writser

I found the article to be a bit confusing. As far as I know, the currency in which a stock is "denominated" is largely irrelevant. A company like Shell has shares denominated in pounds, euro's and dollar. Whichever share you buy, you still end up with exactly the same piece in the same company. Arbitrageurs will make sure that if the dollar strengthens, the share price denominated in dollars goes down etc. There are only two relevant questions: 1. What are my cashflows, do I hedge those. 2. What effect does a move in currency have on the underlying business (e.g. a strengthening USD is probably bad for exporting companies) To give an example: I live in Europe. Suppose I have a euro account with my bank. I can either buy Shell in euro's. Or buy the US listing, denominated in USD. If I do the latter, my bank will convert a couple of my euros to dollars using the prevailing spot rate and use those dollars to buy the US listing. In both cases I end up with exactly the same position: long euro's and long 0.00001% of a business called Shell. I have no exposure to any euro-dollar move. This is the case for 90% of all retail accounts. Only with some brokers like IB you have subaccounts for different currencies. I.e. if I deposit 2000 euro's and buy Herbalife for 1300 dollar, I have three positions: - long 1000 euro (approx, given eur/usd = 1.3) - short 1300 dollar - long herbalife In this case you do have currency exposure. And I usually hedge it because most brokers charge ridiculous interest rates on negative cash positions. You could use futures to maintain the currency exposure if you want to but that's a bit of a hassle. If you think a stock is a good investment because it is "denominated" in HKD, think again. This is irrelevant. For all I know Berkshire could have a HKD listed share and it would be exactly the same as the US listing. Because if the currency moves the price of the stock will change, but not it's value (as long as they don't to business in Hong Kong).

I'm surprised nobody mentioned Intouchables yet. I really enjoyed it, and so did others because it's now #64 in the IMDB all-time top 250. Probably nobody mentioned it because it's French, but even then a few Canadians should appreciate it :)

Very impressive. This year I am up 26%. Pretty happy with that. Especially given that I have quite a diversified portfolio because I'm not yet convinced about my own capabilities to beat the market. Hope to continue learning a lot next year, I really appreciate your insights on this forum.

Depends on the number of ants in each corner. And on the definition of a collusion (do we have to include the endpoint? The starting point? Is it a collusion if three or more ants collide at once?) Do the ants walk to an adjacent corner or to a random one? In the latter case, do they all have the same speed? Is it an equilateral triangle? Will the ants start walking all at once? The requirements are unclear. (Probably not the best answer in a job interview :) )

I think you sidestep the point. If all you have is < 100.000$ dollar you can probably easily make ~10% a year with some special situations (odd lot tender offers come to mind). Earning the same retuns is much harder if you have 23 billion in AUM. In the first case, the universe of possible investments is much larger and more misunderstood because a lot of these investments just aren't interesting (i.e. too small) for professional investors. Hence the comment from Buffett that he would be 100% invested if he "only" had ten million. Now you could be a billionaire for all I know (would be nice to have one on the board :) ) but statistics suggest that you are not. And it that case you might be better off searching the universe of listed securities looking for individual interesting opportunities and base your cash percentage upon the number (and quality) of these investments, rather than putting a lot of effort in macro-forecasts and Yale plannings. An important question here is: do these guys hoard cash because they are afraid of the market valuation in general? Or because they can't find individual good investments? In fairness, probably a bit of both. But I'm sure that if WEB finds a terrific investment he's not going to pass because of the Shiller PE ratio of the market.

This is how the game is played right? Leave the market during the crash of '09, join the rally at the high in '14 :)

