ERICOPOLY

Probably mid-high teens maybe? Low 20s? I'm okay with the reality that this was gambling. Better not to fool myself into thinking this was prudent investing. Maybe prudent gambling, but that's not the same as prudent investing. I think the research (not mine) into the ORH buyout, the CDS research (again, not mine), etc... that was like rigging the outcome of the game, and then betting on it. Only legal! So I like the profile picture of Rothstein -- I have gambled, only I think I've been as smart about it as I can get without being illegal. I think he would be very much a fan of some of these bets.

What the..? Is this word of mouth or public record? Public record...all over the place. Cheers! http://www.nypost.com/p/news/regional/item_UtBcMesvG54xzPnzzxoqVJ Incidentally, Ashlee Dupre is a millionaire. (I looked her up on the celebrity net worth site.)

I've been curious about that too. I guess they don't really investigate anyone unless they get tipped off.

I'm going to sound like a broken record, but it's not just how much capital you hold, it's your earnings power that matters at least as much. Bathtub water level. Rate in versus rate out. Remember differential equations? Once you get yourself buried under a pile of loan loss provisions, how fast can you rebuild your capital? Only thing that matters here is your earnings power. Wells Fargo might get dragged down to a 7% capital ratio, but they'll bounce back 100 bps of capital real fast. "I get knocked down, but I get up again, you're never going to keep me down". This, I believe, is what Moynihan is talking about when he says regulators want to see regular and recurring earnings.

I will be a trillionaire if I can replicate your returns for the rest of my life (given the life history of two of my grandparents).

Also, think of how much faster WFC can rebuild with that earnings power.

Eric, Thanks for these details but can you pls explain further on how you handled this ORH play when you already levered up on FFH 2:1 when this idea came up. The reason i am asking is to fill my gaps. I always invest in 2 or 3 things at a time but when i am at 100% i never use leverage more than 10% of my total portfolio to even on sure shot investments like you mentioned here.I remerber you saying increased your leverage on FFH and used that cash for ORH ..but was not clear to me. I wasn't in FFH 2:1 when ORH came up. At that time I had no upside in FFH and only upside was in ORH. This way I wasn't piling downside upon downside. I was swapping the upside of FFH for the upside in ORH.

Did BAC really just rally more than $1 on hopes that the dividend will be raised to 4 or 5 cents?

That's true. But I think Eric is probably 1 in 100,000,000. The only guys that come close to those returns are startups that take off in a short period of time or daytraders who shot the lights out on a couple of stocks. It's not even likely that Buffett, in his best ten year span in his personal account, was doing what Eric did over the last ten years. And if you ask Eric, I'm sure there were plenty of restless nights when he was thinking, "Have I fu*ked my family over by putting all of our nest egg into one idea?" But he made the bet and his temperament allowed him to get through it. Amazing story, and I'm just proud he did it on my message board. It's a story I'll tell for ages! Alnesh, Andrew and I were talking about it again this morning! Cheers! The thing is, I probably benefit from being on 3rd base myself. My father is not a big gambler like me and I estimate he has a couple of million in liquid assets and a 2.5m house (that he paid 50k for). Well, I don't rely on him to pay my bills or anything, but even if I get completely wiped out I will still likely inherit enough money to purchase at least a condo or something for a comfortable post-65 retirement. Then my wife's mother is in a similar financial condition, is in her 80s, and I figure our share of her money when she passes would cover college for my kids. So maybe that's bratty to talk like this, but it's honest at least. I could afford to take on risks that people without relatively rich parents cannot. Which is why I picked on Prince Alwaleed -- I know the perceived family backing can mean a lot to performance. Thanks for pointing this out. My questions is did this line of thinking ever factor into your investments. Like with FFH or whatever your investment was to get you to the first million or two? I left college with $5,000 to my name (no debt). The thing that really got me determined to "make it all back" was when my Microsoft employee stock options peaked at $500k at age 27 and then crashed to $80k (where I sold them) in 2001. To some people $80k is like some massive nest egg that they would never gamble. But I grew up in Los Altos Hills and "what the hell is $80k going to buy me?" So I think I can more easily lose that much money versus other people.

That's true. But I think Eric is probably 1 in 100,000,000. The only guys that come close to those returns are startups that take off in a short period of time or daytraders who shot the lights out on a couple of stocks. It's not even likely that Buffett, in his best ten year span in his personal account, was doing what Eric did over the last ten years. And if you ask Eric, I'm sure there were plenty of restless nights when he was thinking, "Have I fu*ked my family over by putting all of our nest egg into one idea?" But he made the bet and his temperament allowed him to get through it. Amazing story, and I'm just proud he did it on my message board. It's a story I'll tell for ages! Alnesh, Andrew and I were talking about it again this morning! Cheers! The thing is, I probably benefit from being on 3rd base myself. My father is not a big gambler like me and I estimate he has a couple of million in liquid assets and a 2.5m house (that he paid 50k for). Well, I don't rely on him to pay my bills or anything, but even if I get completely wiped out I will still likely inherit enough money to purchase at least a condo or something for a comfortable post-65 retirement. Then my wife's mother is in a similar financial condition, is in her 80s, and I figure our share of her money when she passes would cover college for my kids. So maybe that's bratty to talk like this, but it's honest at least. I could afford to take on risks that people without relatively rich parents cannot. Which is why I picked on Prince Alwaleed -- I know the perceived family backing can mean a lot to performance.

