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Grahamites

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  • Totally has 508 visits

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  • Thomas Macphers 2015-08-11 12:12
    Grahamites: Tom I still need to figure out how to use gurufocus's personal space better. I noted your message and thanks for the nice words. I've only had 4 years
    Thanks for your note. Agreed then. We will keep learning together!
  • lawrencemconnel 2015-02-09 14:37
    Hi..just read a great article about Grantham and Marks on the drop in oil..I have not read a better article lately, but the way your site is set up I could not find a reference to the author of the article. I'm new to the site, and if I had insights like that, I would sign it..Thanks
  • cgcoss 2014-12-04 19:53
    hi Grahamites! Thank you for your post titled Naked Short Put Options - Warren Buffett's Little Secret. i had a quick question: what is your source for Buffett selling Coca Cola options? I am unable to find anything on that. again thanks for the great post!
  • aapete 2014-06-23 23:35
    Why promote a chinese stock  are you a fraud?

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All Grahamites's Activities

  • Grahamites commented on Grahamites's article 3 hr ago
    The Other Side of the Big Short
    There have been a lot of discussions since the book “The Big Short” was published and the subsequent production of the eponymous movie. I...
    View all 17 comments
    Grahamites 07-23 16:28
    • Batbeer - Nicelyl done! Dead on.
  • Grahamites commented on Grahamites's article 7 hr ago
    The Other Side of the Big Short
    There have been a lot of discussions since the book “The Big Short” was published and the subsequent production of the eponymous movie. I...
    View all 15 comments
    Grahamites 07-23 12:16
    • Snow - Thanks for the comments. 99% of the people would have done the same thing had they come to the same conclusion that Paulson and Burry did and 1% would not. Buffett, Munger, Li Lu and a few other people I know that are associated closely with them, belong to the 1% group. And they don't expect the 99% to understand how they are the 1%.

      If you read my comments above, I didn't say shorting in general, and shorting the housing market was wrong. I pointed out specifically one way, that was shorting the housing market using super leveraged derivatives such as CDS.  There's a huge difference between what Munger's investment of Wash Post and WFC versus shorting the housing market using leveraged derivatives.I also like what David Einhorn (Trades, Portfolio) did when he shorted the hell out of Lehman or what Ackman did when he shorted MBIA. If you actually can explain how CDS works, you might be able to see the difference. Again, think about the second level and third level consequences you will see how taxpayes paid short sellers and if you can't, I encourage you to learn more about derivatives and think more.
  • Grahamites commented on Grahamites's article 8 hr ago
    The Other Side of the Big Short
    There have been a lot of discussions since the book “The Big Short” was published and the subsequent production of the eponymous movie. I...
    View all 14 comments
    Grahamites 07-23 12:01
    • Jtdaniel - Thanks for your insightful and nice comments, as always. Somehow I think I get the wrong message delivered in this article. There were a lot of awefu wrong doings from so many parties involved in the years leading up to the crisis - like you and other readers rightfully pointed out, the government, the bankers, the mortgage brokers. Burry and Paulson just saw this coming and profited enormously from it. They are not villains, I agree. But I respect Li Lu much more for what he did not choose to do. It's a different level. 
  • Grahamites commented on Grahamites's article 8 hr ago
    The Other Side of the Big Short
    There have been a lot of discussions since the book “The Big Short” was published and the subsequent production of the eponymous movie. I...
    View all 13 comments
    Grahamites 07-23 11:55
    • Matt.marcary - I didn't say it's morally incorrect to profit from the crisis and I agree that the bankers and mortgage brokers who sold those shaddy mortages are the real villains and that Burry and Paulson are not.
  • Grahamites commented on Grahamites's article 07-21 21:30
    The Other Side of the Big Short
    There have been a lot of discussions since the book “The Big Short” was published and the subsequent production of the eponymous movie. I...
    View all 9 comments
    Grahamites 07-21 22:30
    • Jean-Francois Nobert - Thanks for commenting and for a great quote. You know it's interesting that short sellers tend to have different personality types than let's call the old school long-only value investors. I'd be curious to see their MBTI types. I think the idea of shorting is very counterintuitive and probably even esoteric to most people. It's very easy to make an extreme and general hostile comments against them. Look at the some of the ridiculous but wildly popular claims the presumptive republican nominee and the unsuccessful democratic candidate made during this presidential campaign, taking advantage of the ignorance and the lack of then what so what thinking of the public in general.....
  • Grahamites commented on Grahamites's article 07-21 21:18
    The Other Side of the Big Short
    There have been a lot of discussions since the book “The Big Short” was published and the subsequent production of the eponymous movie. I...
    View all 8 comments
    Grahamites 07-21 22:18
    • Mark - Thanks for your comments. Great movie indeed and agreed that "Berkshire Hathaway truly exemplifies one of the great companies ever in history brought by exemplary ethics among other great characteristics."

