ERICOPOLY

Just out of curiosity as a Dhando Holdings investor... Does this fit the "tails I don't lose much" philosophy or can it be a lot worse as in "tails I lose everything"?

My book value per share is soaring when the portfolio is up huge. However I'll guide your eye to my impressive gains in intrinsic value per share when the portfolio's performance is unworthy of special mention.

There is a huge short term securities portfolio.

Buffett would suck up all the money on the planet if he were immortal.

Tesla will target Porsche’s gross profit margin of 50%, which the German automaker reported for the past few years prior to when it was acquired by Volskwagen. http://insideevs.com/tesla-sets-gross-profit-margin-target-at-porsches-almost-unheard-of-50/

Straubel says that they would be disappointed at Tesla if battery costs were not under $100 per kWh by the end of this decade. So about $8,500 for the batteries in my Tesla. So it won't be expensive to replace depleted batteries. So their margins on new cars sold would be very high in that scenario, given today's margins with expensive batteries.

Are you saying GM isnt undervalued? Buffet doesn't seem to think so, Also as for dividends, when I am buying options are the dividend still an issue (sorry if its too naive). I know adds to the cost so thats painful I said: "I don't know which is more undervalued". To this you ask "are you saying GM isn't undervalued?". Buffett doesn't pay 33% tax on dividends. It's more like 14.5% (roughly) given that he holds them within insurance companies. Oh, and he prefers wholly owned businesses (where there is no dividend tax). It would be among the list of several reasons why wholly-owned is his preference. The dividend expectations of the market are (supposedly) priced into the option. Unexpected dividend increases hurt the value of your calls -- the opposite if the dividend is not raised as expected or is cut. Open another thread topic if you want to discuss this more -- this is supposed to be "What are you buying today?".

Thanks eric for helping out people like me. Dont you think its better to buy GM calls now? in other words BAC is undervalued but GM is probably better to load up as its more undervalued? I don't know which is more undervalued. One problem with GM is that the dividend costs me 150 bps annually worth of taxes. That costs something like 16% over 10 years. It needs to be undervalued for that dividend to make any sense given my tax situation. Anyways... And to anyone that says that dividends support the price and people will pay a high multiple for dividends in this low rate environment: exhibit "A": GM stock. exhibit "B": SSW stock. I just think that if you have a taxable account (especially in California), then the IV calculation needs some tinkering. It's no longer only distributable earnings that matter, but actual distributed earnings and in what form (dividend or share repurchase). How much do you actually own of those earnings is what matters. I care about how much I actually get to keep -- it matters to me if the amount of undervaluation is merely going to wind up with the government.... or not. But if you think you'll make a quick capital gain and be out of the stock before you get taxed on the dividends, well then that's different.

Aren't you concerned you are paying too much for Vol at these levels? Volatility is always expensive when there is tension and underlying has fallen considerably in price (which is usually correlated with a good price:value). There is no way around it. Just don't buy 6 years' worth of it is my motto. My speculation is that when the stock goes to $20 (whenever that is) or so I'll probably be able to write the $22 strike call for at least $2. So I think I'll get all this premium back in the end. So mentally if I look at it like that it's not so bad.

I added some BAC 2017 $15 calls and some shorter term $15 BAC puts. Not touching my SPY short though -- might need it. Added some GM common.

I admit that I don't understand the issue -- but genuinely I am amazed that all that QE did pretty much nothing to the gold price. Perhaps it permanently propped up a gold price that was already in a bubble (but isn't anymore after the QE). Just don't know.

Gold is just something that ought to shoot up if there is QE, but it hasn't yet. GLD finished at 109 today, and it was 91 at the beginning of 2009, before all the QE. More than 6.5 years later, it's only up 19.7%. That's a bit less than 3% a year. That's after QE1, QE2, QE3! Why is QE4 going to produce better results for GLD?

You too had a hard time engaging the enemy after you lost Goose. There is something to be feared in fear itself, as the economy is in part a confidence thing. Large market collapses and currency crises can feed into the real economy. Will they? Well, we'll see. The odds are higher with a collapse rather than without one.

I personally think this one is a big one..at least 20% correction here if not more. Problems in China are not to be ignored. It is not contained just like Housing problem here wasn't contained to subprime. I don't think it is 2008 here but it is similar to the last Asian currency crisis 1997 i think. Comparing it to 1997 currency crisis makes sense -- that took our market down by 20% or so. I actually added to my SPY short today.

