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  • Circle Of Competence, Fat Pitches, And How To Become The Best Plumber In Bemidji [View article]
    John: I have been reading Buffett, in his annual reports and later with the TV interviews for some 35 years. He has a lot of what sounds like wise old sayings, almost proverbs. He has used the "waiting for the fat pitch" for many years and the "know your area of competence" just as long. The problem is he has made many statements that are in direct conflict with those proverbs. Lately he has been telling us investors that most of us should be in index funds. What do we make of that--wait for the fat pitch and invest in an index fund? He tells his family, recently as a codicil to his will (I think) that they should invest in an S&P 500 index fund after his death--not a broad based index, no foreign stuff, just the one index fund. Now his family includes his son, Howard, who will be (apparently) the next CEO of Berkshire, and I guess he his telling his son he doesn't have an area of competence--just buy an index fund.

    My guess is we are paying way too much attention to the words of Buffett. He is speaking to different groups and we are assuming he is talking to us. We each, including you John, are cherry picking his proverbs--I guess you could call it confirmation bias.
    Sep 20, 2014. 02:06 PM | Likes Like |Link to Comment
  • The Fed: There Is No Bubble, There Is No Timeline, There Is No Exit Strategy [View article]
    Kevin: Excellent article but let me get your response on your favorite chart/bubble measure. Market Cap to GDP. I have asked this question many times and never received a response so maybe you will be the first. GDP, I assume is a U.S. number. Market cap, I assume, is the value of all U.S. corporations (excluding ADRs). In an era of globalization, many US corps do much of their business overseas. The market cap shows up in the graph but much of the GDP does not. Take McDonalds--if you include all of their market cap in your chart but exclude all of the GDP for their foreign operations why is the comparison meaningful?
    Sep 18, 2014. 06:29 PM | 2 Likes Like |Link to Comment
  • Combining Momentum, Value And Profitability [View article]
    Smurti: Thanks for that but with thousands of ETFs you would think there would be a few that combined all factors into one ETF. ( assuming the combo makes sense) I think Wesley Grey has something coming out in about a month--an actively managed factor ETF--I will wait for that but would be good to have others to compare it with.
    Sep 17, 2014. 12:47 PM | Likes Like |Link to Comment
  • Combining Momentum, Value And Profitability [View article]
    The graphic doesn't "say it all". Just like the Asness article your article doesn't provide any specific ETFs or open end funds that use the three factors. Seems like Asness only has open end mutual funds and I can't tell if any of those use this approach. Any ideas on an ETF?
    Sep 17, 2014. 09:19 AM | Likes Like |Link to Comment
  • The Cheapest And Most Expensive S&P 500 Stocks Utilizing CAPE And PEG Ratios [View article]
    Paul: I think just about every reader of SA will tell you that PE, and thus PEG ratios, are meaningless for REITs. The huge amounts of depreciation make the numbers unusable. So suggest you remove American Tower and Equity Residential off your list. You show no PEG for Celgene (MSN shows a 5 year annual earnings growth of 26%) so not sure why you even show it on your list. Three of your cheapest stocks show no PEG so again, not sure what your point is? This looks like a computer generated article that hasn't been thought through.
    Sep 16, 2014. 07:56 PM | 4 Likes Like |Link to Comment
  • Gilead Sciences: The Shorts Did Indeed Get Squeezed -- What's Next? [View article]
    Jssss: I will have to give you an old fashioned link. Hard copy of WSJ, page B2 for Sept 16. They make two statements so I am making an assumption. "In the U.S, a 12 week supply costs $84,000". "In india requires that patients take Sovaldi for 24 weeks, meaning that they would need six bottles for a total cost of $1,800...". Maybe Doctorx will tell me that the reason for the 24 weeks has to do with something other than half strength. But I like my assumption that it is half strength to limit black marketing in the developed markets.
    Sep 16, 2014. 07:42 PM | Likes Like |Link to Comment
  • Gilead Sciences: The Shorts Did Indeed Get Squeezed -- What's Next? [View article]
    Steve: I'm not suggesting that the patient would be the buyer. Probably wouldn't know anything about it. I'm talking about the medical community buying and then charging full price to the patient. But after reading today's WSJ, Gilead might have that covered. It sounds like the generic version is only half strength so takes twice as many pills, twice as long to be effective. Guess that would make it obvious to the patient that they weren't receiving the developed market version. Pretty smart of Gilead, I would say.
    Sep 16, 2014. 08:16 AM | Likes Like |Link to Comment
  • Gilead Sciences: The Shorts Did Indeed Get Squeezed -- What's Next? [View article]
    Jsss: It seems the big risk for Gilead is the cheap version of Solvadi coming from India to the U.S. and other developed countries. If a U.S. medical practice can buy a black market version for $20,000 for full treatment and turn around and charge $84,000 how many will do it? Will it even be illegal to do it? Seems very tempting for the generic makers to make a quick $15,000 and the U.S. medical to make $60K. Now we are told that Gilead has had to do this with other drugs but have those other drugs had a cost anywhere near $84,000? If someone wants to tell us that Doctors would never even think about it check out the Medicare fraud numbers.
    Sep 15, 2014. 01:37 PM | 1 Like Like |Link to Comment
  • Learning To Dislike MLPs [View article]
    I wonder how important correlation with the S&P 500 is to the average MLP investor (I place zero importance on it)? I wonder how important accuracy of analyst quarterly DCF estimates are to the MLP investor? I can imagine that a trader of MLPs might be interested but as a buy and hold investor of MLPs they mean close to nothing--and because of the tax advantages of holding forever I am guessing most MLP investors fit into that category. Maybe I am missing something important but I am looking at current DCF growth and longer term project pipeline, along with analyst overall ratings
    Sep 14, 2014. 06:46 PM | 8 Likes Like |Link to Comment
  • Gilead Sciences: The Shorts Did Indeed Get Squeezed -- What's Next? [View article]
    There seem to be multiple GILD articles every day on SA and just about all the comments are from supporters---many putting the stock in the no-brainer buy category. It is my largest position also but I would really appreciate hearing from some of the shorts. What are you seeing that we don't? Of all the stocks out there that are overpriced and ripe for a correction why would you take the risk of buying a stock that could double in the next year?
    Sep 12, 2014. 08:33 AM | 2 Likes Like |Link to Comment
  • Green Vs. Greed: The Difference Between Speculating And Investing [View article]
    Seems like your quote from Buffett is totally forward looking (five, ten and twenty years from now) and somehow you have turned that around to support your argument about past earnings and current PEs. I guess selection bias applies to quotes as well as investments.
    Sep 11, 2014. 01:52 PM | Likes Like |Link to Comment
  • Performance Nonsense: Why Past Performance Is A Poor Indicator And How To Do Better [View article]
    Margie: I think you are totally correct. I can't imagine buying an actively managed mutual fund without looking at past performance. One or three year's performance numbers can be based on some luck for sure but looking at 5 and 10 year performance should tell us quite a lot about the skills of the managers (and the medal ratings provided by Morningstar are forward looking and in combination with the past performance ratings are a valuable guess at future performance). Of course, all managers get old just like investors and not too many are wise enough to pull the plug like Peter Lynch did. Author--look at the past performance of two of my funds --Dodge and Cox International (DODFX) and Prime Cap Odyssey (POAGX) and tell me the past performance is not a good indicator of future performance. Active share might help us eliminate the closet indexers but looking at the number of holdings does that. If a large cap fund has 450 holdings it is an indexer if it contains 75 it should indicate that the manager is using his best ideas but without past performance how do we know her best ideas are any good?
    Sep 7, 2014. 12:22 PM | 1 Like Like |Link to Comment
  • Tax Inversions Are Immoral, Signal Need For Reform [View article]
    User 395629:

    Since the author of this article is unwilling to defend his article you might do the rest of us making comments a favor and take on that role. I'm not sure if the difference of opinion is a knowledge issue or just a philosophical difference. How about I raise some questions and you share your opinion.

    (1) Do you realize that the tax savings of inversion are almost totally related to U.S. tax on foreign earnings?
    (2) Do you realize in a globalized world that the US is about the only country that taxes foreign earnings?
    (3) Do you realize that US multinationals can accomplish much the same thing by just leaving the cash overseas (awaiting a tax holiday similar to what happened in the past)? I believe there is $2 trillion in this limbo.
    (4) Do you realize that C Corp conversion to REIT status eliminates all Federal and State tax (think Weyerhauser and Iron Mountain)? Would seem to be a far greater issue than inversions.
    (5) Do you realize that C Corp conversion to MLP status not only eliminates all Fed and State tax but defers taxes to the holders of the units until sale (think Devon and Phillips 66). And if held to death often result in zero tax? Would seem to be a far greater tax avoidance than inversions.
    (6) I have never heard any complaint about use of REITs and MLPs to avoid taxes (probably since the media doesn't understand the tax impacts)--do you have the same issue with them and are you going to boycott those businesses (most of the rental property in the country and all the pipelines until Kinder does their changeover).

    Seems like the main benefit of SA is exchange of views to help us all learn about investing so hopefully you will answer these questions.
    Aug 27, 2014. 09:58 AM | Likes Like |Link to Comment
  • Tax Inversions Are Immoral, Signal Need For Reform [View article]
    User: That is how it works now.
    Aug 26, 2014. 11:11 AM | Likes Like |Link to Comment
  • Tax Inversions Are Immoral, Signal Need For Reform [View article]
    Orange Peel: Not clear from your article if you understand the issues or not. I see tax inversions as little different from companies converting to REIT status or MLP status (check the growth of those in the last 20 years). In all three cases corporations are working within tax law to reduce tax liabilities. How do you determine that only the inversion is immoral? C-corporations are the only form of business in this country to pay business taxes--and at the outrageous (nominal) rate of 35% Fed plus about 4% state. Compare those rates with what the rest of the world charges . Then to top if off we want to double tax the overseas earnings of our C-corps if they want to bring the funds home. Just about every other country uses a territorial system of taxing only the income derived in that country--but no, that isn't good enough for us so we will also tax the earnings of US companies derived from other countries (for any amount taxed under the 35%--which is all of it). So to avoid that double tax companies have been leaving that cash overseas--another form of tax avoidance--is that immoral also? Now the overseas cash has grown so large these companies are forced to either bring it home and pay the double tax or change HQ to avoid the double taxation--they will continue to pay US taxes on US derived income just like every ADR listed on our exchanges or any other foreign company earning money in the US. What is immoral is our business tax code so take the time to understand it before writing pointless articles. Make a list of all the REITs, MLPs, and C-corps with overseas cash and you have a list that is almost every large U.S. based stock listed on our exchanges. Are they all immoral?
    Aug 25, 2014. 12:15 PM | 7 Likes Like |Link to Comment