netnet
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Here is an interview with Weschler, nothing new really. He, like his boss, avidly reads newspapers, likes good businesses and suggests small investors use index funds.
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Poor Soros. I wonder if Buffett would be hated as much if he still shorted.
When did Buffett do non-arb related shorting?
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Funny thing about this book. I was very skeptical about it, the artifice. It features an imagined dialogue with what Munger might call a rube and Charlie and Warren. He is seeking wisdom and has sought out these two gurus in a temple of wisdom...
Yet, yet, It is really good.
What Bevelin has done is culled pages and pages quotes from Munger and Buffett to answer the rube's questions. And, get this, it is scrupulously footnoted. So the book has about 1800 footnotes. (This in a non-academic book.) Personally, thinking about writing a book like that with that many footnotes, makes my head hurt. Reading it on the other hand is a sublime pleasure.
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Devil is almost always in the details. Thus the critical nature of DD, but what is Munger's quote about getting rich with soft hands? People sell for a variety of non-economic reasons, retirements, etc. Hopefully there is also some fat to cut, like not employing all the family members, etc.Sounds like a possibility in theory. In practice - well, the devil is in the details. Like with everything else, why would someone sell you a profitable business for cheap? And if they do, how certain are you about the niche, the sales, the contracts, whether it's not a melting ice cube, single customer risk, key personnel risk, etc.From the other side: you might as well ask about buying small premium chocolate companies, I hear they are great cash cows. ;)(not a novel idea, there are companies who already are buying small chocolate companies, see BFCF/BBX filings ...)
Talk about melting. ;)
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An private investor group I'm in had a presentation from a tiny company that was looking for funding to buy a small software company. They were not that impressive, but they did mention Constellation, which got me thinking:
Buying small mission critical software companies, (or maybe just buying one or two) seems to be a reasonable thing to do. Obviously the DD has to be good and the first buy has to be really, else one could be out of business, but buying in a small niche and living off of the maintenance contracts seems to be a totally fine way to go.
(Now with buying more than one integration could be problematic, etc. Plus the overhead burden for the first few, if it is a roll-up can be problematic, but adding professional management and reducing and consolidating costs could be really powerful.)
Thoughts??
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There is a longish thread on the pros and cons of Brexit, but I did not see anything addressing more market or stock specific discussions.
This is one of those unpredictable, but widely anticipated events. With an exit, the English stocks particularly those that need access to Europe will probably drop sharply. My thinking is to have a watchlist of those companies that are not dependent on European exports from the UK that may fall in sympathy.
(Of course there is a wild card that this could be turn into a Lehman type of moment, I doubt it, but it is of course a possibility. As is a surge of the FTSE.)
London real estate looks particularly vulnerable.
Specific companies to keep in mind: Lancashire (LRE.L) and Goodwin, with some EU exposure though.
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I don't really buy that angle. No one is going to beggar themselves just to land a blow on a political rival.
Really, you believe that we are all rational, well I have some Enron stock here to sell you.
But seriously, many a war has been fought that has beggared the combatants.
On a micro level, I have seen this myself. Look at family estate fights or divorce courts. I have personally seen two litigants spend over 90% of the value of the estate suing each other. Now imagine that cat fight spread over 1000 years with a 'religious' divorce, where you believe that your opponent might love to kill you and all of your kin.
And then there is the ethnic component, whew.
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Well, OPEC is a cartel. The question is why is the cartel not working. Well history shows that cartels always collapse. They tend to have relatively short term effective lives.
I would suggest that you have to add in mental models from game theory as well as market forces.
There are political factors at work here as well.
- First of all it is pretty hard to cooperate with your fellow cartel members when you are in a proxy war with one of them in Yemen and you believe that they are fomenting a fifth column in your country (Saudi Arabia) or you believe that the other country is oppressing your co-religious (Iran). Whether true or not, that is what the ruling princes and mullahs believe.)
- Given that background the Saudis do not want a post sanctions Iran, their regional rival, benefiting from maximum oil revenues
- Saudi Arabia used to be the swing producer willing to throttle their own production but for the first two reasons and their own exploding population and budgetary needs do not want to be that producer
- Without a swing producer and no enforcement mechanism, the incentives are to produce the incremental barrel. Classic problem similar to the prisoner's dilemma.
- First of all it is pretty hard to cooperate with your fellow cartel members when you are in a proxy war with one of them in Yemen and you believe that they are fomenting a fifth column in your country (Saudi Arabia) or you believe that the other country is oppressing your co-religious (Iran). Whether true or not, that is what the ruling princes and mullahs believe.)
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Let me meditate on your question...
Here you go:
http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/off-topic-meditation/
I practice mindfulness meditation regularly.
There are four things I've gotten out of it:
1) Mindfulness meditation by its nature is an exercise in concentration. The practice frequently gives rise to states of mind that are intrinsically pleasurable to me. I have no causal explanation as to why this is.
2) I am significantly more cognizant of thoughts and emotions as they arise, and no longer mistake my identity for a thought or emotion that I'm experiencing. To give a brief example, I had a client on the phone last year yelling at me for something out of my control. As he yelled I looked down and held my palm against my chest. As I felt my heart pounding I became aware of the agitated emotional response I was feeling and the urge to yell back. I thought to myself, I don't need to feel this. The emotion was gone in just a few moments. That was a formative experience for me.
3) I found that happiness comes not from having everything, but from what wanting nothing.
4) An insight into the nature of consciousness itself. I'll explain more if you ask.
I have not practiced TM. I know little about about it, but given the extremely high costs associated with it, remain very skeptical. To illustrate the contrast, the TM course on tm.org is about $1,000. I did a 2-day mindfulness meditation (vipassana) retreat in Flagstaff a few months ago. The cost was $0.
Here are three links that influenced my interest in meditation:
Happiness experiment:
https://www.youtube.com/watch?v=5C3JcAYXF8E
Effects of meditation:
https://www.youtube.com/watch?v=O2tEQPNG198&feature=youtu.be&t=2m26s
Sam Harris is a neuroscientist, philosopher, and author:
https://www.samharris.org/blog/item/how-to-meditate
This is why I love this forum! Funny, helpful, and useful on many topics.
Also check out UCLA Medical School's meditation resource center. http://marc.ucla.edu/
If you need the help the Headspace app is 1/10 the cost of TM, about 100 per year. It is good for "newbies".
The branding and rigidity of TM are really unnecessary, IF you don't need it. If you do, then pay up. Some meditation is worth 10x your $1,000 dollars than no meditation. There is also some secondary evidence that it may lengthen your life--meditation seems to affect telomeres' length, which are longevity markers.
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I think picking a specific period is arbitrary.
- If you go solely by 2010-2015, then we haven't beaten the market.
- Add one year...2009-2015 and we have beaten the market and are on par with the best investors.
- Look at 2006 to 2015 and we are in the top 1%.
But our numbers don't matter because no one gives a flying fig about our long-term results. They really only care about shorter term periods or recent history.
Many of the managers who started when we did are no longer in the business. We keep plugging away slowly like Francis did 20 years ago. So much capital in the wrong hands and we can barely get a speck of sand on a huge beach! Cheers!
Agreed.
If don't mind my asking, what was your result from '06 to now or '09 to now? Cause I do care more than a few figs about the long term!
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Well, nutrition science is barely a science, or better stated, we are just at the beginning of understanding a lot of what is going on. There is a lot of false info swirling around and it doesn't help that food is so much a cultural thing. Take for example the statement we need three meals a day. Well, that has never been proven and many believe that throughout history, humans had just one meal per day. In the current time our Ag department is there to help farmers not to recommend what is best.
Furthermore, it is hard to do good studies with diet, double blind ain't possible if you are eating steak vs vegetables, plus people aren't rats so you can't feed 'em and wait for them to die to see what their died of, etc. As well our bodies are incredibly complex. People react both to insult, e.g. some carcinogen or to potentially beneficial compound differently. There is a hugely complex interaction of our genes with the environment. (For example, some people do not properly process Omega 3 derived from flax, so to get the benefit of Omega 3 they need extra 'help', if they are vegetarians or don't like fishy pills)
Thus everybody has the anecdotal story of the smoking 90 year old, which proves precisely nothing.
Now that said on to the Buffett diet.
Meh... people exaggerate the role of "unhealthy" foods. It ultimately comes in to matching calories consumed with calories burned. As a nutritionist I know likes to say, there are no unhealthy foods, just unhealthy quantities. A lot of the foods we call unhealthy simply pack a deceptively large amount of calories, something which I think Buffett recognizes and moderates his healthy or normal intake to reflect that, most people don't. Humans in general are pretty adaptive omnivores and can make a "diet" out of just about anything. Yeah you might suffer some nutrient deficiencies but there are vitamins to correct that.
How to put this delicately, wrong, wrong, wrong. Sure you can make a diet of it as you say, but mortality rates will increase, all things being equal, this is guaranteed. Now there are people who are naturally long lived and will probably live longer than the well and properly nourished person disposed to a short life, but that is not the issue at hand. As as far as evolution goes, you feed an 19 year old burgers and fries and they will shall we say have sufficient energy to get it on, but will he or she live to 95?
