hyten1

damn it, in the middle of building a position http://www.bloomberg.com/news/2013-11-22/davita-spared-as-medicare-wipes-out-9-4-dialysis-cut.html?cmpid=yhoo

parsad, man you kick ass, that is awesome! lots of respect for what you did. hy The $25K was just to start Corner Market Capital and fund the original financing of the U.S. fund...we gave our family and friends 5% of the company for that! The total set up costs for the U.S. fund were actually quite reasonable for the time...about $12.5K...and it was amortized back to partners over five years. All three of our funds have been set up that way...the costs are amortized back to the partnership over 5 years. So essentially, we had about $12,500 left in Corner Market Capital when we launched that had to pay for all of our operating costs not paid by the actual funds. I also had a couple of good years with that $12,500, so essentially I grew it to about $20K in two years, while still using about $5K a year for operating costs. Now we have more than enough in investments and incentive fees in just the Canadian fund, where we can operate for the next ten years...and that's without bringing up any money from the U.S. general partner. So when these large hedge funds go out of business, I haven't got the foggiest clue where exactly they spent their money...must be on lavish parties, travel, office space and excessive staffing. Corner Market Capital and the MPIC Funds will not go out of business unless we choose to close and liquidate the funds...it certainly won't be because we can't afford the costs! Cheers!

parsad, 25k?! how can that be, the administrative/legal cost is almost hat no? hy

i know, i was wondering. what if the rule/law is you are force to covert to cash at the end of everyday and start afresh every morning (with no tax or transaction cost consequence of course) that would be interesting. i personally, periodically would do this same excercise mentally (it is not easy). I ask "what if i start fresh today, what would i buy, TODAY" forget about what i have. i try to do this every so often, but its not easy and taxes clouds the thinking or make it less straight forward. folks, is there some sort of general rule due to tax (I can prob figure this out, but i am being lazy) that is stock is over value by X% you should sell even taken into account taxes. what is X%? hy During the summer of 2008 I read one of Jim Cramer's books. The only interesting thing I found in there is that a trader once taught him to periodically just sell everything, go to 100% cash. Then, reconstruct the portfolio. The idea being that you tend to hold some positions just for psychological reasons that are no longer there once you are in cash. It clears your head was his point.

- if you didn't accidentally liquidate at $85 you would keep it - but if you accidentally liquidate at $85 you would not buy it back (assuming no tax consequence and transaction cost is $0) interesting :) i have to be honest, i too behave this way. but if you really think of it logically, its not logical. (but in the real world tax and transaction cost does exist, which makes this even harder) which one of the human faults (or multiple) does this fall under. hy

i don't see much inflation but i do see wage stagnation, which can cause many of the issue that people face the large increase in the worlds labor supply in the last decade or 2, plus the advent of the internet has cause certain group of folks income to stagnate or even decline. jmho hy James, I know amongst my circle of friends who are all early 30s professionals we're all experiencing inflation and wage stagnation. I've had countless conversations with friends, who are all conservative pay cash don't have debt types who have said they are shocked at how living costs have shot up on them. Groceries, insurance, everything has gone up, and raises have been in the 1% range. A big cost increase has been healthcare. My company is very generous, well, at least they were in the past with healthcare. Four or five years ago we had an all expenses paid PPO for about $250/mo, that plan now costs $700+ a month, or they offer a plan for $275/mo that requires employees to foot the bill on the first $3500 out of pocket. I agree that some things have stayed flat. I recently purchased a Macbook Air, the price was slightly less than what I paid five years ago for a Macbook. The new computer is much more powerful and better all around, and in real terms much cheaper. Airfare is highly city depenant. Back in 2006/2007 we used to fly from Pittsburgh to Florida for $150 round trip, we'd go often because it was cheap. Now a flight is in the $400 range. It's almost impossible to find a flight out of Pittsburgh for less than $200 round trip unless you're flying to a city within a 2-3 hour drive. Sure I can fly to Baltimore for $67, but by the time I drive to the airport and get there an hour before my flight I'd be 2/3 of the way to Baltimore by car, a deal if time is free. I know I've been told there is no inflation, or it's really low, yet somehow for us and our friends our money stretches less and less. And we make a sizable living. My brother has chosen to live a more modest life, for them and their friends the economic situation is dire. It's very hard to find a job, and expenses have risen considerably, they felt the pinch so much they decided to move to a city in the south with a lower cost of living. I can point to two items that I know have gone up for us, health care, and local taxes to make up for a shortfall in city revenue. Outside of that it's a number of small things that have all increased much faster than my wages have increased. Clearly this post is completely anecdotal, and it doesn't show up in any economic stats, but if I asked everyone I knew they would all emphatically say that wages haven't kept up with inflation.

