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User 424270

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  • Weird Stuff For Sale By The Government [View instapost]
    At such prices, I am wondering why no one has found a way to buy and "privative" Detroit. Would it be legal to rent those houses for free for a couple of years in exchange for the inhabitants' votes? Or is that the privilege that is reserved only for politicians?
    Apr 19, 2015. 12:50 AM | 2 Likes Like |Link to Comment
  • 'Smart Money' Keeps Buying Cheap Shares Of J.G. Wentworth [View article]
    Robert, thank you for taking time and effort to respond.

    It would be interesting to know how the overall size of the (legal) pie is changing. With the US population barely growing and getting older, and CPI-adjusted wages being fairly stagnant, and cars becoming safer, etc. perhaps not much... unless overmedication "helps".
    Mar 18, 2015. 01:47 AM | Likes Like |Link to Comment
  • 'Smart Money' Keeps Buying Cheap Shares Of J.G. Wentworth [View article]
    Robert, when you are describing JGW's earnings as interest rate sensitive, are you referring to their customers not willing to sell for less (at higher discount rates), i.e. volume risk, the "between acquisition and securitization" spread risk which you previously mentioned, or something else?
    Mar 13, 2015. 03:53 AM | Likes Like |Link to Comment
  • 'Smart Money' Keeps Buying Cheap Shares Of J.G. Wentworth [View article]
    @IA,

    You are contradicting yourself. "The actuarial game" (low to no credit risk) is exactly what allows them to deploy leverage without undue risk.

    If there is anything that I am certain about JGW is that they know how to advertise. They don't consider SA readers as their core demographics, so your dislike for the timing and manner of their advertising feels rather irrelevant (no disrespect).
    Mar 13, 2015. 03:22 AM | 2 Likes Like |Link to Comment
  • Berkshire Hathaway Annual Letter [View instapost]
    And how about Buffett trying to convince the Treasury to let Goldman (whose preferred he owned) buy Fannie's tax credits. I don't know how to call this maneuver except stealing from the taxpayers. Don't idolize Buffett. He is ethical when it suits him.
    Mar 3, 2015. 09:09 PM | Likes Like |Link to Comment
  • Will The Federal Gasoline Tax Increase In 2015? [View instapost]
    No. If motorists are supposed to pay for the roads then why don't the users of public transportation pay for the services they use (presently heavily subsidized)?
    Feb 21, 2015. 07:46 PM | Likes Like |Link to Comment
  • Avoid Buying Individual Stocks In Distress [View article]
    sethmcs, it is important to separate classical value (*margin of safety*) from distressed/special situations. F at 1.96 probably had a 50% chance of going under. Buying it at that time was a speculation. There is nothing wrong with speculating but it is not value investment. Purchasing a *sufficiently well capitalized* company at the bottom of its cycle, when no one wants it, is a different story. I don't closely follow SDRL (have no opinion on it) but can understand you point there.
    Aug 15, 2014. 09:58 AM | Likes Like |Link to Comment
  • A Few Investment Notes [View article]
    This could become a nice monthly summary... if the author has time and inclination.
    Aug 14, 2014. 02:29 AM | Likes Like |Link to Comment
  • Volatility In Retirement - What A Drag! [View article]
    Total returns are inherently multiplicative (just convert percentages to factors) rather than additive, so the arithmetic average is a meaningless statistic in this case. One MUST use the geometric average, a.k.a. compound return or CAGR. Thus, the only conclusion I draw from the first half of this article is that applying nonsensical - given the context - techniques (arithmetic averages) leads to nonsensical results (expecting all paths with the same arithmetic average to deliver identical results). Couching this discrepancy in terms of volatility hides the real culprit, which is the idiocy of ever bothering to calculate arithmetic averages.
    Aug 8, 2014. 09:03 PM | 3 Likes Like |Link to Comment
  • Bulgaria's Strange Bank Run [View article]
    You are confusing understanding with the ability to recite a textbook. Despite the best efforts of modern financial alchemists to convince us otherwise, credit is not money. One of the functions of money is to be a store of value, and IOU's are not going to do it. Your own example pointed out a problem with your beloved fractional reserve system when you said, "...you might further trade it [piece of paper] with other people **who also trust me**". It's no wonder that central bankers spend so much time in confidence building activities. The system is a huge con. If the banker is not prudent or simply too many people stop trusting him then your pseudo money goes kaput.

