rukawa
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A very nice article on how the cure for Scurvy was repeatedly discovered and repeatedly forgotten with awful consequences:
http://idlewords.com/2010/03/scott_and_scurvy.htm
Now, I had been taught in school that scurvy had been conquered in 1747, when the Scottish physician James Lind proved in one of the first controlled medical experiments that citrus fruits were an effective cure for the disease. From that point on, we were told, the Royal Navy had required a daily dose of lime juice to be mixed in with sailors’ grog, and scurvy ceased to be a problem on long ocean voyages.But here was a Royal Navy surgeon in 1911 apparently ignorant of what caused the disease, or how to cure it. Somehow a highly-trained group of scientists at the start of the 20th century knew less about scurvy than the average sea captain in Napoleonic times. Scott left a base abundantly stocked with fresh meat, fruits, apples, and lime juice, and headed out on the ice for five months with no protection against scurvy, all the while confident he was not at risk. What happened?
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Following is list of net-nets incorporated in NV:
Initio, Inc.
eRoomSystem Technologies, Inc.
American International Industries, Inc.
RBC Life Sciences Inc.
SIPP International Industries, Inc.
Totally Green Inc
Giant Motorsports, Inc
Dynacq Healthcare Inc
Cancer Treatment Holdings
Davi Luxury Brand Group Inc
Nitches Inc
Incidentally SIPP International has a hilarious website which includes gems such as this:
It has taken a great deal of time to get to where the company is today. The company has experienced 'the wait and see' attitude of many sophisticated investors. They shied away from the company in THE BEGINNING. They were skeptical of a NEW JOURNEY with China Telecommers. And, now...??? The company has just developed a new, miracle, life-saving product and will do whatever it takes to win this one for their shareholders. This is one game that will not be called on account of darkness.This is LIFE AS WE KNOW IT.Incidentally I haven't invested in any of these. I tend to invest when I feel the business is "real". Somehow with most American net-nets I mostly never had this feeling. Also every single one of the companies (exception eRoomSystem Tech) in the list above is dark...they are no longer filing. I almost never invest in dark net-nets.
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Does anyone really learn from these letters. Aren't we already all overloaded on Buffett sayings and ideas?
Probably the most valuable thing I got from Buffett was the advice he gave to some NetJet employee...he basically had him make a list of the top 20 things he could do to improve his career...and told him ok now just focus on the top five and avoid anything having to do with the bottom 15.
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One of the author's more insightful conclusions is that one of humanity's unique strengths is in communicating and collaborating in larger groups (and in other ways)
Perhaps when "madness of the crowd" goes right?
Exactly. Ironic in these times, right? Perhaps a bit of a double-edged sword.
Alexis de Tocqueville has a passage in "Democracy in America":
If man was forced to prove for himself all the truths he employs each day, he would never reach an end...he is reduced to the taking on trust a host of facts and opinions which he has neither the time nor the power to examine and verify by his own efforts...I think think this mechanism partially explains how humans were able to advance as a species and the corresponding danger of the madness of crowds.
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Basically when an ETF reinvests cash from stocks it sold into other stocks instead of distributing the money to you, it affects your ACB and its in your interest to track these distributions when you sell the stock. Its explained in more detail here:
https://www.adjustedcostbase.ca/blog/phantom-distributions-and-their-effect-on-adjusted-cost-base/
Most investors don't do this...I certainly never have although thankfully I have never sold an etf. If you don't adjust the acb then are paying tax twice when you sell the etf.
So anyone who has sold an ETF in the past year should pay careful attention to this as it could have a big impact on the taxes you will pay.
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Thinking about teaching my kids the fundamentals of investing and by that I don't mean the fundamentals of the financial markets, I mean the fundamentals of buying a $1 for $0.50 and either waiting for it to be recognized or selling it in a different market/different way to realize the $1 value.
