ItsAValueTrap

Did you get better execution with another broker? With IB, execution for OTCBB and Canadian stocks has been so-so. I don't really know a lot about it and where the orders get routed though. For Canadian stocks, TD Waterhouse seems to fill faster... maybe because IB doesn't post orders onto the major Canadian exchanges (???). But TD has higher commissions and will charge multiple commissions if the order fills over several days (and even if the fill is only 500 shares).

There is something like 20-30 companies dedicated to making money from retail orders. They just play the bid/ask spread game all day long (buy at the bid and sell at the ask). I could be wrong though because I don't have first-hand information.

Can you please elaborate on this? I'd like to know what specifically is bad about Etrade. Before placing a trade, I just view live quotes at atleast 2-3 brokers and then proceed to place a limit order. I'm sure that they have a bag full of tricks and I don't feel that it's worth the time to point out all of them. Regulations and markets are constantly evolving so the practices now are very different than the practices in the past. The most salient practices: 1- Avoid market orders. If you really need execution ASAP, use a limit order that is past the bid/ask spread by a little bit. Or just use a limit order and slowly increase the price. 1b- All or none orders are prone to abuse. That's why Canadian regulators banned them. 2- Most retail brokers will route your order to some internalization network (e.g. ATD, Knight, etc.)... there are 10-30 of these companies now. If you are trading a liquid stock with a bid/ask spread of only 1 cent, you can't possibly lose more than 0.5 cents/share to this. So maybe it's not a big deal. 2b- When you take liquidity with IB (you can set your order to "seek price improvement" too), you will sometimes get paid a negative rebate for many stocks. Retail brokers simply pocket these rebates instead of passing them onto customers. When you provide liquidity, you will often be entitled to a rebate. IB passes this onto customers. Ugh... I guess I will try to explain how the whole sub-penny front running and rebate game works. When you bid for a stock at $3.00 for 100 shares, you might think that you are bidding at $300.00. In reality, your order may be routed to some venue with rebates. Somebody buying your shares on NASDAQ might have to pay $300.00 plus a rebate of $0.29. Your bid is effectively $299.71. Suppose that the spread is 1 cent. The ask price on NASDAQ would effectively be $301.29. There are a large number of market makers that will try to constantly collect the spread, making a 0.53% profit on each flip. Due to competition among market makers (and other exchanges with different rebate structures), the effective spread is usually much smaller than this. Sometimess there is a negative rebate- you get paid for taking liquidity. The effective bid/ask might be $300.02 and $300.75. It'll vary from day to day, and fluctuate depending on the time of day (spreads are wide when the market opens). Retail and institutional investors aren't allowed to bid in sub-penny increments. So market makers can continually front run every other order on the exchange by jumping in at the last second and bidding $0.01 higher. (All this is computerized now.) Retail orders will likely get posted to NASDAQ or some other venue with high positive rebates (e.g. Knight, ISE, NYSE ARCA, etc.). It is likely that your order will only get filled if the rebate is paid. So, you will likely be the last in line to get your order filled (especially when market makers front run you by a sub-penny increment). Your broker will typically pocket the rebate. 2c- Many retail orders will have a split second delay... maybe half a second or less. This is because your broker is polling something like 30-40 different venues to see which one offers the best price. Maybe ATD is offering the highest negative rebate. Your broker will route your order to ATD and pocket the negative rebate. IB lets you choose. Some people don't like that split second delay from seeking price improvement. If you are providing liquidity, your order will go to an exchange. It is likely that market makers will front run the order via subpenny price improvement. Retail orders rarely go to an exchange. 3- NBBO rules are supposed to protect investors. There are many exceptions to them. I'm guessing that Etrade (or the company it routes orders to) exploits every one... because I ran into one of these exceptions with Etrade.

You can also use options to "collect" the full borrow fee, assuming that there is a liquid options for that particular stock. (Obviously SHLD has lots of liquid options.) The order execution with IB also tends to be very good. Many retail brokers play games with your order to generate additional profits. Etrade is awful; I don't know where Fido stands. 1- The interface has a learning curve. I've made some misclicks before... 2- If securities are sold in a margin call, they may sell the most illiquid securities first. 2b- Their margin rules can change, so you only have a few days to avoid a margin call.

Here's other examples where scuttlebutt could lead you in the wrong direction: Dollar stores like Dollarama MTY Food Group Dollarama is kinda ghetto. Many of the restaurants owned by MTY are kinda tacky. Taco Time is a bad knockoff of Taco Bell. These are some of the best performing stocks on the TSX. http://www.wem.ca/media/tenants/taco-time/taco-time-tenant-image.jpg *No position in either.

The problem is... every company tends to have its haters and its fans. You can look at: - Facebook pages - Glassdoor for employee reviews - Online blogs, etc. Usually there will be haters and fans. There are some companies which tend to attract a lot of hate because of the way the business works. e.g. Debt collection agencies rarely receive praise. 2- Just because customers like a product doesn't mean that the company will be profitable. e.g. the Delorean Sometimes delivering less value to your customers is necessary to have the highest profits. The most profitable companies may be the ones which are the most reviled and hated (maybe companies like Gamestop and people like Robert Kotick of Activision). *Short GME, no position in ATVI.

