tag:blogger.com,1999:blog-5389144729834496735.post3602971726603537810..comments2024-03-17T05:15:55.634-04:00Comments on The Brooklyn Investor: Mr. Market versus Mr. BuffettUnknownnoreply@blogger.comBlogger28125tag:blogger.com,1999:blog-5389144729834496735.post-92212200512155975382013-11-04T05:22:12.169-05:002013-11-04T05:22:12.169-05:00I think it is vital to draw a distinction between ...I think it is vital to draw a distinction between the recent and new Buffett. In his partnership days, significantly timely, it appears as if Buffett was terribly tuned in to temporary portfolio volatility. He went thus far on segregate his portfolio across varied buckets and guesstimate however every would perform in an exceedingly down market. <a href="http://www.debtconsolidationloans4uk.co.uk" rel="nofollow">http://www.debtconsolidationloans4uk.co.uk</a>Anonymoushttps://www.blogger.com/profile/03829090917267509902noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-80895986628435760792013-06-21T05:02:53.328-04:002013-06-21T05:02:53.328-04:00This really is my very first time i visit here. I ...This really is my very first time i visit here. I discovered so numerous fascinating stuff in your weblog particularly its discussion. From the plenty of comments on your content articles, I guess I am not the only one having all the enjoyment right here! keep up the great work.Mcx Commodity Tipshttp://www.trifidresearch.com/mcx-premium-tips.phpnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-41671792353880590382013-04-11T06:28:04.816-04:002013-04-11T06:28:04.816-04:00A great article written with great hard work...i m...A great article written with great hard work...i must say....a great work of your which shows...I like your site its quite informative and i would like to come here again as i get some time from my studies. And I will share it with my friends.<br />Stocks and investmentshttp://www.sanasecurities.comnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-11245691204668987692013-02-08T10:17:56.079-05:002013-02-08T10:17:56.079-05:00Got it. Your earlier discussion on 1/30/13 with &...Got it. Your earlier discussion on 1/30/13 with 'Unknown' breaks it down. [(Current BPS + DVD) / Prior BPS], but he raises an interesting point that that assumes dividends are reinvested at book. Still, amazing results.<br /><br />Tremendous blog. Thanks for generating such thoughtful content.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-32449909611464943002013-02-07T16:07:22.759-05:002013-02-07T16:07:22.759-05:00Hi,
Yes, you are adding dividends back to the pr...Hi, <br /><br />Yes, you are adding dividends back to the previous year book value. So let's say in year one, the company grew book value by 20%. Say it went from $100 to $120 before dividends are paid out. Management earned a 20% ROE. Then they pay $10 out in dividends. So the book value at year end is now $110 instead of $120. <br /><br />So if they do the same 20% the following year, book value would grow to $132. That's a 20% increase in book value before dividends are paid out. $132 / $110 = 1.2. I think what you did was do $132/$120 instead. <br /><br />Thanks for reading. <br />kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-12046139716900552932013-02-07T15:43:35.251-05:002013-02-07T15:43:35.251-05:00Having trouble replicating your calculations. 200...Having trouble replicating your calculations. 2002 BPS + Div = 9.53. 9.53 is 12.11% increase over 2001 level. 2012 BPS + Div is 28.52, a 12.18% increase over 2011 level. Am I missing something?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-44178134241053493342013-02-04T06:27:46.025-05:002013-02-04T06:27:46.025-05:00Thanks for sharing the information. That’s a aweso...Thanks for sharing the information. That’s a awesome article you posted. I found the post very useful as well as interesting. I will come back to read some more. <a href="http://research4u.co.in/" rel="nofollow">best advisory company</a>best advisory companyhttp://research4u.co.in/noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-56893148649797346692013-02-03T17:51:34.271-05:002013-02-03T17:51:34.271-05:00Great, just tell me what industry is going to rece...Great, just tell me what industry is going to receive a $500 billion injection and I too can invest for the long term like Warren Buffett. bjdubbsnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-69904919412228480312013-02-03T09:28:24.196-05:002013-02-03T09:28:24.196-05:00OK, for comparison here are the BPS numbers:
2002...OK, for comparison here are the BPS numbers:<br /><br />2002 7% <br />2003 312% <br />2004 68% <br />2005 57% <br />2006 43% <br />2007 36% <br />2008 16% <br />2009 10% <br />2010 -1% <br />2011 11% <br />2012 ? <br /> <br />5 year average 15%<br />10 year average 56%<br />8 year average 30%<br /><br />The 8 year average throws out the anomalous 2003 result.Sidhttps://www.blogger.com/profile/15163184293079062331noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-7568459618671900312013-02-02T17:42:21.641-05:002013-02-02T17:42:21.641-05:00Hi, You can post them here, or at least just the s...Hi, You can post them here, or at least just the summary. It might be an interesting discussion. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-89562361419498192012013-02-02T08:24:25.212-05:002013-02-02T08:24:25.212-05:00I would love to share my thoughts, but they are fa...I would love to share my thoughts, but they are fairly lengthy. Should I post here or do you have an email address?Sidhttps://www.blogger.com/profile/15163184293079062331noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-73502076609184800852013-02-01T12:28:30.098-05:002013-02-01T12:28:30.098-05:00Hi,
