ERICOPOLY

Were you to have a perfect knowledge of the future, the first 5 years of slow growth matter little to the overall intrinsic value of the economy. That's why I was finding Shilling's comment relatively bullish -- in other words, not that much left to discount for.

How much are they influenced by A. Gary Shilling? I hear he was at the dinner and the last AGM. I've been watching his comments over the past 12 months and it sounds like he's rather bullish -- only 5 more years of this deleveraging and then he believes the US will go back to it's long run growth trend. Not this "new normal" pessimism. He predicted deflation 10 years ago, in 2003. So I wonder, are they listening to him? Will they dump their CPI hedges relatively soon (next few years) given that the 5 years isn't much runway for these hedges to make a lot of money?

Some of these (and I am no doctor) sound like symptoms of asperger's, which Burry has been diagnosed with. That's what I was thinking.

The Macro Picture Today: New Home Sales Surge 25% in October. http://money.cnn.com/2013/12/04/news/economy/home-sales/index.html?iid=HP_LN Private Sector Hiring Strongest in A Year http://money.cnn.com/2013/12/04/news/economy/adp-jobs-report/index.html?iid=HP_LN US Exports Climb to Record High: http://online.wsj.com/news/articles/SB10001424052702303997604579237761389959526?KEYWORDS=Trade+gap

Difficult to say what the normalized revenue is for servicing, but it is dropping fast. It is $699 million in Q3 and $2400 million YTD. This is provided in the earnings supplement (page 27). They plan to get rid of servicing loans they have not originated. So once all the loans that they bought are gone, they would be just keeping the loans they originate. Originations are about $25 billion per quarter over the last few quarters but since this varies with mortgage rates. Moynihan has mentioned that he wants to grow the share of originations from 5% so I would expect loans to increase but cannot really translate this into a normalized number. Vinod Given the size of the decline in servicing revenue, I find it strange that the analysts on the conference calls only ask about the expenses. They just don't seem to be curious.

Does anyone have an idea as to the normalized revenue from mortgage servicing? We've only heard them talk about normalized cost. Their servicing revenue fell over the past year when they sold a lot of the servicing rights. Are they planning on fully replacing it with organically originated loans, to be built up over time? Or is there some sort of plan to simply never let the servicing portfolio get larger than a given size again?

His comments begin at the 17:35 mark and ends around 18:40

This board is also a very beneficial therapy group when markets go very low. It is responsible for all of my good decisions (I'm responsible for the bad ones).

100% is the most concentrated. Several times since 2006 I've had 50% declines from earlier peaks. Out of curiosity, what goes through your mind when you're down 50%? How do you deal with the psychological stress that it causes? Well, it's probably the same as with everyone else -- you wish you had done something else differently, but you are stuck with the cards you are holding and you don't have much choice but to stay in the game at that point. It sucked every time.

One of Buffett's better quotes was when he pointed out that his gift of $50billion means nothing to him because he suffers no loss of utility. Instead, it's a bigger deal when a person gives away money that causes some sort of sacrifice -- like if you worked for a living, haven't yet saved enough for retirement, and gave away $100. That $100 still has utility to you, as you need to keep on working to replace it. But Buffett's $50b gift is pretty meaningless to him -- it changes nothing in his life. At least that's how he phrases it -- it might just be false modesty, hard to say. He makes this point in the recent talk he did with Brian Moynihan at Georgetown.

Sorry, my mistake. You seemed to write 10 about messages about how Buffett hated artists, using phrases such as "Buffett's theory of artists being a waste of capital". So, I thought you were confused about what Buffett was actually saying and were seriously suggesting that Buffett hates artists. Because of the preponderance of dialog about the artists/capital allocation, I didn't realized that your caveat was your key point. Sorry for the misunderstanding. I didn't bring up the topic, Richard. Read back and see. Somebody raised the point that Buffett would not hire 10,000 artists because it would lead to people not working on cancer research. I argued against that point, saying how it wouldn't happen (with a variety of colorful illustrations). I don't even know if Buffett ever said it at all (the point still stands at face value no matter whether true quotation, misquotation, or mythology) -- it's irrelevant if Buffett really said it at all, or if it was misattributed to Buffett. Then to the rescue of Buffett, you leap into it and stick your foot in your mouth. And here we are ;)

100% is the most concentrated. Several times since 2006 I've had 50% declines from earlier peaks.

I think tipping should be banned in favour of higher wages for people in the "tipping" industries. No tip restaurants have a record of better service... look it up. I am not talking about low end places. I wonder if a psychologist could study the brain waves of big tippers -- perhaps tipping makes them feel superior/powerful (over the servant) and they derive extra reward from it -- being "the boss" for a moment at the end of the meal. I wonder if it leads to greater pleasure (for some people) and thus brings more enjoyment to the dining out experience. Personally, I find tipping awkward but I have to take part in it because that's the way the system is set up in this country.

Life expectancy would improve by 3 years. The real problem isn't cancer -- it's that our cells divide 20 times and then die (I think it's 20, could be wrong on the number). EDIT: quick google search suggests 52 times

This is a gross misinterpretation of what he meant. He meant that because he controls great amounts of wealth, he's capable of allocating resources in ways that are stupid and not beneficial to society. He could have said "Dig holes, then fill them in", as Orwell said in 1984, and it would have had the same meaning. He was not saying anything about the merit of art to society. It's typically a mistake to assume that Buffett is saying something idiotic, when a reasonable alternative explanation exists. (i.e. I agree that if he meant to imply that artists should become surgeons, it would be idiotic. But he didn't meant that.) The part of my message you deleted was: that is, if he really believes that It's typically a mistake to edit the caveat out of another's post and then advise them about reasonable alternatives. How ironic, in a sense, that is.

