ZenaidaMacroura
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Posts posted by ZenaidaMacroura
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Perhaps it's time for a separate VPRT thread so this one can become un-hijacked for those that only want to be notified and read about Allan Mecham?
one step ahead of ya!
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This makes me smile just thinking about all the people attempting to bang out 500 pages a day. It was and is impossible* despite claims to the contrary. 500 pages a week is of course a different story and many people are doing that.
* When I say impossible, I am not referring to a single day in which it can obviously be done, but day in and day out where it cannot.
I think it can be done if you're the "boss" (per warren's case). I mean if you determine it's your job, and it's something that you enjoy, why not day in and day out?
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I think this is a great topic and I am still absorbing the article.
From this article and others, I am crystallizing my rationale for investing during times of very negative sentiment. I wrote (link below) that my best gains have been running into very unknown negative news. First example is in 2000 when US tobacco lost a $200 bil decision in florida. Unless overturned, the decision would bankrupt us tobacco. Fast forward today, MO and its spinoffs are up 7-10x. Second example, WLP dropped to $50 after the supreme court upheld obamacare. Today it is $100.
Obamacare and the Engels court ruling are both huge unknowns, so people just jump off, but to me that seems like the time to place my bet (with guidance from sources like the Harvard paper)....
Anyone else got other examples from recent memory? ...... My latest bet BTW is ERUS on Russia.....
http://bovinebear.blogspot.com/2012/08/why-i-own-wlp.html
Watchout tough, Berkowitz has the best approach in regards to crisis stock. Ask yourself if the business has an actual value for society. You might have been lucky with your tobacco picks.
Banks = Yes
Offshore Drillers = Yes
For profit education = No so much
Tobacco companies = No
I think that approach is too subjective to provide much value as a litmus test.
In the same vein I would argue that coca cola and krispy kreme's don't provide much value to society either...
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One thing I like to think about is how things would have changed for people had they been born at different times. What if you push Buffett's birth date back to say 1901? He starts his partnership and is a couple years into it around 1929. Would he have made the same decision to wind it up, like he did in '69? I think that is an easier decision when you are old and wise and rich, but it's hard to have patience when you are young and hungry. Maybe he would have gotten hit by it and would have come away with a more cautious attitude.
Malcolm Gladwell discusses this topic in one of his books. Maybe it was in Outliers. It's in the context of the luck component of success in life. How when you are born (and where you are born) is a large factor in what one is able to accomplish. He talks a lot about people like Steve Jobs and Bill Gates and how it isn't a coincidence that they were both born in the mid 1950s. That they both came of age at a time when computer availability was in its infancy and in a place where they both had access. So if they were born maybe even a year or 2 earlier, they come of age prior to that time and if a year or 2 later someone else beat them to it.
The other thing I remember about his discussion is how he looked back at how very few of the "most" successful people were born I think in the 1910s or 1920s because they would have come of age during the Depression and there wasn't the opportunities around, but someone born in the 1930s came of age after the Depression and WWII during a period of expansion.
He talks about Canadian hockey players and how most great ones are born early in the year because of how leagues are organized and how, for example, 8 year old boys are grouped together, but there is a big difference between one born in January and one born in December (almost a year older). Anyway, Gladwell is just pop science, but it's always interesting and applicable to the topic you raised.
Jim Collins posits an interesting counterpoint - specifically to the hockey example. In his book "great by choice" he says that although an overwhelming majority of hockey players are born in the earlier part of the year there is about a half and half split of hall of fame inductees (half born in the early part of the year and half born in the latter). He goes on to mention that this infers that a player born in the latter half of the year who IS in the league has a greater chance of ascending the ranks into the hall of fame.
His point being that time, place and luck can enhance someone's own ability and produce "good" performance but that truly exceptional performance may owe it's origin to consistency and discipline... (coupled with innate talent).
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I don't know if this is "cheap", but once I have sold my current apartment, I don't think I will ever own property again. Reason? Over the long term, I target 12% + from my portfolio. Why own property when (long term) it can't return much more than nominal GDP plus a bit. In the UK, as of last week, a married couple can invest £30k tax free, it was around £22k.