FYI my kids are currently 8,6,4
I would love to show them how to be able to buy something tangible and either add value to it or realize the value through marketing/selling. It is a combination of investing/entrepreneurialism.
where would you look for opportunities that involve tangible items, under $100 price point, where there possibly is a scaleability issue that would prevent big money from dealing with it.
They are currently learning how to do work for others (outside of family) and get paid for it. And that's great as far as it goes so they now have some savings but I would like to help them learn how to make their money work for them instead of just working for money.
Any ideas or input?
I've been thinking about teach a niece about net-nets. And I had this idea of having her father give her 10,000 a year for her to invest which I would supervise. Net-nets are simple enough that a 10 year old could learn them and overall performance is excellent. Its a pretty good way to start. I don't think it would be hard for a 10 year old to run a screen, go to an investor relations page, get current assets, total liabilities etc and calculate ncav. Its all arithmetic.
This would happen from 10 to 14. At 14 she get told that if she get a job, her father will match salary....she makes $10000, and he will double to $20k and in addition she get $10000 even if she does nothing. At this point she would be responsible for buying her own stuff (clothes, phone etc) and for paying for her university education. So she has to plan out how to save, invest and consume such that she has enough money to fulfill her current and future objectives, including university.
The whole point is the best way to save, invest etc is to actually do it and be responsible for it.
When I first tried teaching her about investing I essentially followed advice similar to Scott's. I showed her how money compounds at 20% a year for a long period in an Excel spreadsheet. I showed her that small changes in compounding rate don't contribute linearly to final value....going from 10% to 20% over a long period will do much more than double the final value. I taught her the 70 rule. She was 8. I know she didn't understand everything but she was definitely trying. She enjoyed it...at one point she exclaimed "I'm going to be rich!!".
The real worry about this isn't that she will take to it. I'm fairly sure that will be easy in this case. The greater danger is that she learns the lesson too well...she becomes overly cheap, she spends too much time thinking about money and/or that she brags about it. Kids have far more important things to do with their lives than worry about money (as is true for most people) and part of the education is to make sure she understands that.
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Not to nitpick, but I think regulatory moat are very much so not the best moats of all, exactly because the regulations can either change, or they lead an industry to become fat and unresponsive to customer's need, creating a huge umbrella under which better competitors can come in (often assisted by new technologies that give them an edge).
Regulatory moats seem more stable when they deal with B2B stuff rather than B2C.
The thing that surprised me about the taxi cab industry is that the regulations DIDN'T change until after the competitors were already fairly well established. I think its a rare thing when companies break the law in order to change the law. I can't think of a parallel anywhere else.
Even Tesla is not setting up direct sales in New Jersey and then fighting lawsuits. They are just complying with regulations even though most consumers are behind them.
The whole consumer angle I also find odd. If you proposed eliminating the licensing of taxi cabs 10 years ago editorialists, consumers etc would have objected. There was zero expressed desire for change by consumers for decades at the political level. Even today you will find it hard to find political for eliminating Canada's ridiculous supply management system.
Or even worse Canada's evil de minimis threshold which I would guess costs the average Canadian a few thousand dollars a year. Who on this board that is Canadian even cares?!
http://www.cbc.ca/news/opinion/cross-border-shopping-1.4226427
So I actually think these moats are pretty powerful and strong. What surprises me in the taxi case is that companies found a way to get around them.
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Taxi cab industry had the best moat of all....political protection which prevented competition. The whole government was behind them...and still capitalists found a way to disrupt it. Is anything safe? I would be tempted to say that the medical profession. But who knows.
Taxi Medallions have dropped enormously in value:
https://www.nytimes.com/2017/09/10/nyregion/new-york-taxi-medallions-uber.html
Indebted drivers are committing suicide:
https://www.wired.com/story/why-are-new-york-taxi-drivers-committing-suicide/
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FWIW-
I have a friend who has worked in the medical device industry for years, an executive at a firm known to everyone here. He says their DD made it clear the products could not perform to the hype, and they moved on quickly.
He's astonished at the 'fools' who invested in Theranos.
