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Author Topic: Stocks, bonds and investing  (Read 43392 times)
bhodi
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Posts: 6817

No lie.


Reply #35 on: February 01, 2012, 12:36:12 PM

This.

A great deal of the money to be made in the financial services industry is to be made telling other people what to invest in and then taking your commission off the top, regardless of performance. Also, the biggest difference between a successful analyst and some random tool off the street is just the amount of information they have access to and their ability to process said information.

So since you got out of the rat race, WTF do you do now with your stuff?


Edit:

I realized I have been doing nothing but bitching in this thread; sorry.

The biggest advice I can personally give is to make sure you are READY to invest. If you're still paying PMI on your mortgage, have ANY credit card debt or any debt that's more than a percent or two of interest, and don't already have a few months worth of expenses in a readily available place (that you can liquidate in a day or two), you aren't ready to invest yet.

And dear god, don't buy a house if you have to pay PMI. Really, it's just not worth it. Especially since they raised the rates recently. Rent until you can put 20% down or you might as well flush thousands upon thousands of dollars down the toilet instead.
« Last Edit: February 01, 2012, 12:43:32 PM by bhodi »
Miasma
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Reply #36 on: February 01, 2012, 12:42:11 PM

They also have God knows how many deals on the back end, they get commisions from selling financial products not only from you but from the companies themselves.  They have every reason to try and steer you into buying whatever their kickback is the highest on.  They've tried to clean it up but they're smarter and more motivated than the regulators so they will get around it.
MahrinSkel
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When she crossed over, she was just a ship. But when she came back... she was bullshit!


Reply #37 on: February 01, 2012, 12:43:09 PM

A great deal of the money to be made in the financial services industry is to be made telling other people what to invest in and then taking your commission off the top, regardless of performance. Also, the biggest difference between a successful analyst and some random tool off the street is just the school they went to and what clubs they joined while there.
FTFY.  Seriously, most of the time, the reason for "why does this guy have his job" on Wall Street can be explained this way.  A successful analyst is one who either follow the consensus of other analysts or "makes the market" (has so much influence their pronouncements become self-fulfilling).

--Dave

--Jello Biafra: "If evolution is outlawed, only outlaws will evolve."
ghost
The Dentist
Posts: 10569


Reply #38 on: February 01, 2012, 12:44:24 PM

So my current strategy will be to invest in the "small dogs of the dow".  Of this group, there are some fairly interesting looking stocks:

1.  GE-  this is at a very, very low price point historically.  The yield is 3.57% and the 52 week range has been from 14.6 to 21.  Most "analysts" rate it as a fairly strong buy, for what that is worth.  
2.  Intel-  also at a very low price point historically.  The yield is currently 3.14% and the 52 week range is 19.2-27.  The consensus seems to be a lukewarm buy.  
3.  Pfizer-  yield of 4.1% but the P/E ratio is a little higher than some of its counterparts.  It's also rated as a decent buy.  
4.  AT and T-  yield of 5.9%.  52 week range of 27-31.  It seems to have been pretty stable over that time, but the deal with T-mobile seems a little sketchy.  It is weighted more to a hold rating currently.  
5.  Verizon-  yield of 5.28%.  52 week range of 32-40.  Weighted toward hold rating.  

On the surface, this seems like a pretty non-dynamic group of stocks.  I like GE and Intel on their own, and would probably consider buying one or both alone.  I do like the high yields on the telecom stocks and Pfizer.  The dogs did pretty well last year, but a lot of that came from McDonald's.  As the US economy bounces back I think that the telecoms and GE could do very well, however.  
bhodi
Moderator
Posts: 6817

No lie.


Reply #39 on: February 01, 2012, 12:51:20 PM

As for specific stock advice, a friend of mine said:

pepco, ge, fsc, iau, gsk. winners.
ivr, cvh, vod, mo, tosbf losers.

Who knows if it's true. I sure don't!
Murgos
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Reply #40 on: February 01, 2012, 01:08:38 PM

It seems to me that if the market tanks that you might be well suited to get out and buy back at a lower price point.  For instance, if you sold at or near the peak prior to the most recent recession and then bought back during uptick or near the bottom you would have been better off than riding it out.  Or if you are in a particular aspect of the market, e.g. a commodities index or oil index, and anticipate more growth in another area you would be well suited to get out and reinvest somewhere else. 

This involves being able to successfully predict the future (time the market).  If you can do it, great.  If you can't, well then trying to avoid risk is probably the best you can do.

If people were able to do what you're suggesting (buy low and sell high) consistently then you would only ever need to watch one stock, any of them would do, and place options on it depending on your intuition and you would be a billionaire in 6 months and have exponential growth.

"You have all recieved youre last warning. I am in the process of currently tracking all of youre ips and pinging your home adressess. you should not have commencemed a war with me" - Aaron Rayburn
Merusk
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Reply #41 on: February 01, 2012, 01:13:05 PM

I'd been looking at GE previously and didn't know what to do with the last $1100 that's been sitting in cash since I sold Apple.  Looks like I'll put that through today, thanks Ghost.

My little portfolio:

P&G, Intel, McDonald's, Wal*Mart, Duke Energy, Kraft, and some in a Spartan Market index fund (FSEMX).   The index fund has underperformed so far, sitting at -.03% since I bought it.  McD is -.61% but I get dividends and wasn't looking to make money there so I'm OK with that.

The past cannot be changed. The future is yet within your power.
ghost
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Posts: 10569


Reply #42 on: February 01, 2012, 01:14:09 PM

It seems to me that if the market tanks that you might be well suited to get out and buy back at a lower price point.  For instance, if you sold at or near the peak prior to the most recent recession and then bought back during uptick or near the bottom you would have been better off than riding it out.  Or if you are in a particular aspect of the market, e.g. a commodities index or oil index, and anticipate more growth in another area you would be well suited to get out and reinvest somewhere else. 

This involves being able to successfully predict the future (time the market).  If you can do it, great.  If you can't, well then trying to avoid risk is probably the best you can do.

If people were able to do what you're suggesting (buy low and sell high) consistently then you would only ever need to watch one stock, any of them would do, and place options on it depending on your intuition and you would be a billionaire in 6 months and have exponential growth.

It appears to me that there is probably a reasonable middle ground.  I'm a rank amateur at this though, so maybe it is appropriate to not get out when you see a big turndown.  I certainly am not advocating day trading.  I don't think it's going to work for little fish like me to try and invest like Warren Buffet though, and a big question I have always had with these "sit on the EFT" suggestions is who stands to make money from it?  Maybe the little guy, maybe not.  
K9
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Reply #43 on: February 01, 2012, 01:35:04 PM

I thought Warren Buffet's schtick was that he always invested for the long haul. Getting in on small companies that have good prospects and riding it out until the went huge. Admittedly he had the ideal period in history to enjoy that sort of investment.

I'm looking to buy a house at the moment, so investing is a ways off. From what I have read though (depending on how soon you need the returns) there are almost no stock-picking approaches that outperform the market over long time frames (10-30y) so index funds make more sense in that regard. Yes there are lucky (emphasis lucky) people who make a killing flipping stocks, but for every one of them there are a hundred who piss all their money away. You might as well bet on the NFL or play roulette. YMMV

I love the smell of facepalm in the morning
ghost
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Posts: 10569


Reply #44 on: February 01, 2012, 01:41:14 PM

Buffett moves a lot of money into and out of big stocks, like Coca Cola.  Yes, he has some "smaller" stocks, but his portfolio is cock full of heavy hitters that you would expect to be there.  He does recommend long haul investing, but you kind of have to when you're dealing with millions and millions of dollars at a time. 
Bann
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Reply #45 on: February 01, 2012, 01:42:37 PM

My investment strategy:

Disclaimer: I inherited some stock along time ago, found it recently and sent it off to a freshly opened ING sharebuilder account. I sold the inherited stock, netting about $1350, and have decided to use that as my investing money for education/gambling fix. For Serious, I contribute a good hunk of my salary to a 403b investment account and will not look at/touch it till retirement or whatnot.

1. Read interesting article (usually in economist) about company/industry X in some (usually Asian) country.
2. Click around Google Finance for a company in Industry/Country from the article.
3. Realize 90% of the time the said Company is not tradable via my ING account.
4. End up finding some other company only very tangentially related to my initial search but that I could buy, and invest in some small amount of shares.
5. Take my well deserved beating.

Some examples of this strategy would be Longwei Petroleum Holdings (LPH) and Mongolia Energy Corp (MOAEY).

