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frommi

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Posts posted by frommi

    Best car for value investors?

    in General Discussion

    Posted

    Hey Nate,

     

    Thanks for the additional information about the Prius.

     

    And you're right...the traffic in Columbus is crazy. In Cincinnati, driving was a non-issue. Now, my blood pressure goes up way more than it should while driving! haha. Overall, it's a good city but the drivers are something else.

     

    The prius is the ideal car to calm down while driving. :)

    I drive mine now since 4 years, i have never been a more relaxed driver.

    2015 portfolio performance

    in General Discussion

    Posted

    24% in € after commissions and interest

    8% F/X

    22% Shorts in the summer on xbi and russel2k futures

    3% long mainly us stocks including ~6% loss on nwh.ax and rsss

    -5% leveraged asset allocation

    -3% short term trades and options

    -2% commission and interest for shorts

     

    so no microcap stocks and options for me next year, moved more money to IB to reduce commissions. Was the worst year for a diversified asset allocation in quite some time, so hopefully next year is better there. Overall my summer hedges have saved the year for me.

    Any small cap Net Nets out there?

    in General Discussion

    Posted

    I like understandable businesses (for me, i m not the smartest person around) with good asset base i can buy at an fair price. Over time it worked for me :) I found a few big winners in the past; but these findings are rare today.

     

    I understand that, but when i can get Berkshire with 10-15% forward returns, why invest in something that gives you lower returns with higher risks?

    Writing Covered Calls on SPY

    in General Discussion

    Posted

    As anyone thought about writing weekly covered calls on the SPY?  Say you own 100 shares of SPY at $205.68.  You write a call option at strike price of $206 for $1.08 premium.  That's about 0.5% gain (excluding taxes and fees).  Annualized that, it's around 27%. 

     

    Any thoughts to the downsize of this?  You could be stuck holding the SPY, shares are called away, and might not get the premiums you want.

     

    Its exactly the same as selling a put option, so to make it easier think about the up and downside of that. You are an insurance provider, in the long run you will make a small profit taxed at short term rates. Not a good business to be in, and a lot of people overestimate the returns and underestimate the risks, which leads to leverage and a black swan event erasing all your profits and some more.

    Read some books of Nassim Taleb.

    Any small cap Net Nets out there?

    in General Discussion

    Posted

    NWLI is at around 60 of book.

     

    Float is tiny (difficult to accumulate). Insider ownership large so no real catalysts but you are buying a conservatively run insurance company at 55-60c/$.

     

    Why do you think a company with an RoE of ~6% should be valued at bookvalue? Can someone else earn more with the same assets or what should the catalyst be for higher earnings?

    I would say Hornbach is in the same league, RoE of ~8% and p/b of 0.8 looks like fair value at the moment. At least as long as nobody is going to sell all the real estate assets, but the opportunity cost for holding until it happens can be huge.

    2016 Goals

    in General Discussion

    Posted

    I love options. Particularly, the yields I can get from selling them on stocks perceived to be particularly volatile. I recently made 5% on notional in a couple weeks (not annualized) by selling the Wayfair $35 puts. They expired worthless.

     

    LEAPS and warrants interest me from an investment perspective... short term stuff, I'm more interested in being the insurance provider.

     

    Had some ideas for this this year, as long as it is planned, nothing speaks against it. Was several times thinking this year about selling VRX put options near 80-90, would have been a good idea in hindsight. But i made some stupid bets on short-term put options in june that has cost me some money, or buying TLT for 2 weeks probably just out of boredom. Really interesting to go through all the trades of the year and rethinking of why i did that trade. Buying options with less than one or two years to expiration is definitly something i will not do again. (Made a big comment in my depot spreadsheet, maybe it helps.)

     

    On the other hand without making short term sell decisions on some stocks, i would have lost a lot of money this year. For example i made money on VRX,SEC.TO,OUTR,Intralot and AIQ. Holding these stocks for 12 months would have easily cost 20% of my networth(instead of making 10%). Of course we can argue that buying them was the mistake in the first place.

    2016 Goals

    in General Discussion

    Posted

    Most people should just be in index funds. I wouldn't talk him out of it.

     

    At least its a lot more tax efficient, but on the other hand the 500 original companies of the S&P500 outperformed the index (and when you equal weight at the start even more). So maybe its a good idea to build an index yourself with >100 companies. It shouldn`t be too hard to exclude the crappy businesses. On the other hand you are back to active investing then. Maybe do it like Buffet and make buy once sell never decisions, that should be even better.

     

    My goals for 2016 are

     

    1) hold my weight

    2) make more friends

    3) stop trading options, OTC, microcaps and illiquid stocks and stop making stupid short term trades. (the last one was already on last years list, if someone has an idea to force myself to not do it, its welcome.)

     

     

    3rd Quarter results

    in Fairfax Financial

    Posted

     

     

    To be clear....Fairfax strength is it's insurance business...the acquisitions made were excellent and this part of the business is night and

    day compared to decade ago...that what has saved them over the last half decade...it used to be the other way around. We would rather have it that way for sure. However, the only way for Fairfax to grow in the future is through their investment portfolio...which was the strength and it is now their weakness. If this happens like it has at Berkshire and Markel the sky is the limit which is what I have been cheering about for sometime.

    Unfortunately we are stuck in two themes...massive hedge losses and large losses in Resolute, Blackberry, Eurobank, SD etc...and it continues because we know that they did not cover any shorts and the Oct was the best month for stocks since 2011. Resolute, Blackberry, SD and Eurobank did not rebound they actually fell and the short postitio hedges got killed in the month.

     

    its like playing short handed.

     

    Dazel

     

    Thats not true. Bonds are flat, IWM is up 6% since 9/30 and BBRY for example is up 19% since then, so overall they shouldn`t have lost that much in october. Eurobank is immaterial now. Its crazy how they lost a billion and you don`t even see it in the results (BV). If they suddenly have a good quarter they will hit the ball out of the park.

    European Brokers Discussion

    in General Discussion

    Posted

    I have accounts at cortalconsors, comdirect and ib. I suspect that these "free" brokers either sell your data or your order flow, both is more expensive in the long run than ib. And i want access to futures, options and short selling. I am really happy at ib so i don't see a reason to search for another broker.

    Holding Period vs Return

    in General Discussion

    Posted

    I agree. I think my original post was unclear. Let me try again.

     

    In the situations where there is mean reversion, what is the metric that mean reverts? Do the profit margins erode or do the returns on invested capital or both?

     

    Profit margins erode through competition when there is no true moat or through inflation that can not be passed to the customer, roic erodes because it becomes harder to invest bigger chunks of capital. So in most businesses you see both mean reverting but at some only roic.

    Holding Period vs Return

    in General Discussion

    Posted

    We all know that Buffett says his favorite holding is forever.

     

    But that doesn`t mean its the optimal holding period for everyone. When you deploy capital in tenth of billions, its not really a matter of choice.

    There are not a lot of businesses that can compound capital at >20% forever (if they exist at all), so when you want to compound faster than that your only chance is to increase your inventory turnover or to use leverage.

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