Rabbitisrich

Congratulations to him. I saw him at the Wesco AGM last year, and he looked happy and relaxed as if his fund had doubled. Is his letter publicly available?

Google may spend more to attack Microsoft, but if they create an equivalent product and offer it free of charge, they will seriously impair Microsoft's model. I don't believe that the opposite holds true. Microsoft can't simply create a search engine that is just as good or slightly better than google. People won't stop using google unless it yields insufficient results. That's why the first mover advantage is so sticky, as seen in China, where Baidu, an inferior engine IMO, still commands 60% market share.

A recent BusinessWeek article offers a counterpoint to that survey of IT personnel: http://www.businessweek.com/technology/content/jul2009/tc20090713_452960.htm Yet the news that diverted some of the attention that might otherwise have been focused on Microsoft came from a company called ScriptLogic. The small software vendor released results of a June survey that showed that 59.3% of companies have "no current plans" to use Windows 7 in their computers. At first glance, the findings might appear to undermine a widespread assumption among investors that Windows 7 would spark a much needed round of corporate buying. But the results may be less indicative of companies' eventual buying plans than the headline numbers show. The Web-based survey was carried out four months before the planned release date of Oct. 22. So companies haven't yet heard the marketing pitches Microsoft has planned for the launch. Chief among these are big price promotions. During the first six months after launch, for example, the professional version of Windows 7 will sell at a discount of at least 15%, compared with the current business-class version of Vista, the most recent version of Windows. ScriptLogic survey: http://www.scriptlogic.com/landing/google/da/windows-7-migration.asp?utm_source=pressrelease&utm_medium=pressrelease&utm_campaign=dawindows7

Oec2000, thanks for the correction. I unintentionally twisted the thread by misreading the article. Dcollon, while I agree that pension funds are manipulating PE activities to protect their own butts, I think that the pensions prefer to sell their stakes in the secondary market rather than ordering a liquidation of the PE firm assets. http://www.bizjournals.com/houston/stories/2009/07/06/daily22.html I'm mostly looking at CALPER's, which may the lowest common denominator, but they have been desperately trying to avoid marking to reality. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ax1qj6l6PfdU

That seems to be normal for the current PE industry. In California, CALPER's actually raised their PE allocation to 14% from 10%. It was 6% in 2006. My guess is that pension funds appreciate these investor lock downs because they prevent the PE firm, and therefore the pension fund, from marking to market. For example, most of that 4% increase in CALPER's PE allocation came from the decline of its other assets. Without forced asset sales, CALPER's can claim that PE outperformed the market by declining a mere 5%.

You guys are clearly too dumb to understand why naked shorting is necessary. Watch this bloomberg debate, fast-forward to 7:23, and be illuminated: http://www.youtube.com/watch?v=461zaWXH6YE

It might be worthwhile to call around and see whether some IOU recipients will sell their claims at a nice discount.

I made the mistake of reading through two pages of comments. The commenters' thought processes jump from unsound induction to unjustified conclusion. This is my favorite comment courtesy of MOFarm: I have nothing to offer in the way of help, but this just enraged me, and I had to say something. I'll pray that things get better, turn the bums in, and I will never ever eat at a Steak n Shake. EVER. I am not a racist, but when I read his name, I thought immediately: FOREIGNER!!! Kind of like all the Convenience Store Gas Stations. In CA you cannot get help at the pump because they can't understand. I came home to MO and discovered in our two largest cities, there is some of this as well. Woman are second class citizens in this man's home country...thus his employees. I'm going to email that company,and alert everyone I know to this Blog, and the information. So sorry

Does the shelf registration of June 10 make anyone nervous? Management is strongly incentivised to short-term results, so an equity offering at this ridiculous price may happen. I love the hedges, but management seems to possess the same moral fiber as the MBIA team. Any contrary opinions?

