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Berkshire Hathaway Inc. Message Board

strat58cat 14 posts  |  Last Activity: Aug 5, 2015 3:19 PM Member since: Apr 18, 2007
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  • Highlighting the "technical" concept of resistance, there's a lot of hype today to sell and naturally the consumer is biting with BAC trailing the market. What's it add up to? Street wants in now. Should run up into the 20s within a year.

  • Bush is in the catbird seat. He has over 100 million in his superpac and no credible rivals.

    Trump has a big lead, but also a low cap. Moreover, its doubtful that he really wants to be President. Still, he can't get out of the race until he amps his brand to 11. His announcement, when meaning to denounce the Mexican government for corruption and failure to aid the poor he walked into a firestorm of controversy that adversely impacted his reputation, means he can't exit easiy. First, he'll dominate for a while and ridicule the GOP candidates a bit, while using every opportunity to praise the Mexican people. Next, he'll retreat while on top with a stronger brand to compound his billions into tens of billions.

    Walker is going to do a Huckabee. He's not in this race to win. He needs money. Dude's got a net worth of $-244,000 to $70,000. He's got $20,000 of high-interest credit card debt. As Charlie says, the liabilities are good. He has a Wisconsin pension (while he tries to cut the pensions of other state workers) and a house, but a mortgaged Wisconsin house isn't going to make up the deficit. For comparison, I'm below small fry on this board, and yet have multiple multiples of Walker's net worth, currently one slice in a balance of cash and equities, a large slice of real estate, and a truly epic annuity into which I've invested for many, many years. Annuities can work great when rates fall. Walker, who didn't graduate from college, is strictly small-time. Like Huckabee, he'll use his notoriety from losing the primary to publish a (for Walker ghosted) book, speak for fees, and try to get a contract on Fox. Nearly impoverished Walker no doubt temporarily will overtake my hard-won net worth that required all of my ingenuity and steely nerves to obtain, but mine continues to compound as long as I listen to Buffett. Dude talks about shopping at Kohl's, when he should be at Wal-Mart with me.

  • Reply to

    MYCC

    by strat58cat Jul 23, 2015 6:35 PM
    strat58cat strat58cat Jul 23, 2015 7:27 PM Flag

    Shouldn't BRK be looking into buying this company? It's a niche. It's got facilities that are not reasonably duplicated. The stock's going to tank now and may become a good value. Any of the investment managers looking at it? Would Buffett buy the whole thing?

  • Reply to

    MYCC

    by strat58cat Jul 23, 2015 6:35 PM
    strat58cat strat58cat Jul 23, 2015 7:09 PM Flag

    Since I'm a so-so tennis player and my kids are competitive juniors, I'm most familiar with the tennis section of the club. Again, like the restaurant and the men's room, management is dysfunctional. The tennis section of the club has an older tennis director. He actually deals with maintenance issues well. So the courts are in good shape. In various ways, he tries to slip in preferences to a long-standing clique. It's shocking the lack of professional management. He brought in three other pros. It should be great, but there's no execution. The director ineffectively tries to favor his newbie students in various silly ways, while the so-called high-performance coach the director brought in has borderline qualifications. The director resents other coaches, while they all resent him, and each other. In short, the various pros undercut each other, competing for customers are retaliating against the clients of other coaches. It's a comedy routine.

    I frequently use highly competent service businesses like Disney and Hilton. My impression from experience at my club is that MYCC is an unbelievable operational mess.

    Still MYCC is strategically positioned in my locality. Despite keystone cops execution, and even my own kids using top coaches in functional programs elsewhere, we don't quit due to the many good things about the club. We stay members and hope the problems get fixed.

    The concept is promising. The properties are not readily duplicated. If the price tanks into value territory from growth territory, I may have to pick up a few shares. The big financial concerns are the debt load and the overhang of stock held by private equity.

  • Reply to

    MYCC

    by strat58cat Jul 23, 2015 6:35 PM
    strat58cat strat58cat Jul 23, 2015 6:44 PM Flag

    My club in many ways should be great. It's got great grounds with a nice view into an arroyo where the golf course is. It's in a nice part of town. It's got a nice, big pool; a small but decent gym with good equipment, a view out of the restaurant, a good driving range, a golf course that golfers tell me is good, several tennis courts that are in good shape with great lighting. In my family, we all play tennis. My kids are highly ranked junior players. One of my little kids is in the process of winning an Open there as we speak.

