Hielko

Did you read the part where bullshit is called on that napkin math? Making assumptions like "guessed net worth from arbitrary point is good proxy for equity returns and let's assume there were no large withdrawals or exposure changes over time" don't sound very realistic to me. Not everybody is Buffett, living in the same house he bought in the 50s, driving hail-damaged cars, not giving money to family, and keeping equity exposure at 99.99% of net worth his whole life... Yes, I think most of us did read the "napkin math". You had a link to the article, after all! ;) Great investor (best we've never heard of!)..with no evidence. The evidence we do have leads us to reasonable doubt. The dude's a self-made billionaire with a small company and multiple hundred-baggers worth over a billion in his fidelity account, but yeah, there's no evidence because you've decided to assume 100% of his net worth has always been invested in equities, he's never withdrawn big amounts (especially early on, which would have a HUGE impact on your math), and that your guessed starting point (midway through his life, why not start earlier?) is correct. I'd rather say that what we do know is very impressive, and that we don't know his exact investing performance, but that the chances that all your assumptions are correct is pretty low, so he's likely outperformed the market with the money he's invested, and that holding on to multiple hundred-baggers is impressive in itself. The article claims he is the best investor you've never heard of and then proceeds to provide near zero evidence for that statement, and based on some on the information in the article it seems quite likely his returns have been below average. Perhaps instead of faulting people for questioning the premise of the article you should fault the author of the article for making such an extraordinary claim with nothing to back it up... And to address some of your points: according to the article he's a buy-and-hold forever type of guy, so yes: assuming that he has never withdraw huge amounts and has stayed fully invested most of the time should be true. Secondly, according to the article he liked to use leverage, so probably comparing his return to the S&P500 index without any leverage is already pretty favorable for him.

I totally agree. I also have been outbid by fractions of a penny. I think a small tax that introduces enough friction costs for them to go away would help some more. I agree. A transaction tax will blow away the cockroaches. I'm in favour of even more than 0.1%. Do you want to incentivize investment or speculation? How much do you think a HFT firm makes if they are the counterparty to one of your trades? They probably make less than a $0.01/share. So now you want to add a 0.1% tax or higher? Really??? So instead of maybe "losing" a cent to a HFT trader you will be paying something like 10 times as much in taxes?? Great... that will really make things better. Not saying that the market structure can't be improved in the US, but adding transaction taxes is something like shooting yourself so you won't get robbed... maybe it works, but the end result isn't necessarily better.

How things trade on the pink sheets is always a bit of a mystery. Stocks on the pink sheets don't trade on any real exchange and the original pink sheets printed on the pink paper was obviously only a service to make a bid/ask public on certain stocks. 20/30 years ago it was replaced by an electronic quotation system, but it still was only a system to provide stock quotes, not a system to handle trades. OTC Markets has the OTC Link ATS (Alternative Trading System) that does include trading functionality, and there are probably some other platforms that can also handle OTC trades, but I think this mix of different systems, not all designed for trading itself, makes it possible that sometimes you see quotes but without the ability to trade them electronically.

Yeah, I highly doubt that that's a good decision. Giving up on value investing sure, most people can't beat the market, and the sooner you realize you aren't one of them the better. But I think the conclusion of Muscleman that "value investing" doesn't work, but perhaps something else does, is 100% the wrong conclusion. If you can't handle value investing, arguable one of the easiest ways of active investing!, I doubt an alternative active approach is a wise step. Especially since all the point why his value investing doesn't work also apply at basically anything else. Some of them even at passive investing! If you can't psychologically handle the risk and the losses that are inherent to stocks it doesn't matter what your strategy is, your problem isn't going away.

I'm a regulator user of AirBnB and I like their platform a lot. But that's sort of obvious that there are many people like me. Otherwise the business wouldn't be as big as it is today. Small note w.r.t. float (that I don't think is very important anyway), but these days you can pick if you want to be charged the full amount when you make your reservation, or spit it in two transactions with the last half of the booking amount only charged close to your booking date.

Managed 13.1% in euro (probably a few percentage points lower in USD). Pretty happy with it, although I do think there were some things that I could have done better.

I really don't have anything that I'm very enthusiastic about... I think I have a portfolio with decent idea's, but wouldn't want to call one of them my best idea for 2019...

