Hielko

You said, "The fact that a stock goes up after you decline to buy it doesn't mean your analysis was wrong". Ok, then what shows this analysis is wrong or right? We don't know what Buffett's analysis was so we can never know if it was right or wrong, and even if we did we still might never know. That's the unfortunate reality of investing: we can only observe what has happened, but we can't observe what could have happened.

ERICOPOLY: I probably agree with you more than most, but I do think there is a flaw in your thinking in practice. 1. As a shareholder you don't know exactly how many shares the company is buying, so it is impossible for you to sell an equal amount of offsetting shares 2. Even if you would know how much shares management is buying back you would be unable to sell the same amount because of transaction costs (minor point) 3. Because of 1. you are more or less forced to sell as soon as shares cross your intrinsic value estimate because if the possibility of share repurchases exist there is an possibility that as a continuing shareholder you see value destruction while in other scenarios a company that is trading above IV might be worth keeping (they could for example use their overvalued stock in an acquisition and actually create value) 4. For some investors a dividend might be a better option compared to a share repurchase because they don't have to pay dividend taxes, but they would have to pay transaction costs to sell shares in lieu of a dividend. 5. If the company is repurchasing shares regardless of valuation it forces the investor to evaluate daily to buy or sell. Not everybody wants to have that on their plate.

I'm not a physicist, but there is a lot of weird shit going on in quantum mechanics. This is a nice example that also shows that there is energy inside a vacuum: http://en.wikipedia.org/wiki/Casimir_effect I don't think you are necessarily breaking laws of physics if you manage to find a way to use that energy, but maybe you are... I have no clue :D

Seems like that negative 10% alpha goal isn't that hard :)

This is very off topic, but I'm pretty sure it isn't that easy. Not everybody is able to contribute enough to be worth a high minimum wage. I don't know if you ever visited a super market in for example the Netherlands, but you would probably be amazed at the relative low number of people working there (I was amazed at the high number of people working at Wallmart when I visited the US). When you raise the minimum wage you might also be forcing the less skilled into unemployment while they are replaced by technology and/or other alternatives (doing stuff yourself as a customer: no-one here in the Netherlands to pack your grocery bags...).

I don't know a whole lot about macro, and I don't think it helps a lot to spend a lot of mental energy on it, but http://www.philosophicaleconomics.com/ is absolutely worth reading if you want some counter arguments against what John Hussman is saying.

I think the 6% threshold is simply saying "if I deliver crap results I'm not going to get paid". Considering that average equity returns are around 10% he would get a somewhat reasonable fee for average performance, and only a great fee if he really manages to outperform. Pretty effective while keeping things simple if you ask me.

That's what you get if you started investing after 2008...

I do think a smaller discount for dividend paying stocks is appropriate for obvious reasons, but there are imo a couple of other factors that are pretty important: 1. How much liquidity do you personally need? If you have a long-term horizon and you don't need to generate a lot of income from your holdings an appropriate DLOM should be a lot smaller. If the market is willing to sell you stuff with a big discount because of the lack of liquidity: buy it IF you don't need liquidity. 2. What is the probability that you want to sell your position in a given year? If you have a high quality company with a strong management team you can accept lower liquidity than when you buy some cigar butt that's just too cheap to ignore. PS. I personally think that a 20% DLOM for a 5%+ yield is excessively high. An presumably under-priced security at a 5% yield would probably be a great investment since the under-priced part of the story implies an growing yield. You will probably generate a nice return even if you never sell.

Bonus points for providing the formula showing how the difference between the two returns relates to volatility. ;) Easy :): G = A - V / 2

Overly complex post. I'll save other board members some time and summarize the post:

I use Feedly for following sec.gov feeds and blogs. Works perfect imo.

Betfair has Germany as a 50.5% favorite. Probably closest match-up in the WC so far.

Google trends seems to think it's a boom: http://www.google.com/trends/explore#q=soccer%2C%20NFL&geo=US&cmpt=q

It might rationally be a good bet, but that doesn't necessarily make it a good idea. What's your sisters risk tolerance? Wha't's the downside for your relationship with her if this plan doesn't work out?

No good. So don't use checks.

I do. Built a monte carlo script in phyton once to value convertible preferred stock with a call feature, and having some skills is nice to grab data from the web (used for example the Chrome inspector to pull the raw volume data that was displayed in a graph on the Bloomberg website). You have to be creative if you don't have access to an actual Bloomberg terminal.

I have a master degree in software engineering, but I have zero professional work experience :). Been playing poker and investing the profits since I finished my education. But think investing and engineering are a good match because both require similar skills like analytical capabilities, affinity with numbers etc

The prices I have seen are in the same ballpark. Think they are trying to target investment professionals with their pro-service. Doubt how successful they are though. I have written a couple of pieces for SA Pro and the number of pageviews in the first day is usually very low (and must include a decent number of views from other SA Pro authors)

I'd say: it depends. Often there are easier ways, but sometimes a DCF analysis can be very helpful. Take Awilco for example: it has a limited life so you don't have the problem that the far future is a very big part of the total value and at the same time a simple multiple such as the current yield isn't appropriate because the fleet has a limited life (and it doesn't account for periodic maintenance costs).

I think it also matters what books you have read earlier how great a book is. When you read the intelligent investor after 30+ other value investing books you probably think "pretty basic stuff, nothing new" but if its the first book you read on value investing it's great. Think that this is also the problem with the Marks book. It's a great book, but when you have read Klarman, Buffetts shareholder letters and tons of other stuff there is less worthwhile information than when it's one of your first value investing reads.

None of the stocks mentioned here obviously. You can't start with a big and well known name if you want to have a huge amount of growth.

Because of the reasons outlined above I usually participate in smaller deals.

I certainly participate in some merger arbs from time to time. But a lot of the time the big deals with high spreads have a lot of difficult to handicap regulatory risk, and the big deals with little risk have spreads that are almost non-existent.

A delisting isn't a big risk I think since you would be able to cover when it trades on the pink sheets. Margin requirements will suck though if it's a low priced stock. The biggest risk is when the shares are cancelled, but your broker doesn't have an offsetting long position for your short. In that case you will have to wait for the DTCC to cancel the shares, and that could take some time (weeks, months or even more). So if the borrow fee is high you could get screwed very hard in this scenario.