LongHaul

Uccmal, Haha. No I am not the friend. I thought I would just help advertise his business as I think he has already helped people in the oil and gas area. I have actually never invested in oil and gas in my life and know little about it. My friend will be in Omaha if anyone wants to meet him. Good guy and can often cut through the total nonsense that gets sold to O&G investors by mgmt teams that are full of BS, lying etc. I generally think consultants are BS but if one has specialty technical expertise that can add a lot of value in a specialty then it can help a lot. And your 25x was spot on regarding the S&P 500. Index Funds may makes sense at most times - but not at 25x. That is a ripoff.

As a general rule when you hear a lot about something it is usually too late and overdone and I think the S&P 500 is currently like that. It is a similar theme to history. Stocks get overvalued - investors lose a lot and get scared and sell cheap. The S&P 500 is very overvalued in my opinion and most people don't have know what the S&P 500 really earns or approx what it is worth. People are acting like there is no risk out there. But fear can spread in a flash. Nice point about August 2015. Markets got a whiff of fear about China and tanked quick. Here is something to think about - if there is a housing boom that should of went bust in year 5 but then went to year 10 before it busted what are the effects? I think this is what has happened.

Hilarious Parsad! I must of missed the conservation of flakes law in my physics class! Great advice John H. It is also a great competitive advantage to be responsive vs. people that flake out. Flakes lose opportunities left, right and center and they don't even know it.

From my perspective I think times have changed in the last 20 years or so and I think people are more flaky than they used to be. There have always been flakes who didn't return calls, show up on time and do what they say they will but I notice the frequency of it happening more and more. These are calls not being returned from friends, investor relations, business people, people I am trying to buy products from, etc. I have no data though - just my own and friends anecdotal experiences. Perhaps many are drowning in technology, media, information and distracted to the point of not paying attention to what is important. Technology also removes some element of the human interaction. Texting is much easier than confronting someone face to face. Any thoughts?

Great Post BG2008! That was really fascinating. You got an enormous education from your parents that is invaluable. That is why I have heard immigrants can make great tenants. Any thoughts on wage arbitrage - what does this mean exactly?

At the later stages of bull markets everyone feels like a genius and investing is easy. Or is it?

Anyone know of what events will be happening this year?

Trying - but not overpaying for it either.

That's a great quote Liberty! Mozilo had a better tan though.

Good posts everyone. Schwab is right - not relevant to compare pretax vs post tax with corporate tax rate differential so high. Looking at slide 9&10 Yardeni is using pretax. US corporate tax rates are much higher so the after tax effect percentage of foreign profits would likely be higher in slide 10. I think it is likely this is the cause but I am not 100% sure. If anyone has a clear breakout of US ONLY after tax profits that would be clearer to look at. The other thing that may be going on is consolidation causing pricing power. If this has happened and is causing elevated margins thus ROIC, I would expect it to come down. Of course the consolidation is a relative term vs 10, 20 yrs ago etc. From a bottoms up perspective, I think there is more of this now than 15 yrs ago but I can't quantify it in the S&P 500. See Figure 4 First - for all the brand names, and brain power the clarity of what the data actually is pathetic. I don't really understand it because is it Net after tax corporate profits? No clear definitions given. Assuming Figure 4 is Net after tax corpororate profits for the S&P 500 then the figure has gone from ~6.5% in the 90's to 8ish range now. That is a big jump ~23%. https://www.yardeni.com/pub/sp500margin.pdf See Net margins page 17 Factset - not as large of a time frame. https://insight.factset.com/hubfs/Resources/Research%20Desk/Earnings%20Insight/EarningsInsight_030917.pdf Here is the deal - investors get excited by industry consolidation and companies jacking up prices. But the long term effect is new entrants come in and revenues and profits decline. At the end of the day though it is hard to disentangle what is really causing the increase in after tax corporate profits. Best to to in industry by industry when one invests.

Here is a good data source on corporate profits after tax/ GDP It is roughly similar to the 1st chart in the Business insider article. https://fred.stlouisfed.org/graph/?g=cSh I think the main reason may be foreign profits becoming larger as a % of corporate profits. I am a bit unclear on some definitions though.

Book Value per share from 1/1/07 - 12/31/16 has grown at a CAGR (not a simple average) at 9.4%. That is pretty good but not great. Now Berkshire is bigger and buying Airlines. I own Berkshire but have modest expectations at this point.

A few contrary comments: 1. If Berkshire is worth more than book why isn't the book value per share growth greater than 10% while all earnings are retained? The last 10 years were less. 2. I very much disagree with the multiple of earnings plus investments. I don't think it is that simple. If there is an insurance company with $200m of assets, $100m of float and $100m of equity that makes $10m per year from underwriting after tax (10% ROE) why is that company worth the assets plus a multiple of earnings? For my example this would be $200m + $100m (10x $10m) = $300m My example is extreme but something to think about because BRK does require some cash and fixed income investments that earn lower returns. In addition there are corporate taxes on everything. 3. Brk is really big now.

