frommi

Maybe because it stimulates the mind and you learn more every day. Pure index investing is to boring for me to work as an investment strategy. And being a multi millionaire only in retirement is a bit late, life is short. :)

Looks like deflation is now a mainstreet thesis. I really doubt that the majority will be right on macro calls, so maybe its time to switch. When you look at inflation ex energy it doesn`t look that bad, so when oil prices normalize its possible that inflation picks up again.

Sometimes i really question whether what he talks is what he does. I mean he speaks about investing in industries without rapid change and then invests a lot of his money into cyclical car companies where every 2 years a new carmodel has to be created and competition is intense? That makes no sense to me, but who am i to question him? And i think he is wrong on Netflix, because they indeed become a very valuable content company going forward, financed with overvalued stock and float like Amazon. But that of course doesn`t make the stock a good buy right now, or at least its very hard to figure out if it does. But these bubble valuations in the NSDQ are probably worth looking at, maybe its a good idea to use QQQ as a hedge going forward over the summer.

There are so many moving parts like interest rates, inflation or USD thats its pretty impossible to figure out what S&P500 earnings will do over the course of the next few years. But you can be sure that in 10-20 years earnings will be higher than they are now. When you know where interest rates, inflation or the USD go, why bother with equities? Just speculate directly on them with futures. If you are not able to figure out what happens there, than probably buying cheap stocks is whats going to work over the long run. Oh and i think i figured something important out for myself. If you want to outperform the market over the long run, you first have to give up on trying to outperform it.

Maybe that is because IT (20%) and healthcare (14%) have now a much bigger and financials a lower weight in the S&P500 than 10-20 years ago? Now that the market has fallen below the august low, i have to agree that the technicals really look weak. Easily possible that we started a bear market that takes us 40% lower from here over the next 2-3 years. But don`t forget that even bear markets have rally`s. :)

Nestle and Unilever. I will not make 15% on these stocks, but solid 7-10%. Better than cash. www.suredividend.com is a pretty good site for these type of stocks.

Perhaps you should really look at some stocks. WMT,KO,JNJ,PG,CL for example (this where just the first 5 stocks i had in my mind). All have declining or stable margins in the last 5 years. Even for AAPL the margins are pretty stable. Commodities going down is what they have done the last 250 years. Global growth slowing - yes ok thats a valid point, and the USD apprecation is not helping. But its a temporary problem. Market technicals - nothing to worry about at the moment. If we take out the August 2015 lows we are in a different game. Reason not to short: Wrong time. I never short in the winter months, you are just playing against the odds. Most corrections in winter are over very fast. But who knows, maybe i am wrong. The market is sometimes a bitch.

I just built a diversified large cap blue chip portfolio with 45 names. None of them was overvalued. Maybe there are overvalued names in the indices, but at the current point at least half of the market is fair or undervalued. And at the same time the sentiment is more negative then it has ever been in 08/09, thats the recipe for a big rally.

https://docs.google.com/spreadsheets/d/1bA3Nv5YwiYIJ5Vdha1YrN3A_kyhF65N5LZvoskK86-c/edit?usp=sharing At the bottom there is a timetable. I pay ~26% taxes regardless of holding period and i calculated with a 1 year holding period vs. infinite holding period. If that is realistic is on another paper, and that is maybe the flaw in my thinking. Thanks for the response.

So you mean reinvested at high rates of return like for example VRX has done? Even Berkshire is struggling to get high rates of return on its capital lately. Sounds easier than it is in reality. The ideal business doesn`t need reinvested capital and growths without it. Doesn`t it make sense to pay it out as buyback or dividend?

No, only reinvestment of dividends.

I know of these etfs but why pay someone if i can do it myself? 0.1% every year of 1 million are 1000$ per year for nothing. I also want to create barriers to exit for myself and have the psychological benefit of dividend payments hitting the account every day. And if someday in the future vanguard choses to close the etf or increase the ter (see current lawsuit against them) you are screwed and have to pay the taxes and lose all benefits of doing it in the first place.

Its all about after tax returns isn`t it? With 15% returns pretax at a 26% tax rate, i get ~11% after tax returns. Here is my spreadsheet: https://docs.google.com/spreadsheets/d/1bA3Nv5YwiYIJ5Vdha1YrN3A_kyhF65N5LZvoskK86-c/edit?usp=sharing Its not a hurdle, it was the average growth rate of earnings & dividends over the past 10-20 years. There are utilities and REIT`s with lower growth rates included (but of course with higher yields). There more i know the more i realize that i don`t know anything. The crux with value investing is that you rely on both the market being inefficient and at some time in the future being efficient and you being smart enough to find out when it is and when it isn`t. Since the future is unknown and all the value is in the future, how can anybody be sure about anything? The dividend growth list has of course hindside and survivorship bias. So how reliable is past dividend growth to estimate future dividend growth?

I`ve been playing around with numbers the last week and came to realize that i need 14-15% pretax returns with value investing to get the same results as just buy and hold indexing after taxes. 15% returns long only, full time invested for me looks like a pretty tough hurdle especially given the risks of underperformance and concentration necessary to reach these goals. Now i am thinking about improving the index returns with equal weighting and a dividend growth approach. I started building a list and have now around 100 companies with a history of increasing dividends every year with an average yield of 3.0% and 9% historical growth. This comes down to 12% returns which is exactly what the original S&P500 companies that built the index in 1957 have returned, so it doesn`t seem to be that wrong. I don`t like buying etf`s for indexing because i am too cheap to pay fees for nothing (and after buying there will be no additional fees with my approach), and there is always the risk that the etf someday will be closed and i lose the tax advantage. And its probably a lot harder to sell the complete portfolio, so psychologically its easier to maintain the approach for me than etf`s. Has somebody else done it that way, or is it just a stupid idea?

I know of no utility with an ROIC of 11-13% and i think that pipelines are more like real estate. Of course i can be wrong on that. And regarding the multiple i don`t trust the yahoo finance data and calculated myself with the debt/(net debt/ebitda multiple) in the latest presentation. That gives ~7.5 billion EBITDA and a EV of 75.5 billion for a EV/EBITDA multiple of ~10. This is in-line with some utilities, despite the fact that most utilities grow EBITDA by 1-3% and KMI by 8-10%. But please don`t trust me. :)

Maybe a bit late, but my best ideas are Spin offs: CCP - Healthcare REIT, ~9 x FFO (TTM) CABO - Cable company, ~10 x FCF (2016) Stocks: BBBY ~9 x ~FCF (TTM) IBM ~10 x FCF (TTM) KMI ~7 x DCF (TTM) Oh and just in case oil and gas prices come back: BXE

To the topic, i still believe that market timing is possible and that Elliottwave analysis works more often than not. (if done right) But i am 100% sure that everybody in this forum will disagree with me. (ok, 99%) ;D

And how do you know if we are not going up 20% first? Can feel pretty dumb to sit in cash than. :)

CFX, but feel really bad now. I dipped into margin because i don`t know what to sell for it.

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.

Sold LVNTA/EXPE because the discount has gone down to single digits, bought CABO and BBBY.

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.

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?

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.

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.