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boilermaker75

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Posts posted by boilermaker75

    Tesla Model S Named Automobile's "Car of the Year"

    in General Discussion

    Posted

    Signing paperwork today and about to pay the money for my Model S.  But that's not why I'm posting this...

     

    The California sales tax exceeds my tax credits.  So there is no subsidy, don't worry fellow taxpayers.

     

    Sigh...

     

    Recently they brought online new Supercharger stations in Buellton and Atascadero.  So now I can pick up the car at the Fremont factory, get a tour, and easily drive it home without worrying about public charging stations.

     

    I don't live in CA, so the CA sales tax you paid does me no good! ;) Actually, my daughter lives in West Hollywood, so it is helping her.

     

    I'm old enough to remember when IN first adopted a 2% state sales tax. Our current rate is 7%. I know from visiting my daughter you have it worse.

     

     

    If your daughter: has a job; has a significant other with a job; and/or  lives off of invested capital earning a return;

    then CA taxes are most certainly not helping her.

     

    She has a job and owns property. So she is paying CA income tax, CA real estate tax, and whenever she buys anything CA sales tax of 9% in her area. So yes just her CA taxes are a significant amount.

     

    I often joke to my wife after we return from a trip to visit our daughter and buy something that the sales tax in CA would have been more than the item, or service, cost here in IN.

    Tesla Model S Named Automobile's "Car of the Year"

    in General Discussion

    Posted

    Signing paperwork today and about to pay the money for my Model S.  But that's not why I'm posting this...

     

    The California sales tax exceeds my tax credits.  So there is no subsidy, don't worry fellow taxpayers.

     

    Sigh...

     

    Recently they brought online new Supercharger stations in Buellton and Atascadero.  So now I can pick up the car at the Fremont factory, get a tour, and easily drive it home without worrying about public charging stations.

     

    I don't live in CA, so the CA sales tax you paid does me no good! ;) Actually, my daughter lives in West Hollywood, so it is helping her.

     

    I'm old enough to remember when IN first adopted a 2% state sales tax. Our current rate is 7%. I know from visiting my daughter you have it worse.

    IV... and your estimation

    in General Discussion

    Posted

    If the intrinsic value of a company never changes, then all companies that ever existed, exist today, or will exist in the future have the same IV. Eventually they will all be worth zero.

     

    However, before they are worth zero, they potentially will distribute earnings.

     

    That is true, but as they distribute earnings the IV changes.

     

    One thing for sure, the IV of all companies will cease to exist the day I die!

     

    The Berkshire model of sweeping the earnings and allocating it to purchases of new businesses reduces the chance of zero.  The more independent businesses they own, the less likely that they will all be zeros at the same time.

     

    Now, if Berkshire instead were to buy back shares with the earnings, they would be doing nothing to reduce the probability of the shares being worth an absolute zero.

     

    How do you think about the IV of BRK? Did the IV change when Buffett bought BRK? I believe Buffett has referred to his purchase of BRK as an investment mistake. So did the chance event of Buffett buying BRK change the IV? Did BRK go from a possible zero IV to whatever it is today?

    IV... and your estimation

    in General Discussion

    Posted

    If the intrinsic value of a company never changes, then all companies that ever existed, exist today, or will exist in the future have the same IV. Eventually they will all be worth zero.

     

    However, before they are worth zero, they potentially will distribute earnings.

     

    That is true, but as they distribute earnings the IV changes.

     

    One thing for sure, the IV of all companies will cease to exist the day I die!

     

    The Berkshire model of sweeping the earnings and allocating it to purchases of new businesses reduces the chance of zero.  The more independent businesses they own, the less likely that they will all be zeros at the same time.

     

    Now, if Berkshire instead were to buy back shares with the earnings, they would be doing nothing to reduce the probability of the shares being worth an absolute zero.

     

    Until the sun red giants and they are all burnt to a crisp, lol.

    IV... and your estimation

    in General Discussion

    Posted

    If the intrinsic value of a company never changes, then all companies that ever existed, exist today, or will exist in the future have the same IV. Eventually they will all be worth zero.

