giofranchi

No Al, I am certainly not macro investing. Comparing prices with real earnings is not macro investing… even if you use a bunch of 2000 companies, instead of 10-15… It might be less precise, of course… but it is not macro investing. And at the end of Q2 2013, as you can see in attachment, US small caps were already priced to deliver negative returns on a 7-years time horizon… giofranchi GMO_7-Year_Asset_Class_Real_Return_Forecasts_June_2013.pdf

YTD FFH has declared ($1,234.9) million losses, all of which are unrealized. If it were reporting earnings like banks are, it would have declared practically no losses. Though this has clearly no impact on BVPS, earnings do exert a great influence on the multiple the market is willing to put on any stock: it is much easier to pay 1.3 x BVPS for a company that seems to be profitable, than for a company that seems to be losing money. Needless to say, I am very glad FFH reports earnings the way it does! :) giofranchi FASB-changes-FAS-157.bmp

How many percentage points FFH closes down today might be one of the best “stock market barometer” I can think of: If FFH stock price closes down more than 10%, this bull market might still march on undisturbed for a long time; if, on the other hand, FFH stock prices closes down less than 5%, that would be a serious warning sign for the health of the market. If this bull market marches on undisturbed for a long time, I will make money; if a serious correction comes, I will make a ton of money. ;D ;D ;D giofranchi

I cannot agree. --John Maynard Keynes I myself have written a few days ago that a correction of the stock price was very likely. Yet, I also said I haven’t sold a single share. Because long-term prospects for FFH are better today than they were yesterday: underwriting performance is really starting to provide better than free float! That’s what a long-term investor and an entrepreneur should be focused on. As far as valuation is concerned, ask Mr. Tom Gayner what he thinks MKL is worth, based on its long-term business prospects: he will answer in between 1.7 and 2 x BVPS. The same imo applies to FFH. Now, FFH yesterday closed at $436, and its BVPS is $334: it is selling for 1.3 x BVPS. Furthermore, and this is very important, today’s BVPS for FFH is very conservative: after remaining flat for 3 years, now we have this quarter in which the Russell2000 increased 10%… and the following drop in BVPS for FFH. (Think of it: 10% in 3 months… not from a deeply undervalued company, but from a whole market index, that four months ago already was way overvalued! Talk about stock market bubble…!). So, not only FFH is clearly not overvalued, it is not even fairly valued… instead, it is still undervalued. Of course, this is true, only if you consider its long-term business prospects. Instead, if you are able to jump in and out of FFH, like many on the board seem able to do, very good for you! You have foreseen correctly this terrible quarter and will be able to take advantage of the big drop, when the market opens today! Simply put: it is just not my game. :) giofranchi

I agree. Either the “smart money” is starting to smell something rotten in the air and piling on FFH, or stock price appreciation will soon be reversed. This doesn’t mean that I think FFH at 1.2xBV is expensive, because I think it is not, or that I am going to sell a single share, because I won’t. :) --John D. Rockefeller, Sr. giofranchi

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Sad sad sad piece of news… His music will stay with me for the rest of my life. giofranchi

Jay, great quote indeed! But I haven’t got to that one yet… I bought this book some years ago, after finishing “Poor Charlie’s Almanack”, but without the aid of an audiobook, I had always postponed its reading. Now that the audiobook is finally available, I am literally devouring it! And I am just quoting the most interesting ideas I encounter as the audiobook proceeds. Hope some people might find those ideas as useful as they are for me! :) giofranchi

On a micro level I agree: if you have a great idea, now is a good time to borrow! But on a macro level, I am not so sure… How is it possible that everyone has some good idea?! Anyway, I guess margin debt is just a way to judge how much complacency there is in the stock market right now. Therefore, I think it is useful as a comparison between market tops and bottoms. Of course, every time things are a little bit different… And there is always some apparently good rationale to believe this time things will work out better… But... let’s just say that it made me think nonetheless! :) giofranchi

Maybe… Anyway, I wouldn’t define 2007 as the end of “5 years of conservatism and prudent behavior”… And margin debt today is higher than it was in 2007… It might not be too big of a deal, but it makes me think nonetheless! giofranchi

1 picture is worth 1000 words, right? giofranchi

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Great! :) Great! :) giofranchi

