In spite of the fact that most of what he writes is over my head, I am a James Montier fan.
His latest white paper is a gem, but I am not allowed to discuss it here.
WHY did you delete my post: "OT - GMO Forecasts"?
Last night, I posted some absolutely worthless jibber jabber and you were fine with THAT.
This morning I post something of substance and within 39 seconds (I kept a screen copy) you blow it out of the water. WHY?
If you have "do's and don'ts" style guide, post it.
Only those poor souls who are coherst into buying overpriced hamburgers are going to complain.
On the other hand, and not surprisingly, the sellers will generally be ecstatic.
Every putt makes somebody happy.
By the way, my original reply was censored.
balt, you're right. I'll never own those puppies. I'm smart enough to know that I'm far too stupid to play that game and win. The good news is, I won't be competing with the sharpies who do sell those insurance policies to other speculators.
« seems odd ? »
Not at all.
If the goal of an insurance company is to run a tight operation and make the bulk of their money off investments of their float then the current credit & equity markets must be incredible frustrating.
And who's to blame for that?
balt, thanks for the concern, but I'll pass. At my age, I just don't want to make the effort to learn new ways of losing money. The old ways work well enough.
hc, I don't hate options, I just don't understand them well enough to want to get involved with them. While the Time Value of Money equation makes sense to me, the Black Scholes does not. I don't understand the pricing.
« Every period of outperformance starts with a post like this. »
That shouldn't be too hard to do going forward. My guess is that the S&P 500 would have only done about ~5% YTD if folks hadn't bid the multiple up ~24%. At the start of the year they were only willing to pay a $1.31 for a dollar of sales and now they have no problem with paying $1.63. Think about it. About 80% of the current YTD return is a joke. A dollar of sales only puts about three cents worth of dividends in your pocket and sales per share have been growing (nominally, which includes inflation) recently by about 3% to 4% per year. IMO, if your goal is to make a ~7% return on your investment then you shouldn't be bidding more than 1.00X sales. JMO.
But, according to the "Historical, Forward Returns by Capital Distribution Practice – Relative to S&P 500 TR Index" chart (page 11) in FactSet's BUYBACK QUARTERLY, 23Sep2013, what folks really like (reward) are companies with "No Buybacks and No Dividends".
hc, I'll stop begging for a dividend if you stop begging for a buyback, deal?
Thomas Russo suggested (BARRON'S, 6/16/2012) a solution to that problem:
Below is an excerpt from the interview:
What about Berkshire post-Buffett?
It will be a different company, but I think it could be a very value-creating company still. It has an able team to help deploy Berkshire's cash, and Berkshire could pay a fairly high dividend when you consider that the bulk of Buffett's shares will end up inside the Gates Foundation, and that entity is burdened with a 4%-5% payout ratio.
You're referring to government rules on spending by charitable organizations? How high could the dividend be?
It could be 4% because Berkshire generates so much cash. At the end of the day, the burden of putting cash to use that Warren has faced may not be faced by his successors because of share buybacks and a big dividend.
Looking, is this some kind of sick joke?
"Deposits would be subject to a negative interest rate, too, only smaller than the reserve interest rate. Banks would take demand deposits at, say, –7 percent interest, or time deposits at perhaps –5 percent or –3 percent, and make loans at –1 percent or 0 percent."
Correct me if I'm misinterpreting this, but are you/he really suggesting that the banks should CHARGE ME to deposit my money with them and then PAY OTHER FOLKS to borrow it?
hc, the answer you seek might be found in the "Doubleline Income Solutions Fund" thread over on the other board. If something looks too good to be true, it probably is. I mentioned previously that Vanguard threw in the towel on VPDFX after they realized they couldn't do a ~7% annual distribution. Now, they're going to try 4%, and that's probably still too high.
Both Hussman and Grantham are making, respectively, ten year nominal and seven year real, FORECASTS of the returns they expect will occur, based on various inputs and a reversion to the mean.
Do you remember the story I told you about the co-worker who berated me in the hall at work, telling me that I was a coward for not continuing to buy stocks (it was Fall of 1999)? Two years later when our paths would cross he couldn't look me in the eye, because he knew I knew that he had racked up some major losses as a result of his excessive bullishness when stocks were already too high.
I like his empirical graph correlating the subsequent ten year nominal annual total return with the starting price to revenue ratio.
The current, estimated Price to Rev of 1.63 suggests an ATR of about 2.7% over the next decade.
Try retiring on a nest egg that compounds by that much per year!
Years ago, (~2006, when I coattailed KKR on one of their deals, Accuride), I learned that book value and return on equity really don't correlate with anything. GMO's Ben Inker discussed that very same problem in the paper we discussed this week.
Before you can begin to talk about "a big discount to IV" you must first tell me what IV is (numerically) and then you have to convince me that you have calculated it correctly. IMO, it can't be done for a "zero coupon consol".