locatevalue

RIP Charlie, Learned a lot from him, A true legend!

One of the worst year from absolute returns perspective -10% on return this year and compounded returned(IRR) dropped to 22.4% over 8 year holding period. Oil is my biggest drag this year, Legacy small positions from 2013 of SD and Lukoil, Added PWE in Jan but stupidly did a big portfolio bet when oil was in 70's on PWE ad LTS together. (On hindsight you can never be sure about commodity prices too late to learn now I am just holding and waiting (and hoping this crash wont be too long)) If BAC is not a big part of my portfolio it would have be much worse with Oil and other looses like Oi and Sears. My total Portfolio was up more than 10% around April end and September end but never cashed out. Hope this year will be good and I wont repeat my mistakes.

Best year after 2010 for me with 81% before Tax in Taxable and IRA accounts combined.(IRR for past 6 years is 35%). I dont expect to repeat any of these results as i dont use any leverage and still didn't buy a single option except BAC warrants. Good returns even with stupid speculation that i made with Velti which turned out be dud lucky just gambled with 4% but learned a valuble lesson. Thinking back all these good things are happened from my good bets at end of 2011 BAC, PCS and Leap.(Still hold all BAC and Leap stocks) Both PCS and Leap worked out very well but should have just kept TMobile without selling and i would have been much better , After selling TMobile i couldn't find great stocks and started going down value ladder so far not great but will wait another 1 year to find out how new strategy works out.My current portfolio has lot more stocks then i ever had with 7 different new 3-5% positions after i soldout TMobile. I am currently with 25% cash(workout) and waiting for good opprotunities. Hopefully i will find atleast one good or continue adding 5% positions.

When you talk to Keith you will realize how passionate and focused he is on investing,these kind of results just doesn't show up without clear thinking. Keith you should seriously open a fund.

I agree 100% and most of people dont get it, Property tax is hidden tax and it hits everyone living here in Texas either directly by owning or indirectly thru renting but it really hurts when you dont have any income mostly after you retire. Thats one other reason i bought a second small home that i bought if i plan on living here for next 50 years then after my kids move out i can move to smaller and rent the bigger home but if possible its better to retire somewhere else and get property income from these homes if they are giving +ve cash flow. I tell everyone who plans to retire here and are currently buying 4k sq ft home which they dont need , but can afford now on their current high income but most people dont get it.

I use MerrillEdge for my IRA and CMA. Its great and works out for me. I dont use much margin so its fine and rarely trade so i might not be using all the services they provide but the execution and 30 free trades that i get more than enough for me. I am not able to do lending shares and other stuff IB does but for me i dont need those things. I would say it all depends on what you need. If you use margin IB has great rates and you can also have lot of felxibility with foreign trades with Fidelity and IB. I don't use margin and I rarely trade as well, so that is not a problem for me. Fidelity 401k cannot trade international stocks, so if we compare these two companies, is there any other advantage of Fidelity? I did some research online, and people were saying that Merrill was horrible that even the web pages do not function properly. They don't even show the correct ticker price. Is that true? I have been using Merill Edge from 2010 and never had any issues, I like it, probably i am bisaed becasue i own it (as share holder) and work for the same company. If you are privileged customer of BAC then you get all the benifits and free 30 trades and i didn't pay anything as transaction cost or maintenance cost for past 2 years. I also took a short term margin loan to buy a house and customer service is great and never had any issues. I also bought some OTC stocks on merrilledge without any issue..never bought foreign stock so far just using ADR to buy foreign stocks , so i am happy so far.