Only company of note I've had luck with (and it has been total luck) is CVV. It has been fluctuating pretty wildly since the summer when I started peeking at it every day. I've gone in and out twice and that has managed to pretty much cover all my other losses.
Sky
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WWW
Reply #46 on: February 01, 2012, 01:48:13 PM

My general strategy is to not pay interest on things and keep your costs as low as possible.

Any time you're not paying interest, you're making that money. So tempted to refi, I just missed a no-point 3% deal for my mortgage, dammit (paying 5.5% now).

Viin
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Reply #47 on: February 01, 2012, 01:57:22 PM

We thought of refi-ing too, but the closing costs wouldn't be worth the 150 basis point gain. Instead, we are focused on paying the house off in the next 5-6 years.

- Viin
Merusk
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Reply #48 on: February 01, 2012, 02:24:06 PM

Look around on closing costs and see if you can find a small local bank.  A co-worker just gave me a lead on a place locally whose closing costs were $250.  No, I'm not missing a 0. 

Doing another 30-year at 3.875 with them has a total cost of $~850 to me, because they then require a .5% delivery fee based upon house price at time of appraisal. 

A 15-year at current rates (3.5%) will cost me $27 more per month than my current loan and drop 6 years off my repayment terms - netting me about $66k in kept money after taking the extra $27 in to account.  Plus we'd pay off the house by the time I was 52.  That's huge.

Only thing keeping me from it is our own laziness about getting my name on the deed.  That's done now and I've got to wait 6 months to refi, but rates aren't going anywhere with the Fed having declared no change until 2013.

The past cannot be changed. The future is yet within your power.
Hammond
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Reply #49 on: February 01, 2012, 03:08:33 PM

Merusk That sounds EXACTLY like my situation.  I am at the tail end of my refinancing and hope to have it done this week.  My closing costs were roughly 500 bucks total.  The only messed up part is its taking about 3 months total to do it.  Backlog with the bank if you can belive that.
Sky
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I love my TV an' hug my TV an' call it 'George'.


WWW
Reply #50 on: February 01, 2012, 03:15:04 PM

A 15-year at current rates (3.5%) will cost me $27 more per month than my current loan and drop 6 years off my repayment terms - netting me about $66k in kept money after taking the extra $27 in to account.  Plus we'd pay off the house by the time I was 52.  That's huge.
That's why I brought it up. How much money would you have to invest to make $66k?

Lantyssa
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Reply #51 on: February 01, 2012, 03:21:01 PM

I have a bunch of money I need to invest, and what I should really do is get a financial planner. With ING's orange account paying less than inflation, it's pretty much time i get involved. I've just been putting it off because it really scares me and I am extremely risk-adverse. And, because every time I look, my IRA has lost more money.
I've got the perfect fund for you.  I'll handle it all.  Just make the check out for all your worth to L-A-N-T-Y-S-S-A and I'll get you set up in no time.

Hahahaha!  I'm really good at this!
shiznitz
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Reply #52 on: February 01, 2012, 03:24:45 PM

The hardest part of investing is overcoming emotion.  As an individual investor, ALWAYS sell your losers first to buy new ideas and ALWAYS sell your losers before they become long-term.  Understand that if you lose 20% on a stock, then you have to make 25% on the next one to get back to even.  This math gets worse the more you lose.  Preventing losses should be priority number one.  Do this by selling losers quickly.  If you stick to this, you will find that your portfolio has lots of winners in it and you will feel good!

The bottom line, though, is that you are competing with people who have much better information and spend all day doing this, and still most of those people cannot beat the index whatever it happens to be (I am one of these people).  I get paid a lot to try and beat the market.  I get paid a lot if I just do an average job of it.  Why do I get paid a lot? Fees.  Investors do not understand the long term costs of fees.  

Buy a US stock ETF, an international stock ETF and a bond fund or two.  Be boring.  Keep fees low.  The best way to save is to add money to your account regularly, not try to pick the hot thing.  It is virtually impossible to get high returns without high volatility.   The guys who can do it charge a fortune in fees once people notice and the high returns then tend to stop.  

They key is getting a nice chunk invested as soon as you can.  Better to scrimp up $5000 and get it invested today than start with $1000 and add $1000 a year.  The math of compounding is very powerful.  Still, the regular adding is better than nothing



« Last Edit: February 01, 2012, 03:45:18 PM by shiznitz »

I have never played WoW.
Murgos
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Reply #53 on: February 01, 2012, 03:45:35 PM

The hardest part of investing is overcoming emotion.  As an individual investor, ALWAYS sell your losers first to buy new ideas and ALWAYS sell your losers before they become long-term.  Understand that if you lose 20% on a stock, then you have to make 25% on the next one to get back to even.  This math gets worse the more you lose.  Preventing losses should be priority number one.  Do this by selling losers quickly.  If you stick to this, you will find that your portfolio has lots of winners in it and you will feel good!

