Beach, I agree, the time frame is important. My two sons (ages 25 & 29) have Vanguard Traditional IRAs and are invested in the Target (Years 2055 & 2050) Retirement Funds. Both funds are currently: 63% Total US Stock Market, 27% Total International Stock Market, 8% Total US Bond Market, and 2% Total International Bond Market.
The Fed has done an incredibly effect job of destroying both the Credit and Equity Markets by pumping asset prices up to the point where it is almost a certainty that returns over the next decade will have to be subpar.
IMO, there really is nothing left to do other than take Munger's advice:
“At a certain place you’ve got to say to the people, ‘Suck it in and cope, buddy. Suck it in and cope.’”
Reference: Bloomberg, Andrew Frye, 20Sep2011, « Munger Says 'Thank God' U.S. Opted for Bailouts Over Handouts »
brkahoo, isn't it obvious?
Mr. Market understood what he said!
09/26/2011 Press Release : Will buyback shares at or below 110%
10/04/2011 WEB clarifies the PR by remarking: "Buying One Dollar for 90 Cents", implying an IV/BV ~122%
12/12/2012 Press Release : Buyback threshold reset to 120% or less
WEB's 4Oct2011 statement was NOT the "wishy-washy" proverb that you would like to believe it was, it was QUANTIFIABLE.
Maybe you should take the time to review what he actually said as reported in a Bloomberg article by Andrew Frye.
« Buffett Likens Berkshire Repurchases to Buying Dollar Bills for 90 Cents »
“If I can buy dollar bills for 90 cents, I’ll buy them,” Buffett, 81, said today at Fortune magazine’s Most Powerful Women conference in Laguna Niguel, California. “I want to warn the people that are selling to me that I believe I am buying their dollar bills for 90 cents.”
hc, I have never put anyone on ignore. With only one exception, "NJ Flo" (see below), almost everyone brings something of value to a discussion. The particular trade that seems to fascinate (to no end) several folks on this board, doesn't bother me in the least. My hypothetical loss on that trade is simply the difference between what I would have made on BRK-B and what I actually made on VPU. Nothing to loss any sleep over. The trade that really haunts me is my 1982 purchase of Apple. On the 5Apr1982, I bought 100 shares at $18.50 per share, and then sold them, less than a year later after a fantastic run up, on the 30Nov1982, at $28.375 per share, to lock-in a 53% profit. Those prices, by the way, include the market maker's (Dean Witter Reynolds) commission. But, if I had simply held onto them, those shares would have grown, after four splits (2x2x2x7), to 5,600 shares, now worth more than half a million dollars. In my defense, you need to remember that IBM introduced their PC in August of 1981, and it was clear to me by late 1982 that it was taking sales away from Apple. My "market research" consisted of monthly visits to the local ComputerLand store during that period of time.
"Flo" is short for Florentine, and I'm sure you know what ingredient that generally refers to in Italian cuisine.
I gave your post a positive recommendation for both creative writing and sense of humor, even if I'm the butt of the joke.
Balt, I'm sympathetic to your point of view. In spite of the fact that the current price per share is $94.32 and my cost basis is $77.47 (~20% portfolio weighing, bought in four ~5% installments) and my thoughts on its value, I have no intention of selling it. It does look like the T4Q D/s growth rate may have stalled out, temporarily, but a pseudo least squares linear regression (plotting the natural log of the trailing 4Qtr D/s vs the date) of data going back to 2005 still looks good. By the way, the slope of the PLSLR line, the growth rate, is 5.6 ± 0.2 % per year. Hopefully it will be the last thing my wife sells after I'm gone.
« One of the book's most notable advocates is former United States First Lady Laura Bush, who listed it as her favorite book in a 2006 Wall Street Journal article. »
« Jad is Sad »
NT, is that a title from your reading list [see below] or are you just late to the party? If it is the latter, stick around, we'll being needing folks to fold & stack chairs, take down the decorations, and sweep the floor.
NT's Reading List?
Hop on Pop
Clifford the Big Red Dog
One Fish Two Fish Red Fish Blue Fish
Go, Dog. Go! (my favorite!)
« Take some responsibility for your mistake. »
I have. In my previous post I said, I MADE THE MISTAKE OF TRUSTING HIM TO KEEP HIS WORD.
Other than that, I have no regrets on closing out a short-term trade that had gone bad. One I should never had made in the first place. By the way, on the very same day, 7May2012, that I sold BRK at $81.97, I also added to my VPU (Vanguard Utilities ETF) position at $75.57 (as of 7/9/2014, that's an ATR of about 14.8%). I have always have enough cash available so that I don't have to wait for one trade to clear before I make another.
Now, give it a rest.
« 1% is 100% better than 0%, no? »
Beach, offering to pay me 1% to borrow my money so that they can loan out to someone else at a much higher rate and then skim the difference is an insult, particularly when year over year inflation is running about 2% per year. Falling behind (in buying power) by 2% per year (by holding cash, demand deposit) or 1% per year (savings account) is still losing ground. If I can't make a decent return on money, I'll do my darndest to make sure no one else does either. How's that for being spiteful?
