LC

The more I think about it...when we talk about risk-adjusted returns...it's difficult to really standardize. Let's take Nate since he is the topic of conversation right now...I could never run a portfolio like his! For me, it just does not jive with how my mind works. Let's say Nate and I ran the same portfolio, identical stocks, weightings, everything. I would consider his risk-adjusted returns much higher! He is more comfortable with this portfolio strategy. It is less risky to be in his hands than in mine. I might achieve the same results, but it would be much more risky. I think my thoughts echo those who say that investing truly has to match each individual. Otherwise it is just too risky...and trying to standardize that number to compare between managers...maybe it can be done partially, but I don't think one percentage can ever really capture all the risks.

I'm not sure I agree. I think this year was a bit crazy due to (1) the market in general going up up up and (2) the special-ness of BAC warrants. A good portion of most returns here were probably due to BAC and the 300+ page thread devoted to it, as well as Eric's insights regarding the cost of leverage between the common/warrants/options. This led to a lot of people moving into the options...hence the large upsides. I think most of the time this board is focused on cheap stocks. Packer's posts are a great example of this. I don't think he's ever suggested something trading at a EBITDA multiple > 6 ;D Finding cheap businesses and returning 20%/year during normal conditions is a skill more envious in my eyes than buying LEAPs during an awesome year for the market in general...just my 2 cents!

Happy New Year everyone! Thanks as always to Sanjeev and all the kind people on this board. To a happy and healthy 2014! ;D

He's just so rich that the only thing he can put major money to work in (with good future prospects and economics) is energy. Demand for energy isn't going down, not in this lifetime or the next. Solar, fossil fuels, all will benefit from increased demand. Hell, he may be following Munger's logic...generating as much renewable energy in the US for sale within the US.

Share your uploader name on Youtube perhaps? Found the way to do it (click the playlist you want to share, there is a "share" button which will promp you with a link. Here is my playlist of value investing videos I've accumulated: http://www.youtube.com/playlist?list=PLV-6FPX1lkKIou3WDcZnm_BtMZUUj4tm2

I there a way to share a playlist? I have a list of about 80 YouTube videos and I would be happy to share the list, if possible.

Fiat. I think a deal with Chrysler gets done later in 2014. To the market, I am about 15pct cash. I don't really hedge, IMHO cash is the best hedge.

http://www.smartplanet.com/blog/business-brains/icon-doug-morris-chairman-and-ceo-of-sony-music-entertainment/ Morris calls the incident his “favorite” mistake because it taught him a lesson about “how to really get the best out of an album and my own mistake, which I was happy to acknowledge because I was so wrong,” he said. The approach to obstacles sets Morris apart. “People make mistakes. Everyone makes mistakes,” he said. “As long as the mistakes aren’t intentional, there’s no reason to be upset by them.” This attitude, coupled with his interest in treating employees well, has given Morris an uncommon ability to hire and develop executive talent. “You want to set an example by always being there, and then you want to make them feel proud of their accomplishments,” he said. “You want to overpay them a little bit. But the truth is, you want to create an environment where people are motivated, are happy. There is no yelling in this company. The idea is never to give anyone a bad night, any reason to worry about Monday. That’s really important.”

I am certainly not an expert on FFH like many of the board members here are, but the way I view it is that the insurance operation offers two distinct benefits: 1. Increase the scale of Fairfax. This enables them to get better terms, participate in bigger deals, etc. etc. etc. Akin to increasing the AUM were they a hedge fund only. 2. Optionality. Eric mentions the 15% average. IMHO that is a 15% in relatively bearish times, or when constrained by the hedges. What happens if/when the tide changes? So if they can "break even" at 15% during the worst of times, then the insurance leverage should add some value during better times.

Merry Christmas and Happy Holidays from my friends and family to yours, everyone! ;D

The only way I see Mr. Market's valuation as being in the realm of accuracy is if there is growth ahead. Where is the runway? Are people going to stop buying from other home furnishing stores? Are Amazon, Target and Walmart suddenly going out of business? It's not like their offering is so niche that you can't find it elsewhere. I don't quite get it.

Personal products because there are so many psychological factors in play.