What's your threshold for loser? 1%, 5%?  If you're using stops you can have a hiccup that drops you out at the bottom of an upswing so you have to make your stop big enough to avoid that but yet small enough not to be painful when you inevitably buy a dog that just keeps dropping.

"You have all recieved youre last warning. I am in the process of currently tracking all of youre ips and pinging your home adressess. you should not have commencemed a war with me" - Aaron Rayburn
ghost
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Reply #54 on: February 01, 2012, 03:58:52 PM

That's the thing, Shiznitz-  I had ETF indexes for years and they just sat there.  I've done much better since 2008 since I started paying attention to this stuff myself.  Do you have particular indexes that you like?
Abagadro
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Reply #55 on: February 01, 2012, 05:54:16 PM

I just do dollar cost average investing in index funds so anything I would contribute would be very boring.  This year my AGI was such that I had to rejigger how I do it (457 instead of my IRA), but that's about as exciting as it gets for me.

Isn't a 457 an insurance annuity?

It's the government employee version of the 401(k).  I've been putting stuff into my IRA from the roll-over I did from my private practice profit-share but now I can't deduct it so went with the 457 contribution. It's kind of a bummer because I really liked the fund I have my IRA in (Vanguard Target 2035).  I've gone with low-expense ratio bond (20%) and stock index (80%) funds in my new account.
 

"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.

-H.L. Mencken
Johny Cee
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Reply #56 on: February 01, 2012, 07:24:21 PM

I just do dollar cost average investing in index funds so anything I would contribute would be very boring.  This year my AGI was such that I had to rejigger how I do it (457 instead of my IRA), but that's about as exciting as it gets for me.

Isn't a 457 an insurance annuity?

It's the government employee version of the 401(k).  I've been putting stuff into my IRA from the roll-over I did from my private practice profit-share but now I can't deduct it so went with the 457 contribution. It's kind of a bummer because I really liked the fund I have my IRA in (Vanguard Target 2035).  I've gone with low-expense ratio bond (20%) and stock index (80%) funds in my new account.
 

hmm...  you don't have a 403b?  I thought most governments and non-profits had swapped by now.
Abagadro
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Reply #57 on: February 01, 2012, 07:30:28 PM

I thought those were only for schools, churches and hospitals, not pure municipal government employees.

"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.

-H.L. Mencken
Viin
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Reply #58 on: February 01, 2012, 09:06:40 PM

I've been putting stuff into my IRA from the roll-over I did from my private practice profit-share but now I can't deduct it so went with the 457 contribution. It's kind of a bummer because I really liked the fund I have my IRA in (Vanguard Target 2035).  I've gone with low-expense ratio bond (20%) and stock index (80%) funds in my new account.

I use Vanguard for my rollover IRA too - though I have my money spread around a bit more. Target 2040, bond index fund, and 3 EFTs - two are international small-cap/emerging markets.

- Viin
Torinak
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Reply #59 on: February 01, 2012, 11:36:39 PM

That's the thing, Shiznitz-  I had ETF indexes for years and they just sat there.  I've done much better since 2008 since I started paying attention to this stuff myself.  Do you have particular indexes that you like?

What are your expectations for what the indexes should do?

What are your goals for investing?

There are no realistic ways to get rich quick. There are some ways to get rich slowly. There are lots of ways to get poor quick, or get poor slowly.
K9
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Reply #60 on: February 02, 2012, 07:16:05 AM


I love the smell of facepalm in the morning
shiznitz
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Reply #61 on: February 02, 2012, 08:16:33 AM

The hardest part of investing is overcoming emotion.  As an individual investor, ALWAYS sell your losers first to buy new ideas and ALWAYS sell your losers before they become long-term.  Understand that if you lose 20% on a stock, then you have to make 25% on the next one to get back to even.  This math gets worse the more you lose.  Preventing losses should be priority number one.  Do this by selling losers quickly.  If you stick to this, you will find that your portfolio has lots of winners in it and you will feel good!

What's your threshold for loser? 1%, 5%?  If you're using stops you can have a hiccup that drops you out at the bottom of an upswing so you have to make your stop big enough to avoid that but yet small enough not to be painful when you inevitably buy a dog that just keeps dropping.

Severe market drops are rare, even if they have been more common in the last few years.  I like the 15% loss threshold myself.  The other loss threshold I like is if a stock was making money (+10% or better) and then slips to a loss, sell it immediately.  Lastly, a losing stock in a rising market should be puked.  I know that sounds like chasing, but in a bull market investors tend to chase.  It works for the most part.  It is ok if you miss the first and last 10% of a bull market.

Quote from: ghost
That's the thing, Shiznitz-  I had ETF indexes for years and they just sat there.  I've done much better since 2008 since I started paying attention to this stuff myself.  Do you have particular indexes that you like?

I like the SPY and and SCHB for broad US market exposure.  I also use the double long and double shorts (SSO and SDS) on top to play momentum and juice returns.  If you try these leveraged ETFs, do NOT buy and hold.  They are meant for trading.  I don;t hold them for more than a week. I have not found an international ETF with reasonable fees.  Use a Vanguard fund.

I have never played WoW.
Xanthippe
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Reply #62 on: February 02, 2012, 08:36:44 AM

I have a little IRA. I buy $1000 worth of stock at a time from some company that I like for some reason (i.e., I like their products, like to shop there, like their employees, or something similar). I read what I can about them before buying to make sure they're not in financial trouble. Then I forget about it, until I start to not like them and then I sell and buy something else. I've only sold a few times.

My return is probably on par with randomly picking stocks, which is basically what I'm doing, because I pay little attention to P/E ratios and so on, and I don't know much about investing, but my return is way way better than my husband's 401k, which gets eaten up by administrative fees from all the buying and selling that those assholes do.

Salamok
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Reply #63 on: February 02, 2012, 10:15:49 AM

And dear god, don't buy a house if you have to pay PMI. Really, it's just not worth it. Especially since they raised the rates recently. Rent until you can put 20% down or you might as well flush thousands upon thousands of dollars down the toilet instead.

And that interest crap is really f'd up.  Whatever you do don't buy a house until you have 100% down, you might as well flush hundreds of thousands of dollars down the toilet.  PMI is a few thousand dollars with 10% down on a 250k house or do a 95% FHA loan with monthly MIP and once your home value inflates you to an 80% LTV refi to an 80% conventional loan.  There is a huge gap between being able to absorb a $2500 hit over the course of 5 years and saving up an extra $35k to put down on a house.

Buffett moves a lot of money into and out of big stocks, like Coca Cola.  Yes, he has some "smaller" stocks, but his portfolio is cock full of heavy hitters that you would expect to be there.  He does recommend long haul investing, but you kind of have to when you're dealing with millions and millions of dollars at a time. 

Too bad he is so old, if he was 20 years younger I would say just buy a share or 2 of Berkshire and let it sit, as it is when he dies I'm guessing that will take some sort of a hit.
Murgos
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Reply #64 on: February 02, 2012, 11:12:32 AM

Too bad he is so old, if he was 20 years younger I would say just buy a share or 2 of Berkshire and let it sit, as it is when he dies I'm guessing that will take some sort of a hit.

That would make a good death pool.  Every year you just buy a few put options that are way out of the money and the year it hits you make a small fortune.

"You have all recieved youre last warning. I am in the process of currently tracking all of youre ips and pinging your home adressess. you should not have commencemed a war with me" - Aaron Rayburn
Abagadro
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Reply #65 on: February 02, 2012, 12:35:36 PM

Yea, just buy a share or two. They are only 117, 000 dollars a piece right now. :)

"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.

-H.L. Mencken
K9
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Reply #66 on: February 02, 2012, 12:38:25 PM

Well, the B shares are only ~$76 each.

I love the smell of facepalm in the morning
Abagadro
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Reply #67 on: February 02, 2012, 12:48:35 PM

Feh. Who wants to own a share with a 1/10,000th voting right.

"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.

-H.L. Mencken
K9
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Reply #68 on: February 02, 2012, 01:02:21 PM

It might be fun to have a ticket to the Omaha shindig; I think I'd like to see that at least once.

I love the smell of facepalm in the morning
shiznitz
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Reply #69 on: February 02, 2012, 02:43:17 PM

It is a crowded love fest with real life banner ads for other Berkshire companies all over the place. 

I have never played WoW.
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