slickvguy

The most startling revelation of today's letter, Buffett buff Jeff Matthews writes, is that Berkshire's (BRK.A) entire equity portfolio presently carries no premium to its cost basis. By contrast, in 2007 its equity portfolio had a $35B unrealized gain.

HiSpeed: FYI - shorting index puts (over the long run) has been an excellent strategy and produces better returns AND less risk than simply buy and holding the underlying. Far be it for me to defend WEB - sure he makes mistakes, i.e. he's human - but I believe strongly that those particular bets will be winners. The odds are greatly in WEB's favor (re: the index puts). But worst case, even if they wind up being losers, BRK can easily handle whatever that loss might be. Meanwhile, they keep the fat premiums for many years, they are EURO style so can't be exercised prior to expiration date, and BRK has to post very little collateral against M2M losses. Even the collateral posted in trust is still earning $ for BRK while it's being held! (Wish I had a sweet deal like that!).

I've had plenty of criticisms against WEB (the main one being that he's so public over the past few years - too much in the limelight). Also, he's getting old, and that unfortunately impacts the mind. But all in all, he's brilliant (as an investor and more importantly as a man) and has been extremely successful. Personally, I like Munger better. Warren gets all the attention, but it was a lot of Munger's picks when they began that made them a fortune.

One last thing. In the past, whenever WEB has been beaten up and the press and public have been questioning him or criticizing him harshly - it has been THE time to buy. I have no idea if that will prove to be true this time around again. We shall see. It's always at the bottom of the cycle that value managers look their worst. The ironic part is how poorly the so-called "sophisticated traders" (the hedge funds) have done. Except for a few, most of them got taken to the cleaners. You can understand the value managers getting killed in these markets - but the traders??? The hedge funds should have made a fortune on the short side.


On Mar 01 11:12 AM HiSpeed wrote:

> Buffy has stated that, "I like buying quality merchandise when it
> is marked down". Now, how one can make the argument that financials
> are quality merchandise is beyond me. According to the article linked
> above, he's down FIVE BILLION on WFC here! While that may be nothing
> to the average politician in Washington, to the rest of America it's
> a lot of money! The sad thing about WFC is that it will probably
> get busted like the rest of the big banks. How was Buffy demonstrating
> keen financial acumen regarding stocks in buying WFC?
>
> Additionally, SHORTING PUTS is an outstanding way to lose WAY more
> than the premium you've collected shorting the puts. I was surprised
> to learn that Mr Buffet is now playing the CDS market by selling
> CDS. I'd like to think that he knows better after seeing BSC, LEH,
> and AIG among other meet their destiny in such disgrace.
>
> I know that any negativity against the great Mr Buffet is generally
> met with sneers, shaking heads, torches & pitchforks, and wide
> eyes of disbelief on seekingalpha. However, imo BRK shares have
> much lower to go. The only thing that saves them is hyper-inflation.

The most startling revelation of today's letter, Buffett buff Jeff Matthews writes, is that Berkshire's (BRK.A) entire equity portfolio presently carries no premium to its cost basis. By contrast, in 2007 its equity portfolio had a $35B unrealized gain.

Even by lowly Internet standards, your post is ridiculous.

Berkshire is about as solid as they come. AAA rated. Tremendous positive cashflow.

And btw, he SOLD puts - not bought them. And BRK will reap a handsome reward on those sales - even though they look bad now.

You obviously lack the intellect and skills necessary to properly analyze their financial reports. It's all there in black and white.

BRK may have another rough year, and I do not recommend them as a great investment today (not cheap enough), but to suggest they will seek Chapter 11 protection is simply ludicrous.

On Mar 01 03:54 AM joshuaodonnell wrote:

> I have said this numerous times. Take a look at my comment stream
> if you like, but I say it one more time here so everybody truly understands.
> Berkshire will go bankrupt within a year. Thats right folks, Im
> calling Chapter 11 on Berkshire. He made very bad decisions, not
> just on conoco, but buying put options on leverage... this will all
> backfire. Dont' believe me? Fine. I called Wamu collapse months
> before it occured. I also called Wachovia collapse, along with lots
> of other instiutions, and I was right about all of them months before
> they failed.
>
> I believe Berkshire is in the worst possible position ever, in the
> company's history. Don't believe me? Watch what happens........
> Im telling you, sometime early next year we will see Chapter 11,
> sadly for Berkshire. This time, I really hope I am wrong, but I
> don't think so...

The Coming Depression: See It Clearly Through Historical Eyes

Standing ovation for this comment!
An essay written by this commenter would be far more valuable than the one in question.
Bravo.


