LC

I agree with this, but with a caveat: In my experience, transparency works best when it's actually transparent in all factors, not just work. Let's say your coworker is missing some deadlines, you notice it for a bit and in the spirit of transparency, you mention it. In the same spirit, he says that he's going thru a breakup, has a new baby, or what have you, and therefore his mind has been elsewhere. A fully transparent relationship is when you already know your coworker is on the rocks with his girlfriend, or his wife is expecting, or whatnot, because you share these things. And so you may preemptively re-allocate resources to avoid the situation entirely.

Yea I agree cubfan. Either (1) he's lying which is what i suspect, or (2) he allowed processes in place to allow one person to allow such a huge breach

@BG2008 - Thanks for replying. I was looking for a little confirmation because the principle makes a lot of sense yet nobody mentions it. Everyone just takes 6% because that's what Buffett used 50 years ago. As you mention, 6% was the average risk free rate back when Buffett was setting up his partnerships. @Rod - I'm not sure I agree with that idea. I don't think economically it makes sense. It assumes that the client would be earning the index rate of return without the fund manager. Empirically that assumption has been shown to be false. Individual investors are pretty good at buying/selling the index at the wrong times.

Ok but, why 6%? Why not 5% or 7%? In Buffett's time, 6% was the 30 year coupon.The idea (as I understood it) was that managers are paid in excess of the risk-free rate. Clients moving outside of t-bills are assuming risk. They can either pay themselves for that risk, or pay someone else, presumably a professional. The real question is, why are value fund managers stuck on 6%, versus payment for the intelligent assumption of risk above the risk-free rate? Note: I think his actual fee structure for the multiple partnerships varied: 33% above 6% 25% above 4% 16.6% above 3% But (1) he provided liquidity back to his clients from the fund at 6% (again, the risk-free rate), and (2) I think when he combined all the various partnerships, he adopted 6% as the rate.

Buffett was writing back in the 60s that the money managers job was to beat the index. The concept of risk adjusted return is imho used too much as a method to rationalize underperformance.

I completely agree. And you know, IIRC the reason Buffett chose a 6% hurdle was because that was the average 30? year treasury rate at the time. What are your thoughts on that? Or even a floating annual hurdle rate that mimics the 30 year?

The answer to that is totally dependent on who is asking the question :)

I don't follow them closely but if we assume there is no fraud, then to get from the 13F analysis (which shows much more modest performance) to their claimed performance, they would have to be using leverage or derivative strategies like you mention. Not that there's anything wrong with that, I sell puts to initiate or add to positions and sometimes sell covered calls. But a good general question: what isn't required to be reported on 13Fs. Edit: 13F list here: https://www.sec.gov/divisions/investment/13flists.htm

Seems silly to me...removing the most popular part of the product? True genius. Next thing the email feature of Gmail will be replaced with an interactive game of telephone.

Which is why you would use Kelly's. 8) I hate that damn formula! :D Just because it is precise, does not mean it is accurate. It fools people in that way. In reality, we are all probably not-so-great at determining exact probabilities and expected outcomes. Take the common-sense lesson from the kelly formula: safer stocks with higher potential outcomes deserve more of your investment dollar than risky stocks with lower potential outcomes. But most people don't need a formula to tell them that...

Could you elaborate? Yeah, so usually the idea is saying, well OK I think the value of this company is $100 (EV = 100), but I can buy it at P=75 and sell somewhere around $100. In this case the ceiling is 100, and you buy below that. But take the same example. What's the worst case scenario, tail risk, etc.? Your $100 EV is just the average of a bunch of probabilities. How does that distribution look? In other words, the EV = 100 but P1=0 and P2=200 is much different investment than EV=100, P1=95, P2=105. For the second, your floor is essentially 95. For the first, your floor is bankruptcy. But same EV.

On second thought I'd go with the first option. It's all about expected value, but I think your example is a bit extreme to illustrate it. 1) and 3) look like the same thing to me. I'd also think about expected loss as a floor vs. expected value used as a ceiling. The second option is how you run into value traps.

I would say the second. 1 and 3 require repeated tries to reach expected value. You might hit zero in your first four tries and now are bankrupt and can't continue.

I voted Sanjeev. Bezos would be my other choice but I have never interacted with him. Honesty and integrity are characteristics at the top of the list of what i would be looking for...I just don't have the ability to pick the next maniac-level uber-investor like Buffett.

Heh...this topic came up recently over beers. An ex-analyst said a popular NYC manager almost never read the Ks (but of course all the analysts did)

Jamie Lannister's thoughts on bitcoin: https://www.cnbc.com/2017/09/12/jpmorgan-ceo-jamie-dimon-raises-flag-on-trading-revenue-sees-20-percent-fall-for-the-third-quarter.html

You could use two screens: one which measures overall share count reduction over ten years (or whatever timeframe). then a second screen like the one provided, which screens for regular buybacks (X% per year). simply remove screen 2 results from screen 1 results and you're left with the "bulk" repurchasers.

Wow. Mental note: never incorporate in Alabama (or if I want to slush money out of a company I solely own, incorporate in Alabama)

Any idea about the average Fico for ADS customers? My concern is outsized exposure to the low end of consumer credit.

Paging Nate...

Best investment in 2017 was 3M (+40%) and PM (+30%). Those are like 1.5 year returns, not 2017 YTD. Going forward I don't see much. Took a small position in DVA. Larger positions in CMP and C.

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I think the research paper that racemize performed suggested that you should remain invested as long as you still can find undervalued positions. My take is that, even if the market is going loco, if there are still a few pockets of value, then it pays to stay invested in those.

Ehh...I use it as kind of a gut check. Doing a completely private valuation is essentially saying you know everything better than the market does. And maybe you do, but it's helpful to see what the general consensus is around companies in the same industry. It's a triangulation tool. So yea, maybe you think P&G is a bit better than Unilever and deserves a slightly higher earnings multiple, but if all the CPGs are trading around 20x earnings and your valuation comes in at 35x, it gives you a second to pause and re-evaluate.

debt coverage, interest coverage are the two most important to me. i don't usually look in the bargain bin of stocks, so take that for what it is.