I bought some $10 strike 2015 puts for a moral victory if the stock drops. Otherwise, no. The puts are actually not meant to be traded... they're just to hedge below $10 given that they were fairly inexpensive and I plan to offset their cost if the stock rallies (I'll write some covered calls). My new thinking is $14 by Christmas 2013 and something higher the next year. Just guesswork.

Just go back to the old days before FFH delisted from NYSE. You could buy LEAPS on FFH. Right before the short selling ban in 2008 I was losing money for the year thus far as FFH drifted down with the market panic, but I knew FFH was making money under the covers because of the great information on this board. Then posters on the board starting commenting about AIG's soaring CDS value and the general gains made in the CDS portfolio, the bond gains etc... I reasoned that if the gains were booked, stock would go up. I reasoned that if the gains would reverse (market rally), then the stock would go up. So I went 2:1 notional leverage using the deep-in-the-money calls. Things like the $120 strike LEAPS when the stock was at $220 range. Then out of the blue a short selling ban was announced, FFH was on that list, and Fairfax issued a press release about large realized gains on sale of AIG CDS. The stock went from $220 to over $300 in a couple of trading sessions. Then it went all the way to like $340 or something and along this way I booked my gains. Then I added the leverage again in early 2009 when it was back below $240. Repeat. Then Cardboard handed us the ORH buyout on a silver platter. Bam! This was a bit like betting on the fixing of the World Series which is from the Rothstein playbook.

I believe I could get there just at 10% annualized returns from here. Of course, by then a billion likely won't be such an exclusive club and Forbes might be talking only about the people who are in the $100 billion club. EDIT: Two of my grandparents lived beyond 90. Besides, maybe I'll live to 150 -- they'll be able to grow new organs for me by the time I'm hitting 90.

I had never heard of the guy until PlanMaestro mentioned him. Haven't yet seen any boardwalk empire.

I feel like the stock is going to drop again now after the results are out. I am skeptical that there will be any rally like last year -- I feel like we've already had it over the past couple of months with people remembering what happened around the results last year.

Has anyone figured out who is in my profile picture?

2007 -- FFH gains 2008 -- FFH gains (a lot of them because I was levered in the calls the day of the short selling ban) 2009 -- FFH gains, WFC gains (some), and ORH gains (account went up 50% the day of the buyout offer -- thanks to Cardboard) 2010 -- FUR gains, C gains, not sure I remember what else 2011 -- lost 35% in RothIRA 2012 -- Up 300% from BAC (it doesn't show in the numbers given because it excludes January 2012 which was epic month)

And this one is cumulative: Cumulative.tiff

It is only possible because of this board, but anyways here's what Fidelity is telling me for the RothIRA -- they have, as of the end of January, been tracking my performance for exactly 10 years: ROTHPERF.tiff

I already have more than 50% of it in a RothIRA -- for the next 20 years it can't be moved anywhere without getting hit with tax. After that, I'm not sure why I'd move it anyway (unless tax laws change). I can set up trusts as beneficiaries of the RothIRA, but as long as they don't yet have the assets there would be no need to file with the SEC. It would be epic to get into those kinds of numbers in a RothIRA. No drag from taxation and completely under the radar (Forbes won't find out).

Hopefully it's only if you directly own 100m worth of stock. In other words, maybe if you own 50m of mutual funds and 50m of stocks, then no filing is necessary? Otherwise it seems like this is an invasion of privacy -- how do you keep your wealth secret from your children if you are filing with the SEC? http://www.sec.gov/divisions/investment/13ffaq.htm ''...but a natural person who exercises investment discretion over his or her own account is not an institutional investment manager" Nice. Thanks.

Hopefully it's only if you directly own 100m worth of stock. In other words, maybe if you own 50m of mutual funds and 50m of stocks, then no filing is necessary? Otherwise it seems like this is an invasion of privacy -- how do you keep your wealth secret from your children if you are filing with the SEC?

At least Mr Confident at the ECRI can now be said to be wrong: http://finance.yahoo.com/blogs/daily-ticker/ecri-lakshman-achuthan-no-m-not-wrong-still-145239368.html

I would own a large allocation in Fairfax if I couldn't own BAC. I do have 25% in AIG warrants at the moment -- that's the only non-BAC thing I own. So if BAC were taken away I'd probably put 50% in FFH and buy more AIG warrants (to a 50% allocation). Eric, I am trying to get up to speed on Fairfax. The fact that you say that means a lot. Could you let me know why feel so strongly about Fairfax? I have read the Fairfax board. Obviously the lack of uw profits doesn't bother b/c you like mgmt, ability to allocate capital, etc. I don't feel strongly that Fairfax is going to explode to the upside. I feel strongly that if I venture out on my own, my net worth is likely to explode to the downside. So choosing Fairfax is really a signal that I don't trust my ability very much. I view it as a hedge fund of sorts. They do a good job over time and unless something really easy to understand like BAC comes along, I'm pretty much better off to be with them (or another manager. This is why I bought the minimums in each Berkowitz fund. I know very little and will eventually need to park the money somewhere -- quite likely at a time when there is nothing simple enough for me to figure out. Interesting. I actually can't buy BAC or AIG due to them being restricted securities at my wife's employer. And I don't think I know enough to do a good job of picking other companies. So I've entrusted most of our net worth to Watsa, Berkowitz, and Chou. Good to know Eric shares this thinking. The advantage though of knowing so little about business is that when something simple enough to understand comes along, it's a really good one!

Let Ballmer explain it to you: A $500 phone?