DoddDisciple

Bump. Curious about this too. For Worldwide Fundamentals, how good if the data? Is there a screener? Thanks :)

This is all based on your network. I'm sure several people on here trounce fund returns, but how many qualified investors do they know? You are a qualified client if: You have an individual net worth, or you and your spouse have a combined net worth of $1.5 million You have at least $750,000 in assets under management These folks (and the net worth echelons above them) are all you want. I don't see why anyone would want a group of lesser accredited investors you can charge a paltry 2% management fee to. Sure, raise $50M, take home a cool $1M if expenses are low, but how likely is that for the average sod? While I think you can get around SEC filing based on number of investors, can you get around guidelines for performance management fees?

While I appreciate the humility, I have to say that you honestly do teach more than any finance class :) As a matter of fact, I would have no problem using some of your writeups as case studies to explain not only finance concepts, but business in general. Of course, that wouldn't fly at all since you don't have PhD at the end of your name and actually have real-world experience and sense ;) At times I'd like to say that my trend of having poor business professors is just a string of bad luck, but as I read online and talk with people, I have a feeling I'm giving most of them too much of the benefit of the doubt unfortunately. Anyway, listen to Nate; he speaks with wisdom. The whole needing to know "where they're headed for 10-15 years in advance" is especially pronounced in business students, and it's sad to be honest since I don't really think people recognize the 20-30 years in between graduating and becoming CEO. Also, I'd really recommend just not studying business at all at the undergraduate level, especially if you're going to move onto a Master's program. Maybe pick up the accounting classes needed for the CPA, but that's it. One minor regret I have is graduating early and just going through the motions in a lot of business classes I didn't care about versus picking up a minor or major in Philosophy. The fact of the matter is that, at it's core, business education is almost an oxymoron. Most of marketing and management consist of vocabulary obfuscating very simple concepts. Finance removes a connection between assets and the "math" used to value those assets. Accounting is just memorization. Be different. You are the only person who knows what's best for you.

No problem. Let's me rant a little anyway :P The author at the same link also has a video/post sort of in line with this I think too: Again, not trying to be a downer or anything, but eventually, you realize the system doesn't work the way people say that it does. Irregardless, credentialism creep is a big problem. Just to illustrate, I've came across several people who have a MBA, MS Accounting, CPA, CMA, CIA, CFE, CFM, etc. as their background. Like it was literally their name and then a spillage of like 10 alphabet soup licenses/certifications after their name. It just gets crazy to a certain point and there's no way one can truly defend such insanity.

Good advice. You are expensive meat to your employer. Don't look to them for support. They will fire you to save a few pennies. Return the favor :D

I'd say the sciences in general are a bad field unfortunately, especially without a PhD in hand (even a Master's isn't that great since typically it's awarded on the path towards a PhD, if at all). I did the majority of a MS Finance at an AACSB accredited/CFA partner school. It was quite literally a joke, especially from the perspective of wanting to learn how to manage money. I was somewhat optimistic going in, and wasn't foolish enough to expect anything all that great, but my god :P Let me just go over a few things that characterized the program. The "capstone" class consisted of doing "presentations" on CFA problems already answered and explained in the text. Like, quite literally, people got up and were dressed in suits to read the answers in the book to us. Another class was solely case-based. The professor lectured three times, and each time, they didn't even lecture the entire class period. The only thing they did was sit in the front row and play with their iPhone the whole time, and tell us when time was up and then ask a few questions on the case. I had 3 other classes with the department chair that consisted of just a single multiple choice test. I could go on. I get it, teaching is a burden for a professor. They hate it. We are mere worms to them distracting them from their "research." Then again, I actually was bored and read some of the professors' publications. I don't really get how any of it extended the frontier of knowledge within the field. Hell, one professor specialized in derivatives, but had never bought a single option in their entire life. So anyway, there's no reason to do a MS Finance unless you have a particular plan in mind, and definitely not doing a PhD in Finance unless the stars align perfectly. Finance academia is actually pretty glutted in that finding a decent-paying job is difficult. The reason being is that finance attracts a lot of people who couldn't hack their original quantitative field (engineering, physics, etc.), but there is overlap in coursework, so they switch over to finance so as to not have wasted all their time. Again, you'll learn nothing, much less if you want to manage your own funds. I learned more reading the majority of Oddball Stocks in class. The professional advice of the professors was to actually find a endowment or pension asset management job since it was "easy" and "impossible to get fired if you get did what everyone else did."