On Feb 23 09:16 AM You're Kidding wrote:

> You say you see cycles in the above chart...
>
> I see nothing in it that would tell me when to get fully invested
> in this market, nor do I see anything in your article that would
> indicate you are willing to make any such predictions.
>
> That would be a smart move on your part and quite revealing as to
> how much practical, useful information you really think these "cycles"
> tell us.
>
> Nothing like having your cake and eating it, too. That's a winner
> if I've ever heard of one.
>
> But there's more! You conclude by saying:
>
> "If I am correct in the assertions made in this article, it raises
> serious doubts about the effectiveness of the Obama plan to fix the
> economic problems of the country."
>
> So let me get this straight. You are saying that these cycles you
> see, going back hundreds of years, portend the future success of
> what the government might do now? You realize, of course, that if
> the government was going to take say, a much different action, that
> your "model" would still raise the same doubts about its success,
> too? In other words, no matter what the government does, or doesn't
> do, it probably won't work, because of what your cycles tell us.
>
>
> Now, I know you haven't thought this through, because any logical
> person would see the complete irrationality of such thinking. So
> please, tell us you were wrong, so we don't have to put your name
> on the "Never Read Another Article From These People" list.
>

Exclusive Interview with Jim Rogers: Inflation Is Coming

Excellent post.

Not to take anything away from Jim Rogers, but the touting of his record is completely subjective and without merit. Where is the data to support the praise that gets heaped on him? Where are his buy and sell calls? Instead, we get generalities. He has been right about some things, and wrong about others. The media (and many investors) are in awe of him because of his wealth.

For example, he has been dead wrong about commodities since the bubble burst. Did he advise anyone to sell? No. He has said that is holding and buying more - the whole way down. This might work for a billionaire - but it spells disaster for the average investor/trader. Can't have it both ways! If he gets lauded for speaking about commodities before the bull run, then he deserves criticism for not giving the sell signal on the way down. Also, he has been dead wrong about the US dollar, but has a ready-made excuse to explain away that one (shorts covering, etc). And he was wrong on treasuries - shorting them too soon. I don't mind that he's been wrong (everyone makes bad calls) but it bothers me that the media never mention those things in their hysterical adulation of the guy.

Another criticism I have is of these so-called interviews (media appearances). They are so superficial that they are nearly worthless. He never gets asked DETAILED questions. Never gives specifics in his answers - so he can't be nailed down. But not only are the details lacking in his predictions (which is somewhat understandable), but more importantly, in his REASONS as to why he thinks what he does about various investment opportunties. He offers a few VERY broad and general statements with that "I'm right - you don't know anything" tone and attitude and then it's onto the next subject or question.

I like Mr. Rogers, and respect him, but his alleged "record" doesn't stand up to scrutiny andt the media fawning over him is no replacement for serious, hardnosed financial journalism.

On Jan 16 03:18 AM sundrenched wrote:

> "Now when a man with that kind of track record (4200% gain over 10
> years) gained from being able to look ahead and read the tea leaves
> "
>
> Correction: He was the junior partner in the Quantum fund which returned
> 4200% in the 1970s. Soros has stated explicitly that Rogers was someone
> who "did the work of 5 analysts" but in the end ALL decisions were
> taken by him. The work was clearly split up so that Rogers was the
> analyst (with a knack for seeing the big picture), and Soros the
> decision maker. Just go google it. Soros went on to build the bulk
> of his fortune after Rogers left. This is not to take anything away
> from Rogers' achievements, but the fact is that there's no easily
> verifiable track record for him, just a lot of predictions over the
> years, among which many prescient ones. I recently re-read the 1989
> Market Wizards and a lot of his predictions there did materialize,
> but others didn't. Notably, he was already extremely bearish on the
> dollar then. As another poster wrote, the problem with this big-picture
> stuff is in the timing, and you can get your shirt ripped off your
> back in the mean time. For instance, if a new panic breaks out that
> we're entering a long-term slump (Japan-style, but world-wide this
> time), commodity prices could drop a lot further from where they're
> now (as of now, they're still well above the levels before the whole
> commodity boom started). For what it's worth, that's how I'm playing
> it: I expect most commodities to sink further in the short run.<br/>
>
> As for China, in the very long term I believe he's right, but given
> that only 30% of GDP there is domestic consumption (40% exports and
> the rest capital investment, a lot of it in turn export oriented),
> that there's a middle class of barely 150 million people there, and
> that the Chinese are tightening their belts even more now their explosive
> growth has come to a halt, in the short run things could get very
> ugly very easily there. I don't think the market has fully factored
> in what's coming in China yet. Now there's this sense that China
> is in a much better position, but frankly, I'm convinced recent economic
> statistics there are hogwash (exports barely dipped where those in
> Taiwan, Vietnam, Japan fell off a cliff... How?!?) and that in a
> few months the true extent of the decline will become apparent. China
> needs to overhaul its entire economy, and this will be the work of
> at least a generation. Chinese stocks are cheap now, but they could
> get A LOT cheaper in the future.

