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Tuesday, September 27, 2011

Berkshire Hathaway stock says Buy Me

I can't even express how difficult it is to stop myself from buying Berkshire stock when the "A" shares dipped below $100K and then Buffett starts buying back shares.  Note that unless you're investing millions, I think it's a mistake to buy the "A" shares, even if you can.

Buffett makes his thinking very clear in the everything he writes.  It's extremely straight forward and rational.  He's buying back shares because it's the best allocation of excess captial that he can find, given the limited opportunities available when dealing in billions.  He's saying Berkshire stock is cheap, and he's probably the best or 2nd best person to make that judgment call (Charlie Munger is the other one).

I hope that I'm making the right call by holding out and keeping a high percentage of cash.  I consider Berkshire to be a very easy 50% gain at this point.  It feels crazy not to buy it.

I've found that things very often feel wrong when they're the right decision.

Monday, September 05, 2011

Senior IMF Economist Expects Hard Default For Greece. Soon.

An unidentified senior IMF economist expects a hard default soon from Greece.

This is what I've been expecting for some time.  The first domino.
I expect a hard default definitely before March, maybe this year, and it could come with this program review,” said a senior IMF economist who is keeping close tabs on the situation. “The chances for a second program are slim.
First Greece defaults, then all the banks that are using Greek bonds as collateral show up as being in serious trouble.  Then it continues to spread.  The global economy nosedives, causing more of the PIIGS countries to default.  Then we start to see who has been responsible and who has been reckless globally.

Things could get surprisingly ugly.

UPDATE Tues Sept 9, 2011:
Josef Ackermann just gave a "terrifying speech" at a conference in Frankfurt.
It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels....
In recent weeks, the distrust of the financial markets has spread to the banks because they are now suffering from the debt crisis in Europe and have a lot of exposure to, for example, Greek bonds.
Let me translate that into English: Everyone knows that if European banks had to accept a lower value of the bonds from shaky goverments that they own, it would wipe out those banks.  Unstated is the following: European countries have been scrambling like crazy to do anything possible to avoid having to acknowledge a lower value for those bonds from shaky governments.

When he says, "for example" I think it's fairly clear he means that it's not limited to Greek bonds.

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