racemize

Found a good article: https://personal.vanguard.com/us/insights/article/index-funds-tax-072013?SYND=RSS&Channel=MFN

This is how I thought too, but I've read in quite a few places that indices have avoided having any capital gains distributions for the past decade. I'm not sure how though. Maybe I'm misunderstanding it, though (although I did have an index investor friend look, and he didn't have any capital gains distributions last year).

I'm working on an essay showing how much an active investor has to beat the market by in order to achieve the same after tax returns, given various investment lengths, turnover rates, and annual returns. In order to properly model this, I have to account for the dividends that are taxed for index returns. I have a graph from 1870 showing the dividend yields for the S&P 500. As you can imagine, it is much higher at the beginning (e.g., 6% range) and bottoms at 1998 (~1%). Thus: 1) If you had to guess, what will be the new normal for S&P 500 yields? 3%? (talking about over the next 10-50 years) 2) If anyone can give an explanation on how indices avoid capital gains distributions (e.g, from removing/adding members), I'd appreciate it!

Buffett's punch card approach to emoticons? (This way your post can have a Buffett reference, as is your wont)

Latest video from Perlman: http://techland.time.com/2014/02/19/artemis-pcell/ My main questions: 1) How many of his transmitters does he need to do this on a massive scale (i.e., how expensive a roll out are we talking)? 2) How well does it deal with fast moving and/or high fading terminals? To me, his descriptions of DIDO (e.g., in the white paper) sound quite a bit like MU-MIMO, but with a high degree of separation on the network side. I'm not sure if he's provided enough details to really discuss what the difference would be, but if any other wireless experts are around that think they know, I'd like to hear it. (I write patents on wireless technology, including MU-MIMO, but that gives me a bit of a higher level understanding than an actual wireless engineer)

That sounds amazing, thanks Nate!

I was hoping for a longer history and for the industry as a whole, but that may be too big to have in a single book.

Does anyone have any recommendations for books on railways, e.g., history, economics, etc.? I couldn't tell if one had been posted (seems like something that would be). Thanks!

Here's the requested checklist: (IMO, this does not serve the purpose of what I'm going for, but I typed it out anyway) A) How to Generate Investment Ideas 1) Do I want to spend a lot of time learning about the business? 2) How would you evaluate this business if you were to become its CEO? B) Understanding the Business - Basics 3) Can you describe how the business operates, in your own words? 4) How does the business make money? 5) How has the business evolved over time? 6) In what foreign markets does the business operate, and what are the risks of operating in these countries? C) Understanding the Business - Customer 7) Who is the core customer of the business? 8) Is the customer base concentrated or diversified? 9) Is it easy or difficult to convince customers to buy the products or services? 10) What is the customer retention rate for the business? 11) What are the signs a business is customer oriented? 12) What pain does the business alleviate for the customer? 13) To what degree is the customer dependent on the products or services from the business? 14) If the business disappeared tomorrow, what impact would this have on the customer base? D) Evaluating the Strengths and Weaknesses of a Business and Industry 15) Does the business have a sustainable competitive advantage and what is its source? 16) Does the business possess the ability to raise prices without losing customers? 17) Does the business operate in a good or bad industry? 18) How has the industry evolved over time? 19) What is the competitive landscape, and how intense is the competition? 20) What type of relationship does the business have with suppliers? E) Measuring the Operating and Financial Health of the Business 21) What are the fundamentals of the business? 22) What are the operating metrics of the business that you need to monitor? 23) What are the key risks the business faces? 24) How does inflation affect the business? 25) Is the business’s balance sheet strong or weak? 26) What is the return on invested capital for the business? F) Evaluating the Distribution of Earnings (Cash Flows) 27) Are the accounting standards that management uses conservative? 28) Does the business generate revenues that are recurring or from one-off transactions? 29) To what degree is the business cyclical, countercyclical, or recession-resistant? 30) To what degree does operating leverage impact the earnings of the business? 31) How does working capital impact the cash flows of the business? 32) Does the business have high or low capital expenditure requirements? G) Assessing the Quality of Management - Background and Classification 33) What type of manager is leading the company? (Owner Operator?) 34) What are the effects on the business of bringing in outside management? 35) Is the CEO a Lion or a Hyena? 36) How did the manager rise to lead the business? 37) How are senior managers compensated, and how did they gain their ownership interest? 38) Have the managers been buying or selling the stock? H) Assessing the Quality of Management-Competence 39) Does the CEO manage the business to benefit all stakeholders? 40) Does the management team improve its operations day-to-day or does it use a strategic plan to conduct its business? 41) Do the CEO and CFO issue guidance regarding earnings? 42) Is the business managed in a centralized or decentralized manner? 43) Does management value its employees? 44) Does the management team know how to hire well? 45) Does the management team focus on cutting unnecessary costs? 46) Are the CEO and CFO disciplined in making capital allocation decisions? 47) Do the CEO and CFO buy back stock opportunistically? I) Assessing the Quality of Management - Positive and Negative Traits 48) Does the CEO love the money or the business? 49) Can you identify a moment of integrity for the manager? 50) Are managers clear and consistent in their communications and actions with stakeholders? 51) Does management think independently and remain unswayed by what others in their industry are doing? 52) Is the CEO self-promoting? J) Evaluating Growth Opportunities 53) Does the business grow through M&A or does it grow organically? 54) What is the management team’s motivation to grow the business? 55) Has historical growth been profitable and will it continue to be so? 56) What are the future growth prospects of the business? 57) Is the management team growing the business too quickly? K) Evaluating M&A 58) How does management make M&A decisions? 59) Have past acquisitions been successful?

no electronic version! sadface.

Schloss made it work with the local paper, Value Line, a pencil and a pack of gum. Schloss was amazing.

I believe so that he's fair to all shareholders. He doesn't like buying out his partners without telling him he's going to, since he believes they are selling at a low price.

Hi Al, what happens if you pull from the HELOC for multiple years in a row and you have to deal with interest payments? I guess they aren't enough to be concerned about?

I wonder if the ILS market will shrink back down if rates on bonds get to normal levels?

http://www.finalternatives.com/node/25948 Anyone know if the 13-Fs will be under the same filer as before?

yes, but somehow they manage to not have cap gains distributions, which I haven't been able to fully figure out. I think it is even true for funds and not just etfs. I was hoping someone who understood this well could explain it, but I'll keep digging online.

Hi All, I'm working on an essay that relates to how much better active investors have to do to beat index funds over various holding periods, and given different turn-over rates. In order to make this comparison, I need to figure out how index fund holdings are taxed. After some research, here's what I think I know: Capital gains distributions appear to not really ever happen (I would have expected some amount due to changes in companies in the index). From my reading, I've gotten the impression that it has to do with the fact that more and more money flows into the index funds, but I never got a clear understanding of it. Is this a phenomenon that can continue? Dividend taxes on the dividends received. Currently that amounts to taxation of only ~2% of funds per year (given a 2% yield). Otherwise, cap gains taxes just hit at the end. Please correct any of the above if I am not stating it correctly. I've never owned an index, so I had to ask a EMT friend of mine to look up his index taxes for the last few years to confirm that the above at least appears to be mostly correct.

Thanks for the clarification, agaglio. Anything else noteworthy? I thought Paul Singer's presentation on risk parity was very interesting. I attached my notes from Klarman's discussion. Would you mind putting some color around "Value Investors feel like they should be invested all the time"? What was he implying about that mindset?

thanks! Turns out a lot of my stocks aren't really in indexes. Interesting.

Berkshire 13-F's smaller than Buffett's positions.

I do not, I was hoping for a public (read free) resource. =p

Does anyone know of a good way to figure out if and how many indexes a stock is in?

Starts with "A" - maybe Alleghany - which is Y? Yep, that was it!

I like: BRK, MKL, FFH, BAM, LRE(maybe, lots of dividends), FRMO (high price now), LUK (although change in business due to switch over to handler). Then there's the BH, GLRE, TPRE, L, and I'm missing one that starts with an A I think. That's most of what I can think of. Probably best to ask Gio.

Thanks? I get your point, you're trying to build a framework for a habit. Here's a question, so you call the auditors of all your investments I presume (based on your above question). How has this worked for you? I know I've talked to people who do this and it seems very mixed. I've heard of auditors gushing about how terrible the client is to others who refuse to answer anything. My take-away from talking to people about this is that the auditor reports are near worthless unless something egregious has happened. Auditors will talk on the phone about how bad a client is and how they can't be trusted then rubber stamp a fairness opinion. Is this what you've experienced as well? I had a friend who was a public auditor, I asked her if she would be able to detect fraud at a company, she said it was extremely unlikely. Oh, no, this is a very basic check--just make sure that the auditor's statement is unqualified. If it is qualified, then that is a really big red flag, particularly given your comments above.