Yes, I have taken a quick look at it but not...Hi, <br /><br />Yes, I have taken a quick look at it but not too deeply. I have no thoughts on it at this point. Thanks for posting. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-73411995193372293762013-02-01T12:23:40.752-05:002013-02-01T12:23:40.752-05:00Have you looked at DVA, another company who's ...Have you looked at DVA, another company who's shares BRK has been buying? Fascinating company.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-35080677168467286672013-01-31T14:52:57.659-05:002013-01-31T14:52:57.659-05:00By the way, it's not overly generous to add ba...By the way, it's not overly generous to add back dividends to change in book value because that is in fact what management has achieved for the year. Book value is reduced every year by the amount of dividends it pays, so just looking at BPS growth misses something. <br /><br />And it can be achieved and compounded if WFC traded at BPS and you invested in a tax-free account. <br /><br />Or management can compound BPS at that rate if they retained their earnings instead of paid it out as dividends, assuming the opportunity is there to deploy that capital (which may not always be the case). <br /><br />Dimon, for one, has said that he hates to pay dividends. He would rather deploy the capital or buy back shares. He said he only pays dividends because that's what the board wants to do because that's what bank investors want. Or some such thing. <br /><br />Anyway, it's a good metric but you have to understand what it means, I guess. As I said in someone else's comment, I will have to make this more clear the next time I use the metric. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-14630284962852097002013-01-31T14:37:37.859-05:002013-01-31T14:37:37.859-05:00Hi,
Thanks for the comment. Yes, you are right ...Hi, <br /><br />Thanks for the comment. Yes, you are right about that. <br /><br />But you can't compound at ROE either (as dividends are paid). <br /><br />Think of this metric more as a "comprehensive ROE" which includes gains in net worth that doesn't pass through the income statement (which then gets into the ROE). <br /><br />So it's still a good metric to look at, just as ROE is good to look at. <br /><br />But you are right that we can't expect the company to compound at ROE or my comprehensive ROE. <br /><br />Thanks for posting. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-8362714721190434332013-01-31T14:32:31.095-05:002013-01-31T14:32:31.095-05:00I think it's probably overly generous to add t...I think it's probably overly generous to add the div and compound it along with book value. It presumes a level of growth that was never actually there.<br /><br />Let's say WFC achieves a ROE of 15% long term. Let's also assume that going forward, long term growth is 6% annually. That leaves 9% for shareholders each year (divs and share buybacks). Now at the current price/book value of 1.26, the 9% return translates into a yield of 7.2%. Adding the long term growth of 6%, you get a rough total return of 13.2% at the current share price, which is still a very good return. Obviously if they are able to grow faster than 6%, the total long term return will move closer to the 15% ROE, but given WFC's current size, it's probably not likely.<br /><br />Having said that, I think it's possible that then can do better than 15% ROE, maybe 17%. Capital regulations are stricter, but for the same reason, there's also less competition.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-8704181614829683572013-01-30T12:02:23.448-05:002013-01-30T12:02:23.448-05:00I found your comments on WFC to be among the most ...I found your comments on WFC to be among the most interesting thoughts on an important investment opportunity that I have read in quite some time. While the market is crowded with stock investors seeking more stable companies to purchase, most equate a stable business with a stable share price. Buffett's comments over time make clear that he doesn't see it that way. Instead, he sees a volatile share price as an opportunity.Your post is one of the few to direct the reader's attention to relevant financial data, a much steadier result which almost any investor would find acceptable.<br />Kudos for pointing out what most journalists and many stock analysts miss.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-38443580453431239642013-01-30T09:46:34.770-05:002013-01-30T09:46:34.770-05:00Hi,
Thanks for posting. Banks are not perfect. ...Hi, <br /><br />Thanks for posting. Banks are not perfect. There are problems to be sure, and articles like this are fine. They talk about specific problems. I don't mean that journalists should never run negative stories on banks or corporations.<br />But most articles I read are not like this at all. <br /><br />Thanks for reading. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-68046009648880678952013-01-30T09:30:28.084-05:002013-01-30T09:30:28.084-05:00In response to this sentence:
There is a weird ob...In response to this sentence:<br /><br />There is a weird obsession in the media with large, 'evil' banks who have gotten away with murder unpunished.<br /><br />What do you make of articles about foreclosure fraud like this one?<br /><br />http://www.nakedcapitalism.com/2013/01/bank-of-america-foreclosure-reviews-part-iv.html<br /><br />Is this just sour grapes? I don't think so.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-33698286060119653732013-01-30T07:25:36.176-05:002013-01-30T07:25:36.176-05:00Hi,
