GregS

Teen retail maybe?

Does she qualify for premium subsidies? If not, then it might make sense for her to go off exchange and purchase HSA compatible plan directly from an insurance company. If available, she can check out Kaiser Permanente. My g/f uses them and she loves it. It's an one stop shop for her. She also like their online portal for scheduling doctor appointments and prescriptions. She does not qualify for a subsidy. The issue is we researched to find her top doctors and these top doctors will not accept Obamacare. There is a huge spread in competency of physicians. You know what they call the medical student that finishes last in his/her class? Doctor. Also top hospitals, where you would want to go with some life-threatening situations, are opting out of Obamacare, http://health.usnews.com/health-news/hospital-of-tomorrow/articles/2013/10/30/top-hospitals-opt-out-of-obamacare Or they are like Cedars-Sinai Medical Center and have only one company in their respective networks LA is a crazy market because there is a huge spread in quality between top and bottom. There's a lot of garbage health care in LA, even at big hospitals. Where I am in the Sacramento region, there are only a few big health systems and the level of care is much more consistent across the area. Sure, there's some low quality but not at the scale of LA. We have top quality but probably don't match SF or LA for the very elite care in some areas. If you want your daughter to have access to the very best doctors and hospitals, you are going to have to pay for it. Blame Obamacare if you want but it was like that when I lived in LA from 99-07. I'm completely biased, because my wife is a Kaiser physician, but check out Kaiser. When she was at med school (in LA), I got to know a lot of students. Of the ones I would trust my life or my family's life with, a great number of them went to Kaiser. They want to practice medicine and don't want to deal with the business/regulatory BS.

We're having a pretty epic drought here in Northern California...my water utility's intake pipes in Folsom Lake will be sucking air in a month or two...but yeah, you are having winter weather in winter so must be no global warming. Got it.

I read this article on problems auditing cash balances in China awhile ago and it gives some insight into the basic audit process and what can go wrong. Definitely worth a read. http://www.chinaaccountingblog.com/weblog/auditing-cash-in-china.html Basically, it goes like this: Auditing a bank statement should be the easiest thing in the world (it's also critical). The auditors get third party confirmation from regarding balances from the bank and it matches the company accounts, and the overwhelming majority of the time they match and that's it. But auditors get complacent and lazy like people sometimes do, and the article describes a case where PwC let the CFO fax the confirmation to the bank himself (I'm sure the CFO was very helpful and insistent) and he faxes it to another machine and forges it and faxes back. Totally stupid and wrong for the auditors to do that, but it happens and all the investors have left is a civil claim. Note that the threat of liability and professional discipline wasn't enough to keep the auditors on task. But other auditors do what they are supposed to do and correctly do the third-party confirmation. And it comes back clean, except the CFO who faked the accounts know they will do this and bribe the low level official at the local bank branch, or find some other way to muck up the confirmation process. The auditors fulfill their duties and investors get screwed, because a company hell bent on fraud will find a way to cover it up. So now you end up in the situation of the China MediaExpress Case. Deloitte gets wind of possible fraud (I don't recall how) and decides they are going to contact the bank's head office instead of the branch. The company refuses and Deloitte resigns. Investors get crushed. Note what Deloitte was doing here was beyond what is normally required of auditors, unless there is strong reasons to suspect fraud. I'd argue that account confirmations for every company in China at this point need to be done this way, but that's not going to be the case in the US (in fact, my advice to any accounting firm wanting to audit a Chinese company is "don't"). The broader point is this: bank confirmations are simple, but even then the auditors can be deceived. Now imaging trying to do the same process for inventories, shipments, sales contracts, etc. The company can easily move product around and fabricate documents. In many cases, third party confirmation may not be required (if I recall correctly, it depends on the auditor's assessment of fraud risk). There's a lot of ways an auditor can be fooled or miss things. It especially doesn't help that if the CFO and controller are in on it, they are probably former auditors who know exactly what their auditors will look at.

