Author Archive for Doug

Obama Only Got 1 Million More Viewers Than Palin

Published
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Doug
on September 4, 2008
in Elections and Politics
. 0 Comments

The Hotline posts some Nielsen numbers from last night’s speech by Sarah Palin:

  • The Sara Palin speech generated 37.2 million viewers, just a 1.1 million viewers short of Barack Obama’s record-breaking speech on Day 4 of the Democratic Convention. The Palin speech was carried on only six networks while the Obama speech was carried on ten (including BET, TV One, Univision and Telemundo).
  • Palin attracted a large female audience (19.5 million women, or 4.9 million more than Day 3 of the Democratic Convention).
  • Ratings for viewers 55+ (25.2) continue to be about ten times higher than for teens (2.2)
  • Day 3 for the GOP attracted more Hispanic viewers (1.4 million) than Day 3 of the Democratic Convention (1.2 million), even though Univision and Telemundo did not carry the speech.

Todd Sullivan thinks that Palin would have easily beat Obama’s numbers had a million people in Louisiana, Mississippi and East Texas not been displaced due to the hurricane. Still, this is an amazing showing for a Vice Presidential nominee compared to a Presidential nominee. Also, I think it’s good proof that lots of people are either excited and/or interested in this Republican nominee.

Palin’s Introduction at the Republican National Convention

Published
by
Doug
on September 3, 2008
in Elections and Politics
. 0 Comments

Some stream-of-conscious notes on the Wednesday speeches of the Republican National Convention in Minneapolis-Saint Paul.

The governor of Hawaii held up her hand in a symbol for “zero” when saying that neither of the Dem candidates had executive experience and the crowd started to chant “zero, zero, zero.” One of the funniest moments for me.

Romney was pretty aggressive in his speech and used very aggressive metaphors.

I really liked Huckabee’s speech. He was less aggressive compared to Romney, but he had a great anecdote meant to show how we should all be grateful to our military. I know this brought some tears to the eyes of some at the convention.

Next, the Governor of Hawaii, another person who became governor of a state after experience as a mayor, did a great job of talking up Sarah Palin.

Next, Rudy got a great reception. Rudy did a fine job of picking over Obama’s resume and belittling some aspects of it. The best part was his focus on the 130 times Obama votes “Present” while in the House. To Rudy, this indecisiveness was foreign and alien to him. As Rudy said, mayors and governors don’t get to vote “Present” when faced with tough choices or crises. Rudy also got in a bunch of digs against Obama and Biden.

Rudy did a great job. Each speaker I’ve seen thus far has been better than the previous.

Now, Palin.

The crowd loves her.

I think that Palin’s nomination as Vice President is the best thing to happen for the Republican party since the election of Ronald Reagan. Palin’s nomination marks the first time I’ve been excited about the election this year. It also marks the first time I’ve made a donation to a political campaign.

She introduces her family and talks about her life experiences.

She explains what the job of a small-town mayor involves. Paraphrasing, Palin said being a small-town mayor is “kind of like a community organizer, except that you have actual responsibilities.” Palin did a great job. Very well-spoken. The preceding speakers did an awesome job of warming-up the audience for her.

Now McCain makes it up on stage and the crowd goes nuts. It’s just too bad that McCain is an awful speaker. Hopefully McCain wil be able to show his strengths in the coming televised debates.

It Might Be Time to Pick Up Some Dell

Published
by
Doug
on September 3, 2008
in Investing and Stocks
. 1 Comment

Last night I stayed up way past my normal bed time listening to excerpts of the Longleaf Partners Funds’ most recent annual presentation. Though the presentation took place back in May, I’m glad I eventually got around to listening. Mason Hawkins and Staley Cates are the two main guys who run Longleaf and they are true-blue value investors.

The two qualities that impressed me the most - aside from their impressive investing record at Longleaf - were their confidence in themselves and their wit. Hawkins and Cates responded to questions with commanding knowledge and reiterated their investing philosophies in a way that their audience could easily understand.

Turning now to stocks, Dell (DELL) is the top holding of the Partners Fund (LLPFX), taking up 9.3% of the portfolio. This is a huge stake, and after listening to the excerpts of this year’s presentation, I am pretty convinced that Dell is presenting a great opportunity for investors.

Cates and Hawkins go into some detail on the reasoning behind their Dell investment during their response to a general question about technology investing. According to Longleaf, Dell has:

  • strong, organic revenue growth;
  • cash flow growth that’s even higher;
  • value that’s growing even faster than cash flow because they’re buying back very cheap stock at a rapid pace; and
  • an opportunity to provide their products to everyone in the world

Hawkins says that Dell isn’t a tech company—it’s more an assembler or retailer.

Additionally—and more tantalizingly—Hawkins feels that Longleaf has “an eight- to ten-bagger” with Dell. Hawkins made this statement in May when Dell was at $20. Today, Dell is back at $20 after plunging the most in almost eight years after saying the U.S. slump in technology spending has moved abroad. I think this is probably another opportunity for Longleaf, Dell, and perhaps other like-minded investors to purchase even more shares.

