tag:blogger.com,1999:blog-27697009.post2309879622429226219..comments2024-02-29T03:21:35.007-08:00Comments on The Great Depression of 2006 : Buffett " The Financial World is a Mess"Jim in San Marcoshttp://www.blogger.com/profile/09435296419912935381noreply@blogger.comBlogger28125tag:blogger.com,1999:blog-27697009.post-67623821815398677472008-10-21T19:54:00.000-07:002008-10-21T19:54:00.000-07:00Liquidate everything, even if you have to pay pena...Liquidate everything, even if you have to pay penalties and taxes on your deferred tax vehicles. Buy rental properties at foreclosure for 30 cents on the dollar. Live on those rents for the rest of your life (just hope that the rental income has value and isn't destryoed by hyper inflation). Could live in Mexico... earning USD but paying living expenses with pesos.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-27697009.post-17440417472135872032008-10-20T22:15:00.000-07:002008-10-20T22:15:00.000-07:00Hi Anon 7:05I haven't been able to follow the CDS'...Hi Anon 7:05<BR/><BR/>I haven't been able to follow the CDS's in the WSJ to a sale price.<BR/><BR/>You can see that they will trade at secret auction, but I haven't seen an after sale price list of what they sold for. I have the sneaking suspicion that there were no bids in previous auctions for the securitiesJim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-26878506561736192522008-10-20T21:48:00.000-07:002008-10-20T21:48:00.000-07:00Hi Im not PotusMaybe Buffett is broke and no one k...Hi Im not Potus<BR/><BR/>Maybe Buffett is broke and no one knows it yet. <BR/><BR/>Wouldn't that start a panic if it was true?<BR/><BR/>I wouldn't dare suggest it in the blog, but as for remarks section, I have my suspicions, you can't bat 1000 forever.<BR/><BR/>thank you for your commentsJim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-28491735907799340602008-10-20T21:35:00.000-07:002008-10-20T21:35:00.000-07:00Hi ShankarI can't take credit for that one. It ha...Hi Shankar<BR/><BR/>I can't take credit for that one. It has some unspoken reality to it.<BR/><BR/>Glad you liked it, it is one of my favorites.Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-68020189824816784602008-10-20T19:05:00.000-07:002008-10-20T19:05:00.000-07:00Speaking of CDS's, isn't tomorrow some big CDS red...Speaking of CDS's, isn't tomorrow some big CDS redemption day? I hear it could be a doozy.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-27697009.post-30911393086509589562008-10-20T16:23:00.000-07:002008-10-20T16:23:00.000-07:00Buffett could spend a billion a week on bottom fis...Buffett could spend a billion a week on bottom fishing without flinching. How many years does that work out to????????????<BR/><BR/>He really should qualify his time horizon. The rest of us can't spend that much time at the bottom of the pond picking up bargains.<BR/><BR/>Numbers are just too big. If you spent a billion dollars A DAY since the birth of Jesus of Nazareth you still would be well short the alleged value of the CDS market.I'm Not POTUShttps://www.blogger.com/profile/06885542838234710249noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-90490656475108990762008-10-19T22:46:00.000-07:002008-10-19T22:46:00.000-07:00"A Pessimist is an optimist with experience.........."A Pessimist is an optimist with experience..........."<BR/><BR/>Just another one of your classic statements. I am going to make a note of it.<BR/><BR/>Great blog.Superbearhttps://www.blogger.com/profile/01623256139816834834noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-73570117872232962382008-10-19T20:13:00.000-07:002008-10-19T20:13:00.000-07:00Hi BusterI think that the TED spread pretty much s...Hi Buster<BR/><BR/>I think that the TED spread pretty much shows how out of sync the two banking systems are.<BR/><BR/>I don't think that anyone is sure of what it means when the spread goes above 1%. <BR/><BR/>The Euro system is functioning. The US system could or couldn't be functioning properly no one knows. The Feds are pumping money into everything. The trouble is, it's "play money."<BR/><BR/>As for recession or depression, 1932 sounds better than what we are looking at now.<BR/><BR/>I think that we are witnessing the debauchery of our monetary system.