     

    However, before they are worth zero, they potentially will distribute earnings.

     

    That is true, but as they distribute earnings the IV changes.

     

    One thing for sure, the IV of all companies will cease to exist the day I die!

    IV... and your estimation

    in General Discussion

    Posted

    They flutter behind you your possible pasts

    Some brighteyed and crazy some frightened and lost

    A warning to anyone still in command

    Of their possible future to take care

     

    A very underrated album.

     

    Don't those lines seem especially well suited to investors?  This is the kind of stuff Bill Gross would add to his newsletter for color.

     

    Intrinsic value is The Final Cut!

     

    I prefer:

     

    So you run and you run to catch up with the sun but it's sinking

    Racing around to come up behind you again.

    The sun is the same in a relative way but you're older,

    Shorter of breath and one day closer to death.

     

    Me too, and I often quote the line, "And then one day you find ten years have got behind you. "

    IV... and your estimation

    in General Discussion

    Posted

    I added the bold, because I think it represents some confusion.  No one is arguing that the one IV was "destined to happen", that is, it couldn't have been another value.  Rather, the claim is much weaker: it will be some value X, and no other value.  To me this seems to be above reproach.

     

    This is independent of wave functions or any other deliverance of the physical sciences - in fact it they have nothing to do with the question.

     

    "I disagree.  IV doesn't change.  Your perception of IV changes along the turbulent path of discovery.  You keep trying to predict the unpredictable, and blame it on the IV of the business rapidly changing.  No." - Eric

     

    Doesn't Eric's comment "IV doesn't change" imply that IV couldn't have been another value?  I have issue with that.  IV can and does change.

     

    +1

    IV... and your estimation

    in General Discussion

    Posted

    There are multiple estimates of intrinsic value.  The presence of estimates to IV does not refute the existence of a single IV.

     

    "Possible" suggests "it could be this, or it could be that, or it might be this other thing, or perhaps that other thing".

     

    There are multiple "this".

    There are multiple "that".

    There is only one "it".   

     

    People are effectively arguing that if there exist multiple possible guesses at the answer (most likely none of them exactly correct), then there cannot be one unknown precisely correct answer.  That's flawed logic.

     

     

    There are not multiple possible guesses at IV, but multiple possible IVs. The wave function will collapse to one particular IV when the observation is made in the future, but this does not mean that IV was destined to happen.

     

    Or in a many-worlds interpretation you might have BRK with a market cap of $1 trillion at some fixed point in the future in 60% of the universes, but BRK is bankrupt in 0.00001% of the universes.

     

    IV... and your estimation

    in General Discussion

    Posted

    I think a more accurate description of a single intrinsic value would be the following: There is only one intrinsic value for a single point in time. Think of the following example:

     

    You build a factory and it becomes more and more efficient each year, thus its intrinsic value is growing each year. After 100 years, there is an accident at the factory and it explodes into smithereens, rendering it completely and utterly useless. At time = 100 years, its intrinsic value is zero. Does that mean it wasn't worth building in the first place? Or do you do a discounted cash flow analysis? Do you include year 100, where cash flow is zero? Or do you ignore year 100 and do your analysis up to year 99? Whether you include year 100 or not, you get a different intrinsic value.

     

    So it all depends on your end point in time, even if you have perfect knowledge of interest rates and cash flows. You get a different answer, depending on if you sell the business at year 99 for lots of money and thus realizing your return on investment, or you sell at year 100 for 100% loss.

     

    Exactly. Plus every year there is some probability the plant will blow up. Maybe a 1% chance that it blows up in year 10. So if you could restart at the initial point in time 100 times one of those time-lines the IV would be zero in year 10 and 99 time-lines it would not. Saying there is one IV is equivalent to saying your whole life is predestined and that your decisions just don't matter because they are pre-determined. I have used quantum mechanics in my career and my belief is everything is probabilistic.

    What are you buying today?

    in General Discussion

    Posted

    Rimm's "intrinsic value" is likely dropping....why would you buy more? People seem to assume that IV is fixed and certain while price is variable....but IV seems to be pretty variable when it comes to these tech stocks...

