ERICOPOLY

All 2016 now.

D) A couple of years ago, a settlement this large would have impaired a lower capital base during a time when earnings were struggling under a higher expense load, and so a 15% drop would be more likely -- especially since it would mean something dilutive like selling more common stock (which last happened in December 2011 despite the bank claiming they didn't need more money). Eric, if you don't mind me asking, what percentage of your portfolio is in BAC now? The taxable account has each and every one of my BAC shares guarded by puts with $15 strike. However the upside is greater than 100% exposure. The RothIRA -- I have no idea if there are any BAC shares in there. You'd have to ask Mohnish and Sanjeev/Alnesh.

D) A couple of years ago, a settlement this large would have impaired a lower capital base during a time when earnings were struggling under a higher expense load, and so a 15% drop would be more likely -- especially since it would mean something dilutive like selling more common stock (which last happened in December 2011 despite the bank claiming they didn't need more money).

$17 billion will ensure that the government gets Oct, Nov, and Dec pre-tax earnings too.

Another question: Why did they reserve such a small amount in Q1 when they knew they would be offering north of $12b in a settlement? They made the leap from thinking it would only be $2.5b to then offering $12b just two months later? It sounds like lying to me.

I'm curious who has it worse. BofA shareholders or the Fannie/Freddie shareholders. It seems in both cases the government has nationalized all the earnings.

$12 billion. $2.5 billion already reserved. So there is a cost of $9.5 billion left. It will eat up roughly April, May, June, July, August pre-tax earnings. So by September, we can start to actually keep some earnings... I mean, start to establish a reserve for the foreclosure abuses.

I still manage the taxable portfolio. However it feels great to have a significant sum (all of the Roth IRAs) tucked away under somebody else's eye. We are busy gardening. Kids are finishing the school year. Going houseboating on Lake Powell next week. Pretty busy actually, although everyone else does this in addition to a job -- so in that respect it's hard to call this "busy".

Regarding a completely free market: Under such a system are the owners personally liable for the errors/debts of the corporation? So no more legal protection behind the corporate veil? I think some regulations are meant to deter the kinds of behaviors that limited liability would tend to encourage. So I'm wondering... to get rid of the regulations, you also need to get rid of the corporate legal protections. Then you have a free market. But under such a system, things like oil drilling would be too risky without the corporate legal protections. So certain things simply would no longer get done. So could such a system even exist successfully?

You also need to eliminate the "limited liability" legal protections granted to corporate owners (by government) before you can possibly have a free market. So I'm skeptical of the possibility of a free market. You would need less offshore drilling regulation, for example, if the investors were personally responsible for cleaning up every drop of oil spilled. Instead, they are only liable for the equity they have invested in the company. This invites regulation upon them -- because if their financial liability is limited, then they will cut corners if they can. That's why there are people who feel the need to heavily regulate them. Sure, regulations have costs. They pay these costs instead of paying for the full price of their mistakes. That's the present system. I guess we have this system because nobody would go out there and drill otherwise without the limited liability protection.

That's not entirely true. Florida does not have non recourse loans. They are full recourse in Florida. Florida had one of the biggest housing disasters.

Mohnish should have chosen 'OBAMACAR' for his plate.

Tesla CTO says they are breaking ground on Giga factory in next few weeks: https://www.greentechmedia.com/articles/read/Tesla-CTO-on-Energy-Storage-We-Should-All-Be-Thinking-Bigger The CTO spoke of attacking the battery's cost with the Giga factory by "doubling the worldwide capacity in a single factory and reinventing the supply chain." He said that Tesla would be "breaking ground in the next few weeks." A total of 35 gigawatt-hours of cell production from the new plant will be devoted to meeting the needs of the Fremont plant, and 15 gigawatt-hours will be devoted to stationary battery packs. Straubel said that Tesla was "bullish" about the California energy storage mandate. Straubel also said he was bullish that stationary energy storage "can scale faster than automotive."

1) On my laptop I found that I'm banned if I use Google Chrome, but not when it's in "incognito" mode. It doesn't ban my Firefox browser on the same computer. So it's not strictly an IP based ban. I've done the clear cache thing with Chrome, which I think worked for a bit but then it came back again. So I just go to incognito if I have to 2) On my iPhone I am banned. I deleted the web data on the phone but it doesn't help. I find that I can still read the site if I go to "private browsing". Oh well, at least that works. 3) In my Tesla I am banned and I don't know how to work around that. I can't find anyway to clear the cache from the Tesla browser, and it doesn't have a "private browsing" or "incognito" mode. I'm not sure how to get the IP address for the Tesla. Everything else is working well enough using private or incognito.

actually most people on this forum seem to have shorter term strategies. i guess trading is the new holding. I've noticed that too, but berkshire (and Fairfax) is about holding good businesses long term, I wonder how the board members can seem to agree with the logic but don't follow through in their actions.... Fairfax recently dumped their good businesses WFC, JNJ, etc... So I'm not sure they are about holding good businesses long term. Not that it matters, as long as their trading is working for them, which it has so far over their history. Or perhaps you meant people hold FFH the stock for a long term... which is just a stub for the trading that goes on underneath the cover. That too is okay. Buy low and sell high -- it's trading. I think a self affirmation (ala Stuart Smalley) is in order -- it is okay to trade. It's okay. You'll still be a good person.

Not sure where the comparisons to Buffett come from? Where does Buffett come in? He is an example of an investor with a very low cost basis. Applying your argument, he would not be aligned with shareholder interests if the following two things happened: 1) he sold 50% of his stake (he could therefore afford to lose the other half) 2) the stock dropped 50% (he wouldn't care if it went back up because his cost basis is so low) I'm simply pointing out to you how retarded that argument is. Sometimes an example is necessary.

So if Buffett had 50% of his wealth outside of Berkshire, then he wouldn't care if BRK dropped 50%. He only cares because his ownership is 99%, not 50%. That's the key difference between him and Eddie that align them with shareholders? This ownership thing can be taken too far (for example, see if WorldCom shareholders were well served by Bernie Ebbers' stake. A person with too large of a stake might cover things up when things are getting bad, hide it from fellow shareholders to buy themselves more time.). Eddie has plenty of incentive here. I don't think this argument has merit -- his cost basis in SHLD is irrelevant to his forward returns, and growing his money is what a billionaire does for sport. You don't like losing in sports even if you can afford to retire from it. Lampert likes to compound his money, not see it go down. He already has more than a billion net worth -- for many many years now he could afford to lose 1/2 of his money, but I think it's the last thing he wants to do.

They will probably produce cheaply made electric cars. GM may even produce a cheaply-made electric rolling sarcophagus :) Tesla will probably still generate top-rated cars -- no promise that they will be cheaply-made.

You are saying that because Eddie has made a lot of money, he doesn't mind losing 50% of what he has left in it. Similarly, Berkshire investors today need to be very cautious because a 50% decline from here wouldn't worry Buffett one bit because he's already made many fortunes from BRK.

There is something wrong with the company culture at GM. How good does this look? The company urged employees not to say ‘this is a lawsuit waiting to happen.’ GM suggested engineers avoid ‘judgment words’ like ‘death trap,’ ‘grenade-like’ Read more: http://www.politico.com/story/2014/05/gm-death-trap-grenademaker-106787.html#ixzz32VPcAQtW GM told engineers to avoid using dozens of words when communicating about vehicle problems that could potentially lead to recalls, including everything from “safety” to “Kevorkianesque.” Here is an endearing term for their cars: “rolling sarcophagus (tomb or coffin),” I detect an air of frustration that the engineers feel like management won't let them fix the problems. That's why they have these cynical names for their own product. One theory is that they want to fix things, but the upper management won't let them (likely for fear of costs and publicity).

I remember when the ex-CEO of GM commented that Tesla would find out what it's like to produce a car. It's interesting that Tesla found out how to make the highest rated one on their first time trying. Whereas here GM is, nearly 100 years later, and they're making trucks that catch on fire when idling their engines: http://www.freeinews.com/automotive-2/gm-recalls-trucks-for-fire-risks-from-excessive-idling-one-2014-silverado-owner-tells-a-different-story Tesla, no matter howgood they are will some day or another have a recall. It's a not a question of if it will happen but a when it will happen. Keep in mind that the GM recall for idling engines only required a software fix. Tesla does software updates all the time, without needing to recall the cars.

I remember when the ex-CEO of GM commented that Tesla would find out what it's like to produce a car. It's interesting that Tesla found out how to make the highest rated one on their first time trying. Whereas here GM is, nearly 100 years later, and they're making trucks that catch on fire when idling their engines: http://www.freeinews.com/automotive-2/gm-recalls-trucks-for-fire-risks-from-excessive-idling-one-2014-silverado-owner-tells-a-different-story

Does anyone know if the renovated stores are making money? At the end of the day, all the stores will either be closed or renovated. So you get left holding the renovated bag. Might be interesting to find out.

They have renovated some of the Sears stores, and they have fewer Sears stores overall compared to last year. Did they break out the same store metrics for the renovated stores? That seems to be the interesting metric -- are they able to successfully run a retailer when they actually make a concerted effort to do so.

Rent is paid with after-tax dollars. The higher your marginal tax rate, the better it looks to buy. You earn tax-free imputed income by occupying your owned home. The calculator doesn't recognize this. In other words, owning a rental (as a landlord) is not as good of an investment as owning your own home. The rent on the former is taxed, and the imputed rent on the latter is tax-free.