I had a friend who made the case way before the WSJ story came out that it was a fraud. He knew that the FDA would have a approve the blood test. He also knew the FDA had not approved anything from Theranos. So the only thing Theranos could be doing is take the blood samples they received and sending them to a company with an approved blood test. But they would not have sufficient liquid since the Theranos test was based on a pin prick...so they would have to add some liquid to use a conventional test and then of course the results would be total garbage.
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1m market cap seems way too low to be meanindgful. What results do you get if you bump this to say 50 mn?
Thx
What is your objective or reason for increasing the threshold to 50m? And why is 50m more meaningful than 1m?
I'm not going to bother to check because I basically know it would result in much lower returns, more volatility since it would reduce the quality and number of net-nets...maybe to a handful. I would guess that I could find 50 net-nets right now...but maybe <10 satisfying your criterion,
I've invested in sub-1m companies. Its harder but its possible. >2.5 m I generally have no problems as long as the company isn't dark. To me >50m is a ridiculously high threshold that would exclude a lot of very good net-nets. Including many very high quality, high liquidity net-nets in Japan. Not sure what it accomplishes except to lower returns and make the strategy completely untenable.
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Thanks! My observation over the last 2 years has resulted in similar conclusions. A large cash balance and/or share buybacks are the things you want to see in a netnet for huge returns. (Still hold SHOS, but my patience is getting smaller every quarter)
I have some questions:
Was this a backtest with international data?International. But excludes developing countries and China/HK. I'll extract my exact screening parameters and post them later on. Generally I've found that ex-financial improves performance..and ex China/HK does as well. But not a lot. My own practice mostly excludes China, Financials and even Hong Kong.
What was the rebalance timeframe?Quarterly is my standard
Are the results stable when you exclude really low liquidity stocks like price < 0.1 and daily volume < 10k USD?I only include stocks with market cap > 1m market cap which helps a bit with liquidity. I'm not sure whether I excluded dark companies. I'll have to try the other things you mentioned.
When you exclude 2009 and 2003 are the returns still that high?Don't know and its fairly difficult for me to answer that so I won't. My screen was from 01/01/2000 to 01/01/2017 so it includes both the years you mentioned. But as far as I can see there are always some monster years. E.g. investing from Dec 31, 1993 to Dec 31, 1996 would result in a 10 bagger based on a conventional NCAV screen. In fact look at this paper it appears that the killer time for net-nets was actually the 1990's (see Exhibit 3). I don't really see the point in excluding years like this.
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I have been running backtests regularly on net-nets and related screens. An interesting thing I found was that the following screen returns about 80% a year according to EQBT on bloomberg:
1) market cap - net cash < -0.3 * market cap
2) and price/book < 0.6
I define net cash as cash - financial liabilities. Note I don't include operational liabilities like trade payables etc. Including operational liabilities reduces the performance of the screen.
My reasoning about net-nets is that the reason they do well is that they are able to last long enough that some good thing happens and the market revalues their business. They avoid the typical problem with deep value which is that the debt destroys the company and the assets end up being worthless. So I started looking for companies with a good debt situation which could last a long time. Hence the first criterion.
The idea of the second criterion is that you want a stock that is cheap. This is a net net like screen. My view is that it excludes the net-nets which typically do badly which are those which have very little cash, plenty of accounts receivables and even worse inventory and also a lot of financial liabilities. A typical example of this is SHOS (Sears Hometown). The reason these net-nets are not great is that the inventory often ends up worthless and the financial liabilities destroy the company. I've run screens for SHOS like companies and they don't do well though the appear to be very cheap when viewed as net-nets.
A typical net net screen does well but it includes shit and sugar. I think as investors we aught to think more critically about what assets are cash-like and what liabilities are truly dangerous vs non-dangerous. And why exactly net-nets tend to outperform vs the ones that don't
I've begin to consider a way of analyzing which assets are truly cash like using time series of balance sheet data. Often with assets that are convertible easily to cash you will observe that one asset will decrease at the same time as the other increases. Their increases/decreases tend to be very strongly negatively correlated. A sum of such variables would tend to be relatively constant over time. Over time there must be a statistical/mathematical way to figure out which assets are cash-like. In some sense they are not linearly independent...they are linearly dependent. There are non-current assets that I also think are cash like...an example would be long-term security investments.