A cash deal that doesn't have financing ready might be more risky, but for a deal that is financed with for example cash on hand or existing credit facilities the cash deal offers a certain return while in the stock deal you have to hedge the acquirer to lock in the current spread. But hedging might not be possible because insufficient shares are available, it could cost quite a bit in borrow fees, and it might eat up a huge amount of your margin space if the target and/or acquirer can't be bought on margin. Additionally, there are scenario's possible where both your long and short hedge will move in opposite directions (could be deal breaking for example). So everything considered, usually a cash deal is preferable above a stock deal :)

It sounds sort of reasonable, but I think there are plenty of cases were you aren't totally aware of the potential variance in outcomes before doing the simulation. You take some quick and easy mental short cuts and you decide it's a low risk thing that should work out in most cases. No Monte Carlo simulation needed. Right?

I doubt that running this at home is an efficient use of energy.

Yes, but no guarantee that Parliament will back it. (I suspect they will bottle it at the last minute and back it, but there's no guarantee.) Sure, still anything is possible. Who knows, maybe even remain could still gain popularity once people see that leaving isn't the win/win/win scenario that was promised. But I'd say that getting a deal for sure makes a hard brexit less likely, not more.

Why do you think hard brexit is now a reality??? There is a deal...

If Buffett would have said that, which I have no clue about, he would have been wrong since there is a thing called Put-Call parity.

People sell what people want to buy. So yes, a lot of crap is being sold. That said, there is more than one way that leads to Rome. Your view that value investing is the only way to for long-term success is extremely narrow minded and simplistic. 1. Some of the funds with the best long-term track records are actually quant (and yes, that has a T at the end...) hedge funds. See for example https://en.wikipedia.org/wiki/Renaissance_Technologies 2. Furthermore, value investing itself could be considered a quant strategy; you buy stocks that are statistically cheap based on measures such as P/E, P/B (or something more complicated...) 3. There is tons of academic research that indicates that exposure to a momentum factors generates excess return, just like exposure to a value factor (or at least used to in the past). Maybe momentum and value investing are really two sides of the same coin that both exploit the same behavior biases that cause mispricings in markets. 4. Also, don't you think that a lot of value investors aren't exactly doing what you accuse other investors of doing: "people with no basis behind what they are doing and simply follow a strategy because "it seems like a good idea""? Most value investors read some stuff online or a book and decide to follow some simple strategy... (named value investing...) Sorry, my laptop was almost out of battery just now so I had to reply quickly and I missed out some stuff that I wanted to say on top of that. While a lot of your points are valid, I don't really agree with one. I don't think that it is narrow-minded to believe that only 1 strategy work. I can only speak for myself but I had tried technical analysis before, and I concluded that it doesn't work well so I jumped to value investing, and it hasn't failed me. At least not yet, it may fail me in the future, but as of now my belief is that value works, and there is academic studies, and my personal anecdotal story to prove that. It doesn't mean that I discredit every other form of investing, but I certainly do believe that my form of investing is superior to theirs, if not I will just switch to their form of investing. I am certainly not trying to make anyone look bad by saying this, but I think that I have to put my POV out that as well. Thanks for reading. So, you tried technical analysis and it didn't work and now you are trying value investing and you are sure it's not only working, but the only strategy that works? wow...

People sell what people want to buy. So yes, a lot of crap is being sold. That said, there is more than one way that leads to Rome. Your view that value investing is the only way to for long-term success is extremely narrow minded and simplistic. 1. Some of the funds with the best long-term track records are actually quant (and yes, that has a T at the end...) hedge funds. See for example https://en.wikipedia.org/wiki/Renaissance_Technologies 2. Furthermore, value investing itself could be considered a quant strategy; you buy stocks that are statistically cheap based on measures such as P/E, P/B (or something more complicated...) 3. There is tons of academic research that indicates that exposure to a momentum factors generates excess return, just like exposure to a value factor (or at least used to in the past). Maybe momentum and value investing are really two sides of the same coin that both exploit the same behavior biases that cause mispricings in markets. 4. Also, don't you think that a lot of value investors aren't exactly doing what you accuse other investors of doing: "people with no basis behind what they are doing and simply follow a strategy because "it seems like a good idea""? Most value investors read some stuff online or a book and decide to follow some simple strategy... (named value investing...)