Sickeningly true. It seems to compound capital, you need to do your best to avoid purchasing real estate. I live in Texas, in an area with crazy demand for housing at the moment (Austin). I calculated all in costs for the house we have a mortgage on versus renting and then investing the principal amount. I realized that the low interest rates + leverage from the mortgage was hard to beat from an investment standpoint, especially when taking into account the cost to rent. Here is what I calculated: cost to own = interest portion of mortgage + insurance + taxes + other costs versus cost to rent = monthly payments For a comparable place, we would be paying much more in rent, so we would not get the increase in equity every month (excluded from the cost to own above). then comparing possible appreciation of the home leveraged 4:1 (I own 25%) versus my own investment returns using the 25$ of the house, which are unlevered, I was concerned that I couldn't match the levered returns. Additionally, the house diversifies the investments and the low interest rate is somewhat a hedge against inflation. Prices are currently very high in Austin for real estate (and rent), so if someone has a better way to think about the above, I'd be glad to hear it; I kind of wanted to sell the house this summer and move downtown. I think it is just too cheap to live in my house right now, versus renting. No you are accurate, Rents are going higher and with the deductions available with house owner its definetely cheper then renting currently in Texas even with property rates going up, At these intrest rates it still makesense to own a home. Also its a good hedge against inflation. I work with lot of people, they rent a 2 bed room home and when they buy they buy a 5 bed room mansion and ask me how much they save by purchasing home :) . So for comparable homes its still better to own then rent in texas but would have preferred Eric scenario of not paying taxes on primary or atleast like CA where you pay on purhcase price. In texas it is ridiculous i pay 2.2% of every year appraised value. I hope we never go into crazy boom in which case i would prefer to sell and then move into smaller then paying lot higher taxes.

I use MerrillEdge for my IRA and CMA. Its great and works out for me. I dont use much margin so its fine and rarely trade so i might not be using all the services they provide but the execution and 30 free trades that i get more than enough for me. I am not able to do lending shares and other stuff IB does but for me i dont need those things. I would say it all depends on what you need. If you use margin IB has great rates and you can also have lot of felxibility with foreign trades with Fidelity and IB.

All one has to do is look at all the 100% cash deals that were done the last few years by investors. Does anyone with 2 cents of brains in their head really believe these investors all wanted to be doing 100% cash deals? They wanted to buy all they could! But nobody would lend to them. Not at 25%LTV. Not at 50% LTV. Not at 75% LTV Not even at 5% LTV! Completely madness to believe there is no loan demand. I agree , I am working on a loan and its kind of ridiculous the way this process works. Its like banks are once bitten twice shy!. They look everything as risk and forget about HELOC. Even normal loans so hard to get for investment properties i am working with broker and so many stupid things like i need to take policy for loss of rent, Even i told them i have income which supports debt to income ration even if they dont consider my networth or liquid asserts as reliable source for their payment. They all lack commonsense, plain and simple just going by book. By the way BAC, Wells denied to give me investor loan, I am going with local bank after calling so many banks finally i found few who are working with investors. Its kind of very sad, I was talking to some senior execute in bank and it looks like most of foreclosures are done by investorsn and HELOC in last crises so they added so many strict conditions to qualify and some banks decided not to even do them.I would say its stupid they should just charge more and get on with it. I didn't like BAC decided not to do loans from 3rd party origiination, rather they should have hiked the prices and keep that business as well.

This is my experience as well. Seems like the site has fallen a lot in quality in the 4 years I have been using, but there is no better alternative. +1 and +1. I wish google would do something more in this area. Have you guys tried google finance, google.com/finance i use it but you wont get details on bank warrants and other stuff.

I learned a lot on this board from most of the members posts, if i have to pick just 2 then i would say Ericopoly and Packer16

That was just poor luck for some people. It could have gone the other way too -- their tax shelter could have been upheld and instead tax rates could have gone back to their peak of 92%. It happened to people who couldn't claim they met the "Real Estate Professional" test. The NAR (I presume it was them) made sure that it didn't apply to realtors -- perhaps Congress got all mixed up and thought it was just a typo -- I sure as hell wouldn't want a bunch of angry NRA folks after me :D However if you don't have a shelter like that you get stuck paying more taxes year after year. So it's no sure thing, but it will work for at least a while. And it still works today for anyone that's a Real Estate Professional (under the IRS rules). It still works, I see some smart real estate professionals using these and pass on equity tax free using step-up and 1031 exchanges even though they claim these depreciations and repairs on upgrade as expenses every year, The trick is to find great properties and not to sell, even if you want to sell , if you can reside in that house for 2 years you dont have pay tax on gains. Its all perfectly valid and legitimate if you follow IRS rule book. Eric as you said NAR spend lot of money for lobbying and they have a good clout in congress. The only reason i got this license is for Investment pruposes and haven't use it much till now , but plan on using this going forward.

