ERICOPOLY

The government would be much happier to have a lot of tiny, regionally-exposed, heavily leveraged banks instead of having the deposits concentrated among a few less-leveraged, regionally-diversified mega-banks. So just give them what they want. Split BAC into 30 pieces and lever the crap out of each piece. We can then have the next banking crisis look more like the 1930s again :D

Instead, look at the returns on allocated capital in each of their business segments. Then go back and look at the 10.7% ROTE number. How can it really be this bad given the returns they generate on allocated capital in each segment? I fully understand that the entire entity cannot be as leveraged and such so I can't expect ROTE to be anywhere near the returns they make on allocated capital... but neither can JPM escape that problem. I want to compare their returns on allocated capital for the various businesses against what JPM achieves in their businesses. Something doesn't add up, because I believe JPM is getting something like 14% ROTE already.

He said 13% to 14% last Nov-Dec during the Q&A (recorded audio was once on the website) at an investor conference. He specifically said it was for the "present" interest rate environment, I posted it here (it's buried somewhere in this thread), and then Sanjeev posted that he agreed with me that Moynihan did indeed say it. Of course, the most recent comment is a better one because there is always a chance that he's simply changed his mind. The difference between 10.7% ROTE and 14% ROTE is 3.3% (330 bps of ROTE) Just eyeballing it, that feels like way too large of a move to be coming from a 100 bps parallel rise.

Some of your questions are getting well out of my league... But I don't disagree, the present numbers point to around $1.50. Or perhaps a bit under $1.60. Anyways, $1.50 is only 10.7% return on tangible equity. The bank executives commented that they can do 13%-14% return on tangible equity... in this interest rate environment. Of course, people have pretty much written off anything they say at this point given their seemingly complete ignorance around the costs of settling their legal issues. Okay, so forecasting the DOJ is out of their league, but they are bankers and knowing if they can get at least 13% ROTE is something I think they are more qualified to comment on. So while they aren't currently earnings 13%, they seem to have an idea that it can be done by shifting things around. Could they lie that badly? Surely they aren't so incompetent that they can't look at their Q2 numbers the way we did and see that 10.7% is nowhere close to 13%. So I "have faith", but I'm protected by the stock price if faith is misguided. Nor is $0 normal for litigation expenses. But I figure neither is $1.3b quarterly LAS expenses. Strip out some of the LAS and sprinkle it into normal provisioning and normal litigation.

Nor is $0 normal for litigation expenses. But I figure neither is $1.3b quarterly LAS expenses. Strip out some of the LAS and sprinkle it into normal provisioning and normal litigation.

I'm just crediting them with a pace of roughly $500m per week from pre-tax after-provision earnings. Nothing more complicated than that. Ignores other settlement costs, ignores the Buffett conversion, ignores capital freed up from runoff of real estate loans, etc... Nine billion dollars sounds like a lot of money, so I wanted to put it into a time-context. Nine billion dollar cash penalty to BAC is the same as not making any money for 4.5 months. Penalty is not that bad. I'm assuming they've already written down most of the other parts of the penalty concerning loan-forgiveness.

I still can't say if TSLA stock is incredibly expensive or not even today. I mean, I don't personally have $30b lying under the mattress... yet... so I do respect the market cap. A long-established company like BAC is much easier for me to value because I don't have to think as much about the future value of the growth. I can justify today's price by looking at present earnings. The day when people realize that gasoline cars are a huge hassle is not too far off. People are having a lot of trouble seeing this, and so they think Tesla will be a niche company for too far out on the horizon. However, I drive my Model S each day and realize how insanely f**** awesome the car is. The electric drive has so much instant torque that you just bolt off the line in that thing -- it forces the blood into the back of your head. People are going to need their head examined if they choose a gasoline car over an electric pretty soon here. I've got three other cars, I need to get them smog tested every two years in California. That smog requirement is going to happen in all states in 2017 (Federal rule). It's such a pain in the butt to keep those cars around -- regular oil changes, servicing, etc... Wasting time each week at the gas station. They suck! The 10 minute full charging time goal is going to turn heads as the company incrementally reaches it. Look at the supercharger map today for Europe (click on the "Europe" tab) -- they didn't have a single charger a year ago: http://www.teslamotors.com/supercharger move the slider over to 2014-2015 to see the planned locations Okay, so now imagine what that map will look like five years from today as they gather more scale. Tesla is going to own your $10 a gallon gas continent and Putin's going to feel it. You guys hate SUVs because they are gas-guzzlers and your gas prices are high -- wait for the Model X. You can get out of those cramped little cars. Oh, and it goes 0-60 MPH in less than 5 seconds.

