thekiefs

Sold most of my COVID trades: GOOG, WMB, SPY, V Finally exited FCAU, RACE to build some cash

https://www.economist.com/finance-and-economics/2018/10/27/the-agony-of-the-value-investor?fsrc=rss%7Cfec Thoughts? The only hard-hitting quantitative analysis is the Russell 3000 index comparison. I, and maybe many of you, probably take issue with the categorized "value" stocks at a macro level, prompting many questions on defining that "value". We need that analysis to draw generalized conclusions about the whole sector, but I think too many value investors retort by cherry-picking a few superstar returns over a long period of time as evidence of the efficacy of the approach. I see that bias in venture capital too; I don't like it. I also know declarations of value investing's death have a long history, one rife with bitter debate over the actual stocks at play versus the realization that the market is right a majority of the time (i.e. EMT kinda true). As I pour more into the battered down names this week (TAP, FFH, AN, ADS, BRK) I can't help but think of the shift to the knowledge economy and how expensing R&D might actually provide more value over the long-run in growth-focused industries than the business moats we look for... businesses typically not associated with high R&D spend, a salient point about accounting made in the article. How do you keep the faith?

BRK.B @ 185.5. Almost bottom-ticked it. Close to a 10% position.

For those who have an .edu email: https://buy.wsj.com/offers/pages/jieStudents?trackCode=aaqntpz9&page=jieprof&term=annual ;)

Do you have a source for this? I was trying to find accurate numbers on average VC returns over the last 15 years but couldn't find anything for the average returns. I could only find returns for the outliers like Sequoia and AA, with numbers all over the place depending on how you mark their returns (http://a16z.com/2016/09/01/marks-offmark/). From The Economist, 22th of October: "This July, in an update of a previous study*, business-school professors at the Universities of Chicago, Oxford and Virginia found that, although in recent years buy-out funds had not done much better than stockmarket averages, those raised between 1984 and 2005 had outperformed the S&P 500, or its equivalent benchmarks in Europe, by three to four percentage points annually after fees. That is a lot. Ludovic Phalippou, also of Oxford, is more sceptical; he argues that when you control for the size and type of asset the funds invest in, their long-term results have never looked better than market-tracking indices. That said, getting the same size and type of assets by other means is not easy. The average return, disputed as it may be, does not tell the whole story. Studies find some evidence that private-equity managers who do well with one fund have been able to replicate their success (though again the effect seems to have decreased in the past decade). The biggest inducement to invest may simply be a lack of alternatives. Private equity’s current appeal rests not on whether it can repeat the absolute returns achieved in the past (which for the big firms were often said to be in excess of 20% annually) but on whether it has a plausible chance of doing better than today’s lacklustre alternatives. This is a particular issue for pension funds, which often need to earn 7% or 8% to meet their obligations." And the study to which they refer in case anybody is interested: http://www.investmentcouncil.org/app/uploads/ssrn-id2597259.pdf Even with the higher-end performance estimate, a 3 to 4 percentage point S&P beat is low in comparison to many value funds that adhere to the original Buffett/Graham philosophy--even pales to returns from "amateur" members on this board. Actually, shoulda just bought BRK in 1990. For some reason I was thinking 20%+ CAGR for many VC firms. At least, it's certainly not the average. That might be the elite ones that like to squawk about unrealized returns (the whole marking unrealized gains issue). I also wonder what their definition of "buyout" funds is, or at least what their breakout by type is. Tech-focused ones might perform better than funds similar to 3G. They don't break it out by sector or fund type. The money quote in the abstract I think nails it "Post-2005 vintage year returns have been roughly equal to those of public markets." Thank you for sourcing this.

Do you have a source for this? I was trying to find accurate numbers on average VC returns over the last 15 years but couldn't find anything for the average returns. I could only find returns for the outliers like Sequoia and AA, with numbers all over the place depending on how you mark their returns (http://a16z.com/2016/09/01/marks-offmark/).

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Congratulations! Here's to another 9 and beyond! ;D

Awesome find. Thanks!