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I think it is incorrect. You can see what RBC is saying...I would have quoted this:
The CRA considers that a foreignexchange gain or loss has occurred:
a) at the time of conversion of funds in a foreign currency into another foreign currency or into Canadian dollars; or
b) at the time funds in a foreign currency are used to make a purchase or a payment.
Or if you don't believe that ... AdjustedCostBase.Ca tells us:
A capital gain or loss is also realized when the funds are used to purchase securities that trade in the foreign currency, or when the funds are used to pay expenses or make a purchase. In these cases a deemed disposition of the foreign funds is considered to have occurred, even though they may not have been converted into Canadian dollars.Or finally you could check the CRA itself which as is often the case is really not easy to parse:
13. The Department considers that a taxpayer has "made a gain" or "sustained a loss" in a foreign currency only where there has been a transaction resulting in a gain or loss. Subsection 39(2) does not apply where a loss has been made "on paper" but no transaction has taken place. As a result the "accrual" method of accounting for foreign exchange gains or losses is not acceptable for purposes of reporting foreign exchange gains or losses on capital account. The following are examples of the time when the Department considers a transaction resulting in the application of subsection 39(2) to have taken place.(a) at the time of conversion of funds in a foreign currency into another foreign currency or into Canadian dollars,
(b) at the time funds in a foreign currency are used to make a purchase or a payment (in such a case the gains or loss would be the difference between the value of the foreign currency expressed in Canadian dollars when it arose and its value expressed in Canadian dollars when the purchase or payment was made), and
© at the time of repayment of part or all of a capital debt obligation.
So its not just when you convert back to canadian dollars. Its a deemed deposition of your foreign currency whenever you use it to buy goods, services, stock or bonds.
Consider the following admittedly ridiculous example, which demonstrates why basing foreign exchange capital gains on currency conversion alone would not work:
1) Person converts CAD to USD because he expects USD to appreciate
2) USD appreciates heavily
3) He then buy shares in company cross-listed on US and Canadian exchanges (e.g. TSGI) using his US currency on a US exchange
4) He then journals over the shares to Canadian exchange.
5) He then sells the shares.
In theory assuming the exchange rate and cross-listed company prices didn't fluctuate during steps 3-5 he would pay zero tax because he made no capital gain on the stock. And he would never pay any tax on the currency appreciation since he never converted the currency from USD to CAD.
This is why CRA requires that buying anything with a foreign currency is a deemed disposition of that foreign currency and can result in a capital gain/loss. With the CRA rules the speculator above could not avoid taxes because he would end up triggering a capital gain at Step 3)
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I've never relied on any Broker to calculate capital gains. I always just calculate the ACB myself. The think I don't like doing is the FX since you are supposed to account for your foreign currency gains in a relatively confusing and complicated manner.
For instance if you buy a stock with US dollars theoretically its considered equivalent to converting your USD to CAD and when you sell it, its equivalent to buying US dollars. So you have to calculate and adjusted cost base for each of your foreign currencies and each time your buy a stock it can trigger a foreign currency gain/loss. It weird that buying something can trigger capital gains but that is the way the CRA rules work. I would guess that very few people do this correctly.
This is my first year with IB and I haven't even really considered the implications of their automatic loans of foreign currency. In theory I guess when you buy a stock you would be entering into a short position in the currency...in this case "buying the short currency" and the when you sell the stock you would be "selling the short currency" so in the IB its seems to be a lot more straightforward since you would never trigger a capital gain from buying a stock. This weekend I'll try and write up an example on this since I imagine its confusing to many people.
If anyone already knows this, please share.
