Seeking Alpha


Send Message
View as an RSS Feed
View MaxPSA's Comments BY TICKER:

Latest  |  Highest rated
  • The Dividend Advantage Over Gold [View article]
    To make the point clear, here is what Buffett said about gold.

    The following is an excerpt from the Berkshire Hathaway 2011 Annual Report pages 18-19, where Buffett outlines his position on gold as an investment:

    "The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever
    unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century.

    This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can
    produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future.

    The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.

    What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while.

    Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market, and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise man does in the beginning, the fool does in the end.”

    Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

    Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying
    binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

    Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users,
    frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.

    A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The
    170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

    Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at
    a rate far inferior to that achieved by pile B."
    Apr 23, 2013. 06:27 PM | Likes Like |Link to Comment
  • The Dividend Advantage Over Gold [View article]
    @ Author,

    Since my previous comment re. making references/listing sources for articles, I'd point people towards the Berkshire Hathaway 2011 Annual Report pages 18-19, where Buffett outlines his position on gold as an investment.

    (pages 18-19 discuss Gold as an investment)

    It's unusual that anyone would attempt to violate the 1st Amendment of the US Constitution (which protects the right to FREE SPEECH, right?), let alone someone who studies Law.
    Apr 21, 2013. 09:54 PM | Likes Like |Link to Comment
  • The Secret Of Warren Buffett's Alpha [View article]
    @ Evane,

    You're right -- retail investors got stiffed by Buffett -- Goldman could have phoned me up and asked me for the $5 billion.
    Feb 16, 2013. 05:25 AM | 1 Like Like |Link to Comment
  • Berkshire Hathaway: Undervalued And Ready To Jump [View article]
    I'd be interested in seeing the article(s) that explain why IBM "is going to tumble shortly per SA".

    SA's articles are very often written by amateur investors who don't even have a million dollars, whereas Buffett/BRK has billions and has put more than $10B of those billions into IBM stock.

    If I'm playing the odds, I'd suspect that Buffett is more likely to be correct, just like an M.D. is more likely to read an x-ray more accurately than an amateur without a full medical school education and relevant medical work experience.

    Buffett doesn't "roll the dice" -- he's made his life's fortune betting when the odds are overwhelmingly in his favor, not betting on long-shots and then praying while filling his britches in fear.
    Jan 11, 2013. 04:27 PM | Likes Like |Link to Comment
  • Berkshire Hathaway: Undervalued And Ready To Jump [View article]
    Answer: Not much.

    AAPL is a tech company that relies on ONE *tech* product (the iPhone) for the majority of its profits.

    There is no way to predict with realistic confidence whether the iPhone will even be around in 10 years' time. (For an example of obsolescence and the tech industry, the Commodore 64 was the world's biggest selling computer, until something new came along and Commodore disappeared).

    Samsung and its Galaxy phones and Android have been eroding Apple's dominance -- anything can happen in a rapidly and perpetually changing industry.

    On the other hand, BRK is a diversified conglomerate of companies and investments in a wide variety of industries, all of which have "an enduring competitive advantage" and proven long-term profitability.

    I can't speak to "people finding fault with AAPL's management" -- I think it's more a case of, what's the new, immense, profit-spewing rabbit going to be that AAPL *must* pull out of its hat, in order to just maintain its current profit levels. The iPhone is starting to bore a lot of people, and Android is providing an alternative that was either not present or not as compelling in the past.
    Jan 11, 2013. 04:20 PM | Likes Like |Link to Comment
  • Wal-Mart: The Recent Weakness Is A Buying Opportunity [View article]
    @ Author,

    I like your article, but the title of the article (which the editors make up, I know) and the content of the article (bullish on WMT) is inconsistent with the fact that you don't like WMT enough to actually own it yourself (based on your disclosure statement).

    WMT trades hundreds of millions of dollars worth of shares a day, so nothing you say about Walmart would have any material effect on the share price.
    Jan 11, 2013. 03:48 PM | Likes Like |Link to Comment
  • Am I A Dope For Holding Coke? [View article]
    @ Clayton,

    Last time I'll repeat my point -- 2 years is not "long term" investing in stocks, any way you slice it.

    When you're talking about a company's stock price performance over 8 quarters, performance or under-performance doesn't prove much. Coca-cola is a dividend aristocrat with 50 years of increased dividends -- if it had increased its dividends for 2 years, would you say that KO is a "long term" dividend growth stock, with a "long term" record of increasing dividends?

    Do you get the point now?