Thoughts? Does anyone else have this attitude.
It always depends how much you pay and the location. Real Estate can far outpace stocks IF you buy at the right place at the right price. Example of my current house. using numbers adjusted to 100,000.
Purchase price - 100,000
Down payment 10,000
Current price - 140,000
So equity went from 10,000 two and half years ago to 50,000
Assume it increases at 2% ie 2,000 per year that's 20% on my initial investment.
Mortgage+HOA+Insurance+Maintenance is less than rent so principal is accumulating as well.
Explain how that's a bad investment?
I think you may be taking for granted the assertion that "Mortgage+HOA+Insurance+Maintenance is less than rent." I find in many places the mortgage already surpasses rent by a fair amount (15-20%). I find that when the rent is more than the mortgage+et al then appreciation is pretty stagnant 5 years going out. Just empirical though, not a huge sample.
Then you have to lump in the frictional costs of buying and selling, as your property value increases so do the corresponding taxes etc...
You may have chanced upon a rare case. Incidentally there are (at least to me) more bargains in equities and distressed debts than there are in residential real estate because while some people will shun stocks until the absolute zenith of the bull market, almost everyone is in the market for a house if the price is right.
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I think a lot of high end labels - especially in fashion/clothing are not worth the price. They are just marked up more to create a perceived exclusiveness or veblen goods essentially.
But there is a certain genteel allure picking the exact fabric from which a suit will be cut - and for the finished product to fit perfectly as only something made specifically for you can. Ditto for the footwear.
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When I was in school I worked 2 part time jobs and saved every penny. I subsisted on mostly canned Tuna and Pasta. Eventually I started working for the dorm I was staying and and fulfilled my daily calorie requirement with my complimentary employee meal. This frugalness was not motivated by necessity as my tuition and living expenses along with a hefty allowance were paid in full by doting parents. I think I had one of the most miserable college experiences imaginable (for which I hold myself responsible)!
My college career started in 2008 and ended in 2011 and coincided with my investing the money I saved from my income/allowance. Due in no part to astute timing (it was all luck) I hit 2009 perfectly - at times leveraging to the hilt. When I started working in 2011, I think I spent just about everything I brought in in terms of my working income. Looking back it seems silly but I spent money on extravagant things such as bespoke clothing (cifonelli suit, hamilton bespoke shirts etc), St Crispins/Corthay/John Lobb shoes, and a similar calibre car. Along with the usual young adult expenditures on weekend outings etc. I can't say it wasn't a blast.
The (poorly conceived) rationale was that if I could compound the windfall derived from the finacial crisis at a moderate rate (leaving the principle and appreciation untouched) then the annual appreciation would eclipse my regular income. For the most part this has proven true to date.
But since early 2013 or so I have come back full circle. Although I have kept and continue to enjoy my previously acquired material possessions I think if I had a do-over I would opt to save the money. It's very easy to get lost indulging in the finest of the finer things in life. It is definitely worth aspiring towards and I think in a strange way the experience helped to redouble my efforts in investing/work...
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Doesn't depressurizing the cabin release the oxygen masks throughout the plane? Would everyone still pass out immediately with oxygen masks on?
I don't feel like they could mount an effective resistance being confined to overhead oxygen masks.
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Zenaida, hope your mom will do well, hang in there, all the best .
Thanks
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I work in chemical engineering and absolutely loathe the profession. I figured in a decade I would be ready to take the leap as I'm in my mid twenties and have a mid six figure PA, no debt etc. In the last 3 years I've compounded at a greater than 40% clip per annum. But recent circumstances have changed my view of my potential end-game.
My mom got diagnosed with stage IV NSCLC (lung cancer). She doesn't smoke (nor secondhand smoke) and it wasn't environmental - just an unfortunate genetic disposition. It is fortunate that my father (who works for the same company as I do) has a very beneficent corporate health insurance policy. If the cost had to be procured out-of-pocket one would have to compound my portfolio at a greater than 50% rate.
