Global Macro Trading Journal

I'm down quite a bit on my BRKB purchases. But frankly I'm thinking of buying more. Stock is at GAAP book value, the true book value(What buffett calls intrinsic value, IValue) is quite a bit higher and that should grow by, say, 10%-13% a year(Historically is has done much better but Buffett says it won't be the same), add a recession and slow GDP growth and that could go down to 5-7%, seems pretty decent given that the margin of safety is high

But given that the stock sells at the decent discount to IValue the actual return will be higher given that in order to keep the ratio stable the stock will have to run more than IValue

And I'm not even factoring in that the stock could reach IValue(expand PB ratios), which it historically has done
 
Quote from m22au:

I think you're thesis is sound, but playing devil's advocate,

what if:

> Bernanke does not provide more monetary easing (or hints thereof)
> Germany does not agree to increase EFSF beyond current levels
> Italy and Spain default
> There is a global depression

all of those stocks could fall by a lot, and the VIX could reach 80 (or higher).

Then once the panic passes, the fair value that you describe (what is that exactly?) could be at lower levels than at which you bought them.

As you probably know secular bear markets end when P/E ratios are in mid single digits.
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Its very easy to overestimate the probabilities of those events when stocks are down a lot and the VIX is high. It was one of my lessons from 2008
-When the VIX is high, don't trust opinions, even your own. Look at the numbers and make rational decisions. Its very easy to get caught up in the emotions
 
Quote from Daal:

Its very easy to overestimate the probabilities of those events when stocks are down a lot and the VIX is high. It was one of my lessons from 2008
-When the VIX is high, don't trust opinions, even your own. Look at the numbers and make rational decisions. Its very easy to get caught up in the emotions
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Very true - for what it's worth I believe that the Bernanke put is still in place and that even though it's misguided, he will at the very least hint at additional stimulus later day.

Then again - like you said - I shouldn't trust my own opinion. :)
 
Quote from Daal:

More than 80 points range in the ES Globex session, insane
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Yeah - at 1100.00, is the ES 23 points off the low of 1077 or 48 points from the high?
 
Quote from Debaser82:
According to news sources here... the ECB bought somewhere between 50 billion euro to 100 billion euro of Italian and Spanish bonds today....

Would it not be cheaper to buy the beaten down banking stocks and trigger a risk on rally that way?
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This is a completely silly claim, Debaser, don't listen to those people... They didn't buy anywhere near those amounts. It's more like EUR 3 - 8bn, no more than that.
 
Quote from Ghost of Cutten:

valuations are very attractive and the likes of WMT, AAPL, KO and GOOG, aren't going to suddenly stop making shitloads of money just because some leveraged players are liquidating their stocks due to margin calls.
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So, on my investment account I am going 100% long stocks here. If the market falls another 10, 20, 30 or even 50%, I will simply sit and wait for the panic to pass, reinvest my dividends at bargain prices, and wait until fair value is reached before cashing in anything.
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Agreed. Also, FOMC is meeting today, should help stop this mayhem.
 
Quote from Daal:

The rumors are talking about Paulson level 'large', not just a big fund
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Whats the source of the rumor. Market action seems to back your hypothesis that someone big might be in stress or going down! Also implies we might be nearing another LTCM/Lehman - and this time we might not get the luxury of a weekend to sort out things......now thats scary part of this panic.

But in light of today's FOMC, I am going long usdchf at least till the time I am proven wrong.
 
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