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Old 03-26-2020, 06:37 PM   #61
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+1. Your freedom to swing your fist ends at my jaw. That’s why we need government.
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Old 03-27-2020, 07:04 AM   #62
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My suggestion...receivership instead of bailouts and a requirement that execs maintain a certain level of at-risk investment in the company with a multi-year tail after their exit. Perhaps as much as 50% of their gross income.
Having been a corporate insider as well, I agree with most of the things you said. On the issue of bailouts (in the form of grants or emergency loans), I think we have the distinguish between normal situations and times of unforeseen crisis, which I include the current situation. No matter how much we plan, I don't think any reasonable corporate leader could have foreseen a complete shutdown of society.

For man-made crisis, I agree with all your general points. Unfortunately, that's the role of the Board and the shareholders, and as the majority of the shareholders invest in index, the situation will get worse.
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Old 03-27-2020, 08:39 AM   #63
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... For man-made crisis, I agree with all your general points. Unfortunately, that's the role of the Board and the shareholders, and as the majority of the shareholders invest in index, the situation will get worse.
I see this argument all the time but I am skeptical. I don't think that small investors, if they voted at all, were anywhere near enough an influential block to matter. Pension funds and other large shareholders can easily, even if they have delegated their stock-picking to an index, identify and direct voting where there are specific issues. An index fund manager will listen very carefully to direction from a customer for whom he is running a few hundred million or a few billion $$.

For example, DFA has announced that they will vote against every director of companies that enact poison pills AND that they will follow those directors to any board they serve on or are nominated to and will vote against them there too. I think that's pretty neat.
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Old 04-08-2020, 07:43 AM   #64
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“Only when the tide goes out do you discover who’s been swimming naked.” - Warren Bu

The zombies are back. I wondered when they’d show up to the federal trough. In the last recession, we bailed out the unregulated Collateralized Loan Obligations (CLOs) stuffed with faulty mortgages. This time, the taxpayers’ gift from the unregulated free market Wall Street capitalists is emerging to be $3 trillion in CLOs stuffed with corporate junk bonds issued by companies who cannot pay their obligations to bond holders. Who knows what level of Hell lies this way?


https://qz.com/1833565/some-are-call...-loan-bailout/
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Old 04-12-2020, 08:46 PM   #65
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The zombies are back. I wondered when they’d show up to the federal trough. In the last recession, we bailed out the unregulated Collateralized Loan Obligations (CLOs) stuffed with faulty mortgages. This time, the taxpayers’ gift from the unregulated free market Wall Street capitalists is emerging to be $3 trillion in CLOs stuffed with corporate junk bonds issued by companies who cannot pay their obligations to bond holders. Who knows what level of Hell lies this way?


https://qz.com/1833565/some-are-call...-loan-bailout/


Remember the good old days when politicians would at least pay lip service to concepts like long term debt and moral hazard before increasing the national debt by 40% (projected over this crisis) to bail out dubious businesses who chose not to save for a rainy day?
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Old 04-12-2020, 09:29 PM   #66
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Remember the good old days when politicians would at least pay lip service to concepts like long term debt and moral hazard before increasing the national debt by 40% (projected over this crisis) to bail out dubious businesses who chose not to save for a rainy day?
This is exactly the situation that calls for increasing the national debt, as opposed to the massive transfer payments that have driven it for the last half century. And exactly what kind of "rainy day" fund do you think businesses should have to cover a government ordered, multi-month complete shutdown?
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Old 04-12-2020, 09:52 PM   #67
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... dubious businesses who chose not to save for a rainy day?
I think you have never run a business.
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Old 04-12-2020, 09:56 PM   #68
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I think you have never run a business.


Actually I’ve started and run seven companies, but nice attempt at an insult.
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Old 04-12-2020, 09:59 PM   #69
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This is exactly the situation that calls for increasing the national debt, as opposed to the massive transfer payments that have driven it for the last half century. And exactly what kind of "rainy day" fund do you think businesses should have to cover a government ordered, multi-month complete shutdown?

Good luck explaining that to future generations who will be saddled with incredible debt (leading to some combination of higher taxes, lower services and and slower growth.) oh I forgot...the only people who matter are current voters, at least if you ask current voters.
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Old 04-12-2020, 11:56 PM   #70
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This is exactly the situation that calls for increasing the national debt, as opposed to the massive transfer payments that have driven it for the last half century. And exactly what kind of "rainy day" fund do you think businesses should have to cover a government ordered, multi-month complete shutdown?
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Good luck explaining that to future generations who will be saddled with incredible debt (leading to some combination of higher taxes, lower services and and slower growth.) oh I forgot...the only people who matter are current voters, at least if you ask current voters.
It doesn't have to be either/or. I agree with Grant that few small businesses would be prepared for a few months of no revenue and this is a very unusual situation justifying fiscal stimulus... more for the employees of the business but also for the business.

