ERICOPOLY

I'll stop you right there... I am a passive investor. (I buy shares in companies and also allocate dividends) Buffett is a passive investor. (Berkshire buys companies with management intact and just allocates the dividends) So if I work "like Buffett"... then... what will happen?

You are moving it from places that generate less return to places that generate good return. You are a steward for society's capital -- you are good at it, so you tend to manage ever-higher amounts of society's capital. Your selling depresses the stocks of low-return companies (unproductive assets) -- this enables a low price profit opportunity where an activist investor finds an opportunity to unlock the value of those assets (liquidation, spinoffs, management changes, etc...). But you make that opportunity available to him by encouraging low prices on unproductive assets.

Good for society? Certainly. 1) I left my previous salaried job. This means that another worker was hired in my place and this took stress off of government services who provide for the unemployed. 2) Now I'm spending my savings instead of increasing it. That stimulates the economy and provides jobs. So you see, I'm a job creator.

Camp was also proposing a 25% corporate tax rate. You see, banks are one of the few companies that actually pay higher than 25%. So they don't want to lower tax rates on banks, because that would lower tax revenue. So these politicians want to "lower" the tax rate without lowering revenues. So they have to throw the banks under the bus, and nobody is going to stand up for the banks. So Republicans will be heroes for "lowering" the tax rate, even though they'll just be playing politics and not actually lowering tax revenues. Overall it's expected to be revenue neutral -- so taxing the banks is part of that.

No country is going to openly admit to having a hole in their military radar where a large passenger plane can pass through. Saddam for example never wanted the Iranians to believe that they didn't have a chemical weapons stockpile. So they're all going to tell you that their military radars didn't detect anything and that it would be impossible for a plane to fly over their territory undetected. Duh. :P

I also read that the oxygen delivered to the passengers is partially supplied by oxygen generators. The generator works by compressing oxygen in the outside air. But these things on a commercial flight would never be designed for the lack of oxygen at that altitude, right? So could they really squeeze much oxygen from the air at 45,000 ft?

So how long until the oxygen supply to the masks runs out for the crew and passengers? Is there enough oxygen in the atmosphere to support human life at 45,000 ft? I read that the oxygen supply to the masks last longer in the cockpit -- can't verify that but it could be true. Putting that together, I wonder if it's possible to fly around at 45,000 ft until the oxygen runs out and everyone dies (except the pilot).

Question for Prem: Are you still writing catastrophe insurance business in the United States? Buffett says that Berkshire is writing almost none due to pricing.

"This is your captain speaking. Please remain calm. We are being diverted due to severe weather. We expect to resume our original course once we have been given proper clearance". Or whatever bullshit story. Why would anyone panic?

What do the many "academic studies" say about picking stocks, and actively managed funds? Do they conclude that we should try? :)

That occurred to me. Sort of like real-time self-experimentation on investor psychology.

Alright... wtf? Missing nuclear materials from former Soviet empire... Missing plane that has a range of 8,000 miles... I don't like this. It doesn't make me feel good. Maybe it crashed in the sea, maybe it landed on a makeshift airport bulldozed in a remote area where it gets refueled. Maybe they can highjack a second flight bound for the real target destination, spoof the transponder from the second flight on the original hijacked planes' systems (carrying the payload) and fly the second hijacked planes' flight plan all the way to the target city. Lex Luther stuff, sure, but I don't like how this looks so far. Yet another hysterical post from me >:(

Yep, I think you summarized it well. I am expecting income from dividends and expiring volatility that I have sold. Instead, of trying to live on that income, I'm spending it all on hedges. This way, I utilize the full value of my income rather than letting a large percentage of it get confiscated by the government taxation authorities. I want unrealized deferred capital gains, not taxable income.

I don't manage any of the assets in my Roth IRA anymore (as of January). I am leaving it for others to manage. I have another 18.5 years until those Roth IRA assets are tax-free. So, my intent focus is on making it another 18.5 years living solely off of my taxable funds. I'm pretty sure it won't be an issue -- I can sustain my current rate of spend even if I don't make another dollar in returns again (I just need to match inflation and not lose money).

Here's what might happen... China property market collapses at a time when they try to transition to a domestic consumption driven economy. But don't worry about that... it's not like the Chinese have their household wealth tied up in the property market :-\

That was good. First, the Western world put them on an unsustainable growth path fueled by our debt bubble in the US and elsewhere that boosted unsustainable consumption of Chinese exports. Second, when that blew up China has tried to maintain that growth trajectory using unsustainable domestic credit growth rate. So what happens next?

Why do they need $14 Trillion credit expansion if they have so much cash? Something doesn't make sense. Are they using cash to build their economy, or credit? Which one is it?