It was April 24th when I first learned that the DOJ was going to put a huge fine on BofA: http://dealbook.nytimes.com/2014/04/24/justice-dept-offers-bank-of-america-a-mortgage-deal/?_php=true&_type=blogs&_r=0 They've now settled the cash portion for $9b. Okay, but since that initial headline we still had a week more of earnings at the end of April, then there was May, June, July, and now another week in August. During that period, the company's business performance has increased their available capital (through retained earnings) by approximately $7b. Now if we wait a month it will be up to around $9b. It's pretty cool how quickly the bank can recover from a penalty like this.

Interesting. So would you classify Pabrai as a blind sheep? -CM Wouldn't a blind sheep have more trouble keeping up with the herd? Perhaps he has developed other senses to compensate and thus, in investing, a blind sheep may actually be advantaged.

Their battery production facilities which enable knock-on scenarios. I'm looking forward to having Tesla battery packs in RVs. That would be unbelievably cool -- how about a huge Tesla battery pack in an RV! No noisy generator to run. So much fun. We went house-boating on Lake Powell for a week this summer -- it was super-annoying to run the generator 7 hours a day and used up 25% of our fuel (thereby reducing our range). Boats like that are the kind of thing where it would be nice to leave the marina with a fully charged 85 kWh battery pack.

I see, that's why then went with "Model 3": http://www.latimes.com/business/autos/la-fi-hy-tesla-model-3-20140716-story.html Ford has the rights to "E". Otherwise... Tesla Motors CEO Elon Musk once thought the electric car company’s lineup would spell out SEX. There would be the Model S sedan, the upcoming Model X sport-utility vehicle and later, the Model E, a smaller, less expensive vehicle for the masses. Stymied by Ford Motor Co. – it has the rights to E – Musk is now going for Model 3 for the third car, he told the British automotive news website Auto Express.

I can't do it now because it's up 700%. But it's going to be fun to watch the big one-legged automakers get their asses kicked in this ass-kicking contest.

I'm totally the opposite. I feel like by starting out with the set of names a guy like Buffett has been interested in, I'll have a less polluted lake to swim in. It doesn't seem like a good idea to me to ignore his behavior and instead only go with the names that I think are best. I'm aware of his experience and wisdom and... more importantly, mine! I'm not saying a random process. I'm just saying if you put all of Buffett's investments (including the bond deals and what not) on a piece of paper and selected one at random the chances are pretty good that it would underperform a name selected similarly from the cheapest 20% of the market that is investible to you and me. Perhaps you are right about that -- if randomly selected.

I'm totally the opposite. I feel like by starting out with the set of names a guy like Buffett has been interested in, I'll have a less polluted lake to swim in. It doesn't seem like a good idea to me to ignore his behavior and instead look over every stock in the market and only go with the names that I think are best (instead of peeking at the list of stocks that a few shrewd investors own). I'm aware of his experience and wisdom and... more importantly, mine!

Back in early 2013 I wrote on this board that while I didn't know how to value the company, I wouldn't dare short it either. I think it was about $30 or so. Thing is, I knew the Model S was going to do for autos what pantyhose did for women's apparel. Remember the story about Peter Lynch buying a pantyhose stock? Dammit! I should have done something about it versus merely warning people not to short it.

One thing about shorting an incredibly successful disruptive company, is the stock price tends to get disruptive too. Tesla X to devour premium SUV market: Morgan Stanley report The value of Tesla stock, thus, should be about $320, well above its current $250, making Tesla "our top pick in US autos." http://www.latimes.com/business/autos/la-fi-hy-tesla-x-to-devour-suv-market-20140807-story.html

Here's GM's first all electric car since they crushed the EV1 over a decade ago: http://www.autoguide.com/auto-news/wp-content/uploads/2012/11/2014-chevrolet-spark-ev1.jpg $26,685 MSRP, 82 miles of driving range. I doubt it'll compete very well with Tesla's upcoming Model 3... The key part of that article is the bit about the coming improvements in the speed of charging (a full charge in 10 minutes) and the advantage Tesla has from controlling the battery cooling, the charger, etc.... you sort of have to be vertically integrated to get it right because they all must work together: http://www.technologyreview.com/news/516876/forget-battery-swapping-tesla-aims-to-charge-electric-cars-in-five-minutes/ So Tesla vehicles will charge quickly and GM cars won't. One legged man in a ass kicking contest.