It's one of the relatively most insulated, with exports being a small percentage of GDP (at about 13%). The rest of the world feels relatively more pain when the US stops buying their goods, than vice-versa. Eric, are the S&P 500's overseas earnings part of "exports". My line of questioning relates to if they aren't, then with emerging and Asian economies slowing, this could impact Europe's economy (which may be more reliant on exports than the US). If this is the case, the rest of the world may be slowing dramatically reducing the S&P 500's overseas earnings (which I hear is half their earnings). Does this make sense? I thought the overseas earnings were what we derive from the exports. Happy to be proven wrong though so I can keep learning.

It's one of the relatively most insulated, with exports being a small percentage of GDP (at about 13%). The rest of the world feels relatively more pain when the US stops buying their goods, than vice-versa.

Somewhere in the annual letters to shareholders Buffett refers to all of his companies collectively as "the streams of income that form the mighty Amazon" (I'm paraphrasing). I think it's quite a bit of his strategy is to prefer an acquisition over his own shares -- his own shares would have to be awfully tempting to be a better idea. Or something like that.

I think Glass Steagall preempts that. For a commercial entity and a banking entity to be under the same roof potentially gives that commercial entity a very strong financing advantage, which, in a guaranteed deposit world, is arguably derived at the public's cost. With the right management, it's not a bad thing, but regulation is never intended for the well behaved. The closest banks got to own a legal "diverse income stream" is owning the credit card processors, Elavon in the case of US Bank, Vantiv in the case of Fifth Third, and they haven't been bad things to have during the tough times. But such is life with these heavily regulated entities. It figures that Glass Steagall is responsible for the financial crisis ;) Let's make sure these banks are heavily concentrated within banking -- good!

I keep thinking about that last banking crisis. What if each bank never paid dividends (nor bought back shares) and instead retained those earnings to purchase more diverse income streams (not more banks, but completely separate industries)? Would they have needed bailout money? I wonder how much money was poured into dividends and buybacks at BAC over the prior 20 years leading up to the crisis. Anyways, different topic from this thread. Berkshire has something great going on from the nearly indestructible nature of it -- those independent businesses reinforce the safety of each other. Businesses that return capital to shareholders can never reach their maximum potential level of safety -- by definition of having returned the excess capital. IMO.

I don't know, but I also question why they'd want to. Instead, they wind up with more assets on the balance sheet if you use the same amount of cash to add to existing equity positions. A buyback is a return of capital -- it's not as good as adding to their positions that earn a return. That is... if you want a fortress. If you like the idea of growing the many little rivers that feed the mighty Amazon. IMO. Buffett is all about increasing intrinsic value, not expanding empire. If he could buy a significant amount of his existing businesses at a price cheaper than buying a new business he would do it. I would guess he'd rather put $37 billion in to BRK share buybacks than PCP but it is unlikely he could repurchase that amount of shares. The future of the entire enterprise is more secure if you have more varied streams of income, and put together those streams of income are bigger than before. You can never attain the same ever-increasing level of safety by buying your own company stock. Just like paying dividends doesn't make your earnings capacity greater... Just like paying dividends doesn't make your balance sheet stronger... Buybacks fortify the business in the same way as a paid dividend -- exactly zero. There's a bigger issue here than "empire building". How about ever-more-secure empire? Build it stronger. Make it even harder to break. I'd rather have 2 separate income streams within Berkshire than just 1. I'd rather have 3 than 2, I'd rather have 51 than 50, I'd rather have 75 than 74. Etc... etc....

I am back in with a fair size Leaps bet. Actually got some Leaps really cheap this morning before things rebounded some - I think the stock was below tangible then. Do you suppose tangible book value accounts for the billions in regulatory expenses to start up a beast like BAC? Good work. You have been doing this trade a couple of times this year.

Getting pretty close to tangible book value. With nearly two months of earnings under our belt for the quarter, might already be there based on the after hours trading price. I suppose tangible book value is what you'd have to pay to go start your own bank from scratch -- if you actually knew how to do something like that.

I don't know, but I also question why they'd want to. Instead, they wind up with more assets on the balance sheet if you use the same amount of cash to add to existing equity positions. A buyback is a return of capital -- it's not as good as adding to their positions that earn a return. That is... if you want a fortress. If you like the idea of growing the many little rivers that feed the mighty Amazon. IMO.

I'm fairly ambivalent. Might go higher or lower. I don't feel particularly gutsy at the moment. Pass.

I didn't. I wrote: "I'm not particularly game to try again either."