Thanks for the link. I found this part to be interesting: ''I did not want to be running any vehicle where my implicit obligation was to earn the highest return I could every year,'' Buffett says. He wanted to be free to make long-term investments. Moreover, there was a personal factor involved. ''I was developing relationships with the operating people in our owned businesses,'' he says, ''and I simply didn't want to have their duration determined by whether I got an exceptionally good bid that morning.'' It's the clearest expression of his unwillingness to sell certain companies despite valuations.

What do you think of the Van Hoisington argument? I'm oversimplifying, but Hoisington and Hunt cited Irving Fisher's research which demonstrated that excess debt overpowers most economic factors. Until we match debt service to normal income, change in velocity is a non-issue. Most inflationary arguments, including Andy Xie's, focus upon monetization, international competition for commodities, and dollar depreciation. Is there an economic argument for velocity increase in the near future?

This may have appeared in the old board: http://www.scribd.com/doc/11593471/Paulson-Funds-Annual-Report In retrospect, Paulson's move away from LBOs, hostile offers, and event-driven mergers was perfectly sensible. Yet plenty of smart managers, such as David Winters of Wintergreen Funds, fell into traps like BCE-Teacher's Pension. Perhaps the most persuasive evidence of Paulson's investment abilities is that his letter displays mostly common sense.

Good trade roughly right. Please just make sure that you are familiar with margin requirements.

Cardboard, don't worry too much over future inflation, dollar depreciation, etc... Read this website if you want to relieve your stress: http://mwhodges.home.att.net/nat-debt/debt-nat-a.htm#ratios

Agreed with both statements. I, too, will reluctantly and dismissively read his next books.

Just to add to JackRiver, even if you have a 5 year time span, by the end of year 5 the stock price will reflect expectations of years 6+. In other words, you shouldn't truncate your discounting period. A better strategy for you would be to focus on event-driven activities and on situations with catalysts. After reading the thread more carefully, if you are new to investing, I recommend that you turn away from the stock market and just read every finance and accounting book you can find. If you know anyone who took the CFA level 1, try to read the level 1 accounting text. I began my education only a few years ago, and that text really saved me a lot of time. There's so much junk or redundant information in publication; the CFA material can help to organize your reading schedule.

That's probably true Crip. There aren't many situations in which the brother comes out on top by holding cash.

I agree with you Netnet. Here is a good opinion piece from the Atlantic Monthly that explains the relationship between Prop. 13 and our reliance on income taxes for revenue: http://business.theatlantic.com/2009/05/should_we_blame_californias_government_or_its_citizens_for_the_deficit.php. However, no one should get the impression that California is some sort of low tax, high spending state. Here is a summary of California taxes relative to other states: http://www.taxfoundation.org/research/topic/15.html. Note that it doesn't include the 2% increase in sales tax to 9.25%.

You've got to let people get excited about something before you throw the book at them.

Yes, I go for the Cheesecake Factory sliders during Happy Hour. Tasty and cheap!

Good interview, thanks.

Maybe it's just your area. In Los Angeles they taste like cardboard.

I didn't see a Mea Culpa there. Basically, Michael Lewis admitted that his previous Buffett article had been motivated by petty emotions, but he never acknowledged the logical flaws of his work. Even now, he doesn't parse Buffett's statements about the widespread use of derivatives; instead, he parrots the notion that Buffett's use of derivatives is hypocritical. At the end of this article, he links to his infamous critique, mentioned in the Snowball, of Buffett's Solomon purchase. If you criticize someone for making a better than market deal with a company, isn't the logical next step to explore whether that person provided a better than market service to the company? Michael Lewis' books are intelligent and well written, but when he lets his biases run wild, the results are underwhelming.

Just curious, how do you know that the companies you named are great businesses if you don't know how to value a business? I've recommended Ben Graham books but I've found that the writing style turns some people off. One of the Mohnish Pabrai books, I think The Dhando Investor, is an easy read and covers the same major concepts.

Apologies if someone posted a link already: No new information for those following the proxy battle. It's interesting that Ackman seems to want board seats without a specific plan. He is surprisingly noncomittal on specifics regarding sale-leasebacks and funds from the sale of the credit portfolio.