January 6, 2006 White Board Notes

Theme for 2006 (just a possibility, not bankrolling this theme)

Housing Bust

speculators

consumer spending retrenchment

sub-prime lenders

Watch the 30 year rates (interesting, although short term rates have risen since 6/04, I have been tracking one lender and their mortgage rates. here is a table of some comparisons.

Type (no points)          Jan 3, 06                 June 30, 04

15 year Fixed              5.625%                     5.25%
25 Year Fixed              6.125%                     not listed
20 Year Fixed              6.000%                     5.75%
30 Year Fixed              6.125%                     6.25%
1 Year Arm                  4.625%                     4.00%
3/1 year Arm               5.000%                     4.25%
5/1 Year Arm               5.250%                     4.875%
7/1 Year Arm               5.625%                     5.250%
10/1 Year Arm             6.000%                     5.875%

loan max for above $1.5M $750K

2. People I admire

Buffett
Springsteen
Others , just not listing em

3. Housing Inventory Ratio

Housing Inventory Ratio = Supply for Sale (or inventory)/Monthly Sales

4. Review all lesser looked at positions closely.

5. “It takes 20 years to build a reputation and 5 minutes to ruin it.” Warren Buffett

6. Things to look at

GRMN
NOVL
ADPT
Borland
Imclone
ADM (sugar and fuel)
Monsanto (feed the world, reduce needs of fertilizers)

7. OID said, and i think it was munger who quoted it

something like this, “recognize mistakes, and act on that recognition, and you will turn lemons into lemonade”

8. Friend of mine said seat on NYSE is worth $5.1M I don’t know if that was a sale price in Dec 05, or if it was his interpretation of value. This is good to know if you own a position in a specialist or owner of seats.

Richard Russell says, watch the djia and make sure it doesn’t close below 10,717.50

another oid on buffett and gold – I eliminated my 13 year precious metals position during 2005. It bothered me, that I couldn’t figure out the reason it was a “safe haven” or “money substitute”. I then reread OID year end 2000 and I think buffett said he grew up with gold, his dad loved gold, but he never understood it.

just some ramblings, doing lots of work on various positions. came off a real good year, hope to improve upon that. Returns last year for accounts that allowed shorting were beyond my expectations. Most accounts exceeded djia, spx and ixic. yet, i am only a long term investor and dont give a hoot about short term results.