Speaking of Biochemistry, I've got a friend who recently completed a PhD in Pathology. The only nibbles he is getting are in lab jobs that he could have pretty much done as an undergrad (or, if we're really honest, as a 16 year old with some on the job training). I've got another who has a Bachelor's in Biochemistry who is having problems finding the same sort of jobs since she lacks a graduate degree. As a matter of fact, she was trying to get a job at a place that just does drug testing on urine, and they wanted her to have a Master's :D

Well, if you happen to have a lot of student loan debt, I would advise you to stick out at that position until 10 years total if the numbers work out. You can get a public service forgiveness at a non-profit on federal loans. In regards to value investing, well, good luck. I'd say Nate at Oddball Stocks is the most prolific person in this space, and it doesn't look like anyone is going to come in and scoop him up. The fact of the matter is that it's a buyer's (i.e., employer's) market. Employers want you to do free work for years, THEN pick you up. I mean, the ValueUncovered guy developed a pretty good body of work and then got a semi-value investing related job. Course, I think he had a spiffy MBA degree too. If you're interested in deep value investing a la Nate or me, there are pretty much no job openings, and even if there is, you have to haul yourself halfway across the country to get them depending on where you're located.

I'll toss this out there too. The average accounting/finance job that a BA/BS in either subject could get are now being outsourced. There really isn't much reason to pay a domestic worker more for a task that pretty much at it's core is data entry and analysis. Sure, auditors and the like still have to physically go to the engagement sites, but I wouldn't be surprised if they keep requiring more education, certifications, etc. for people to keep the same job domestically. They've pretty much done that with the 150 hour requirement when before, well, just take a look at this: http://captaincapitalism.blogspot.com/2013/09/10-years-of-unnecessary-hoop-jumping.html TL, DR is MNCPA board chair didn't even have a college degree, but was able to pass the CPA when it was arguably harder to do so. Food for thought.

I'll just toss up some general opinions since I was an undergrad accounting and finance major and have 2.5 Master's degrees in the same :P Accounting really doesn't pay all that well unless you go the Big 4 route, and even then, if you sit down and calculate your hourly rate, it's not worth it. There are more job openings available in accounting, but the average pay rate isn't all that great (which just goes to show how much WORSE most other majors/fields are). Just to compare, I'd say a public school teacher makes more when you factor in the 9-month schedule and if they are willing to just put in the 35-40 hours a week and treating it like a "job" vs a "calling." My experience with the subject has been that it is pretty much memorization. You don't really "get in" and "understand" the financial statements. Additionally, the whole major is obsessed with getting a job in public accounting, which if you're like most accountants, you won't, and then you'll secretly loathe learning all this Sarbanes Oxley minutiae ;) That being said, don't even bother with finance unless you have connections, live in area with decent financial services firms that YOU want to and are able to get a job at (say you already did an internship with them). I'm very interested in value investing too, but I'm not going to pretend for a second that I'll ever do it professionally (even though I've had numerous finance professors who've never bought a single share of stock or derivative, but they have the PhD and I don't, so I can't question them). The fact of the matter is that, for an average student at an average school, finance is a WORSE choice than accounting. Depending on where you are, you may be able to get a job at a podunk bank, but then again, you could do the same with the accounting degree. Now, let's talk about the prominent designations in either field, the CPA or CFA. Let's look realistically at which one has a quicker route to actually obtaining the license. The CPA is pretty much offered year-round at prometric centers, and is broken down into 4 parts. If you get 150 hours (and the extra 30 hours can be in anything, again showing that it's just another hoop to go through, so you could pick up an extra "dummy" class every semester and do it without a Master's) and obtain 1 year of pretty much any sort of work experience (depends on the state, but most are very lax in what qualifies), you can get to add the CPA to your business card within 1 year. However, the CFA test has parts 2 & 3 only offered ONCE a year. CFA level 1 is offered twice. You could get 1 & 2 done hypothetically in one year of course. They are more expensive (pretty much $1k a pop vs $1k TOTAL for the CPA). You can only take the CFA tests in certain cities (you may have to travel and account for that cost). Then, on top of that, it requires 3-5 years of more specified work experience, and even more if your duties don't fully "count." So you could go down this route, end up in a job that doesn't really count and require the CFA, and be done with 2-3 parts of the test and it pretty much not count for anything. The curriculum doesn't have anything to do with value investing, so it won't help you there. It is mainly a designation for analysts. Really, both aren't all that great to be honest. I mean you may make double what an average full-time college graduate can make, but that extra money will be squeezed out of you. Sure, you can become CEO, CFO, etc., but what happens if you're not and you've wasted half your life selling widgets that people really don't need? Fact is, either route is extremely risky and you're preparing yourself to be pretty domesticated as a worker. Just one slip up, and you can be blacklisted from the higher echelons of the field forever. Hope you're getting these degrees on the cheap :)

