back to big cars. Do the math people, how much money are you losing on selling or trading your SUV now vs. how much you will save in gas with a smaller car? A big "gas guzzler" SUV might cost $3100 a year in gas at $4. If it was $2 a gallon, you would save $1600 a year. A more efficient car MIGHT save a similar amount. In the big picture, is that really that big of a deal if you can afford to buy a big SUV in the first place? I admit it, I just bought a big Japanese SUV. Maybe bought isn't the right word - they practically gave it to me. I have a big active sports-oriented family and need space and utility - it's either a minivan or big SUV for us. I have had two vans, the kids are getting bigger, the vans aren't great on ski trips, so it was time for an SUV. Ever look at your gas mileage if you do a lot of short trips? Our van rated at 17/25 got an average of 12mpg in day to day driving! So far the SUV, rated 13/18 is doing 13+. The amount I saved on the SUV (which under "normal" conditions would likely not be discounted at all) vs. what it would normally cost (got it substantially under dealer invoice with 0.38% financing) will likely way more than make up for the extra gas expense. If gas was $2 per gal for the next three years (the term of my lease), I would save $6k on gas vs. $4 a gallon gas, less than I saved on my lease. If you want to conserve energy, adjust your habits. Carpool. Live closer to work. Telecommute. Combine trips. Ride a bike. etc. etc. Jun 04 03:28 PM
    • Setting the Record Straight on Buffett and Derivatives [view article]
      This confounds me as well. Surely Kass is is smarter than his statements on Berkshire's "style drift" make him appear. Buffett sold index puts for about $4B if I recall correctly. As long as the indexes in question are at higher levels in 15-20 years (a pretty darn good bet), the puts expire worthless. Meanwhile Buffett gets $4B to play with. Not even in the same universe as the so-called FWMD's. (I'm long BRK) May 22 02:50 PM
    • Investing's Holy Grail: More Return, Less Risk [view article]
      The best measure of risk is the probability of permanent loss of capital. The other measures are a function of stock price fluctuation, so that a stock that appreciates 100% but has a volatile stock price could be "riskier" by these measures than a stock that declines slowly and permanently. Or, a very cheap stock that has a volatile price could be "riskier" than a very expensive stock with a less volatile price - which of course is the opposite of reality. Assuming we are truly investors and not short term speculators, we need to try and evaluate the probability that we might permanently lose capital if we purchase the stock at a given price. Apr 25 10:23 AM
    • Buffett: The Impossible Expectations of Stock Performance [view article]
      mla99, you re right - just because the number looks big relative to today's level means nothing. It's all a matter of whether the Dow can return 9% on average. I am not sure why Buffett emphasized the enormity of the number, as it is an example of "anchoring" , one of the behavioral mistakes he and Charlie try to avoid. Here he seems to be using our natural tendency to anchor to help make his point.

      Regarding the puts, he wrote them because he get $4.5B NOW to play with for 15-20 years. I am sure he believes there is almost NO CHANCE of the indexes being lower in 15-20 years, hence he gets $4.5B almost like he found it on the sidewalk. When you consider the return he should be able to generate on those funds over 15-20 years, the chance of any NET loss is nil. If he can earn 6% on that 4.5B, he'll have 12.5B in 17.5 years. Vintage Buffett. He could care less about the non-cash effect on accounting earnings. I wonder who is on the other side of the trade - can you say sucker...       Mar 04 09:12 AM
    • Some Subprime Mortgage Loans Are Actually Current [view article]
      Thanks for supplying some rigorous analysis of this mess. The sweeping gloom and doom generalizations out there are really setting off my contrarian radar. When everybody's on the same bus (acting like experts), it's time to wait for the next bus. Feb 17 08:19 AM
    • UBS Sees Trouble Ahead for Cable Stocks [view article]
      Last time I heard Chanos calling Comcast a short was at the VIC in Nov. 2005. It proceeded to go up 50% immediately thereafter. And you guys are right - the Street analysts are always several steps behind in their groupthink. It's probably much closer to a buy than it is a sell. Feb 11 06:18 PM
    • Rick Santelli Takes Down Jim Cramer [view article]
      I agree - an excellent discussion here - I think GKM summed it up very well. Kudlow used to really get on my nerves when he came on at five pm. Now I don't have to listen to him ramble on about the Goldilocks economy anymore since he's on at 7. He fiddled while the credit markets burned. He brought on guests who backed him up, and talked over anyone who disagreed.

      I think there are a few folks out there who can make money, at least for a while, via momentum investing. One thing is for sure though: it requires lightning fast trading to get in and out of positions at the right time. By the time Cramer to comes on at 6pm, the momentum ship may well have sailed. Does anyone think Cramer took his eyes off his screens for even a minute in his fund days? Yet he is asking mom and pop investor to do just that (if only for 24 hours).

      I know I'm not "smart" enough to know when to jump in and out of overpriced stocks. If you are, you should be running a big hedge fund and not reading this. If you're not, don't listen to Cramer. Invest in good companies at cheap prices for the long term.       Jan 27 07:57 PM
    • Rick Santelli Takes Down Jim Cramer [view article]
      Seeking Wisdom is a fantastic book - everyone should read it. I have had the opportunity to engage in email exchanges with Mr. Bevelin, and I agree with your passage. However, in this case, it has nothing to do with "being nice to me". As another comment said, the guy is really a snakeoil salesman. He has admitted to doing many unethical (if not illegal) things in his Goldman and fund days (see www.vestopia.com/Blogs... for links). His stock picking is questionable at best, and I fear he will lead many a small investor to ruin. Yet the guy holds himself out like he is the second coming. Here's some more wisdom: "The spouting whale gets harpooned". Jan 26 06:50 AM
    • The Fear Is Palpable. Time To Buy. [view article]
      I'll try to respond to some of these comments over on my Vestopia blog, vestopia.com/Blogs/Mar... Jan 19 07:12 AM
    • There’s Only One Right Way to Build a Portfolio [view article]
      Volatility does not equal risk. Simple as that. dsilisk has it right, whether or not his 8B year number is right. It's shocking how much money and resources are wasted on so called risk management and portfolio design, which create no real value. Jan 16 01:11 PM
    • Berkshire's Intrinsic Value: Raw and Uncensored! [view article]
      Please email me via my website nobadeercapital.com Jan 14 05:05 PM
    • A Rare Opportunity To Buy AmEx On The Cheap [view article]
      Lots of good comments, lots of controversy, that's why it's cheap. One could argue that all the negatives everyone cites are well known by the market, and hence priced in. 9-11 was such a "black swan" that it was not priced in, and the market over reacted to the downside. Yet you now have it trading at a similar multiple. Remember too that it had the lousy financial advisors business back then too. The comments about Chenault's options is a good one. I also agree that scaling in makes sense - there could well be more bad news before there is good news. Value investors are notoriously early... Jan 14 07:30 AM
    • Berkshire's Intrinsic Value: Raw and Uncensored! [view article]
      Insurance capital = statutory surplus. This is reported in the SEC filings. Dec 28 06:39 PM
    • The Maelstrom Continues. Ignore it. [view article]
      Thank you for the kind words! Always nice to hear that my writing resonates with readers. Dec 20 03:36 PM
    • Berkshire's Intrinsic Value: Raw and Uncensored! [view article]
      It's basically a ddm model or dcf. Similar to the way Alice Schroeder did it, I grew the float at 7% for 4 years and 5% for 6 years, which should be conservative. Then, at year 10, I calculate a perpetuity value and discount it back to the present. I used a perpetual growth rate of 4% and required return of 6.5%, a more typical risk free rate than we have currently. You never actually own the float, but if you have the right to invest that $59B at the risk free rate in perpituity, then that privilege is worth $59B. It is worth more if the float grows and/or the returns are greater than the risk free rate. I hope that helps. Dec 18 09:01 PM
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