<BR/><BR/>Let's hope I'm wrong. Thank you for your commentsJim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-10608186257969489822008-10-19T19:30:00.000-07:002008-10-19T19:30:00.000-07:00Jim:What do you think about the TED spread coming ...Jim:<BR/><BR/>What do you think about the TED spread coming in substantially. I doubt we are going to have a collapse, but I do think we are going to have a severe recession.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-27697009.post-77536033220224654842008-10-19T13:31:00.000-07:002008-10-19T13:31:00.000-07:00Hi Tyrone60K for a house--not bad. Buy when no on...Hi Tyrone<BR/><BR/>60K for a house--not bad. Buy when no one wants it. You might want to pick up one as a rental.Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-10096451683843411152008-10-19T09:29:00.000-07:002008-10-19T09:29:00.000-07:00Hi PingvinNo disagreement from me on that.Look at ...Hi Pingvin<BR/><BR/>No disagreement from me on that.<BR/><BR/>Look at it from a different perspective. Its 1933 you have lost everything and you're 65 years old. You will probably freeze to death while sleeping next to your shopping cart.<BR/><BR/><BR/>Your savings give you freedom. Poverty robs you of your freedom if you are too old to work.<BR/><BR/>The individual and his\her present age is the real kicker here. I laughed when Buffett suggested to invest in the future. I was mentally imagining him trying to decide on risking the purchase of green bananas. Would he be around to eat them when they ripen?<BR/><BR/>Thank you for the link and your comments.Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-52562160613673713212008-10-19T07:30:00.000-07:002008-10-19T07:30:00.000-07:00If you had invested the same amount of capital eve...If you had invested the same amount of capital every year from 1929 to 1954 in Dow Jones, with reinvested dividends, your return would have been +529%, or +7.3% per year... Link with the story:<BR/><BR/>http://penguinsgoldenegg.blogspot.com/2008/10/1929-1954-lost-years.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-27697009.post-73364721158186790722008-10-19T01:41:00.000-07:002008-10-19T01:41:00.000-07:00I think you're right, Jim. I had a go at showing t...I think you're right, Jim. I had a go at showing the Dow long-term, adjusted for inflation, back in April:<BR/><BR/>http://theylaughedatnoah.blogspot.com/2008/04/panic-overstated.html<BR/><BR/>And as for Buffett, surely he's well aware that he's big enough to affect the market. When you're part of the process, your comment is less than objective. I'd like to see an analysis of the difference between what he says and what he does (preference shares yielding 10%, with warrants that represent an immediate capital gain, aren't what the ordinary investor gets).<BR/><BR/>I'm now trying to see the big picture, rather than be a MSM blow--by-blow commentator. Would appreciate it if you could swing by and take a look at today's rant.Sackersonhttps://www.blogger.com/profile/09410040031410954403noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-8316562923134043212008-10-18T22:55:00.000-07:002008-10-18T22:55:00.000-07:00Hi ShankarI like that quote you referred to.'As Ta...Hi Shankar<BR/><BR/>I like that quote you referred to.<BR/>'As Taku Yamamoto said "The correction hasn't finished and will continue until the all the optimists are wiped out."'<BR/><BR/>I'm a firm believer that a Pessimist is an optimist with experience.<BR/><BR/>The quote does suggest that things are about to get a lot worse.<BR/><BR/>Pardon me while I go stick my head in the sand.Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-50965120297409059522008-10-18T22:34:00.000-07:002008-10-18T22:34:00.000-07:00If you bought last year, you have a bit of a wait ...<I>If you bought last year, you have a bit of a wait for RE to get back to your purchase price. </I><BR/><BR/>Jim, just to clarify. I didn't buy anything for myself. I just loaned (gave) some money to someone in my family. And it wasn't in CA. I live by the following philosophy: I only pay what I think something is worth. Can't get my price, I walk. And I agree with your statement on loaning to family. I was initially pained with the request, but I thought about it and then decided to go forward and accept any outcome; then it was easy. (FYI: previous price on the house was $180K vs $60K paid today)Tyronehttps://www.blogger.com/profile/04226876002855072090noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-18456454595170981932008-10-18T22:09:00.000-07:002008-10-18T22:09:00.000-07:00Jim:Thanks. I'll still refer to Mr. Buffett as Num...Jim:<BR/><BR/>Thanks. I'll still refer to Mr. Buffett as Numbnut or a Nutcase, no matter what he feels. ;-)<BR/><BR/>People like to throw out snippets like the one Buffett uses - "Be greedy when others are fearful" or the blood on the street one without asking themselves whether that has occurred.