Nice post RKB :D Honestly, if you look at government spending as a % of GDP, especially if you include state and local government, it's insane. It's a "the bureaucracy is expanding to support the needs of the ever-expanding bureaucracy" sort of thing.

I think they'd grandfather ROTHs. They honestly can't be stupid enough to shoot themselves in the foot when all of the vehicles they've created, they are partaking of the benefits themselves. Just like the extra pre and post tax money people can put into health savings plans. They say it's for the "poor" and "uninsured," but honestly, neither group do I see putting $12k per year into such plans, but overpaid government works, certainly ;) Then again, they've been known to do such things. Like with the health care reform pretty much killed high deductible plans. I could get one for $25-$50 monthly and then self insure up to $5k per year in costs (exactly how insurance should be). Now, unless I get it through an employer, they want me to PAY $3k-$5k or even more a year for health benefits I don't want. I saw on my wife's plan the combined rate with employer and employee contributions was $12k-$13k PER YEAR for a 22-23 year old with no health problems. Just give me that extra money and I'll self insure :P

All this is going to do is increase costs, and yet they are also rolling out the myRA which is a 100% money grab. It is quite possibly the scammiest thing I have ever seen the government try to peddle at large to the public, and they are using weasely words and marketing to help ensure people take the poison.

Why on earth would you want to go public? So many of these legitimate microcap companies want to go private. You could list fee shares on Crypto:Stocks and deal only in BTC. That's the absolutely cheapest route. Just need an email address :P

How are they going to keep track of this for people who hold tax-preferred retirement accounts at multiple brokers? What about ROTH vs traditional IRAs? Are they going to have similar limits on the absolutely terrible myRA plans they are rolling out?

Honestly, from a philosophical perspective, BTC doesn't interest me as much if you can use it to buy throw pillows on Overstock.com. All that's going to do is allow businesses to save on the credit card processing fee somewhat and be a pain in the ass if you actually want to return something. I was reading Bitcointalk and actually saw an interesting post regarding how corruption in China may be tied to 10%-20% of the wealth in the nation. There have already been instances of corrupted officials transporting their gray wealth in areas such as collectibles. One thing that was fascinating were these 1980 Zodiac Monkey stamps that have a value of 8 cents RMB, but trade at 10k+ RMB. BTC or some alternative could be a better proxy for under the table trades: https://bitcointalk.org/index.php?topic=483304.0 A currency/commodity built on corruption & criminality; now that sounds sexier :D

As a rule of thumb, do you think requiring insiders/restricted/large shareholders to hold a decent amount (calculated as what's not in the free float since it's hard to get accurate insider & 5% owner data) and seeing if an M-score calculation on the firm check out will be sufficient? I was getting a lot of OTC Chinese stocks in my screens, DSWL being one of them, and I know some where RTO, but now have 5-10 years of data.