I like the idea of this thread, but why only post links to what the media think are the best books? It'd be much more interesting to hear what you and other forum members read and liked in 2012. Let me kick off. Note that I also read a few great Dutch books but they are probably not that interesting for the majority here so I will leave them out of my list. (I included Amazon links but these are no affiliate links afaik. If anyone is offended tell me; I will remove them :) ) Thinking, fast and slow by Daniel Kahneman. The best non-fiction book I read in 2012. I've read quite a lot about the subject (behavioral finance / psychology) lately, including Freakonomics, Charlie's Almanack, Talent is overrated, books from Malcolm Gladwell, Dan Arieliy, Nassim Taleb, James Montier, articles from Howard Marks etc. This was by far the most interesting book on the subject. It's a bit broader than only economics - it tries to give you a real insight about how the human brain works and how that is different from how we expect it to work. An eye-opener, extremely well written. It really delves deep into the subject (it's a big book too!). This as opposed to Predictably Irrational or Outliers, those were easy reads but I felt sometimes that the ideas were too "dumbed down" to appeal to a broader audience. I believe this is a classic every investor should read. Titan: The Life of John D. Rockefeller, Sr.. As suggested by Charlie Munger I've started reading biographies from inspiring people. First I tried two autobiographies, from Benjamin Franklin and Andrew Carnegie. Their lives were impressive but these books felt a little bit dated and one-sided. The book about Franklin by Isaacson gets really good reviews but I didn't want to read it right after the autobiography. Anyway, I was really impressed by "Titan". Rockefeller's work ethic, how he built Standard Oil, his charitable work and his philosophy about life are an example for everybody. JDR achieved more, influenced more, lived longer and met more interesting people than probably anybody else from his generation. The ruthless, (shady?) stuff about Standard Oil, business practices in that time and stories about his competitors / colleagues are also very interesting to read. The author did extensive research and he's a good writer. I didn't expect that a biography could be so inspiring / affecting. Great North Road. I haven't read many fiction books this year. A couple of days ago I started in the latest book by Peter F. Hamilton, an English SF writer. His 'Night's Dawn' trilogy is among the best SF I ever read, together with the 'Hyperion Saga' from Dan Simmons. So far this book is impressive and I expect it to be so until the end. Sherlock Holmes. Ok I admit, I have to show the forum that I also read some real literature ;). (probably shouldn't mention that I stopped halfway Atlas Shrugged this year - too slow for my taste). Anyway, the big Holmes stories are really good and timeless, I couldn't tell that they were written over 100 years ago. The collected works contain a lot of smaller stories (3/4 pages) and it's a bit of a drag reading ten of them in succession but the major pieces were excellent. I have to note that I picked up this book after seeing the BBC 'Sherlock' series. Excellent television, much better than the movies! Any other tips? I'd like to read some more biographies next year. Names that come to mind: Thomas Jefferson, Albert Einstein, Richard Feynman, Keith Richards, Andre Agassi. For some reason I don't really care about Steve Jobs. HHhH is supposedly very good. And I like the title! Will probably pick that one up next. Would like to read some more fiction but the problem is that there are too many books to choose from.

The market for hard disks is shrinking and a new firm would need a decent share of the market to justify allocating a lot of capital today to acquiring technological knowledge, building a plant, marketing etc. How can a firm in a declining "commodity" business get market share? Probably by a price war, and then nobody will earn those nice margins anymore. That's the moat Packer is describing if I am correct. Right now Seagate and Western Digital have a tacit understanding; they are not lowering prices but are squeezing the last dollars out of a declining market. This is the best case scenario and if it works out WD could very well be a great investment. Problem is that this equilibrium is not very stable, if either STX, WDC or a new competitor starts a price war then profitability will go down sharply. There is also the danger of HD's becoming obsolete within a couple of years.

How rational are the answers of people that answer this poll?

Berkshire Hathaway (NYSE: BRK.A; BRK.B) has purchased 9,200 of its Class A shares at $131,000 per share from the estate of a long-time shareholder. The Board of Directors authorized this purchase coincident with raising the price limit for repurchases to 120% of book value. Berkshire may purchase additional shares in the market or through direct offerings at no more than 120% of book value.

Thanks; problem with these is that they also contain some holdings that I don't like. For example I am short Sales force and that's a major holding in one of them. The other one is 20% Apple. IGM is the most interesting one but the overlap with the stocks I mentioned is < 20%. I think I am better off buying individual shares.