      Shb600 - I'm sure Paulson doesn't regret making billions of dollars. And I agree there's nothing dishonorable shorting, assume one has done the due diligence and not involved in price manipulation and etc. But I think shorting a mismanaged and profit from the decline is different from shorting the housing market using CDS. When you short a company and it goes to 0, the counterparty is the buyer who bought the shares you shorted and they themselves, along with the existing stakeholders including management team and company employees, bear the adverse consequences. The adverse result doesn't have a spillover effect. Moreover, it's less leveraged than a CDS trade. But imagine you short a company through a CDS equivalent, let's hypethetically call it EWS (equity wipe out swap), you paid 5 cent per swap contract in return for a dollar of equity equivalent in case of bankruptcy,  and you know the EWSs are being resold over and over the counterparties of the EWS doesn't have the ability to make good of the contract. For you to profit in the end, , the innocent taxpayers who know nothing about the company, or about what the hell EWS is, have to pick up the tab. It's a moral hazard in my opinion. 

      Ccortes - Thanks for your comments. Please see my response above for the difference between shorting a company and shorting the housing market through a leveraged derivative contract on a mass scale. I think short in general is a healthy thing for the capital market and you can argue what Paulson and Burry did was not dishonorable. In fact, as great as Howard Marks (Trades, Portfolio) is, he said one of his biggest regrets was that he was not John Paulson (Trades, Portfolio). So it's not a dishonorable act per se, but let me just say it's not something you would expect from Berkshire. 

      W1omega - Thanks for the nice words. I'm also young, ignorant, and hungry. So take my words with a grain of salt. In my opinion, Michael Burry probably didn't even think about the second and third level consequences such as so what, then what if the housing bubble triggers a systematic crisis, he focuses on the payoff of his bet and he was right in his calculation. On your other point, I think as Munger said, there are many ways to make money, they choose to make a lot of money in a way that would pass the newspaper test. Imagine what the press would say if Berkshire actually bought a ton of CDS and made many billions as a result. What kind of example would that set and how would doing so parallel with Berkshire's culture? Sometimes we can't just look at where money has been made, we also have to look at where big money could have been made but wasn't.

      And thanks for an interesting article idea. I'm intrigued.

      Tron119 - I'm aware of the fixed income bubble that many say is on a cusp of bursting. I myself don't know too much about the bond market. Nor do I know enough to comment on bitcoin, or forex trading. I do share your view of economy figures and experts opinions.

       

       
  • Grahamites commented on Grahamites's article 07-21 20:43
    Value Investing, Taught by 6 Superinvestors
    Recently I bumped into this great free value investing course offered by Udemy. (link here) I like it so much that I decided to share it with our...
    View all 4 comments
    Grahamites 07-21 21:43
    • Nedimsters - You are welcome.
  • Grahamites left cbsecured a message on the message board 07-21 07:55
  • Grahamites posts: 07-20 10:40
    The Other Side of the Big Short
    There have been a lot of discussions since the book “The Big Short” was published and the subsequent production of the eponymous movie. I haven’t read the book yet, but watched the movie and thoroughly enjoyed...
    Comment
  • Grahamites commented on Grahamites's article 07-15 13:02
    Value Investing, Taught by 6 Superinvestors
    Recently I bumped into this great free value investing course offered by Udemy. (link here) I like it so much that I decided to share it with our...
    View all 2 comments
    Grahamites 07-15 14:02
    • Jean-Francois Nobert - Thank you:)
  • Grahamites commented on Grahamites's article 07-13 20:01
    The 'Bribing the Purchasing Agent Model' – Part II
    In my last article, I wrote about the conditions to which the “Bribing the Purchasing Agent Model” applies: The existence of information...
    View all 2 comments
    Grahamites 07-13 21:01
    • Fung9815 - Thanks for the comments. You are right that a strong model often lead to complacency both on the manufactuer side and the agent side. The example I provided in the article illustrates this point. I do think there's a difference between some of the names you mentioned and the companies that subject to this model. For instance, the customers of Nokia, Blackberry products are price sensitive and there's very little information asymmetry between the users and the manufactuers. I agree that we need to watch out for the more frequent disruptions though.
  • Grahamites commented on Grahamites's article 07-13 19:54
    The 'Bribing the Purchasing Agent Model' - Part I
    Charlie Munger (Trades, Portfolio) had famously asked this question to business school students: “Under what circumstances the correct answer for...
    View all 2 comments
    Grahamites 07-13 20:54
    • Tom - Great insight.  Indeed, the U.S healthcare system by its very design is a playground for the model. You certainly fish in the right pond:)
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