Hielko

Not very shareholder friendly to sell a bunch of shares at a discount without offering them to current holders...

Historically stocks have been a poor hedge for inflation. And to answer the Pete's original question: yes, you missed what the impact of inflation will be on the rate of return that insurance companies will be able to earn on their float. In the current low rate environment that is almost zero, but when rates go up they gain earning power.

You need a broker where are able to specify how you want to sell your stock.

In the scenario that you describe you could simply sell the shares with the highest cost basis first.

You don't need a free Gulfstream jet to execute on a very long term vision, and it has nothing to do with thinking in the best interests of "his" company. The new products were simply so good that no matter what returns would be great. They probably could have been better, but no-one complains when the company is a 100-bagger. Unfortunately, most companies don't manage to pull an iPhone-like success from their hat and only manage mediocre returns if company resources are wasted on free Gulfstream jets.

At Interactive Brokers you can evaluate execution based on various criteria such as: * Improvement vs NBBO * Improvement vs NBBO after 1 minute or 10 minute delay * Price vs close * price vs vwap * price vs daily range * percentage of order filled * fillrate/sec Think that with a combination of these metrics you should be able to figure out who is providing the best execution.

Good question. One issue is the extreme leverage. If they leveraged 50x, losses can get big quickly. Yes, clients remain liable for losses. But it might not always be easy to get paid.

Don't get me wrong, I think that it is great that you are starting this thread, but I find this reply very strange. You are an investor, not a writer. You don't need to define diversification or risk management, but you do need to practice it. That's exactly the point of risk management. You need to expect the unexpected.

Saxoband found a neat solution, stealing some money from customers to make up losses... http://brontecapital.blogspot.nl/2015/01/it-is-time-to-close-saxo-bank-down.html This is standard for the forex brokers. You get what is called "slippage" and a certain percentage of trades get reworked at another price. Usually not more than a few percent of total trades, but it happens a lot when things get volatile. Thats not what people generally mean with slippage: http://www.investopedia.com/terms/s/slippage.asp Saxo (and other fx boiler rooms) make money by trading against their customers. This time some of their customers apparently got on the winning side of the trade. Changing execution prices after a trade has been completed should be a criminal offense. I bet that Saxo wouldn't adjust prices if they suddenly had made an abnormal amount of money instead of losing it.

It seems to me that the obvious lesson is missing from your list, and it's called diversification and risk management.

Saxoband found a neat solution, stealing some money from customers to make up losses... http://brontecapital.blogspot.nl/2015/01/it-is-time-to-close-saxo-bank-down.html

There are two forces, the fundamental price of the stock (in CHF) and the change in exchange rate. The value of the company is declining by X% but the currency is strengthening by Y%, and generally today Y>X You cannot separate the two factors, and measuring the value of an international company in CHF is pretty random since most costs and revenues will be in other countries. I have no idea why international Swiss stocks gained when measured in USD or EUR. Doesn't make sense.

It's surely unrealistic and I wasn't really making that point. Not literally, but that's the extreme implication if you say outperforming a relevant benchmark is not important, but absolute performance is. There is no such thing as absolute performance, and if the actual 10 year return of your relevant benchmark is -2 percent than you are screwed whatever your absolute performance goal. Someone who is capable of generating a 0% return in that environment is doing a great job with a shitty hand. Doing 12% when the market is doing 14% for 10 years on the other hand is not so great. You can't control what the market does, but you can control how much alpha you add/subtract.

When index does -2% for 10 years then an individual doing 0% for 10 years is not going to help in building wealth. But doing 12% even if market does 14% is going to help a lot as far as building wealth is concerned. Yes, after 5-10 years you should always see if your performance is better than index but when all said and done absolute performance over a long period matters. If you are a good investor then you should get more than index over a long period. It's a good idea to be honest with yourself and see if you should continue investing actively but I am not sure if setting a goal of getting more than index is the way to go. Whatever goal you set it's going to require heavy exposure to risk factors that you can benchmark, be it equity, (corporate) bonds or something else. Looking at how you are doing compared to those shared risk factors is a lot more informative than looking at returns without context. Sure, everybody wants to make an absolute return that is always positive, but unless you are running some kind of fully hedged long/short arbitrage strategy that is simply not going to happen. Expecting to make a positive 10% return while the benchmark can go -50% is just as unrealistic as wanting to generate 60% returns/year. The best most can hope for is to outperform a relevant benchmark by a small margin on average per year.