Eric, Thats what i am doing its a cash auction deal so i am using a margin loan but planning to get it financed as much and as soon as possible. I can only refinance upto 75% of purhcase price till 1 year then will get the remaining as equity loan if intrest rates went up or refinance if its still cheaper but the plan is to free up equity as much as possible. Now i need to see what "rich people" mean i dont feel rich by any standards ,jut a normal 2 income family with some accumulated trade asserts.

I slowly started moving some funds from stock market to RealEstate, Being in the realestate business i always saw these opportunities but stock market was good or seems more profitable past 4 years but now i see similar returns on both and i prefer realestate deals then stock market at these rate of returns. So recently bought a house in auction. Stockmarket made me very lazy now i have to getup and work with renters but will try to put it in cruise as much as possible as i prefer to be lazy!

That's true about "some" folks with regard to real estate. However others never experienced that. For example, I invested in rental housing in the early 2000s and I deducted all of my passive real estate losses against my Microsoft income, without limits to the amount, for a couple of years before I sold my properties. The trick is that either you or your wife needs to earn the designation of "Real Estate Professional". The funny thing is, the rental were mine, but I got the write-off anyways given that I was married to a "Real Estate Professional". Here is a recent article about the technique: http://www.inman.com/2012/09/14/real-estate-pros-can-deduct-rental-losses/ Thanks Eric, I didn't know this till now. I am certified realtor but my number of hours as relator is not that much as i have a full time job. I recently found bargain rental property in my neighbourhood and bought it, will close it this week. I will see if i can use this special clause. When you say loss,Are you talking after depreciation ? if i can't count depreciation then i will be making a profit as it will generate +ve cash flow on this property.

I agree spring of 2009 was very different and i think its once in a lifetime opportunity. I did spread out my bets on 7 to 8 during that time. Unfortunately by end of 2008 all my cash was already in market and suffering and the only income i can add was my salary which i kind of funneled everything into market the day it was deposited, It was plain luck that market didn't get any worse otherwise i would have suffered. I am expecting opportunities more in the lines of end of 2011 which is quite possible like some sector getting extremely cheap or good quality business mispriced and in which case i would like to swing hard. Till then playing with buckets of 3 to 4% in this market and keeping some cash.

I live in Dallas suburb and love this city, I have a nice work from home setup and great neighbourhood. I lived in Jersey City and LA. I missed CA weather when i moved here but not for long as this city provided more time for my investing and other activities. I would travel to Florida or LA whenever i would like to take a vacation. On top of that cost of living is no where compared of other cities i lived in and no state tax is a plus.

Al, Though our portfolios are different my results seems to match yours though mine is very short period of time as i only started in 2008.More my portfolio size grows and increases in mulitples of my salary its seems more harder to concentrate everything on just 1 or 2 ideas, Loss Aversion kicks in as i always think how long will it take for me to earn everything back with my normal salary. I wonder how Eric concentrate such large amounts in 1 or 2 stocks, thats one thing i need to learn. For that matter how Fairhomes concentrates Billions in just 5stocks is really amazing.Probably time will teach you how to handle more money when great idea shows up or may be i also think extreme concetration happes during the worst times and we are not their currently thats my feeling!

