Carl Jung on the state

"He saw that the state was treated as a quasi-animate personality from whom everything is expected but that this personality was only camouflage for those individuals who know how to manipulate it."

Also am thinking about the Agency Problem.

The above two concepts  may explain why things go wrong in this system of the world.

Ron Paul - our only hope.

I disagree with Ron Paul on many issues like abortion and climate change.

Still I would vote for him If I were a US citizen.

People vote for candidates for a variety of reason, I am a consequentialist;- to me results matter. A president is not a man you have to admire. Like a plumber, a president is merely one you hire for a specific job.


There are too many sites that discuss the advantages of Ron Paul, so I will bring up only one point that I feel is missed by everyone.

Mexico will thrive if the war on drugs is ended. There is no reason why the standards of living in mexico do not rise to be the same as in the USA. The only thing holding it back is the crime and instability.

And as for the fence along the border, Mexico will have to make a fence to keep the Americans who will want to migrate there for a better life.

Recent purchases.

Bought Google, because it was cheap (p/e <30).

Bought Tesco, because Buffet bought it. Will exit if Buffett sells.

These decisions are not very well thought out, but I don't have the time to do much research anymore. In both cases I am really assuming another well regarded investor has done plenty of due diligence.

Both companies also do not look very risky to me .

Prefer style over substance.

"More troublingly, listeners preferred speakers who answered the
wrong question well over those who answered the right question poorly"

"A politician in a debate asked about the illegal drug
problem in America whose answer stresses the need for universal healthcare has engaged
in a successful dodge if listeners have both forgotten that she was even asked about
drugs, and evaluate her highly."

-From here. See a review of this paper here.

Time and Chance.

I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favor to men of skill, but time and chance happeneth to them all.

Despite our best efforts, the complexity of reality prevents prediction.

Strategic Hotels

I was drawn to Strategic Hotels (NYSE:BEE) on hearing about Bill Gates taking up a stake in it via his investment company Cascade Investments. Value investors like Bill Gates are usually early to the party. The price has nearly halved since he bought shares and is around 4$ today( 17 Oct 08).

Recently I saw a report that Bill is now going to take an active strategic role in the business.

My guess is that at this price he can simply take over the company, Bill is no stranger to the hotel business, and has a stake in the Four Seasons Hotels.

I will skip detailing a valuation of the company here, I think it is cheap. Bill is no fool and I assume that he has done more due diligence than I will ever be able to match.

I am going long Strategic Hotels.

When to Sell Berkshire Hathaway

I own some Berkshire Hathaway B shares. I have mentioned my reasons for buying Berkshire in a previous article. So now that I am sitting on a nice profit ( unlike most of my other buys from that time) should I sell now?

I feel that any stock should be sold if

1. It is overvalued.
2. There is better alternative.
   

To address point 1 we need to check if Berkshire is overvalued. To do so you may now use the IntrinsiValuator. It is a nice tool created by some nice guy to help us value Berkshire according to hints that Warren Buffett himself has given.
According to the site if you select "Conservative" in the Assumption field the "Intrinsic Value" for the B shares is 4829 USD. This is above todays (19 sep 08) price of 4595 USD. So we still have some way to go before I feel I should sell. I would sell when it is well above intrinsic value and maybe closer to the Optimistic scenario price of 6500 USD.

As for point 2, Are there equivalent or similar businesses that are available cheaper? To answer that I need to research Leucadia National Corp and Markel Corp. Both these companies are similar to Berkshire. They have insurance operations and use the premiums they receive to invest in diverse businesses. All these companies have well regarded managements and are followed by value investors.

Thats all for now...