I think it really depends on what the company is doing. If a tech company is buying a company that is pretty unrelated to its current products, then it should be considered expansion capex. Ebay bought Skype... and later sold it off. That is not R&D capex. Sometimes tech companies will buy companies for their technology instead of building that technology themselves. You might look at Ebay buying Billpoint and then later buying Paypal (which replaced Billpoint). But even then... it looks a lot like expansion capex (with the benefit of 20/20 hindsight). The economic reality was that Ebay didn't succeed in cloning Paypal. So they bought out Paypal instead... booking lots of intangibles. 2- As a strategy, buying R&D isn't something that will work. A company could fire its existing development team (or just part of it) and try to buy software code from another company. But that would be completely stupid. The acquired code can't be combined into the existing product without a lot of work. And it's highly unlikely that another company will be working on exactly what the acquiring company needs. From a software development perspective it makes no sense.

Maybe the title of that article was a little misleading? It seems like these firms were both long and short IPO stocks... which should really be considered IPO flipping. (Jim Cramer advocates a similar strategy in one of his books.) I'm surprised to see the Ontario Teachers' Pension Fund Plan on the list. 2- I think that the real problem lies in the underwriters fleecing their clients on these IPOs. One set of their clients is getting ripped off to benefit another set of their clients.

Yeah it's expensive. But apparently Australia and Chinese coastal cities have even more overpriced real estate.

Profile --> Modify profile --> Buddies / Ignore list --> Edit Ignore List So now you guys know! (Though I secretly wish that trolls get warnings and then eventually get banned if they keep trolling.)

I'm starting to think that if you wanted to emulate Buffett, you'd go buy an entire insurance company. Kind of like Prem Watsa, though Watsa doesn't seem to have an obsession with first-rate businesses with first-rate management. If you look at Berkshire Hathaway, most of it is invested in private businesses. Of what remains, most of that is invested in a highly concentrated portfolio of (mostly) quality businesses. And then there are some random odds and ends like derivatives, corporate bonds, etc. I do agree that he's the Michael Jordan of investing and very difficult to duplicate. Ben Graham's method is easier to execute and probably makes more sense for most people. Warren Buffett makes very few bad investments and I think that's very, very hard to duplicate.

Yes managing less funds is better. But if you managed very little money, I don't think that it necessarily makes sense to focus on the absolutely smallest stocks. There are probably some gems hidden in there. But for the most part, a lot of the smallest stocks don't make sense. You have to pay at least $100-200k/year to be publicly listed for the auditor, board of directors, somebody to prepare financial statements, filing fees, transfer fees, etc. (Maybe if you are really cheap you can get that down to a little under $100k.) When the market cap is very small, that overhead hurts you. There are some delisted stocks out there where the overhead isn't a problem. 2- There's nothing wrong with applying Ben Graham's style to microcaps. I'm just saying that it is something that Buffett may not do a lot of. If Buffett had $1M, I think that he'd look at *every* company in an industry that he understands, even the large cap ones. The mid/large cap stocks have options that may be attractive. His stock portfolio would likely be mostly in small cap companies, but I wouldn't be surprised if he owned LEAPs or stuff like BAC warrants.

I'm not sure that he said that. He has said that buying Berkshire Hathaway was a mistake and that he should've probably bought a (well-managed) insurance company instead. Originally he made money using Ben Graham's investing style. Then he realized that investing in cigar butts works better if you have control over the company and can liquidate fast or realize the value of the assets quickly. Then he realized that it's better to buy wonderful businesses like See's Candies than it is to buy cigar butts. And insurance can be a wonderful business too, but only if the underwriting is good and only if their float is invested well. There'd be a large focus on buying private businesses. He'd probably buy stocks too through his insurance companies. 2- To me, there's a difference between Walter Schloss and Warren Buffett. Schloss' style is very close to Ben Graham's and I'm sure he'd invest in a lot of microcaps if he was managing less capital. But there's a reason why Buffett is in a league of his own. His preferred investment is a private business, not a stock.

The scraper is very cool. Unfortunately I think it will be very difficult to overcome certain limitations. - Sometimes ideas have a very specific timeframe or the author may recommend an exit of the stock. - Some ideas may be short ideas. Some aren't ideas at all... the person simply wants to know about a certain company. - Dividends and spinoffs can be tracked, but you'll probably need to use another data source. Perhaps look at valueinvestorsclub.com Its tracking system is more mature. I'd be curious if you scraped data from there and looked at the performance of VIC.

You can short both the bear and the bull ETFs. On top of that, you can rebalance daily. So it won't matter if markets trend or have excess volatility because you rebalance. This is actually a losing strategy because the ETFs have excessive transaction fees. They are not structured to trade liquid products like S&P 500 futures. They trade illiquid products instead. There is probably some kickback going on (e.g. "soft dollars") because they are selling out their shareholders. This is the reason why these ETFs are shorted and the borrow is in the mid single digits. 2- I agree with NormR that penny stocks lose an incredible amount of money, and that it's difficult to short them. I've lost money shorting penny stocks (that have gone to zero) because I've been bought in on the borrow. I only made very small trades just to see what the borrow is like... I never figured out how to make money shorting them. Another way to lose money is to index the TSX Venture, index chinese reverse mergers, etc.