Cycles, Recessions, and Looking Forward

The private sector went on a spending binge that it couldn't really afford, and disaster ensues. So what's the government's solution? You got it...spending binge that America can't really afford. Likewise, we got intot his mess thanks to Greenspan not allowing the tech bubble burst to play out. He fought the recession tooth and nail, lowered rates too low for too long, and the rest is history. So what's the govt doing now? Same thing. Instead of allowing the pain to take place NOW so that a true recovery can happen, they are fighting it tooth and nail, which will only delay the inevtiable. Propping up GM? Why in the world would you back your losers instead of your winners? How much more money to be thrown at Citigroup? At AIG? At FNM/FRE? Is there a single major financial company that was properly managed? (And please don't tell me Wells Fargo - they were BETTER than the others, but still not great).

The Treasury and the Fed have been wrong every step of the way. It would be funny if it wasn't so tragic. They have been ridiculously inconsistent and behind the curve. And now we're supposed to trust them to finally get it right? I don't think so. I realize they have an impossible job, but they haven't helped matters by their actions. They've made things worse. Here's my advice to the government: GET THE HELL OUT OF THE F'N WAY! Let the free market take care of this. Let's have a depression if we must. Clear out all the garbage and start over again. Let the winners win and the losers lose. Only then will we be able to rebuild properly.

And this stimulus miracle? What a crock. Did this guy in the article actualyl say 3x the proposed size? WTF? Why would he say that? There's zero chance of that happening. Waiting for govt. spending to save the economy? Are you kidding me? First, it'll have a very small impact. Second, it'll result in higher taxes (or far less public spending) down the road.

Yellen's sentiment was echoed by Chicago Fed president Charles Evans, though he tempered his enthusiasm for wide-scale stimulus by calling current policy 'sobering.' "By historical standards, our current fiscal debt is not unusually large; but our expected future obligations are enormous." (full speech)

Bravo. Perfectly stated.


On Jan 04 11:50 PM bearfund wrote:

> Almost but not quite; a bit too much class warfare and not quite
> enough both sides against the middle. A better expression would be:
>
>
> 1. If you are rich, we will keep you rich.
>
> 2. If you are poor because you have no marketable skills and don't
> care to acquire any, spend too much, and/or can't be bothered to
> look after yourself, we will give you money to support your bad habits.
>
>
> 3. If you are not "you" in (1) or (2), you are "we" in (1) and (2),
> and if you don't like it you're welcome to join "you" in (2) by accepting
> an unlimited stay in federal prison.
>
> Some days it sounds a lot better than working for a living.
>
> On Jan 04 10:34 PM Jackson Cash wrote:

Finally, Some Holiday Cheer

Am I the only one who sees the giddiness today as a sign of extreme desperation? How many pundits have bought into the "trade this Obama bounce"? From Richard Russell to Marc Faber and everyone in-between. I'm slightly long here - I expected this rally. But the higher it goes now, the flatter I'll get, waiting to put on shorts again.

I don't think that the market has all the bad news built in. It's highly likely that we retest 2008 lows. This rally has that bubble feeling we had in 2000. Ignoring of reality. Optimism is nice - but REALISM is even better. Great values? Sorry - I don't see too many of those. I see lots of relatively lower prices - but that does not mean relatively cheap. To be sure, value is much better than it was a year ago. At SPX 800, I'm a buyer. At SPX 900, much less eager. And the higher we go above 900, the worse the expected reward gets for a value investor. Let others jump on the trend train. Haven't we seen that go bust enough times?

I'm not a doom and gloomer. We'll get through this eventually. But I see far too much wishing and hoping for rebounds/bottoms rather than recognition that fundamental long-term shifts have taken place. There's still far too much economic damage that needs to get unwound before a healthy recovery can take place. Did bailing out GM and Chrysler for a few months get rid of their problems? Of course not. All those layoffs and business closings are going to suddenly revers? Government trillions will take time to work their way through the system.

I hope I'm wrong, but I see this as a suckers/delusional rally. The higher it goes, the worse the outcome for those buying into it. When I sense the frantic buying of those who fear they have missed the bottom, it'll be time to short again.

Market Signal: Proceed with Caution

"If we don’t make a move up right about now, we could have some selling pressure. "

Man, what would we do without such insight?

