NeverLoseMoney
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I've read some chapters from The Snowball multiple times, mostly about Buffett's partnership years. I skip all the personal stuff. Nassim Taleb's books as well.
And I like to do some counter-cyclical reading every year: reading about crashes and bear markets when stock markets are up a lot for the year and about about bull markets when they're down. Some suggestions here: The Great Crash - Galbraith, Bull - Maggie Mahar, The Great Beanie Baby Bubble - Zac Bissonnette (must read for investors in CryptoKitties and ICO's), The Funny Money Game - Andrew Tobias.
Fiction: The Shadow of the Wind - Zafón
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I'm a Bitcoin noob. How can you tell if/how many of these transactions we see on Bitcoin exchanges are "real", as in arm's-length transactions?
I'm pretty sure there is a ton of fraud in the ICO space from the few things I've seen there and this makes me question cryptocurrency pricing as well.
There are a lot of exchanges trading BTC for USD, as well as foreign currencies, as well as other cryptocurrencies. I'm not saying fraud can't take place, but it would take hundreds of millions if not billions of dollars spread across multiple currencies (both fiat and crypto) in dozens of exchanges to fix the price of BTC right now. I think what you are seeing isn't fraud, but simply increased demand.
https://coinmarketcap.com/exchanges/volume/24-hour/all/
There seem to be some questions about the printing of Tether to inflate the price of Bitcoin: https://www.bloomberg.com/news/articles/2017-12-05/mystery-shrouds-tether-and-its-links-to-biggest-bitcoin-exchange
“There’s a fear going on that the recent price rise was helped by printing of USDT (Tether) that is not backed by USD in a bank account.”
Little public information exists about how tether is created, fueling questions, said Barry Leybovich, a product manager at IPC System who creates risk and compliance products for financial institutions interested in blockchain applications. The market believes that each tether is worth $1, even if they’re not actually backed by that money, and trades of tether for bitcoin at Bitfinex are helping drive up the price of bitcoin, he said.
Whatever is going on at Bitfinex, it looks very shady to me. And this is a major exchange, so any manipulation could affect pricing on other, smaller exchanges I'd think, inflating the "bubble".
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I'm a Bitcoin noob. How can you tell if/how many of these transactions we see on Bitcoin exchanges are "real", as in arm's-length transactions?
I'm pretty sure there is a ton of fraud in the ICO space from the few things I've seen there and this makes me question cryptocurrency pricing as well.
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the purest definition of a portfolio that is not antifragile is one devoted to investments where 95% are likely zeroes.
It could very much be anti-fragile if you have the expertise to pick a few 1000 baggers from time to time. This can't be done without also picking a lot of losers. And again, the portfolio is not devoted to (in the sense of concentrated in) these investments. It would be a tiny sliver of a total portfolio. The overwhelming majority of the portfolio would be in cash or treasuries.
I'm amazed there is even any debate about this. Taleb literally talks about this in his books. He made his own money by seeking extreme payoffs with a small portion of his portfolio.
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In my field of infectious diseases - companies making next generation antibiotics to treat resistant bacteria, like Paratek and Achaogen are interesting- caveat is it should be a zero to one kind of drug, be available to use inpatient and outpatient and the company although small has a fortress like balance sheet w cash on hand. If economies do well, they do well with tailwinds of aging population, increase in drug resistance in a compounding fashion, and the GAIN act for additional 5 years market exclusivity, or get bought out via big Pharma. If wars/ flu pandemics/ natural disasters occur then after the emergency stage is over there are more infections in the population due to poor sanitation needing treatment. If recessions occur or costs of care keep rising, Insurances want less people admitted to hospitals and pay up for drugs that prevent hospitalizations. Not correlated much with the indexes and worldwide value potential. Thoughts?
Interesting. Reasonable thesis and good play on specific knowledge you have. In this case you are making the argument for a macro event and placing bets that it may happen. If there is another "great Recession" unrelated to a plague, it's unlikely that this pharm company may get stronger. It might not survive the downturn. R&D may get halted. Due to recession, drugs won't be bought on patent....Thus, whilst the investment thesis may be sound, it wouldn't be part of an "anti fragile portfolio" in my view.
I think biotech, venture capital, etc. are all areas where one could find anti-fragile investments with massive potential pay-offs. That doesn't mean that you are able to identify these investments yourself or that most of them will succeed. 95%+ of those investments will probably be zeros. That's why you don't put your entire portfolio in extremely risky stuff like this, but only a small portion at most.
