rukawa

Samsung Climate Control is a pretty cheap stock. Not sure how the Korean market works though. Price to tangible book is like 0.5.

I feel like if you are going to talk about IQ you aught to be thoroughly familiar with the critique of IQ provide by either Ron Unz or Thomas Sowell. See here: http://www.theamericanconservative.com/articles/race-iq-and-wealth/ The single best example which destroys the idea that the IQ of a population predicts success is the Russian Jews (Rose Blumpkin was a Russian Jew) who migrated to the US from 1880-1910. When they first came to the US their IQs were tested during WWI and found to be among the lowest. Their rise from extreme poverty to parity with American levels is unprecedented in American immigrant history. No group has achieved greater success in less time. Russian Jews are now thought to have higher IQs than the rest of Americans and a disproportionate number of Nobel prize winners are Russian Jews. For example Feynman, Glashow and Weinberg are all Russian Jews from NY. If you were trying to use IQ to predict what would happen to the Russian Jews, or for that matter other immigrant groups like Italians and Irish, you would have been dead wrong.

Two points: You might want to check out the January effect which relates to your comment and is talked about in the net-net article basically January alone accounts for about 10% of the out-performance of net-nets. Your comment reminds me of a deeper question I am asking myself. Is value investing even about intrinsic value? To me it appears that the reason low P/B does well is because of random hiccups in the market where the business appears to do well for some period of time and the stock price goes way up. I feel like the real value effect comes from the fact that market expectations are so horrible that positive surprises get massive bumps. In this sense low P/B is more an indicator of low expectations than anything else. Net-nets might have the advantage because they simply can outlast companies without cash and they indicate very low expectations. This might also be why negative earning net-nets out perform positive earning net-nets...they have more room to surprise. I think when you think the Buffet way, you expect that eventually a company through the power of its intrinsic value alone will force the market to recognize its value. Coke is a very good example of this. Coke's earnings and dividends increased so much over time that it was impossible for its price not to go up without resulting in absurdities like 100% dividend yields or 0.1 P/E's. Coke's increase in intrinsic value is the catalyst Buffett relied on. In that sense cigar-butt investing seems ridiculous because the "intrinsic value" of a lot of these companies in the long run is zero. You really are making money off short term changes in market perception and then selling. I think this psychological hurdle is why people have a real hard time with these methods. They really do rely on the markets random changes in expectations and perception in a way that Buffett's quality companies method doesn't. But if it works....it works.

I guess you are arguing that it should be a real business instead of just a cash box. I would agree. This might also be the reason they found that its bad to exclude companies with negative earnings...they have actual businesses that might turn around. I would additionally argue that you should exclude Chinese reverse mergers.

Traditional value investing consists essentially of investing in low price to book companies. In traditional studies of market anomalies there appears to be out performance that comes from low P/B stocks which are identified with "Value" and also an additional alpha that comes from small cap stocks. Normally Net-Nets are considered as a variant of low P/B investing. But one thing observed with Net-Nets is that they get considerably higher returns than low P/B and additionally a lot of the out performance cannot be explained either by value or the size effect. Typically the best performance you get from both value and small cap effect together is less than 20% a year. But net-nets returns are usually substantially in excess of 20% a year. For instance the following study finds returns of 2.55% monthly which translates to 30% a year http://csinvesting.org/wp-content/uploads/2015/01/Benjamin-Graham-s-Net-Nets-Seventy-Five-Years-Old-and-Outperforming1.pdf Even more surprising is that you get even higher returns when you invest in negative enterprise value stocks. This study finds 50% a year https://blogs.cfainstitute.org/investor/2013/07/10/returns-on-negative-enterprise-value-stocks-money-for-nothing/ Basically net-nets are like low price to book except that instead of including the fixed assets you zero them out completely. In the Net-Net paper by Tobias Carlisle that I cited NCAV (net current asset value) stocks are defined as: Liabilities including preferred stock - current assets. You buy when the stock trades at 2/3 of NCAV. This values all current assets including inventory and accounts receivable at 100%. Negative Enterprise value is a different calculation in that it relies on market values but in some sense the Negative enterprise value calculation can be considered nearly the same as the Net-Nets if you assume that debt trades at par. The only difference is that you completely zero out accounts receivable and inventory. Basically I would summarize this as follows: Negative Enterprise Value Buying Rule Buy when Cash - Debt > Market Cap Return: 50% a year Net-Net Buying Rule Buy when (2/3)*(Cash + Inventory + Accounts Receivables - Debt) > Market Cap Return 30% a year The fact that enterprise value > Net-Nets > Low P/B seems to indicate very strongly that in any asset based value investing strategy it hugely pays to buy stocks that are cash rich. Cash really is King.