That's exactly right. Because alcohol is legal for those over 21, there is therefore no black market for alcohol. Therefore, it's harder for teens to get alcohol vs acid or coke.

All other automakers are kind of between a rock and a hard place when it comes to electric cars. To properly make them, they can't keep using most of their legacy manufacturing equipment, and to properly sell them, they have to explain why they are superior to gasoline/diesel vehicles (their main products). They're also stuck with dealers who make most of their money on maintenance, something that goes away in good part with EVs. That explains why they all kind of do a half-assed job, limit production to relatively small batches, or make EVs/plug-ins that are pretty conventional technically (small electric range, not much use of lightweight materials, etc) and look kind of niche (why wouldn't Nissan sell an electric Altima? or BMW an electric 3 or 5?). They want the PR halo effect from making these cars, but they don't want to cannibalize their other sales. Tesla is fighting against a bunch of people that have their hands tied behind their backs, basically. So GM is a one-legged company in an ass-kicking contest.

http://www.teslamotors.com/forum/forums/tesla-announces-free-data-connectivity-and-internet-radio-four-years

It might disappear if it were legal. The guy lives in a bubble of "do goodness", and needs an outlet. When things are legal, they are no longer a naughty outlet. The dog however is not consenting and it's just animal cruelty at that point -- animal cruelty cannot be legalized. Teen binge drinking is probably worse when it's illegal. At least, I remember my Australian cousins being more responsible around alcohol than I was at age 18. People it seems get a thrill out of breaking rules.

Back when I bought my Tesla, the fastest charge time for gaining 50% charge was 30 minutes. Today, they've got it down to 20 minutes. Forget 50% in 20 minutes, they aim to eventually hit 100% charge in just 10 minutes. http://www.technologyreview.com/news/516876/forget-battery-swapping-tesla-aims-to-charge-electric-cars-in-five-minutes/ At that point, you'll be spending an extra 4 minutes charging (vs pumping gas) on those long road trips out of town. The rest of the year, you'll never pull over to charge (it charges at night while you sleep). Compare that to having to go to the gas station every week -- you won't be able to rationalize that weekly hassle against the 4 minute savings you achieve pumping gas on long road trips. When will BMW build their gigafactory? Or will they (and the rest of the automakers) purchase battery packs from Tesla? Will this be the last gigafactory that Tesla builds? There is a good reason why it would make more sense to purchase the battery packs from Tesla: Straubel says Tesla has been able to rapidly improve charging because it designs and builds all of the key components itself, including the chargers, the electronics for monitoring the battery pack, and a cooling system for the battery. They’re all optimized to work together in a way that’s not easy for systems built to accommodate many different models of electric vehicles. One challenge of fast charging is that delivering power to a battery very rapidly can cause it to overheat. To avoid damaging the battery, the outside charger needs to communicate with the electronics that monitor the state of the batteries, including their voltage and temperature, and quickly adjust charging rates accordingly. “To do that kind of charging, everything has to be designed and working in perfect synchrony,” Straubel says. Achieving five-minute charges will require not only further improving the charging system, but also improving the interface with the electrical grid. As it is, only some places on the grid can handle 120-kilowatt charging. Drawing large amounts of power from the grid also incurs demand charges from the utility, increasing the cost of the system. But Straubel says that Tesla plans to get around these problems by equipping supercharging stations with solar panels and batteries. Storing solar power in batteries in the charging station could also be helpful to operators of the power grid (see “Wind Turbines, Battery Included, Can Keep Power Supplies Stable”). They could provide utilities a way to moderate fluctuations on the grid, something that’s becoming more important as more intermittent sources of power, such as solar and wind, are added. Tesla plans to test such a system soon in California. It could charge utilities for this service, which, Straubel says, could help offset the cost of the stations.

No, I wanted a car that goes to 60 MPH in 4.2 seconds. I also wanted an electric car. i3 is a hybrid. http://www.technologyreview.com/view/517936/why-bmws-i3-electric-car-is-really-a-plug-in-hybrid/

You could go with BYD. Their receptionist is in China. I tried calling their only US listed number (in LA) but they only had an answering machine. So I left a message and they never called me back. Whereas Tesla came out to my house and fixed an issue with my glove box latch -- for no charge! I wonder if BYD would do that.

GM vehicles have power windows that catch fire: http://online.wsj.com/articles/gm-issues-third-recall-for-suvs-that-can-catch-fire-1407506304?mod=WSJ_hp_LEFTWhatsNewsCollection Auto Maker Tells Customers to Park Vehicles Outside Until Window Switch Repaired