coffeecaninvestor

But as a % of assets that’s what 30%. it’s usually in the 10-15%range . The size of the dollar figure is huge, but I just think they are mostly always invested. if shit gets crazy like it typically does in a bubble and we go up double digits per year for the next 2-3+ years (or longer) and have a 40-50% drop mostly in the bubble stocks and your not mostly invested I think you end up in a much worse place by trying to time it and stay out of the market.

AMRZ and GEHC

Not sure my last message was clear/understood. I don't think P/E is the end all be all. It is merely just a simple metric that tell you how much someone is willing to pay for each dollar of earnings. I don't think it really tells you anything about the future, or the companies intrinsic value. I don't think anyone would tell you COST/META/FB etc don't deserve to trade at 30x+ earnings (or any other valuation metric) assuming they continue to execute, grow, and preserve their "Moat". It' tells you nothing in terms of timing, and based on what you are saying forward returns. Which is why it is a terrible investment timing metric. To me it just lets me know there is the "potential" for a re-rating (which typically happens quickly when it starts), and I would rather avoid the unpleasant event, but I would be willing to pay up for a quality company 50x might be too much, but 25x sure..

There are a handful of companies that are like this ROL comes to mind. But I don't believe multiple compression is a made up thing.. Look at some of the software stocks. COST and ROL are continuing to execute better than any of their competitors.

Just don't fish in the Costco pond. Annualized Returns 2000-2002: S&P 500: -14.6% (29x PE in year 2000) Lg Cap Value: -9.56% Mid-Cap Value: 1.12% Sm-Cap Value: 5.94% Spending some time in value land you could have done much better than the index's. This seem to be rhyming a little (PE ratios are rounded). Annualized Returns 2000-2002: BRK.B: 9.81% (Year 2000 PE: 15x / Current TTM PE: 15x) BRO: 51.24% (Year 2000 PE: 18x / Current TTM PE: 18x) JNJ: 6.26% (Year 2000 PE: 26x / Current TTM PE: 26x) GIS: 12.45% (Year 2000: 8x / Current TTM PE: 8x) DEO: 15.17% (Year 2000 PE: 18x / Current TTM PE: 18x) AOS: 10.18% (Year 2000 PE: 15x / Current TTM PE: 15x)

+1 same thoughts.. just wish I hadn’t bought so much a few weeks ago. I’ll add here and there as cash rolls in.

BRO, AJG, DIS, CPRT, ADP, MKL

Started a small position in ACN. Going to add a little bit every day if it stays this cheap.

I think a person also make the decision to buy a index, and go about their life doing shit the enjoy, or work on their career, and being productive in the world. It's probably a better outcome in the end as well. I think the barbell approach makes sense for most people. They start with 100% index funds, and if they like investing and the right opportunity arises, they take a % of those index funds and buy a business, and keep repeating that as opportunities arise. I think it makes a lot of sense to run money this way for the average investor.

I’ve literally just did this I was 100% S&P for years, then lowered it to 80% a few years ago, and last week i lowered it down to 30% allocation.

I think this is very much like the conversation in another thread that you should focus on the increase in intrinsic value and not share price changes especially short term price changes. I agree with you It is definitely tough to see relative underperformance I see intel up double digits and Fairfax getting whacked 7% is massively frustrating but also long term beneficial to long term returns because I can see prem in there buying back shares as a discount. Also I know most investors chancing the hottest stocks on the way up will give back a lot or more of those returns where as Fairfax and BRK will be cushioned by their large bond holdings and take advantage of a down turn.

I think it’s clear Buffett has a lot of admiration for how Tim managed Apple post Jobs, and I think he would like if Greg followed a similar model. Focus on the core businesses, maintain a Fortress balance sheet, buybacks, and bolt on acquisitions. I doubt he thinks Greg needs to make a big swing on a large equity purchase or acquisition unless we see another GFC type draw down or something that serves up a can’t miss opportunity.

Sorry fellas as a new owner of Fairfax it’s only natural for it to tank after I decided to make it a large position. I’ll be cheering on the sidelines for share repurchases since I cannot average down at the moment.