Depends on the price. Fidelity is maybe $20 a trade? I don't remember exactly, but it's in that ballpark. IB CAN be cheap, or expensive. IB charges based on the number of shares. If you're buying a few high price shares it's cheap. I went to place a trade on a low price stock, and it was a $150 commission for something like $2k worth of stock. Purchased on Fidelity instead for $5. While IB can be expensive when you do orders for low priced stock, the commision is capped at 0.5% of trade value. So for $2K worth of stock it shouldn't be more than $10...

I'm not quite sure if that articles uses the right terminology to describe what happens. As far as I understand, and of course I could be wrong, brokers sell their order flow to HFT firms, not to exchanges. The HFT firms look at the orders, and execute those orders that they think have zero/negative alpha (for example: market orders from retail investors). Retail investors gain a little bit here as well since the HFT firm has to provide a better price than the NBBO to make this happen (although it's usually a very pathetic $0,0001/share or something like that). Orders that the HFT firm then doesn't want to execute are routed to the various exchanges and executed at the NBBO (if marketable). The big downside of this scheme is that the remaining order flow that is hitting exchanges is more toxic (from the point of view from a market maker) and as a result spreads might go up, and so in the end even the retail investor that is getting a price improvement from the HFT firm might actually be paying more.

You're just personally out of luck here if you miss out on the upside. Clients have to come first and you'll get your fees anyway. If you miss out on the downside and your clients don't, well, you made a mistake. That is the risk the clients are taking. Sure, but the point is that clients want you to be sharing in their risks. They don't want you to miss out on the downside! (and presumably also not on the upside, although arguably less important for them)

I disagree. I think TD Ameritrade is pretty good with regards to supporting OTC stocks and with good customer support. Haven't had an issue with my account values at TD Ameritrade, but who cares? You probably have some exotic positions that they cannot mark to market properly intraday. Have had this happen at IB previously, and never thought that was a big deal either. It's probably the least important thing I would judge a broker on.

That said; I think it's quite reasonable to expect that buying your clients positions first, and selling them first has the best expected outcome for them and should be a good and fair mechanism, if doing things pro-rata is too complicated.

I think that's also quite a reasonable approach, but also not perfect. What about those positions you never manage to acquire a full position for the fund, without ever getting a position in your own account? If that position end up going up a lot I'm sure your LPs are fine with it, but what about when it goes down -100% overnight?

Except who wants a HF manager that doesn't have its own money at risk? The cleanest solution is probably setting up a offshore hedge fund with a master feeder structure so both US investors and international investors can participate in the fund in a tax efficient way: that's how all the other (big) funds do it. The big downside is that this structure isn't cheap to set up and maintain, and since you would presumably be starting with a limited amount of money it might just be too expensive. So the other option is what what advisors do with SMA, using a broker that supports automatic trade allocations based on certain rules. It will absolutely not solve all your problems though, because taxes for example, will seriously complicate things. The international account probably doesn't have short-term/long-term capital gains, or not the same system as in the US. Companies that are classified as a PFIC would be a major tax headache for US based investors, but no problem for you. Dividend taxes aren't equal. If you go this road, no matter what you do it will be messy. So there needs to be trust that you try to do your best to do things in an ethical way. I'm not a US tax expert, but I think this is 100% wrong. Otherwise everybody in the US would put all their money in a hedge fund, and people would defer capital gains taxes indefinitely. That's why these PFIC rules exist in the first place, making it also impossible to put money offshore in a fund and defer capital gains taxes.

I bought a couple of ice creams yesterday evening.

I think it's not that significant. In many countries companies report twice a year, and it works just fine. At the same time I also don't think there is really a good case to be made to reduce the frequency of reporting numbers. I can't believe communicating with shareholders 4 times a year is such a big burden that 2 times is better....

I guess he was focusing on capital gains taxes. Most foreigners are probably also not investing tax free. But they aren't paying capital gains in the US, but still a large part probably pays dividend withholding taxes (and possibly other taxes in their home country). And this graph also misses all the foreign stocks owned by US tax payers that do pay capital gains taxes in the US.