Race and others, Are you familiar with payment for order flow? I am not an expert in it but basically many brokers send the order another trader. That is why the $8 commission seemed cheaper than IB's at times. The payment to the other trader could be 5 bps on average all in. So basically your broker gives someone else your order and allows them to rip you off. It is small, but can quickly add up. I think the practice is deceptive and disgusting. IB does almost none of this to my knowledge. It never made sense to my institutional investors would pay more cents per share when trading in volume vs tiny retail investors until I learned of this practice. Great article on it. http://blog.alphaarchitect.com/2015/03/16/shedding-light-on-payment-for-order-flow-insights-from-emmet-peppers/#gs.o69VVO0

These are really great posts on what people use. I really appreciate them. I have been looking for good alternatives for awhile and hadn't known about some of these. Seems to be a lot of room for sites since Yahoo finance stinks now. I still like Morningstar the best for a quick overview of a companies financials. Value line is also great for a paper edition of a quick overview of a company.

daysoft.com for the cheapest disposables i've found, anywhere. Actually it's one of the few companies I love purchasing product from. The guy just does it right. https://www.daysoft.com/usa/about-daysoft/meet-the-inventor/ Not only does he literally invent the product and tech, he re-enters the market solely to undercut everyone who is overpricing little pieces of plastic. Helluva dude. LC - thanks for the heads on up on the contact lens company. Might be big savings for my family. Winjitsu - thanks for posting the Costco video. I very much enjoyed it. I really admire business leaders who don't price gouge their customers to make as much as they can in the short run. And I think they are safer businesses to own. A business that overcharges customers is often one that stock buyers get overcharged on as well.

I like Klarman a lot. I have a lot of respect for his independence of thought and action. It is highly unusual even among value investors. Minor criticisms of him: 1. Reprint your book to share information. This could probably be done with 1 phone call and yet he does not do it. Perhaps it is just ego. 2. Publish your letters. At this point he is rich and famous (among investors) so what not share them and educate the world.

Perhaps for someone enterprising there is an opportunity here. If you can buy enough rooms for cheap enough (assuming maint fees are low) then perhaps one can get control and sell the property outright. I have no idea how to do this but just a thought in activist time share investing.

I better run out and buy a timeshare right now! I knew time shares were bad investments but getting them for free that is incredible. I imagine that new sales will be hurt by the incredible losses people take. On comment about time share stuck with me: "They are sold not bought." Reminds me of this documentary about a Time share king and his wife which enjoyed. http://www.magpictures.com/thequeenofversailles/

Sometimes you can anticipate fundamental results before they happen with forensic accounting This wont be 100% predictive but if you are interested in learning more about forensic accounting and accounting red flags to watch out for to learn here is a case study. I have generally found even most experienced analysts have very weak forensic accounting skills so it is not something simple. But it can keep you out of some high risk situations and blow ups. I was looking at a company this am and saw the 2015 cash flow statement and organic growth and a lot of forensic accounting red flags went up immediately. You can download the 2015 annual here: http://www.essentraplc.com/investors/company-information/financial-summary Take a good look at it and see if you spot anything that might be an issue before you read on. Except for link, I have left company name off post. Here is what I noticed: 1. Organic growth (like-for-like) was ~0.7%. Essentially flat. 2. And on to the cash flow statement: Inventory increase (14.6m) which is a 17% rise over the 12/31/14 balance. A/R increase (51.2m) which is a 31% rise over the 12/31/14 balance. Notice how Inventory and A/R are rising much faster than organic growth. 31% A/R vs ~0.7% for organic sales growth. These can indicate either serious business issues or accounting shenanigans companies may be playing to use the balance sheet to boost earnings. What about the provision for impaired receivables (or provision for doubtful accounts in the US )? That is one of the easiest accounts to reverse if mgmt wants to boost income. See note 18. Although the company wrote off 1.5m of A/R in 2015 it recorded an income of 2.6m (not an expense) from a net reversal of it’s A/R provision. (2.9m release- .3m impairment = 2.6m). A realistic expense for impaired A/R should have been ~1.5m for 2015. That is a 4.1m difference. What happened subsequently? Fundamental results have stunk and the old CEO is gone. Interestingly enough the CEO was a CFO of a major company before. Hmm Anyone that is interested in learning more about the skill should read Howard Schilit’s Financial Shenanigans book and look at a ton of historical case studies. The case studies will be highly instructive. *The acquisition done in 2015 would have increased the balance sheet accounts but probably not so much of an effect organically on the cash flow statement.

RKABANG: Actually Trump's twitter account is highly intelligent with deep, accurate analysis that is well thought out. (deep sarcasm :) haha ) . His twitter account is hilarious. Look at this post. Donald J. Trump ‏@realDonaldTrump Jan 11 "Russia has never tried to use leverage over me. I HAVE NOTHING TO DO WITH RUSSIA - NO DEALS, NO LOANS, NO NOTHING!" Trump confirms that Russia has "NO NOTHING" on him. With that double negative I wonder what is the something they have. The WhiteHouse is now comedy central!

SNL skit

Sounds like you had a PITA IRA issue. IB isn't perfect but I really like them. Super low fees, transparent fees and for me generally good execution. Customer service has generally been fine. The fee savings can be a lot both on commissions and hidden fees. As a general rule - if you are on the phone with a customer service idiot call back and get someone good. This applies for any organization. I like them having tough margin requirements because that make for a more conservative financial institution. IB could be more conservative in margin IMO.

Thanks for the tip on the subreddits!

Has anyone ever worked at Costco or Sams club who can share their experiences? I love both of these businesses and am very curious of their culture, business practices, etc. I very much enjoyed this article about Costco. http://fortune.com/costco-wholesale-shopping/ BTW - if you ever need tires or glasses both places have quality for far less.