<BR/><BR/>As Taku Yamamoto, who helps oversee about $107 billion at the Pension Fund Association in Tokyo, said recently - "The correction hasn't finished and will continue until the all the optimists are wiped out."<BR/><BR/>By that standard, we'll find the bottom when the last optimist stops buying and starts selling.Superbearhttps://www.blogger.com/profile/01623256139816834834noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-44937253926852664952008-10-18T20:24:00.000-07:002008-10-18T20:24:00.000-07:00Hi TyroneI agree. Your home is great protection a...Hi Tyrone<BR/><BR/>I agree. Your home is great protection against inflation and a store of value. A lot of the homes in the San Marcos area will be worth a million dollars in 20 years. If you bought last year, you have a bit of a wait for RE to get back to your purchase price. If you paid a Million last year, you will pay off the note with hard earned dollars today for inflated dollars years ahead.<BR/><BR/>I picked up gold and silver back in 1985 so I got it pretty cheap. Silver is still a good buy for the money.<BR/><BR/>I have learned, that you never loan money to relatives, you give it to them. Once you understand that you don't get upset when they don't pay it back. If they are your kids, you did the right thing-- help them out while you're alive.<BR/><BR/>Thank you for your commentsJim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-46679786777823119952008-10-18T20:03:00.000-07:002008-10-18T20:03:00.000-07:00Hi John in TexasI know what you mean, Ford and Gen...Hi John in Texas<BR/><BR/>I know what you mean, Ford and General Motors are tempting me also. I am still looking for frames for my Florsheim and Bethlehem Steel Stock Certificates.Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-84547963808377894822008-10-18T19:46:00.000-07:002008-10-18T19:46:00.000-07:00Hi TomI agree there is some truth to his remarks i...Hi Tom<BR/><BR/>I agree there is some truth to his remarks in the right situation. IMHO stocks are still in the stratosphere far from any reality.<BR/><BR/>If you go back to the battle of Waterloo in 1815. Nathan Rothchild a wealthy stock trader on the English exchange was able to learn that Napoleon had been defeated several hours before the rest of the nation. He went into the market and told his associates that the British had lost. The market went nuts and everything that was English tanked. Rothchild sold his worthless French holdings for a profit and then bought everything English at pennies on the pound.<BR/><BR/>The time to buy is when no one wants it. I think we are quite aways away from that point. People keep repeating "No one can pick a low." In the last 20 years anyone could make money in the market with any stock, it always went up. A drop in price was a "buying opportunity." <BR/><BR/>Warren's perspective assumes that things will return to more of the same. Things are different now. If stocks were to drop 75%, that might be pretty close to a low. The question then becomes will that company survive. As with all bottom fishing, there is no one ahead of you in line.<BR/><BR/>I do agree that dividends play a key roll in the price of a stock. It's the pits when the board cuts the dividend. A lot of retirees purchase stock for their dividend payout. Rough times ahead will cut into dividend yields.<BR/><BR/>Thank you for your commentsJim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-77596697661917647312008-10-18T19:00:00.000-07:002008-10-18T19:00:00.000-07:00Hi ShankarThanks for the link I hadn't caught...Hi Shankar<BR/><BR/>Thanks for the link I hadn't caught the item that Buffett was into Goldman Sacks for 5 billion. It's funny GS was the only trust to survive the Great Depression and do it again in spades to a new generation.<BR/><BR/>You're right on with the Nikki market in Japan. It went from a high close to 39,000 and is currently at 8,693. "Down" is "up" over there.