ERICOPOLY

Aren't those two completely dissimilar measurements of performance? Why not instead measure Berkshire share price performance vs the book value growth (+ dividends) of the S&P500 companies over that period? Berkshire's price gained 5.5% annually. Did the S&P500 book value growth (including dividends paid out) do better than this?

Surprising how closely the declines of C and BAC have tracked one another: http://moneycentral.msn.com/investor/charts/chartdl.aspx?PT=6&showchartbt=Redraw+chart&compsyms=c&D4=1&DD=1&D5=0&DCS=2&MA0=0&MA1=0&CF=0&D7=&D6=&symbol=BAC&nocookie=1&SZ=0 Is BAC really down because of the lawsuit headlines? Okay, then, maybe so -- but why is Citi down by almost as much? It looks like the market is punishing BAC barely more than it is punishing C (which doesn't have any scary headlines). So perhaps Mr. Market isn't really buying into all the headline hype around BAC.

I've been looking over their latest presentation again. The one from 7/27: http://www.citigroup.com/citi/fin/index.htm Look at the slide #10 and they list the loan trends for the trailing 12 months of the segments in Citicorp: Corporate loans grew 22% Consumer loans grew 11% Collectively, loans grew 16% in Citicorp Within the consumer segment, Asia loans grew 20% and Latin America loans grew 25%. Collectively they now comprise 53% of the consumer pie. North America loans grew only 1%. Going forward, it looks like Asia and Latin America grows from 53% to a much bigger slice of the pie. Still a "US" bank? CitiHoldings loans shrunk 33%. At that pace, only two more years of drag of that size. (or several more years with much lighter drag). Alright, when we talked about this a while back it was determined that the total assets would shrink. But that hasn't happened yet. Q2 2009: $1.849 trillion total assets Q2 2010: $1.938 trillion total assets Q2 2011: $1.957 trillion total assets Over the past 12 months, assets in Citicorp have increased by $169 billion (14% increase), and assets in CitiHoldings have decreased by $157 billion (34% decrease). Now, what if over the next 5 years they manage to completely run down CitiHoldings and keep the total assets at today's level of $1.957 trillion. Pandit gave a range of 1.2% to 1.5% ROA as to what we can expect from Citigroup in the future when things settle down. That would be about 24b or 30b net income. Or today's stock price is about 3.5x or 2.8x that future level. So maybe Berkowitz is right about a $100 per share price tag (last year he threw out $10 per share)? I figure he used that 1.5% figure on the $2 trillion assets (roughly what it is today including holdings and corp/other). I figure I must be high or something to come to the conclusion that it's possibly trading at 3.5x or 2.8x normalized earnings right now ("normalized" once the assets are sold in CitiHoldings and invested in Citicorp, and they earn 1.2%-1.5%). Can Citicorp continue to grow it's asset size at a pace matching the reductions in CitiHoldings? They did it over the past year when Holdings shrunk 34% from a high humber. Unless they are going to be all run down in 2 years, it will be easier to match the reductions at CitiHoldings with gains at Citicorp.

:) How did you do that? I owned the deep-in-the-money $2.50 strike calls. When the stock was at $4.50, there was hardly any volatility premium compared to when I traded out of them. The rising volatility premium softened the fall. The stock is a bit cheaper too, but that's luck.

This time I just bought the stock. I had the calls originally and got out of them for a tax loss on the way down as volatility spiked. Now I'm back in at $27. I gained about 20% IV out of this trade (compared to my original position before the crash).

Speaking for someone who is 38, you describe it as I remember it. I'm not sure 12 more years (to 50) makes much difference. The world is still cruel to those who aren't born bright and/or don't plan carefully for the future. Damn I hope I am retired at 38, lucky or / and smart man........ Also agree about the world. At least it's not 1997 when you left college. I started working on Aug 4th, 1997. The S&P500 was about 900. You have a huge advantage. My generation got the SHAFT!

From page 32 of the 7/21/11 presentation linked here: http://www.citigroup.com/citi/fin/index.htm Citigroup – Net Exposure to GIIPS  As of June 30, 2011, Citi’s net funded exposure to the sovereign entities of Greece, Ireland, Italy, Portugal and Spain (GIIPS), as well as financial institutions and corporations domiciled in these countries, totaled $13B based on our internal risk management measures  Of the $13B in existing net exposure: – About $2B is in assets held in trading portfolios and Available-for-Sale portfolios, which are marked-to- market daily; trading portfolio exposure levels vary as we maintain inventory consistent with our customer needs – The remaining $11B is net credit exposure, mostly in the form of funded loans comprised of:  a little more than $1B to sovereigns;  approximately $6B to financial institutions of which 70% represents parent guaranteed short-term, off-shore placements with these financial institutions’ non-GIIPS subsidiaries or fully collateralized by high quality, primarily non-GIIPS collateral;  and approximately $4B to corporates of which 2/3rds is to multi-national corporations domiciled in the GIIPS  We also have $9B unfunded exposure, primarily to multinational corporations headquartered in these countries. Like other banks, we also provide settlement and clearing facilities for a variety of clients in these countries, and are actively monitoring and managing these intra-day exposures  Citi also has additional, locally-funded exposure in these countries to retail customers and small businesses, as part of our local lending activities. The vast majority of this is in Citi Holdings (Spain and Greece) and has been previously disclosed  The sovereign entities of Greece, Ireland, Italy, Portugal and Spain, as well as the financial institutions and corporations domiciled in these countries, are an important part of the global Citi franchise. We fully expect to maintain our long-standing relationships with these entities going forward, and to continue to maintain a presence in these markets to service all of our global customers

Speaking for someone who is 38, you describe it as I remember it. I'm not sure 12 more years (to 50) makes much difference. The world is still cruel to those who aren't born bright and/or don't plan carefully for the future.

CitiHoldings is getting small enough now where the loan growth in Citicorp over then next 12 months should overshadow the portfolio runoff of Citiholdings. The headlines can read more like "Wow, a TBTF US bank with loan growth". The past 12 months the headlines kept talking about declining loan growth at Citigroup, even though Citicorp total loans grew 16% YOY.

Exactly. Everyone has the choice to save money by prepaying some mortgage, holding cash, or buying some investments. Somebody with no mortgage and no cash is the same as someone with a mortgage and stock investments that offset the mortgage. The way we view it is left up to psychology :) Personally, I think it is lower risk to have the mortgage and the investments, rather than no mortgage and no cash or investments. The scenario where you lose your job and need liquidity -- you can't tap your equity in your home when you have no job/income. So my personal believe is that it's lower risk to tap the equity and buy investments -- this way you have at least some liquidity when you lose your job.

But read what he says in the analysis: and US banks’ balance sheet problem is squarely a real estate one — non-real estate loan growth remains positive. Now if you look at Citigroup, it doesn't really have that much USA real estate exposure relative to it's earnings power. Other banks have more exposure. I actually swapped some of my BAC for C today. Initially I had swapped out of C for some tax losses, but a month has gone by now so I can swap back in.

The statute of limitations for dire macro forecasts has to be on horizons of less than 30 years. I think he was just wrong. And the current problems were not foreseen by Hayek, so I'm not giving him any credit for whatever malaise we currently have or how bad it will get.

I think that either you own the CDS for a big gain as interest rates climb, or you own the debt for a big loss as interest rates climb, but these large swings in valuation just cancel each other out if you own both. So no chance they own both is my vote.

To me it all looks like communing with the spirits and the stuff of superstition. Not the kind of leadership I'm looking for, I could have lived in Afghanistan if that appealed to me.

I wonder if the crisis in Europe is helping MBIA commute it's exposures. As I understand it, the banks drop out of the lawsuit when they no longer have insurance provided by MBIA. So if a French bank needs to raise cash pronto, they may be open to doing a commutation where they get cash upfront from MBIA rather than down the road. http://www.reuters.com/article/2011/09/12/mbia-creditagricole-idUSS1E78B12U20110912?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=43

This is, in my view, testament to the slippage of education in the US. Education via Sunday School. Texas has even moved to incorporate a nonsecular curriculum in public schools.