Additionally, the company is extremely accommodating allowing him take time off without notice to be with her whenever she's receiving treatment. I think it would be a bit much to have to worry about performance while enduring such an ordeal, high cost of medical expenses nonwithstanding.
Something to think about. :'(
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^Why do you feel so, given that the US is trying to export more.
hmm I feel that the presence of cheap chinese goods helps hold down the cost and improve the (perception of?) standard of living in the U.S.
The U.S. is always trying to export more, but as the domestic economy struggles to improve I think this may spur economic activity. Rising tide lifting all the boats and such.
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Outperform, but not necessarily return positive right (at least in recent years)?
Early in his career I imagine workout-type and special situations played a significant role in never experiencing a down year (as well as a little calendar-date luck).
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Added to my Jan 2016 KMI $30 strike calls. 2014 dividend is expected to be $1.72 per year. If it rises 8% a year for the next 2 years and the yield remains at 5%, we get a $40 stock and the $30 calls will go up 160% at expiry. If the yield increases to 6%, I will still almost break even.
As a poster on the KMI thread mentioned, KMI has authorized another $100M of common/warrant repurchases:
https://www.bamsec.com/filing/150630714000014?cik=1506307
However, per the 10K release last week, the company used the last $94M of the $250M authorization to buy back the commons. Thus, perhaps the company signals the share price will not rise quickly. There are 348M warrants outstanding @$1.80, or $626M market value for these warrants.
Btw, it's interesting to see a few posters entering market puts. I am keeping a lot of dry powder too, hoping for an opportunity to buy hands-over-fist soon.
Wait they backward adjust the calls for dividends?
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I find this pretty concerning that China is devaluing the Yuan. Most expect that this is driven by the slowing economy, but my concern is that the US is tapering right now, which implies rising US rates and capital outflows from emerging markets, which should devalue the yuan anyways, but China doubling down on it, when really they should over time be raising the currency is very worrisome.
In the short term this should lead to a pickup in economies that import goods from China? I don't see how this smooth things out for the chinese longer term, but it seems good for the U.S. economy in the interim...
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is putin really in full power tho? Lets take the olympics. What would have happened if he chose not to funnel away so much money to all the higher ups? I doubt he is some kind of russian superpower on his own. He probably has to please certain powerfull parties in his country, or else they conspire against him and hes fked.
Would be fascinating to watch that guy at work for like a month. Take an uncensored peek into his world.
I've always wondered this; To what extent is Putin (or any other person in a position of perceived power) acting of his own volition as opposed to taking action out of necessity to ensure their own survival?
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Todd and Ted were on CNBC yesterday with Buffett. The two were asked which investors they admire other than Charlie or Warren.
Todd mentioned Tom Bancroft, has anyone heard of him?
Ted said he admired David Tepper, that surprised me!
He does give off a sort of megafund honcho vibe on Bloomberg/Cnbc but I assure you Tepper is brilliant. He is a tried and true value investor in his distressed debt positions and if you've ever heard him speak in person (and take questions - answering "of the cuff") you wouldn't have trouble seeing why. I think he's easily one of the top 5 investors living today.
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I work in this industry!
Among diversified Chem producers the biggest boom since 2011 is in the ethylene cracking plants- it seems everyone has a few 1mil+ short ton facility coming online in 2015-17. There is an unbridled optimism due to the cheap shale/natty gas feed and everyone is scrambling to up their capacity.
We've had to re- apply for a permit to break ground 3 times because the c-suite wanted the design capacity increased (the latest iteration is capable of twice the original capacity). It seems there is pricing power now but once everyone's post financial crisis facility comes online in the next half decade the business may become more commoditized. Some of the more "specialty" stuff such as spvc might maintain their pricing power but it is difficult to keep the product spec and the capex is quite high.
East Asian producers took it to the chin as they don't have the pipeline infrastructure nor ready availability of cheap shale gas... most of the margin is captured in the downstream processes but these plays really embrace vertical integration. So it's somewhat hard to determine whether its the specialty nature/R&D aspect that is driving the high multiple - or if it's just firm's anticipation of being able to produce their end products at a fraction of the cost of competitors (located in Asia/Europe).