Maybe there isn't a correct discount rate? However, there might be arbitrage opportunities available. Sometimes the implied discount rates don't make sense. The prices of assets often vary wildly in a single year... in practice, it often makes sense to take advantage of these mood swings.

Yeah, people have been working on automating mining machines for a long time. If you read a mine engineering textbook, it's one of the things that they mention.

I believe that Buffett has said that long-term bonds are a terrible investment right now.

Addiction to restricted substances is a huge problem, but I wouldn't be so quick to blame. Some people are legitimately trying to get themselves off illegal drugs. I think it's a good thing that the for-profit drug companies are trying to find solutions to that problem. Unfortunately, the current solutions (e.g. methadone) are almost as bad as the actual drugs. But I think that the net benefit on society is positive. The FDA does a pretty amazing job and they take all this stuff really seriously. *Once a drug gets approved, a lot of abuses do occur because the drug manufacturers are incentivized to price gouge and to sell as much as possible. This creates waste, certain drugs being overprescribed (e.g. DaVita and EPO, highly addictive drugs, etc.), etc. etc. Many companies try to defraud and game Medicare.

Sounds like DaVita... (a Berkshire Hathaway holding) I do think that unused product should be thrown away. From looking at DaVita, it is a good idea for nurses and dialysis techs to throw away unused product. A lot of them are worked to the bone and they take shortcuts in sterilization. (This is if the clinic doesn't have a lot of private-insurance patients.) If they aren't practicing good sterilization practices then patients will get infections and possibly die. What DaVita did is that they worked with their suppliers to buy medicines in packages that are unnecessarily big, increasing the amount of waste. More medicine "used" = more profits for the manufacturers = more kickbacks for DaVita. It's totally unnecessary waste. The private PBMs are actually fighting that type of waste. They won't pay for a pharmacy claim at all if the quantity is too much. Sometimes the PBMs go too far... if a medicine comes only in packages of 5 and the patient only needs 1 dose, sometimes the PBM won't honour the claim. 2- Surgery used to be a pretty dangerous operation until people learned about bacteria and sterilization. I wouldn't slam it as pseudo-science. It's about as scientific as it gets.

I don't see it as that unethical. Buffett's style is to buy and hold. I don't see anything wrong with buying the Washington Post. The paper had unusual integrity in standing up to the US government. Later on, they got into the education business. I think everybody getting into the education business originally had good intentions. Unfortunately, the for-profit education business morphed into something else thanks to the idiocy of the US government. *If you don't join into the private education party... you arguably aren't doing your fiduciary duty to your shareholders. *If you do join in... then you're taking part in an industry that became a lot more abusive. And far as Buffett goes, he says that he tries not to flip companies and tries to leave management alone. So it's not easy for him to turn his back on the Graham family. 2- DaVita and Goldman Sachs strike me as morally dubious. Both companies have paid very large settlements over improper conduct. DaVita has no problem putting profits ahead of patients, as demonstrated by their practice of overprescribing EPO. Goldman Sachs has a terrible reputation among the public. In my opinion, most of it is justified. And they do things that most people don't know about (e.g. market making) but is also very questionable (Goldman is the largest market maker around and skims a lot of money from retail and institutional investors).

Thanks for the link, very interesting! Personally I think that Einhorn is too overleveraged. What can happen is that both his longs and shorts will move against him. With 130-170% leverage, it can get ugly. Read Richard Sauer's book "Selling America Short". Or read "Trading with the Enemy" and then read Jim Cramer's book Confessions of a Wall Street Adict... guys like Jim Cramer have no problem with squeezing people out of the hedge fund business.

Apparently co-axial cables will still be more cost effective? From the node to the home, you have a choice of: -telephone wire -cable (coaxial) -fibre -Other (power line, wireless, etc.) By the time Alcatel Lucent rolls out its product, there may be a coaxial product that is just as fast if not faster. 2- Check out Netflix's ranking of ISP speeds: http://ispspeedindex.netflix.com/usa Fibre holds the #1 spot, followed by cable. Verizon Fios is at #6.

The industry currently has too much capacity. For example, POT isn't running its Patience Lake operation at full capacity. World potash capacity is expected to go up by roughly half over the next several years. Most of these guys have publicly announced their expansions and I think that a lot of the capacity in the works will come online.

That's a skill you can learn. A lot of memory techniques involve converting difficult-to-remember stuff into things that are easier to remember. For example, you can concoct a story that is something like the following: Once upon a time, there was ONE HEART. It was a heart that had to be buried into the ground with FOUR SPADES, because four is an unlucky number. Everybody at the ceremony was from TWO different CLUBS: the village of graham and dodd and the church of Jim Cramer. etc. etc. If you look on Google you can find better memory systems.