LC

Michael Larson

Ultimately it leads to less reserves.

Yes. I posted this a while back, I believe the jist of that post still holds true: https://www.cornerofberkshireandfairfax.ca/forum/strategies/are-big-banks-value-traps/msg384018/#msg384018

In vino veritas. Yes, I agree on some semblance of a valuation threshold. But how many times have we said and heard “ah if only”. 35 vs 30 times earnings is not going to make or break the outcome. And it wasn’t a huge purchase - like Greg said I buy often but in small quantities.

I bought a tiny bit of MSFT. Bit the bullet so to speak. Time will tell if it is closer to buying PG in the middle of the century or KO in the 90s

Buying during after hours directly after bad news is usually not a great move. I estimate more often than not, after hours price action lags rather than leads. Particularly during sensational timeframe (eg the day of earnings release).

I used to have a rule...never watch the evening news. yes, this dates me. now, with twitter, etc, you are bombarded with "what's going on in the world". and I am not even talking about finance... Everything new is old, everything old is new - as they say: You're right that news is bombarding both on TV and online - which means they need tons of news stories, every second of every day. Now, good journalists don't grow on trees. So they have junior people, freelancers, even artificial intelligence (and trust me, the intelligence is surely artificial) writing these "news articles". And so after reading some for a while, you realize it's just trash, so it becomes really easy to ignore because it's not really journalism, it's just tabloid-ism. You can tell the decent stuff because it's usually published by a reputable source and is relatively long-form. And within the first few paragraphs you can usually figure out if the writer is a twit or not.

1- Brk has never to my knowledge acted on political imperatives - and I think that is unlikely to change. 2- On the taxes, remember that one aspect of owning the utilities & BNSF is the ability to capture depreciation tax benefits. These are essentially bond like income with an added benefit of requiring large capital investments to upkeep - which allows WB to offset equity capital gain taxes and expand incomes at the same time.

https://www.ft.com/content/ccb46309-bba4-4fb7-b3fa-ecb17ea0e9cf Jim Chanos: ‘We are in the golden age of fraud’

Got a buddy trying to drop a cummins or a 7.3 in an old bronco. I think the bronco is a good fit, but they should keep it slim. 2 door and a 4 door. Improve the F line if they want better trucks. What they really need is a a better powerstroke that they can plop into their lineup. Almost everything after the 7.3 feels like it has more wires than metal.

You have my vote. Now, I am not on the Nobel committee, so my vote doesn't count. Alas! you say, hopes have been dashed. But not so soon! You see, all those on the committee do, in fact, vote. And as we have already established that I too vote, it can be shown that I am therefore on the committee. So, congratulations.

Most likely these customers were delinquent and the bank put them into the COVID forbearance program. This is somewhat beneficial for WFC because it reports less 30/60 DPD customers, granting the illusion of higher credit quality for its "base" customer group (i.e. the non-COVID forbearance group). Just a clarification: I doubt WFC did this intentionally, placing customers into COVID forbearance without their explicit consent is the height of stupidity. It was most likely accidental, but I am saying it does have somewhat of a benefit for WFC as they view the credit quality of different customer segments.

On the reg credits - can TSLA recognize these as revenue when JoeShmoe et al put down the $100 or whatever-it-is deposit for a new Tesla? Or is it only when a vehicle is delivered? If so, one angle is this: Tesla designed this cheap customer deposit structure so it can legally comply with revenue recognition laws. Therefore, it can start recognizing these regulatory credits - which it can then sell to other automakers for Cash, Today. OK yes so they do recognize deferred revenue from regulatory credits, but I am still not sure when that recognition takes place. Is it when the car is delivered but the credits are yet-to-be-sold to another automaker? Or is it when a customer places a non-refundable order (therefore Tesla has reasonable assurance the car will be built&delivered, and therefore the reg. credits delivered from the gov't) and then the credits are sold.

Given the price action today I would guess he is continuing to purchase.

Investment Ideas threads having a direct link to rocketfinance 10 year financials... I'd click on that all day. Save me the trouble of having to type, make some money for Sanjeev & the RF folks...win/win/win?

I agree with that description, perhaps removing bull item 3 and bear items 3,4

https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)31604-4/fulltext

My main gripe with "textbook" value investing is the lack of understanding of the above, and also the poor ability to differentiate between expected vs. realized return.

As the quoted section states, this is really a process vs. outcome question. Or put into COBF terms, investment (repeatable process) vs. speculation (outcome guessing). So, build a good process. Determine the inputs and estimate their value contribution. No practitioner is perfect, so leave room for mistakes. No process is comprehensive, so leave room for luck.

Problem is we have market forces and external events (COVID, gov't spending response) pushing down NIMs. And WFC is exposed - negligible trading business to counteract the heavy consumer/consumer-related lending. Mentally I think of them as the poor side of wealth-inequality, applied to the banking industry.

This has happened to me previously. Needed to call the broker and have them adjust my buying power as their programs are stupid and don't realize that spreads and other covered positions have limited exposure.

Well, that's my fear. Cutting 4/5ths of the dividend is not a good sign. I don't think it has anything to do with "signalling" to the Fed. I think Scharf sees low profitability for a good while. WFC is reflecting income inequality - less HNW customers, less trading activities...more modified mortgages and other consumer/consumer-driven loans.

Lack of compelling investment alternatives, I would say is the largest factor.

WFC and V. Getting to a self-imposed limit on WFC (currently 3.75%; would go up to 4%), so maybe one more opportunity to average down and then we let it ride.

Two jokes from the pearly gates: