Category: Public Policy

Best of the Aleph Blog, Part 23

Best of the Aleph Blog, Part 23

Posted on by David Merkel

Before I start this evening, I would like to explain some of the reasons for these “Best of the Aleph Blog” articles. ?I write these no closer than one year after an article was written, so that I can have a more dispassionate assessment of how good they were. ?I write these for the following reasons:

  • Some people want a quick introduction to the way I think.
  • Some publishers on the web want additional copy, and I let them republish some of my best pieces.
  • One day I may bundle a bunch of them together, rewrite them to improve clarity, and integrate them to create a set of books on different topics.
  • One of my editors at RealMoney once shared with me that I was one of the few authors there whose articles got re-read, or read after a significant time had passed. ?This is meant to be mostly “timeless” stuff.
  • New readers might be interested in older stuff.
  • I enjoy re-reading my older pieces, and sometimes it stimulates updates, and new ideas.

Anyway, onto this issue of the “Best of the Aleph Blog.” ?These articles appeared between August 2012 and October 2012:

On Credit Scores

Why credit scores are important; make sure you guard yours.

Retail Investors and the Stock Market

On the pathologies of being an amateur investor when there are those who will take advantage of you, and you might sabotage yourself as well.

On the Poway School District

Goes through the details of how a school district outside San Diego mortgaged the future of the next generation who will live there, if any will live there.

Using Investment Advice, Part I

Using Investment Advice, Part II

Using Investment Advice, Part III

Using Investment Advice, Part IV

A series of articles inspired by what I wrote at RealMoney, encouraging people to be careful about listening to advice in the media on stocks, including those recommended by Cramer.

The Future Belongs to Those with Patience

On why patience and discipline are required for good investing.

What Caused the Crisis?

A retrospective, if somewhat controversial.

On the International Business Machines Industrial Average

Replace the DJIA with a new cap-weighted index of the 30 largest capitalization stocks.

How Warren Buffett is Different from Most Investors, Part 1

How Warren Buffett is Different from Most Investors, Part 2

You have to understand Buffett the businessman to understand Buffett the investor.

Volatility Analogy

How an interview I messed up led to an interesting way to explain volatility.

Spot the Gerrymander

Eventually we need to eliminate gerrymandering — hey, maybe we can do that at the future Constitutional Convention.

Reforming Public School Testing

Creating exams where you can’t study for the test; you can only study.

Carrying Capacity

Governments imagine that they can shape outcomes, and in the short-run, they can.? In the long-run, the real productivity of the economy matters, and only those that can make it without government help will make it.? Whatever government policy may try to achieve, eventually the economy reverts to what would happen naturally without incentives.? There is a natural carrying capacity for most activities, and efforts to change that usually fail.

Actuaries Versus Quants

On why Actuaries are much better than Quants

Neoclassical vs Austrian Economics

Applying math to economics has been a loser.? Who has a consistently good macroeconomic model?? No one that I know.? Estimates of future GDP growth and inflation are regularly wrong, and no one calls turning points well.

The Dilemma of Adding Yield

A quick summary of risk in bonds, and why additional yield is often not rewarded.

The Dilemma of Adding Yield, Redux

On working out the pricing between discount, premium, and par bonds.

Too Much Investment

Investment is a good thing, overinvestment is a bad thing.

Got Cash? (Part 2)

On Buffett and others carrying cash to give themselves flexibility.

Set it and Forget it

On what uneducated investors should do.

Forest Fires and Central Banking

Short piece pointing out that small crises are needed to prevent huge crises.

Match Assets and Liabilities

Total Return Versus Long Liabilities

Cash flow matching has often been sneered at as an investment policy. ?I explain why such a view is naive, not sophisticated, and definitely wrong.

The Rules, Part XXXIV

?Once something is used for hedging purposes, it becomes useless for predictive purposes.?

Why I LOVE Blogging

On the downsides of blogging, and why they aren’t so bad.

Higher Taxes, Inflation, Default (Choose One)

Coming to a country near you, and soon!

On the Virtue of Hard Questions for Young Analysts

How young analysts toughen up through hard competitions.

Dealing in Fractions of Sense

On how to reform High Frequency Trading

Yield is the Last Refuge of Scoundrels

Far from offering high price appreciation, it is far easier to cheat many people by offering a high yield, because average people look for ways to stretch their limited resources with a tight budget.

Book Review: Treasure Islands

Book Review: Treasure Islands

Posted on by David Merkel

9780230341722

Tax havens exist to lower taxes and regulations on corporations and wealthy individuals. ?But doing this involves significant complicated legal and accounting work. ?The average person could not benefit because the fixed costs are high. ?You need to have a lot of assets to benefit from tax havens.

So why do the wealthy governments of the world tolerate tax havens? ?Why don’t they “use NATO to blockade these places, and tell them to end their tax-avoidance-facilitation policies, or else.” ?Sadly, the wealthy have disproportionate power over politicians, and the majority of politicians are wealthy. ?They like the system as it is. ?You can make the tax code as progressive as you like; you will not end up taxing the intelligent wealthy much more.

This book confronts transfer pricing, where profits get shifted to low-tax countries by clever accountants. ?Very difficult to police.

The is an amusing section in the middle of the book about the City of London Corporation, which has unique rights in the UK. ?It is the home of most financial activity n London, and is mostly unaccountable to the UK.

In general, I believe that taxation should be the same regardless of the structure of the entity being taxed, its location, etc. ?To that end, I think that corporations should be taxed on their global income as expressed to its owners. ?Or, don’t tax corporations, but make all taxation like limited partnerships, and tax the individuals that own them.

There are other possible solutions. ?There can be limits on corporate structure. ?Israel limits subsidiaries such that the depth from the holding company cannot exceed two. ?There could be consolidation and/or non-recognition of ?subsidiaries in tax havens.

Additional Resources

Longreads article

Book website?(those reading at Amazon, come to Aleph Blog to get links)

Quibbles

The book makes its last chapter about how tax havens helped cause the financial crisis, but it makes a very weak case. ?Individuals and Banks overlevered themselves as asset prices rose, creating a bubble — not much different than the 1920s. ?Tax havens played little role, even if they aided securitization in a few ways.

The book argues for capital controls, but those controls often create incentives for greater corruption.

My main problem with the book is that it does not offer any workable solutions to the problems. ?My secondary problem is that the problem is not so much with the tax havens, which we could easily marginalize, but with the politicians, who do not do the hard work of seeing that taxation takes place, regardless of the corporate form or location.

Who would benefit from this book:?You have to be willing to endure complex arguments to benefit from this book.? If you want to, you can buy it here:?Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens.

Full disclosure: I borrowed it at my library.

If you enter Amazon through my site, and you buy anything, I get a small commission.? This is my main source of blog revenue.? I prefer this to a ?tip jar? because I want you to get something you want, rather than merely giving me a tip.? Book reviews take time, particularly with the reading, which most book reviewers don?t do in full, and I typically do. (When I don?t, I mention that I scanned the book.? Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.? Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.? Whether you buy at Amazon directly or enter via my site, your prices don?t change.

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Rest of the World

 

  • Malaysia Plane Traced in Inmarsat Engineer London Huddle?http://t.co/roKtJSY9WY?How they managed to figure out the area of the crash $$ $SPY?Mar 30, 2014
  • UK Pension Revolution Putting Long-Term Bonds at Risk?http://t.co/o8TNO4lgAn?Need 2 match liabs drives demand 4 long bonds, lowers yields $$?Mar 30, 2014
  • Putin Has Exposed NATO’s Weakness?http://t.co/xDs2X10AKg?US & NATO Europe willing to agree upon? What r they willing 2 risk? Be careful $$?Mar 30, 2014
  • China Said to Expand Property Survey Amid Oversupply Concern?http://t.co/m0VAkijXmi?Will b difficult 2 end overinvestment by fiat $$?Mar 30, 2014
  • Chinese Pigs Eating Soybeans Cut US Supply to 1965 Low?http://t.co/hLfrB2MXM1?Chinese demand 4 pork drives demand 4 US Soybeans $$?Mar 30, 2014
  • Lira Fate Tied to Real Assets as Hot Money Flees?http://t.co/GpdoGuymdO?In countries where inflation is a threat, invest in property $$?Mar 30, 2014
  • Business not ipso facto criminal: Tendency of presuming it guilty without proof is damaging India?s economy?http://t.co/HgpdxdNrbu?$$?Mar 30, 2014
  • Mr. Putin’s Revealing Speech?http://t.co/BTQ2IDbny5?Defender of Orthodox civilization as he sees it pushes back against encroahing NATO $$?Mar 30, 2014
  • Russian Forces on Border Stir Concern as Crimea Annexed?http://t.co/b7SLK8wTTH?Threats of more economic sanctions will not deter Putin $$?Mar 23, 2014
  • What the West Can Learn From Putin’s Other Neighbors?http://t.co/NB4aeGih9D?Don’t make promises that u won’t keep; Putin is not scared $$?Mar 22, 2014

 

Financial Sector

 

  • So what is today’s nonbank business model??http://t.co/awllKHMHK1?Legalized extortion done to ?protect consumers,? objective is political $$?Mar 30, 2014
  • Wall Street Banks Cut Out of Prized Commercial Mortgages?http://t.co/xImkJXAwC7?$MET $PRU originate commercial mortgages 2 fund own liabs $$?Mar 30, 2014
  • SEC Is Probing Dealings by Banks and Companies in Loan Securities?http://t.co/yseFiyZvFJ?Current CLO issuance drives loan issuance $$ $BKLN?Mar 30, 2014
  • Pimco Chases BlackRock in ETFs as Money Returns to Bonds?http://t.co/rL9Bm40rHm?Amazing how people follow anything w/positive momentum $$?Mar 30, 2014
  • And if banks start lending aggressively, it will b time to radically shrink asset maturities in bond portfolios, velocity will b rising $$?Mar 30, 2014
  • Banks Lending Like It?s 2007 Belied by $10T Hoard?http://t.co/Ef6yHiVNSu?But they aren’t lending heavy yet, if they do FOMC has 2tighten $$?Mar 30, 2014
  • Scandal-Hit British Banks Turn to ‘Weirdy Beardy’?http://t.co/XGv1Bt9af1?”Why do you exist?” “Who r u?” Pondering existence bugs bankers $$?Mar 30, 2014
  • Josh Rosner: The Wrong Remedy for Fannie and Freddie?http://t.co/ExIuZxRlyM?Better to wind them up & get Govt out of the Mtge mkts $$?Mar 30, 2014
  • Iowa?s Friendlier Watchdogs Lead Insurer Pack to Des Moines?http://t.co/UPug7MJA7I?Iowa DOI will regret embracing complexity, gtee funds2 $$?Mar 30, 2014

 

Market Impact

?

  • Which will win? $BRK.B or $IWM ? 3views:?http://t.co/P4rWOG283S?& http://t.co/c20Fbqh2b6 & http://t.co/QMIWqojPnB BRK will beat smallcaps $$?Mar 30, 2014
  • Americans Can?t Retire When Bill Gross Sees Repression?http://t.co/4hNi5jAH2U?Investments eventually reflect the underlying cash flows $$?Mar 30, 2014
  • Financial scars linger: 1/3 of investors wary of stocks?http://t.co/xbFcGeOykX?Have 2 wait 4 these people 2 come & put in the top $$ $SPY?Mar 30, 2014
  • 1999 Buffett: stocks can’t possibly meet public’s expectations. Internet? Notes how few got rich in auto &aviation?http://t.co/2FsC9vuvKe?$$?Mar 30, 2014
  • Declining Pension Benefits Leave Workers Uneasy?http://t.co/A5RmBueODe?Difficult 2 fund high benefits when interest rates r so low $$ $TLT?Mar 30, 2014
  • Google Traders See Opportunity in Confusion on New Shares?http://t.co/2bTfXy75ol?New nonvoting shares may allow 4 some arbitrage plays $$?Mar 30, 2014
  • Attention Suckers: Please Send Us Your Money?http://t.co/Mibp1EXWh3?@Ritholtz comments how the JOBS Act weakened investor protections $$?Mar 30, 2014

?

US Housing

 

  • High Prices Partly to Blame for Slow New Home Sales?http://t.co/rSHWH4Uzra?When markets near their peak, frequently volumes drop off $$ $LEN?Mar 30, 2014
  • Time might be ripe for boomers to sell their homes and move on?http://t.co/hzL9mMImDS?Sell them 2whom & @ what price? Lack move-up buyers $$?Mar 30, 2014
  • Finding a House That Won’t Destroy You?http://t.co/kJNQf3upos?Buy a house u can afford even under stressed conditions, reduce risk $$?Mar 30, 2014

 

US Politics, Policy & Economics

 

  • Florida?s Scott Travels on Corporate Tab as Lobbyists Tag Along?http://t.co/qhDVzIgXO1?Governors increasingly use corporate $$ 2fund trips?Mar 30, 2014
  • IRS Takes a Position on Bitcoin: It’s Property?http://t.co/aCbGKvWGRT?Thus any trading of bitcoins involves capital gains &losses $$ $BTCUSD?Mar 30, 2014
  • Google, EBay and the Roots of Collusion?http://t.co/Vc2SMUU5T5?Some don’t want to annoy companies that r complementary 2their biz goals $$?Mar 30, 2014
  • The Individual Mandate Goes Poof?http://t.co/PvjexmswaF?Barack Obama undoes what House GOP would like 2undo, just not permanently totally $$?Mar 30, 2014
  • Global Warming Will Not Cost the Earth, Leaked IPCC Report Admits?http://t.co/hziljg2Npp?Will b interesting 2c how gets spun by bothsides $$?Mar 30, 2014
  • Economists: Rising interest rates are the biggest threat to recovery?http://t.co/gPQ1c2ZHAQ?More evidence that rates will stay low $TLT $$?Mar 24, 2014
  • Kocherlakota: Don’t raise rates to head off possible crisis?http://t.co/yxAGSWGmGQ?There may come a time when you will have no choice $$?Mar 22, 2014

Other

 

  • Advice for a Happy Life by Charles Murray?http://t.co/7y51RDeGy3?Marry young & someone similar 2u, don’t try2get rich, Groundhog Day $$ $SPY?Mar 30, 2014
  • Why Runners Can’t Eat Whatever They Want?http://t.co/FLMOWE8sC1?Studies Show Heart Risks to Devil-May-Care Diets?No Matter How Much U Run $$?Mar 30, 2014
  • Speed Reading Returns?http://t.co/EwxEFe6Paz?Apps and Classes Help People Adapt 2Reading on Their Phones | More content 2 read everywhere $$?Mar 30, 2014
  • The book Scientology tried to ban?http://t.co/g4GeTda7bS?Read about the *real* L. Ron Hubbard, from a book Church of Scientology hates $$?Mar 30, 2014

?

Wrong

  • Wrong: Not Voting Should Not Be a Choice?http://t.co/UlBFwMe6fi?Seems fundamental that no one should b forced to vote; it’s a protest $$?Mar 30, 2014
  • Wrong: Japan Is Doomed Unless It Learns to Love Inflation?http://t.co/AFD8QA1d8Z?More “hair of the dog that bit you solutions” $$ $JPY $JOF?Mar 30, 2014
  • Wrong: Digital v human: the new debate?http://t.co/PiUgvNHm6x?We’ve seen transformational technologies b4, takes a while 4 new jobs 2show $$?Mar 30, 2014
  • Wrong: Fed?s Bullard: Yellen?s ?6 Months? Comment Doesn?t Represent Change in Policy Stance?http://t.co/v7gzHBobVw?Could have fooled me $$?Mar 22, 2014

?

Notes, Comments, Reples & Retweets

  • RT @ReformedBroker: In November 1999, Buffett wrote this op-ed for Fortune on why he doesn’t bet on innovation. @pmarca @hblodget http://t??Mar 27, 2014
  • RT @felixsalmon: “This means Bitcoins are not fungible, and that makes it unworkable as a currency.??http://t.co/JjFOO8Z2Xq?cc @pmarca @bar??Mar 27, 2014
  • RT @journalistjosh: Crowdfunding emptor: Attention Suckers: Please Send Us Your Money?http://t.co/gvxeT4SyOW?via @BloombergView?Mar 27, 2014
  • We enjoyed having @susanweiner speak to us at the #CFA Institute – Baltimore; we can all benefit from learning to write more engagingly $$?Mar 26, 2014
  • ‘ @PlanMaestro Yes, I remember that piece?http://t.co/YDhQTnNopk?and the series that followed it http://t.co/OC2PfnWc1z $$ Capital efficient?Mar 26, 2014

?

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Federal Reserve

 

  • Why Central Banks Should Be Vague?http://t.co/iVO9s9l3il?They would b better off saying nothing, as their ability 2analyze future is poor $$?Mar 21, 2014
  • Yellen and the Curse of Forward Guidance @BloombergView?http://t.co/kAWJg4vrEN?Better the Fed should shut up & let the market adjust $$ $TLT?Mar 21, 2014
  • Yellen and the Fed Go Dark?http://t.co/M70bG02KZ3?@M_C_Klein tells the truth, better the FOMC should say nothing, words don’t mean much $$?Mar 21, 2014
  • Yellen Punt Prompts Panic?http://t.co/ztlpEuEGp6?Interesting to be quoted in the article above. Author liked my comment on the weather $$?Mar 20, 2014
  • Essentially Yellen said monetary policy will b the same as before, only more so. But the forecasts show a faster removal of accommodation $$?Mar 19, 2014
  • Level of Central tendency of FOMC Fed Funds forecasts 2014-6, LR — 0.30%, 1.13%, 2.42%, 3.88% Change -0.04%, 0.07%, 0.25%, -0.01% $$?Mar 19, 2014
  • Level of Central tendency of forecasts for when the Fed first starts tightening Fed funds: October 2015, change from prior January 2016 $$?Mar 19, 2014
  • Level of Central tendency of FOMC PCE Inflation forecasts 2014-6, LR — 1.55%, 1.80%, 1.84%, 2.00% Change 0.04%, 0.03%, -0.03%, 0.00% $$?Mar 19, 2014
  • Level of Central tendency of FOMC Unemp forecasts 2014-6, LR — 6.21%, 5.73%, 5.41%, 5.45% Change -0.24%, -0.20%, -0.13%, -0.08% $$?Mar 19, 2014
  • Level of Central tendency of FOMC GDP forecasts 2014-6, LR — 2.81%, 3.04%, 2.76%, 2.21% Change -0.13%, -0.09%, -0.08%, -0.05% $$?Mar 19, 2014
  • Low-Wage Workers Are Finding Poverty Harder to Escape?http://t.co/RQP18XOPQA?Low Marketable Skills plus divorce or no marriage w/kids $$?Mar 18, 2014
  • Fed set to roll out new low-rate pledge?http://t.co/WXYH7aiBcK?Fed spends 2much time on words, not enough on long-term efficacy of policy $$?Mar 18, 2014
  • Yellen should take away the punch bowl?http://t.co/VzkzJZr83D?Fed will never do that; doesn’t like 2 take actions that point back @ them $$?Mar 18, 2014

?

Rest of the World

 

  • Bloomberg Hints at Curb on Articles About China?http://t.co/q1R6Xsa8fF?Bloomberg makes its $$ by renting out terminals; wants more China biz?Mar 21, 2014
  • CPI Credibility Lasts 34 Days as Doubts Return?http://t.co/qtUNozXPnZ?Well, that was quick – guess Argentina doesn’t want 2 pay more out $$?Mar 20, 2014
  • Putin?s Tools of Sabotage Beat Urgency of Ukraine Invasion?http://t.co/Yv3rRkrdnd?Putin ready 2 play a rougher game, understands politics $$?Mar 20, 2014
  • Putin Is No Madman to Russians as Power Play Trumps Economy?http://t.co/hOPPmnCF5u?We shouldn’t fight over this, Crimea is Russian $$ $RSX?Mar 19, 2014
  • ?Nobody Knows Anything??http://t.co/WTlzkgXvkM?Knowledge lost as Cold War Generation gone from foreign policy: C: http://t.co/0KvkZIqlHW $$?Mar 18, 2014
  • How China’s official bank card is used to smuggle money?http://t.co/2PIMdctQu5?Between Macau Casinos & UnionPay, wealthy get $$ out of China?Mar 18, 2014
  • China to Spend More Than $162B on Shantytowns?http://t.co/l0HKesS6lr?Herding people into cities, but what will they do for work? $$ $FXI?Mar 18, 2014
  • Alibaba Confirms It Will Begin IPO Process in US?http://t.co/jkdScz12kQ?Could be valuable 4 $YHOO who owns ~24% $$?Mar 18, 2014
  • The Welsh dairy farmers who bought 320 buy-to-let properties in Sweden?http://t.co/haGuwFQXGn?Worry when it seems easy 2 make $$ in housing?Mar 18, 2014
  • Chinese Companies Caught in Yuan Riptide?http://t.co/BnKss6ZQvN?What was once viewed as “free money” proves to have a cost, panic ensues $$?Mar 18, 2014
  • Musk Jab at Rival Shows US Space Reliance on Russia?http://t.co/NBun2inY5Q?Interesting how we rely on Russia 4 manned space flight $$?Mar 18, 2014
  • Nigeria Overtaking South Africa Masks Poverty Trap?http://t.co/Bf2ZGIXuHl?When economy is mostly resource extraction inequality common $$?Mar 18, 2014
  • Putin?s Motives Rooted in History Remain a Mystery Abroad?http://t.co/ckRcNaYgUj?Should b happy that most of Ukraine is allied w/West $$?Mar 18, 2014
  • Chinese Developer Bonds Sink in Secondary Trade Amid Collapse?http://t.co/LDVrHVdptU?Test 4 Govt: how much bad credit will u bail out? $$?Mar 18, 2014
  • Japan Analysts Split on Fiscal Crisis Time as Tax Looms?http://t.co/9VQPhtQaoD?Testing the limits of how much a govt can borrow b4 crisis $$?Mar 18, 2014

New Businesses

?

  • Rock-Climbing Generation at Foot of US Startup Ascent?http://t.co/dQjCDlYNVL?Example of an unusual business catering to exercise wants $$?Mar 21, 2014
  • Zuckerberg, Musk Invest in Vicarious?http://t.co/C5avwXQ0mi?Part of brain that sees, controls the body, understands language & does math $$?Mar 21, 2014
  • Personally, I think Artificial Intelligence won’t succeed w/ that. No surprise that Vicarious is trying, though — would save lotsa time $$?Mar 21, 2014

?

Finance

 

  • Credit Card Data Security Standards Don’t Guarantee Security?http://t.co/Kky2011rLb?Antiquated technology relatively ez2hack, no surprise $$?Mar 21, 2014
  • Why Do High Frequency Traders Never Lose Money??http://t.co/V3CdYpzVZx?Why do auctioneers & brokers rarely lose money facilitating trades $$?Mar 21, 2014
  • How to Decide on Your Investment in Bonds?http://t.co/9ApVxQkxyG?When rates are so low you should b extra careful, stay short & hi qual $$?Mar 21, 2014
  • Shadow Banking Deals Prompt SEC Plan to Cap Broker Leverage?http://t.co/6CKxLVDYT5?SEC does not go far enough, repo mkts should b ended $$?Mar 21, 2014
  • SEC to take another look at ETF regulation?http://t.co/pKPQeUvVqU?Should leveraged products & inverse products b allowed? Lousy returns $$?Mar 20, 2014
  • Junk Bonds at $2T as Gundlach Pulls Back?http://t.co/CMRM6cLF6E?Markets always seem large when they are overvalued, Gundlach is right $$?Mar 20, 2014
  • Seth Klarman warns of impending asset price bubble?http://t.co/oa49IEj68A?When he runs out of safe places 2 put $$ the red lights flash?Mar 18, 2014
  • ARM Loans?a Vestige of the Housing Bubble?Are Making a Comeback?http://t.co/BrrfQlDwni?True 4 wealthy & those with prime credit scores $$?Mar 18, 2014
  • Buffett gets the better of everyone, version 4,762?http://t.co/uCq0dE1Uo8?Parts w/his holdings of $GHC, retires shares of $BRK.A & $BRK.B $$?Mar 15, 2014

 

Politics & Policy

 

  • Uneven Wage Gains Restrain Recovery?http://t.co/LD5h31WFxO?Article has a lot of interesting data on what jobs r available to semi-skilled $$?Mar 21, 2014
  • Obama Keystone Choice Pits Donors Against At-Risk Senate?http://t.co/jCNbOFTg0w?Kind of a no-win situation 4 Obama; should ok the deal $$?Mar 20, 2014
  • Young Invincibles Are Killing Obamacare?http://t.co/AcNg9p83d7?Obamacare destroys the healthcare system as healthy young people leave $$?Mar 20, 2014
  • Christie Counts on Revenue Surge Not Seen in Most States?http://t.co/dfOkM7gy8V?A Reaganesqe flaw: relying on the rosy scenario w/Dems $$?Mar 20, 2014

 

Companies & Industries

 

  • Phillips 66 Considering Splitter at Sweeny Refinery?http://t.co/9g7NefuiTJ?New trend: Partial refining. Those products can b exported $$?Mar 21, 2014
  • TV Subscriptions Fall for First Time as Viewers Cut the Cord?http://t.co/M984bGpJfr?It is cheaper to not have a cable subscription $$ $SPY?Mar 21, 2014
  • A Sour Bean Sweetens Cocoa Supply?http://t.co/AsUOr8cBlM?Fascinating story of a high-yield bean that is more sour than low-yield beans $$?Mar 21, 2014
  • Buffett Cuts Tax Bill, Tells Others Not 2 Complain?http://t.co/bbjxWcyy8i?If Buffett weren’t so sanctimonious on taxes this would b small $$?Mar 20, 2014
  • IBM’s Watson to help in brain cancer research?http://t.co/EozXiEIXq8?Fascinating 2c Watson sequencing DNA of cancer & suggest treatments $$?Mar 20, 2014
  • TED Winner Launches Campaign to Unmask Shell Companies?http://t.co/g7FXj6ca2I?Ambitious effort 2unmask those using shells 4 bad purposes $$?Mar 20, 2014
  • Windows XP: What to Do When Microsoft Ends Its Support?http://t.co/MSKGTC0ofU?Article agrees w/my answer; get a copy of Windows 7 $$ $MSFT?Mar 20, 2014
  • Fannie Mae Wind-Down Deemed Threat to Home Recovery?http://t.co/L8Bg5wd7bz?It will be painful, but we need to delever housing $$?Mar 19, 2014

 

Other

 

  • IFRS could be stripped of accountancy watchdog role?http://t.co/zxcHHBaUcW?This would be very good. US GAAP is far superior to IFRS $$ $SPY?Mar 19, 2014
  • Bugatti-Driving 26-Year-Old Tied to Penny-Stock Website?http://t.co/p9J5FOb6kx?Of John Babikian & the misnamed AwesomePennyStocks $$ $SPY?Mar 18, 2014
  • Behind The Scenes With Dream Team, CytRx & Galena?http://t.co/xFC3DgsVT9?He gets inside firm paid/undisclosed promotions 4 $CYTR & $GALE $$?Mar 18, 2014
  • Individual investors Lose Money When Using Technical Analysis?http://t.co/dVLgjWUOk8?I can hear it now, “But they’re doing TA wrong!” $$?Mar 18, 2014
  • The Hidden Rot in the Jobs Numbers?http://t.co/R0FHIrKaVt?Here’s another way 2c it: http://t.co/KtoClJngXF $$ $TLT $MACRO?Mar 18, 2014
  • Want Success? Choose the Right Parents?http://t.co/AverC5lySd?Not sure I believe it, but interesting thesis $$?Mar 18, 2014
  • Pssst! Everything’s a Conspiracy?http://t.co/cFUH0dK9eo?Tough 2hold a significant conspiracy together, high incentives 2eventually reveal $$?Mar 18, 2014
  • To Make an Airplane Disappear, Start by Getting Through the Cockpit Door?http://t.co/AVcMjSG1LY?How difficult it would b2 take over a 777 $$?Mar 18, 2014

 

Wrong

 

  • Late: City vs. Country: How Where We Live Deepens the Nation’s Political Divide?http://t.co/lDKNT0bOjx?This isn’t news; no surprises here $$?Mar 21, 2014
  • Wrong: ?Ring of Death? Throttles Georgia as Small Banks Close?http://t.co/g9VGMPkKx0?Lent 2 much on overvalued properties, their fault $$?Mar 20, 2014
  • Weak: Why gaining from value investing is hard?http://t.co/hGY8Xnr6p7?Value investing typically does better on other side of mkt peaks $$?Mar 18, 2014
  • If We?re Going to Take Budget Forecasts Seriously, Then This is a Good Way To Present Them?http://t.co/yk9asr52HT?Kinda naive about stats $$?Mar 18, 2014
  • Wrong: Why equities sold off despite a dovish Fed?http://t.co/pyUW8FebAB?Fed was not dovish. Yellen’s comments & Fed forecasts bearish $$?Mar 21, 2014
  • Weak: Robert Shiller On The Tech Economy?http://t.co/tvvo8uzgot?Some innovations save labor; others create demand 4labor through new svcs $$?Mar 21, 2014

 

Replies, Retweets & Comments

 

  • The bigger change was the shift in the time tightening is likely to happen. That shifted up 3 months on…?http://t.co/dIxt1tcxgB?Mar 19, 2014
  • “Interesting to be quoted in the article above. If you want to see the other things I wrote about?” David_Merkel?http://t.co/k0NyUsgTzG?$$?Mar 20, 2014
  • RT @treehcapital: Credit investors like the elves in LOTR~when they leave Middle Earth, time to pay attention “Gundlach Pulls Back” http://??Mar 20, 2014
  • @treehcapital That’s a great analogy. I’ve lightened up as well, time to do more.?Mar 20, 2014
  • We’ve been through periods like this before in human history. Inventions that save labor in an area…?http://t.co/ajY9DJwns6?Mar 21, 2014
Limit Repo Financing

Limit Repo Financing

Posted on by David Merkel

If you have a moment, read this Bloomberg article. ?The brokers are utterly dishonest when they say:

Brokers contend that their borrowing is generally less risky than bank lending. Repo borrowing, for instance, is backed by collateral that can be readily sold to raise cash in case the other party defaults, said Steven Lofchie, co-chairman of the financial services group at Cadwalader, Wickersham & Taft LLP.

?If you think about a bank that is lending 90 percent against a house, versus a broker-dealer taking in 102 percent against a loan of a security, the broker-dealer?s credit risk is exponentially less,? Lofchie said.

This is true under ordinary circumstances, but not in a crisis, as we saw in 2008. ?Seemingly safe securities were no longer safe, because too many overleveraged parties could not hold their positions when the prices of their seemingly safe securities started to fall. ?This led to a panic, because of the structural error of financing long-dated securities with short-dated funding. ?In a crisis, that is the fatal flaw of repo financing.

I think the proposals of the SEC are decent, and those that the broker-dealers propose are not. ?I would go further and abolish repo markets. ?They are crisis-bait. ?The asset-liability mismatch invites trouble.

The proposal of the broker-dealers is flawed, because they don’t adopt a model where they match assets and liabilities. ?Stable systems match assets and liabilities. ?Until they do so, they should not be taken seriously. ?The math of risk control wars against them.

As Light As Hydrogen

As Light As Hydrogen

Posted on by David Merkel

Okay let?s roll the promoted stocks scoreboard:

Ticker Date of Article Price @ Article Price @ 3/18/13 Decline Annualized Splits
GTXO

5/27/2008

2.45

0.040

-98.4%

-50.8%
BONZ

10/22/2009

0.35

0.001

-99.7%

-73.0%
BONU

10/22/2009

0.89

0.001

-99.9%

-79.1%
UTOG

3/30/2011

1.55

0.000

-100.0%

-95.1%
OBJE

4/29/2011

116.00

0.167

-99.9%

-89.7%

1:40
LSTG

10/5/2011

1.12

0.010

-99.1%

-85.7%
AERN

10/5/2011

0.0770

0.0001

-99.9%

-93.4%
IRYS

3/15/2012

0.261

0.000

-100.0%

-100.0%

 Dead
RCGP

3/22/2012

1.47

0.300

-79.6%

-55.1%
STVF

3/28/2012

3.24

0.420

-87.0%

-64.5%
CRCL

5/1/2012

2.22

0.026

-98.8%

-90.6%
ORYN

5/30/2012

0.93

0.110

-88.2%

-69.5%
BRFH

5/30/2012

1.16

0.515

-55.6%

-36.3%
LUXR

6/12/2012

1.59

0.009

-99.4%

-94.7%
IMSC

7/9/2012

1.5

0.900

-40.0%

-26.1%
DIDG

7/18/2012

0.65

0.042

-93.5%

-80.7%
GRPH

11/30/2012

0.8715

0.085

-90.3%

-83.5%
IMNG

12/4/2012

0.76

0.045

-94.1%

-88.9%
ECAU

1/24/2013

1.42

0.240

-83.1%

-78.8%
DPHS

6/3/2013

0.59

0.010

-98.3%

-99.4%
POLR

6/10/2013

5.75

0.070

-98.8%

-99.7%
NORX

6/11/2013

0.91

0.210

-76.9%

-85.2%
ARTH

7/11/2013

1.24

0.360

-71.0%

-83.6%
NAMG

7/25/2013

0.85

0.164

-80.7%

-92.2%
MDDD

12/9/2013

0.79

0.320

-59.5%

-96.4%
TGRO

12/30/2013

1.2

0.220

-81.7%

-100.0%
VEND

2/4/2014

4.34

4.900

12.9%

187.3%

3/18/2014

 Median

-93.5%

-85.2%

Tonight’s loser-in-waiting is HydroPhi Technologies [HPTG]. ?This one can’t even get basic science right. ?It claims to be able to split water into hydrogen and oxygen, and then recombine them to create energy. ?Circular processes in general lose energy, otherwise we would have perpetual motion machines.

And behind the vapid analysis is an uber-loser. ?His analyses never pan out over one year. ?A clever speculator might make money occasionally, but not regularly, because the stocks he pumps are like this one. ?Little revenues, negative earnings, negative net worth. ?This is a recipe for disaster.

Think about it — if you had a miracle energy technology, would you merge your company with a failed internet advertising company “BigClix?” ?I would think not. ?You would keep your company private and enjoy the significant profits.

As it is, there are no profits, so where is this great energy technology? ?This is a scam, and laws should be revised to allow prosecution of those who write such promotional garbage as we have seen. ?It is no good to have the 4-point type disclaimers telling some of the truth, while the big type says “Buy, buy BUYYY!!!” ?Also, as far as the web version of this promotion goes, the promoters pour in half a million. ?As it says in the 4-point type:

Third Party Advertiser IMPORTANT NOTICE: Esquire Media Services Inc (EMS) has managed up to a $500,000 USD advertising production budget as of January 21, 2014 in an effort to build industry and investor awareness for HydroPhi Technology Group Inc (ticker symbol: HPTG).?

It’s easy to affect the price of a company that has bad fundamentals. ?It’s overvalued to start; it will only be more overvalued at the crest of the promotion. ?If you attract a bunch of people to the pump-and-dump who want to play the momentum, some may think they will be clever enough to scalp a quick profit along with the insiders. ?Some of them win, and others lose. ?Others believe the advertising, and stay to lose a ton.

Seth Klarman recently said,??It might not look like it now, but markets don?t exist simply to enrich people.? ?This needs to be remembered by all. ?Markets are for trading, and trading is a negative-sum game. ?Those who buy & hold valuable businesses for a span — that is a positive-sum game, because the underlying asset is appreciating.

To close: don’t buy promoted stocks. ?Never. ?Those who are paid directly or indirectly to encourage you to buy are at best sub-agents for the seller — they aren’t on your side. ?In buying promoted stocks, it’s like going to Vegas, minus the fun. ?You will lose. ?You will lose a lot. ? The house edge is fixed — it’s only a question of how much you will lose.

Avoid promoted stocks. ?As I often say: “Don’t buy what someone else wants to sell you, buy what you have researched and know has value.”

On the Structure of Berkshire Hathaway, Part 2, the Harney Investment Trust

On the Structure of Berkshire Hathaway, Part 2, the Harney Investment Trust

Posted on by David Merkel

In Omaha, there is Farnam Street. ?Among value investors, it is well-known, because the small main office of Berkshire Hathaway [BRK] is located there. ?Less well known is Harney Street, but from an insurance standpoint it is important, because Berkshire Hathaway’s largest insurance subsidiary, National Indemnity, is located there. ?One of the major assets of National Indemnity is the Harney Investment Trust, of which National Indemnity is the sole beneficiary.

Before I go further, I want to say there is a lot I don’t know about what I am going to write. ?Let me tell you what sources I have looked at:

  • SEC filings of companies where the Harney Investment Trust was a greater than 5% shareholder.
  • Legal documents from Bankruptcies and other corporate legal events where Harney Investment Trust was a party.
  • All of the statutory filings for Berkshire Hathaway’s primary insurance companies in 2012.
  • All of National Indemnity’s statutory filings on assets 2002-2013.
  • All of National Indemity’s statutory audits, 2002-2012.

Now, if you read through BRK’s filings to the SEC, you won’t find many mentions of the Harney Investment Trust. ?You have to read the insurance regulatory documents to find it, and even if you do that, you will still be puzzled. ?Why?

  • Over the last 12 years, the National Association of Insurance Commissioners does not require “Other Assets” on Schedule BA to provide enough data so that an external user can make the change in book value or market value make sense. ?It has gotten better over time, but it is still not enough. ?You want to have enough data such that it explains the change in market and book value to the nearest thousand dollars.
  • There are a few errors that are obvious. ?Some easy calculations don’t add. ?Current year starting values are not the same as last year’s ending values.
  • A few numbers between the statutory filings and audits don’t agree.

Now, some of that is due to bad regulation. ?The data reported for schedule BA assets could be streamlined such that it reports the change in the balance sheet for each asset on a book and fair market value basis.

But more of it is due to BRK’s lack of willingness to discuss/mention the Harney Investment Trust. ?I did a lot of digging on this, and found ?little that was definitive. ?One seemingly intelligent opinion I found here. ?I will quote the most relevant portion from “globalfinancepartners”:

Regarding the large surplus at Berkshire – it is largely because many subsidiaries are owned inside the insurance companies – especially within National Indemnity.? 100% of the stock of BNSF, for example, valued at BRK’s cost of $34 Billion – is owned by National Indemnity and counts towards the statutory surplus.? Also, National Indemnity owns 100% of the shares of GEICO.? Then in addition there are the securities, of course.

GEICO, in turn, owns 100% of the shares of Clayton, McLane, TTI, as well the marketable securities.

I’ll attach an NAIC filing if you really want to geek out.? But unfortunately, the mystery stock Buffett has been accumulating and receiving confidential status on through the SEC is hidden like always inside the “Harney Investment Trust” – Buffett’s go-to vehicle for keeping stock trading hidden from regulatory filings.? (Harney Street is in Omaha)

He gets it, mostly, and concludes that Buffett uses the Harney Investment Trust to hide his buying and selling of positions. ?Assets inside the Trust do not get reported one-by-one on the insurance Schedule D.

Now, before I close, I want to share the data that I have harvested from the Statutory statements, and make a few more comments.

Year

2001

2002

2003

2004

2005
Cost ?? 8,063,249,239 ?? 6,098,184,425 ??? 4,345,049,427 ????? 7,566,419,887
Addl Investment ????? 4,314,851,219
Fair Value ?? 10,532,124,694
Book ?? 9,814,864,000 ?? 9,325,481,908 ?? 8,326,636,998 ??? 5,326,049,532 ????? 9,524,818,329
Change ???? (220,350,768) ?????? 859,931,290 ? (1,141,017,994) ????? 1,958,398,441
Accretion
OTTI
FX Change
Inv Income ????????? 455,078,969
Book Sold ?? 5,405,086,442 ?? 4,640,112,416 ??? 2,934,268,712 ????? 1,121,718,176
Change ?????????? (40,084,139)
Consideration ?? 6,156,977,208 ?? 5,492,507,843 ?? ?3,827,449,032 ????? 1,561,718,363
Gain ?????? 751,890,766 ?????? 852,395,427 ???????? 893,180,320 ????????? 399,916,048
income
% Assets

25.77%

18.33%

10.45%

15.36%
Am Cost ?? 8,355,067,000 ?? 8,063,249,000 ?? 6,098,184,000 ??? 4,345,049,000 ????? 7,566,420,000
URGC ?? 1,459,797,000 ?? 1,711,427,000 ?? 3,810,157,000 ??? 2,316,272,000 ????? 2,965,705,000
URCL ????????????????????????????????? – ?????? 144,894,000 ????????????????????????????????? – ?????????????????????????????????? – ???????????????????????????????????? –
Fair Value ?? 9,814,864,000 ?? 9,629,782,000 ?? 9,908,341,000 ??? 6,661,321,000 ?? 10,532,125,000
Comments Disagreeing figs

 

Year

2006

2007

2008

2009
Cost ????? 6,964,633,697 ?? 20,139,079,483 ????? 5,921,482,114 ????? 5,786,018,179
Addl Investment ????????? 982,768,239 ?? 15,783,905,450 ????? 9,781,668,840 ?? 10,865,269,974
Fair Value ?? 12,117,706,779 ?? 21,921,621,265 ????? 4,923,093,676 ????? 6,769,046,868
Book ?? 11,123,440,646 ?? 21,921,621,265 ????? 4,801,843,191 ????? 5,800,502,260
Change ????? 3,098,256,653 ????? 1,751,436,622 ??? (2,840,908,667) ????? 1,108,867,879
Accretion ????????? 119,595,243 ????????? 197,707,597
OTTI ????????? 288,188,143 ????? 2,590,146,282
FX Change ?????????? (57,873,620) ???????????? 36,966,246
Inv Income ????? 1,261,755,231 ????????? 663,463,512 ????????? 987,469,687 ????????? 826,207,723
Book Sold ?? ???1,746,959,239 ????? 2,653,395,647 ?? 24,830,673,311 ????? 8,645,957,509
Change ??????? (100,447,051) ????????????? (3,398,147) ???????????? 37,662,286
Consideration ????? 1,999,993,027 ????? 6,522,527,452 ?? 24,010,303,351 ????? 9,017,341,154
Gain ????????? 353,480,839 ????? 3,869,131,805 ????????? 179,640,040 ????????? 371,383,645
income ??????????????? 3,658,670 ???????????? 62,505,008
% Assets

16.56%

29.56%

7.78%

7.39%
Am Cost ????? 6,964,634,000 ?? 20,139,079,000 ????? 5,921,482,000 ????? 5,786,018,000
URGC ????? 5,153,073,000 ????? 1,782,542,000 ???????????????????????????????????? – ????????? 983,029,000
URCL ????????????????????????? ???????????- ???????????????????????????????????? – ????????? 998,388,000 ???????????????????????????????????? –
Fair Value ?? 12,117,707,000 ?? 21,921,621,000 ????? 4,923,094,000 ????? 6,769,047,000
Comments Bought out other trusts Cleaned House
Year

2010

2011

2012

2013
Cost ????? 9,457,498,340 ????? 7,464,877,852 ?? 7,064,639,865 ?? 5,004,510,446
Addl Investment ????? 7,068,414,613 ?? 12,784,563,299 ?? 4,186,877,510 ?? 3,254,233,606
Fair Value ?? 11,700,226,848 ????? 7,807,366,099 ?? 9,066,610,408 ?? 7,675,070,719
Book ?? 10,720,330,531 ????? 7,450,894,712 ?? 8,417,129,742 ?? 7,511,081,043
Change ????? 1,271,863,576 ??? (1,276,652,476) ?? 1,332,026,027 ?? 1,163,420,948
Accretion ???????????? 17,914,824 ?????????? (25,309,149) ???????????? 2,759,586 ???????????? 2,810,400
OTTI ????????? 476,659,635 ????????? 190,142,457 ?? ????115,680,863
FX Change ????????????? (5,766,223) ?????????????????? (911,734) ???????????? 1,296,067 ????????????????? 659,774
Inv Income ????????? 554,369,500 ????????? 719,996,080 ?????? 389,469,312 ?????? 403,093,171
Book Sold ????? 2,944,738,747 ?? 14,566,437,847 ?? 4,479,185,215 ?? 5,214,644,823
Change ??????????????? 7,728,019 ??????????????? 4,705,665 ???????????? 4,970,996 ???? (102,528,623)
Consideration ????? 3,576,396,272 ? ?14,738,706,689 ?? 4,833,798,698 ?? 5,785,003,373
Gain ????????? 631,657,525 ????????? 141,268,842 ?????? 354,613,478 ?????? 570,358,551
income ???????????? 76,920,680 ???????????? 25,137,655 ????????? 11,091,687 ?????? 118,147,838
% Assets

9.60%

6.45%

6.59%
Am Cost ????? 9,457,498,000 ????? 7,464,878,000 ?? 7,064,640,000
URGC ????? 2,343,171,000 ????????? 866,984,000 ?? 2,083,717,000
URCL ????????? 100,442,000 ????????? 524,226,000 ????????? 81,747,000
Fair Value ?? 11,700,227,000 ????? 7,807,636,000 ?? 9,066,610,000

Notes: OTTI: other than temporary impairments. ?URCG: Unrealized Capital Gains. URCL: Unrealized Capital Losses. ?Other categories are hard to define, though I am sure the NAIC has definitions, though they don’t give complete changes in balance sheets.

Another thing that I could not make to match from the statutory statements was the securities that went in and out of the trust. ?Aside from some Treasury bonds ?in 2002, here are all of the reported transactions where securities moved from National Indemnity to the Trust, and vice-versa.

Year Action Ticker Shares Value Consideration Capital Gain (loss)

2003

 In MTB ???????? 927,760 ????????????? 3,655,241

2003

 In WFC ???? 6,138,800 ???????? 127,795,056

2003

 In AXP ???? 5,308,500 ???????? 101,902,002

2003

 In MCO ?? 16,140,300 ???????? 340,631,841

2003

 Poof LVLT ?? 32,691,065 ???????? 100,000,000

2004

 In TMK ???????? 872,200 ?????????? 20,268,837

2004

 In HRB ?? 14,350,600 ???????? 222,546,836

2004

 In CDO ???? 1,195,274 ????????????????????????????? 1

2004

 In COST ???? 5,254,000 ???????? 146,595,428

2004

 In GCI ???? 3,447,600 ?????????? 81,873,173

2004

 In MLI ???? 1,361,900 ?????????? 30,408,193

2004

 In SEE ???? 1,113,300 ?????????? 32,102,292

2004

 In USG ???? 6,500,000 ?????????? 37,180,000

2005

 Out TMK ???????? 872,200 ?????????? 20,268,837 ???????? 49,826,080 ?????????????? 29,557,243

2005

 Out HRB ?? 14,350,600 ???????? 222,546,836 ?????? 703,179,400 ???????????? 480,632,564

2005

 Out CDO ???? 1,195,274 ????????????????????????????? 1 ???????? 26,666,563 ?????????????? 26,666,562

2005

 Out COST ???? 5,254,000 ???????? 146,595,428 ?????? 254,346,140 ???????????? 107,750,712

2005

 Out GCI ???? 3,447,600 ?????????? 81,873,173 ?????? 281,668,800 ???????????? 199,795,627

2005

 Out MLI ???? 1,361,900 ?????????? 30,408,193 ???????? 43,853,180 ?????????????? 13,444,987

2005

 Out SEE ???? 1,113,300 ?????????? 32,102,292 ???????? 59,305,491 ?????????????? 27,203,199

2005

 Out USG ???? 6,500,000 ?????????? 37,180,000 ?????? 261,755,000 ???????????? 224,575,000

2008

 In USB ?? 20,768,728 ???????? 657,202,698

2008

 In WFC ?? 52,372,788 ???? 1,819,017,267

2008

 In COP ?? 71,896,273 ?? ??5,878,643,401

2008

 In COST ???? 5,264,000 ???????? 146,595,428

2008

 In KFT ?? 89,222,400 ???? 2,957,096,963

2008

 In PG ?? 17,200,318 ???? 1,026,726,674

2008

 In USG ?? 10,102,918 ??????? ?202,419,056

2008

 In WMT ?? 18,998,300 ???????? 901,731,797

2008

 Out PG ?? 20,000,000 ???? 1,193,846,154 ?? 1,468,400,000 ?????????? (274,553,846)

2009

 In COP ?? 29,711,330 ???? 1,163,495,683

2009

 In MTB ???????????? 6,300 ???????????????? 447,467

2009

 In PG ?? 14,328,093 ???????? 855,276,936

2009

 In TMK ???? 1,656,900 ?????????? 60,572,017

2009

 In WMT ?? 14,892,842 ???????? 746,046,432

2009

 In WFC ?? 21,030,680 ???????? 473,941,080

2009

 In GSK ???? 1,510,500 ?????????? 78,918,016

2009

 In PKX ???? 1,087,000 ?????????? 44,260,228

2009

 In SNY ???? 2,896,133 ???????? 119,233,280

2009

 Out COP ?? 71,896,273 ???? 5,690,321,498 ?? 3,724,226,941 ???????? 1,966,094,557

2009

 Out MCO ?? 15,000,000 ???????? 163,880,137 ?????? 284,850,000 ?????????? (120,969,863)

2009

 Out PG ? ?26,000,000 ???? 1,552,000,000 ?? 1,607,320,000 ???????????? (55,320,000)

2010

 In JNJ ?? 13,274,736 ???????? 851,173,066

2010

 Out COP ?? 25,227,450 ???????? 987,906,942 ?? 1,288,365,871 ?????????? (300,458,929)

2010

 Out KFT ?? 57,684,645 ???? 1,885,271,843 ?? 1,567,868,651 ???????????? 317,403,192

2010

 Out MTB ???? 4,680,322 ?????????? 36,930,716 ?????? 216,105,603 ???????????? 179,174,887

2010

 Out PG ?? 15,000,000 ???????? 895,384,615 ?????? 909,450,000 ?????????????? 14,065,385

2011

 In COP ?? 21,109,637 ???????? 826,653,385

2011

 In GCI ???? 1,740,231 ?????????? 13,921,848

2011

 In IBM ?? 63,905,931 ?? 10,856,339,550

2011

 In MTB ???? 4,671,245 ?????????? 38,003,193

2011

 In PG ?? 12,669,252 ???????? 756,256,889

2011

 In WFC ?? 28,446,437 ???????? 718,140,133

2011

 Out JNJ ?? 12,951,761 ??? ?????829,897,088 ?????? 801,466,418 ?????????????? 28,830,670

2012

 In WFC ?? 32,872,641 ???? 1,090,916,624

2012

 Out PG ?? 29,754,036 ???? 1,776,087,072 ?? 1,984,891,742 ???????????? 208,804,670

In means assets came into National Indemnity, and out means the reverse. ?Poof means something came into National Indemnity, and left in the same calendar year.

Notably, in 2008, Buffett had most of the assets exit the trust into National Indemnity, when they were in a position of unrealized capital loss. ?I don’t fully understand the tax and capital effects here, but it seems that Buffett found it to his advantage to move assets out of the trust, and into National Indemnity once the assets were unrealized capital losses.

I think the guy I quoted is correct. ?Buffett uses the Harney Investment Trust to hide his acquisitions and dispositions of stock. ?The NAIC should end this, and make Schedule BA assets that are easily separable appear on Schedule D, where they belong. ?Schedule BA should be for assets that are not publicly traded. ?Partnerships with assets that would fit on Schedule D should ?be on Schedule D.

Summary

Buffett tries to take an ethical stance in investing, and makes many statements about the way investing ought to be done. ?Using a trust to avoid disclosure of holdings and transactions is not in the spirit of GAAP or statutory accounting/disclosures. ? This practice should be ended. ?Warren, step up your game before you have to and end the Harney Investment Trust. ?I write this as a fan who owns BRK/B shares.

And, to my dedicated readers, if you have more data, or a better means of analysis of the data I have gathered, by all means offer your help. ?Thanks, David

Full disclosure: long BRK/B for clients and me

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Rest of the World

?

  • Chinese Workers at IBM Factory on Strike Amid Company Sale?http://t.co/TBE44EtSgI?Chinese workers don’t want to work 4a Chinese company $$?Mar 07, 2014
  • China Tropical Island Lures Rich Homebuyers Fleeing Smog?http://t.co/SLi78lj115?Wealthy Chinese find ways 2escape pollution others endure $$?Mar 07, 2014
  • China Banks Show Too-Connected-to-Fail Link to Loans?http://t.co/XQXaAJNNy5?Wanna join my exclusive club & make lotsa $$ Chinese Ponzi $FXI?Mar 07, 2014
  • China Attack Gives Xi Impetus to Tighten Grip on Security?http://t.co/eM021jQeQ7?No matter how unfair the Communist Party can’t look weak $$?Mar 07, 2014
  • Cut Off the Russian Oligarchs and They’ll Dump Putin?http://t.co/WDCDgEXzfd?Argues that economic sanctions would do the job. EU is no go $$?Mar 07, 2014
  • US Fighters Circle Baltics as Putin Fans Fear of Russia?http://t.co/XybK3YxHDq?This is ticklish, u don’t want to accidentally start a war $$?Mar 07, 2014
  • Merkel Eye 4 Russian Empress Shows Putin Ties Are Complex?http://t.co/2HP4i5xNi0?Putin speaks German, Merkel speaks Russian. Cute Couple $$?Mar 06, 2014
  • China heads for 1st corporate bond default?http://t.co/gJRnBMVwrE?1st corporate default on public debt in China since the late 1990s.$$ $FXI?Mar 06, 2014
  • Crimea Crisis Haunted by Ghosts of Bungled WWI Diplomacy?http://t.co/YjrQNqkprD?Complexity in foreign relations-> unexpected results $$ $RSX?Mar 05, 2014
  • Putin?s Push Into Crimea Shows Cheap Can Get Cheaper in Russia?http://t.co/Qwfpzw6zda?See what sanctions do 2 banking system $$?Mar 04, 2014
  • China Central Bank’s Move on Yuan Leads to More Cash Flowing Into System?http://t.co/LHIfEqUveg?Sorcerer’s apprentices find their limits $$?Mar 04, 2014
  • In Crimea’s Capital, Gratitude for a Russian Takeover?http://t.co/3HUH1N3N0h?59% Russian, many welcome Russia, as in Georgian invasion $$?Mar 03, 2014
  • Putin?s Gamble: Crimea Land Grab Will Be Met W/Western Inaction?http://t.co/TwCab9skoD?Confused article thinks sanctions will move Putin $$?Mar 03, 2014
  • Putin Crimea Grab Shows Trail of Warning Signs West Ignored?http://t.co/VmsFLmgBxG?Putin knows that the West will do nothing $$ $EFA $SPY?Mar 03, 2014
  • Oil at $100 Loss Warning Rejected by Norges Bank?http://t.co/VhPaLc4zL1?Norway is smart to leave interest rates higher, grow slower $$ $STO?Mar 03, 2014

?

?

Companies & Industries

 

  • Safeway to Be Bought by Cerberus?s Albertsons?http://t.co/ivygaGRXxr?Interesting deal, definitely consolidates supermarkets $KR $SWY $WMT $$?Mar 07, 2014
  • BP Splitter Refinery Seen Skirting US Oil Export Ban?http://t.co/pTiND92WZ5?Light processing allows crude 2b exported & refined out of US $$?Mar 07, 2014
  • MIT?s Liquid Metal Stores Solar Power Until After Sundown?http://t.co/P0XlvhZL7m?New batteries needed to store energy from wind & solar $$?Mar 07, 2014
  • RadioShack?s Store Closings to Break Covenant?http://t.co/c1X5mu5erN?So $RSH pays a little $$ to break lease terms & reduce expense $SPY?Mar 07, 2014
  • Fannie’s Profits May Be Fleeting–Heard on the Street?http://t.co/lkAiXTGutW?Think $FNMA investors r wrong; belongs 2 the government now $$?Mar 07, 2014
  • Amcol Hot Commodity as Bidding War Escalates?http://t.co/biRyucMyqn?Unusual bidding war 4 $ACO | Price moving up slowly “nickels & dimes” $$?Mar 07, 2014
  • Behind the $100B Commodity Empire That Few Know?http://t.co/2Y1ivuWvXC?Pay a visit 2 Mercuria & c how the Crude gets traded moved stored $$?Mar 07, 2014
  • Chevron pizza ‘scandal’ isn’t one in small town?http://t.co/XYPNDjI6TM?Give $CVX credit, they understood culture of Bobtown, unlike media $$?Mar 07, 2014
  • The DJIA’s 22,000 Point Mistake?http://t.co/BgX4W7y8g1?If $IBM had been in the $DJIA 1939-1979, DJIA would be a lot higher today $$ #splits?Mar 06, 2014
  • Jain feeds Buffett?s hunger?http://t.co/KKuQyWoe7e?$BRK-B Article ~5 mos old, highlights what might be a chg in U/W philosophy $$ $KIE $IAK?Mar 06, 2014
  • Sons of Ikea?s Kamprad Emerge as New Swedish Billionaires?http://t.co/WvH03xylxW?Throw enough trusts together &u can hide almost anything $$?Mar 06, 2014
  • The ever-expanding Google juggernaut?http://t.co/TgdZrWGEUM?$GOOG goes from strength2strength; it passes $XOM to have 2nd highest mkt cap $$?Mar 06, 2014
  • US Oil-Refineries Bulk Up?http://t.co/wC1kybHjuQ?Annual increase in capacity only 0.5%/yr over the next 5 yrs. Unlikely to change things $$?Mar 03, 2014
  • Wi-Fi Phone Upstarts Lure Penny Pinchers From Verizon?http://t.co/xJCplpR9TC?Get 90% of what u want for less than half the cost $$ $VZ $T?Mar 03, 2014
  • The Housing Market With Nowhere to Go (but Up)?http://t.co/3gQqi24Nes?San Fran shoots itself in the foot with building restrictions $$?Mar 03, 2014

 

Municipal Finance

 

  • Buffett Says Pension Tapeworm Means 10Yrs of Bad News?http://t.co/H8LtRrZueb?”greater electorate ignorance of governmental pension costs” $$?Mar 07, 2014
  • Detroit to Pay $77M in Swaps Accord With $UBS & $BAC?http://t.co/Jjd6yFmRgw?Banks took 70% haircut, makes me think all b/ks w/swaps lose $$?Mar 07, 2014
  • The Ideologue vs. the Children?http://t.co/cvIKH9XmmM?NY mayor cares more 4 ideology than effective education; Cuomo steps in2 fill void $$?Mar 07, 2014
  • North Carolina Is a Case Study in Jobless-Benefits Cut?http://t.co/SjDG0I0BoW?Eliminate computers analyzing resumes & this problem dies $$?Mar 04, 2014
  • TARP Funds Demolish Homes in Detroit to Lift Prices?http://t.co/mqF4IKgMfN?Severely blighted areas benefit from destruction of blight $$?Mar 03, 2014
  • California’s $600B Sinkhole?http://t.co/mtTvH4ifwL?Pension liabs accrue silently as Brown & legislature dither; bigger problem later $$ $MUB?Mar 03, 2014

 

 

US Politics & Policy

 

  • Private health exchanges begin to shift behavior?http://t.co/HbChMXMXJs?People tend 2 choose less expensive plans, and then stick w/them $$?Mar 07, 2014
  • Will Obama Ever Enforce His Health Law??http://t.co/zqNln7AR7b?Obama won?t stand up for the hard choices his law requires $$?Mar 07, 2014
  • SEC Can Explain Why It’s So Good at Selling Stocks?http://t.co/GIj3HzxxKS?@matt_levine perhaps it takes a thief 2 catch a thief $$ $TLT $SPY?Mar 07, 2014
  • Another Obamacare deadline moved: Non-compliant plans get 2-yr extension?http://t.co/6fc8FwM2Wu?Signature law survives by non-enforcement $$?Mar 07, 2014
  • How Presidential Budgets Became a Joke?http://t.co/uw78mnO8Wb?Interesting article on how US budget process has changed over time $$ $TLT?Mar 07, 2014
  • Supreme Court Has Some Theories on Market Efficiency?http://t.co/OBiMrmVrWs?Sadly, mkt efficiency can’t really b tested w/o a model $$ $SPY?Mar 06, 2014
  • Insurers? Obamacare Losses May Reach $5.5B in 2015?http://t.co/cEiFXV7nNp?Defective PPACA law increases medical expenses dramatically $$?Mar 06, 2014

 

Market Impact

 

  • Companies Rush to List Shares?http://t.co/FZcfw0AGkV?Initial Public Offerings Hit Pace Not Seen in Years, similar to 2005-7, <2000 $$ $SPY?Mar 07, 2014
  • Buffett Cuts Bond Allocation as $BRK-B Warns on Yields?http://t.co/1IlcxihmE7?Can c bond holdings on Sch D: Buffett Buys Boring Bonds $$?Mar 07, 2014
  • That’s a compliment to Mr. Buffett by the way. He keeps his bonds relatively safe to compensate for aggressive alloc 2 stock 4 an insurer $$?Mar 07, 2014
  • The Great Divide over Market Efficiency?http://t.co/1vls4pokmn?Purists argue ad nauseam & can’t b happy with the idea “mostly efficient” $$?Mar 07, 2014
  • Old Mutual Breathes New Life Into the Multiboutique Model?http://t.co/pv0VCH6PGI?Still skeptical; $AMG is the model but $PNX failed $$ $XLF?Mar 07, 2014
  • High-Grade Firms Dive Into Debt Market?http://t.co/Kd9hxJmMSj?Whenever there is high issuance of new stocks or bonds, time 2b careful $$?Mar 07, 2014
  • Seth Klarman: Investors Downplaying Risk “Never Turns Out Well”?http://t.co/gjgSObhR9m?”Markets don’t exist simply to enrich people $$ $QQQ?Mar 07, 2014
  • Buffalo Small Cap Tech Fund Tops Ranking with 61% Return?http://t.co/KyP5qcKx9E?If u r looking 4 aggressive growth funds, many ideas here $$?Mar 07, 2014
  • How to invest like a billionaire?http://t.co/8OsYmbDUid?Billionaires build corporations; they don’t just trade stocks $$?Mar 06, 2014
  • Deleveraging Is a Drag?http://t.co/nCjzfJc4w2?Gary Shilling tells us what factors may lead interest rates to go down further, not up $$ $TLT?Mar 05, 2014
  • Buffett?s Book Pick Guides Fuss to Marks Beating Market?http://t.co/AyJROYpYov?Many investors cut their teeth on The Intelligent Investor $$?Mar 05, 2014
  • Buffett Derivatives: back in black?http://t.co/iitbAGrUFQ?Keep it simple — @WarrenBuffett won on this trade, add in the float earnings $$?Mar 05, 2014

 

Other

 

  • Fed’s Plosser Asks Central Banks to Get Back to Basics?http://t.co/wiUb3CU9qL?Slight fed funds rise helps money mkts & metal inventories $$?Mar 07, 2014
  • How the Chevron RICO Ruling Relates to Abortion Clinic Protests?http://t.co/URsJ3pAuVl?Fascinating analogy, though I think it is flawed $$?Mar 07, 2014
  • 95% of bank ATMs face end of security support?http://t.co/WOYOoiB9Kw?Bet u never knew that almost all bank ATMs use Windows XP! $$ $XLF $SPY?Mar 07, 2014
  • Food Hacks To Change The Way You Eat?http://t.co/GEAX14oDjy?Cute ideas; I may try a few of them $$?Mar 06, 2014
  • Satoshi Nakamoto’s Modest Lifestyle?http://t.co/4UZGSXmyFg?& how Leah McGrath Goodman found the Bitcoin founder http://t.co/qAY239pRZ4 $$?Mar 06, 2014
  • Women Could Have Greater Role in Church, Says Pope?http://t.co/4RcQVeWZ5Q?Making them deacons doesn’t make sense; prelude to priesthood $$?Mar 06, 2014
  • The Computer Mouse Still Roars?http://t.co/opGReEejHJ?If u want accuracy & speed, nothing beats a mouse, aside from a trackball $$ $LOGI?Mar 06, 2014

 

Wrong

?

  • Warren Buffett, Climate-Change Denier?http://t.co/A0YFEHjgzk?Buffett didn’t deny climate change; just that it had no impact on P&C ins $$?Mar 04, 2014
  • Unlikely: Buffett Power Hunt May Target Wisconsin Energy?http://t.co/kmceBMMY4T?Don’t think Buffett pays up 4 an earnings yield <6% $$ $WEC?Mar 04, 2014
  • Wrong: Insurers will destroy themselves 2nudge us in2 robot utopia?http://t.co/pjn4OUNYD3?Systems will never b that good; rates will fall $$?Mar 05, 2014
  • Wrong: The well is running dry for big oil?http://t.co/sgzsvu4tkU?Article ignores growing demand 4 crude globally, but depletion is big $$?Mar 03, 2014
  • Wrong: Vladimir Putin’s Alternate Reality?http://t.co/M1ioKfzqPg?Putin saw that the West did nothing when Georgia was invaded, he learned $$?Mar 03, 2014
  • Wrong: Debt alarmist chart.?http://t.co/uq0cC33Kel?Neglects the entitlement liabilities of the US Government. Wish he gave data source $$?Mar 03, 2014

??

Retweets, Replies & Comments

?

  • RT @footnoted: A bit of hedging in there @vitaliyk my go-to person on Russia/Ukraine situation?http://t.co/bUBvcRj2bm?Mar 05, 2014
  • @firstadopter Not worth the paper it is written on, not that Ukraine could have maintained nuclear weapons. The US is an unreliable ally.?Mar 04, 2014

?

Thoughts on the Berkshire Hathaway Annual Letter & Report

Thoughts on the Berkshire Hathaway Annual Letter & Report

Posted on by David Merkel

I’m going to try to take this topically. ?Here goes:

On Acquisitions

Buffett still has a strong desire for more acquisitions. ?After $18B to buy?52.6% of Heinz (counting in the low strike warrants), and all of NV Energy through MidAmerican, there were additional?bolt-on acquisitions $3.1B after additional payments of $3.5B to buy the rest of Marmon ?and Iscar. ?After all that, the cash level at BRK was virtually unchanged from the beginning of 2013.

He might like to own far more of Heinz in the future:

Though the Heinz acquisition has some similarities to a ?private equity? transaction, there is a crucial?difference: Berkshire never intends to sell a share of the company. What we would like, rather, is to buy?more, and that could happen: Certain 3G investors may sell some or all of their shares in the future, and?we might increase our ownership at such times. Berkshire and 3G could also decide at some point that it?would be mutually beneficial if we were to exchange some of our preferred for common shares (at an?equity valuation appropriate to the time).

And he might want to buy more utilities:

NV Energy, purchased for $5.6 billion by MidAmerican Energy, our utility subsidiary, supplies electricity?to about 88% of Nevada?s population. This acquisition fits nicely into our existing electric-utility?operation and offers many possibilities for large investments in renewable energy. NV Energy will not be?MidAmerican?s last major acquisition.

The Powerhouse Five

MidAmerican is one of our ?Powerhouse Five? ? a collection of large non-insurance businesses that, in aggregate, had a record $10.8 billion of pre-tax earnings in 2013, up $758 million from 2012. The other companies in this sainted group are BNSF, Iscar, Lubrizol and Marmon.

If you look at BRK earnings now, leaving aside derivatives, one-third of earnings come from insurance, and the rest stems from the industrial & utility enterprises. ?[Note: Buffett uses the word “sainted” which he used in the 1980s to describe a group of much smaller private companies that he owned in full then. ?He doesn’t mean holy, but leading and valuable. ?They are driving the economics of BRK.

None of the Powerhouse Five did badly in 2013, though Marmon was a little weak. ?It’s difficult to find any part of BRK that did badly in 2013. ?BNSF was particularly impressive, and I am glad that I thought it was a good move when Buffett bought it, because too many criticized it at the time.

As an aside, it’s interesting how much MidAmerican is pouring onto wind and solar power.

Debt

I’ve always thought Buffett was clever with debt issues. ?He never guarantees the debt when he takes over a company. ?He is willing to live with the complexity of subsidiary debt issues. ?But hear these quotations from the Annual Report:

  • Berkshire does not guarantee any debt or other borrowings of BNSF, MidAmerican or their subsidiaries.
  • BNSF?s borrowings are primarily unsecured.
  • All, or substantially all, of the assets of certain MidAmerican subsidiaries are, or may be, pledged or encumbered to support or otherwise secure the debt. These borrowing arrangements generally contain various covenants including, but not limited to, leverage ratios, interest coverage ratios and debt service coverage ratios.
  • The borrowings of BHFC, a wholly owned finance subsidiary of Berkshire, are fully and unconditionally guaranteed by Berkshire.?

Buffett only guarantees the debt of a small finance subsidiary, and nothing more. ?The rest of the debt is non-recourse to BRK, and so bondholders take their chances on a subsidiary failing.

Derivatives

Our credit default contracts generated pre-tax losses of $213 million in 2013, which was due to increases in estimated liabilities of a municipality issuer contract that relates to more than 500 municipal debt issues. Our credit default contract exposures associated with corporate issuers expired in December 2013. There were no losses paid in 2013. Our remaining credit default derivative contract exposures are currently limited to the municipality issuer contract.

The equity puts are way out of the money, and only municipal issues remain among his fixed income derivatives. ?BRK “made” $4B on the derivative positions in 2013, something that will be impossible to repeat.

Give Buffett credit, though, because he structured some clever trades that have made a lot of money. ?Value investing won vs option pricing. ?At present, the future performance of the derivatives is?close to immaterial, unless we have significant municipal defaults.

Insurance

A few qualitative notes: Buffett mentions that GEICO has passed Allstate to become #2 in Auto insurance. ?He later mentions State Farm (#1 in Auto, I think the first time he has mentioned it):

Unfortunately, the wish of all insurers to achieve this happy result creates intense competition, so vigorous?in most years that it causes the P/C industry as a whole to operate at a significant underwriting loss. This loss, in?effect, is what the industry pays to hold its float. For example, State Farm, by far the country?s largest insurer and a?well-managed company besides, incurred an underwriting loss in nine of the twelve years ending in 2012 (the latest year for which their financials are available, as I write this). Competitive dynamics almost guarantee that the?insurance industry ? despite the float income all companies enjoy ? will continue its dismal record of earning?subnormal returns as compared to other businesses.

But after mentioning State Farm’s abysmal underwriting, though Buffett doesn’t say it is such, he mentions how well BRK has done:

As noted in the first section of this report, we have now operated at an underwriting profit for eleven
consecutive years, our pre-tax gain for the period having totaled $22 billion. Looking ahead, I believe we will
continue to underwrite profitably in most years. Doing so is the daily focus of all of our insurance managers who
know that while float is valuable, it can be drowned by poor underwriting results.

BRK had a light year for catastrophes, which inflated their income somewhat. ?It also seems that they put the poor deal that they did with Swiss Re behind them.

Buffett also talked about the “float” growing — assets held for future payment where no interest has to be paid. ?It’s $70B+ now. ?More on that later.

Buffett also trumpeted a move into Specialty Insurance. ?He poached a team from AIG in 2013 to start this. ?Specialty Insurance means niche markets with very careful underwriting guidelines. ?I’m sure that Berkshire will do this well.

Finally, the insurers have good underwriting and reserving. ?BRK still has a underwriting profit over the past eleven years, and they continue to release reserves from prior year claims.

The Structure of Berkshire Hathaway [BRK]

Though insurance no longer provides the majority of income for BRK, it is crucial to BRK’s functioning. ?The insurance companies own almost of the industrial and utility enterprises. ?BRK has little?in fixed income and cash vs insurance reserves. ?Buffett says:

 

Payments of dividends by our insurance subsidiaries are restricted by insurance statutes and regulations. Without prior regulatory approval, our principal insurance subsidiaries may declare up to approximately $13 billion as ordinary dividends before the end of 2014.

 

There is a rule of thumb in P&C insurance. ?Claim reserves are funded by high quality bonds of equivalent length ?Unearned premiums are funded by short-term debt like commercial paper. ?Surplus funds are invested in risk assets, like equities.

With BRK, more is invested in risk assets than the rule of thumb would allow. ?I’m not sure how the Risk-based Capital formulas allow this. ?Other insurance companies can’t do this.

Notes

Buffett uses his private investments in?real estate investing to show the difference between private & public investing. ?This explains why we should be slow to trade. ?He also says:

Most investors, of course, have not made the study of business prospects a priority in their lives. If wise, they will conclude that they do not know enough about specific businesses to predict their future earning power.

And as such, an investor in that state of ignorance should index.

Other Notes

Those who want to ask questions at Buffett’s annual meeting should send questions to:?Carol Loomis, of Fortune, who may be e-mailed at cloomis@fortunemail.com; Becky?Quick, of CNBC, at BerkshireQuestions@cnbc.com; and Andrew Ross Sorkin, of The New York Times, at arsorkin@nytimes.com.

Some have complained about a lack of transparency at BRK, and I have to disagree. ?BRK is a collection of small and large businesses. ?The annual report adequately talks about all of BRK, but gives less time to smaller issues. ?BRK is the fifth largest company by market cap, and Buffett reveals more of his intentions then most CEOs.

I have more to say regarding Intrinsic Value & Compounding, but that will have to wait.

Full disclosure: Long BRK/B for myself and clients

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Bitcoin

 

  • Mt Gox: The brief reign of bitcoin’s top exchange?http://t.co/9jSwvxrzOJ?What happens when u neglect basic acctg & programming controls?Mar 01, 2014
  • Bitcoin Exchange Mt. Gox Files for Bankruptcy Protection?http://t.co/aobpHTmsYi?B wary of opaque transaction systems, clever may steal $$?Mar 01, 2014
  • Where Did the Bitcoins Go? The Mt. Gox Shutdown, Explained?http://t.co/0OkksL8TPG?Currencies can’t exist apart from legal systems $$ $BTCUSD?Feb 26, 2014
  • The Bitcoin Collective Delusion?http://t.co/t51GGmuWbw?Inevitable that gov’ts get involved in currencies & trade 4 punishment of fraud $$?Feb 26, 2014

 

Companies & Industries

 

  • Wall Street Hates JPMorgan Fee 4 $1T Junk Loans?http://t.co/laoAXelOIr?It is a private market; if the distortions r bad enuf, biz will leave?Mar 01, 2014
  • Line Builds $15B Value With Teddy Bears, Wicked Witches?http://t.co/ccGFjIVQsQ?Freemium model applied to Asian messaging, watch 4 IPO?Mar 01, 2014
  • Old Mutual Plans IPO of US Unit After Profit Increases?http://t.co/a28VUvS23r?The final reconciliation of a decade-plus of mis-investment $$?Feb 28, 2014
  • Oil Giants Sell Pipelines as Shale Strength Drives Deals?http://t.co/OBVZ66Tm5y?They expect oil prices 2rise as they c cheap oil scarcity $$?Feb 28, 2014
  • Dream of US Oil Independence Slams Against Shale Costs?http://t.co/eFRnOdt0aX?If debt funds a large part of drilling, time 2b nervous $$?Feb 28, 2014
  • $MSFT ‘s Culture Is Like ‘ $IBM Circa 1990,’ New Chairman Says?http://t.co/gzy5NzCaAX?Use MSFT Office/Windows Cash Cow 2build new biz $$?Feb 27, 2014
  • What is ‘Forbes’ worth??http://t.co/mHpDgpfkpi?The Internet chgs everything; formerly important publications get digitally hollowed out $$?Feb 26, 2014
  • Rolls-Royce Drone Ships Challenge $375B Industry?http://t.co/CCC9L0rynT?Problems here r considerable- control in bad weather, piracy, etc $$?Feb 26, 2014
  • US Issues Emergency Testing Order To Crude Oil Rail Shippers?http://t.co/bU5AuY7Ixd?Reasonable precautions 4 general safety $$ $UNP $CSX?Feb 26, 2014
  • Japan Post Prepares for IPO?http://t.co/yE7k137VjT?Lotsa assets, but the Q is what can be done w/them. Fuzzy situation w/no hurry $$ $EWJ?Feb 26, 2014
  • Zuckerberg Dines With Phone Frenemies Fretting Over Profits?http://t.co/NMga2US13J?Monet 2b made in solving mobile payments problem $$ $FB?Feb 26, 2014
  • Rising Premiums May Hit Small Firms?http://t.co/nBA1wjigHP?The lies told by the administration regarding cost control r astounding $$?Feb 26, 2014
  • Saudi?s Allure Undimmed for Bechtel to DaVita Amid Fallout?http://t.co/ikppxlukf3?Someone has 2 buy from the US; $DTA helps w/diabetes $$?Feb 26, 2014
  • $BAC Reaches Deal With Buffett on Preferred Stake?http://t.co/bLpgqOMJzT?Buffett gets better call protection, divs can b waived in crisis $$?Feb 26, 2014
  • Woes of Megacity Driving Signal Dawn of ?Peak Car? Era?http://t.co/npHTO6NtcJ?It may take ~10 yrs, this will right itself, w/fewer cars $$?Feb 26, 2014
  • Google Buses Fuel Inequality Debate as Boom Inflates Rents?http://t.co/CaQ4msqBnW?I f you can’t afford living in San Francisco, move out $$?Feb 26, 2014
  • How ARM Holdings Dominates the Chip World?http://t.co/CCFJDitgh1?$ARMH vs $INTC – 2 clever approaches that r utterly different. Who wins? $$?Feb 26, 2014
  • Health Law Already Has Impact on Bottom Lines?http://t.co/o4k5u6uWgB?Fitting that health insurers r getting hosed 4 cooperating w/Obama $$?Feb 26, 2014
  • Repsol Agrees to $5B Deal W/Argentina on $YPF?http://t.co/piwKwxqS70?$REP decides half a loaf is better than none, nondefaultable bonds $$?Feb 26, 2014

Rest of the World

?

  • China’s Yuan Slides Against US Dollar?http://t.co/VLBVTrLPEf?The Yuan is still a rigged market, we need 2c it float to ascertain value $$?Mar 01, 2014
  • Bulgaria?s Currency Board versus Ukraine?s Chaos?http://t.co/w1lAYExWuF?A currency that is anchored leads 2 better results in many ways $$?Feb 28, 2014
  • China’s Central Bank Engineered Yuan’s Decline?http://t.co/WmwpCa0H4L?It remains 2b seen where the yuan will trade when it freely floats $$?Feb 28, 2014
  • War Crimes Evident in South Sudan, Human Rights Watch Says?http://t.co/1AfsvPMYmG?Easiest way 2 call off dogs of war is not 2 loose them $$?Feb 27, 2014
  • Abe?s Southeast Asia Push Adds to US Ties Amid China Rift?http://t.co/3BDgdNznN4?Example of entangling alliances: Will US defend Asia? $$?Feb 26, 2014
  • Ortega?s Zara Fashions Tax Avoidance by Shifting Profits to Alps?http://t.co/RGBMJ4Xmzc?Govts have an interest in unifying tax policy $$?Feb 26, 2014
  • Crisis Gauge Rises to Record High as Swaps Avoided?http://t.co/hLKrltiEVk?Chinese corp spreads widening, same for their TED spread $$ $FXI?Feb 26, 2014
  • Investors Mount Attack on Norway in $20B Oil, Gas Row?http://t.co/VOPMQgMZKE?Norway becomes less predictable, may chase developers away $$?Feb 26, 2014
  • Ukraine Pledges to Protect Deposits as Kiev Rally Called?http://t.co/iMGsdLODA2?Must ring hollow in Cyprus as EU moves 2 support Ukraine $$?Feb 26, 2014

?

US Politics & Policy

 

  • How ADA, a Chemical Used in Rubber, Got Into 500 Food Products?http://t.co/moZqNNco85?Just because it’s not natural doesn’t mean it’s bad $$?Mar 01, 2014
  • Federal audit calls new school lunch rules a failure?http://t.co/RyEd0JpP7j?Missing middle ground where kids get yummy nutritious food $$?Mar 01, 2014
  • Study Finds SEC Staff Sold Shares B4 Cases Made Public?http://t.co/8xRzyCfIgx?SEC staffers don’t know what 2 buy, they know what 2 sell $$?Feb 28, 2014
  • GOP Targets Hillary Clinton With Obamacare Attacks?http://t.co/QKlHYwHUeG?It is fair to ask her what she would do differently than Obama $$?Feb 27, 2014
  • Here’s How Much People Are Actually Paying for Health Insurance?http://t.co/AeC4xs3y2d?Interesting, not sure what to make of it $$?Feb 27, 2014
  • Busted State Obamacare Websites Haven?t Caught Up to Healthcare gov?http://t.co/LLee1ovP2y?OR, MA & OR r worse than Fed’l website 4 PPACA $$?Feb 27, 2014
  • What Does Eric Schneiderman Know That the Rest of Us Don’t??http://t.co/aI4Crec3EZ?Oversteps his bounds, but gets sellside firms 2 stop $$?Feb 27, 2014
  • Dave Camp: How to Fix Our Appalling Tax Code?http://t.co/lx4VM2kHNz?Complex tax codes allow the wealthy 2 eliminate taxes that poor can’t $$?Feb 26, 2014
  • When the Minimum Wage Goes Up, the Menu Price Also Rises?http://t.co/ukEWzIjoje?The pain has 2go somewhere, including reducing employment $$?Feb 26, 2014
  • America’s 10-Year Experiment in Broadband Investment Has Failed?http://t.co/hjGuuu7JA0?We need to free up competition in the “last mile” $$?Feb 26, 2014
  • How Dodd-Frank Might Kill the CLO Market?http://t.co/ztV9PMdums?& we won’t miss it, b/c securitized credit is not accounted 4 properly $$?Feb 26, 2014
  • High-Priced Hydrogen Cars to Challenge Electrics?http://t.co/3akLFwjJuG?Hydrogen is not the solution, it is just fossil fuels in disguise $$?Feb 26, 2014
  • Truth About Hydrogen Power?http://t.co/McG32mWHyT?Old article, explains y hydrogen is no panacea b/c it takes fossil energy 2 produce it $$?Feb 26, 2014
  • The same is true of fusion power. The costs of creating Tritium at a scale needed to power a city would be astounding. $$?Feb 26, 2014
  • A Surprise Guest at the SEC’s Annual Gathering?http://t.co/R15fMul7CU?@mcuban shows what a measured & classy guy he can b @ SEC meeting $$?Feb 22, 2014

 

US Economics & Monetary Policy

?

  • Foreclosures Climaxing in New York-New Jersey Market: Mortgages?http://t.co/NPQeYY7Rc3?Judicial foreclosure states catching up rest of US $$?Feb 26, 2014
  • Home Prices in 2013 Notch Biggest Annual Gain Since 2005?http://t.co/FjTjdA7YcU?Demand from investors pads purchases, rates higher now $$?Feb 26, 2014
  • America?s Hottest Housing Market Has Suddenly Cooled Down?http://t.co/00uIJ4gSo3?Phoenix RE rises out of ashes on speculative demand $$ $Z?Feb 26, 2014
  • March 4 Hearing for Three Fed Nominees?http://t.co/McV2Tt7p29?One bullet & 2 blanks in the gun. Stanley Fischer will bring some wisdom $$?Feb 26, 2014
  • Fed Crisis Transcripts Highlight Futility of FSOC Crystal Balls?http://t.co/XComU1xA5K?Bureaucrats can’t/won’t predict disaster coming $$?Feb 26, 2014
  • The Fed knows less than average?http://t.co/cnA4nBBwU0?& http://t.co/5wG84hxPGi & http://t.co/C5y3re8ajV 2008 Transcripts show clueless $$?Feb 26, 2014
  • How to Profit from the Yellen Fed?http://t.co/4oAiBUdXDr?Yellen is core 2 the M.O. of the Fed, it’s like jazz, they make it up as they go $$?Feb 26, 2014

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Market Impact

 

  • Banks Averting Bond Losses With Accounting Twist?http://t.co/VC83ByMGNC?Switching bonds from available 4 sale 2 held 2 maturity $$?Feb 26, 2014
  • The switch limits flexibility b/c u can’t change back w/o poss changing all back; also doesn’t change economics, moves losses 2 future $$?Feb 26, 2014
  • Greed Turning Losers to Leaders in Russell 1000 Index?http://t.co/vpGTVXkD9t?Could this b a harbinger of a change in the markets? $$ $SPY?Feb 26, 2014
  • Outcome or process ? what investment focus succeeds over time??http://t.co/edXLqAX9pg?@Ritholtz tells us to focus on process not results $$?Feb 26, 2014
  • Social psychology: Market madness?http://t.co/BtaVXAYWYZ?This is y the 1st priority of investment is risk control; can’t sleep @ night $$?Feb 26, 2014
  • 10 Value Investing Blogs You’d Be Crazy Not To Follow?http://t.co/mt8tZkGRAq?Happy 2b featured among this great group of blogs $$ Thanks!?Feb 26, 2014

 

Other Business

 

  • Harvard Brainpower Joins MIT Fueling Boston Sports Teams?

Titles?http://t.co/OZNC8wCIJi?Bright guys using math2analyze sports in Beantown $$?Feb 28, 2014

  • Big Data Comes to the Farm, Sowing Mistrust?http://t.co/ayBsxp8qAt?Farmers worry that data used to help them will b used against them too $$?Feb 28, 2014
  • Corporate Economists Are Hot Again?http://t.co/DUn5O7Idjz?An alternative would b actuaries, they r usually better at practical models $$?Feb 27, 2014
  • Dwindling Midwest High School Grads Spur College Hunt?http://t.co/iVURNV69EU?Demographics now fight against colleges, many weak will die $$?Feb 26, 2014
  • The Joy and Freedom of Working Until Death?http://t.co/wkGRoRSJIg?Find something that u enjoy doing that supports u & yours well forever $$?Feb 26, 2014

 

Medical

 

  • Dad May Join Two Moms for Disease-Free Designer Babies?http://t.co/yiXUO0sLok?Designer babies:many embryos die in order 2 produce 1 child $$?Feb 26, 2014
  • Your Heart May Be Older Than You Are?http://t.co/46PbtkWQ7h?Cute way 2 get people to take care of themselves; may have false negatives $$?Feb 26, 2014
  • Mystery Medical Symptoms Hit a Surprising Number of Patients?http://t.co/6DoJnAjt6w?Stress can trigger pains; this teaches stress control $$?Feb 26, 2014

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Pimco & Bill Gross

  • Pimco’s Gross: ‘U don’t always produce productive family by sweet talking&always being inclusive’?http://t.co/sjKnhN76jh?Allianz happy w/him?Mar 01, 2014
  • Counterpoint: It?s time for Bill Gross 2 retire?http://t.co/UB1ikZhTlI?Everybody Should Get Off Bill Gross’s Back http://t.co/hbbAYRXuBN $$?Feb 26, 2014
  • Inside the Showdown Atop Pimco, the World’s Biggest Bond Firm?http://t.co/kVtk8Zf5d8?Gross developed the theories guide Pimco & he stays $$?Feb 26, 2014

 

Wrong

  • Wrong: Templeton Braving China?s Housing Bubble?http://t.co/rjVSQUXoAe?China looks like Japan in 1989, or the developed world in 2007 #avoid?Mar 01, 2014
  • Wrong: NASA Scientists Discover 715 New Planets?http://t.co/6KhRpp2Y5A?Life is finely tuned on Earth +/- 10% in size of Earth -> no life $$?Feb 27, 2014
  • Wrong: Fed s Tarullo Eyes New Tools to Limit Interest Rate Risk?http://t.co/fA4l6omDVi?Dreams 2 undo effects of bad policy w/o undoing it $$?Feb 26, 2014
  • Wrong: It Takes How Much Water to Grow an Almond?!?http://t.co/u8kpW7kJFj?Misses the idea that water does get reused many times: rain $$?Feb 26, 2014
  • Wrong: Can Amazon Dominate in Insurance, Too??http://t.co/zAP8GkunSx?Except 4 simple products, Insurance is too complex 4 people to pull $$?Feb 24, 2014

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Comments, Replies & Retweets

  • @jasonzweigwsj @AlexRubalcava I wrote an article on the problems w/zero cost investing recently?http://t.co/ALu1ijgVev?”sand in the gears”?Mar 01, 2014
  • RT @AlexRubalcava: Zero commission stock trading sounds like a product tailor made to amplify investors? behavioral finance mistakes.?Mar 01, 2014
  • “Currencies & trade cannot exist in a vacuum apart from legal systems, because fraud is a crime?” ? David_Merkel?http://t.co/7fJX26SEyP?$$?Feb 26, 2014
  • ‘ @GSElevator Tattletale Exposed (He Was Not in the Goldman Elevator)?http://t.co/S1NVy13sZn?I don’t get out much, 1st I’ve heard of this $$?Feb 26, 2014
  • “Regarding First Data, many might think it quite desirable to step out of the spotlight @ $JPM &?” ? David_Merkel?http://t.co/COHGctym2A?$$?Feb 26, 2014
  • . @dpinsen The ancient retirement tripod of course?http://t.co/k06EUCbHa1?unless the modern one works. $$?Feb 26, 2014
  • @dpinsen That was icky, and more… gotta go wash my brain out… brrr.?Feb 22, 2014
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