    The restaurant lost the chef shortly after we joined, and has struggled. The food quality crashed. Orders usually went wrong. The concept of taking an order became foreign to the waitresses and even the series of food and beverage managers who have rotated through. Recently, they brought in a new chef. I just ate there and the food was good again. My order was taken almost like it's a restaurant.

    Most disturbing is the plumbing in the men's room. The men's room has issues with constant daily flooding in the areas of the toilets. I believe it's constant overflowing from auto-flush combined with poor ability to flush. Nasty. One of my kid's is young enough to use the ladies' room and that's what he did last weekend. No way to run a railroad.

  • strat58cat by strat58cat Jul 23, 2015 6:35 PM Flag

    This one is tanking big time. They missed seriously on net income. I personally belong to a small MYCC country club in my fair-to-middling non-coastal Southern CA city. So I follow this company a bit. At present, it's got a sky-high valuation. The company seems to operate like a 1960s conglomerate, using acquisitions of clubs to grow revenue and net income. I could work, and leisure should be a growth industry ad infinitum. If the price was right . . . but it all depends on execution. Here's my experience.

  • My esoteric blather of a few years ago seems to be informing Warren's decision-making, as he's largely ditched fossil fuels and is loading up on solar with his utilities. Warren, I can also work by the hour to share my golden insights for far less than a Goldman Sachs banker. I do my best thinking at the beach by the way. I'll spend 8 hours per day there at only $400 per hour and share my insights through a private email. It will be much the same as here. Actually, I'll probably just recycle the one insight daily, since it's pretty much all I've got. Such a deal! Anyway, the energy-crisis hype since the early 1970s was driven by producers who by combining and collusion - perfectly openly in OPEC - were able to create artificial shortages. Such shortages depended on a perfectly benighted failure to realize that it's physically impossible for energy to be scarce. The problem was that our paradigm was limited to burning stuff, or alternatively unleashing the power of the atom to boil water, as if we were burning stuff. Genius, sheer genius.

    Now, at last, we're moving along. Germany is far in the lead of the U.S., but California and even Nevada are well along at following the German lead. Solar, wind, tidal, geothermal, in addition to the old-fashioned dams, are being put in harness at a remarkable pace. Buffett's utilities just made a long-term contract for astonishingly cheap solar. Solar, of course, is readily available, and it's just getting started.

    There's no energy crisis. We are surrounded by energy all the time. Recently, we have begun to open our eyes and use it. Once vehicles move away from fossil fuels to using electrical energy, which is happening remarkably quickly, we'll have a very low-pollution, sustainable, nationally independent energy profile. Only a few machines, such as jets that require combustion, actually need to use so-called fossil fuels.

  • Greece, while certainly an interesting story of a country that should not have merged into a currency union with very different economies now trying to escape, is largely a sideshow. Market's problem is valuation. While it's certainly true that at current rates the market is reasonably valued, everyone knows rates must increase markedly from here. As a result, any excuse to sell will do. The 11 million people of Greece essentially would hardly register among the 300+ million (and growing) in the United States if Greece were dropped somewhere nearby Nebraska and the population splashed unharmed uniformly across the US. The story of Greece is without question a tail wags dog appearance, but actually it's valuation wagging the dog.

    Greece's primary importance in the global economy is as part of the PIIGS that smoke screen the Germanic economy in Europe. The Germans and other northward-ho! European nations are export powerhouses, and they used to have very strong currencies as a result. Then they thought up the Euro and brought on the PIIGS to weigh down the currency. Since PIIGS now are being slaughtered - alas, inevitable not just foreseeable and exactly predicted by me - Greece may be the vanguard of squealing, porcine exits. There's nothing good for the majority of Greeks in being tied up with much more competitive economies and having an absurdly strong currency as a result. Cheap Greek vacations for Americans equal cash and jobs for the Greeks. American impact: great vacations, more competitive against the Germans.

    That's not what's making Market nervous. The inevitable interest rate adjustment towards normal levels is obvious. What's less obvious is what happens to earnings. While long-term bonds must be crushed, it's unclear what happens to equity markets. Increasing rates can be counter-acted by increasing earnings, when it comes to stocks. Practicing not-knowing, I am 50-50 in-out of the market.

  • strat58cat by strat58cat Jun 8, 2015 7:23 PM Flag

    Buffett says abide, man. Seriously, dude. Six months doesn't even register as a semi-appropriate time frame to Buffett. Six years barely gets on his radar as reasonable. He's thinking decades. Of course, he's 80-something so he may not see it personally. But BRK will abide. Anyone holding BRK for six months or to pace the S&P 500 should get out. Also, we're nearing hurricane season. BRK can take a dump during the summer when reinsurance liabilities make Market despondent. BRK looks fully priced but it's a moving target with value increasing all the time, so it's actually pretty hard to keep up. Pretty much all you can do is buy low and abide.

  • Reply to

    22

    by strat58cat Jun 4, 2015 4:14 PM
    strat58cat strat58cat Jun 8, 2015 7:18 PM Flag

    Where do you live and are you willing to wear a wire? Seriously, real estate looks righteous. I'm seeing beautiful appreciation while it kicks out a very fat cash return on invested capital. I bought my last in 2012 though. So no, I'm not buying real estate now, but I'm holding without any qualms at all. I'm talking about Southern California residential properties.

  • Reply to

    22

    by strat58cat Jun 4, 2015 4:14 PM
    strat58cat strat58cat Jun 8, 2015 7:16 PM Flag

    I believe it depends on how you define trailing and forward. I am adopting the most strict and rigorous definitions because man that's just how Blues Players are, you know?

  • strat58cat by strat58cat Jun 4, 2015 4:14 PM Flag

    22: That's the trailing p/e of the S&P 500. The earnings yield thus is about 4.5% How's that look if interest rates rise to 4%? Terrible. Even worse, if interest rates don't rise to 4%, it's because the economy stalled and we had a prolonged stagnation that will impact earnings. The stock market earnings yield is going to have to come into line.

    IMHO, the market at these heights is perilous. Wretched and perilous. Almost all of my capital has been in real estate for years, but through the recent highs I was still about 25% equities. I slashed my equity exposure last week to roughly 8% of assets - which in my case are the same as net worth since I don't have debt. I do have a substantial percentage of money markets right now. I'm more than content to sit with a substantial percentage of money markets until the market's earnings yield looks good relative to normalized interest rates.

  • Reply to

    Where Are Dimon's Shareholders' Yachts?

    by strat58cat Jun 3, 2015 4:33 PM
    strat58cat strat58cat Jun 4, 2015 4:05 PM Flag

    Citi was in part created by Dimon. About 1/2 of his billion derives from compensation there. Has it done well? Citi is out of business except for a massive taxpayer bailout. JP Morgan was the best bank for 100 years before Dimon arrived. That's the point. He took the reigns of a pre-existing functioning organization. Did he do so well there? JP Morgan would have been in huge trouble and might have failed without TARP, in stark contrast to WFC, which would have been fine but got lumped in with the others for the "greater good" to the chagrin of their outspoken CEO. By all accounts Dimon is a highly competent manager. Great. That kind of compensation imho is gouging the shareholders. The agency costs of corporations are now so high that they are material to shareholders.

  • What a contrast with BRK. Warren Buffett and Charlie Munger pay each other little. They got rich by owning BRK stock in large part, and they didn't get BRK stock through compensatory stock options.

    When a bank CEO gets onto the billionaire list through executive compensation at two banks, can we have a discussion about agency costs and corporate governance? Have investors in Citibank and JP Morgan Chase during the time periods when Dimon held executive positions at these banks achieved returns warranting a billion-dollar compensation package? How about the tax payers who bailed out both Citibank and JP Morgan Chase (unlike WFC, JP Morgan was happy to have TARP)? Is there anything special about clawing your way to the top of the knife-fighting corporate ladder that warrants your family becoming multi-generational landed gentry? Buffett and Munger created BRK in its present form from a bankrupt textile. Jobs, the Google guys, Ellison, Musk - created businesses and revolutionized society. It's a longstanding tradition for the tycoons list to be replete with world-changing entrepreneurs and their heirs. Execs simply manage pre-existing corporations. For this, now, they pay themselves enough to make themselves billionaires. Compensation to executives has reached obscene levels, and it's the shareholders who are getting screwed. That excess compensation comes directly out of profits, meaning dividends and retained earnings. I hope that Warren will be heard more on this. Sure, it's just a little per shareholder, but it adds up - even to a billion.

BRK-A
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