Sincerely, I have no idea… The disclaimer was just meant as an example… And of course I will be investing in exactly the same companies I recommend! I guess the part of the disclaimer we will probably share is the following: Anyway, these are busy days and I haven’t find the time to check it out yet… But I will surely do as soon as possible! :) giofranchi

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Absolutely not! I will just write something like this: Recommendation: Buy this stock below this price, or Sell that stock above that price. Readers will then have to place their own orders with their own brokers. Actually, I have always thought that a simple disclaimer, like the one Agora Financial uses (see attachment), might be enough to prevent any legal issue… But I am going to delve deeper into this and make sure I won’t run unforeseen risks. Thank you very much! :) giofranchi Agora-Financial-Disclaimer.bmp

Good question! And I haven’t checked it out yet… Mr. Carraro’s firm is an investment advisor, so he will surely be aware of any legal issue that might occur. I will ask him as soon as possible! Thank you! ;) giofranchi

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Goldman: Entire S&P Move Higher Is Due To Multiple Expansion; Shiller P/E Says 30% Overvalued So... Buy http://www.zerohedge.com/news/2013-10-19/goldman-entire-sp-move-higher-due-multiple-expansion-shiller-pe-says-30-overvalued-s giofranchi

That's a great point. You are publicly building a track record with no capital down. From a business point you cant lose. You have no operating expense and it your results are above average this will be easy to scale up. Perfect asset light high ROIC business. Also little to no competitors in a niche business. You already research owner/operators so you are doing what you love. This could be a home run and a great win/win I wish you continued success. Thank you, Kraven, 50centdollars, and premfan! Those were exactly my own reasonings! :) Cheers, giofranchi

Thank you very much to all the great and useful feedback! Cannot tell how much I really appreciate your help! Ah! By the way, I forgot to mention that I have called my newsletter “The Superinvestors of Singletonville”… almost nobody in Italy understands what I mean… but you surely do!! ;D I will try to answer some questions: 1) The platform will provide nearly 10 different newsletters. Mine is just one (and, constructive, I will be writing my own newsletter, I will be the only one in charge of it, and I will receive 20% of the subscription fee for each reader who decides to subscribe to my newsletter), then there is a newsletter about bonds investments only, a newsletter about ETFs (I guess it is a sort of “asset class allocation” investment newsletter), there is also a cigar butt (deep value) investment newsletter, there is a trend-following newsletter, even an “ethical investments” newsletter (never heard about ethical investments before… and I am not sure how well they might perform… but some days ago dcollon sent me this piece of news and it sounds interesting: www.cnbc.com/id/101055952). All those other newsletters will be managed by people I don’t even know. They are all Mr. Carraro’s acquaintances, though I hope I soon will get to know them well too! 2) My newsletter will be divided into “free” content and “paid for” content: each week I will publish the description (a brief introduction to) of an owner-operator. And to receive that weekly document, it is enough to fulfill a registration on-line. It is free. This way I think I can put together an Index of owner-operators in little more than a year, and people will receive not only the names of those companies, but also some (I hope useful) information about their past track-record and their future prospects. Then, there is the “paid for” content, which will consist in the management of a portfolio of 10-15 companies in the Index. Those who subscribe will receive a monthly newsletter with results and news about the companies in the portfolio. They will of course receive alerts to buy and sell, every time I add or reduce a position. Both the weekly description, the monthly newsletter, and the alerts will be posted on the platform and sent by e-mail. 3) The service will be priced at 250 Euros per year. 4) The deal I have with Mr. Carraro is that I keep 50 Euros for each subscriber who wants me to manage his/her portfolio (or at least a part of his/her portfolio). If this sounds too generous, well, I am very glad! Maybe, it is because Mr. Carraro teaches a course inside the Master in Project Management of the Master School “F.lli Pesenti”, Politecnico di Milano, and I pay him good money for each lesson of his! Talk about synergies!! ;) 5) For now the newsletter is going to be only in Italian. And, should Mr. Carraro decide one day to publish also an English version, I wouldn’t recommend it to any of you… You all are clearly too well informed and too smart! For now the target is clear: people who still have difficulties with the English language + people who don’t like to manage their own money. That’s it! Thank you again to all of you! :) giofranchi