Do NOT rely on the auditors to detect fraud. I worked as an audit defense attorney. ItsAValueTrap nails it: I've worked on cases with Big 4 firms (umm, used to be Big 5), small and midsize firms. Cases involving small companies, big front page stuff, and one of the first Chinese RTOs to blow up. In no case have I seen anything that would suggest the auditor was in on it or ignored it. When the company blew up, the auditors were as surprised as everyone else. Auditors must rely on management representations in order to conduct their audit, and management bent on committing fraud will work as hard to fool the auditors as the investors. I would say that sometimes there have been questionable accounting decisions where they let the company get too aggressive. Read the footnotes and try to understand how the accounting impacts earnings. Understand the industry to know what's normal. Be careful with complex businesses. The books suggested above have techniques to identify problems. Watch out for auditor resignations, especially if questions have been raised about the company. Auditors will never say fraud has been committed because they can't. The closest thing they say is don't rely on our reports. And as far as an auditor's history, I would say that technique is better for identifying short candidates than longs.

One thing that is key is if you want to learn to invest in individual companies, use real money. Nothing focuses the mind like the risk of losing money even if it is a small amount, as long as the amount is significant for you. I initially tried investing on Investopedia's simulator and I never really cared enough to do the work and my results showed. When I started investing real money I started getting much better results and learning much more. For $1000, yeah, you are probably limited to 3-4 stocks. Get the cheapest online broker you can find. Try to keep transaction fees to 2% or less per transaction, preferably 1% or less. But don't sweat it too much initially. Want more money to put to work? Earn wages from your day job and save. Also, remember that for stocks with reasonable liquidity you can go ahead and buy 10 shares or even 1 share. I've heard advisors and journalists tell people to buy Apple options because the price is too high for the stock. BS. Buy one share, buy two, whatever. Try it, it works. Reading investing books is a fantastic way to learn investing philosophy and methods and the ones mentioned above are all great, but nothing replaces actually doing. Nate Tobik has a great recent post on Oddball Stocks about this. It not only allows you to practice what you've learned, get better and find weak points, but it will help you develop your style. This is very important. The key to style is to fit your personality. If you don't invest in a style that suits your personality, you will bail when it gets hard, which it inevitably will. You have to have confidence in what you are doing and the only way to develop that is by actually doing it. Regarding books, my favorites for the beginner are: Intelligent Investor - yes, it's dry and somewhat complicated, but you either get the philosophy of Margin of Safety, Mr. Market, etc., or you don't. Good read to discover if you are truly a value investor. Lowenstein's Buffett bio - great for learning about Buffett from the big picture perspective, especially for the beginner. I would recommend people read this before Buffett's letters to give you more context for Buffett's writings. One Up on Wall Street - Lynch comes closest to anyone of writing a how-to manual for the amateur. Just watch out for the PEG ratio - it's a screening tool, not the basis for investments. Other books mentioned by people here are all great. Also spend time reading about industries and successful and unsuccessful companies. Books, articles, journals, annual reports, anything you can get your hands on. Ratios are great, but the real key is learning about business models and real competitive advantages.

There's no reason you can't give her advice to act on now and still tell her to go to a financial planner when she can find one. While putting the money into a target retirement fund isn't the best choice, it is the best choice for someone who doesn't want to do much work or doesn't have the capacity to manage their own investments. Even picking mutual funds will trip up most people. This is a 401k, so I assume it is for retirement, but anytime someone is asking for advice about money (formally or informally) their time horizon is the first question to ask. I would recommend that she go to a financial planner, but would let her know to do the target retirement fund first. I've seen first hand from my friends that many people delay investing at all when they don't understand what to do. They freeze, sometimes for years. She can get started compounding her money now in a "second best" solution and when she has real assets later the advisors will find her. I agree that you should tell her to forget about it. Tell her to give you a call when she gets nervous. Stay the course is almost universally the best advice for people in their 20s and 30s when investing for retirement.

The Manual of Ideas has an audio podcast with interviews of professional investors. It was great for me while marathon training.

Taking everything you said at face value, I think fair price would be a bit above book, like 1.2x. 1.5x would be on the upper end. I think it is very difficult for an insurance company to grow consistently because attractive returns even in a niche will attract competitors and put pressure on rates and underwriting. Good insurance companies will retrench a bit during soft markets. You mention the market is hardening, which is great, but at 2x book, I think much of that is already priced in. If you really like the management team, I wouldn't necessarily call it a sell at 2x book if your time horizon is many years. But probably not a buy, either. One key question: how much of the recent growth is organic vs. acquisition?

I agree with those that say risk in investing is not volatility, but the permanent loss of capital. With that in mind, I think the only way to lose money investing in Berkshire is to use leverage.