    The "average hold period by the average investor" is 100% irrelevant. By analogy, if I'm in a room full of A.D.D. people, is waiting 5 minutes "long term", because the "average person" there has ZERO patience to wait longer than 1 minute?

    My constructive advice is for you to stop trying to defend your irrational position and re-read OccamsRazor's comment above and follow his advice, if you actually want to have good investment results.
    Jan 10, 2013. 01:32 AM | 3 Likes Like |Link to Comment
  • Am I A Dope For Holding Coke? [View article]
    @ Clayton,

    I'm not the original poster, and I answered your question re. what the other person was laughing about.

    If your idea of "long-term" is 2 years, that's great, but it's also absurd, ergo the laughter.

    How would laughing at your absurd statement be equivalent to making me upset? LOL. You ARE good -- keep the comedy coming.
    Jan 9, 2013. 07:15 PM | Likes Like |Link to Comment
  • Am I A Dope For Holding Coke? [View article]
    @ Clayton,

    Probably because holding a stock for under 3 years is not really "long-term", is it?
    Jan 8, 2013. 08:25 PM | Likes Like |Link to Comment
  • 5 More Value Stocks For 2013 [View article]
    @ Author,

    Your comment that "I'd rather people criticize me for not owning stuff that I write about, than criticize me for writing stuff I do own and potentially trying to ***manipulate the price.***" is ABSURD beyond belief.

    You're not discussing micro- or small-cap stocks here (the SMALLEST company stock you've discussed in this article trades more than $100M in shares on any given trading day).

    The amount traded by your readers/followers and you has ZERO effect on the share prices beyond irrelevant blips.

    Please think first before making such a preposterous statement in the future, lest you become 100% irrelevant.
    Jan 6, 2013. 04:17 AM | Likes Like |Link to Comment
  • Berkshire's Billion Dollar Buyback Bodes Well For Investors [View article]
    @ Saibus,

    Apparently IRONY is something you're also unfamiliar with.

    No more comments from me after this one, as you've proven that you're incapable of any worthwhile discussion and are a complete waste of my time.
    Dec 29, 2012. 08:53 PM | Likes Like |Link to Comment
  • Berkshire's Billion Dollar Buyback Bodes Well For Investors [View article]
    @ Saibus,

    Instead of using the "Royal 'We'", please just start saying "I", as in "I think Warren Buffett is a hypocrite" -- you are speaking on behalf of yourself, and are the sole person behind "Saibus Research". Once you get back to reality, then you can start a worthwhile discussion.

    The crux of your problem with Warren Buffett is that he's too reasonable and balanced, whereas you are a partisan dogmatist. I doubt you'll get over that fact, so the discussion likely ends here.
    Dec 22, 2012. 08:41 PM | Likes Like |Link to Comment
  • Berkshire's Billion Dollar Buyback Bodes Well For Investors [View article]
    @ Saibus,

    You're not a member of the top 1% anyways, so your objection to tax increases for the top 1% is merely theoretical anyways.
    Dec 22, 2012. 08:37 PM | Likes Like |Link to Comment
  • Berkshire's Billion Dollar Buyback Bodes Well For Investors [View article]
    @ Saibus,

    I've never read any of Roubini's speeches, as I think he's a Chicken Little who gets paid for a doom and gloom shtick (similar to Jim Cramer and his clown routine). If they are paid very well to spout the same lines over and over, then they are looking after themselves nicely, but I don't have to listen to their routines.

    Getting back to your comment, the facts are still facts regardless of who has or does state them. The numbers do not lie.

    Lastly, if you're going to try to portray yourself as a research outfit, you would do better to act the part and at least give the illusion that you're not just some young guy creating castles in the sky. I've never seen a single real research firm make comments like yours (like a kid having a tantrum) and use words like "gonna", etc.

    If you're going to try to continue with your fiction, then please state what relevant investing credentials you have (ex. CFA, CPA, MBA, etc.) and which organisation you are licensed through. Barring that information, I call bull on your whole pretension that you are a legitimate research firm (rather than just a guy pretending that that is the case).
    Dec 22, 2012. 08:34 PM | Likes Like |Link to Comment
  • Berkshire's Billion Dollar Buyback Bodes Well For Investors [View article]
    @ Saibus,

    Nice mindless slogan and spewing of generic mantras.

    "Buffett's 'out of touch', blah, blah, blah" -- I don't see ANY other ultra-wealthy people/investors publicly sharing their investing techniques/philosophy/... and advocating for higher taxes on themselves.

    Instead of learning something, you're just talking nonsense.

    Dec 20, 2012. 04:42 PM | Likes Like |Link to Comment