rukawa

Glad to see someone else who's watching velocity as their main indicator. This is why I'm still convinced deflation is the biggest threat and why I've started purchasing long-term, zero-coupon bonds again after having sold them in July. How can deflation be a threat with under 5% unemployment and a huge tax cut and stimulus on the way. The decline in the velocity of money is just a consequence of the massive increase in base money. Velocity has gone down but only because base money has gone hugely up. All this tells me is that monetary policy is not working. There is a huge difference between the Great Depression where velocity went down because people actually bought less stuff and the current situation where people are still buying stuff but base money has increased due to the Fed buying bonds.

What is shareholder activism? Basically I consider it shareholders bothering management until they do what you want. Normally shareholder activists are hedge funds or professionals and they buy a certain percentage of stock, have some demands and then bother management. Sometime they force management to do something by acquiring enough board seats that management has to do something..but often they don't even do that. I propose a different model. What I am basically suggesting is that we organize on this board regular shareholder activist type sessions for candidate companies. We post their IR phone number, email etc and we all go and keep bothering them for a period of time. There are hundreds of us at least and if we encouraged each other, share information I think by shear numbers we could accomplish some things for small companies. Plus I think it would just be fun. We could also synchronize with small investment blogs and reddit's Security Analysis blog.

I agree this board is great. And I am grateful for it. Thanks Sanjeev. Just donated using the button.

I check your dumb question and raise you: Why are you looking at form 3 and 4?

Wow. You nailed it. I am surprised at the large jump in share price.

I blame John Malone. I have never been a fan of EBITDA. But as much as its criticized its still used extensively on this forum and on VIC. I accept that its going to be used...given that I would like to have some idea of what if anything it indicates.

Any insight on why it is so cheap? Is it because its an SOE. I find it weird they combined such desperate businesses together.

A quick determination of whether something is cheap or expensive. You say 20x is extremely cheap but only if companies are investing at high rates of return. But that is the point! When I see a 20x I am going to expect that the company earnings should have very high quality and growth to justify the price I am paying. But I would never expect that if the ratio was 4x. If it was 4x I would ask the opposite question, why is it so cheap? These ratios are informative because they structure how you analyze the company and they enable you to make quick decisions.

I normally think in terms of PE and my guideline would be <10 P/E cheap, around 15 p/e normal and >20 expensive. However a lot of people use ratios based on EBITDA or EBIT and the question is how to convert between these? I'd like to start a discussion. I propose the following based on the table below: EBIT/Net Income = 1.5 so for any EBIT ratio multiply by 1.5 to obtain the corresponding P/E ratio. E.g. EV/EBIT of 6.6 means a PE of about 10. Similarly EBITDA/Net Income = 2 and thus EV/EBITDA of 6 translates to a P/E of 12. I would propose the following cheap, normal, expensive scale. Cheap is < 5x EBITDA, < 10x Earnings, < 6.6x EBIT Normal is 8x EBIDTA , 16x Earnings, 10x EBIT Expensive > 10x EBIDA, > 20x PE, >13x EBIT Now something to assist in this is the following table which provides the total earnings, revenue, market cap, EBITDA, EBIT, Net Income, Capital expenditures for all companies that have positive earnings. Based on this you can obtain the average EBIT/Net Income worldwide or in the USA. The attached spreadsheet contains all the source data I used to calculate this. The data was downloaded in 2014. .|USA |World Total Revenue| 14,215,502 | 50,202,975 Total Debt| 5,401,687 | 19,192,144 Market Capitalization| 22,390,228 | 58,851,933 EBITDA| 2,447,460 | 7,635,562 EBIT| 1,809,426 | 5,338,728 Net Income| 1,171,988 | 3,647,796 Capital Expenditures| 805,240 | 3,193,362 P/S|1.58| 1.17 P/E| 19 | 16 Profit Margin|8%|7% EBITDA/EBIT| 1.35 | 1.43 EBITDA/Net Income| 2.09 | 2.09 EBIT/Net Income| 1.54 | 1.46 And yes I understand that I really should not be using multiples and also that different industries should have different multiples. I should instead be discounting future cashflows. But I like rough rules of thumb. financial_data_for_all_companies_worldwide.xlsx

For any of the Canadian residents on this board. What solutions have you found for buying international stocks. I am using interactive Brokers but there are various limitations. For instance, it doesn't allow one to buy AIM stocks, Korean preferreds or Brazillian stocks. I was thinking of setting up a US Fidelity account. Wondering if anyone on here has found good solutions to this problem.

I am looking for reasonably priced growth companies in Emerging markets like India, Brazil etc. Wondering if anyone has a good screen they could suggest or an interesting ideas? I was thinking things like consumer brand companies or something like Thomas Cook in India. I know nothing so any suggestions are welcome.

Why do you think TSL will blow up?