The problem with Western Digital for me is: basically all companies in the "dying pc sector" sector look like decent investments to me. Other examples include Seagate, Marvell, Intel, Qlogic, Intel, Microsoft, Cisco and Dell. These show up in portfolios from managers I respect (Einhorn comes to mind) and in several screeners, for example the Magic Formula. But I already have positions in MSFT, CSCO and INTC and I don't want too much exposure to the sector. I have a hard time figuring out the best stocks. I like MSFT and INTC because of their moats but from a valuation perspective other options appear to be cheaper. Maybe I should just buy the whole basket equally weighted, saves me some thinking. Somebody should launch a new fund for that, I believe the "OKPC" ticker is still available.

Yep or run some queries on SEC Edgar once a week.

I think Interactivebrokers is the best if you like no-nonsense low-cost internet brokerage.

I do a similar thing; whenever I do something stupid I force myself to put a chunk of the money invested in that into Berkshire, never to be touched again. If I'm lucky I will have only Berkshire in my portfolio in a couple of years and I don't have to bother trying to beat the market anymore :)

Holding commodities and VXX is no "investing"; it is speculating.

He can charge as much as he wants if people are willing to pay, but it looks a little awkward to me. First he presents himself as the guy that wants to make simple and effective investing available to the public, writing some very good books and opening the magic formula investing website. And then he starts a fund with a large mgmt fee. Then again, I don't know his reasons for doing this.

yep, great article.

Agreed, nice interview. He makes it sound really easy :)

"The four most dangerous words in investing are: 'this time it's different.'" - Sir John Templeton

Due to the timing aspect there is not really a margin of safety, e.g. if mr. Market disagrees with your valuation at the expiration date, you have nothing.

Not saying you are a gold bug. I was just replying to your statement: I think this is incorrect: you don't own physical gold, you own a claim to a holding company that holds gold and claims to a refining company. If the worst happens you have to pray that both companies stay solvent. You rely on the solvency of your counterparty, as demonstrated by press releases like this: link. The biggest gold ETF in the world is a trust fund, a form of investment in which you have no credit risk. The ironic thing is that the conspirary gold bugs don't believe this and end up buying inferior products with larger expenses, often at a premium, that are specifically marketed at their ignorance. Like the Sprott Physical Gold Trust: http://sprottphysicalbullion.com/sprott-physical-gold-trust/ . The world "physical" is mentioned 6 times on their frontpage. What they don't mention is that you buy it at a 3 percent premium. Now I am not saying Xetra-Gold is a bad product, you might or might not have made an informed decision. But if your prime reason for buying this product is that you want "physical exposure" then you bought the wrong product. You don't OWN gold and the redemption feature is a marketing ploy.

Giofranchi: if you look in the prospectus of Xetra Gold, page 7 (link) you will read: So you do not actually own physical gold, you just have an unsecured claim with an issuer who might have gold or might have claims to a gold refinery (we don't get to know anything about these claims). In other words: you are buying a bond, and you are paying monthly fees to own it. It is ironic: the gold bugs want physical gold because the huge ETF's are supposedly unsecured and manipulated by the big banks. This led to scores of new issues catering to this niche market. Products like Sprott physical gold trust, issuing shares at a huge premium to net asset value. Or Xetra Gold, which is actually just a bond. These products lure retail investors by offering them the possibility to actually claim physical gold. Obviously at a cost and obviously nobody ever does this. Unless the world collapses and at that point the gold might not actually be there or other creditors have priority over you. It is just a nice marketing ploy. In their search for "extra-physical" gold the gold bugs end up buying shitty products that are specifically marketed to them. The big ETF's are actually the most safe (and the cheapest) way to own a stake in physical gold.

I like the analogy. It's also very risky to get out of the atmosphere, but some people desperately want to achieve it. Would you say the same for your investment strategy right now?

This guy already expained far better than I ever could why you should not use stop-loss orders: http://kiddynamitesworld.com/aftermath-remedies-dont-lose-faith-in-markets-lose-faith-in-market-orders/ . If you use market orders you will shoot yourself in the foot at some time. What you want to do is "sell at the high" and unfortunately these is no order type for that. If you mean you actually don't use a stop-loss order but define a stop-loss yourself because you have a hard time selling you could calculate your intrinsic value / share, add a little extra and put a good-till-cancel limit sell order at that price beforehand. Don't bother trying to time the market.