frommi

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.

For me, its easier to stay rational when i have cold hard (actual) numbers in front of me. You know how stupid the market sometimes is.

Thanks, i thought the overall investment in eurobank was only 400 million. I like to be ahead of the market. Imagine you knew that BV is 50% down in the quarter but the market hasn`t priced that in. Would you ignore that? Of course it doesn`t matter if it is now 5% more or less, but knowing it roughly gives me a good feeling.

That would be nice! Greek exposure should cost +/- 5% of book. I can`t really believe that number, what are the big greek positions that result in this?

From my limited knowledge bookvalue should be up more than 10% in q4 because of the bond portfolio. But who knows maybe i misinterpreted something in the annual report.

From my understanding since these indexes are all marketcap-weighted there is no additional rebalancing necessary. But stocks that fall out of an index can be hit harder the more money was in the ETF. Perhaps that is the best hunting ground for value picks in the future.

When he is right, FFH continues to be the pick for 2015. :) I am really curious to see the current value of the deflation hedges.

I am pretty sure that with the latest currency movements these costs are not anymore where they are in the graph. Or is it based on latest exchange rates?

Long term interest rates track inflation, yes. But short term rates are set by the BoJ. And since the government taxes capital gains or interest, they get a higher tax income with higher inflation.

Thats the weak point of your theory. They can always borrow short term where the BoJ has full control over the rates, and when there is inflation their tax income will grow because they get a share of the inflation as tax. But in the end nobody knows how it will exactly play out, there are dozens of possibilities with second and third grade consequences that can be good or bad. Think about the butterfly in china that influences the weather in the US.

Margin account with IB is the easiest and cheapest way that i know of.

Foreign automakers taken to task in China over dealers' bloated inventories: http://uk.reuters.com/article/2014/12/30/uk-china-autos-idUKKBN0K80EI20141230 Not a good sign for the world economy in 2015.

In the first chapter of "You can be a stock market genius" Greenblatt told the reader to concentrate on 5-10 stocks and gives the math to that. Perhaps its a good idea to reread that chapter. But in the end everybody has to find what works for him and do this over and over again.