racemize

I thought this was intriguing: http://www.philosophicaleconomics.com/2015/04/recycle/

Do you have to close out margin when you switch accounts?

buying a portion of an IPO'd company? http://www.newser.com/article/567c3a5500224d7c800ae36df2f1dd7e/berkshire-hathaway-buys-nearly-10-percent-stake-in-axalta-coating-systems-for-560-million.html

One in five years. So 0.005 to 0.4 5 to 80 Do you have data to back this? I can run some calculations to check, but just want to verify.

But how often does the market drop 30%?

Just finished listening to this one. I've read three of Lewis' books now, and each time I feel increasingly uneasy with his representations. I get the impression that he presents a version of the truth, but it is a potentially dangerous, one-sided version. That said, I have trouble believing HFT is doing a whole lot of good for the world. Following on to that, has anyone read this counterpoint? Flash Boys: Not So Fast: An Insider's Perspective on High-Frequency Trading

http://www.theverge.com/2015/3/9/8175619/hbo-now-announced

I found this interesting; I don't think it posted here elsewhere: http://www.bp.com/content/dam/bp/pdf/Energy-economics/energy-outlook-2015/Energy_Outlook_2035_booklet.pdf

initiated CBI and GM-warrants.

I vote 1.5. Seems like there is an in between view that isn't represented by the poll?

http://www.berkshirehathaway.com/letters/2014ltr.pdf

First time out: http://whalewisdom.com/filer/aquamarine-capital-management-llc

anyone have a source for his long-term record?

http://www.businessinsider.com/ubers-plans-to-be-cheaper-than-owning-a-car-2015-2?utm_content=bufferdb7fc&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer Thought this was interesting. I think when driverless cars hit, the uber-like services versus owning a car may dominate in urban areas.

Joel, Of course, you are right. But I don’t think your reasoning considers another psychological obstacle: to invest a very large percentage of your capital in a single business is hard. With only three large positions right now I think I have a portfolio more concentrated than most, and Fairfax today represents almost 43.5% of my portfolio. It is already by far the largest investment I have ever held. My cash reserve is around 18.5%… If I use it to buy more Fairfax, I would be making that single investment 62% of my portfolio… It might be the most rational thing to do… But, as much as I like Fairfax, I am not prepared for that yet! ;) Cheers, Gio That makes sense--I thought you had more positions than three these days, so diversification is also a concern that has to be taken into account.

I did not update it, as I was just focused on cash or not (I don't hold my money in treasuries if it isn't invested). Also, since yields are absurdly low right now, it wouldn't really change things currently. It would be a good exercise though.

Or to use Klarman's lesson: "8. Holding cash in the absence of opportunity makes sense."

Hi all, thanks for reading and your questions/comments; I'm going to try to answer everything from my point of view below. I've PM'd everyone links to the data that asked, I believe. Hi Pete, thanks for your kind words. I think what you are saying is probably right, but I didn't try the combinations you suggested. Certainly, high CAGR, low vol, holding cash is very very expensive. And from the data, I think high volatility makes cash much more important. And since low CAGR implies low opportunity cost, it would seem to make sense that pairing high volatility with it would make holding cash a good idea. I too share your feeling that prima facie, low CAGR high volatility makes sense going forward. However, my personal view is solidly with Marks on forecasting--There's people who don't know and people who know they don't know; I'm solidly in the latter camp. I also imagine people have had such thoughts at various points in the last century and have been proven wrong. Of course, this time may be different! The bull-run from the 80's to 2000's certainly would have taken people by surprise as an anomalous upside. Anyway, I'm rambling. I think you mean 9.15% pre-tax, 0 additional volatility and 14.56% pre-tax, 100% additional volatility. I'm wondering if volatility is the right word here, after thinking about your question. In any event, what I did for that one was amplify the returns each year, or basically use free leverage. e.g., multiply the annual returns by a factor--for 100%, it was a factor of 2. Thus, where the S&P 500 went up 20% and then down 30%, the model would use 40% and then -60% instead. As you can imagine, there is an upper limit on this, because a downturn of 35% can only be amplified by 2.85 times before you lose all your money. In any event, since it is magnified and the overall result is positive, it results in a higher CAGR. I labeled this as increased volatility, since I was amplifying the ups and the downs. That's also what I meant when I did the individual investor portfolios. To be clear, while your characterization of what I'm saying might be true and might be supported by the data, it wasn't the conclusion I was drawing or question I was trying to answer. My question is one that both of us face and have reached different conclusions. I'm going to describe it in both our situations, please correct me if I get yours wrong! In your case, I believe you hold around 5-7 ideas that you have high conviction in right now, and who's price you don't think is too high. I also believe you have some amount of cash available, e.g., 20%ish? So, the question I was trying to answer is, in your situation, if you still believe these stocks are cheap and meet your minimum, but are skittish about the macro environment, does it make sense to hold cash or to put the cash to work in these high conviction ideas? When I started, I thought the answer would be that some amount of cash would be helpful, so that it would be available for downturns or when a new idea came along. So, I tested to see if holding cash ever made sense for the general market, and couldn't come up with any good models that didn't result in underperformance. Perhaps more importantly, I analyzed whether the idiosyncratic returns of actual investors would have been better off with or without cash. The answer kept coming up 0% cash. Thus, I'm not saying always be 100% invested (although that may be correct); I'm saying, if I still have a good idea, but am queasy about the market (as I am right now), should I invest in that good idea or not? Or, in your position, should you allocate more money to FFH, BH, OAK if you have cash and have high conviction at current prices? I believe the answer is yes. In my case, I have money coming in almost every quarter, and each time, I have had an available existing position that I could average my price down. As a result, I've put the money to work and stopped worrying about what the market will do. If I don't have a good idea for the money, or prices of my current positions are too high for me to be comfortable, I'll hold cash. It absolutely does not capture the best allocation for the current period, but I don't view my ability to forecast the current period as good enough to rely upon, so I'm using history as a guide to see which whether holding cash has worked. Ultimately, all the essay says is that timing the market is really hard, and you have to be really good to do it. I do not believe I'm good enough to do it, so I don't.

does anyone have a good way of importing the S&P 500 total return? I may need to attempt the importJSON for: http://us.spindices.com/indices/equity/sp-500 (You can get a link to export an xls showing the current YTD return, but I have no idea how to automatically import a value of a cell from an xls file into a google spreadsheet) This used to work, but is very very flakey these days (morning star gives a lot of errors, it appears): =(Index(ImportHtml("http://quicktake.morningstar.com/index/IndexCharts.aspx?Symbol=SPX",0), "table", 10),3,7))/100 Anyway, it's driving me a bit crazy. If someone else is pulling this and has a different way, please let me know. Thanks!

I am underperforming the market in my primary account this year, and at ~22% in my concentrated IRA account. Still positive, but second year of underperformance. Just thought I'd add some lower returns to the thread.

I went to a 7 day meditation retreat, and posted a log of my days there, if anyone is interested: http://www.joelstevens.net/2014/12/meditation-retreat-arrival.html

I used to use DCF/future earnings analysis. A year or so ago I stopped and just went with the, "I better know it is cheap if I'm buying" it mentality. The false precision of long-term projections feels dangerous to me.

Here he is saying basically the opposite of that. So, in that interview, he was giving general advice to investors, not stating what he does with his funds. In the interview I watched before (which I can't find now, unfortunately), the hosts basically asked him how he used the pendulum and he said that they were always fully invested (maybe referring to high yield funds) as that was the mandate of the fund, so they used the pendulum to determine aggressiveness in what they were buying. Regardless, thanks for the video, I'd not heard him actually give advice to stock pickers like that. However, I don't think holding cash based on the temperature of the market is a great idea, for a variety of reasons. I do think understanding the pendulum is important, however; e.g., I like a strategy similar to Marks' comments about aggressiveness and defensiveness in picking stocks with his own funds above.

I assumed the cash earned 0% for two reasons: 1) Since the cash needed to be available to be deployed, I did not have it get invested in bonds, as I did not want to expose the study to interest rate risk; and 2) I was mostly doing the study for myself, and I don't invest cash in bonds when not invested to ensure its availability. I also assume this is generally the case among most investors here, but perhaps I'm wrong on that. I'll PM you.

Yes, that's pretty much my conclusion. It also does some other tests besides market timing (e.g., hypothetical and real investor testing to determine ideal amounts of cash for non-market portfolios).