LongHaul

I think there may be some misconceptions about field research that I wanted to clarify for people. Everything is not on the internet. Let me repeat that - Everything is not on the internet. There is a ton of information in people's heads that is often super important information that can sometimes only be found by calling or meeting with people and talking with them. I have found in my career that field research can be critical to understanding a business, it's risks and management. You don't need any special expertise or to hire a bunch of consultants at high prices. I have almost never paid anyone and talked to all types of people. In fact, you may get better information by not paying, as that can bias your sources. Don't expect 100% of people to talk with you - perhaps 30-40%. But you just keep calling and must be persistent. I can initially be shy but I just line up a bunch of contacts and crank through them and try to see who I can get on the line. No need to have too much to THINK. In your research you will sometimes realize that you don't fully understand a company and need to reach out. I just want to encourage everyone to reach out to people in the industry and not be shy. Don't ask for inside information. But most general information for long term investing isn't even close to that anyway. You can do this just by calling people who work for the company, competitors, suppliers, customers, etc.

Google news is pretty good too. You can limit time frame to last month. Finviz seems better though.

Anyone found a website for comprehensive news on stocks? Yahoo Finance was pretty good before. Now it is just garbage. Amazing how bad that mgmt team is to make Yahoo Finance much worse. Thanks in advance.

+1: I would add Social proof and Group failure as well. Never trust anyone over 1 years of age on Wall street!!!!

Great Post SD!

Rukawa, I thought this was an exceptional book by Buffett's son, Peter Buffett. I would highly recommend it to to anyone. One of the major themes is finding your passion and I think it can only help anyone looking for more fullfillment with their career. Peter Buffett quit college and went into music which was his passion. Life Is What You Make It: Find Your Own Path to Fulfillment Paperback Often you don't know if a career is for you until you do it. As I have gotten older I have realized there are so many things in life that I just can't know or fully understand until I get my hands dirty and do them. 1. There is just too much information, 2. creating the full learning and processing can just take a lot of time. 3. Sometimes emotional pain has to be felt to really sink in and create true understanding. Entering a new field I think is similar - it's good to read books, talk to people, try it yourself as much as you can but ultimately you have to take the leap and learn to see if you will like it. I can't tell you how many times I have made mistakes - with investing, business failures and even DIY mistakes. I once cracked a rib trying to take a valve off a water heater. But every time I learned a lot and for that it was worth it. As the old saying goes experience is the best teacher. Don't be afraid of getting out there and trying something. We will all be dead one day. As far as getting bored with a job. I think it really helps to be fascinated with the area of the job. If you are fascinated then there are really unlimited levels of understanding and knowledge. The furthest level is where you are pushing on the boundary of what is currently in existence and inventing something totally new. That can be a lot of fun thinking thoughts and making things that perhaps have never been done or realized before. Wiring I have son and a daughter. My son is obsessive and gets super into stuff one at a time - trains, robots, now it is gardening. My daughter has a lot of what I would call mild interests but nothing obsessive. They are both raised in same house. How much of this is gender related or wiring I just don't know. Maybe some people are just wired to be totally obsessive about certain things and others are not. My issue is kind of the opposite Rukawa. I am a total business junkie and would love to pursue more ventures but I have to restrict myself to my time and human limits. I can get stressed when I put too much on my plate and have to scale back. My mind will run 24-7 on a problem that I find interesting. Perhaps business and investing are just complex puzzles that interest me.

I enjoyed this. Thanks for posting!

Good question and I would be careful on your assumptions. On the low end for apartments and triple net retail I would assume at least $1 a square foot. That could easily be more. Malls can be a lot more. Office buildings can be very high with Tenant improvements, maint capex, etc. It is worth understanding the nature of the leases and what a landlord is responsible for. Roof, HVAC, parking lot, etc all have limited lives. The tooth fairy is not going to pay for these things so one has to take them into consideration in their valuation as opposed to some EBITDA calcs. I generally find FFO to to be a garbage # if it doesn't account for a full load for main capex. Most reits that I have looked at seem to lowball their true maint capex so I think one has to be careful.