     

    I disagree.  IV doesn't change.  Your perception of IV changes along the turbulent path of discovery.  You keep trying to predict the unpredictable, and blame it on the IV of the business rapidly changing.  No.

     

    To get the IV prediction accurate with a higher batting average, and thus fewer investment mistakes, stick to businesses that are more predictable.  (that's a "Duh" comment).

     

    I guess that by definition of the term "predictable business", you then realize that your IV number is a "prediction of the business"... well, more of the obvious.

     

    I would say IV changes in some cases and doesn't in other cases.

    For example, due to the fact that AMZN is trading at extremely inflated multiples for prolonged time, it is able to issue a small amount of equity to do a lot of things. The IV increase whenever it issues the equity at such extremely inflated multiples. You can run some simple math. Suppose AMZN's book value is $10 per share, and it issues equity at $200 per share and doubles the share count, what is the book value now? It is $105 per share! Who can create value faster than this? Buffet clearly cannot! ;) Then if the market thinks OMG, AMZN is much cheaper now than before, buy a ton! Then the stock price will jump to maybe $400.

     

     

    Those kind of companies' IV has little to do with BV and thus the effect on IV is much smaller. It's substantial but I don't see how they could exploit this forever. Do you have examples of extreme cases that were able to double share price a few times? I doubt they are out there and if they are it simply won't be for the capital injection but market perception of the company / simple momentum.

     

     

     

    OT: Bought some ITM SD leaps.

     

    Is CRM not a good example? They are making reckless acquisitions, so eventually they will go really bad.

    But assume they can issue shares at such extreme multiples and have our champ ERICOPOLY on the board to manage all the acquisitions, won't you agree that over the past few years, their IV would be growing?

    My point is, when these kinds of ridiculous companies trade at 100x IV, and they issue shares to acquire companies trading at 0.5x IV, doesn't this increase their own IV significantly?

     

    The future is the future.  On a rolling basis, it is revealed.  Intrinsic value didn't change, you merely witnessed managerial actions that were part of a past future, and this were always reflected in IV. You merely updated you estimate based on revealed information.

     

    To more accurately estimate IV, you need to listen to Buffett's list of what he looks for in an investment with low hurdle.

     

    I think the future is more probabilistic than that. If you could restart today 100 times and let the future unfold, I think you would get 100 different futures and hence 100 different "IVs." Probably some very drastically different IVs. At any initial set of conditions, the best you can do is your best guess at the most probabilistic IV.

     

    For instance, in 20 years the probability of BRK's IV being > $1 trillion might be 90%, but the probability that BRK is bankrupt might be 0.00001%. (I made up these numbers as I was typing.) So either might unfold, but I know where I am placing my bet.

    Strategies for Patience

    in General Discussion

    Posted

    Cool ideas, based on the responses I'm guessing everyone invests full time or is a professional?

     

    I do this on the side, amazingly there are still plenty of cheap companies to pick through, maybe I'm just looking where others aren't or my standards are lower.

     

    The market increase has been nice, I've been working on launching a startup and haven't had as much time to research as I normally would, my time is all going into the startup.

     

    I also have a full time job and invest as a hobby (obsession?).

    Cannibals

    in General Discussion

    Posted

    Guys (girls),

     

    as promised please find a list of 741 companies generated with the following formulas:

     

    BB1: Total decrease in Cap Stock/MCAP

    BB2: Total decrease in Cap Stock/MCAP in Y1

    BB3: Total decrease in Cap Stock/MCAP in Y2

     

    So BB1 is for the past year, BB2 for a the year before and BB3 for the year before. The companies included have each of these three measures < 0 (which means buyback in bloomberg language).

     

    For your comfort I have provided the prices of the stock per year and included a rough FCF/EV metric (as calculated by BB analysts).

     

    The red lines are clearly erronous formulas of some kind but I let them in anyway. Should you notice any mistake or come up with a better metric, please let me know, I think there is still some finetuning to do :)

     

    Happy investing

     

    Wow, thank you very much!

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