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The new thing here is having a bar inside the grocery store with a rotating selection of local craft brews. Very inexpensive, $3 high gravity beer, $6 glasses of wine. With daily specials taking the beer down to $2 a few times a week and the wine to $3.
I'm sorry, I don't mean to be insulting. But if you think those prices are inexpensive you're delusional. I can walk into my liqueur store and buy high quality German beer for $2.10 (tall boys 500 ml). For $30 ($6 a glass) I can buy a good Burgundy. For $18-$24 I can buy a very good bottle of Cotes du Rhone. The quality of these wines are very likely much, much higher than what you get in your grocery store glass. These are regular price btw, no sales. I live in Canada where alcohol is expensive due to taxes. I'm sure the prices are lower in the US for these items.
I should mention that I am someone who has plenty of money. I consider the prices you've listed as very high and would not pay. The idea that an average person would consider that very inexpensive is incorrect to say the least.
Liquor store is the same as a bar in Canada?
Grocery store is the same as a bar in the US?
https://www.charlotteagenda.com/41470/theres-a-killer-little-bar-in-harris-teeter-really/
as someone who has plenty of money, you would have a ball here. I guess you could finish up with the $12 cocktails we have in town afterwards, no doubt you can get them much cheaper and better quality in Canada at the liquor store bar.
There is no liquor store bar in Canada..not sure why you guys are willfully misunderstanding each other but OK.
Typical prices in Canadian bars are: $6-$8 per beer...maybe as cheap as $4 in Montreal or if you go to the right college bar. But $3 for beer, AT A BAR, is very cheap. But the real question is whether you are really getting a "Bar" inside a grocery store...typically people get drunk at bars, party, dance and socialize. The grocery store might not be conducive to that and so maybe it makes sense that its cheaper since its not really achieving the same effect as a bar.
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If Moleenbeek is a no-go zone, I'm not sure how I made the round trip from Brussels center city to the Atomium in one piece. Lucky, I guess.
Feel like I answered that already....
1) They are real but they primarily impact government and police not tourists and this is why when you look for who actually complains about this...its all quotes from government and police.2) Tourist people will never observe a no-go zone both because they aren't in places most people go and because they have no impact on normal people. A normal person would be unmolested in a no-go zone. But Police or government might have so many problems in no-go zones that they can't do their jobs effectively.
And to add to that from alwaysinvert:
You are correct, the direct problems with no-go zones (clan culture, Islamism, mob-like crime gangs, etc) primarily impact the inhabitants of the no-go zones.So the primary impact on people who are:
1) Government officials
2) Police
3) Long-term inhabitants of the area
4) The people who die in terrorist bombings
Tourists will be pretty much ok. Which explains why you didn't have a problem.
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Did Munger invest in spinoffs?
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Here is my take on no-go zones:
1) They are real but they primarily impact government and police not tourists and this is why when you look for who actually complains about this...its all quotes from government and police.
2) Tourist people will never observe a no-go zone both because they aren't in places most people go and because they have no impact on normal people. A normal person would be unmolested in a no-go zone. But Police or government might have so many problems in no-go zones that they can't do their jobs effectively.
AFAIK, every single comment in this thread agrees with the statements above.