I am not sure about a bubble. But there a lot of easy money for subprime auto borrowers. A classic pattern of a credit boom is there, with lenders tripping over themselves to loan to subprime auto buyers. Extended loan terms are one sign to lower borrowers payments. I have even read that in the out years the car will now sometimes be worth less than the loan principal because of this. I have read about lower lease rates too. Centuries low interest rates and low employment seem to be creating the perfect boom. So how does all this play out when the easy money spigot it turned off to auto borrowers?

I often find that European CEO's are paid substantially less than US CEO's for comparable companies in size. Why is that? I am not fully sure. Some observations and who is really at fault in the US from my experience fighting some of this stuff. Institutional shareholders are: 1. Lazy. 2. Corrupt. (conflict with managing pension funds, etc) 3. Lack Courage. Retail investors are similarly lazy. Jurgis is right - vote against the most extreme comp plans and vote against the board. Have some courage in your life. I have seen blatant legal theft by mgmt and the institutional shareholders just vote to approve the comp scheme, options and board members. I tried to convince them otherwise but they were just wusses. The end cause is pathetic shareholders. If mgmt stinks and the board doesn't respond there should be a less than 25% vote for these board members. But it rarely happens. Ben Graham found something similar around 75 years ago. Articles on US vs other countries ratios of CEO pay to average worker. http://work.chron.com/ceo-compensation-vs-world-15509. http://www.theglobalist.com/just-facts-ceos-rest-us/html

Excellent replies and analysis. I very much agree with many posts. If these companies can keep up their performance they should continue to win in the market which also benefits consumers. I have heard great things about Space X too. I am in awe of what Musk is doing with that company. That was after a conversation I had with an ex satellite engineer who told me how well run Space X was. Would be great to hear from more posters regarding what businesses they admire.

I think it would be great if we all picked one business we admire and discuss the details of why we admire that business. And I am really referring to how the business is run and attention to customers with products, prices, quality and service. There are many models out there. Please ignore stock prices. Details of what the business does better than competitors is really what I think is most interesting. I will pick Aldi. It is a private German company (with 2 parts, one owns Trader Joes, the other Aldi US) that has been opening up locations where I live. What fascinates me is that they are able to beat Walmart's prices by ~20% in a variety of apples to apples price comparisons I found on the internet. Think of all the scale Walmart has in purchasing and Aldi still beats them. Here is what Aldi does better than Walmart from what I can gather. 1. Lower labor costs. 2-3 people operate a smaller footprint store. Details on how: you deposit 25 cents to get a cart and get the 25 cents back for returning the cart (less cart moving labor). Many items are put up in cardboard boxes, less stocking labor. You bag your own groceries. No bags provided free. checkout clerks required to scan 1,000 items per hour. All these little details add up. Big bar codes on products for easier scanning. 2. Lower rent. Much smaller footprint because stock far fewer items. I am guessing that the super low prices and limited inventory create huge turnover in the items they have so rent/sales is probably less than the competition. Other fixed costs are probably less as a % of sales. 3. Items are packed to brim. Seems like a small detail filling up the cereal box all the way but has clear cost savings in a number of areas. 4. Simplification with less items. 5. Minimal advertising. 6. HIgher inventory turns means higher A/P relative to Inventory so profit margins can be lower and still make good ROIC. 7. They also specialize in their own brands which are way above average vs most private label brands. 8. There are probably tons of things I missed on this one that go on behind the scenes with little details that add up. Bottom line their cost structure is lower than comps and they can charge a lot less than Walmart.

I enjoyed watching Buffett's speech for Clinton. Thanks for posting. Here is my prediction for Trump's tax returns: There is some pretty embarrassing stuff in them and that is why he refuses to release them. Perhaps very aggressive tax shelters or who knows what.

