Spekulatius

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die. But in reality, if you made mistake, you get the boot or as they say "retire". Despite this, I think Berkshire has some of the best executive/employee retention track record. Does anyone here know how Berkshire pays its managers and what are the tools to keep them on? It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it. This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective. I suspect the acquired business weren't that great and t wasn't just the decline in the price of crude that impaired the,. WFT for example appears to run their business very poorly, or they become poor business while they own them. The executive probably was canned, because that was an unforced error - WEB encourages bold on acquisitions, but does so, because they are supposedly low risk. I think he sees the acquisition price and probably was Ok will what they paid, but if the business owners twelfth is crap, it's on the executive and in my opinion should be dealt with, From my perspective, the due diligence that a lot is of executives do on these acquisitions is laughable. I have experienced a few as an engineer where I thought that sending a few good engineers and operations people into the to be acquire company for some due diligence would have uncovered issues very quickly, the came later back to haunt. in public companies, failure with acquisitions are rarely acknowledged an much less leads firings, at least not at the executives ve level. It can lead to consequences at a mid r upper management levels, when they can't get a handle on fixing something that supposedly did not need to get fixed to begin with. My favorite quote from the Sopranos applies to the business wowners world as well, maybe even more so than for the Mafia: "Money flows up, shit flows down"

Looks like WEB really dislikes DOW and hedges his exposure. I think he is onto something,because DOW was snreally to a large extend a commodity chemical company that claims to be a specialty checmical company and that will at some point see a Dramatic reduction in margin. I think it will be a great short at some point. Besides that, even specialty chemicals see large variations in margins, that tend to expand early in the economic cycle and contract in the mature state. There is a lot of petrochemical capacity being build in NA, which I think can lead to oversupply issues.

"An investor should ordinarily hold a small piece of an outstanding business with the same tenacity that an owner would exhibit if he owned all of that business.” And another one... To make money in stocks you must have “the vision to see them, the courage to buy them and the patience to hold them.” And another one... You've gotta know when to hold them and gotta know when to fold them....

The vacuum tube for the Hyperloop just needs to be large enough in diameter to fit a train through, unless Elon Musk plans are more grandiose than I thought they would be. A tube of let's say 5 m diameter is possible, it is in fact not that different than a pipeline tube, which are able to sustain very high pressures. I will rest my case in this thread, it just encourages trolling and there is not relation to investing either.

I think the issue with a lot of deep value investor is that they forget about rule #1 from Buffet (or Graham for that matter) : Don't lose money! With most of Choe's holding, I see a lot of ways where he can lose money - VRX, RFP and other are very very risky stocks. They may trade below intrinsic value, but there are huge error bars with those intrinsic value estimates. I think WEB had very low losses throughout his career, because he considered the downside much more than Chou does and stayed within a much narrower circle of competence.

The tubes are not the issue, it is easy to build tubes that are able to sustain athmosperic pressure, what do you think vacuum equipment is build of? The idea of a hyperloop sort of system is very old - I have a future tech book from the 70's, where Systems with tubes and trains under vacuum driven by electromagnetic fields were proposed. The problem is not to thinks this up, it is to make all that work, to put the huge infrastructure in place, design the trains, power them, find a way to sustain vacuum (how do you do that with trains getting in and out?), to power the trains and to do all this safely and cost effective. Itis going to be a long time, until we see something. Also keep in mind that conventional trains can do 250mph and more, Maglev trains can go even faster. the quantum jump of a hyperloop is not even needed, if we could just exploit current technology and put it into place. Even that is not happening in the US, because it is too expensive, at this point the hyperloop is just futuristic nonsense when we can't even put a decent high speed rail in place in the US.

Well, can the taxes realy go to zero, if the property value goes to zero? A house may cost 30k, so if you keep the property tax at 1.2%, like it is in other parts of the US, this is $360 per year, can this really pay for firefighters, schools etc? I agree that property taxes are too high in some areas, but at some point, you need to look at the tax as the price for services provided, not a percentage of the value of the house.

Trading on Trumps tweets are Hail Mary's... I bet he doesn't even remember in the evening what he tweeted about in the morning, the ridiculous fact aside that he uses this medium to begin with. Didn't one of the he value guys state in his letter that the he majority of the Millenium generation trades on Trump's tweets? God bless them.

His banks stocks are working obviously. Who knows whether others will work at some point too perhaps. I guess if you are a value investor you should always look into the intrinsic value vs. the market value. Not market value as an absolute indicator... I think the intrinsic value of most of his holding has been going down. Someone in the SHLD thread brought up the great mental picture of a large sack of cash that is on fire. Well, it matter less how large the sack of cash is - the much more important question is if the fire can be put out at all, because if it can't, the cash will turn into ashes; is is just going to be a matter of time.

