JBird

Hahahaha! Thanks for posting Liberty. Just phenomenal work by SpaceX-- such a pleasure to watch.

Then why do you own the stock?

Why? So you receive $1 in dividends, and you net 85 cents. Have you thought about what rate you would have to compound at to make this sensible? If Berkshire compounds at 10% for a decade, you need to compound your dividend proceeds at 11.8% just to match Berkshire's performance. If you're in the top marginal tax bracket paying a 20% tax on dividends so you'd have to compound at 12.5% to break even. Are you hoping for a dividend because you have so many other better investment opportunities?

As of Feb 29, 2016, the market value of DJCO's stock portfolio was $109 million. The portfolio consists of $74.6 million in WFC (68.5%), $28.8 million in BAC (26.4%), $5.4 million in USB (5%).* I estimate the intrinsic value of the Daily Journal by summing its stock portfolio valued at market ($109 million), plus excess cash (~$5 million) minus its margin loan ($32 million), plus the intrinsic value of the legal publishing business ($5 to $30 million), for a total of about $90 to $115 million. That's $80 a share. DJCO is valued at $275 million and has an implied valuation on the legal-publishing business of ~$190 million (DJCO market cap - stock portfolio + excess cash - margin loan). I think DJCO is a reasonable short-sell candidate. To hedge shorting risk, and to short the valuation of the legal-publishing business specifically, one would short DJCO and go long the DJCO stock positions in proportion to each stock’s representation of DJCO’s market capitalization. Put on the following trade: 1) Short $X worth of DJCO 2) Initiate a long position in WFC worth .27 of X, a position in BAC worth .10 of X, and a position in USB worth .02 of X. Finally, 3) As the implied earnings multiple on the legal-publishing business collapses from 190 to say, 40, the short should be covered and the long positions sold. This short trade has roughly 55% upside, less borrowing costs (which are currently zero). In order to sustain a permanent loss of capital on this trade, the earnings from the legal-publishing business must grow to justify and then exceed a $190 million valuation. I estimate that in order to do so the earnings must compound at 30% per annum for at least a decade. It's worth noting that a true groupie and cloner has taken an enormous position in DJCO and may be partly responsible for the current stock price.** If you have any disconfirming evidence I'd love to hear about it. * http://whalewisdom.com/filer/daily-journal-corp#/tabholdings_tab_link ** http://whalewisdom.com/filer/rwwm-inc

It's important to note at the bottom of page 4 of the letter that all earnings are stated on a pre-tax basis. If I remember correctly from the AGM a couple years ago, he thought the operating businesses in aggregate were worth 8 or 9 times pre-tax earnings. So the calculation would go more like 160k + 99k. $170 or so per B share.

Just click on the hyperlink that he attached. When it opens the new page, at the bottom click Pages. The follow up page is 7 pages after the first. And thanks so much for sharing!

Whether Buffett or Munger agree with this or not, what you've said is totally correct. To be rational is to behave in accordance with logic or reason. There's nothing mutually exclusive about behaving rationally and having a lot of fun outside of work-- and in having a good work-life balance. If your definition of rational is to be money-obsessed and devoid of emotion, then it's time to revisit your definition.

Thanks. I sent you a PM

I'll post my full-length audio clip as soon as I can figure how to transfer the damn thing to my computer. Here's the highlight of the meeting for myself: Me: Hi Charlie, I'm JD from Phoenix. At Berkshire last year you said that rationality was one of the things that was most important to you. What advice can you give to someone who's looking to improve his own rationality? Charlie Munger: Well I say if you start working at it young and keep doing it until you're as old as I am, that's a very good idea. It's a very good idea, and it's a lot of fun-- particularly if you're good at it. I can hardly think of anything that's more fun. I think I have a lot of cousins in this room, and--and I can say you're on the right track. You don't have to be the Emperor of Japan to get fun out of rationality. You can avoid a lot of hopeless messes, you can help other people scramble out of their messes, you can be a very constructive citizen if you're always rational. And being rational means you avoid certain things. It's like, I don't want to go where the standard result is awful. Where is the standard result awful? Try anger. Try resentment. Try jealousy. Envy. All these things are just one-way tickets to hell. And yet some people just wallow in them. And of course it's a total disaster for them and everyone around them.

