ERICOPOLY

It always is. I found this interesting: https://www.quora.com/What-was-the-P-E-Buffett-paid-for-Coca-Cola

Thank goodness we have our deposits centralized in the too-big-to-fail banks instead of spread across thousands upon thousands of small banks as was the case in the 1930s.

You believe the market has priced in the chance coronavirus has hastened the end of these companies? The possibility of being made illegal? It isn't even illegal to marry a child in this country. This is a country where masses of school children are riddled with bullets at school but freedom to own guns wins the day. Is there a constitutional right to tobacco I'm unaware of? In the US the smoking rate is what 25%? Try to take away the drug of choice for 25% of the population and see how that goes for you electorally? Maybe there is some coocoo kamikaze congressman out there that sees this as his wet dream coming to life. But for the rest of them ain't gonna happen. One reason for not owning tobacco stocks is some smokers will die from coronavirus and may decide to quit. This virus is especially bad for smokers The argument will be made that smoking is now especially dangerous. Making it not-unlike other illegal drugs. I don't believe it's likely, I'm just questioning if the possibility is priced in (I'm guessing not). Interesting: https://www.politico.com/news/2020/02/15/could-tobacco-cure-coronavirus-115329 Smoking is the more likely target, by far, but a junk food tax should also see a tailwind from this too. Heart disease, diabetes, and high blood pressure have covid-19 mortality rates of 10%-6% according to the Chinese CDC. The external costs of the western diet are coming home to roost.

Did anyone notice the beating this has taken? Did they go into banking? If Berkshire doesn't add I will be surprised. This appears to be over restaurant traffic declining due to the pandemic.

1. No affinity -- I only have one account to trade in now, my Roth IRA, so margin+puts isn't a possibility for me 2. When it was near $48 I bought $47.50 strike calls. Near $40 I bought $40 strike calls. Near $27.50 I bought $27.50 strike calls. Intend to hold them all, and I intend to buy more for certain if there is a further drop. Along the way I had some shorter term in-the-money $30 strike calls, but traded out of them (at a loss) when I could sell the volatility at-the-money (softened the loss I took).

Terrifying speed and identical rate of spread

So what's not clear to me is this following situation: step 1). you short the stock on March 23rd, 2020 and create the constructive sale step 2). you buy an ATM put on January 29th, 2021 step 3). you close out the short sale on January 30th, 2021 The tax code's constructive sale rules said that you had to be a good boy for the next 60 days AFTER closing out the transaction that created the constructive sale. As far as I can tell, it did NOT say anything about how you need to behave the day beforehand.

You believe the market has priced in the chance coronavirus has hastened the end of these companies? The possibility of being made illegal? It isn't even illegal to marry a child in this country. This is a country where masses of school children are riddled with bullets at school but freedom to own guns wins the day.

I'm pretty sure you're right about selling short to hedge... ... but I don't think you're right about buying a put to hedge, because there is still the capacity for upside potential. Because there is the capacity for upside potential, the IRS cannot argue that it is functionally the same thing as selling the stock. But I do believe it can restart the holding period clock in terms of short vs long capital gains treatment. If you simultaneously write ATM calls to pay for ATM puts, they'll likely rule that a constructive sale. Even so, if you reverse the transaction after the stock drops a lot, and you do so within the time period rules, you don't trigger the sale but you have restarted the capital gains clock and you're back to waiting 12 months for long term treatment. I'm not positive on the put option. Selling calls and buying puts is certainly closer because the payoff curve is identical. According to this: https://www.fidelity.com/viewpoints/active-investor/protect-your-profits Buying a put is viewed as a constructive sale, but this is a footnote in an internet article that ends with "consult your tax advior". So if you have first hand experience and have dealt with the IRS on this, I would certainly defer to that. These are the constructive sale rules (https://www.law.cornell.edu/uscode/text/26/1259): ©Constructive sale For purposes of this section— (1)In general A taxpayer shall be treated as having made a constructive sale of an appreciated financial position if the taxpayer (or a related person)— (A)enters into a short sale of the same or substantially identical property, (B)enters into an offsetting notional principal contract with respect to the same or substantially identical property, ©enters into a futures or forward contract to deliver the same or substantially identical property, (D)in the case of an appreciated financial position that is a short sale or a contract described in subparagraph (B) or © with respect to any property, acquires the same or substantially identical property, or (E)to the extent prescribed by the Secretary in regulations, enters into 1 or more other transactions (or acquires 1 or more positions) that have substantially the same effect as a transaction described in any of the preceding subparagraphs. If you have created a constructive sale (and I am not a professional or expert tax resource), you only have a taxable event on your hands if you don't reverse the transaction on or before the 30th day after the close of the tax year... and further, you abstain from attempting anything like it again for the next 60 days thereafter. However, at that point you've restarted the clock on the capital gains treatment again and you must hold for another 12 months for LT cap gains treatment https://www.law.cornell.edu/uscode/text/26/1259 (3)Exception for certain closed transactions (A)In generalIn applying this section, there shall be disregarded any transaction (which would otherwise cause a constructive sale) during the taxable year if— (i)such transaction is closed on or before the 30th day after the close of such taxable year, (ii)the taxpayer holds the appreciated financial position throughout the 60-day period beginning on the date such transaction is closed, and (iii)at no time during such 60-day period is the taxpayer’s risk of loss with respect to such position reduced by reason of a circumstance which would be described in section 246©(4) if references to stock included references to such position.

