House Price Crash Discussion Thread

KITCHEN1_2

Gen,
Yes, the bond vigilantes have been back for awhile .

Being,
You must believe what you must believe and that is it. I will tell you that the best investment opportunities that i have ever had were the one's that on paper looked as unattractive as your example taken in a textbook manner. They are pukey unattractive until you consider mispricing which afterall is exactly what arbitrage is.I don't expect agreement ,because this view is typically a minority view and only works because of that. When you get majority agreement you're not looking at arbitrage anymore ,the mispricing is at best gone and at worst is way past fair value.
Best wishes.

Generali

Perhaps I'm missing something but isn't arbitrage making money by buying and selling the same thing in different markets at different prices at the same time and so turning a profit?

Isn't borrwing at one price and lending at another carry?

KITCHEN1_2

Gen,
No ,you're not missing something. The advent of the carry trade means the modern definition of arbitrage and carry trade is now as you suggest. I simply don't think of it like that because my views on arbitrage and how it relates to long term investment were formed long before there was a carry trade for which of course we have to thank our japanese friends.

Generali

KITCHEN1 wrote: »

Gen,
No ,you're not missing something. The advent of the carry trade means the modern definition of arbitrage and carry trade is now as you suggest. I simply don't think of it like that because my views on arbitrage and how it relates to long term investment were formed long before there was a carry trade for which of course we have to thank our japanese friends.

Wasn't it Wozza Buffet that said that the carry trade was Japan's greatest gift to the world?

KITCHEN1_2

If he did he must have had his tongue firmly in his cheek ,wouldn't surpirse me though as he appears to have a dry wicked sense of humour.

Generali

KITCHEN1 wrote: »

If he did he must have had his tongue firmly in his cheek ,wouldn't surpirse me though as he appears to have a dry wicked sense of humour.

My mate works for Wozza and has met him briefly a couple of times. Apparently a very decent bloke, gently funny and you really need to be on top of your brief.

The first time they met, my mate was asked what the consequences to the company (not to BH but to a subsidiary) would be if LA and New York were basically wiped out. Not knowing the answer went down very badly although he got bonus points for not trying to blag it!

KITCHEN1_2

The guy appears to have an encyclopeadic memory for data. It must be all the cherry cokes he drinks....LOL . I've only seen vidoes of him ,but I've noticed when it comes to the companies he has holdings in he finds countless opportunities to plug their products. The guy is truly a remarkeable individual.
I poached one of his 'lines'. My wife wanted a ring for a anniversary present and on seeing the cost of her choice I told her do you know how much that money would be if compounded for 25 years ,why don't we come back then and buy the shop ! Obviously I don't have his gift as it did not work.

Generali

BERKSHIRE HATHAWAY INC.

SHAREHOLDER LETTERS

http://www.berkshirehathaway.com/letters/letters.html

Well worth a read when you've got a moment or two. I like the line “My wife ran away with my best friend, and I sure miss him a lot.” The serious stuff is very interesting too, even the obvious bits like 'float' are interesting and very informative. You read him and wonder, 'Why isn't every company run like this?'.

KITCHEN1_2

"You read him and wonder, 'Why isn't every company run like this?'."...everytime I read him I come away wondering why our country is not run like his company !

MissMoneypenny

Generali wrote: »

“My wife ran away with my best friend, and I sure miss him a lot.”

The old ones are always the best.