Personally, I think this whole idea of seeking anti-fragility in financial markets should be left to the 140+ IQ folks. I'm not able to make millions or billions the next time the market crashes, like Taleb and Michael Burry did. Most of us should just focus on being "robust" and not blowing up when the shit hits the fan. I think that can be achieved by seeking out companies with strong balance sheets and where investor expectations are already low. Perhaps increase your focus on special situations and workouts as bargains dry up, or else raise cash levels.
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I think most of the examples given so far are more in the "robust" category, not anti-fragile.
One stock I held about 6 years ago was Alpha Pro Tech (APT). Its market cap was $24m at the time, tangible book value was ~$36m and it had net cash of ~$6m. The company was profitable, but only marginally. The company sold disposable protective apparel and infection control products. Any time a pandemic breaks out, or the flu season is particularly severe, their sales and earnings tend to increase significantly. Just the threat of a major outbreak could make the stock spike as investors speculated on earnings increases.
I think that was an anti-fragile investment at the time. At a big discount to tangible book and with a large cash balance, you were unlikely to lose much, but you stood to gain significantly when (the threat of) an epidemic appeared. And major epidemics are certain to occur from time to time. The company benefits from disorder. Any company with a large inventory of potentially vital products that are only rarely scarce could be a candidate.
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I believe the exchanges have written the guidelines for the range of the minimum investment. It might have been something like a 50k Yen minimum up to a maximum of a few hundred k. The Japanese are unlikely to make sweeping rule changes, it's all pretty gradual. They have taken some small steps in the right direction.
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It is in conexion with this, i guess:
"Stock exchanges nationwide hereby announce that the deadline for transitioning to 100-share trading units has been set as indicated below. The joint decision comes after reviewing responses from 1000-share companies to the “Survey on Transition to 100-share Trading Units”.
Deadline for Transition to 100-share lots: October 1, 2018
http://www.jpx.co.jp/english/news/1020/20160107-01.html
Correct. I believe there are also some guidelines for the minimum investment required for a 100 share lot, I forgot the exact amounts. This is why you're seeing the reverse splits in conjunction with the change in trading unit size. If they hadn't done this, some of the stocks I own would have gone from a minimum investment of $5,000 to $8,000 for one trading unit to a minimum of $500 to $800. The reverse split lowers the previous minimum investment, but not as dramatically. I think September 27th is the date most Japanese companies use for going ex-dividend, so it's probably convenient to also make the switch to a 100 share lot at this date.
I wonder if these stocks will become more attractive to retail investors due to the lower minimum investment. Some of the smaller companies are just too small for institutional investors and seem to be mainly owned by insiders and retail investors.
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Michael Burry bought Deswell in 2000 for $13.75: http://web.archive.org/web/20000815073003/moneycentral.msn.com/articles/invest/stratlab/5747.asp?Strategy=3
What all this adds up to after backing out the $5.33 per share in cash is a stock trading at about $8.50/share after earning $2.01/share over the trailing four quarters -- and quite a bit more than that in free cash flow. This despite recent revenue growth in the 40% range and additional growth expected for the foreseeable future.I think he bought Deswell earlier as well. I remember reading it was a net-net at some point and he had put 10% of his portfolio into this. The company is still around, but is having a much tougher time now. Burry's forum posts at SiliconInvestor can be found here: http://www.siliconinvestor.com/profile.aspx?userid=690845 (requires free registration to view).
Apparently there were lots of small foreign companies that were being ignored by investors and could be picked up really cheap. A couple of other names he mentioned in forum posts were New Holland and Telebras.
These were some comments I found from another forum member (not Burry) about New Holland:
Deere is the U.S. leader, but New Holland sells more tractors globally than anybody in the industry. The business produces about $300 million in free cash flow (they did $400 last year, so I'm being conservative) and the market cap is under $3 billion. They are reinvesting that free cash flow (I define free cash flow as cash flow less the capital expenditures required to maintain the franchise - if they reinvest beyond that at a good return, that's even better than paying it in dividends) back into a non-U.S. business franchise that I think is a real winner. (Wall Street analysts and institutional investors are very U.S. oriented in this industry despite saying they want global leaders. New Holland is at the very least neck-and-neck with Deere globally).The stock trades at 7 times earnings. Senior management is honest and capable. They have done virtually everything they said they were going to do. Fiat will not sell its shares at anything under 30, nor will I. Wall Street analysts agree that the stock is extremely cheap, but don't want to upgrade without a catalyst.
It's also worth checking out John Hillery's letters from this period: http://hilleryvaluecommentaries.com/Commentaries. He discusses a number of very cheap small caps as well. He was also a Deswell owner IIRC.
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Given that it's a super old site that has never been updated I assume that they are probably going to develop the replacement from scratch or something close to it. Spending significant resources on making it possible to transport user data from the old site to the new site is presumably not worth it, especially if the new feature is going to have different features and/or data sources.
That's the optimistic scenario. I give it a 20% probability.
Migrating structured data this simple is a piece of cake for Google.
This Marketwatch article has some more details: http://www.marketwatch.com/story/google-finance-as-you-know-it-is-going-away-here-is-what-will-remain-2017-09-27
It sounds pretty horrible:
To replace the outgoing features, Google said that it plans to migrate users’ portfolios to Google’s search product, which will aim to analyze users’ interests and provide a report for users.“As part of this updated experience, you’ll still be able to follow the stocks you’re interested in and receive the latest industry news and market trends, but the Portfolios feature will no longer be available as part of the service,” a Google spokeswoman wrote in an emailed statement.RIP.
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I use a Google portfolio as well. I have a long list of stocks I follow and Google's solution was very useful at keeping an eye on price movements. FT.com has a portfolio feature as well and I'll probably be using that in the future, as well as a Google spreadsheet.
This is just typical Google behavior by now. It seems that anything that doesn't add to the bottom line gets eliminated. And that is fair to some extent: they have no obligation to continue to offer features that don't make money. I do think they should then stop introducing other free services/features that have no shot at ever making money. The value of free services for Google lies in the information that users hand over. Gmail is valuable to them, because they scan your e-mails, which helps them to target their ads much better. A list of stock tickers doesn't really help them in that regard and this was clear from the start. So why offer a portfolio feature in the first place if you can't charge users and the data you receive from them isn't valuable?
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I bought the 6th edition on Ebay a few years ago as well. I don't think there's much supply anymore though.
Honestly, I don't think the manual adds that much value anymore. The financial information is 15+ years old now and roughly half the companies aren't around anymore. You can create your own treasure hunt quite easily by going to OTCMarket's company directory, selecting "OTC Pink No Information" under "Tier" and then going through the list. It is pretty safe to ignore all the companies that are trading below $0.01. I don't think I've ever found any reputable company trading below a penny in the time I've browsed the website.
Then try to get financial information. Some companies post annual reports and press releases on their website. The most interesting and cheapest ones don't. For those, buy one share or a few shares and contact the company. Some respond, some don't. You might start receiving annual reports in the mail forwarded by your broker. Make sure you have/get a broker that forwards mail or provides these materials electronically. A few bargains might turn up from time to time. I must say that even among dark companies the pickings seem pretty slim right now. I think it is currently easier to find cheap companies in Asia and Australia that are fully public.
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This is from Berkshire's 2014 annual letter:
This cheery prediction comes, however, with an important caution: If an investor’s entry point into Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares have occasionally reached – it may well be many years before the investor can realize a profit. In other words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire is not exempt from this truth.Buffett himself thought in 2014 that a price approaching 2x BV was "unusually high". Semper Augustus thinks that 1.8x BV is fair (using the figures from their "Two-Pronged Approach").
FWIW: I'm long Berkshire, but I've decreased my position recently. It looks reasonably valued to me.
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My question is: what is "the index" exactly? Which assumptions are you baking into your decision by investing in a particular index or by measuring your performance against it? Is the S&P 500 the right benchmark for your portfolio and why?
For example: I think Asian countries are likely to grow faster than the US and European countries over the next few decades. Should I therefore seek out investments in Asian companies and compare my performance against an index that also has a substantial exposure to Asia? Am I making a mistake by focusing too much on companies listed in the US, just because they've had a good century?
Charlie Munger mentioned at the latest DJCO meeting how he made a bunch of money on a particular stock / security and then gave it to Li Lu who turned it into, I believe, five times that amount by investing in Chinese companies. Munger didn't put that money into US stocks or an S&P index fund, he gave it to someone he saw as highly talented and who probably had a lot of knowledge about a much faster growing part of the world. Should we perhaps be looking at that part of the world a bit harder as well? Are we partly investing in the things we are investing in, because it feels most comfortable given the historical results, or because it is part of the standard offering of our brokers and therefore easiest?
I think the question of what your index / benchmark is exactly, is complex and you can't help but make certain assumptions and macro judgments in answering it. I don't think I even believe in the whole concept of "passive investing". You're always making a judgment call at some level when you're investing. For one thing, most people have a huge home country bias. Someone from the US might think that "beating the index" means beating the S&P 500, while someone from the Netherlands might think that it means doing better than their national index (the AEX).
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$12 billion net is a big a big number. Maybe he's including DOW in that. He tends to be sneaky like that when giving out numbers. Otherwise either:
1. He got the waiver from the FED to increase WFC stake.
2. They have a new core position.
3. .... Let's hope it's not an airline
I think #3.