No it won't kill you today, but check in on your 90th birthday.A Coke a day or one McDonalds meal a days isn't going to kill you.In no case, am I saying that being overfed on broccoli is good, but that is really really hard to do, because vegetables are not so calorically dense.
If we're talking about weight, it's all about calories in versus calories out. You can eat 2,000 calories of unhealthy foods and gain/maintain/lose the same weight you would if you ate 2,000 calories of healthy foods. While on the scale you may be the same weight, your body will be a mess internally if you just drank coke and ate fast food, which is when nutrients such as protein, fiber, carbs, fats, cholesterol, sugar, etc. come into play.
See for example the (sort of) crossover study, where a group of African-americans switched from a (Buffett type, burgers, french fries, etc) diets with South Africans, who ate the Buffett diet. The African-Americans' markers for developing colon cancer went way down and the South Africans' markers went way up. (http://www.nature.com/ncomms/2015/150428/ncomms7342/full/ncomms7342.html). To Munger point at the last AM, the South Africans loved the diet.
You will be messed up inside, So the idea is better to be eating good food and fit, even if you are over weight.If we're talking about weight, it's all about calories in versus calories out. You can eat 2,000 calories of unhealthy foods and gain/maintain/lose the same weight you would if you ate 2,000 calories of healthy foods. While on the scale you may be the same weight, your body will be a mess internally if you just drank coke and ate fast food, which is when nutrients such as protein, fiber, carbs, fats, cholesterol, sugar, etc. come into play.
Or the study of women who had breast cancer, lived longer if they ate cruciferous vegetables.
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A tip of the hat to you futile (you aren't the operator of the futile finance site are you?)
You have, as they say, some serious research chops!! ;)
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Three additional, but similar reasons:
1. BRK has regulated subsidiaries, where (I believe) that debt is treated differently for rate setting purposes; in essence, the company gets a greater return by employing debt as interest payments are included in the rate structure.
2. For Treasury (internal company) purposes, you may have a net cash position, but you need debt to balance the flow of funds.
3. Lastly, without the 'debt' (liability) of BRK's float the company would be a fraction of it's current size. And no BRK does not have enough equity to refund all of its float, were it crazy enough to do so. As Warren has said in many ways (low cost and stable or growing) float is better than equity!
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How do you guys and or Warren and Charlie (if they have commented) set up for all your marathon reading? My neck kills me. Do you have one of those reclining zero gravity programmer chairs or something?
Not to play doctor here, but it sounds as if you are bending your neck too much while you are reading. Assuming that your neck doesn't hurt when you looking straight ahead, you should somehow adjust your neck angle accordingly. Smartphone reading seems to be the worst for bad neck angles.
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As for the person who doesn't like Charlie's upholding of traditional Chinese values and calling him "racist," I think you're seeing what you want to see. Charlie hired a Chinese guy (who by all accounts loves him) to manage half his fortune and the guy goes on and on about what an amazing job China has done coming up from poverty, and how much he admires Chinese ethos and how much he admires that Chinese folks are outperforming Americans, and particularly young Mungers...and he's racist? What are you talking about?
Give this a read and tell me why this 1950's racist man is so beloved by a Chinese man. http://www.distressed-debt-investing.com/2010/06/li-lus-foreword-to-poor-charlies.html
Dude, not to pick a fight and it's the internet and one tends to read quickly, but to quote you, coc: What are you talking about?
No I absolutely did not call Munger a racist. nor do I think he is racist. (I will modify my comment to reflect that absolute distinction.) I said that the language he uses smacks of 1950's (racist) way of talking. If him saying things like, well "I like those old Jews," is honey to your ears, then more power to you. if you like stereotyping people, well whatever.
It makes me cringe, and to me it is from a time when in "polite" company you could talk about how hard those Polish janitors work and my those Jewish women in their fur coats seem to talk about how much money their husband make. Frankly, I don't like that kind of thing one bit. My point was my idol is human and has feet of clay. This clearly not an issue for him. (I should also add that the Chinese exclusion acts were justified by the fear of the 'yellow' races taking over, so you see historically the language could be problematic. So....
Let me add though, in a Mungerist twist, that in Hawaii it is perfectly acceptable to talk about how the Japanese (Americans) run the firefighters union and you can say to someone you just met, "You're happa (half or mixed) you're half white but what else are you."
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First of all Munger and Buffett are really smart (duh) and really ethical, but......
