no_free_lunch

Novus was interesting in that after the deal was officially announce and trading resumed, you could still buy the stock at over a 10% discount to the takeout price. I sat there watching it, thinking I must be missing something but sure enough the gap has been closing.

I have been trying to find a legal precedent case for this. I mostly just see cases regarding govennment seizure/acquisition of people's properties, nothing that really fits with this situation. It would be nice to see that someone has taken this type of case up before, and won. Has anyone come across any good precedent's?

Don't forget when comparing canadian newspapers to us newspapers, that there is a free alternative in canada called the CBC. It is funded by the federal government so doesn't need to turn a profit (although they are being pushed to increase revenues). When I was looked at NWSA I recall reading that in the UK, the newspapers are not doing as well with paywalls due to the BBC which is the UK equivalent of the CBC. To me this is a critical difference when coattailing Buffet..

Have you looked at wall street oasis?

EBIX?

To me the risk is not that the government swoops in and shuts them down, they have better things to worry about. It's that they've started the wind-down, with 15% reductions per year. So couldn't they just do nothing and in 5 years time there is really just not much of a business here and private markets have taken over? This has probably been discussed on this thread before but could you play this one by buying both fannie/freddie and then hedging by buying private mortgage insurers (radian?). Someone has to eat the pie right? It seems that if they are shut down it will be a windfall for the private guys. In bruce's slides, the GSEs are insuring something like 97% of mortgages if I read it right.

Too hard to call. The market has been so manipulated by interest rates / deficit spending that I am not sure that standard market dynamics apply. For instance, we are in the middle of a recovery and yet job growth keeps stalling out. Retail sales suck. House prices though are going up, equity prices are going up. I don't know, I will stay in on the basis of american energy production and the fact that there is still pent-up demand but this definitely doesn't feel right.

I bought a little more MBI today. It is back to levels not seen since the settlement with BAC. Upside seems substantial and it seems a considerably better bargain than most else out there.

This is regarding 'the other side'. Personally there are a couple micros in my town that I have invested in. One I worked at previously, no insider info but I know it well enough to know that it won't go bankrupt so I buy it every few years when it is down. I have also seen and heard other locals invest in the 2 companies. My dentist was telling me that he invested in one. The word gets around and the local community buys into it. I don't know how significant this is relative to the market cap but with a $10M company, and local investors putting in 5,10,50k I could see them being a significant force.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1364827

Their focused picks beat out any of their traditional portfolios. http://www.gabelli.com/research/focus-five.html

I have been a bit busy but I had a quick look at this. The problem with just pulling the top 5 from a diversified portfolio is they aren't necessarily the 5 stocks that the manager has the most confidence in. Some portfolios they just represent stocks that have run-up and that haven't been trimmed. In other cases they are also only marginally higher than say the next 5, so the top position is 6% of AUM, the 6th is maybe 4.5%, the 10th is 4%. It gets pretty noisy. I don't think there is a definitive answer on this. Certainly you can get higher returns with a concentrated portfolio. Whether you can do so without risking a blow-up is open to debate.

I think best bet is to just script it. Then you can get a much larger sample.

I wouldn't mind doing some more analysis on concentration effects. To do so you need data. Does anyone know where you can get real-world trading records? Preferably from a guru but I am open to suggestions.

Well I have posted my results before and I don't mind embarrassing myself once again. I run a diversified portfolio with ~30 stocks, a value investing style and doing investing purely as a hobby. From fall '03 to november '12 I outperformed the S&P by about 2% per year. That being said it really seemed that I would get around 5-10% over the index when I really devoted myself to it but I would always burn out after a 3 or 4 months and then just ignore the portfolio for lengthy periods. I think I once went a full year without even checking my balance. I have switched to a more concentrated style (10-12 stocks) so it will be interesting to see in another decade what the difference is.

This is a great discussion. I have been going back and forth myself regarding portfolio sizing. While I certainly appreciate the merits of allocating heavily to your best ideas, I also find that you can never know everything. Personally I think things are ideal around 10 stocks, this is sufficient diversification but turnover is reasonable enough that I am not crushed trying to find ideas. The one strong counter-example is Peter Lynch who just beat the living crap out of the averages for about 15 years while holding hundreds and ultimately over a thousand companies.

Another great write-up from the Brooklyn Investor, this time on the TPRE IPO. http://brooklyninvestor.blogspot.ca/2013/08/third-point-reinsurance-ltd-tpre.html

20% cash. The most I think I have ever had. Not really a market call as I claim no great abilities in that regard. I just don't see too many appealing risk/rewards.

This is interesting from a market efficiency viewpoint. I view this as mostly just noise and positioning by uralkali. Think about what just happened, a company has announced that they will be increasing their volumes and that prices will be dropping. Now why would a firm do something like this? Can you see XOM announcing that oil prices are going to be crashing soon? I think it all comes down to the increased production that is being built. Their is simply too much production being planned, prices would collapse if it all came online. So when viewed from that perspective, this is effectively a scare tactic, probably aimed most squarely at BHP's new mine but really to all the players who are bringing on production. When you view it like that, then what has really changed? What do we know now that we didn't know a few days ago? Not saying the potash producers are necessarily a buy at these levels but I view this as the market being very irrational in that potash equity prices shouldn't have changed as much as they did. I would also note that the uralkali and the other belorussian producer never really played ball as far as the restricting volume. They were always the first to crack, have done so numerous times over the past decade. They can say they will be producing full-out to scare people, but that is what they have always done.

Wasn't that the trend in the US as well? Before the huge RE crash?

Another idea might be an equal weighted index fund. This might sound too simplistic at first but look at the returns. There is an equal weighted S&P500 fund RSP available. Given my feeling that a bear is more likely than a bull this might not be a bad place to have some equity.

I did a bit of digging on individual Greece companies. Have you found that they are not actually all that cheap? Coke HBC for instance has an adjusted quarterly EBITDA of $90M but a market cap of $5.2B. It seems more on the expensive side if anything. All of the companies I have looked at do not appear that cheap, even when you look at prior years earnings. This is based admittedly on a very quick look.

Hellsten, I agree completely, summary stats are difficult to interpet. I mean: 1) How do they determine what the high point is? Is it the highest point over past 52 weeks, 5 years, ever? It makes a difference. 2) How many trades are there? That is, if it stays in this 50-90% down range for several years, how many times does it count? 3) Median, stdev would be nice. 4) How many cases were 0's? I just view it as interesting data, that warrants investigation. I have always wondered if you could just blindly buy pools of deeply discounted stocks and what the returns would be like. Given this data, it might be worth the time to put a study together and figure it out. Regarding Greece, I believe that you are interpreting the results correctly. Faber also did a study where he looked at the effects of low CAPE on returns and while the outcome wasn't as high, I think it was still ~15% CAGR after inflation. I cannot trade foreign securities but have been thinking about the GREK ETF.

Interesting article from Mebane Faber on various historical returns after sectors/industries/countries have seen large declines. http://www.mebanefaber.com/2013/06/25/what-happens-when-you-buy-assets-down-80/

Altius. Iron ore can come down a ways and it will still be a good investment.