By far the best analysis i have read is here: http://www.philosophicaleconomics.com/2016/05/passiveactive/ He has a whole bunch of articles on indexing. I would read and reread all of them.

Can you expand on that?

In line with the Trina Solar investment I found a few companies from China trying to go private and eliminate their ADR's. Did a search here Air Media - AMCN Current price: 2.49, Merger price: 6, Premium: 140% Situation: They amended the merger agreement multiple times but as far as I know they have not changed the terms for ordinary ADS holders. However its pretty clear based on the multiple amendments and article below that there are a lot of problems getting this deal done: http://seekingalpha.com/article/4004170-airmedia-group-going-private-deal-hits-road-block Zhaopin - ZPIN Current price: 15.20, Merger price: 17.75, Premium: 16.7% Situation: Their was a merger proposal by an outside group in Jan for 17.5 and then management followed up with another proposal at 17.75 in May. This one has the support of Sequoia China Investment Management LLP. Its still under consideration by the board. KongZhong - KZ[ Current price: 6.95, Merger price: 7.55, Premium: 8%

I wonder how much of the cheap cost of solar is just due to over-production and subsidies in China. I once asked a guy who was responsible for arranging contracts for coal for Ontario why they didn't just burn the coal onsite and transmit the power to Canada instead of shipping the coal by railway to Ontario. I was surprised to find out that the cost of shipping was cheaper and more efficient than transmitting the power over transmission lines.

I would read the Economic Consequences of the Peace which made Keynes' reputation.

The assumption here being that the health care is what will save you in case of these fluke events. But healthcare often does nothing and sometimes even kills you. The number of iatrogenic deaths (death due to medical error) is something like 200,000 a year. For some context the number of people who die in car accidents is 35,000 a year. Some interesting graphs: Life expectancy vs GDP per capita Life expectancy vs total health spending per capita Life expectancy vs number of doctors per capita Observe that health care spending varies over 1 full order of magnitude and yet life expectancies are flat beyond a very low level of health spending. And physicians per capita varies over a factor of 5 and lifespans are mostly flat to even decreasing beyond 1 physician per 1000 people (US has 2.7 doctors per 10000, Russian has 4.3 doctors per 10000). Costa Rica spends one tenth what the US spends on health care, they have half the doctors per capita and they life slightly longer.

Well if you are interested in health in makes sense to start with the activities that generate the biggest bang for the buck. And the first is not healthcare. Its exercise. So unless you are already running 15 minutes a day it probably doesn't make a whole lot of sense to try to save 500k-1m. After healthcare you would probably want to look at what you eat. And then you would probably want to examine your social network. Healthcare spending has little impact on mortality or general health. Its probably not even in the top 10.

Interesting article on value cycles. Value appears to be poised for outperformance going forward. http://www.pzena.com/CustomPage/Index?keyGenPage=1073752146 Brooklyn investor also has some commentary on Pzena. http://brooklyninvestor.blogspot.ca/2016/11/active-play-pzena-investment-management.html

I feel like this thread should be moved to strategies. It doesn't belong here.

Do you have an idea as to why the had so many underperforming loans before?

As long as their aren't huge increases in unemployment and large reductions in consumer demand their will never be considerable deflation. Large drops in commodity prices indicate large drops in industrial demand primarily from China. These things used to be linked. Before you had a situation where US workers worked at US industries which consumed commodities and produced goods demanded by those same US workers. So when US consumer demand fell, US industries would fire US workers and reduce their demands for commodities, unemployed US workers would then demand less consumer goods and so US industries would fire more US workers etc. This would often be exacerbated by industries having large debts. Thus demand for commodities would thus be linked to deflation. But now that China produces a large amount of the goods that American workers consume and accounts for a large amount of commodity demand the relationship is different. Demand for commodities can now go down without US workers getting fired and thus the link between CPI (which indicates demand from US consumers) and commodities (which indicates demand from Chinese producers) is broken. You can also look at this the reverse way...we had a long period of massively rising commodity prices with very little increase in CPI.

I agree. Even on CofBF I find there tends to be nasty statements by bullish posters when their theses are criticized (see Valeant thread) and even anger at bears when the bears are proven right. So I have been pleasantly surprised by the way Allegheny handles criticism.

My interpretation is a bit different. Here I am thinking of Canada. We are a small market. That means that generally there tends to be few competitors and a lot of oligopolies. So the natural impulse is to regulate to prevent oligopoly abuse. For instance there is a lot of weird, inconsistent policies our federal government has pursued to ensure that there are 4 mobile carriers. And our companies tend to be risk averse...why take chances when you are making oligopoly profits. I think the size of America is incredibly important. America is the largest free trade zone in the world. And I think that not only explains your economic success but in addition many of your economic policies. You don't need government to prevent oligopoly abuse because your competitive market does it for you. You don't need the government to encourage innovation, because your market is so incredibly competitive that your companies will be left in the dust if they don't. There are few countries that have these advantages.