I feel like instead of making this remark it would have been better if you just explained what an optimal currency union is, what evidence there is that an optimal currency area is in fact really optimal for a currency union and then finally why Canada/US is not an optimal currency area. As for my argument for why US/Canada should form a currency union, its based on a simple fact: the biggest advantage of an independent currency for Canada is the ability to independently modify interest rates. However Canada has a huge number of imports from the US and a relatively limited ability to diverge in any big way from US interest rates since higher prices directly effect Canadian consumers. In addition our economies tend to move together due to trade so interest rates tend to move together too. You can look at he following graph to see how closely US and Canadian interest rates follow each other. https://fred.stlouisfed.org/graph/?g=7NUe There is about a 91% correlation between Canadian and US interest rates. In the whole data series there are only really two periods of divergence: in the 1970's and around 1990. Both occurring when US/Canada were far less economically integrated than they are today. The downsides of a floating exchange rate: uncertainty about investments, trade uncertainty vastly out-ways the very limited monetary independence that Canada has. There is probably more trade, economic interaction and even human movement north south across the border than East-West in Canada. It makes a lot more sense for Alberta to have a separate currency from the rest of Canada than it does for Canada to have a separate currency from the US.

Well if this continues any stocks on the exchanges will continue to go up in value and you will have two classes: The popular index stocks and the unpopular stocks which don't trade on indexes. Any stock not trading in a popular index will tend to have a very low valuation. The natural arbitrage would be for popular index companies to issue stock and use the issued stock to buy up these unpopular companies. Of course right now that isn't happening...instead companies are buying back shares. You would expect that given index dynamics a stock which made up a huge portion of the exchange like Apple might self generate its own buying pressure....when the stock goes up, indexes are forced to buy it which increases it value, thereby forcing even more buying which create more buying pressure. But this does not seem to have happened.

Related thread: http://www.cornerofberkshireandfairfax.ca/forum/strategies/screen-stocks-with-negative-enterprise-value/ Incidentally the main thing I am seeing when looking into negative enterprise stocks is a lot of chinese reverse mergers which I am avoiding. You can detect the reverse mergers by looking at the officers and directors on Google Finance. I guess I am racially profiling because I avoid anything with a Chinese name.

Yes your right of course. Policy divergence is limited because as the US raises rates the FX rate rises and a large number of imports in Canada rise in price. So the Canadian rate will tend to ultimately follow the US rates with some lag. The logical course of action given this fact would be to form a currency union since the benefits of this policy for trade are much larger than the disbenefits of eliminating the already limited ability of Canada to have divergent monetary policy than the US. But then the question is how much will the US raise rates. Every time they do the stock market reacts really badly and they back off. We will see.

Another: Emerson Radio Corp (buyer beware...read article below) http://seekingalpha.com/article/3802776-emerson-radio-really-buy-stock

According to this the returns of a negative enterprise value stock strategy in the US are 50% a year: https://blogs.cfainstitute.org/investor/2013/07/10/returns-on-negative-enterprise-value-stocks-money-for-nothing/ You can do a screen for them on ft.com: https://markets.ft.com/data/equities/results My guess is that the reason for the outperformance is that they mostly go nowhere for long periods of time but every so often they pop. So if you have a diversified portfolio you almost never lose money but every so often there is a massive gain. Anyways Nate listed one on his blog: http://www.oddballstocks.com/2013/07/negative-enterprise-value-and-titanium.html

I would guess rates are going down. My understanding of the new mortgages rules was that part of the reason was to be able to lower rates without pumping up house prices.

I think spending is overrated. Whenever I tell people how much money I save I get responses like "live a little" or "what are you going to do with all that money". I really don't get how spending == living. I mean you obviously need to spend a little money to live but beyond that? I like throwing frisbees, going for walks, meeting with friends, swimming, reading about physics or math, watching TV. Almost none of this requires a lot of money. My most memorable experiences involve people...not money.

I was kind of surprised. Miller tried to avoid the question but Chanos basically asked the same thing in two different ways. And Miller's answer didn't involved numbers...it basically amounted to "I trust Joe Pappa"

I don't think better prediction will make a huge difference. Insurance companies have had hundreds of years to get this right and I would guess that all the biggest factors they already know about. And many of the rest they can't get info on because of privacy laws. As for fraud, computers will never be able to help with that. Insurance is the one place where you need real street smarts and cynicism. The human element is tremendously important. Everybody is a shyster in insurance. The people who make claims, the brokers, the service providers, everyone. Peer-to-peer bullshit and digital masturbation is most likely to result in a lot of bankrupt startups on a scale that will make peer-to-peer lending look sane.