News Corp’s Wide Moat

Published
by
Doug
on August 31, 2008
in Investing, Media and Stocks
. 0 Comments

MagicDiligence makes the case that Rupert Murdoch’s News Corp is a wide moat media company that is offering supreme value:

News Corp is one of the largest and most diversified media conglomerates worldwide. The company’s diversification covers both product line and geography. The lion’s share of sales come from it’s 20th Century Fox movie studio, it’s FOX television network, and the growing array of cable television channels such as Fox News, FX, and Fox Sports Network (or FSN). Recently, News Corp has also made a move into business media, purchasing Dow Jones (the publisher of The Wall Street Journal) and launching the Fox Business Network to compete with CNBC. The diversification doesn’t stop here, however. News Corp also owns SKY Italia, a direct broadcast satellite network in Italy, book publisher HarperCollins (one of the largest English language publishers worldwide), the Star TV network in Asia, several newspapers primarily in the U.K. and Australia, many well known websites such as MySpace.com and IGN, and so on. The full list of News Corp’s businesses takes several pages in the 10-K!

Please read the full article. Also, one should be reassured by value investor Seth Klarman owning a very large stake in News Corp. Its Klarman’s second largest holding taking up about 9.3% of his entire portfolio.

Disclosure: I own News Corp stock

Sukiyaki Western Django

Published
by
Doug
on August 31, 2008
in Film
. 0 Comments

A Japanese Spaghetti Western? The NYT describes Sukiyaki Western Django as “Sergio Leone Meets Reservoir Dog in Japanese Pastiche.”

“Sukiyaki Western Django,” the latest offering from the protean and prolific Japanese director Takashi Miike, is a feast for genre fetishists, a loving and lurid pastiche of the spaghetti westerns that were themselves lurid pastiches of classic Hollywood cowboy pictures. It is fitting that the honorary master of ceremonies at this film-geek orgy is Quentin Tarantino, dean of the international film-geek fraternity, who elegantly disembowels a snake in the opening scene and who appears later to fill in some plot holes and speak in bizarrely accented English.

The film title itself alludes to the original Django, directed by the other Sergio, Sergio Corbucci (not Leone). Django spawned over 30 sequels, with only one being official.

Financial Crisis Is Absent From Candidates’ Agendas

Published
by
Doug
on August 27, 2008
in Banks, Business and Politics
. 0 Comments

For the past year, I have been bombarded with a steady stream of dire news and various statistics showing worst declines in decades. Bear Stearns and IndyMac have fallen and several huge financial institutions seem to be teetering, yet Bloomberg reports that neither of the political parties are addressing the current financial crises:

The U.S. is facing the worst financial crisis since the Depression. You would never know that from the Democrats’ platform in Denver or its Republican counterpart, or from listening to Barack Obama or John McCain.

While both candidates have bemoaned the ravages of the subprime crisis, they have yet to spell out steps for tackling it, such as using taxpayer money to shore up banks and housing.

“They fail to come to grips with the biggest danger that is going to hit the next president in his first few months in office: the crisis in the capital markets,” said David Smick, a Washington-based consultant to hedge funds and author of “The World is Curved: Hidden Dangers to the Global Economy.”

The Democrats’ platform, adopted at their Denver convention this week, labels the crisis a “debacle” and promises to jump-start the economy with a $50 billion stimulus package. It says nothing about helping banks or bailing out the mortgage-finance firms Fannie Mae and Freddie Mac.

The draft of the Republicans’ plank, to be adopted next week at their convention in St. Paul, Minnesota, supports “timely and carefully targeted aid to those hurt by the housing crisis” and opposes bailouts of private financial institutions. It doesn’t mention Fannie and Freddie.

The lack of attention to what has happened in the financial world in the past year most likely shows that this is not a winning political issue or that lots of people don’t really know what’s going on in the first place. I think this lack of attention is a serious mistake. Refusing to address and publicize the problems that gave rise to the crises decreases the likelihood that these problems will be solved in the future.

Choosing Stocks Over CDs

Published
by
Doug
on August 25, 2008
in Investing and Stocks
. 0 Comments

Bloggingstocks writes about ten stocks that are better than CDs. There are two separate posts: this one and this one. Most of them are related to the energy sector, a couple of banks, and one consumer discretionary pick.

However, if you feel safe trusting your money with WaMu, they are offering 5% for a 12 month CD in an environment where few banks are offering more than 4.25%.

The Uselessnes of Experts

Published
by
Doug
on August 24, 2008
in Books and Investing
. 1 Comment

I just finished reading Mobs, Messiahs, and Markets by William Bonner and Lila Rajiva. The authors are pretty staunch libertarians, which means they like gold, dislike fiat currencies, dislike George W. nearly as much as they dislike Stalin, rail against the so-called “wisdom of crowds”, etc., etc.

