Liberty

Why the raised eyebrow, Gio? Did I miss something? ???

The comparison in the article that was linked would be. You wake up one morning and realize that Toyota stopped selling Corollas so you can price the Civic at $500,000 and people have to pay (or they die). At the same time the Civic is still being sold for $10,000 or less in every other country because the governments of those countries said price it for 10,000 or we will let our companies copy your design. So you gouge the only people you can which happen to be the citizens of your own country. Finally there are people in your own country who will defend these actions citing capitalism/efficient markets and other such crap. Im not against the companies making profits on life saving drugs. They should make money and they should make a lot of since they are saving lives. There is however a difference between making money and robbing the helpless. If you think price increases from $1->$13.50->$750, 500->10,800, $20->$1850 are just companies fixing mispricing I have a bridge to sell you. I was talking about the Marathon drugs. There were competing drugs and they raised prices to that level. I'm less familiar with the other drugs. Having a monopoly certainly brings a lot more power, and that should be balanced by another force (regulator in this case). I also said that I thought non-discretionary drugs shouldn't be covered directly by people, so everyone who needs them should get them. In a lot of these discussions there's an undercurrent that "expensive = wrong", and I think that's oversimplifying it. If you save someone's life, how much is that worth? If you avoid hundreds of thousands of dollars in hospital/doctor costs with a drug, how much is that worth? Can you price for some of that value, or should all the value of your work accrue to others? If you are doing R&D into rare diseases (with few patients to spread the cost over) and most of your research leads nowhere, should you be able to price the winners so they help pay for the losers or should they be priced based on the COGS of the pills themselves without taking into account overall R&D required and risk taken to get there? Also, when the price of something goes up a lot, people anchor on the lower price, but if the price had always been the higher one from the start, would that make it ok? I'm sure there are tons of expensive drugs and procedures that started expensive and we're not reading about in the paper because there wasn't a price change. Heck, if they start super-expensive and reduce prices a bit every year, maybe they'd get a positive article written even if the cumulative cost ends up being higher for the same benefit as some of the maligned drugs. I'm sure there are abuses, though, and they should be stopped. I'm just not sure what's a good system to do that that doesn't have unforeseen consequences. I'm sure we can improve on how things are, but I get a feeling that a lot of what is in the media is there more for shock value than to elucidate what the real ins and outs of the situation are. I tend to care more about how effective the system is in aggregate. When you optimize for edge cases, you sometimes cause more damage by making less effective the part of the system that covers 99% of people. That's why I like having the safety net to catch edge cases (non-discretionary drugs reimbursed) rather than try to go at it from the other end and control prices with a heavy hand. If we look at things as a whole, some drugs go up in prices, and others that are worth billions annually in revenue go generic and become much cheaper. On the net is the system effective? I often think that the FDA is too conservative and that they over-emphasize avoiding sins of commission over sins of omission (which also raises prices) simply because those are more visible and career threatening despite having just as big an impact on people, but that's a different debate... I'm just worried that the risk-reward equation for researching drugs for rare diseases becomes very different if you use a heavy hand to keep a lid on prices. A lot might never be developed, and the successful ones probably cross-subsidize a lot of the failed ones (and before someone says that VRX doesn't do that kind of research, remember that when they buy an asset from a small biotech, if you follow the money, it still goes to those who do R&D and finances the next pipeline round). Don't get me wrong. I know there's a crapload of inefficiency in the healthcare system and that makes prices higher for everyone. I just think we should be careful about getting a Robin Hood tunnel vision on certain things and not taking into account unforeseen consequences, and that if we want to make a difference, there are billions and billions of inefficiencies (too much bureaucracy, inefficient paper-based systems, not allowing nurses to do more basic procedures without doctors, not cutting down on unnecessary procedures, not favoring disease prevention, etc) that could be worked on without much downside and these could pay thousands of times over for all the rare-diseases drugs out there.

For what that's worth: http://www.wsj.com/articles/apple-speeds-up-electric-car-work-1442857105

I think the selloff in VRX is way overdone and basically based on media perception more than anything else. The trying-to-save-their-skins-so-ready-to-do-anything management at the old Allergan claimed that Valeant was only growing based on pricing (based on bad data and cherry picking) and that obviously partly stuck, as well as some of the stories about things like the Marathon deal, but VRX isn't some biotech relying on a few super expensive products that they need to raise prices on. It takes some price when it can like everybody else, and sometimes they'll do opportunistic deals for mispriced drugs (but they don't have to do those), but I don't feel they're particularly vulnerable here. Management was recently discussing this: I don't remember if they discussed it there too or somewhere else, but basically I recall Pearson saying that Marathon told them that the drugs were mispriced, and that they couldn't raise prices themselves for some reason (I don't remember, some conflict with a more important part of their business maybe?). I also recall something about those drugs being more effective than competing drugs despite being priced way lower, so what Valeant did is basically raise price (they hired consultants who specialize in that to price it, they didn't price it themselves) to the existing market price set by others and sales didn't go down. If they had overpriced them, sales would have gone down as other competing drugs would've been substituted, no? It's like you're Honda and one day you wake up and realize you're selling your Civic for $10k while Toyota is selling its Corolla for $20k, so you match their price, and the headlines all read: "Honda price gouging, doubles price of car". It's always a sensitive conversation when it's about people's health. I think the obvious solution is to have non-discretionary drugs be covered either by insurance or by some form of government insurance. If you want a minor cosmetic procedure, that's another story. But life-saving drugs should be covered. Otherwise any price is always too high for some people, and low prices are often too low for a vibrant drug discovery ecosystem. The debate about prices is hard because prices can always be lower until they're zero. But lower prices, especially for drugs that cover rare diseases where there's not a lot of competing drugs and not a lot of patients (so no economies of scale -- can't spread cost of drug over many patients so high cost per dose -- and not many alternatives for patients), will sometimes just lead to drugs not being developed in the first place, or for small biotechs not to be acquired by bigger players who can commercialize a drug (VRX's favorite approach -- those who say they don't do R&D forget that they buy a lot of R&D, they just reduce uncertainty). These sins of omission - a drug never being created - are less visible, but they are just as bad as people not getting a drug because it's too expensive. So you're not really helping people if the drugs don't get made... You can legislate low prices today, and that'll be great for a few years as we run through existing stuff and late pipeline, but that's short-sighted and probably more people will suffer and die in the long-term than with more market-set prices. In other words, allocating capital to drugs is probably better done by some form of market mechanism than by legislation. But then once the drugs are made, the non-discretionary ones should be covered so that those who need them get them.

New piece: http://www.inc.com/magazine/201510/kimberly-weisul/the-longest-game.html

Some worried that the iOS 8 launch bug would turn off many from updating quickly. Looks like that's not the case: "Apple also announced the fastest iOS adoption ever, with more than 50 percent of devices already using iOS 9."

You'll find some discussion about it here: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/ghc-graham-holdings/

I think that's probably right, and that's certainly my favored explanation. But I think the supply issue is also possible, I just don't know what kind of issues they could be facing there, at that scale. Maybe they would have stretched it a bit to last year but were planning to transition this year and couldn't, I don't know. They also wanted to do more with sapphire apparently but couldn't get the supply up (GT Advanced screwed up). They're also constantly waiting on Intel for new Macs because Intel can't deliver on its promised timetables; maybe flash suppliers are also behind on their promises... Wouldn't be unheard of.

I find it puzzling as well. On one hand, it could be just to push some people up a size and make more money, but it also causes enough problems to Apple that there's a theory that makes some sense: They could be supply constrained. They sell so many devices, growing so fast, that's going from 16 to 32gb on their base device is a big deal for the worldwide flash production supply chain, and they might not be able to cope with that just yet. A popular app developer (David Smith) recently pulled some analytics from his apps and estimates that about 43% (IIRC) of iPhone users have the base model. So doubling the flash requirements for 43% of iPhones is a lot of extra memory... (though they doubled the other tiers, so maybe that's about money too; start by doubling more profitable tiers and later they'll double the lowest tier) Thankfully, the new technologies in iOS 9 will help a bit with that (App Thinning, on demand resources, etc). Light users who just check facebook and take a few photos once in a while are probably fine with 16gb, but it's still too low IMO. I think 32gb should be a minimum now.

The 's' nomenclature is useful because to most regular folks, for something to be new it has to look different. We saw this with the 5c; the externals got all the attention despite the fact it was mostly a repackaged 5. Calling it 6s rather than 7 makes people easily understand that it's an improved 6. If they called it 7 we'd never get to the end of the bitching...

It is definitely a very substantial S upgrade, and that mitigates the effect this year, but I don't think components have to stay exactly the same for it to make a difference. Just keeping them pretty similar must help with manufacturing (fewer variables that can go wrong). And even on the 5s I'm pretty sure that they tweaked all kinds of things that might not necessarily have been announced (I know that the case was more scratch resistant, for example, and I seem to remember from photos that the circuit board layout was tweaked).

Also, comparing supply at launch of the 6 to the 6s isn't an apple to apple (heh) comparison. The changes going from the 5s to the 6 were much bigger than going from the 6 to the 6s (mostly internal changes). The supply chain is a well-oiled machine for many of the parts by now, with likely good yields and volumes. It's also possible that there isn't as much pent up demand because many people wanted bigger screens, but other things can compensate for that, such as the LTE rollout in China, Samsung not having much that excites people these days, and the fact that even with the 6 selling very well, only a small portion of the installed base has upgraded (most people who had 5s had 2-year contracts) and there are many Android switchers too (there's a theory that I like that says that Apple does better on people's second smartphone, because for the second one, people know how valuable a smartphone is and they're ready to pay up a bit, while on the first, people imagine that Android and Apple are equivalent...). Also: "@9to5mac: iOS 9 passes 21% adoption, one ups last year’s Android 5.0 Lollipop in just 48 hours"

https://video-api-secure.wsj.com/api-video/player/iframe.html?guid=0DF26270-8D40-40F0-B9F3-61893BEFBCFA&playerid=twittercard Had not seen that one before. It's from the All Things D 7 conference.

It's possible. It was just one of many scenarios. But assuming that the industry as a whole will be rational and will just turn off the tap seems problematic to me. There's a prisoner's dilemma situation going on, and if anything, the coordination in the industry seems to be going down among the big national players, not up. But your scenario is also certainly plausible. But maybe it all shakes out in a year or two, maybe it takes ten, who knows?

I don't think the only choices are PWE or XBI...

How do you calculate the probabilities of that? Feels a bit like Commodity Price Roulette to me. I agree - that is what makes valuing commodity-based businesses tough. But if oil can fall so easily from $100 to $45, why can't it rise back to $75+ in 12 months? Sure. And why do big moves in either direction need to happen any time soon? Prices stayed low for years, if not decades, many times in the past. I think for any commodity, relatively low prices/margins are more stable than high prices/margins (especially true if you adjust for inflation). As someone else has said, if you want to place bets and speculate on price moves, there are options and future markets for that. If you buy stock in a business, I think you should primarily care about the economics of that particular business and what is under the control of that business' management. One scenario that is just as plausible as any other to me (I have no idea what will happen) is that oil prices stay low for a few years, just long enough for mass-market electric cars to come out (200+ miles range for prices in the $20-30K range) and we enter a new era of demand destruction (it'll ramp up over many years, but it'll have an impact at the margin) just a decade after fracking and directional drilling technology has made it quick and easy to tap more wells and flood the market. Food for thoughts.

How do you calculate the probabilities of that? Feels a bit like Commodity Price Roulette to me.

Thoughts this was interesting: http://scottgrannis.blogspot.ca/2015/09/job-openings-surge.html

Some brokers sell your order data to HFT firms for them to execute. They can sometimes see your orders before they hit the public markets, or they sniff it in one exchange and race you to other exchanges and move the price on you before there's a fill. Or they use weird order types that were never meant to be executed (get cancelled) to sniff out the price and raise it on you. It's not that simple. BTW, One broker that has publicly said that it isn't selling any customer data to HFTs is Interactive Brokers.

Toyota Selects Sirius XM Connected Vehicle Services to Provide Next Generation Connected Services for Toyota and Lexus Vehicles http://www.prnewswire.com/news-releases/toyota-selects-sirius-xm-connected-vehicle-services-to-provide-next-generation-connected-services-for-toyota-and-lexus-vehicles-300144529.html

Andrew Ross Sorkin:

Interesting panel on media industry, which includes CHTR chairman: http://youtu.be/2uDFvorBQ30

Looks like many of the used, refurbished iPhones might be ending up in China: http://daringfireball.net/linked/2015/09/16/subscription-iphones

I want to know how this solves our butt dialing issue. It's becoming an epidemic. Guessing this is a reference I'm not familiar with :)

Hour long interview: Short version: