Vox Rationalis

Berkshire will split its Class B shares (BRK.B) 50 to 1 in order to accommodate holders of smaller amounts of Burlington Northern Santa Fe (BNI) shares who opt for a share exchange rather than a cash payment.

Ricard is mostly correct; if the B share price were to advance due to improved liquidity and become more valuable than 1/1500th of an A share, one should expect A share conversion and arbitrage to push the shares back to square. This does not mean it won't happen, but rather that the A shares will provide meaningful resistance.

I think the historical premium of the A shares has more to do with poor liquidity than anything else. The increased voting rights are worth very little, considering the dominant position of Buffett and Munger.

Berkshire will split its Class B shares (BRK.B) 50 to 1 in order to accommodate holders of smaller amounts of Burlington Northern Santa Fe (BNI) shares who opt for a share exchange rather than a cash payment.

This will improve liquidity and may provide a (very) modest boost to the stock, as the current share price (~$3300 each) is an unwarranted barrier to trading.

Lost decade? With 42 trading days to year-end, S&P 500 needs a 42% gain to break even for the decade.

Some quick math shows that the S&P 500 would need to be about 53.5% higher to match YE1999 in real terms.

Sources:
www2.standardandpoors....
ftp://ftp.bls.gov/pub/...

Lost decade? With 42 trading days to year-end, S&P 500 needs a 42% gain to break even for the decade.

"With 42 trading days to year-end, S&P 500 needs a 42% gain to break even for the decade."

No. Counting dividends, the S&P needs a gain of about 19% to break even since December 31, 1999. Why do investment professionals routinely neglect to include dividends in this kind of calculation?

A growing rift at Ford (F -2%) as a Michigan Mustang plant becomes the fifth factory to reject contract concessions that United Auto Workers previously granted to GM and Chrysler. "The membership did not have a warm reception to additional contract modifications," said the UAW local president. "We did this in ‘05, ‘07 and in February and now they’re back at us again."

A more clearer asked-and-answered in the same post I couldn't write:

On Oct 27 04:25 PM Niner wrote:
> I won't willing vote to cut my retirement
> income and my medical etc. And probably everyone reading this would
> raise five kinds of H if they were asked to take the same cut in
> their pay and benefits as the UAW. Nobody willingly votes to take
> less money and that includes you.

Unless...

>However,
> a job with less pay and benefits may be better than no job at all.

A growing rift at Ford (F -2%) as a Michigan Mustang plant becomes the fifth factory to reject contract concessions that United Auto Workers previously granted to GM and Chrysler. "The membership did not have a warm reception to additional contract modifications," said the UAW local president. "We did this in ‘05, ‘07 and in February and now they’re back at us again."

Here we have a set of people - EMPLOYED people in a metropolitan area where unemployment is higher than 17% - represented by a union that has negotiated this deal on their behalf - a deal quite similar to the ones already struck with other manufacturers - rejecting a contract that keeps them employed by a manufacturer that is reducing production. You do the math.

Ford needs to shut one of these factories where the sentiment is so obviously against any further concessions. The company cuts costs, the other factories get the fear of God, and the workers at the shuttered factory get to join MANY of their neighbors on unemployment assistance.

In this economy, in that city, those workers should be counting their blessings every day.


On Oct 27 04:31 PM user 489326 wrote:

> Just remember there are real live people with families working in
> those factories. How would you like someone to drop kick your butt
> out the backdoor in these tough economic times? Let's negotiate
> some more.
>
> On Oct 27 03:48 PM Vox Rationalis wrote:

A growing rift at Ford (F -2%) as a Michigan Mustang plant becomes the fifth factory to reject contract concessions that United Auto Workers previously granted to GM and Chrysler. "The membership did not have a warm reception to additional contract modifications," said the UAW local president. "We did this in ‘05, ‘07 and in February and now they’re back at us again."

They need to make an example out of one of these factories.

General Electric Generally Down

So what you're saying is that it's going to go up unless it goes down.

Wonder if the sudden plunge has anything to do with this: Richard Bove downgrades Wells Fargo (WFC) to Sell. WFC -3.6%. Dow -0.6%. S&P -0.5%. Nasdaq -0.3%.