I use finviz.com for US screening...they cover other countries as well, though. Thanks for the wisdom, SD. I find my sweet spot is around the $100-300m market cap range. Small enough to be off most (but not all) institutional radars, but large enough that PE guys, small-cap activists, etc. aren't dissuaded. They also get some coverage by smaller sell-side research guys, which can help by piggybacking their marketing efforts to small-cap funds. Plus as Nate said, they're much easier to wrap my head around and consolidate all the relevant information for analysis. Check out the thread on FHCO in the investment section to see one such instance I took part in.

I voted 5-7x Ebitda and here is my rationale: I pretty much ignored the accounting numbers you provided and focused on this: -45 years old -60 stores -Sales in line with economic changes -Products available many other places, though it specializes in one category and does a good job at what it does 45 years old and 60 stores? OK,maybe they operate in a certain niche, which jives with the fact that they specialize in one category. But if that is the case, you would think sales would not be in line with economic changes. But they are...which to me is a red flag. So without knowing exactly what that niche is, I would say it's a somewhat boring retailer. And being a somewhat boring retailer is not the best business in the world...hence 5-7 ebitda multiple. Now I am preparing myself to be embarrassed :)

Ah the author appears! Thank you many times over, infinitee! :D

I agree: Especially when it's one of Buffett's "great businesses", that you can just sit on. Then it's better than cash because even when you can't find anything to buy, your great business is earning an excellent return on capital. So that 10% business might be a mediocre one, and once it's reached fair value or whatnot, you sit there earning a relatively mediocre return. So what's the benefit of holding it? Not much, so you sell it and now you're left with the same problem: having cash and either trying to find another 10% mediocre business to invest in. But that 20% business...if that's a real good business...you almost don't need to do anything unless prices get really out of hand.

This is what i've never understood about the need for an inflating currency. People act like there is no cost to holding a currency (even if it is deflationary). People make cost benift analysis everyday and just because a currency is deflating at 1 or 2% a year, doesn't mean i'm going to hold it forever. at a certain point the value of a new TV etc is greater to me than the deflating currency. The cost benift analysis certainy changes, but the idea that world would be perfectly fine in a 1 or 2% inflationary world...but would collapse in a 1 or 2% deflationary world always seemed odd to me. I don't think the 1-2%/year real costs are the worry, I think it's when something black swan-esque happens and there is real value to a measured inflating of the currency value. Ray Dalio's "beautiful deleveraging" comes to mind.

PlanMaestro's website has an excellent series on bank analysis. Also, the BAC A-Warrants thread.

I couldn't find the original post where this spreadsheet was uploaded, but here it is in google docs: https://docs.google.com/spreadsheet/ccc?key=0Ahf1UeW1kK_xdE9neWJTTDdUT1c0N3VaRGNpLW4wVHc&usp=drive_web#gid=0 All the fields highlighted in yellow are for user input. Essentially the spreadsheet converts the portfolio value into units, then adjusts the # of units when cash is added/withdrawn. You can of course change the index comparisons if your benchmarks aren't the S&P/Russel 2000. To whoever posted this in the first place, thank you!

How do you view bitcoin, given your economic stance? In the long term, what function does it provide? Secondly, let's assume a deflation/inflation neutral argument. What other advantage does bitcoin offer? I see the only real lasting impact being the ease of transfer. Essentially just putting pressure on banks/payment processors/etc to further reduce transaction fees. I see no real improvements in terms of currency usage nor "store of value"....i.e. if the US changed to bitcoin today, nothing in my daily life would improve.

This is my gripe with bitcoin's value in the long-term. There is value in having an inflationary monetary system where the levels of inflation can somewhat be controlled. Yes there are abuses...of course. But IMHO those potential abuses are (1) less harmful than the problems of not having those levers to pull in times of need, and (2) less harmful than the deflationary nature of how bitcoin is currently set up (with a fixed amount). Even gold isn't a totally fixed supply.

I use the spreadsheet which was posted by a member (I forget who...but you are a lifesaver!) on this forum a while back, which adjusts performance for cash added/withdrawn throughout the year to keep an apples-apples comparison.

38% YTD...no complaints here.

I usually suggest to my friends Intelligent Investor followed by Klarman's Margin of Safety (or Greenblatt's Little book), and then Buffett's partnership letters. II: Provides the basic framework MoS/Little Book: Provide real-world examples Buffett letters: Provides lessons from the master himself ;D

Thanks, hard to argue with free!