Trump - I can't help but think he reminds me of the the old Tyrants of countries who do as they please and to hell with the citizens. He also reminds me of used car salesman who exagerates and lies to make his point. You never know when you can trust him. His Slogan is "Make America Great Again" That implies that America is a bad or mediocre country to live in. Is this true? Have any Americans on this board given up their citizenship and moved to Bolivia, Uganda, Romania, China, etc? I think the US is a great country now. We have an incredible amount of freedom and opportunity and justice. Of course it is not perfect but no country is. So his main slogan is marketing garbage that does not reflect reality. I think Trump is mentally deranged. He is very good at persuading people to his opinions though and a lot of people are falling for his BS. I think if he wins he will be a dangerous president and will fully test the constitution. Demagogue https://en.wikipedia.org/wiki/Demagogue#Ancient_demagogues

http://www.politifact.com/personalities/donald-trump/ http://www.politifact.com/personalities/hillary-clinton/ Great find Sys - thanks for posting. Basically according to Politifact Trump lies ~70% of the time (the total % actually equals 101% FYI) Clinton on the other hand lies ~28% of the time. Mitt Romney for comparison was~42% of the time. Trump is basically full of you know what.

At this years Berkshire Annual meeting Buffett mentioned a large derivative mismarking. Anyone have any idea which one he was referring to? “Some of these things get so complicated they’re very hard to evaluate... I know one that’s so mismarked it would blow your mind, and the auditors I don’t think are necessarily capable of holding that behaviour in check,” he said. http://www.telegraph.co.uk/business/2016/05/01/warren-buffett-issues-a-fresh-warning-about-derivatives-timebomb/

http://www.wsj.com/articles/unilever-buys-dollar-shave-club-1468987836

I thought it was fine also and probably a very relevant question given SHLD's situation.

Interesting comments. History is that stocks go from cheap to fairly valued and expensive. If you have a good fairly valued business and it is safe and growing at a modest clip it is certainly not a mistake to hold it. Assuming no great alternative investment opportunities then it seems like one has a call option on selling an asset at a very expensive price. It is a different game trying to time the market and when to sell as to the degree of overvaluation. But it can significantly add to you returns so that is why I asked about it.

Often stocks go from cheap to fairly valued and then to overvalued and perhaps the cycle repeats. Does anyone have any experience waiting for stocks to get overvalued and holding them until they are very expensive before selling. Any thoughts/experience/insights on this matter appreciated.

For Youtube I now use 1.5x speed. Saves a bunch of time. Also works on audiobooks. I liked Oddball's comments a lot. I also try to minimize news reading. I do like long in depth business articles which have unique research and insight which is more rare now. Fortune is great. I have been trying to restrict my reading to A or A+ type stuff. I get more out of it than a B rated book generally.

Thanks for the data Poor Charlie. Even Spain did 4.7% real equity returns from 1965 - 2014. I have a few random thoughts on this. 1. Perhaps the Italian Indexes were dominated by weaker businesses - ie banks, etc. 2. Higher Inflation 3. High corruption I really don't know though. If anyone has any other thoughts as to underlying causality feel free to brainstorm. I think it is worth studying.

Randomrep, Keep posting - I think you did a good job being skeptical and a lot more people read this board than you may think. A lot of great posts get no response but I guess that is function of the board. Most fields are similarly filled with a lot of BS. Medical field, nutrition, advertising, luxury goods, car dealerships, professional investors, etc. I am not fully sure why but my sense is that people are innately lazy and the ego hates being wrong. Many people are just not that curious either. Then there is the whole list of psychological bias'. I think in the long run though companies that are reality oriented when executing do better. At least it should show up with better products. And consumers of products are not dumb at all over the long run.

Anyone have any idea why Italian stock returns have been low since 2004? I think these yearly returns are only price and may not include dividends. http://www.1stock1.com/1stock1_804.htm

Part of the reason Gio started so many of the posts was that he posts so much. I applaud him for being a frequent poster and contributing interesting content to the board. Please keep it up Gio. Tall trees get a lot of wind! All of us who have never made investing mistakes can keep throwing stones. I did not see any posts here prior to the 1st WSJ article claiming Theranos was a fraud. Some skeptics yes, but not a fraud. I didn't think Theranos would run into these "issues". But after listening to the interview I can see why - I was totally outclassed by those in the know of lab testing equipment, medical research, venture capital board composition, etc. I did know that startups are tough. I, probably like most, just read the media articles describing the technology and how it would bring down costs, etc.