But, to imply that no-go zones don't exist or aren't a problem is ridiculous. A large number of the terrorists in Europe were found to come from no-go zones....like for instance this one:
https://en.wikipedia.org/wiki/Sint-Jans-Molenbeek#Terrorism
Molenbeek is 5 square kilometers is size. Europe is 10.18 million square kilometers. Moleenbeek has 96000 people. Europe has 400 million people. So the probability of someone coming from Moleenbeek is
96000/400000000= 0.02% and yet the following terrorist incidents all involve terrorists coming from this one single area:
According to Le Monde, the assassins who killed anti-Taliban commander Ahmed Shah Massoud both came from Molenbeek.[12] Hassan el-Haski, one of the 2004 Madrid terror bombers came from Molenbeek.[13][14] The perpetrator of the Jewish Museum of Belgium shooting, Mehdi Nemmouche, lived in Molenbeek for a time.[15] Ayoub El Khazzani, the perpetrator of the 2015 Thalys train attack, stayed with his sister in Molenbeek.[16] French police believe the weapons used in the Porte de Vincennes siege the same day as the Charlie Hebdo shooting were sourced from Molenbeek.[17] The bombers of the November 2015 Paris attacks were also traced to Molenbeek;[18] during the Molenbeek capture of Salah Abdeslam, an accomplice of the Paris bombers, protesters "threw stones and bottles at police and press during the arrest", stated the Interior Minister of Belgium, Jan Jambon.[19] Oussama Zariouh, the bomber of Brussels Central Station in June 2017,[20] lived in Molenbeek.[21]...At least three of the terrorists in the November 2015 Paris attacks — the brothers Brahim and Salah Abdeslam, alleged accomplice Mohamed Abrini, and the alleged mastermind Abdelhamid Abaaoud — are men who grew up and lived in Molenbeek.So obviously there is a huge problem in Molenbeek and it is a real life no-go zone. Incidentally the Paris and Madrid attacks alone account for more than 300 people killed and that is in a space of around 11 years. School mass shootings (>3 people dead in a single incident) in the US have a total death toll over 4 decades of less than 300.
So all the lefties ringing their hands over US school shooting seem oddly complacent about the European no-go zones though they seem to be causing far more mass death and at a vastly faster rate than all the mass school shootings happening in the US.
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Why not compromise....redo kitchen. Usually there are a few rooms you use most...focus on those.
My mom wanted to redo kitchen and it cost $30000 which is not horrible. They had a perfectly good kitchen before but her sister did it and then she had to do it.
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This is one of those threads that the politics sections was meant for. Why was it posted here again?
My best guess is that there is no audience for Cardboard in the politics section, so he needs to post here.
Your right of course. The solution is to get an account on reddit and post there. Or better still run for office and actually try to change things.
I do the same thing in this forum but really its really just anger and frustration with stuff you can't change directed at the only people who will listen. The politics section was a good middle ground for that.
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This is one of those threads that the politics sections was meant for. Why was it posted here again?
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"We are outspoken about our optimism. These days, though, optimism seems to be in short supply. The headlines are filled with awful news. Every day brings a different story of political division, violence, or natural disaster. Despite the headlines, we see a world that’s getting better."
https://www.gatesnotes.com/2018-Annual-Letter?WT.mc_id=00_00_00_share_em
My basic assumption is that to first order all gains in health, lifespan and environment are a pure function of one variable: per capita GDP. And per capita GDP is basically a function of rule of law, capitalism and effective government. So I have always had problems with philanthropy because it appears to be a waste of time.
I'm very willing to be persuaded I'm wrong about this. Anybody have any good evidence that the Bill and Melinda Gates foundation has achieved anything?
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I've been thinking a lot about selling my most expensive net nets (trading at around 0.75% of NCAV) and buying even cheaper net-nets or ones which have heavier cash balances like Namura Shipbuilding, KDM Shipping or Kikukawa Enterprises.
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I've never understood the modern fetish for positive emotions. We are the products of thousands of years of evolution. If negative emotions were not important they would have been bred out of us a long time ago. Almost every single important step in my life was proceeded by a lot of depressive and negative thinking. And many of the greatest people were enormously negative...Lincoln, Churchill, a tonne of artists and writers.
When I watch Vikings I love the character Ivar the Boneless. And almost all the emotions driving the character are negative...anger, jealously, bitterness and feeling of inferiority. Its a brilliant show.
Scurvy and Vitamin C
in General Discussion
Posted
Another interesting character is Amundsen:
https://www.amazon.com/Last-Place-Earth-Amundsens-Exploration/dp/0375754741/ref=sr_1_2?ie=UTF8&qid=1523815373&sr=8-2&keywords=POLAR+EXPLORATION
A commentor from Amazon summarizes: