frommi

Thanks, good questions! Looks like i have to read more.

Try thinking in probabilities, regarding the future nothing is certain. And valuation is always about the future.

There is absolutely no evidence to backup any of your assumptions. When i recall it correctly than the real estate bubbles in Netherlands and Spain popped because of a recession, not because of rising interest rates. I can imagine that under rising interest rates inflation is rising, so house prices/wages possibly rise too.

Does it make sense to short canadian banks based on this insight?

I can fully understand why the greeks voted this way and i am pretty sure when you are unemployed or barely make a living because of high taxes you vote the same way. As a german i am more upset about our own governments inability to act and think long-term.

Bought some more NWH.AX.

Mr. Market does not like your jokes apparently. Yes it has this brutal way of telling me that i am a fool. :) But aside from that i still don`t know if nobody watches rental DVDs anymore is now true or not.

Ok i agree with you, i have a risky portfolio. Please don`t copy me, looks like i will probably blow up next year because at the same time we get earthquakes all over the country wiping out Toronto and New York, the stock market will decline by 50% and the euro will appreciate by 40%. Steel is now worthless because everything is build of aluminium and japan will get nuked by china erasing the country from the map. Oh and there is a wonder drug against cancer, nobody watches rental DVDs anymore and online gaming/lotteries are prohibited worldwide. All in one year! ( Just kidding :) )

Same experience here, MMM has really changed my life for the better. Jacob of ERE is in my view a hardcore optimizer of money usage, i respect him for that but i know that would be too much for my life. (too much stress with my spouse, even though she is already frugal). As a single or with very little income i probably would give it a try for some time to get a headstart.

The funny thing is that the author has just done a backtest with statistical data. No reading involved, so there where probably value traps in the list that you could have avoided by reading the reports and thinking about the businesses. And still 5 stocks were enough to diversify that risk away and gave the maximum returns.

Thanks for your honest words, but how exactly do you quantify risky? From my point of view there is no single risk that i know of that is able to erase more than 25% of my portfolio in one fellow swipe. I mean look at Monish Pabrais portfolio of BAC,C,GM,FIAT,PKX. Thats cars, steel and banking. All are heavily correlated to the US/world economy, i would call this at least double to triple as risky as my portfolio.

When you read the last sentence of his post you realize that he concentrates, too. For the majority of investors a broad based index fund is probably best, i agree. But the majority of investors probably doesn`t waste hours in this forum searching for ways to improve their performance.

Food for thought: http://patrickoshag.tumblr.com/post/101936700589/how-concentrated-should-you-make-your-value

You can look up all my holdings in the Investment Idea section. NRW.AX and the japanese stocks are mainly asset plays (thats the reason that these stocks are all smaller holdings), the rest have something in place that protects the cashflows for the next years. PKX is the lowest cost steel producer (though i am not sure if the currency wars deteriorate that one).

I feel a lot safer with IB than with every other european bank i have accounts with. They have a lot of capital in the money manager portion of their business and that acts as a cash producing machine in volatile times. I think IB is the only institution that is black swan proof because of this and the fact that it was created by professional option traders that think about every risk that can harm the business.

1% cash, i am still working so i don`t see a reason to hold a larger cash stake (but the yearly contributions are smaller than 10% now). In case of a drawdown i do nothing as long as the businesses progress as i expect them to, what else should i do? Sell? :) I am a cloner and i clone everything that works. The math says more diversification doesn`t reduce risk significantly but reduces returns. There are so many threads in this forum where you can find evidence for this. Most people talk about diversification and the 100 businesses they have in their portfolio but then overlook that most of these are correlated anyway. In the end everybody has to do what works for them and since i noticed that 70-80% of the stocks i buy go up 2-4 weeks after i bought, i thought i can reduce the number of my holdings. Thats the advantage of being a good market timer, though its of course not necessary to be one when you are a good value investor.

FFH (27%) OUTR (10% Common + 5% LEAPs) AIQ (10%) SEC.TO (10%) Intralot (10%) PKX (10%) NRW.AX (5%) 9628.JP (5%) 5965.JP (3%) 7292.JP (3%) I think its a lot easier when you know what you own and have stress tested this beforehand. Most of my businesses are recession prove and SEC and FFH are diversified in itself. Overall i think that the correlation between these businesses is really small. I am pretty sure that i will not be happy if i get those drawdowns, but i don`t think that more diversification is helping me to achieve my goals.

Finished building a 10% position in AIQ. 2015 will be my concentration test year, i have now 50% in 3 stocks and 80% in 6. I am still under the impression that i am sufficient diversified.

Thanks, i somehow missed your post the first time. I didn`t realize that they have so much at stake in Blackberry, good to know.

Easy when the currency has lost 3.7%, i am under the impression that the only thing that counts at the moment is in which currencies you are invested in. Strange times!

Everything in €, wife+me, no kids, medium sized german city, 1 car: 10k rent+heating+electricity 2.5k health insurance 6k groceries/food 3k car incl. gas/insurance etc. 1.5-2k travel 1k internet/handy/movies 1-2k other

I lust looked it up for some stocks that i was interested in, and i found none where that would be possible. Either your cost of leverage is above 10% or you can not limit your losses at 10%. I would love to find a bet where its possible to have the annual cost of leverage <5% and the maximum downside is 10%. And then of course it must trade at 50% of IV. Show me!

You fool yourself when you think that way. See it as 50% of your networth in call options and then ask yourself if this is a prudent thing to do. 2 full losses after one another will wipe out 75%, after 3 you start from 12.5% of your networth again. This is not the same as 50% of your net worth in call options. It's the equivalent of 5% of your net worth in call options. Suppose you have 50% of your net worth in stock, and that's hedged by 5% of your net worth in at the money puts. The worst scenario is that you have to exercise the puts because the stock falls. In that case, you lose 0% on the stock, and 5% on the puts (equivalent to putting 5% in calls, and having them expire worthless.) It depends on the strike price of the put option. Earlier in the thread we talked about hedging with a put option to limit losses at 50%. When you do it with ATM puts its a whole different story, but you can`t ignore the cost of leverage for this case, because ATM options normally carry a lot of that. This can make sense and i can agree that its probably safer with 1 stock where you limit losses at 10% than going with a diversified portfolio. Sounds a bit like a barbell approach which Taleb speaks about in Antifragility. But when i understood it correcly, jmp8822 hasn`t achieved his returns that way, right?

You fool yourself when you think that way. See it as 50% of your networth in call options and then ask yourself if this is a prudent thing to do. 2 full losses after one another will wipe out 75%, after 3 you start from 12.5% of your networth again. According to Kelly formula you can be sure to overbet in most scenarios with this allocation. When you do it with 25% you are closer to the optimal bet, but i am pretty sure that these 100% returns are not achieveable that way. 10 stocks diversified over different countries and truly different businesses is safer, because what counts is the permanent loss of your money not the volatility.

I am missing 2.5 billion USD in non-US stocks that they have in their books, has someone a clue what bigger holdings these are outside of Eurobank? From what i know now BV is unchanged in the quarter, but these 2.5 billion+deflation hedges can still have a material impact.