Preventing the Depression of 2009

Yes, just what we need. After having done such a terrific job for so many years, lets give the govt even more power. Unreal. I'm deeply saddened and troubled that I live in a time where the majority's instinct is for more govt control instead of less govt interference.

Buying USO Is a No-Brainer

On Dec 26 11:49 AM BrotherMaynard wrote:

> Nothing is a "no brainer" in investing. That sort of cavelier and
> careless attitude has lost a lot of people money in this environment.

Bravo.
And what does "no-brainer" mean? That you have no brains for opening the position? How I hate that phrase.

Everyone knows that one day commodities will be a huge winner again. Duh. That's always been true in the past, and even more so in the future. But WHAT to buy and more importantly WHEN to buy it is another story completely.

The fixation on the amount of price decline reminds me of people buying the financials in 2008 because "they can't go lower". Oops. If there's one thing to learn from the past year, it's that there's no sucha thing as "too low". Cheap does not mean low relative price!!! How many value managers (read: Bill Miller) got creamed buying stocks that were lower-priced but NOT cheap (i.e. good value).

You'd better have a rock-solid strategy mapped out, low or no leverage, and plenty of patience if you take positions now. And no matter how much they've fallen - they can fall much more. Oil falls to $25/bbl - not impossible by any means - it's still quite a haircut from current prices. I make no predictions on prices of commodities. Sadly, unlike almost everyone else, I am not able to predict the future.

At this point, I think people should focus on managing risk and getting through the sh*tstorm - rather than swinging for fences. Not the time to be a hero.

Wall Street Boys Cautiously Bullish - Barron's

Who is NOT a "know-nothing"? We are ALL know-nothings. Because unless proven otherwise, nobody can predict the future. People can make GUESSES - and then we see who guessed correctly. But even if someone like let's say a Roubini is deemed to have guessed correctly, it still has no bearing on whether he'll be able to correctly guess again in the future. Sooner or later, he'll be wrong, just like all the other gurus who guessed correctly until they didn't.

Bottom line: Human beings are easily fooled. We just aren't that evolved yet - as much as we like to think we are. Commenter after commenter pretending he or she is brighter than others with no proof whatsoever. And that includes EVERYONE. Nothing - and I mean NOTHING - is as it appears. But we need to fill up our lives doing SOMETHING, so why not waste it reading endless market yammerings that are worthless? lol. Don't be too hard on the predictors et al. Just doing the silly human being thing. Illusions, and all that.

I'm not sure which of us is more stupid: those who insist on predicting that which they cannot know OR the rest of us who read and comment on the predictions. Round and round we go....


On Dec 21 05:02 PM hernje wrote:

> Who in their right mind would put any credence in what these know
> nothings say? The fact that every one of these 'experts' was completely
> blind sided by the biggest financial meltdown in the last 100 years
> shows that they are just a bunch of talking heads, with absolutely
> no special insight.

Why Gold Hasn't Been a Hedge Against Inflation

"The gold-to-oil ratio will keep rising until it comes down."

Brilliant.

The "DOPE-DUD" Phase For Canadian Banks?

Just what we need. More fearmongering without facts. Well done.

Cramer's Stop Trading! (12/12/08) Absence of Panic

I wish peopel would stop looking at all 3 of the so-called "big 3" as one and the same. Ford is in much better shape than the other two. The chances of Ford surviving and becoming a profitable company are much better than for the other two. Aside from the UAW, let's face it...how many car and truck offerings do we really need? There's just way too much supply and not enough demand. It's unfortunate that so many companies are levered to the auto industry - but this MUST change. The free market has spoken. Since when did it become ok to prop up failing businesses with taxpayer money? Why invest in losers - it makes no sense! I would never favour govt getting involved, but if they must, they should be investing in *WINNERS* - not losers. Encourage investment in new and improving markets - not old unprofitable ones.

Research in Motion Warns, But Do Individual Stocks Matter Anymore?

Typical stupidity. Stock price has become everything. Value? What's that? So because everyone else is an idiot - you should do the same. Brilliant. I guess those morons like Buffett and Watsa just don't get it. All the old stuff doesnt' work anymore? Well, here's my take: when the majority of people are saying things like "buy and hold is dead" (translation: I bought companies at way too high a price and ignored them) and "everything we've learned for decades it moot"....the intelligent response is to be a contrarian and do the opposite, i.e. buy great companies at good prices and hold for the long-term. The last time I heard these kinds of things was around the Nasdaq top.

It is *NOT* different this time. Value investing is the only thing that ever has made sense. Too many people think "buy and hold" means something that it doesn't. The key is *WHAT* you choose to buy and hold, and what PRICE you pay for it versus the VALUE.