    Are you following me? Have you figured out why we should seek out money that is not anyone's liability? Or do you simply prefer to defend what you have become comfortable with?

    In order to conduct a useful conversation, you need to move beyond your circular logic that boils down to a statement like "this is what we have today; therefore, this is what we ought to have forever".
    Aug 2, 2014. 09:51 PM | 4 Likes Like |Link to Comment
  • Bulgaria's Strange Bank Run [View article]
    Humans used money well before any banks, public or private, were created, so the idea that to have money one must have banks is preposterous. Money should represent the real wealth of real people/societies. We may want to use institutions like banks to facilitate trade, so that one does not have to carry a goat to his haircut appointment. However, letting a bank to issue, for instance, paper notes that are *fully backed* by metals, harvests, goats, or anything else widely considered to be valuable (and clearly disclosed) is quite different from giving that very same bank a license to create credit out of thin air as it sees appropriate (fractional reserves). This issue has nothing to do with any distinction between public vs. private banking. It has everything to do with the question of whether or not we should let a small group of bureaucrats and/or banking insiders manipulate the value of *our* money. My answer is no. I am certain that billions of people around the world will - through their daily toil and trade - figure it out much better. And, as a side benefit, we know upfront that those individuals will act in their self interests, thus we can avoid a "shocking discovery" (LOL) that so will the highly-minded bureaucrats and insiders.

    It's time for me to check out of this conversation.
    Jul 28, 2014. 11:46 PM | 3 Likes Like |Link to Comment
  • Bulgaria's Strange Bank Run [View article]
    Your point is perfectly understandable. You believe that a financial system must have an actor (actors) to *actively manage* (a.k.a. create) money, and I am saying that such an assumption is widely popular yet wrong. Giving a few humans easy-to-pull levers to manipulate the money supplies skews the cost of money and risk and injects human follies (conflict of interest, ego, bias, etc. etc.) into the system, making such a system more unstable and risky. We don't need central panning to obtain credit. If a deal is good enough then money will come from under the proverbial matrass to finance it.

    You said, "The financial system just tries to measure and predict the risk and to give it a price". If we had a system that simply let its participants, via the combined effect of their actions, to do what you said (measure and price risk) then we would have no reason to argue right now... What we have instead is central banks, which were originally created to mitigate problems with fractional reserves, bending and twisting the system to force everyone to accept their views on risks are prices. In the process, they are absolutely adding - some known and some unknown - risks to our financial system.
    Jul 26, 2014. 07:11 PM | 4 Likes Like |Link to Comment
  • Bulgaria's Strange Bank Run [View article]
    I hear you, Misho. People could be such a nuisance. We won't let THEIR risk aversion to spoil OUR party. Will just put in charge a few know-it-all savants who can think and plan for the rest of us.

    Worthwhile projects would get funded without fractional reserves. We would have less junk and fewer people employed by the financial services industry. On the other hand, more bright people could stay in the field of their expertise rather than chase a quick buck on "Wall Streets" around the world.

    Imagine a life where our biggest position is stable cash and we invest from time to time, only when we see a good opportunity (vs. being scared into the continual "investment" to combat inflation). How about being able to plan your future without wondering what the prices might look like in 20 years or which speculation the wizards of Fed plan to bail out and which they do not.... The fractional reserve system is nothing but a noose that political elites have put around our necks. Enjoy it.
    Jul 25, 2014. 12:17 AM | 2 Likes Like |Link to Comment
  • Bulgaria's Strange Bank Run [View article]
    "...without fractional banking system...credit would be impossible". Wrong. There would be no credit against on-demand deposits. Duration-matched lending against time deposits will work out just fine. People who are prepared to take on lending risk in exchange for proper returns would be able to do so. Others want nothing but safekeeping of their money (and should pay fees for this service). The latter option is missing under the fractional reserve banking system.

    "...this system allows some people to abuse it ...". Some? SOME? Please name for me a few central banks who have not abused their power, all in the interest of the "larger good" of course.
    Jul 8, 2014. 11:59 PM | 2 Likes Like |Link to Comment
  • Cherry Hill: Strong Value With Low Credit & Interest Rate Risk [View article]
    Thank you for your great write-up.
    It's a sad sign of the times when LTV of 94 is associated with "fairly strict" underwriting.
    Jun 15, 2014. 03:56 PM | Likes Like |Link to Comment
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75 Comments
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