I think gg is right on point here. As an example, after oddball posted a link to a video game store for sale on the "What to do with $100k cash" thread that was nearby, I actually went through the store's UPC list and valued them according to Amazon resale value on the inventory. Even being a little generous, of the $30k they listed at, the inventory was maybe worth $3k-$4k or so, and that was assuming 100% sale of all products, which wasn't likely given the low sales rank (or popularity) of a lot of the products. In addition to this store, I've valued about 2 other stores the same way with similar conclusions. I can't imagine trying to get into a business where you just have to "take the owner's word" as to the value of the inventory/operations.

At those rates, I wouldn't have a problem if the employees robbed me blind. Those are super below market rates in either case, especially if benefits are included in that wage, and they'll want to make up for the differential some way. Why work their duffs off to make you money when they could just go find a do-nothing govt job and have less stress and generate a higher hourly rate?

Yay, Facebook : where a good portion of the profiles are fake and the bought ad traffic is suspicious :)

It seems like some of the rule changes reduce competition. This seems to often happen, in many industries, when regulations are increased. They are often increased after a crisis. The large, entrenched players welcome the new regulations. We saw what the Sarb./Oxley regs. did for smaller public companies, we saw what the new banking regulations did for the smaller banks. This isn't to suggest things should go unregulated. It is just something I've become aware of over the years. The big players (who survive the crisis that is the impetus for the new regulations) often appear to have a much stronger position going forward. Exactly. This is what really surprised me about this regulation. I may just be stupid, but I thought you could charge a performance fee to accredited investors and not just a management fee. Who can blame Sonkin for shutting down Hummingbird/Tarsier in this light; I'm sure his newly offered day job would have paid more! Really, the finance industry seems to exist to just serve itself. I joking believe the master plan is to get most people stuck in index funds but charge 1% or more for the privilege. I've seen this in so many retirement accounts. You have the manager leeching 20% per year or so if you're lucky, and then you have the government sucking out the reduced amount when distributions are forced out.

I was just talking about $500k today, not in Buffett's time. I don't think you could setup a $500k investment partnership and charge performance fees unless everyone was qualified investors.

Connections and AUM. When I see this math I wonder why someone's taking the risk of managing money? Most people doing this can make the same amount doing the same thing for someone else with zero risk. There is zero liability risk etc. Unless you can raise a substantial amount of capital, or you're doing it on the side for some spare pocket change the economics are tough. On the other hand I know someone who opened a RIA. They are managing any and all capital. If a retiree wants them to manage their 401k they have a strategy for it. If someone wants a value strategy they have that as well. They aren't AUM constrained, I like that approach a lot. Yeah, I remembered your post on here when I found this out. I was looking to consolidate some family accounts at IB and operating them pro bono, but unlike it the past when I was very explicit in my questions and was told one thing, when it finally got to opening the accounts, what I was told was possible, wasn't, and I was just curious and looked at RIAs some. The economics make no sense to those without connections or those with large AUM. You couldn't just get a few people today together and offer the same Buffett partnership scheme. If I'm reading this right, you can't get 5 people to pitch in $100k each and take a performance fee. I can see why innovation is in such short supply. In regards to the RIA you know, if you spend a few hours with each and charge a fixed fee or management fee, I can see it working, but then of course, you're almost in the marketing business instead of the investing business. Then again, most people aren't willing to just pick up a book to figure out how to invest the money themselves (index funds, etc.), so there is a market for it.

I wasn't aware of the recent 2012 designation of accredited vs qualified investors, but overall it just seems to make it unlikely for anyone to want to start a fund from scratch, especially something more eclectic. With accredited investors, unless they're supplying a huge amount of money to your fund, you can only charge a 2% management fee, regardless of results. So to make $70k, not factoring in all supplemental business and advisory costs, you'd have to raise $3.5M. There's not much reason to do anything beyond just sticking the money in something plain and marketing for more money after that, since you're not going to get any of the upside. To actually get a performance fee, you have to have qualified investors with even higher net worth requirements, and the performance fee is limited to 20%. On the same $3.5M, let's say you do 20% and take 20% of the upside beyond 5%. You're only talking about $100k here, which is a great salary, but again, you have all these other fees and it's not guaranteed. I can now see why success in the investment field is 99% based on the connections you have.