Thanks for posting-- that's great stuff.

Time weighted return is ridiculously hard to do by hand. Thankfully Schwab does it for me.

Huh?? I have no position on the best means of space travel whatsoever. What did I say to even hint that I did? I just asked you a why question...

Not clear when they will get there or even if they are planning to. I just read about Falcon Heavy last night on SpaceX's website. "When Falcon Heavy lifts off next year, it will be the most powerful operational rocket in the world by a factor of two. With the ability to lift into orbit over 53 metric tons (117,000 lb)--a mass equivalent to a 737 jetliner loaded with passengers, crew, luggage and fuel--Falcon Heavy can lift more than twice the payload of the next closest operational vehicle, the Delta IV Heavy, at one-third the cost." http://www.spacex.com/falcon-heavy

Cardboard: What they're are doing seems incredibly complex and I guess cheaper but, wasn't the space shuttle a more novel idea? They were re-using the space shuttle that was landing on almost a regular airport runway. Elon: A lot of people think it was reusable—but the main tank was thrown away every time. Even the parts that did come back were so difficult to refurbish that the shuttle cost four times more than an expendable rocket of equivalent payload capability. Cardboard: Ok. So what about some kind of plane that is able to take-off. Seems to me like it would be a much safer, cheaper and reliable way to fly people and payloads than the current method. Why does it seem cheaper and safer to you? I'm surprised that anyone on this forum has such expertise in aerospace engineering. What is your professional background?

"Apologies for any typos" LOL Came across this from Jeff Bezos on twitter. "Congrats @SpaceX on landing Falcon's suborbital booster stage. Welcome to the club!" Pitiful.

I was in my apartment by myself, shouting at a descending rocket. This was completely amazing!

Operating within a sufficient reward system seems to be the critical factor if you're going to keep the learning machine turned on for long periods of time. I think for the most part, successfully engaging in an activity that requires sustained effort over long periods is going to require a serious amount of reward and reinforcement from your peers. Serious bikers ride with other bikers. Serious scientists collaborate with other scientists. I don't think wisdom-seekers are any different. Sitting on your ass and reading takes some effort. Remembering the big ideas and applying them to your daily routines takes some effort. When I first began learning the "Buffett / Munger" mental models, the ideas resonated so strongly with me that the chemical reward for learning them was in itself a sufficient feedback loop to continue learning. Over time that's waned. I look at the base rates for individuals who have an active interest in this sort of thing, and hope tends to fade. But I guess that's life. Like William the Silent said, it's not necessary to hope in order to undertake.

What is a value index fund?

Always insightful. Thanks Eric

Buffett did say in 2004, "Clearly, Berkshire’s results would have been far better if I had caught this swing of the pendulum. That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, it’s the windshield through which investors must peer, and that glass is invariably fogged. Our huge positions add to the difficulty of our nimbly dancing in and out of holdings as valuations swing. Nevertheless, I can properly be criticized for merely clucking about nose-bleed valuations during the Bubble rather than acting on my views. Though I said at the time that certain of the stocks we held were priced ahead of themselves, I underestimated just how severe the overvaluation was. I talked when I should have walked." I've learned so much from Buffett it's wonderful to reflect back on. Only Charlie Munger and Elon Musk have helped shaped my life and worldview as much as he.

I've taken the 7, 63, and in process of taking the 66. As a prospective investment advisor representative, you must be operating under an Investment Advisor (IA). They'll give you the ID #. The exception to this is if you are the IA. If that's so, you'll be filing Form ADV with either the SEC or one or more states. If that's the case you probably wouldn't be asking the question. Feel free to PM me.

First time I've ever cursed out loud reading the morning news. Sad to see that happen, and hope they bounce back quickly.

I think this is a great thread idea. I'm really looking forward to Tesla's autonomous driving systems for a) convenience and b) safety. As long as the price is reasonable I'm a buyer.

http://www.wsj.com/articles/the-hole-in-the-rooftop-solar-panel-craze-1431899563