At the same time, in past "bailouts" the money has been attached to borrowing that has been later paid off, which could help alleviate the impact of this fiscal stimulus on the deficit and debt.

It is very concerning all the money that is being thrown around with nary a thought about the impact on the deficit.
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Old 04-13-2020, 05:03 AM   #71
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I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.
That's where I was going into the Great Recession. This time I was at 58%. Rather better.
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Old 04-13-2020, 06:47 AM   #72
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It doesn't have to be either/or. I agree with Grant that few small businesses would be prepared for a few months of no revenue and this is a very unusual situation justifying fiscal stimulus... more for the employees of the business but also for the business.



At the same time, in past "bailouts" the money has been attached to borrowing that has been later paid off, which could help alleviate the impact of this fiscal stimulus on the deficit and debt.



It is very concerning all the money that is being thrown around with nary a thought about the impact on the deficit.


What happens to the Wall Street artisans who assembled and sold CLOs apparently stuffed with corporate junk whose zombie debt issuers can’t keep up their interest payments? If it turns out these wizards of creative finance have again been allowed to walk the country to the edge of disaster, should they be bailed out? Their investors? Should they go to prison this time? Should ratings agencies like Moody’s et al be shut down and this kind garbage all outlawed? Perhaps we aren’t there yet but the article I posted seems a credible worry.
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Old 04-13-2020, 08:12 AM   #73
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Actually I’ve started and run seven companies, but nice attempt at an insult.
It was an observation, not an insult. But if you indeed have business experience it is even more surprising to me that you would label all companies without months of revenue available in cash as "dubious." Unless, I guess, you consider the majority of US companies to be "dubious."

In fact, for companies self-funding their own growth, tying up that much cash would be poor management and very limiting.
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Old 04-14-2020, 06:24 AM   #74
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I wasn't responding to those issues or your post at all.. your response is so far out of left field that I won't respond other than to say I don't see the outcome being any different from last time.
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What happens to the Wall Street artisans who assembled and sold CLOs apparently stuffed with corporate junk whose zombie debt issuers can’t keep up their interest payments? If it turns out these wizards of creative finance have again been allowed to walk the country to the edge of disaster, should they be bailed out? Their investors? Should they go to prison this time? Should ratings agencies like Moody’s et al be shut down and this kind garbage all outlawed? Perhaps we aren’t there yet but the article I posted seems a credible worry.
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Old 04-15-2020, 06:01 AM   #75
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“Only when the tide goes out do you discover who’s been swimming naked.” - Warren Bu

The whole post is my post but you’re welcomed to comment however you like on it, including that you think it’s from left field. I will push back on the comment, having experienced the mortgage crisis with all the junk in CLOs that was sold as higher quality, which was then insured through credit default swaps for billions more, all of which nearly crashed the economy. I am not as complacent.
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Old 04-15-2020, 07:02 AM   #76
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Well, complacent or not, I still don't see the outcome being any different from last time.
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Old 04-15-2020, 07:57 AM   #77
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I am certain that there are a number of folks among us - equity AAs at 80+ who have been posting for years, condescending to anyone with lower and with no fear.
I would not say condescending, but they probably have a different time horizon.
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Old 04-18-2020, 02:32 PM   #78
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I saw something I thought was remarkable, which is the returns of Vanguard Energy ETF VDE. Had you bought it at inception in 2004, you would not be a happy camper today.

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Old 04-18-2020, 02:36 PM   #79
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I saw something I thought was remarkable, which is the returns of Vanguard Energy ETF VDE. Had you bought it at inception in 2004, you would not be a happy camper today.

Attachment 34688
An excellent lab rat. Evidence that it is not a good idea to make sector bets. I'm sure that the people who bought this thought they were astute investors who could foresee price movements.
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Old 04-18-2020, 02:47 PM   #80
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An excellent lab rat. Evidence that it is not a good idea to make sector bets. I'm sure that the people who bought this thought they were astute investors who could foresee price movements.
Just ask all those who invested in mortgage reits how well they've done the last five or even ten years. I still have a small investment in one mortgage reit but I am not bragging about it. The mreits returns have been pretty bad and the dividend yields are inconsistent at best.

But there are some investors who won't admit they were wrong about them. I admit I was wrong about mreits and will at some point get rid of it. It's not hurting me , but I can do better. At least I didn't bet the farm on it. I only have a little over 7% of my portfolio in mreits.
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