Just to be clear, I wasn't inferring you. I was picking on Buffett's theory of artists being a waste of capital, or misallocation of resources. (that is, if he really believes that -- I know he enjoys a Nebraska football game, and boy is that ever a good allocation of resources with the stadium and all that could instead be a research facility. And those football players should be in lab coats.)

There is a word for the strict capital allocation argument :) Philistine: a person who is unreceptive to or hostile towards culture, the arts, etc; a smug boorish person http://dictionary.reference.com/browse/philistine?s=t

You never disappoint. I think you're right, but I'm not certain. Indulge me. Let's say there's a situation where nobody is changing jobs. Let's say that the most beneficial advancement we can make as a society is to cure cancer. Would you agree that committing money towards cancer research helps further the goal of curing cancer? Would you agree that committing money instead towards art projects will not help further the goal of curing cancer? If so, is it true then that society is better off when the money goes towards cancer research instead of art projects? Would you settle for Art Therapy for Cancer? http://www.ehow.com/about_5409457_art-therapy-cancer.html

Actually, if you burn the 50 bil it will make the remaining capital more valuable. Thus, no destruction of value. Well perhaps we decide the "Buffett Tax" is a misallocation of millionaire wealth because the millionaires get rich slower due to this tax, thereby reducing the amount they can later give to benefit the poor. Instead, we encourage all of the millionaires to shelter their passive dividend income within insurance companies at the 14.5% rate and defer all their capital gains. Then the millionaires have more to give to the Gates Foundation. And let Bufffett's secretary pick up the tax bill due here in the US. Oh wait... did I just point out that Buffett has contributed to his secretary's tax dilemma? Oops. It would be interesting to figure out how much his Berkshire stake would be worth if he paid income tax every year on 3% of it (simulating a 3% dividend payout). Maybe a lot of us are (somewhat) generous like him and don't realize it because our generosity goes to the US Treasury instead.

Actually, if you burn the 50 bil it will make the remaining capital more valuable. Thus, no destruction of value.

I agree that Buffett's work as a capital allocator hasn't much benefited the wider world. Straw-man arguments are funny, but don't help me change my mind. I'm not arguing that if a group of laborers is given a pay-cut they'll suddenly become cancer-researchers. I'm just saying that incentives determine behavior. Laborers go where the money goes. If a profession offers very high pay, over time more people will enter/ stay in the profession. If a profession offers terrible pay, over time fewer people will enter/ stay in the profession. Of course we do. And of course people choosing to teach guitar is not a problem. Incentives determine behavior. Yes. That's why artists are not working on Wall Street. They are incentivized by what they love doing, and it obviously isn't about making money, it's about making art. Do the people going to art school do it because they think they'll be rich? Uh, of course not. So Buffett's argument is nonsense.

Isn't that what Buffett himself did? He became a useless allocator of capital, getting paid more than $10m a year. How many cures has he found? Would we have a cure for cancer if Buffett made less money? What if lawyers were paid less. Would they be curing cancer? Perhaps they'd slap spreading cancers with a trespass suit? We haven't yet used their outside the box thinking to approach the cure, I'm sure that's what the problem is. Damn it. Or how about hotel operators. Is Trump a would-be scientist, dorky hair and all? Kill the skin cancers by blocking out the sun with an analogue to the Trump Towers. Is Moynihan a scientist? What's Angelo Mozillo doing on a Montecito beach when he should be in a lab coat? Perhaps if we didn't properly document the cancers and sold them with reps and warranties to an unsuspecting alien species, we could rid the human race of them. If only the CEO didn't get paid as much, he would be the budding scientist we desperately need. Maybe... we already have a lot of bright scientists working on the cancer problem already, and the true problem isn't that a groovy looking UCSB dude is teaching guitar to my daughter on Sunday afternoons (he is) instead of joining the fray. Just maybe.

Wait... a car crashed and burst into flames... but it wasn't a Tesla? The Santa Clarita Valley Signal reported that the Porsche crashed into a light pole and tree and burst into flames. http://abcnews.go.com/Entertainment/wireStory/publicist-fast-furious-star-dies-car-crash-21059317

We all date back to the same origins in Africa a very long time ago -- so we have all been around for as long as those monks. Well, I've only been around for 40 years, so plenty are wiser based on how long they've been around. I had a grandmother that lived to 93, and she was very wise. Perhaps some of the monks have an edge on her if they are pushing past 93. But are they more worldly? Well, my grandmother was raised in Finland, married in England, emigrated to Australia, and travelled extensively. How many cultures and varied peoples do the monks expose themselves to?

I would still buy BAC. They are now generating $2 a share (with DTA help) and priced at $16. That's a 12.5% yield. Then you have capital gains as the shares approach a reasonable P/E multiple on those earnings. So it should be 20% a year for the next few years -- or instead perhaps a bigger pop up front (which is what I'd prefer). Keep in mind I don't have a lot of stocks that I know much about, so others will have better and more numerous places to put money.