giofranchi

--Ben Graham, 1972 If you check the link I had posted, you get a P/E of 25.8 times average earnings (Shiller P/E), and a P/E of 19.3 times TTM earnings. Ben Graham might not have been a truly outstanding investor... but he knew one thing or two about "value investing"! ;) Gio

Well, maybe… But I think that’s only part of the story… I mean, the last time I saw Cooperman on Bloomberg (a few days ago) he shared the stage with Howard Marks. Obviously, Marks wasn’t sounding pessimistic on the markets… But at least he expressed some caution. A bear might be too unpopular to appear on TV, like you suggest… But is it really necessary to throw caution to the wind? Both Tepper and Cooperman seem serious investors to me. Certainly they both have been extremely successful! What need do they have to appear on TV and express views contrary to their true beliefs? Gio

Well, I know very few people on this board are John Hussman’s fans… And after his dismal performance of the last few years I would be very surprised if it were any different… But, listen, the fact he might not be a very good investor (a judgment that imo is yet to be proven), doesn’t automatically mean that all his research is flawed, useless, and meaningless… Far from it!! Instead, the data he provides are very carefully put together. If you have read some commentaries of his, you’d know very well how during the last 50 years the Shiller P/E ratio, the P/S ratio, and the Q ratio have been reliable indicators of future stock market returns. Moreover, those three ratios always lead to very similar results. The TTM P/E ratio, instead, isn’t a reliable indicator… Hey! In 2008 the TTM P/E for the S&P500 was over 60… What other proof do you need?! ;) Hussman always provides his readers with interesting graphs spanning 50 years, in which you can see an overlapping of the Shiller P/E ratio, the P/S ratio, and the Q ratio, with subsequent market returns. And they might not be perfect, but they fit pretty well! The same graph with the TTM P/E ratio, instead, is just a mess… Gio

Ok… 1/19.3 x 100 = 5.2%... Now get any book about Buffett and see if he would ever invest in a company yielding 5% (if he doesn’t think its earnings might increase substantially in the future)… only because interests rates are low… Gio

I am buying more today. :) Gio

Ahahahahahah!!!! Very interesting! ;) Gio

Ok… Would you value a company based on what it is yielding today? And comparing that yield to the other choices available? I know I would never do so because: 1) today’s yield might simply not be there tomorrow, 2) I am not really a fan of relative valuations. If what a company is yielding today is not a good way to value its business, why should yield be used to judge the future prospects of 500 companies? Gio

Two things I don’t understand: 1) Why do Cooperman and Tepper continue focusing on the P/E ratio of the S&P500, when there is clear evidence that metric has no predictive attribute? I mean, if you are interested to understand how the markets in general are priced, and therefore what they could return during the next 7-10 years, the P/E ratio is practically meaningless… 2) They go on repeating the P/E ratio is around 16.5. The link below instead shows 19.3… Which is the correct number? Because there is a big difference between the two! http://www.multpl.com/ Gio

+1! :) Absolutely! ;) Gio

[amazonsearch]Buffett Beyond Value: Why Warren Buffett Looks to Growth and Management When Investing[/amazonsearch] I am reading Buffett Beyond Value. Though surely nothing new to the people on this board, I think it is among the best books on WB’s investment ideas and practices. Cheers, Gio

I totally agree. :) Gio

I truly think Valeant will go on being a huge success. The fact I am not comfortable enough with their business model is definitely a fault of mine… Nothing to do with Valeant! Good people, good business, good price… It means you must understand why they are good people, why they are good businesses, why they are offered to you at good prices… Without understanding I am stuck… I cannot understand if Pearson’s recipe for the pharma industry is truly the right one yet, and imo there still not enough evidence about it. But, as I have said, the fault is mine… Very very ignorant… And that’s why my circle of competence is unfortunately so damn small! :( Gio

Great! Thank you! :) I am curiuos and I will surely read it. Gio

Any good investment idea belongs on this board! :) So, please, just start a ZIV thread and tell us about the company! ;) Cheers, Gio

Jeffrey W. Ubben, CEO Of ValueAct Capital, Appointed To The Board Of Valeant Pharmaceuticals http://ir.valeant.com/investor-relations/news-releases/news-release-details/2014/Jeffrey-W-Ubben-CEO-Of-ValueAct-Capital-Appointed-To-The-Board-Of-Valeant-Pharmaceuticals/default.aspx Gio

http://www.marketwatch.com/story/blackberrys-square-screen-passport-arrives-to-take-on-iphone-6-2014-09-24 Cheers, Gio

It is 7.1% for me. Less than I had hoped for! ::) Gio

I haven't said 'prolonged periods of 0%'. Actually, the years in which returns were negative are only 3 in their whole history. 15% is the favorable outcome I might expect... favorable but not impossible. The average insurance company is the negative outcome I might expect. Call whatever is in between the most probable outcome I might expect. But let me ask you: do you know many companies with at least the possibility to compound at 15%, and led by trustworthy people like PW, Bradstreet, Barnard, etc., in a business you understand and which is practically not subject to structural changes? If yes, I am all ears... Try to convince me! I would be very glad if you'd succeed! ;) Gio

http://www.thedailybeast.com/articles/2014/09/24/excuse-me-for-not-dying-leonard-cohen-at-80.html --Lou Reed Cheers, Gio

I agree. It is already 4 years now their return on investments has been much lower than 6%. In 2014 it was… negative! But I guess that’s just how they structure their portfolio: periods of returns way below average have always been followed by periods of returns way above average. I can count only 5 years of average returns in their whole history. The fact we will see many distressed debt opportunities in the future, given the unprecedented levels of indebtedness the whole developed economies find themselves right now, is imo a very probable scenario… And Howard Marks seems to agree. The fact FFH might be able to take advantage of those opportunities when they arise is another matter… But they have already done so in California 6 years ago… Why shouldn’t they be able to replicate? Gio

As I have said, I think other distressed debt opportunities might present themselves, and FFH might shift their bonds portfolio from plain vanilla government bonds to distressed debt opportunities. As I have said, at least in part it already happened in 2009 with a large purchase of municipal bonds in California. And look at what Dan Loeb has done with Greek and Portuguese government bonds. And Howard Marks is raising a huge sum of money to take advantage of distressed debt opportunities he sees coming. As I have said, when distressed debt opportunities arise again, I think many will seek the (relative) safety of US government bonds, pushing their yields down (like Japan, like Germany… like even France!!). Then, FFH might sell their US government bonds and redeploy their proceedings in newly formed distressed debt opportunities. Not saying it will happen… but I don’t think it is so far-fetched either! Gio

Obviously, the asset mix is not a static thing. It will change. With regard to bonds yield is not all that matters, there is also capital appreciation. What would happen if the yield on 10-years US government bonds goes from 2.6% today to 1% like in Germany? Gio

Valeant Provides Update On Third Quarter Results And Sends Letter To Allergan CEO And Lead Independent Director http://ir.valeant.com/investor-relations/news-releases/news-release-details/2014/Valeant-Provides-Update-On-Third-Quarter-Results-And-Sends-Letter-To-Allergan-CEO-And-Lead-Independent-Director/default.aspx Gio

Except that superstar status was attached to FFH merely 5 years ago… not 30 years ago! 5 years in the record biz might look like eternity… In business and investments they look like the blink of an eye… ;) Gio PS Of course, as I have explained, I don’t attach to them any superstar or ‘seer’ status.

I have sobered up the discussion shifting from the end of days to only 25-30 years… ;D ;D ;D Cheers, Gio