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Re: Going for Broker
Posted by: mungerite (IP Logged)
Date: June 6, 2008 08:04AM

Thanks to the more than 75 people from this forum have bought it and the many who have reviewed it on here.


Stocks Discussed: MER,
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Re: Going for Broker
Posted by: mungerite (IP Logged)
Date: June 12, 2008 06:11AM

This is another classic case of IGNORING a trend and its effect on future earnings

Read the first sentence of his write up .Merrill Lynch shares have retreated from their 2007 high of $98.70 due to sub-prime exposure that will hurt their earnings. MER has pre-announced a loss for the September quarter related to charges for this. Despite that, estimated earnings for all of 2007 are expected to be $5.50. Value Line carries an $8.70 estimate for 2008 while the Zack's concensus is $8.50.

Now lets use some "logic" here. If the company didn't see the subprime mess coming and neither did Value Line or Zack's ,What makes you think they can forecast 2008 earnings accurately?

See investing is half art and half science. Take the 3rd paragraph

The 2.11% current yield is one of the highest on MER shares since 1994 when the shares where posied to go up dramatically. The two other times when MER yielded over 2% were at market lows in 1998 and 2002. Each time these shares rebounded brilliantly and in very short order. Price/Book Value is also near multi-year historical low

Warren Buffett who has made almost 200 billion dollars allocating capital talked about the"danger" of CDO's and excessive leverage and excesses on Wall street.

ANY INVESTOR with common sense KNEW that the subprime mess was REAL and the housing bubble of the past 5 or 6 years would eventually have to deflate and those investment banks and financial institutions holding these insturments could face drastic writedowns

Logically it would make sense that comparing 2007 and the subprime mess with 1998 and 2002 is BASELESS and ILLUSTRATES why academicians who go STRICTLY by numbers can be so WRONG and receive a 50% haircut( one of many this particular individual has suffered)

Compare this and other UNTIMELY selections with my recommendations of WMT at 43 ,BNI at 81 BRK at 3580 BUD at 48,JNJ at 60,MO at 66

EVERYONE of the selections above COULD have been derived if the book mentioned above WOULD have been read instead of"panned"

All the stocks mentioned above can be documented on gurufocus under the name billytickets ,a polarizing but very successful investor "measured" by the documented posts on gurufocus in 2007.

If you want to achieve financial security MAKE the trend your friend.





Stocks Discussed: MER,
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Rating: 2.3/5 (3 votes)



Re: Going for Broker
Posted by: David Pinsen (IP Logged)
Date: June 12, 2008 08:21AM

"Warren Buffett who has made almost 200 billion dollars allocating capital talked about the"danger" of CDO's and excessive leverage and excesses on Wall street."

Before we begin the ritualistic praise of Buffett here, let's remember that a company in which he was the largest shareholder through BRK, Moody's, facilitated these excesses by slapping triple-A ratings on so many of those CDOs. When you own ~19% of a company, you have a lot of access to what's going on there, if you want it. It's too bad that Buffett didn't exercise more oversight of Moody's during the credit boom.


Stocks Discussed: MER,
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Rating: 4.8/5 (5 votes)



Re: Going for Broker
Posted by: mungerite (IP Logged)
Date: June 12, 2008 08:49AM

Dave politely disagree with you. Buffett 's basis is about 10.10 per share.He only invested less than 500 million in it. Unlike Icahn and kerkorian and Boone Pickens he is a "passive" shareholder and hasno record inthe last 35 years of getting involved in management EXCEPT when necessary with salomon bros. He hadto know that KO buying its stock back at 40 times earnings was a poor allocation of capital but stayed mum. I have critized Buffett's hypocrisy in the past about saying options are no good but yet using them in the BNI purchase and his affair with Kay graham and his support of a estate tax while arranging his estate and his personal affairs in the past 40 years to "delaying" and deferrin" taxes.Fact is a 19% shareholder has less power than you think although i follow your"point".peace


Stocks Discussed: MER,
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Re: Going for Broker
Posted by: batbeer2 (IP Logged)
Date: June 12, 2008 04:07PM

Invert.

What would it have meant if WEB had interfered with the ratings ?

Happy investing to All!


Stocks Discussed: MER,
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Rating: 3.0/5 (1 vote)



Re: Going for Broker
Posted by: David Pinsen (IP Logged)
Date: June 12, 2008 05:12PM

"Invert.

What would it have meant if WEB had interfered with the ratings ?"


Here's what would have happened, had Buffett used his influence to keep Moody's from giving out triple-A ratings to CDO issuers like candy during the mortgage boom:

1) Moody's would have made less money than its competitors during the bubble years of the boom. Issuers looking for easier ratings would have gone to its competitors.

2) Today, Moody's would have more credibility and a stronger brand than its competitors, because it would be recognized as having been more prudent in its ratings than them.

3) Moody's would be positioned to steal market share from its competitors and dominate the ratings industry going forward, because buyers of rated securities would consider its ratings more valuable than those of its competitors.


Stocks Discussed: MER,
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Rating: 3.0/5 (3 votes)



Re: Going for Broker
Posted by: dmangan (IP Logged)
Date: June 12, 2008 05:21PM

Not only that, Dave, but the credit crisis itself could possibly have been averted if credible sources like Moody's warned about it.


Stocks Discussed: MER,
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Rating: 2.0/5 (1 vote)



Re: Going for Broker
Posted by: David Pinsen (IP Logged)
Date: June 12, 2008 05:35PM

Good point, Dmangan.


Stocks Discussed: MER,
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Rating: 1.5/5 (2 votes)



Re: Going for Broker
Posted by: Dr. Paul Price (IP Logged)
Date: June 12, 2008 05:44PM

If there was no bond insurance we would not have had a crisis because lenders would have done due diligence on their borrowers instead of blingdly relying on bogus AAA ratings.

Get rid of bond insurance to avoid future problems.


Stocks Discussed: MER,
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Rating: 5.0/5 (1 vote)



Re: Going for Broker
Posted by: Sivaram (IP Logged)
Date: June 12, 2008 06:59PM

stockdocx99 Wrote:
-------------------------------------------------------
> If there was no bond insurance we would not have
> had a crisis because lenders would have done due
> diligence on their borrowers instead of blingdly
> relying on bogus AAA ratings.
>

As a shareholder in a bond insurer and someone who strongly believes in the merits of bond insurance, I strongly disagree with your assertion that bond insurance was the root cause of these problems. I don't think I need to say much to debunk your view other than the following:

You do realize that most of the problems are limited to subprime mortgage assets, right? Furthermore, you do realize that only a tiny portion of these assets (generally the super-senior tranches) are insured by bond insurers. Of the $200 billion to $400 billion in losses being estimated for the banks and various holders of subprime mortgage assets, only around $20 billion to $40 billion are exposed to the monoline insurers.

I think you mistakenly believe that if bond insurance didn't exist, bond ratings wouldn't exist and that people would do their own due diligence. Bond insurance was started in the early 1970's by Ambac and Moodys, for instance, started assigning bond ratings in 1909! People had been relying on bond ratings for almost 60 years before the first monoline bond insurer was established! As for structured products, the rating agencies started assigning ratings in the early 90's (and probably earlier than that--not sure) whereas bond insurers only gained sizeable exposure by the late 90's.

---------
Check out my investing blog - contrarian with a macro focus and a value investing tilt: Can Turtles Fly? A Contrarian Investing Blog.


Stocks Discussed: MER,
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Rating: 4.0/5 (1 vote)



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