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#21 Petepan

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Posted 10 December 2012 - 02:30 PM

Edited double post

#22 kotmj

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Posted 19 December 2012 - 02:41 AM

An interesting way to look at current gold prices. But I feel there many more ways to look at it. How does one look at commodity prices in general? Beats me, really.

From Berkshire Hathaway's annual report 2011:
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The second major category of investments involves assets that will never produce anything, but that are
purchased in the buyer’s hope that someone else – who also knows that the assets will be forever
unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of
such buyers in the 17th century.

This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they
believe the buying pool will expand still further. Owners are not inspired by what the asset itself can
produce – it will remain lifeless forever – but rather by the belief that others will desire it even more
avidly in the future.

The major asset in this category is gold, currently a huge favorite of investors who fear almost all other
assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however,
has two significant shortcomings, being neither of much use nor procreative. True, gold has some
industrial and decorative utility, but the demand for these purposes is both limited and incapable of
soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still
own one ounce at its end.

What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the
past decade that belief has proved correct. Beyond that, the rising price has on its own generated
additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis.
As “bandwagon” investors join any party, they create their own truth – for a while.

Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses
that can be created by combining an initially sensible thesis with well-publicized rising prices. In these
bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market,
and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But bubbles
blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise
man does in the beginning, the fool does in the end.”

Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it
would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At
$1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400
million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most
profitable company, one earning more than $40 billion annually). After these purchases, we would
have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying
binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual
production of gold command about $160 billion. Buyers – whether jewelry and industrial users,
frightened individuals, or speculators – must continually absorb this additional supply to merely
maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced staggering amounts of corn,
wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the
currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its
owners and will also hold assets worth many more trillions (and, remember, you get
16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can
fondle the cube, but it will not respond.

Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m
confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at
a rate far inferior to that achieved by pile B.

#23 ElPistolero

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Posted 02 January 2013 - 09:37 PM

Gold, however, has two significant shortcomings, being neither of much use nor procreative.


Let me introduce you to my friends at Genneva.

#24 kotmj

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Posted 05 March 2013 - 10:18 PM

I had some courses in statistics at uni, and am also mildly familiar with FMEA. Certain events have a low probability of occuring, so you'd say maybe P=0.000001. P=1 is where that outcome will surely happen.

You'd also assign a weight to a certain outcome, to reflect that impact that outcome would have. So even if a particular outcome has a very low probability of occuring, that outcome might have a very high impact. For instance, the probability of an aeroplane falling from the sky is very low, but when it happens to you it is terminal.

What is missing from these introductory courses is that the probabilities are very operator-dependant.

The historical average of a certain event might indicate that such an event is a very rare occurence, say P=1X10(-17). But what is always silent is that if you put a certain operator to perform a task that might result in that outcome, the probability is no longer P=1X10(-17). It can be more like 0.7.

So I learnt today. Low IQ people are capable to making the sort of mistakes that leaves smarter people bewildered. You would think they went out of their way to make these low probability mistakes. Ever since I started working with sewing tailors, the sort of mistakes I see them routinely make are often beyond my most pessimistic estimate.

#25 Zarium

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Posted 06 March 2013 - 05:16 PM

I know exactly what you mean. Maybe it's like what you said; we're all so surrounded by excellence that we take it for granted.

But the tough part is drawing the line between general norm and what we deem to be the norm. Something we deem particularly easy and straightforward; bar common sense, may be an intricate task for another.

#26 kotmj

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Posted 12 March 2013 - 04:15 AM

http://www.ted.com/t...lationship.html

#27 kotmj

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Posted 21 May 2013 - 12:40 AM

There was some political discussion over on the What You're Reading Right Now thread. I would like to continue that discussion here.

I have had some time to think about the issue of corruption. The general feeling among people is that BN is corrupt like fuck and should be voted out for this reason alone. I am very wary of the wisdom of crowds, so on some matters I ask myself if the prevailing wisdom makes sense, and on what basis it is made. The waves of witchhunts in Europe are a constant reminder that crowds are failable, very. For instance, there is this common practice of buying an apartment the moment you would qualify for a bank loan. I know of people in their first job making a fraction what I make who would commit to buy an apartment. They say it's a guaranteed investment. I have serious misgivings about this.

Another prevailing wisdom I could never figure out is this business of "having a career". Even while at uni, while co-opting and interning, I could see that most people's day jobs are incredibly unsatisfying to them. I would look at them, and instead of seeing what I'm supposed to see -- highly capable, well-trained, decent project managers or engineers, or whatever, I saw people whose realities I want to avoid. They're like animals in a zoo. Trapped.

Back to corruption, before I wander too far off. What I know about corruption is this: nobody knows its extent. Is it 100 million per year? Is it 10% of the economy? I don't know. I bet you don't either. If you were to ask people for instances where they encountered it in the first person, some really vague stuff comes out, or they will give you instances of some civil servant doing some stuff.