Chou' style seems to be to buy really crappy business at a very low price. This does not seem to work out well right now.

I would think that Hertz should resolve this, if their Fastrak does not work. My experience is that Hertz has come from best in class for service to sleazebags, who try to nickel and dime their customer at every opportunity that represent itself. I had a case where the charged me a ridiculous amount of insurance for a rental at a business trip to Europe, and pretty much decided that I will never touch Hertz again (i was Gold member). No surprise their stock is in the toilet, imo. P.S Nice talking to you the other day :-)

I agree with Scott here. conventional wisdom get you conventional results - if you are happy with that, fine. If not, think different! While I don't agree with everything that Scott writes, unconventional thoughts add much more value to these boards than rehashing the same things over and over.

IMO, this really is the key ;) Scott's shit smells better than mine. I personally love rubbing my nose in it

In my opinion, one should sell when the initial thesis to justify the purchase was found to be incorrect, or when adverse things occur, that have not been anticipated. Just empirically, I have found that the initial stock movements, as significant as they appear to be at that time, rarely are large enough to capture the full impact of change that occurred, which means that more declines are likely. I am not talking about 1c /share earnings miss here. I am talking about a significant shift, like a huge write off, and large unexpected loss, a severe decline is margins or revenues etc. that were not expected at all. If these occur, my rule is to sell as quickly as I can and then to re-evaluate.

If the zombie status remains as it is right now, ithr common and preferred are zeros too, it just will take a long time until all hope isn't gone and the stock prices adjust accordingly. And its been discussed multiple times over the "zombie status" cannot persist. I beg to differ. Whatever can exist for 9 years can exist for 90 years. I have never heard a convincing argument why not. I agree that it those entities probably will not remain in the current state, but I think they could, especially since the status quo works really well for the government right now.

For US stocks, that depends on whether tax reform gets done in 2017 like they're aiming for. Assuming rates continue to slowly rise, then if the tax cuts are deep the market is not expensive. If they pass something mediocre, I'd say the market is somewhere between stretched and very expensive. If they can't pass anything, then bubble's the right word. Right now, the market seems to be betting something big will happen on tax reform before the end of the year. Time will tell. As for large cap US tech growth stocks, they're still between cheap and fairly priced. From what I've read, mid-caps are the most overvalued stocks. Relative to other stocks, I agree that large cap tech stocks are not overvalued. I think the case can easily be made that GOOG for example is undervalued, since it is a business with vastly above average prospects trading for not much more than the market multiple. I think a lot of overvaluation is in crappy small cap and mid cap stocks, as well as in somewhat cyclical business Tax cuts don't matter for the valuation, in my opinion, unless they favor stocks over other asset classes, which I don't believe to be the case.

I have yet to click on a FB ad as well. I don't do much FB either, I have used it more about 2-3 years ago, but found it a waste of time and now use it only occasionally. I am obviously in the minority based on FB business prospects.

Don't we have a bubble right now? Bonds, stocks, real estate... But then again, bubbles are only hubbles in hindsight after they popped. Before they pop, they re called secular trends, peak X, Outsiders companies etc.

If the zombie status remains as it is right now, the common and preferred are zeros too, it just will take a long time until all hope isn't gone and the stock prices adjust accordingly.

I don't know -- I've made good money in crowded, megacap growth companies. Should I give it back? You will. 8)

My longest held shares were Nestle, which I bought in 2003 and sadly had to sell in 2013, because I had to liquidate my foreign account in which the shares were held, because German brokerages would not do business with US persons any more, due to onerous anti- money laundering laws. I rebought Nestle again recently when the stock fell somewhat. My current longest term holding is LAACZ, which I purchased early 2012. I found that buying shares that don't trade much easier to hold, because they are harder to sell. ;)

The real estate market is no more logical or efficient that's the stock market or the market for Pokemon cards. It will only be efficient if the market participants are rational. the whole point of a bubble is that prices can far exceed what people can actually afford - for a while.

Which other store let me buy a nice $7.99 charge cable for my ipad and have it the next day, free of shipping. I even got a tube of my favorite German mustard for $6, shipped from France. No other store can get me this.

If the bubble is as big as it looks like and the popping of the RE bubble in the US is any guide, than you don't need to time this perfectly, in fact t is probably better to wait after the prices have turned down for a while. US RE went from red hot to cold in fall/winter 2005 and it took until 2007 to play out.

Thank you for the heads up Scotty. I will habitually continue to puff my 50c/$ cigar butts until the day I can't find them any more, or I become engulfed into the "All becomes One™ " singularity that you have been talking about.