So let's say you're a hedge fund and you're trading in FFH or OSTK, and this is like 15 years ago. Yeah, like, totally. Step 1: You drive the stock down on rumors you've spread that they'll go bankrupt... Step 2: You buy and spread rumors that the company is amazing Step 3: You naked short to hedge your gains without triggering constructive sale (because you aren't delivering the shares) Step 4: Back to step 1 ad finiitum ad nauseum A stack overflow exception occurs: https://www.deseret.com/2013/1/17/20512752/overstock-ceo-arrested-for-having-gun-in-luggage-airport-police-say#one-of-the-banned-items-discovered-by-transportation-security-administration-officers-at-a-security-checkpoint-at-salt-lake-international-airport-in-january-2013

So maybe there was some really good thing about naked short selling that nobody told me about... Section 1.1233-1(a)(1) of the Income Tax Regulations provides that, for income tax purposes, a short sale is not deemed to be consummated until delivery of property to close the short sale. So, potentially, a naked short sale would not be a constructive sale. Maybe that's why naked shorting was hard to squash in a constructive sale world.

This is the second time in a week I've seen it mentioned to buy a put in conjunction with margin borrowing to avoid margin calls. So in case somebody without margin experience is going to try this... ... make SURE your account is configured for "portfolio margin" and not "Reg-T margin". Or else you'll come to regret it at the worst time.

I'm pretty sure you're right about selling short to hedge... ... but I don't think you're right about buying a put to hedge, because there is still the capacity for upside potential. Because there is the capacity for upside potential, the IRS cannot argue that it is functionally the same thing as selling the stock. But I do believe it can restart the holding period clock in terms of short vs long capital gains treatment. If you simultaneously write ATM calls to pay for ATM puts, they'll likely rule that a constructive sale. Even so, if you reverse the transaction after the stock drops a lot, and you do so within the time period rules, you don't trigger the sale but you have restarted the capital gains clock and you're back to waiting 12 months for long term treatment.

Yeah, I cannot get toilet paper, so I use $ bills instead. Cheaper too. Reminds me of Beavis:

RWT also made it through 2009 and they are getting pounded even more right now. Is the common thread between these two the short-term funding of their leverage?

I suppose if they were willing to give up their Bank charter. And if they weren't a bank, it would free up Berkshire to acquire Delta without worrying about the Fed fretting over a very material commercial relationship... The government wouldn't help Delta if Berkshire already owned them. They'd tell Berkshire to help Delta. So Delta would tie up Berkshire's capital in times like this. So maybe it's worth more operating alone rather than being owned by deep pockets?

It’s a great opportunity to redeem me themselves. I think the Fed will grant this request. Given their recent absence of a spine I fail to see why not ;D Everyone else is getting let off early: there have been calls to release prisoners in order to mitigate the crisis https://www.aljazeera.com/news/2020/03/coronavirus-prison-cases-raise-alarms-calls-inmate-release-200319152245414.html

Actually, WhatsApp has 2 billion users today and it was 1 billion users in 2014 -- so Facebook bought them for $19 per user and today it's $9.5 per user. Facebook has $26 in revenue per user per quarter. This helps explain WhatsApp's value to Facebook: https://www.investopedia.com/articles/personal-finance/040915/how-whatsapp-makes-money.asp Is it Really About the Money Though? Industry insiders have speculated that part of the rationale behind acquiring WhatsApp was for Facebook to access user’s behavioral data and personal information. With location sharing data, 65 billion messages sent per day and access to users' entire contact lists, Facebook has access to a ton of personal information – all uploaded and saved on its servers.15 While Mark Zuckerberg has previously promised that this data won’t be used to improve consumer targeting in Facebook ads, it will be unless the user changes the settings to not share information with Facebook.

This one is from the same time period: BlackBerry announced Monday that it has agreed to be acquired by Toronto-based Fairfax Financial Holdings Limited for $4.7 billion.Sep 23, 2013

