Posts Tagged ‘Berkshire’

Oracle Of Omaha Honors Subpoena

Oracle Of Omaha Honors Subpoena

International CEOs Attend Summit At Microsoft Campus

Courtesy of Karl Denninger at The Market Ticker 

So much for "transparency", "fair dealing" and similar.

Warren Buffett was "invited" to testify before the FCIC today.  He declined. 

Now one must understand that when a Congressionally-authorized panel "invites" you to appear, you’re not really being asked.  Right behind said invitation, should you refuse, is nearly-always a subpoena.

Buffett, believing that he has no duty to actually talk about what happened (especially with the ratings agencies of which he has, until fairly recently, held a major stake in via Moody’s), decided to say "nuts" to the invitation.

That in turn led to a subpoena, as expected. 

True to form of a snubbed "King" (remember, there’s kings and there is everyone else – the law applies only to the "everyone else") Buffett has failed to provide any sort of prepared testimony in advance to the FCIC.  That’s a snub too – it is common practice, and considered good form, to provide a written document containing your opening testimony a day or two before you appear so that the panel is prepared to respond to the gist of your comments.

Buffett, of course, deigned to schedule an interview with Tout TV just before going on, it has been announced.  So rather than provide his testimony to the Congress, he will instead give it to CNBS and allow them to spin it into whatever they’d like just before going in the dock.

That’s nice.

The oligarchs are such a sniveling pack of frauds.  If there’s nothing to be disclosed of importance, why not show up at…
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Here Come The Hypocrites! (Berkshire)

Here Come The Hypocrites! (Berkshire)

Courtesy of Karl Denninger at The Market Ticker 

That didn’t take long…

WASHINGTON—Democrats took a step toward their goal of overhauling financial regulation, reaching a tentative deal to set restrictions on trading in exotic financial instruments known as derivatives.

Among the considerations still in the balance: A big provision being sought by Warren Buffett in recent weeks. A key Senate committee had changed its proposed overhaul of derivatives regulation after lobbying by Mr. Buffett’s Berkshire Hathaway Inc., potentially helping the famed investor avoid a financial hit, congressional aides say.

I thought these were weapons of financial mass destruction Warren?

What’s the problem?  You don’t want to be forced to recognize the economic and accounting reality of your transactions?  I don’t see why that should be a problem.

Posting margin on underwater positions is a reality for everyone who trades on margin – and you do a lot of it.  There’s no reason why anyone – you included – should not have to put forward margin – in cash – just like everyone else.

Yeah, I know, Berkshire is "Strong".  So what?  That’s not material to the point at hand, which is that when you are short a "PUT", which is effectively what you are, and the position is underwater, you should be required to post margin!

Hot globe exploding

Reliance on "future economic strength" to avoid this requirement is a big part of why the system nearly blew up.  You were a part of it writing those contracts, and you now want to be exempted from safety and soundness requirements on something you identified – in public – as a dangerous practice.
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A few thoughts on the Burlington acquisition

A few thoughts on the Burlington acquisition

Courtesy of Vitaliy Katsenelson at Contrarian Edge

warren buffettI have tremendous respect for Mr. Buffett.  But every word that comes out of his mouth should not be looked upon as prophecy, or the gospel truth.  I get a feeling that Buffett has been canonized into a value investor saint  – investors and the media worship the ground he walks on and the air he breathes.  The media are unable to get any critical quotes from his investors, and nobody wants to be caught disagreeing with the Oracle of Omaha – after all he’s been right more often than wrong – and so we only get positive puff pieces.  On the rare occasion when Berkshire Hathaway stock declines more than the market, you see an article asserting that “Buffett has lost his magic touch,” but these articles are usually followed by stellar performance by Berkshire.  Though Buffett deserves admiration – he is brilliant and likable and he has achieved incredible returns for his investors over the last half-century – he should not be canonized, and not everything he does or says is the ultimate truth.  

Most investors agree with Buffett’s criticism of Kraft’s decision to buy a fairly valued (or overvalued) Cadbury at 22 times earnings (over the past 15 years, its average price-to-earnings ratio has been 21), using Kraft’s undervalued stock.  Cadbury runs a global, noncyclical confectionary business that, if properly managed, should have a very high return on capital.  Buffett, a shareholder of Kraft, was very public about his dismay – he said he felt poorer when Cadbury accepted Kraft’s increased offer.  

