JBird
-
Posts
529 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by JBird
-
-
Can you comment on what the indexes should logically be priced at? Given the earning power of say the S&P 500 and where we are with interest rates, what is your calculation of the intrinsic
value of the index (or even a broad range)?
And if your answer is that the indexes are overvalued by x, I would ask why that changes your behavior in actively picking individual stocks?
80% or less of total market cap to GDP. Ask yourself what the total US Market Cap to GDP is presently.
It does not change my behavior, but my ability to find undervalued opportunities, as they are fewer and harder to find. Cheers!
I hope this doesn't sound pedantic, but why 80%? I would love as many details as possible.
-
Can you comment on what the indexes should logically be priced at? Given the earning power of say the S&P 500 and where we are with interest rates, what is your calculation of the intrinsic
value of the index (or even a broad range)?
And if your answer is that the indexes are overvalued by x, I would ask why that changes your behavior in actively picking individual stocks?
-
I'm getting more and more freaked out about what I see in the markets. Cash is flooding in...great, because the funds are up big...but very, very disconcerting as investors continue to accept very low risk premiums. The cash continues to build!
Anyone else getting worried? Cheers!
Why worry? Worry about what?
-
Quantitatively, how much can Berkshire lag the S&P and still make sense to hold because of taxes?
-
A very good question to be asking.
The impression I got from listening to them at the meeting was that failing this test would not immediately change their dividend policy. Buffett simply stressed the importance of creating more than a dollar of market value for every dollar retained.
-
5 am central time
-
What do you mean by leave it open to potential?
-
Here is another question,
A $1,000,000 stock price for one A share is a real possibility over the next decade or so. Given your thoughts of being inclusive of the small shareholders (like you shared during the BNI purchase) which created the <$100 B share, what are your thoughts around the BRK shareholder base when the Million dollar A share becomes a reality? Even today there are people who cannot mentally deal with a $100,000 dollar stock price. Will the Berkshire of tomorrow deal with this issue the same way you have?
For people that didn't attend, this was the last question asked at the meeting. The answer was, we're not going to change.
Longinvestor, was that you asking it?
-
I agree the questions could have been better and shouldn't have stayed on the economy for so long. What were some of the good Wesco questions?
-
Thanks for posting
This video reaffirmed a long held notion for me: Charlie Munger is my favorite human being.
-
Racemize, I'll be at the meeting tomorrow. If you want to meet up during or after send me a PM, I'll give you my cell #.
-
"I think if it’s cheap enough, you can afford more country risk or regulatory risk. It’s not complicated." Charlie Munger, Berkshire Meeting 2004
I did a writeup on Lukoil that's in the investment ideas section.
-
For me, the beauty of it is that it requires far less time and effort than rote memory techniques. It does however require lots of creativity and imagination.
-
How do you use your list of mental models?
Lesser question, how did you derive your list?
You are asking really intelligent questions. I adopted the idea that learning the models would be useless unless I applied them to reality all the time; because of course, all skills attenuate through disuse.
I generated my list of models first by studying Charlie Munger's lessons, and by reading every book he's ever recommended. I also studied other sources like Farnam Street. Then I wrote down all the models that obviously had explanatory and predictive power. (This is such a simple idea)
Then I had to make the models easily accessible memory-wise, so I used the linking method and then created a memory palace for them.
When I'm making any kind of meaningful decision, I go through my checklist by walking through my memory palace. And of course the more I do it the easier it gets.
What this mental routine has done for me is perfectly ridiculous. I can never thank Charlie enough for the gift he's given me.
-
Same ideas I'm talking about, articulated better coming from a Harvard Law professor.
-
I don't have a good answer to that, LC.
What I'm curious about is if others have observed this type of situation and how they explain it.
-
I live near a restaurant that has valet, and recently the valet was robbed at gunpoint. In response to this, the restaurant owner hired an off-duty police officer to stand around the valet box in the evenings and basically just patrol. Additionally, the valet’s started to bring personal weapons to work. After a week without further incident, the restaurant owner ended the officer patrol. After another week the valets stopped carrying weapons.
This sort of incident has brought up an issue of wisdom I’ve considered over and over. After an event such as this robbery, there is almost always an increased awareness and sensitivity to danger. Subsequently, there’s a period without incident that leads to a desensitization of risk where security standards are again relaxed.
Running down the checklist of psychological models of misjudgment, it seems that few of them apply. 1) Availability-misweighing bias. 2) Bias from insensitivity to base rates 3) Stress-misinfluence.
I’ve tried to look at the problem from the perspective a risk manager. If the real probability of a robbery is 1/1000, it seems reasonable to spend the time/effort on security that is commensurate with that probability. If circumstances change and risk goes up to 1/500, increase security by the appropriate amount. I just wonder in this case, if the risk of robbery went up enough to warrant the hiring of a police officer (or bringing weapons to work), how did it go down enough over the next 7 days to warrant ending that service?
The question of course is, is this rational behavior? Have you observed this phenomenon?
P.S. Credit to Shane from Farnam Street for helping me identify the applicable mental models.
-
What I'm seeing in this thread is admirable. Individuals are pursuing wisdom, discussing it intelligently, and appreciating the learning process. And of course, if this were done more often we'd be living in a very advanced civilization.
-
"Mr. Buffett, you have said in the past, in your letter regarding the stock market in 1999, "you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%".
Corporate Profits are now greater than 10% of GDP--how should we think about this?
My vote as well.
-
I would ask: In your annual letter you expressed confidence in Berkshire increasing intrinsic value faster than the general market. At what rate, roughly, do you believe the S&P will compound at over the next 10 years? And why?
-
Scenario 1:
A) I buy a stock at 150% of intrinsic value
B) It pays a $1 dividend and I pay 30% tax on it.
C) I have 70 cents of cash
Scenario 2:
A) I buy a stock at 150% of intrinsic value
B) It uses that same $1 to repurchase shares and I in turn sell $1 worth of shares (no tax due)
C) I have 100 cents of cash
So it's much better to buyback shares when stock is heavily overvalued (if the alternative is dividends).
If XYZ buys back 10% of its stock at a 50% premium to IV, the IV of all the remaining shares decreases by 5%. If I understand you, you prefer this route to dividends with the idea that you're better off for having avoided a dividends tax?
Of course, the alternative for capital allocation isn't just dividends.
-
other than looking better how will this improve the efficiency of the forum and the readability???
What will the possible second order effect will this cause ?
How can this go really badly ?
Is it better to do nothing ?
I very strongly applaud your thinking process.
Can't take credit non of these are my ideas. Mostly borrowed from Charlie.
A man who adopts wisdom is worthy of much praise; he is in rarefied air.
-
other than looking better how will this improve the efficiency of the forum and the readability???
What will the possible second order effect will this cause ?
How can this go really badly ?
Is it better to do nothing ?
I very strongly applaud your thinking process.
-
I'm disappointed this cap is even being proposed.
I'm Eric's newest fan.
I Worry About "The Shot Heard Around The World"
in General Discussion
Posted
Did you pick the 80% figure because the Guru article posits that as a fair value, or do you agree with their underlying logic?
If you agree with their logic, do you also agree that returns will average 2.5% over the next 8 years?