Huntsman does appear to be far more moderate. "To be clear. I believe in evolution and trust scientists on global warming. Call me crazy," - Ron Huntsman

Michele Bachmann said that if she becomes President, the Environmental Protection Agency and the Department of Education will be shut down. http://www.examiner.com/conservative-in-spokane/michele-bachmann-promises-to-close-epa-and-education-department

They are a party of faith-healers talking in tongues practically. Not really of course, but that's what it looks like given the people they push to the top of the party to represent them.

Try listening for a few minutes from 18:40 in the presentation. The key question is why do people get fat? Why don't they eat exactly as many calories as they expend? I mean, he says that if you eat less calories than you expend, in the long run you'll be dead from starvation. And if you eat more than you expend, you'll be fat for sure. Ask yourself how you keep it in check? Do you measure precisely what you take in and do you carefully plan your day so that you burn off exactly that many calories? Taubes is a physicist, so the thermodynamics isn't a new subject to him. As he points out, he gets a chuckle out of the people who try to explain it to him. Look, I was a math major, so for me the calories in vs calories out seems completely logical. I changed my mind after hearing him out. Agree, you can't spend 90 minutes on every single nut on the internet that makes a video. But I found the 90 minutes spent on his lecture to be entirely worth it. Given your logical remarks (and they are logical), I think you'll be quite entertained for the full 90 minutes or so.

The people with the cold wait 12 hours or the person in the motorcycle accident waits 12 hours? I guess what I'm asking is, is that 12 hours just a statistic as to how far a non-emergency gets bumped when the real casualties just keep pouring in through the front door? Or is there a shift of guys with mops cleaning up the blood in the waiting room? I think I know the answer.

Did you get the chance to hear Taubes' alternative hypothesis? He strongly disagrees with the simple calories in / calories out. His reasoning makes sense (to me anyway). http://videomedia2.swedish.org/mediasite/SilverlightPlayer/Default.aspx?peid=cd8c7aa15bc94a0486f4ee9b66ef8f8f The argument is basically this: A diet that raises your blood sugar too high will trigger an insulin spike, and this insulin will signal your fat cells to store the energy in fat. Thus you are left feeling low energy and you tend to want to eat more. So the diet will dictate whether or not you will be able to control your eating to a level where you maintain your weight. The more fiber you get with your carbs (whole foods), the more likely you are to maintain your weight. The more processed the food (less fiber), the more you risk getting fat. The fiber slows down the rate at which the carbs hit your blood stream, thus reducing the insulin spikes. And of course the energy is there on a steady, slow flow until the next meal (vs a short term flood of carbs).

Regarding the homesteaders: The start of the video shows that 100 years ago Americans ate half as much meat, less than half as much sugar, and less than half as much dairy. The study in the video that implicates casein in cancer growth did this: they exposed the rats to aflotoxin (a known carcinogen). Then they observed that feeding them a diet high in animal protein (casein) turned on the cancer growth, and then reducing animal protein in the diet turned the cancer off again. So yes, there are more environmental carcinogens that we are exposed to. That makes us susceptible to getting a cancer started -- the research cited in the video suggests that animal protein plays a part in whether or not the cancer actually develops. As for the heart disease: if you go back to the video by Prof Lustig (Sugar: The Bitter Truth), that video points out that the high fructose consumption gets your liver to put triglicerides into your blood, and that winds up pairing up with LDL to create vLDL (the bad kind that starts the plaque formations in your arteries). So the homesteaders and the people in Africa are not loading up on fructose, thus don't have the problem with triglycerides. Anyhow that's my take on what the videos are trying to present.

They will probably shrink by cutting their long term debt. So cutting the least profitable part of the balance sheet.

I watched his lecture online, "Adiposity 101: Why We Get Fat". I haven't read the book. What struck me about his is that he DOES spend a lot of time discussing the role of hormones. He points to a slide of a woman with lipidistrophy and says "what did her bottom half overeat while her top half is on a diet?". That's why I liked his presentation -- comprehensive. Not pretending that all body types are the same or will respond the same to given foods.