netnet

Yeah, Those fora are great. I have really enjoyed them over the years. Thanks for the heads up that they finally put the podcasts online. That's a good idea to put Google Alerts on!!

Thanks for the update! I haven't looked at Loews for a number of years now.

"unethical" "sleazy" You guys are joking right? Look, Countrywide engaged in seriously unethical and sleazy behavior that harmed people who basically could not defend themselves, shoved the crap out the door and repeated it. Klarman, sharp elbowed yes, bought the paper from (supposedly) sophisticated investors, or at least investors who could pay for the education and is now sticking it to the successor company (read partner in crime, BAC). A firm that on the face of it kept up the Countrywide traditions and seriously stretched (read broke) the laws repeatedly in foreclosure proceedings. Proceeding that materially harmed many people who could not afford legal defense. And you feel queasy? I'm sorry this is business. On that premise you would never by anything in a bankruptcy case, where much turns on the fine print, sharp elbows and buying for pennies on the dollar. (I should add that I'm not an Ayn Rand type, quite the opposite really.) I repeat this is just business; it's totally legal. it's not charity. and in this arena, all are sophisticated investors. He isn't selling cigarettes, which though legal are highly immoral. (No one seems to tut-tut about Loew's!)

Interesting article. Unfortunately, it has a number of errors of fact and I would argue the author tailored some of the ostensibly, "correct" facts to suit his argument. (A couple of examples: Buffett first bought Geico in the early 50's, but the author says that he bought cigar butts then and bought Geico in the 70's. Likewise he bought Amex in the 60's, in what the author calls his cigar butt period. Yes, Buffett has grown as an investor, yes indeed he has changed. (Munger called him a learning machine!). But to fit him into neat categories over emphasizes the lessons of his career, which might be summarized as Buffett has grown as an investor; changing and progressing due to increasing knowledge and growing assets. Even in his earliest days, he bought great companies at cheap prices, but later, he started buying great companies at fair prices. Buying a failing textile firm, Berkshire, was an acknowledged mistake, but he turned lemons into champagne, using the trickle of cash flow from BH's permanent capital. He, of necessity, started buying companies instead of just common stocks, as the company's cash flow turned into a torrent. Likewise his forays into arbitrage have morphed into the preferred investments in Wrigleys and Goldman. (I probably should be a little gentler with the writer, as he or she probably is on this board, but the article struck me as a piece where the argument's sake overwhelmed the facts.)

What book or books do you periodically re-read. According to Farnam Street Blog, Jobs read the Autobiography of a Yogi a number of times. I have re-read Carnegie's How to Win Friends, Peter Bevelin's Seeking Wisdom, and Think Twice recently. And plan to re-read Intelligent Investor over the holidays.

I don't know about 100x but as we all know Munger really likes BYD. If successful, that could be a 10x.

Although in hindsight they are obvious to all, to those in the industry, Microsoft and Intel were obvious 100 baggers. Dell was not. Walmart was also obvious for those who knew retail. I would say that at the time each were obviously dominant in their niches, which were big enough to support huge growth that benefited from enormous tail winds. To me Costco was not so obvious, nor was Google or Apple. Remember, a 10 year 10 bagger could turn into a 20 year 100 bagger.

You do need an expert, but that won't stop me from jumping in :-\ In the case as you describe it, the losses have no value. The rules are complicated but basically to use the tax losses, there are change of control issues--discontinuing operations probable disqualifies right there. And the companies have to be in the same sort of business. (at least those were the rules when we looked four years ago!) This is for a standard US based C corp.

I know. After i wrote it, I tried to kill the message, but the system would not let me.

[amazonsearch]Thinking Fast and Slow[/amazonsearch] I'm am halfway through Daniel Kahneman's new book Thinking Fast and Slow. It is nothing short of brilliant. You must read this book! (Kahneman, a psychologist, won a Nobel in Economics. Partially an intellectual memoir, it is brilliant, illuminating (and also has some nice elegiac passages about his late collaborator, Amos Tversky.) It reads like a conversation with your favorite uncle who happens to be brilliant and who won a Nobel prize by inventing an entirely new field. Here is Michael Lewis's Vanity Fair article on the book: http://www.vanityfair.com/business/features/2011/12/michael-lewis-201112

Great thanks! The wisdom of the crowd. Although, there is some distortion from the camera lens, Charley looks a little thin to me.

Munger was on Bloomberg TV today. But I can't find an online link to it. Here is the story: http://www.bloomberg.com/news/2011-10-24/berkshire-s-munger-says-leaders-way-behind-the-curve-on-european-crisis.html Another pithy Munger quote: Does anyone know how long does Bloomberg embargoes these things?