Despite these divergent views, I liked the book because it was very well-written. The authors opined on a multitude of topics in definitively witty manner. There were a bunch of great metaphors used to highlight the absurdity of human nature and the ease with which man can compound public spectacles and make a fool out of himself.

Two examples…

About investment newsletter business, the authors write, “If you really want to appreciate the media, though, you have to get close enough to see how things work—like a prairie dog peering into a hay bailor—but not so close that you get caught up in it yourself. The newsletter business is perfect; it is a part of the media, but no one would mistake it for the most respectable part.”

On conflicting desires: “Watching a fat man with the keen eye of a zoologist observing a species of dumb animal, you would come to the conclusion that losing weight is not his primary concern. He also desires other things—such as Krispy Kreme donuts and Aunt Jemima’s pancakes. The two desires, he knows as well as you do are incompatible. It is his preferences you see in his waste size, not his desire for weight loss.”

So, getting to main topic of this post, which is the uselessness of experts and efforts to predict the future as it relates to investing. Physiologically, the human brain was not designed for the complex world in which we live today. The authors write, “In order to think, people are forced to start simplifying and eliminating a lot of the detail. They have to abstract…theorize…generalize.” Though the heuristics of our brains are extremely useful in helping simplify a complex world to a point where we can understand it, I feel that simplification does not necessarily lead to good results or accurate predictions.

Because modern society “forces human beings to interact in groups far larger than their brains can handle effectively”, individuals will seek out the experts in hopes of gaining some sort of guidance in their lives. But the experts seem to be no good. The authors cite the work of political psychologist Philip Tetlock, who conducted a 20-year study of 287 political experts whom he asked a range of questions: “Would there be a nonviolent end to apartheid in South Africa? Would the United States go to war in the Persian Gulf? Would Canada disintegrate?”

Tetlock found that these experts were terrible in their predictions. Even more amazingly, “specializing” in a field of knowledge tended to make for worse predictions. The moral of the story here is that there is that the law of diminishing returns applies to knowledge and learning. The authors write, “Too much knowledge can actually trip you up, because it gets enlisted on behalf of your favorite hunches—or fears—instead of being evaluated objectively.” Lay persons are just as good as the experts at making predictions.

So, in relation to investing, one cannot and should not hope to achieve perfect or near-perfect knowledge of a company or potential investment. Time spent trying to gain near-perfect konwledge is inevitably a waste and would have been better spent in evaluating several other companies that you feel might be presenting a bargain. Furthermore, I am even more convinced that attempts at predicting the future are clearly a waste of time and a needless source of worry.

Who Wants a Hummer?

Published
by
Doug
on August 21, 2008
in Business and Cars
. 1 Comment

How is GM going to sell its Hummer brand? Who would be willing to buy it? I can’t help but think there are only two types of people who would want to own a Hummer: the rich or the insane. Or perhaps some combination of both. According to the WSJ (look at the link above):

The potential sale of the Hummer brand would be a minor part of GM’s plan to raise the $15 billion in additional liquidity by the end of 2009 that it needs to remain viable during a significant slowdown for the entire U.S. auto industry. GM will trim costs, pledge assets for new financing and sell assets to raise the needed cash.

Mr. Wagoner said Thursday that capital markets “have not opened up robustly” and are “moving in fits and starts.” He noted that GM anticipated the tough environment when it laid out its $15 billion liquidity plan.

How is GM even capable of raising $15 billion? The only thing going for GM is its long history in America. But, judging by its “next-generation of small cars” such as the Chevy Cruze,

things look good for GM if it can remain solvent. I have to admit I like the looks of this car, especially the Euro license plate.

Nearly Four Months Since Reading Graham

Published
by
Doug
on August 20, 2008
in Stocks
. 0 Comments

I read and studied Graham’s Intelligent Investor nearly 4 months ago. After gaining a good overview of the value investor philosophy, I decided to keep track of some attractive stocks I deemed to have a decent margin of safety. I used Tickerspy to track the stocks. I used Tickerspy because there’s nothing fancy about it—no need to decide about how many shares to purchase, it just puts an equal weight upon each stock pick.

Thus far, my portfolio has gained 25.2% versus the S&P500 (the blue line is my portfolio and the dotted gray line is the S&P).

The two essential elements to the initial success of this portfolio are (1) choosing undervalued stocks and (2) the concentrated nature of the portfolio. Not too bad for just four months, but its still too soon to say whether I could achieve similar long-term performance.

Another reason to be hesitant regarding the success of this portfolio is that it doesn’t necessarily mean I am a good stock picker in real life. I probably would not have made the same decisions if I had been using my own money in a real-life portfolio. Perhaps I would have been more conservative with my choices and allocations of capital, which would have affected my returns. The decisions people make can vary greatly depending on whether their own money is on the line.