 But though many agree with Mr. Buffett’s assessment of the Kraft/Cadbury deal, investors and media are completely ignoring Berkshire’s own, $30-billion-plus acquisition of a very cyclical, capital-intensive, not terrifically high-return-on-capital business – Burlington Northern.  A railroad for which Mr. Buffett’s Berkshire will lay out 18 times earnings (over last 15 years its average P/E was 15); and to make it even worse, part of the deal will be financed by issuing what Buffett recently called “cheap” Berkshire stock.  Burlington stock is not cheap, it is fairly priced at best, and likely overpriced.  Also, Buffett owning Burlington Northern will not make the railroad business any more valuable.  There is little value to be unlocked in this business, and Buffett will practice his usual hands-off approach. 

Though Mr.…
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Testy Tuesday – Dow 9,650, Berkshire $60 Edition!

Wheee, this is fun!

Just two weeks ago, on October 17th, I warned in the Weekly Wrap-Up that it was "Dow 10,000 or Bust" for the next week and we failed that one and last Wednesday we were looking to hold NYSE 6,900 and THAT failed too.  Now we enter into the second phase of our limbo game where the deep-voiced guy asks the question "how low can you go?" and we’ll be setting our next bar at our long-standing 9,650 target for the Dow,  which we are already hitting in pre-market trading.  If that fails, we’ll have to look down to S&P 1,000.  As you can see from Jesse’s Chart, we took a nice bounce off serious resistance yesterday but we’re just not feeling it yet, even though the market is now as technically oversold as it was in March

Yesterday was like a roller coaster and my first Alert to Members of the morning targeted 9,775 as the on/off line for our bullish/bearish posture on our DIA covers.  We whipped past that line right about 10 am as we got good reports from ISM, Pending Home Sales and Construction Spending but by 12:45 we had broken back down so I sent out an Alert calling to refocus back to 55% bearish by adding the DIA Jan $100 ($5) and Jan $102 puts ($6.20), already covered by the Nov $99 puts ($2.50). 

The reason we mess around with our covers is we don’t want to flip in and out of our option positions, which are generally either straight bearish or well-hedged long positions, is because options carry a relatively large bid/ask spread and cost you money every time you get in and out.  So, on the whole, we’d rather let our over-riding cover plays, like our DIA spread, adjust our stance as conditions change, making a single adjustment that keeps us balanced as we ride out the market waves. 

It’s been a couple of weeks since we had a good, old-fashioned stick save but we got a mother of one yesterday (as seen in Dave Fry’s chart) which was right on schedule as Kustomz bought it up in Member Chat at 3:09 and I agreed at 3:19 that "It does feel like a pre-stick move" and we grabbed VIX $25 puts at .85 to protect ourselves from a sudden surge in complacency.

By 3:33, my next comment to Members was: "The stick lives!" but…
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More Smelly Emissions From Omaha

More Smelly Emissions From Omaha 

Warren BuffetCourtesy of Karl Denninger at The Market Ticker

One would think that Buffett would be a bit more circumspect when his holdings have benefited so wildly from the fraudfest of the last few years:

The “gusher of federal money” has rescued the financial system and the U.S. economy is now on a slow path to recovery, Buffett wrote in a New York Times commentary yesterday. While he applauds measures adopted by the Federal Reserve and officials from the Bush and Obama administrations, Buffett says the U.S. is fiscally in “uncharted territory.”

The "gusher" has done no such thing.

As I have repeatedly pointed out (including in the Tickers of the last two days) the transmission mechanism in our monetary system – the "moneyness" of debt transmission and sale – remains broken.

It remains broken because we have refused to prosecute and remove those who have committed fraud from the system, we have refused to force honest marks to be taken on these so-called "assets", and we have refused to clear the system of the bad debt.

We have instead "gushered" newly-issued Federal Debt into the system.

This is similar to someone presenting in the emergency room with a severed femoral artery.  By continually injecting huge amounts of blood you can prevent circulatory collapse and the death of the patient.