I think its pointless to read the annual report of most companies unless you have a good reason to. I predict that you will retain nothing and it will be an exercise in boredom. My view is that reading things like annual reports should be driven by the desire to find out something specific. Otherwise you are just wasting your time. I would first find a company you are interested in. And you do that by first discarding a lot of companies you aren't interested in. Then once you find it, you can try to figure out how it makes money. And if it gets too complicated I would just throw it on the too hard pile and move on. You should only read the annual report in order to answer a question you have about the company. And if you want to understand business models the single best way is to become really good at doing Fermi problems. I usually first do the Fermi problem in my head without knowing anything about the business. I used to do the same with ValueLine. I would read a value line on some company and just after reading its description I would try to guess its revenue, number of employees, earnings and market cap. Then I would look at the valueline data and see if I was right. Or sometimes I would just look at valueline data directly and try to guess the companies price. This is a much more active way of analyzing a company, its much less boring and you will learn a lot especially when your guesses are wrong!

;D

Most technologies are like that. The internet was like that. I remember my cousin showing me the internet in the early 1990's. Nobody had any idea of what its impact would be. But often the people who change the world aren't given much power or recognition. This guy is a case in point:

What about people who don't know what their dream is? People who have no passions?! I am in that category. I don't really have a dream job. And I think most people are in some kind of situation like that. In fact I would say not knowing what you want to do in life is basically the story of everyone including teenagers and the very young. You basically never spend time on the problem your whole life. And there is no known way to solve it or even any advice. There is also the question of whether a dream job even exists for most people. A job is doing the same thing, year after year. I find that concept boring. But forget finding your dream. Lets crawl first before we walk. How about just not having to do something you hate?! Most people have a hard enough time figuring that out.

That's exactly what I'm doing :). I just don't know if there is a better solution.

I don't think we are in a bubble. I just think things suck for value investors but that is not the same as being in a bubble. Canadian housing on the other hand is a definite bubble. The shitty thing for value investors is that this whole thing could last a long time. Interestingly companies are not investing in increased capacity, there are issuing buybacks. This is keeping returns on equity relatively high since there is better pricing discipline as long as capacity isn't increased. And this can continue for a while. I really am at a loss as to what to do except look at emerging markets or invest in high quality companies at expensive valuations.

The post below explains the situation well. Basically bitcoin will fail if it succeeds. Lets say Bitcoin succeeds. Everybody starts using it. Problem is that bitcoins tend toward a fixed total number which cannot be increased by design. So if it succeeds then people will start hoarding it because as the economy grows and demand for bitcoin as money increases so too will the value of bitcoins. As a result people will hoard them and as they hoard them bitcoins will increase in value still further since there will be less of them. Eventually people will stop using them as money because they won't be able to find them in sufficient quantities for everyday use. At this point the hoarders will have something that has no intrinsic value (unlike gold or silver hoards) and in addition no longer has value as a form of money since no one is will to accept it (try paying with Gold at Amazon). Eventually it will be realized that its worthless. So the correct value for a bitcoin is zero. https://smilingdavesblog.wordpress.com/2013/10/18/why-greshams-law-means-the-death-of-bitcoin/

I honestly think that the VRX, Ocwen and Theranos threads are the most educational threads on Berkshire and Fairfax. To me the bullish posters have all of us an enormous service. I don't get why they are being criticized. Most CEO's and managers are hugely ego driven. They have an unbelievable confidence in their own bullshit regardless of reality. And they push their delusion onto others. Often they are spectacularly successful. And sometimes they fail spectacularly. Most of the careers include both e.g. Henry Ford, Steve Jobs.

I want to buy this http://www.otcmarkets.com/stock/BVZCY/quote But is has no volume whatsoever. Can I buy it? Is there any way whatsoever?

The 1908 crisis and the actions of JP Morgan were basically the reason for the creation of the lender of last resort system which is the federal reserve. But this is not that unusual. There are many things which are originally done privately but later done by the government. Another good examples is the CDC which basically comes from a lot of the Rockefeller foundations work but was later taken over by government. Or fire fighters which were originally voluntary organizations started by Ben Franklin and also used by insurance companies.