I'd say still highly cyclical but about to enter the boom phase.
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It is interesting John has this thesis that the telcos will get good pricing power moving forward - I am wondering if anyone else on this board has thought about this?
His argument is that due to the engineering limitations, it won't be possible to have an infinite number of cell towers to supply the demand for boradband wireless data in the next decade.... and as a result... telcos will have the ability to raise their prices.
i quickly checked my cell phone bills - seems like there is some truth to that. i am wondering if others agree with this observation. Are there any experts in telcos here (Packer? and others... ? ) that could weight in on this? Thanks Gary
I think he's on to something.
With more things utilizing broadband data (cars, phones, laptops, tablets, appliances) the demand should only rise. Another angle might be to buy QCOM.
Even my cable internet had pricing power on me- comcast, time warner aren't losing pricing power considering regional monopolies
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I've been hoping that this EM thing pulls MercadoLibre down to ~$70. That's a multibagger a few years out...
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Not to derail, but I've been wondering how essential it is to have access to one of these data sources when researching potential investments. I remember having them available in college but is that level of depth wholly necessary for value investing? It would certainly be nice but is that level of nuance a pre-requisite for good due diligence? *sorry end rant/question*
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http://www.washingtonpost.com/wp-dyn/content/article/2007/10/30/AR2007103002292.html
It always struck me as particularly prescient that he was able to make money on Freddie but was not enticed to stay around when the clock struck midnight. It's one thing to not want to be involved in an investment at all but to look at Freddie's earnings growth and return on equity in 1988 and 1992 and to take a substantial position only to subsequently sell it into an apparently strong housing market is lost on me.
He cites in the article that he sold primarily because they diversified into an unrelated line of business - anyone know what he's referring to? Also, given the reaffirmed earnings growth Buffett alludes to, would anyone here sell an investment that was showing stellar returns and guiding mid teens earnings growth just because it happened to diversify some? I mean if they were good at utilizing retained earnings before why expect that to change?
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I was wondering if there was a site that you guys use to access recent hedge fund letters? Most notably Appaloosa, Third Point, Greenlight, Baupost etc? I'm not opposed to a membership/fee site if they have "timely" letters (say Q3 or Q4 of 2013). Not necessarily for trades but more for the information...
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I will pass the information along,
I tend to agree that it makes more sense to keep the 401K intact given the relatively low interest rate on his mortgage.
Thanks everyone.
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I have a friend who is facing this dilemma - he works for wells and wants to know if he should liquidate his WFC shares to contribute to his mortgage:
I have an inactive 401k whose only future changes in value will come from reinvested dividends and the price of Wells Fargo stock. If withdrawing the full balance of $20,420 will eliminate approximately $22,000 in interest on a mortgage for a total mortgage balance reduction of $42,420, would you recommend pulling it or holding on to 410 shares of Wells Fargo stock. This WF stock is currently 91% of the 401k balance. The contributions total about $550 in reinvested dividends per year. Thank you and any legitimate advice will be eternally appreciated,Seems like on a 15/yr mortgage wells would just have to return 5% or so a year (dividends plus share appreciation) for him to be better off not touching his 401k?
You also haven't given a lot of relevant info eg
1. How old is your friend decisions are different for a 20 year old vs 60year old.
2. Is the 20,420 account value or it what he will get after taxes and penalties?
This is not advice its just an example of how I would think of this situation.
Withdrawing 20,420 now will eliminate 22,000 in interest over how many years? say 10 years left on the mortgage(just a guess).
Will the 20,420 in WFC stock with dividends reinvested for those 10 years be more than 42,420?
You're example is actually quite close - I figure that means wells has to return better than 8% (dividends plus appreciation) to make up the difference in the 10 year left scenario...
He's 26, married and although as aforementioned though it is not a "wells or nothing" decision, he does get to acquire the shares at a discount. I think the impetus of his question though is, as you say, whether to liquidate the tax-advantaged retirement account in order to pay off the mortgage.
Insider buying, how important is it, how to track it
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What would be the most effective way to screen only small/microcaps?