I did suggest 1.5x book is a good valuation ...Hi, <br /><br />I did suggest 1.5x book is a good valuation for WFC, and I also mentioned that Buffett would be happy to pay 10x pretax earnings for it. Those are two valuation data points for you. You can adjust up or down if you want to. <br /><br />Thanks for reading. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-89678443149748092202013-01-30T06:05:16.926-05:002013-01-30T06:05:16.926-05:00Your post remembered me that I once met Mr. Market...Your post remembered me that I once met Mr. Market at this fast-food.<br /><br />We got friendly. You know he is an obliging fellow so soon enough he acquainted me to his buddy, Mr. Ecstasy (Mr. E). We bonded like brothers. One day, while having dinner at the Neverlands (the chicest cruiser "dive" ever), Mr. E said: "Oh my! There she comes. She is to me like the Moon is to the Sun, a running valentine ...". He split no more hairs but quite vanished into thin air ...<br /><br />This is how I met Miss Agony. She sat straight at the table and begun tapping into my lobster. I had to step up to the plate, pay the bill and walk away in the dead of night.<br /><br />I left town for a while. When I came back, Mr. Market, friendly as ever, greeted with open arms and brought to pass an invitation for free lunch at the Neverlands (to catch on with the crowd, the new feeding trends and all that...).<br /><br />I touched on my scars while answering:"I beg your pardon, Sir. The old heave-ho to the chaps and to Neverlands. I only cook my own meals now... all boiled down oysters."<br /><br />He palmed the invitation and nodded: "Within rights, within rights.... By all means, help yourself! Who am I not to oblige? I may tip your hand to the crowds, though. Right on the boil. Got to go... Lads, hear, hear! Hush, hush, you know! Lobsters ..."<br /><br />Yours truly,<br /><br /><br />W. BucketAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-61170040681122691862013-01-29T22:53:28.366-05:002013-01-29T22:53:28.366-05:00Big fan of your blog, although I don't comment...Big fan of your blog, although I don't comment often. Just wanted to say thanks for sharing your thoughts.<br /><br />I think you've clearly shown how superior WFC is as a business (and very well done). However, you said this is well understood by value investors, and yet, I don't see you making any attempt to value the company here.<br /><br />Not trying to poke fun, and honestly I didn't expect you to "value the company for me", I just was curious how you might go about valuing WFC. At a premium to book value already, it's tough for me to know exactly how to pick a decent entry point. It's generally why I stay away from bank investing.<br /><br />I guess I just prefer companies where I can understand the economics. With banks, it is quite difficult for me.Schneckhttps://www.blogger.com/profile/08025685748774674294noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-9835933761597850722013-01-29T17:13:43.945-05:002013-01-29T17:13:43.945-05:00Hi,
Thanks for posting. That's a very inter...Hi, <br /><br />Thanks for posting. That's a very interesting observation, and you may be right. But since he was willing to put 40% of his fund into a single idea, he was obviously not very volatility averse. <br /><br />There really is now way to predict what Mr. Market can do to a stock no matter how attractive someone thinks it is. I have no data from Buffett's partnership years, but we know that WPO (Washington Post) went down another 50% after he bought into it. <br /><br />There is no way he could have predicted that, and that is sort of the point. He didn't need to predict it and since he didn't buy on margin (and therefore couldn't get margin called), it was OK. <br /><br />As you say, though, BRK is permanent capital so he was able to do this. Maybe it was not so easy during the partnership years. That's a point I never really thought of. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-28518495301769434302013-01-29T16:48:37.595-05:002013-01-29T16:48:37.595-05:00Just a quick comment FWIW on permanent vs temporar...Just a quick comment FWIW on permanent vs temporary loss of capital. <br /><br />I think it's important to draw a distinction between the old and new Buffett. In his partnership days, particularly early on, it seems as if Buffett was very aware of temporary portfolio volatility. He went so far as to segregate his portfolio across various buckets and guesstimate how each would perform in a down market. <br /><br />Also, the following quote, particularly the last sentence, from his 1966 letter seems to suggest that he was keenly aware of near-term portfolio volatility. <br /><br />"Proponents of institutional investing frequently cite its conservative nature. If ‘conservatism’ is interpreted to mean ‘productive of results varying only slightly from average experience,’ I believe the characterization is proper…However, I believe that conservatism is more properly interpreted to mean ‘subject to substantially less temporary or permanent shrinkage in value than total experience.’"<br /><br />As he gained a more stable base of capital, it seems as if he's become less worried about short-term price volatility. He likely has never really cared about it personally, but dealing with new investors, establishing a new track record is another matter entirely. <br /><br />Anyway, nice set of posts and keep up the interesting writing. Buddy0807https://www.blogger.com/profile/02262830312093859118noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-11462654106427958832013-01-29T15:19:05.293-05:002013-01-29T15:19:05.293-05:00In this post, I used regular BPS, not tangible. S...In this post, I used regular BPS, not tangible. Sorry to confuse you. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.com