They are humans with all the attendant foibles, so there is probably something there (in their files) that is not the ideal.
As for Munger, I am an admirer and do not think he is racist, but I absolutely hate him going on and an about Chinese people and values; it smacks of 1950's racism, however enlightened. It makes me cringe and I'm a card carrying Munger groupie.
As for Warren, well:
I'd laugh, and wouldn't be shocked if that will going to be the case.......i truly wouldn't......maybe he has a love child.. "You know that he had what for a mid century Midwesterner was a pretty scandalous relationship with Astrid. (So the love child, would not have been at all surprising.) Even today not many men have mastered having harmonious relationships between their wife and mistress. (How did he do that?) Note that he doesn't seem to be the most loving Dad and he cut off Schroder after she wrote the book. And BRK owns Coke.
They have clay feet. Okay.
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Oddball/Jawn/Anyone
Any of these guys trying to do any Buffett style outright purchases...and abuse the businesses cash flow into other opertunities?
There are a fair number of companies that abuse their cash flow ;)
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What is either side trying to get/learn by winning this debate? There were probably 50 other questions and the best thing you can debate on is the coke question.
I really enjoyed hearing Buffett's reasoning behind minimal due diligence. Essentially you will not go wrong in getting the minor details wrong, it is your view of the industry economics that will determine whether or not you do well. WB also mentioned pattern recognition multiple times, which seems to point to the value of watching these industries for 50+ years.
+1
The sugar thing is getting tedious. Ok, let's agree, in excess or maybe at all Coke is bad, there, done!
I still wonder about the limited DD, my response to Munger about how limited DD is before marriage, well doesn't living together count?
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I was just thinking about what both Charlie and Warren said about reading, basically you have to read the Wall Street Journal and Fortune Magazine, as a business person and investor.
Additionally, you need to read the AR's of your potential investment, as well as that of the competitors and the industry trade publications, but what about new media and note taking s/w?
Specifically, what would they be doing if they were 30 or 60 years younger? For me, my Twitter feed has loads of investors, but it is way too time consuming to diligently go through all the tweets from even the best investors. (Also, who is in your twitter feed?)
(Note, there was one notable investor, the guy who ran Windsor, who used to be in Barron's Investor Roundtable, who would stack up a weeks worth of the Wall Street Journal and finish reading it on the weekend.)
I don't know how they take notes, how often they re-read, etc. And obviously you have to do what is most suitable for you.
I spend about 10% of my reading time re-reading and I use Evernote for stuff on the web, but not for books.
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Here's my compilation (though it does not have some of the items you requested):
https://www.dropbox.com/s/d9o5gk2hsy594dr/Munger.pdf?dl=0
This has everything I can find on Munger that was written by him (skipping interviews). Includes talks that I've found.
If you have anything that is not in the compilation, please let me know, as I'd like to add it.
Wow, very impressive collection, I had not seen the Blue Chip stamps AR's before. Well Done!
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Not to be that type of person, but Swami X remember, on this board you have a lot of Buffett and Munger groupies!
Shane (creator of Farnam Street Blog) has a great site, etc., but that is hardly close to a full compendium of "everything Munger" or even the best compendium on the web. See Value Act or the listings on Wikipedia, Tilson, or that accountant, whose name escapes me at the moment, maybe RHJ partners, etc.
Second, you aren't even answering the question...
but after all that snark, welcome to the board! I see that this is one of your first posts. You have now been officially hazed and are hereby initiated. Your sash (not stash) will be arriving in the mail, once you have completed your first investment recommendation. ;)
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That was unbelievably awesome.
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I think Buffett's mention crashed the longbets.org site, blank screen now.
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So between re-reading Intelligent Investor (4th time) and reading this what is your call--personally,
i have to look at the opportunity cost as well as the marginal utility of re-reading vs reading something new!
P&G, Gillette, and the Decline of the TV-Industrial Complex
in General Discussion
Posted
Shai,
Thanks for opening the topic. The links are great. I have already sent to colleagues as the link of the day!
It just goes to show, yet again how f*&king on the ball Buffett is. If any of you are so inclined that would be a question for him or Munger next year. What was it that you saw. (Of course someone asked that about Wesco sale of Freddie Mac securities, however many years before the crash and basically the answer was useless, at least to me. It was something on the order of, 'Well we saw that it was getting risky.')
Another point on prescience or lack thereof, Amazon in the depths of the Great Recession, was about as sure a thing as you would want, frankly way more 'secure' than BofA if you ask me, with the considerable benefit of hindsight. (Even with a government guarantee!)