Decent write-up on NG on Seeking Alpha today: http://seekingalpha.com/article/2815355-sell-novagold-market-vastly-overvaluing-donlin

No. But not sure if you want to get into VIC these days. I always read the (delayed) write-ups but it has been a long time since I found an idea truly attractive.

Why? Someone who is (significantly) above average doesn't need a teacher. I suspect that this is true, but given the history of home schooling in the US I would suspect that there must be some decent research on the subject. Because lets face it; this is probably going to be a worthless discussion where everybody is going to justify the decision they or their parents made. Cognitive Dissonance...

How did they manage owning a sizable Berkshire stake?

I also find that part of the argument non-convincing. The Netherlands (my home country) has full-recourse mortgages, but in the eighties we had a nice 50% drop in house prices. The drop since 2008 has been a lot more gradual and is currently at -20%, but its still sizable. I bet there are plenty examples of countries with full-recourse mortgages and large price swings. I don't know if the intuitive idea of full-recourse is higher risk is supported by the historical data.

I was just reading a story about how they cracked one version of poker and programmed a computer that will always win in the long term. They did this with an algorithm to have the computer always minimize the worst case scenario. How a computer program took the gambling out of poker "These algorithms look at situations and come up with a decision that has, to put it simply, the best worst case. Regret minimization tries to come up with answers with the smallest amount of downside." Bit off-topic, but the writer of that article doesn't understand what game theory optimal play is and what it means w.r.t. strategy. The computer plays a strategy that cannot be exploited by any conceivable counter strategy. The trade off is that it cannot maximally exploit an opponent that plays an imperfect strategy. So in a sense it tries to minimize downside risk, but this is certainly not true when you look at individual hands. Risk adjusted returns are not a consideration when developing a GTO solution, only the maximization of expected value while staying unexploitable. If you give a poker bot a bet with $10,000,000 downside but with a positive expected value of $1 it is going to take that bet! It might even take that bet when the expected value is zero*, so that's not what most people would consider minimizing downside risk. * For example a higher calling frequency could make it necessary for the opponent to have a lower bluffing frequency which might increase the expected value of weak hands that would have folded to a bluff.

I think I'm in the $20-29K range, with housing being the biggest cost at ~$10K/year. No car, kids or wife and living in a relatively cheap town.

This is exactly the point I wanted to make. When you are young and your portfolio is relative small betting 100% on a single stock is not necessarily risky since the net present value of your human capital could easily represent 90%+ of your 'instrinsic value'. When you are older the net present value of your human capital usually drops because your are getting closer to retirement while at the same time you hopefully converted your human capital from the previous years into a bigger stock portfolio.

If you want to cut a CEO salary you have to fire him.

Stahl had a piece in 2012 I believe that talked about this. He showed valuations of index components and then valuations of competitors that weren't in the index. In a few cases the competitors had better operating metrics and were selling for lower prices. The discrepancy could be attributed to the mindless buying of indexes. After reading this piece I was pointed to the website Stahl used to research this. I've since lost my notes and don't remember it, but it was cool to see. When one company is in the index but another is not there is usually something going on that makes it an apples to oranges comparison. If the stocks would be nearly identical with regards to size, liquidity, float etc they would both be in the index.

I don't know if the increasing popularity of indexing will have a big effect. You could argue that in the past a large amount of money was already effectively indexed by funds with a closet index hugger as manager. Perhaps what you see now is mostly people realizing that they can achieve the same result with lower costs? An additional question: how much "smart money" do you need for efficient price discovery? It could be that we are far away from a point where indexing would impact price discovery in a meaningful way.