Hmmm. Methinks depending on Bove for banking stock wisdom has been a losing proposition for any time frame longer than 7 months.

Bank analyst Dick Bove is disgusted by the "witch hunt" which forced Ken Lewis out of Bank of America (BAC). "The guy has been phenomenally good... to push him out now because of a witch hunt is totally inappropriate," he said on CNBC this morning.

Yeah - never mind that he was completely derelict in his fiduciary duties, withholding material information from his shareholders that cost them BILLIONS of dollars.

How The Federal Reserve Is Monetizing Debt

On Aug 26 01:29 PM MinAkkar20 wrote:

> You educate yourself with this basic article on why governments prefer
> inflation in a fiat-currency regime.
> Then you can use logic to see that maintaining interest rates at
> zero % and boosting excess reserves at banks to $1 trillion dollars,
> Congress passing new home-buyer credits, increasing purchases of
> GSE bonds all promote inflation.

I don't need to read anything to understand the argument. Unfortunately for folks like you who prefer theories to reality, we have actual pricing data which shows that all of these extreme measures undertaken by the Fed over the last year have resulted in a price level which is pretty darned close to where it was a year ago. In case you're in need of a basic education, inflation relates to prices; if prices are flat, there is none.

By the way, the Fed didn't boost excess bank reserves. Banks did that on their own, in the face of losses they couldn't quantify. And for the record, it was very much DEflationary.

> Or you can believe that the boom-bust cycles that have been created
> since the existence of a central banker in the US occur in the pursuit
> of price stability and only believe what you read on government websites.

I know you won't believe me since it doesn't fit into the storybook world in which you live, but the boom-bust cycle was MUCH worse before the Fed than it has been since, especially since the U.S. began to abandon the gold standard in 1933.

How The Federal Reserve Is Monetizing Debt

On Aug 26 11:18 AM MinAkkar20 wrote:

> I think the real estate bubble and resulting collapse, followed by
> the official goal of reinflating asset prices is evidence enough.

Please provide a link to the government website describing the "official goal of reinflating asset prices."

> I don't need a Fed policy statement as proof - actions speak louder
> than words.

Of course you don't need a policy statement - it's part of your assumptions. Facts be damned.

During the last year, when the actions under your umbrella of the "official goal of reinflating asset prices" have occurred, what has happened to prices? Basically flat.

The Zimbabwe comparisons are the work of ignoramuses.

Federal Debt Prediction: Dollar Bearish, Gold Bullish

Imagine, GoldCore's bullish on metals.

How The Federal Reserve Is Monetizing Debt

"the fundamental picture concerning the dollar has not changed since I first became wary of its fortunes in 2002."

Wait, you're admitting that you've been singing the same song related to the dollar for the last seven years? You're saying you think the situation for the dollar today is the same as it was in 2002, when it was some 50% higher?

"The Federal Reserve has effectively been monetizing far more US government debt than has openly been revealed, by cleverly enabling foreign central banks to swap their agency debt for Treasury debt."

Pretty much nonsense, since the government agreed last year that it would stand behind agency debt. If the government stands behind agency debt in the same way it stands behind Treasury debt, what you are describing is a wash.

"This is very nearly the same path that Zimbabwe took, resulting in the complete abandonment of the Zimbabwe dollar as a unit of currency. The difference is in the complexity of the game being played, not the substance of the actions themselves."

No, the difference is that Zimbabwe abandoned price stability as a goal. There is no evidence -- not the tiniest bit -- that any relevant government official has even considered such a thing.

A dramatic visual of how an earnings-less rally can produce a historic P/E ratio.

On Aug 21 02:31 PM Moses wrote:

> I'm not going to bother responding to the rest of your comment but
> the simple fact that you cite operating income for P/E valuations
> says enough about your argument not to mention those pesky recurring
> "non-recurring" charges for GAAP.

Just so everyone understands - you're so offended by my mention of operating earnings (which are tracked by S&P) IN ADDITION to GAAP earnings, that you're unwilling to waste your precious time rebutting my critique.

Do you know how pathetic that is?


> Clearly we can revert back to
> the good 'ole days of 2007 but with double the unemployment rate.
>