<BR/><BR/>I've always used "Numbnuts" as a plural. Warren might feel insulted being referred to in the singular;>)<BR/><BR/>Thank you for your commentsJim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-55699065478105138422008-10-18T18:57:00.000-07:002008-10-18T18:57:00.000-07:00Mr. Buffet is right on the money except for one sm...Mr. Buffet is right on the money except for one small detail: possible bankruptcy. There are lots of cheap stocks out there that I want to buy (like Ford and GM), but they could easily go bankrupt. And I wouldn't touch a financial stock with a ten-foot-pole because they seem to vanish without notice.<BR/><BR/>I wish stocks all came with a "Defcon Level" that showed how close they were to detonation.<BR/><BR/>John in TexasAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-27697009.post-6034972143226245792008-10-18T18:40:00.000-07:002008-10-18T18:40:00.000-07:00Hi DeariemeThat would be the final play to save yo...Hi Dearieme<BR/><BR/>That would be the final play to save yourself from inflation. The trouble is, the banks can't stay stupid forever (I hope). I would look for future loans linked to the price of gold or inflation. Borrowing hard earned dollars now for cheap ones later is how the government does it. Banks cannot survive using that model. <BR/><BR/>Real estate is a very visible taxable item but it has been a very successful business investment and store of value. Rentals could turn bad if unemployment gets worse. Plus the government might pass rent controls which could mess you up.<BR/><BR/>I think we still have 5 years or more before inflation becomes a problem. I could be wrong, I never imagined a 700 billion dollar bail out.<BR/><BR/>We are in uncharted territory. I do have one recommendation. If the government offers you a tax incentive for doing something that's reason enough not to do it. they keep changing the rules.<BR/><BR/>Sorry I could be more help.Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-27588154678869125092008-10-18T18:16:00.000-07:002008-10-18T18:16:00.000-07:00“Who lost all of this money?”I'm good. Got out wh...<I>“Who lost all of this money?”</I><BR/><BR/>I'm good. Got out while the the getting was good. I put 20% in precious metals in case the worst happens.<BR/><BR/><I>There must come a point when, rather than let your paper wealth all evaporate, it becomes wiser to buy some real estate of one sort or another.</I><BR/><BR/>I thought this exact same thing, and then loaned (0%) someone in my family $60K to buy a nice house on 2 acres, paid in full. I figured I should ensure that some good use come from these dollars. If the dollar survives and it's paid back,... great; if the dollar becomes worthless,... oh, well, at least somebody got something tangible from the fiat while it was still around.Tyronehttps://www.blogger.com/profile/04226876002855072090noreply@blogger.comtag:blogger.com,1999:blog-27697009.post-73590744401335260252008-10-18T17:56:00.000-07:002008-10-18T17:56:00.000-07:00Jim,If you take his words at face value they seem ...Jim,<BR/><BR/>If you take his words at face value they seem to be contrary to gut instincts. But his simple buying strategy of "Be fearful when others are greedy, and be greedy when others are fearful." is sound advice and if you look at the last two bubbles (all of them in fact) it is telling what the statement really means.<BR/><BR/>In euphoric high times why would you buy into anything that is about to peak? I think everyone would agree that business cycles all exhibit ups and downs. Since no one can predict the top or bottom, it sounds like good advice to be the one buying in a down market... not an up one.<BR/><BR/>One last point. Who would buy long term stocks that do not pay dividends? If you take into account dividend reinvestment and stock splits of invested companies, the stock market's percentage drops or gains have nothing to do with your profitability.<BR/><BR/>TomAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-27697009.post-72933108525333672032008-10-18T17:55:00.000-07:002008-10-18T17:55:00.000-07:00Hi Anon 3:04Buffetts Company Berkshire Hathaway to...Hi Anon 3:04<BR/><BR/>Buffetts Company Berkshire Hathaway took a billion dollar hit in first quarter playing with derivatives contracts. Hard to say what he does investment wise. He does make mistakes. That's a pretty big one.Jim in San Marcoshttps://www.blogger.com/profile/09435296419912935381noreply@blogger.com