I just feel like taking away the largest source of stimulus from the world (China's ballooning private debt) is going to have a destimulating effect on the world economy. That won't improve the rate of inflation in Europe. Then we'll see renewed headlines about Europe. Anyways, I sound like a "born again" zero hedge author these days. The shear magnitude of the stimulus (from China) about to be removed from the world economy is what is impressing me. There appears to be no other potential source of stimulus on that scale that can replace it. I can see the "princelings" in China selling their property in Sydney, London, etc... the 100m Chinese tourists are staying home... etc... Just think of all those economies that have benefitted from China's expansion. They will have layoffs, their people will stop buying BMWs and other exports... it is not going to be the kind of "boost" that has been benefitting Europe over the past few years.

The CASS report showed that China’s net assets exceeded RMB 300 trillion ($49.3 trillion) in 2011, almost three times China’s total indebtedness. Is pre-crash real estate value included in that net asset figure? And 2011? Ah, the good ole' days. If we go back to 2008 the numbers look even better. Before the debt expansion.

quoting: China is restructuring from an investment-driven economy to a consumption-driven economy It's a debt driven economy, isn't it? $14T expansion in private debt since 2008. How are they going to restructure from a $14T expansion in debt driven economy to one that isn't driven by expanding debt? Merely slowing the velocity of credit expansion ought to hurt the growth rate -- right? quoting: A China “hard landing” has been predicted by notable analysts for three years, but we have not seen the signs of a disruptive undertaking here. Nevertheless, let’s look at the facts and let the facts speak for themselves. Again, it's the massive expansion of debt which has so far held up the growth rate. You know, that article doesn't even address the topic of the debt expansion. Not even mentioned.

Very impressive. Okay, I have no idea if the following is true given the source but... Since Lehman Brothers collapsed in 2008, the level of private domestic credit in China has risen from $9 trillion to an astounding $23 trillion. That is an increase of $14 trillion in just a little bit more than 5 years. In fact, it is being projected that Chinese companies will pay out the equivalent of approximately a trillion dollars in interest payments this year alone. That is more than twice the amount that the U.S. government will pay in interest in 2014. http://www.zerohedge.com/news/2014-01-21/guest-post-23-trillion-credit-bubble-china-starting-collapse-%E2%80%93-what-next I don't know, maybe those high interest payment are on unproductive assets (like for example empty real estate developments). There must be some source behind the low ROE.

I know, but there is some legitimate measurement of why he hasn't been proven correct yet: quoting his letter: . Since 2009, the Chinese banks have grown by the equivalent of the entire U.S. banking system or 15% of world GDP. Since 2009, the easing by the Federal Reserve combined with the explosive growth in China, backed by higher interest rates, has resulted in huge inflows (‘‘hot money’’) into China. The near unanimous view that the renminbi would strengthen has resulted in a massive carry trade where speculators have borrowed at low rates across the world and invested in China, almost always backed by real estate. The shadow banking system in China – i.e., assets not on the books of the major Chinese banks – is estimated by Bank of America Merrill Lynch to be approximately $4.7 trillion or 51% of Chinese GDP. Oddly enough, prior to the credit crisis, the U.S. had $4.5 trillion in asset-backed securities outstanding or approximately 31% of U.S. GDP. You know what happened then. When the flows reverse in China, watch out! It's rather staggering. The very thing that has thus far worked against him is actually making the final chapter a doozy. However, I don't know how many chapters so I hedge with calls. I don't want to be like Kyle Bass and his clan that short JGBs and keep getting stymied for years and years.

quoting: Although Porsche sold only 155,000 cars last year, dwarfed by the VW brand's sales of 4.7 million cars, the sports-car maker reported a 173% surge in operating profit to €2.6 billion, making nearly as high a profit contribution to the group as the VW brand passenger-car division. Profit at the VW brand unit fell 21% to €2.9 billion. http://online.wsj.com/news/articles/SB10001424052702304914904579436621769480200?mod=WSJ_LatestHeadlines&mg=reno64-wsj

Here's an analogy. Two clydesdales are in a harness pulling a cart up a hill. A veterinarian has been blood doping them and giving them steroids, etc.... The cart is barely moving. One of the horses is beginning to look tired. Do you want to be walking behind the cart?

Don't you pay capital gains when you eventually sell the depressed stock for gain? Well, take right now for example. I have BAC shares that have a big gain -- but I'm not selling them. Instead, I hedged. The cost of the puts is minor relative to the earnings power of the shares. Also, the capital gains are forgiven when the marriage community is dissolved (if either I die or my wife does). So it's sort of like a life insurance policy in a way -- the family gets relieved of a big tax liability. Call it a "death benefit".