eric i hear ya why you by puts (benefits are hedge, reduce capital gains) but the put is such a small percentage of your entire gains. How do you plan to realize ALL those gains? (this puts strategy is just a little bandaid). - Take the tax hit eventually (obviously timing matter, or spread it out) - borrow against your portfolio (pay interest to offset the cap gains) - i understand you might not completely ever realize the gain. - what else? hy

i always find it funny, its always either a "genius" or "idiot" how about just average

hielko, i hear ya and agree i guess the point is, eventually high dividend tax will hit you at some point. i understand you take tax into account as part of any investment (I wish i didn't have to, but oh well). but at some point it will hit you as you invest long enough. UNLESS you completely avoid paying tax in ALL your investment which is possible but might not be the most optimal. (maybe this assumption is not correct, maybe there is a way by setting up a holding company etc to completely avoid tax, completely, which i know nothing about) i guess it boil down to given you will get hit with the tax at some point, what do you prefer buybacks vs dividend etc. some poster here prefer buyback (given the high tax) but some dont. hy EDIT: if someone knows about the personal holding company and at what size of asset does it make sense to setup one up or any info about it, it would be greatly appreciated if you can share it with us. Tax situations differ for every person, buy you put yourself at a big disadvantage if you buy something that has a high tax rate for you, but a low rax rate for most investors. Sometimes not buying a certain asset class might be the best move: if you indeed need to pay a 45% dividend tax as an Australian on a foreign stock you are basically screwed by the government, and owning a dividend paying foreign stock is just not an option. But you might be able to work around the issue. Buying derivatives (such as options, or CFDs) could be a solution: their pricing does include the expected dividend, but since you don't receive the dividend you don't need to pay the tax and the party writing the option is most likely not paying any dividend taxes. Or maybe you could setup an offshore holding company. If you face high taxes you either have to find a way around it, or just not buy it in the first place.

hielko, i am curious, i don't see how you can avoid this. unless you actively avoid dividend paying stocks in your taxable accounts. unless you have a way to invest always in non-taxable accounts? or you only invest non-dividend paying stock in tax able accounts? because i have both tax able account and non taxable. my non tax able account is a lot smaller than my tax able. hy If you own stocks where you need to pay 45% dividend taxes you probably made a mistake buying the stock in the first place. You can't ignore your tax situation when you invest.

one aspect of teacher employment that need to change is tenure. i am not talking about university professors (that is another discussion). In NYC once a teacher reach tenure you are pretty much set for life, they can't fire you or its very very difficult to do so. so you have teacher of substandard quality getting high pay (while not doing much). when budget cuts comes around, these folks get to stay but the newly enter teachers (young, energetic etc.) get let go. "Once tenured, a teacher cannot be fired without due process. Technically, that doesn’t guarantee a teacher’s job for life. But in practice, the due process required to remove a tenured teacher is so burdensome and has such little probability of success that most schools don’t even attempt to remove the worst of them." also New York’s teachers are eligible for tenure after just three years.

eric, i hear and i agree in the sense that the system is prob not 100% fair, nor is it the best system but at the end of the day the cost of society needs to be paid, how the gov get that money definitely a complicated topic. i mean imagine a world were everyone or close to everyone has retired. now how will this society fund its expense (sales tax? capital gains tax?) in an ideal situation the gov should've save up in prior years in anticipation for all these retiree and use the saving to fund the society, but we all know that doesn't happen. gov gets paid, they spend it pretty much right away and then some. how do gov best get the money they need to pay for the needs of the society? also its important to remember you have to live somewhere, and living has a cost attach to it. that is why the property you live in to me is not truely an investment. i think people forget that (i am not saying you are) hy The have roads, fireman, cops, etc... etc... in Australia too. They have high sales taxes, high income taxes, etc... etc... But these are all things that tend to cost you less when you are in the dumps financially -- you don't pay sales taxes when you have no money to spend, and you don't pay income taxes when you have no income. So when you can best afford the tax, you pay it then. They don't prey on the weak broke homeowner like a sick society.

eric i hear your gripe about property tax, i hate it too ... but - who will be paying for all the services that you use, after you retire (roads, fireman, cops, etc etc.). will sales tax alone cover it? - another way to look at it, is compare to renting. i mean you have to live, unless you decide to hide out in the woods and start your own little society, you have to live somewhere, i think the better way is to compare to renting. owning vs renting, that is how i always compare my first property that i live it. now for real estate investments, that is another story hy

i think looking/searching for the next wmt or amzn or apple or whatever is futile. if its doable in a repeatable way (not just being lucky), i think whoever can do this will be the riches person on earth. the time and effort is better spent just looking for value just my 2 cents. EDIT: also you can easily figure out what the market thinks the next msft, goog, brk or whatever will be. many of these companies have very high valuations (nflx, tsla, etc.) i highly doubt value investors are willing to pay up for the potential. now the question is can you find the company that will be the next big thing, that the market doesn't think so.

any loan officier around there, i am very curious, what banks are looking for and what loans are they giving out (we are strictly refering to residential mortgages here). my understanding is residential mortgages is only 25% or so of the big banks loan vol.

eric, what you said make sense i am curious, who are the banks lending to (they are still lending billions)? what are these people's finances if they are not lending to erics relatives? hy

does anyone have any historical reference, in past raising rates environment what happened? also it depends on how fast the rates rise too, too fast would be bad for banks ... i think man there is just so many moving parts, how do you know?

people need not forget the massive increase in labor supply for the last decade or more from china/india etc.

One Idea, i think you have many assumptions to arrive at your conclusion: 1. you are assuming what ben graham and Walter Schloss achieved with net-net is the best that "anyone" can do. i would bet buffett can do better, that is just my opinion. 2. i think buffett said seek out net-net, did he said ONLY net net? i don't think so. 3. also i think folks need to be more flexible, as we all know stock market is a very dynamic and changing beast. even if buffett said net-net in 2013 (i just pick a year for illustration purposes) that doesn't mean things doesn't change. i would think buffett can make good money doing all kinds of things, more than most of us can achieve. buffett can prob thrive under various types of environment that many of us won't able to. also you can see this just by looking at history. before 1970's came along, buffett was making a killing, but when the situation changes he adapted (he closed his fund). the point is i am sure buffett can and will adapt. - also i think many know Walter had hundreds of positions and ben was very conservative and didn't get involve with management like buffett would and have done. just some example of things that buffett would prob do differently. hy

eric is this true? so you put money in, invest tax deferred, later on you inherit the money you put in you can then use it anytime without 10% penalty and you don't need to pay tax on your gains?!?

i always find it odd, hardcore porn is legal but prostitution is not, doesn't make any sense so basically i just sign up to be a porn star (there must be a easy way) and bam its legal hmmm this might be a biz, help folks qualify as porn star and get the prostitutes to qualify as porn star, bam

folks what are your thoughts on the risk of the gov changing the rules midway. i guess with any of these plans there is that risk. in order to completely eliminate the risk is if you have cold hard cash (after paying all taxes) EDIT: eric weren't you talking about this in some other thread (i can't recall which one) something about roth ira etc., having the gov changing the rules.

what is value investing? i think people pigeon hole or like to categorize things too much, like eric said "buy low sell high", i don't see how that won't work EVER.

palantir, i am a little confused, my DCF skill is not the greatest, but generally - you take FCF (not the per share value) from the firm, apply some discount rate and growth rate etc, you get a valuation for that firm - you divide that value by the outstanding share count (current outstanding share count) that gets you a value per share what the future holds in terms how much stock company buys back or issue etc etc is another matter. or am i missing something you are trying calculate FCF/s and discount that value? hmmm that sounds funky to me. hy Hyten, I agree, the issue is, when you do a DCF, what cash flows do you end up discounting? Company 1 (No buybacks) Makes 1M a year, no buybacks, also does not grow, makes 1M into perpetuity. Company 2 Makes 1M a year, buys back 20%, does not grow FCF either, but grows FCF/s due to buybacks. The way I see it, you have to value these very differently, for the first, you'd discount $1.00 every year with no growth in FCF/s. Whereas in the second you'd start with a base "Adjusted FCF" of $0.80 and project growth into perpetuity. The issue really arises IMO, with firms like IBM, who are growing very slowly, but are buying back hella stock. So there is a lot of FCF/s growth. However, the firm is also basically using all of its FCF in buybacks, so you can't really use all of that FCF to value the firm.

haven't sold anything for a while, looking to deploy the 40% or so in cash that i have burning in my pocket. the tax man clouded my judgement and prevent me from selling more stock recently (the tax bill is getting too high) still looking for the opportunity to deploy more cash EDIT: anyone with a HIGH conviction opportunity?