« What model did you use when you sold BRK.B in the low $80's? »
The 4Oct2011 Buffett Model : Buying back shares at 110% of book value per share is like buying dollar bills for 90 cents --- hint, hint, hint --- IV/BV is 122%.
The cost basis on my SHORT-TERM TRADE was 125% of BV. I don't trade, SHORT-TERM, to make single digit returns.
I made the mistake of trusting him. Little did I know that he would move the goal posts on this and other things that he had said in the past. I won't make that mistake again! Currently 0% BRK.
hc, you might want to take a look at post # 211690 (currently 23 recommendations) over on "TOB", the other board.
The author has posted his 10 year predictions for the "500" and several stocks, at least two of which, BRK-A and AAPL, may be of interest to you. What is particularly interesting is he presents a model and suggested inputs for each. It is kind of fun, at least for me, to reverse-engineer someone else's model, someone who has obviously put quite a bit of thought into what he is doing.
If I'm not mistaken, you can convert his IV10/Price ratio to a 10-Yr %ATR by taking the 10th root of the ratio, subtracting 1, and multiplying the result by 100. So his IV10/Price of 2.69 for BRK converts to a 10-Yr %ATR of 10.4%. But, look very carefully at the underlying assumptions before you put too much weight on that.
Check out: « Fedspeak 3.0: The 'dot plot' »
Appropriate pace of policy firming based on the 'dot plot' (showing how 16 individual FOMC members voted) - the MEDIAN target federal funds rate at year-end: 2014, 0.25%; 2015, 1.00%; 2016, 2.25%; and Longer run, 4.00%.
It will probably take several more years before it happens, but eventually risk adverse savers may once again make some money on their savings accounts. A coupe of weeks ago a teller at the bank told me I had way too much money in my checking account and suggested that I open a savings account. She held up a sheet of paper offering 1.00%. I smiled and said at that rate it would take another 72 years to double my money. I don't have another 72 years (I'm a gray haired old geezer). When you can offer 6% I'll be interested. At 6% it would only take 12 years to double my money.
Balt, I too, feel that utilities are now fully valued or even over valued. VPU, Vanguard's Utilities ETF was the only one of my holdings that ended in the green yesterday. Geezers like me sure love our dividends! Unfortunately constantly bidding the price up only destroys the yield. If I add an assumed growth rate of about 3% (2% inflation + 1 % real growth) to the current 3.3% yield, that suggests a total annual return, going forward, of about 6.3%, not bad. But what is particular disturbing, at least to me, is the fact that, at least near term, my guesstimated growth rate may be too high. VPU's year-over-year growth rate has now fallen to only 0.32% (T4Q D/s: $3.098 as of 6/27/2014, vs $3.088 as of 6/28/2013). The same appears to be true for both the DJ Utility Avg (52 week change: 0.56%) and that aging fleet of aircraft carriers know as the DJIA, which is now negative! (52 week change: -0.03%), by the way, my calculations for the last two are based on the BARRON'S weekly data table: "Major Index Price-Earnings Ratios and Yields". That's become a weekly ritual for me. The S&P 500, on the other hand, is still merrily racing along at 11.0%. My guess is, when that one hits the wall, it's over. If someone asked me what a reasonable expectation might be for the annual growth rate of a herd of mature elephants, my answer would be about 4%, 1.8% real + 2.2% inflation. To my mind, anything much higher than that is highly suspect.
Well, they (Birinyi and Hussman) can both be right.
That price would put the S&P 500's price to revenue ratio at about 186%, revenue per share as of 3/31/2014 was $1,126.00. That's very high, but it has been higher! The S&P 500's P/Rev metric is, at least in my opinion, analogous to the MktCap/GDP ratio. A ratio of about 1 is close to fair value. Good buys can be had below 1, and things get progressively scarier the higher it goes. For a good review of historic P/Revs, take a look at the table at the bottom of: « Hussman Funds - Price-to-Sales Ratio May Prove Valuable in the Next Profits Recession »
I thought his explanation of how varying discount rates (through time) effect the price of a zero coupon bond (a single price at the end of an otherwise empty series of cash flows) was very good.
Unfortunately, the arithmetic is a little different for dividend paying stocks. The near-term dividends only see the current discount rate, while the dividends at the end of the series have to "run" (are effected by) the entire "gauntlet" (through time) of discount rates.
StevesStox's post on the other board now stands at 15 recommendations. It's now obvious that quite a few other folks also see the change that has taken place, the difference between the New WEB and the Old WEB.
No doubt in my mind that years ago, when he was a buyer, he wanted his hamburgers to be cheap or at least fairly priced, now that he is in the business of selling hamburgers (liquidation of his portfolio via the BMGF), no price is too high.
« How is it in any way logical to go to McDonald's and be surprised that they don't sell Lobster Bisque? »
To the best of my knowledge, you're right. They don't sell Lobster Bisque, but they (New England & Eastern Canada MCDs) have sold, in the past, a « McDonald's McLobster lobster roll sandwich ».
Unlike your post, StevesStox's post has now received eight positive recommendations, on a message board that is decidedly pro-Buffett. Absolutely amazing!