I don't own them, but have noticed CLX yields 5.13% at 15x PE which seems pretty reasonable, KMB with a 5.2% yield, and UPS yields 6.31% but not sure how safe that dividend is I believe they froze it at its current level. I own OTCM with their special dividends yields around 4-5% yield for a high quality company. I also own HRB which I think can grow their dividend with their low payout ratio, and commitment to returning capital to shareholders.

How concentrated were you?

HRB

Congratulations! Just be present and be patient with them..

I like both and I think HUDL is a great asset but I think FFH is a better business with more capital allocation opportunities and will earn a higher and more predictable return on equity going forward. Also I do worry a little about nelnet bank it’s growing fast and hasn’t been tested during a market downturn. In my mind buying FRFHF is like buying a leveraged bond due to the float with tons of optionally with the way they can deploy capital all over the world in various ways. They are pretty defensively positioned with how much of their portfolio is in bonds so if I think they can return mid teens on equity pretty reliably and I am paying ~1.5x book value I can still earn 10% and justify paying above BV. I think that’s pretty good risk adjusted returns relative to the whole market that probably earns 0-5% optimistically at today’s multiples. I am not sure NNI has the same ability to earn that high of a ROE historically it hasn’t so paying a similar multiple isn’t as attractive. also think about NNI from a businesses perspective it is in venture investments which have low success rate and are riskier, they weren’t successful in residential solar, and are starting a bank which has inherent risks. I just think apple to apples if I’m making a concentrated bet at these prices I am picking FRFHF over NNI or S&P 500.

BRO’s acquisition of Accession and now higher debt load has kind of kept me from buying.. I’d feel better buying it a little cheaper which might just take time rather than continuing selling pressure. I wouldn’t be surprised if these chop around and create a base while earnings grow and debt comes down especially if operationally things don’t change quickly. I also think it’s pretty clear multiples got a head of themselves and when making acquisitions in an expensive market it compounds issues when it deflates since you likely overpaid for some of those companies. I don’t think the brokers are immune from this despite being great businesses.

Sold STZ at a small profit to buy MAT. I sold STZ because the price got away from me before I could make it a full position, and I am trying to limit the number of stocks I hold. I think MAT has been improving it's balance sheet and at today's price with the large share repurchases presents a better buying opportunity, and I will jump in rather than dip my toe in like I did with STZ. Sold NNI and some BRK to make FRFHF a material position in the portfolio. In my efforts to diversify away from the S&P 500 since BRK is part of my index funds I rather hold Fairfix especially since it is smaller and can grow for years to come where as BRK growth will be limited due to size. Bought more OTCM and a new position in AOS.

I think a more constructive conversation for the average investor who likely has the bulk of their wealth in an employer 401k and can only invest in bond or stock ETFs.. what would you do today assuming you have accumulated a large amount of capital and are not just beginning where contributions make a larger impact? I’ve largerly shifted contributions outside of retirement to avoid compounding the issue but it is for sure an issue because index fund returns are dicey looking forward

I agree I have a position and added. I was hoping it would go a little lower before earnings and I would load up but it’s being stubborn.

I can assure you if hired a hospice agency owned by a PE firm I would be looking over that bill with a fine tooth comb.

Have you ever been tempted to sell. I get it they gave amazing track records, but it seems like it’s getting to the point where they are having to dicier and dicier things to keep it up. But I could be wrong since i haven't followed the industry. It could just be one of those narratives that pops up in every bull market. The tape worm nature of all these investments and how it is starting to work its way into 401ks, life insurance, etc is definitely concerning to me.

Steve Eismanhas has been doing a good job digging into the PE industry. I know we have a lot of holders of APO/KKR/BAM/etc so feel like this might be a decent topic..I feel like the PE and Life insurance industry in general is very hard to wrap my head around given how blackbox the businesses are.. I also wonder if Berkshire is liking their chops if the life insurance industry ever comes to the brink of failure they can jump in at much more attractive rates of return. Either way it was a good podcast episode and work a listen, and if you have any other resources please share.