Pages

Friday, September 30, 2011

Chairman of China Construction Bank on Charlie Rose - asked about the real estate bubble


Guo ShuQing, the chairman of China Construction Bank was on Charlie Rose.  Charlie asked him about the real estate bubble @ 17:00. 

Charlie asked him if he thought the real estate bubble would burst. The chairman said, he doesn't expect it to burst because they will give it a "soft landing"...oy vey

To be honest, I haven't read CCB's financial filings so maybe I should shut up. Yet, I can't help feeling extremely anxious about BAC still having their stake in CCB. I've never heard of a real estate bubble having a soft landing - maybe there is an example of one, but I sure as heck don't know of one.

Monday, September 26, 2011

Buffett Squashes My 100K A Share Dream

It's not everyday a billionaire squashes one of your dreams, but when Buffett announced Berkshire will repurchase shares when they are trading below 110% of book, he pretty much kept me from ever buying a Berkshire A below 100,000 USD.

Fox News, does this count a class warfare? I'm sure you could spin it somehow.

It's not surprising that Buffett is signaling Berkshire is cheap, but it is surprising he is willing to repurchase shares. Maybe this will be like 2000 and he will never need to pull the trigger, but if he ends up repurchasing it would be historical. Repurchasing shares is essentially a liquidation of a business and a way to give capital back to your shareholders. With so many interesting opportunities in terms of large high quality companies, I thought Berkshire would never point the gun to themselves, but I guess at these prices Berkshire is too good to be true.

Tuesday, September 6, 2011

Screenshot of Westpac's market cap > BAC's market cap

Last week, my friend just got back from Melbourne. We met up in Taipei to catch up. Then he said something absolutely crazy. His cousin had just purchased a $750,000 AUD home. He has three children and his wife is a homemaker. His salary is $60,000 AUD.  That's right, his cousin's house is 12.5X times there pre-tax income.  That's absolutely ridiculous. This is all anecdotal, so maybe they are just outliers of the average Australian new home-buyer.  I hope they are, and I hope my anxiety isn't warranted.

Bronte Capital has a great post with some Australian bubble pictures, it's pretty jaw dropping.  The Inoculated Investor had written up an analysis of the Australian banks in 2009. It's a bit dated now, but worth the read.

I've had a negative point of view on Australia and Australian banks for quite a while (for fun I think about Australia...I need a real hobby).  On August 23rd something pretty memorable happened. The equity market cap for Westpac was actually larger than the equity market cap for Bank of America. I thought this was so strange I took a screenshot of it.

Bank of America's August 23, 2011 (equity) Market Cap of 63.54B



Westpac's August 23, 2011 (equity) Market Cap of 63.58B

In five years from now we will see how different the delta is.