Mad Men

Sometimes the markets just go so stupid that you wonder why they are trying to give away money.

In these circumstances, I tend to ask myself one question. Am I on the same side as Warren Buffett on this?

If the answer is "yes", then I sleep easily.

Buffett is a man who, despite his age (or perhaps in part because of it) is not one for short-termism. He has taken a very big position on the performance of the US stockmarket over the next decade or so. He is bullish.

Institutional investment staff who, despite their age, are very much ones for short-termism, look at the current performance of the stockmarket, shout "the sky is falling!!!", and suddenly decide that Berkshire Hathaway debt is worth less than Travelers. The cost of insuring against Berkshire Hathaway debt is currently on a par with Ba3-rated companies.

This is a company with more than $33bn in cash, a company that's just about as safe as safe can be. If anyone wanted to pay me to insure Berkshire's debt at Ba3 rates, I would bite off their hands. It's as close to free money as you will ever see. The people buying this cover should be sacked immediately. They won't be, of course, because they will mutter all the current mantras on "prudence" and "unprecedented volatility". This, apparently, justifies insuring yourself against being hit by a falling spaceship as you cross a New York street.

Because that's slightly more likely than Berkshire Hathaway defaulting on its debt obligations.


Elsewhere in the land of Mad Men, the price of US Treasury Inflation-Protected Securities (the irritatingly named "TIPs", which makes them hard to Google) looks laughably cheap. I bought $4k worth of 2028 1.75% + inflation yesterday for $87. That works out at roughly 2.2% + inflation to maturity. Given the current price of non-index-linked Treasuries, that appears to me to mean that I need inflation to average more than 1% a year from now to 2028 to be in front on the deal. Well, duh.

Why are they so cheap? Because institutional investors can't see more than 18 months ahead, and all that they see for 18 months is deflation. The argument is "sure, they are cheap, but they might get cheaper".

Or, once again, the inverse of the "buy tulip futures now" argument. "Yes, they are over-priced, but they are going to become even more overpriced!"

Money from Betfred still not in Neteller account. Getting a bit worrying/annoying. Nothing has taken that long to show up even as "pending" before.

Last night I won back a quarter of the rather lumpy loss incurred Monday evening, just about putting me in the black for the week that ends tonight. After five weeks of good wins (and 11 good weeks out of 12) I suppose a stinky night was overdue.

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Catch-Up

While finally clearing my $240 bonus on Stars I caught up with the last episode of Tony Palmer's All You Need Is Love. In the main the entire "History of Popular Music" has been disappointing. One might understand the misplaced emphasis of contemporary stuff, but even the material on the Blues, the musical, and other early 20th century stuff, was strangely rooted in its time, the mid-1970s.

However, one shining light appeared in the final few episodes -- Lester Bangs. I'd heard of the man, of course; Bangs was known as a gonzo style writer, and I knew that he had died. But in the interview he gave for this series, he virtually eviscerated the music of 1975. If I'd been any member of Emerson Lake & Palmer, and I had watched this, I think I would have killed myself. Or Mick Jagger, or Rick Wakeman.

Derogatis wrote "Let It Blurt", a biog of Bangs, and I really ought to get round to reading this. Bangs is also linked to Truman Capote -- both have been played by Philip Seymour Hoffman on film. As Nick Tosches said:

"He was a romantic in the gravest, saddest, best and most ridiculous sense of that worn-out word. He couldn't merely go to bed with a woman; he had to fall in love with her. He couldn't merely dislike something; he had to rail and rage against it. None of it was real but in the end, the phantoms of all that crazy love and anger, since they weren't his to command, conquered him."

We all tend to remember Hunter Thompson as the king of Gonzo, but as Bangs showed in this one illuminating -- no, stellar shining interview, he felt and knew more about music than virtually anyone else at the time. If punk hadn't existed, Lester Bangs would have had to invent it.

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