Today, I have been reading Fairfax's 2014 Annual Letter to Shareholders, but this is not really a Fairfax specific post so I'm putting it under 'General'. The valuation of three companies, Tesla, Amazon, and WhatsApp were used as examples of extreme market excess and they were shorting the market as a hedge because they couldn't believe the 'excess' out there: Here is the quotation from Fairfax's 2014 letter to shareholders: Last year, I quoted a major U.S. bank CEO who famously said, ‘‘As long as the music is playing, you have to get up and dance.’’ You can see how difficult it is not to dance! And what a party it was in 2013! The S&P went up 30% while the Russell 2000 was up 37%. As discussed earlier, the high tech stocks were soaring – particularly those with no earnings and very little revenue. Tesla Motors, for example, sold 22,477 cars in 2013 but commands a market cap of $31 billion, while Fiat, which we like, sold 4.4 million cars but has a market cap of only $14 billion. Amazon has a market cap of $167 billion but has not earned more than $1.2 billion in any one year since it went public in 1999. Facebook has recently made a $19 billion offer for WhatsApp – a company with approximately 50 employees and $20 million in revenue. This is the poster child for the excesses that prevail in the tech world! Tesla: because. it only sold 22,477 cars at the time, it couldn't be worth X... they delivered 367,000 cars in 2019. Amazon: it's stock now trades 6x higher just 6 years later WhatsApp: Facebook had no footprint with very young users, and this was a strategic acquisition (of unique value to the buyer). The price tag 6 years later is now $19 per user, not the $54 it paid per user at the time. Anyways, it's hard to know the future, isn't it.

The WH was warned last year that the country isn't ready for a pandemic. Hopefully after this, people realize the importance of having the right leadership in place.

If he is right that 50 people have it for every 1 we know about, then 22 people have died out of 180,000 infected in NYC. You have to take into account time it takes for the virus to run its course, though. Daily exponential growth means the vast majority of infections are early stage and haven’t had time to create complications. Do we also upwardly adjust the 180,000 number to add back the number of people who were once infected but no longer are? Really we need to look at this data at a cohort level, which as far as I know does not exist publicly. Without it we need to look at places like China where it's mostly run its course - otherwise we'll be comparing apples and oranges. The Chinese data tells us that 3.4% of the cases they identified died. But it doesn't tell us the % of infected that were identified. The Diamond Princess is the best population that I've heard of yet. 1% of infected died -- relatively old people go on cruises. So if we were to take the number of people who died in NYC yesterday, and if we can estimate when they contracted it, then perhaps we could estimate the number of infected people in NYC at that time. If we then estimate the rate of spread, we can take a stab at how many are infected in NYC today. I haven't looked into Diamond Princess in depth so I just tried to find some info. While I agree that it may be the best possible data set so far, it also seems potentially incomplete: https://www.sciencemag.org/news/2020/02/coronavirus-infections-keep-mounting-after-cruise-ship-fiasco-japan Given the number of people who were infected but did not test so at the time of disembarkment, I'm just not sure how reliable the data is (again, may be the best we have). Either way, still a high level of imprecision it seems. What's notably missing in this "analysis" is that the Diamond Princess passengers had the benefit of ample hospital, ICU, and ventilator capacity to treat themselves in Japan and elsewhere. There are patients in many places who will not get the same level of care due to healthcare overload. Furthermore, there may be more deaths to come. Of note, a passenger on the Diamond Princess just died TODAY: https://mainichi.jp/english/articles/20200321/p2g/00m/0na/050000c That's now 8 deaths. I can't find the data, but surely somebody knows how many of the ~700 infected were put on ventilators.

If he is right that 50 people have it for every 1 we know about, then 22 people have died out of 180,000 infected in NYC. You have to take into account time it takes for the virus to run its course, though. Daily exponential growth means the vast majority of infections are early stage and haven’t had time to create complications. Do we also upwardly adjust the 180,000 number to add back the number of people who were once infected but no longer are? Really we need to look at this data at a cohort level, which as far as I know does not exist publicly. Without it we need to look at places like China where it's mostly run its course - otherwise we'll be comparing apples and oranges. The Chinese data tells us that 3.4% of the cases they identified died. But it doesn't tell us the % of infected that were identified. The Diamond Princess is the best population that I've heard of yet. 1% of infected died -- relatively old people go on cruises. So if we were to take the number of people who died in NYC yesterday, and if we can estimate when they contracted it, then perhaps we could estimate the number of infected people in NYC at that time. If we then estimate the rate of spread, we can take a stab at how many are infected in NYC today.

I am down quite a bit, but my goal is to be able to afford more shares than I could afford back when the year began (and I was counting the Dhandho investment in that figure). Right now, I can afford that many shares with my incoming cash + my accounts present vale (without counting the Dhandho investment). So I feel like I'm kicking ass right now despite being down by a lot. Whether I include or not include the Dhandho has infected my thinking to some degree, but I kind of think of that as in liquidation (because it is). I was offered the opportunity to cash out completely earlier this year, but I turned it down because I want the share of the fund manager. Mohnish is incredible at talking the panties off of ladies (I mean, raising cash from investors). Perhaps he is great at the ladies too, but I cannot confirm that. I want a share of that future income, whatever it may be.

Montefiore Medical Center in New York has already started seeing the surge of Covid-19 patients that public health experts have been warning about. The hospital is participating in the remdesivir trial and is giving Covid-19 patients chloroquine. “All of our patients get put on chloroquine, as well as on antiretrovirals. We’re using Kaletra. Different places are using different antiretrovirals,” says Liise-anne Pirofski, chief of infectious diseases at Albert Einstein College of Medicine and Montefiore. “Everybody gets that, unless they have some contraindication.” https://www.wired.com/story/an-old-malaria-drug-may-fight-covid-19-and-silicon-valleys-into-it/