I highly, highly recommend Think Mental Models. It's available in PDF for $2.00 (U.S.) http://www.thinkmentalmodels.com/ it is rather like one's own cheat sheet to mental models. Way easier to absorb than Bevelin's book, From Darwin to Munger, not because it's dumbed down, rather it is visually oriented. (For me, it has become part of the graduation gift for college student nephews, nieces, etc. Now that you have graduated, it's time to get educated! And I do pay for each copy, by the way.) The best $2.00 you will ever spend, guaranteed! netnet

Sorry seshnath, I must disagree. (I did not grow up in Kerala though, but you know despite everything, they did not ruin the chai! And it's not as if any other party has particularly clean hands.) I like (most of) you guys and how you think on financial matters, but seriously Ayn Rand--indeed it is fiction and rather insipid fiction at that, whether as fiction or as political theory. (how's that for being a skunk at the garden party!) I am reminded of Munger's comment about overdosing on Rand, something to the effect that even the economic equivalent of axe murders were considered acceptable as long as it was "market" based.

Tilson says that BRK has never been cheaper (bit of a hyperbole there) He is quoted as saying it is 1x pre-tax. I don't know how he gets that but here is the short article from WSJ: From Bloomberg, via WSJ: Berkshire Hathaway ‘Never Cheaper,’ Says Tilson Bloomberg Is the best value stock out there also the home of the world’s most famous value investor? That’s the verdict of T2 Partners’ Whitney Tilson, who says the firm’s biggest position is Warren Buffett investment vehicle Berkshire Hathaway — a stock that’s “safe, cheap and growing at 8%-10% a year.” He says Berkshire shares are trading at one time pre-tax earnings, a 40% discount to intrinsic value. “It’s never been cheaper than today,” he says, adding investors in Berkshire get “Warren Buffet to invest for you.” Mr. Tilson, speaking at the Bloomberg Markets 50 summit, admits it is very hard for stock pickers to maneuver in today’s environment, but says there are still good stocks.

It is the mad man himself.

I think you mean to say that he has stayed within his circle of competence not that the circle has not increased. Although he has been a very prudent investor, his circle of competence has most definitely increased! (To paraphrase Munger, he is a learning machine.)

It's a great book.

Spoken like a true value investor :D I enjoyed it. I would put in in the very interesting read category, not a must read. In other words, it is not in the top 20 business and finance books to read, but is probably in the top 100. (I felt I had to read it because Buffett had praised Singleton so highly.) Hope that helps, Netnet

I enjoyed Physics for Future Presidents, the (non-text) book. The book is based on the text from a U.C. Berkeley Physics course. The course is online at iTunes U, Muller Physics 10. I have not read the textbook of the same title that is the course reader, and is more expensive and has twice the material. For a general physics book, I enjoyed Thinking Physics, rather than Physics for Dummies. Farnam, man I love your site. I read it an least three or four times a week.

Here is an article that covers a lecture/discussion that Gates and Buffett gave in 1998. It's a great read. (I'll only spoil one punch line--tech stocks should trade at lower PE than say Coke, because of competition and obsolescence!) http://money.cnn.com/magazines/fortune/fortune_archive/1998/07/20/245683/index.htm Netnet

Thanks for that point. I have come upon Hill (relatively) late in life and like a great deal of it.

I'm just curious at whether anyone on the board has done any trade to help protect a portfolio from a US default. Frankly we looked at this a month ago, but decided not to do any trades, despite handicapping the default risk at more than 10%. I think currently it is more like 30 to 50% now. The imbedded assumption here is that a default will disrupt markets. Now it may turn out that a "default" causes only a minor disruption. Or that the markets have already discounted it. If you believe the markets, then you have to think that default is not an issue, but I just find that really hard to believe. (I think this is one of those things that you can not imagine happening, but may actually occur. Like say the Princess of Wales being a rather frumpy concubine...no wait that did happen :-X ) But other than a general market put or a long bond put or a short of one of the etf's what did people do? Clearly most people had done nothing! Netnet

This article quotes Buffett as saying he reads Dimon's (JP Morgan) and Marks's (Oaktree) annual letters as soon as they come out. http://www.msnbc.msn.com/id/43726015/ns/business-motley_fool/

Here are some good notes from the meeting on the "Inoculated Investor". http://inoculatedinvestor.blogspot.com/2011/07/notes-from-final-conversation-with.html