Things which are not quantifiable have in them the potential to be assigned all kinds of values. Because corruption is not quantifiable, people can say all sorts of things about its severity without someone else being able to claim otherwise.

You don't know how bad, or how good, corruption is. I don't. You don't.

I do think there is corruption, the way there is crime. Where does it take place? I think some corruption takes place at the civil servant level. The bulk of civil servants remain even with a change of government. If you replace the government, you do not replace all civil servants. And even if you replaced all civil servants, the replacements are only human. I just do not think corruption is eradicated this way.

People would cite major cost overruns in civil construction projects as examples of corruption. If you tell me this, I find it difficult to take seriously everything else you tell me. Because even in the private sector, projects are always late and always cost more than anticipated. Eg. The Airbus A380. Or TollCollect (http://en.wikipedia....ki/Toll_Collect). There are major cost overruns in civil projects in first world countries, too. All the time. Actually, most of the time.

This is what I know about corruption. I doubt most people know more. What I know is not enough to conclude that the government needs replacing because it is too corrupt.

#28 Petia

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Posted 21 May 2013 - 01:36 PM

The Scorpene case is a typical example of how things are run. Minister decides to buy billions worth of military hardware. The Ministry does not pay direct to vendor but goes thru a middleman who takes a cut from the deal. The middleman in question was a close associate of the Prime Minister, lets put aside the murder case for now.

Why can't the purchase be direct from the vendor, thus saving the taxpayers millions of dollars, instead of enriching a middleman who have absolutely no use at all, its not like the middleman provides aftermarket servicing, training or any value added service.

Corruption is robbing the poor and giving the rich. Changing the robbers does not make the poor richer but at least they have the pleasure of showing their displeasure. My 2 sens worth.

#29 kotmj

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Posted 21 May 2013 - 07:27 PM

Just spent the last hour reading about the Scorpene case and the murder. Most intriguing!

Middlemen/Brokers are a common feature in any transaction. When I rented my apartment, I never did see the landlady. It was the agent I dealt with, who makes a commission.

My father once brokered the change of ownership of a business. He was paid very nicely for little more than handholding the various parties.

Everywhere you look you see brokers in action. Lawyers are particularly fond of such jobs.

Baginda was probably hired by Thales to facilitate the transaction. It's no mean feat selling anything to the Malaysian State. They pay several years after services have been rendered. They are intransparent, unless you know the key players.

#30 Petepan

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Posted 21 May 2013 - 07:30 PM

Is there not a conflict of interest when a lawyer acts as a broker?

#31 Petia

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Posted 21 May 2013 - 08:06 PM

http://www.asiasenti...5261&Itemid=178

People related to the case are dead of mysterious circumstances. Translator, Private Investigator, 2 of Najibs elite bodyguards, Lawyer of DCNS the French vendor.

Similar cases related to DCNS in Taiwan and Pakistan also resulted in multiple mysterious deaths. The French are bad news...

#32 Petia

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Posted 23 May 2013 - 01:36 PM

This is a live recording of the public inquiry into the death of a political aide who was in the custody of the anti corruption agency.

I wonder why nobody was charged with contempt of court since it was so hard to control oneself from bursting into laughter, including the judge.




#33 Guest_Antonio Panico_*

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Posted 23 May 2013 - 02:47 PM

This is a live recording of the public inquiry into the death of a political aide who was in the custody of the anti corruption agency.

I wonder why nobody was charged with contempt of court since it was so hard to control oneself from bursting into laughter, including the judge.



This is hilarious in a sad way.

#34 kotmj

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Posted 23 May 2013 - 09:57 PM

That lawyer doesn't really speak English, does he?

Petia, you appear fascinated with Malaysian news! I go out of my way to avoid being exposed to it. It's all just noise.

#35 Petia

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Posted 23 May 2013 - 10:58 PM

Due to election fever my facebook news feed is flooded with posts from Malaysian friends or ex-Malaysian but now Singaporean friends.

#36 joonian

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Posted 20 June 2013 - 03:07 AM

&nbsp:



#37 kotmj

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Posted 25 June 2013 - 12:20 AM

There is a species of Malaysian Chinese here in KL which crawled out from some God-forsaken deep province and who go to school at some Tunku Abdul Rahman place or another and who have infested a certain McD I am presently in. They are so goddamned irritating. They are loud, unbelievably loud, with their high pitched Mandarin going on non-stop. They don't talk to each other, they shout at each other. In all my time in Kota Kemuning you do not see people like these. It's just in this McD. It's stupid chatter too, totally pointless chatter with no intellectual content.



#38 kotmj

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Posted 25 June 2013 - 12:25 AM

So I just went and asked the girl to shut up. Phew, peace at last.



#39 kotmj

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Posted 25 June 2013 - 12:44 AM

It's like with the Africans. When a bunch of them get together, they sound like they are starting a riot.



#40 Petepan

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Posted 25 June 2013 - 11:18 AM

Wait till you get to experience mainland Chinese.  Everything pales into insignificance in their presence.






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