Packer, Wow you made close to 32 times on each dollar you invested in past 10years, You must be very rich by now. Intresting you still do your day job. I started serious investing from 2008 its been a bumpy ride at march of 2009 my portfolio was down by 70% then recovered and made around 35% by end of 2010(in 2009 and 2010 i was holding around 7 to 8 stocks) and again 2011 another down year of 37% and at end of 2011 i went in obscene concentration of just 3 stocks and sold out GE , USG, Visa etc and concentrated on my 3 best ideas of BAC, MetroPCS and Leap.So, the last 2 years was really great 2012 of 70% and 2013 another 70% so far, This year. i started moving back to diversifying as i started selling MetroPCS and Leap after their mergers but still currently top 4 is 80% of my holdings. I am still willing to go all in with less than 5 positions if i find good pitches so far this year i would say none to my earlier standards patiently waiting.

+1 Literally the best series I've ever seen. It is pure AU. +1 Love it , Great show and i dont watch too many shows and this was so addictive and i watched all episodes in nextflix in 2 days last year..I dont have amc eagerly waiting on new aaditions in netflix or will buy the tape soon. Hands down its the best series i watched so far.

Back to topic! Today, I bought some SHLD, OIBR and ALSK(thanks to Packer)..I see telecom is very cheap , though i dont like debt and high capex of these companies, Valuations are very compelling, Trying to compile a set of 5 telecom companies as a basket case of max 10% portoflio will make it larger if market dumps them more. So far couldn't find any great business at value prices like 2011 to make it big part. Still waiting !

You are correct! I was under wrong impression that all dividends are treated same, I didn't see this clause..my bad My scenario is different as i was working on this special situation and holding this stock more than 60 days..thought this is a special sitatuion can be used by other..I guess someone already thought about it and plugged it! "meet holding period requirements: You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. For calculation purposes, the number of days of ownership includes the day of disposition but not the day of acquisition."

Convert short term profits to long term profits using MetroPCS reverse merger This is a special situation of MetroPCS reverse merger with T-Mobile. Today shareholder approved this reverse merger. As per this merger agreement, On April 30th MetroPCS' stockholders of record as of the close of business on the closing date, which is expected to be April 30, 2013, will receive an immediate $1.5 billion aggregate cash payment, or approximately $4.06 per share (prior to the reverse stock split that will occur in connection with the closing of the proposed combination), as well as an approximate 26% ownership stake in the combined company. At current stock purchase price of 11.60..on 30th you will get $4.06 in one time dividend. So you can pay long term profit on dividend and get use the $4.06 as loss towards your short gains this year. I dont think their is lot of risk for this stock going down after before May 1st as this is trading on lowest part of valuation. If 4 days is too risky you can try this approach to buy on 30th and sell on 1st. On May 1st this stock will trade with new symbol with reverse split price of 2 PCS stocks combined and taking out cash dividend paid and the price will be average of past 5 days closing price that is closing price of next 5 days starting today 4/24 I tried to remove this post but its not allowing me.. It looks like this scenario wont work as their is already a clause in tax for dividends thatprevents thismeet holding period requirements: You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. For calculation purposes, the number of days of ownership includes the day of disposition but not the day of acquisition.[1]

Eric, Thanks for these details but can you pls explain further on how you handled this ORH play when you already levered up on FFH 2:1 when this idea came up. The reason i am asking is to fill my gaps. I always invest in 2 or 3 things at a time but when i am at 100% i never use leverage more than 10% of my total portfolio to even on sure shot investments like you mentioned here.I remerber you saying increased your leverage on FFH and used that cash for ORH ..but was not clear to me.

By the way, someone should be doing a case study on Eric. That's arguably, the greatest investment results over a 10-year period I've seen. Eric, you should come to our dinner in Toronto and speak! Cheers! Agreed, We can all certainly learn. Eric i would really like to understand your thinking process during those ORH special situtation as you said it changed your account by 50%,I saw bits and peices from past few years but nothing very detailed, I guess you used lot of levered calls.Hopefully its a good mental model incase we run into similar situations!