However, your ability to continue this path of "treatment" is limited by your supply of blood.  If you do not repair the severed femoral artery before you run out of blood supply the patient will die.

We have done nothing about the severed femoral artery.

The government is trying to spark business and consumer spending through a $787 billion stimulus plan spanning tax cuts and infrastructure projects, while the Treasury and the Fed have spent billions more on separate programs to rescue financial institutions and resuscitate the banking system. The U.S. budget deficit is forecast to reach a record $1.841 trillion in the year that ends Sept. 30.

There’s the draining of the blood bank.  How much longer can we continue to draw on what our policy-makers seem to think is an unending credit supply of accumulated reserves in China and Japan?

This much is certain: There is a finite supply,…
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Phil's Favorites

FUCT gets day in court as SCOTUS considers dropping slippery moral standard when granting trademarks

 

FUCT gets day in court as SCOTUS considers dropping slippery moral standard when granting trademarks

Courtesy of Megan M Carpenter, University of New Hampshire

When’s a brand too scandalous to trademark?

That’s a question the Supreme Court will soon decide in a case that tests the constitutional limits of free speech.

I attended the oral argument on April 15, when lawyers representing streetwear clothing label FUCT ...



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Zero Hedge

Gold Bounces Off Key Technical Level, Erases Earlier Plunge

Courtesy of ZeroHedge. View original post here.

Update: European markets closed and gold found a bid, erasing earlier losses...

And for now, it has decoupled from the dollar strength...

*  *  *

Gold futures suddenly took a turn for the worse this morning as 'someone' once again decided that 0830ET was the perfect time ...



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Insider Scoop

Arista Networks Stock Already Reflects Bright Growth Prospects, Morgan Stanley Says In Downgrade

Courtesy of Benzinga.

Checks indicate Arista Networks Inc (NYSE: ANET) should easily meet expectations in the current quarter and could continue to gain share going ahead, but its stock already reflects these positives following a recent rebound, according to Morgan Stanley.

The Analyst

James Faucette ...



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Chart School

Weekly Market Recap Apr 21, 2019

Courtesy of Blain.

This past week was the definition of “consolidation” – a period of very little movement and volatility after a large move up to work off overbought conditions.  A slight gap up Tuesday was about it in terms of excitement for the week.  Bulls remain in full control.

We are in the midst of earnings season – it is not a great one but companies have lowered the bar enough that they will “beat”, everyone will clap and cheer, and we continue on.

The first-quarter earnings outlook has improved somewhat, according to CFRA, which said consensus estimates now call for a 2.3% fall in first-quarter operating earnings a share. That is up from the call for a 3% drop ahead of the kickoff of earnings season, but down from the 4.5% increase projected at the end of last year...



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Digital Currencies

5 Cryptocurrency Tax Questions To Ask On April 15th

Courtesy of ZeroHedge. View original post here.

Authored by David Kemmerer via CoinTelegraph.com,

Depending on what country you live in, your cryptocurrency will be subject to different tax rules. The questions below address implications within the United States, but similar issues arise around the world. As always, check with a local tax professional to assess your own particular tax situation.

...



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Kimble Charting Solutions

Silver Bear Market Faces Big Price Support Test!

Courtesy of Chris Kimble.

When silver, gold, and the precious metals industry were red-hot bullish in the 2000’s, investors could do no wrong.

You could buy SILVER at just about any price and it would go higher.

In today’s chart, you can see three large green bullish ascending triangles from the 2000’s that lead to big gains. But that was the bull market before the current bear market.

The tables have turned since the 2011 price top. Silver quickly formed a bearish descending triangle and fell another 50 percent when that broke down. This sent a vicious bear mark...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Biotech

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Reminder: We are available to chat with Members, comments are found below each post.

 

Marijuana is a lot more than just THC - a pharmacologist looks at the untapped healing compounds

Assorted cannabis bud strains. Roxana Gonzalez/Shutterstock.com

Courtesy of James David Adams, University of Southern California

Medical marijuana is legal in 33 states as of November 2018. Yet the federal government still insists marijuana has no legal u...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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