From the Bloomberg article:
In November, Berkshire disclosed that it held in American Airlines Group Inc., Delta Air Lines Inc., and United Continental Holdings Inc. at the end of the third quarter. The billionaire said that month that Berkshire also bought a stake in Southwest Airlines Co. since Sept. 30.Buffett told Rose he wouldn’t get into why Berkshire bought the shares, but said that it was “in large part” his decision.
So the investment in the airlines is "in large part" Buffett's decision. The Sept. 30 filings showed relatively small investments in the airlines. I therefore thought they were Ted or Todd picks, but we now know it is mainly Buffett's decision to invest in them. Looking at Dataroma, the airlines were around 1% of the portfolio at the time. Buffett wouldn't have bothered if the amounts invested would remain this modest. I think they bought a lot more of the airlines.
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I think you need to be careful about how you frame something like this and the language you use to describe it. While it is true that some shareholder activism could be described as causing some inconvenience to management to get them to do something you want, you should never use the word "bothering" in a thread like this or on a blog if you want to achieve something. That immediately gives management an excuse to ignore you and others, because they can basically dismiss you as a bunch of spammers.
I believe you're mainly talking about dark companies that are reluctant to provide information to shareholders. Some of them simply ignore shareholders who ask for the financial statements of the company. Some of them keep promising to give you something, but don't keep that promise. A company that completely ignores its shareholders just looks bad and unreliable. Not only to shareholders, but to (potential) customers as well.
I think it could be a good idea to organize shareholders in a situation like this and use a blog or message board to do so. The main problem I see is that some of these companies might be extremely cheap. It could be a bad idea to share information about very small companies with illiquid stock, because you might destroy your own opportunity of buying a meaningful position by sharing the name publicly. So, I think most people who invest in small, dark companies regularly would prefer working informally with a few like minded investors that have a lot of knowledge and contacts in that space and to try to get some information that way.
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click include and then show all button and it will show form 3's and 4's
Thank you!
It is exclude by default and there is no way to change the default to include.
Try setting up a custom search engine for Chrome / Firefox: https://glennchan.wordpress.com/2015/11/22/edgar-tips-and-tricks/
Make sure you change "owner=exclude" to "owner=include" in step 4 (for Chrome).
Works like a charm for me. I just type "sec" followed by a space in my address bar and I can then type the ticker, hit enter and it will bring up the SEC filings for that stock.
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Watsi: https://watsi.org/
Donations fund healthcare for people around the world. I like the idea that healthcare costs are quite low in the countries that their medical partners are active in. A few hundred dollars can often fund a medical procedure that will have a very positive impact on the patient's life.
Watsi also offers a transparency document that shows you where the money goes.
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I do think there are far fewer opportunities in the market today than a couple of years ago, so yes, there is less to write about.
Other reasons that could cause bloggers to stop:
- Some very successful bloggers get hired by investment firms or start something of their own. That usually stops them from posting or dramatically reduces posts. Clients are obviously number 1 for them from then on and good opportunities are scarce. Also, a goal of the blogger might have been to build a public track record to obtain a position at an investment firm. Once that goal is achieved there is no more need to maintain a blog.
- You're not going to make much money from running advertising (like Google Adsense) on a value investment blog. Visitors are going to see ads for forex trading and other speculative trash like that. To monetize a successful blog you either have to put up a paywall, start an investment newsletter or switch over to SeekingAlpha which offers a premium subscription model for authors.
- It's hard to get many visitors to a blog that presents obscure investment ideas. That means it's hard to get any feedback on your ideas initially. Only when people find out you're actually offering valuable ideas do they start to comment and e-mail more frequently. To reach that point can take a lot of time and effort though and most people will give up well before that.
If you get little feedback from visitors, are not making any money and have no intention to start a career in money management, what reason is there to blog?
Some of the above has been true for me. Additionally I noticed some authors on SeekingAlpha taking ideas from certain websites and blogs and presenting them on their premium offerings. Reproduced in their own words of course, so they are not violating copyrights or anything. I'm not going to present investment ideas so some guy on SA can put "his idea" behind a paywall and charge his subscribers for it. I decided that I'm either going to put up a paywall myself or put my time into something else. Burdensome EU regulations concerning VAT rules has so far stopped me from launching and continuing to publish new ideas on my blog. I'm still figuring out what to do.
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One additional problem: I would not feel comfortable sending a broker in, say, Nigeria a copy of my passport and a proof of address. I feel the same about most other African countries. The damage that can be done by identity theft is so huge that it just seems like a bad idea to me, no matter how cheap the stock is that you're considering. You really need to be able to trust the people that have access to your personal information and be able to trust the security of their systems from outside attack.
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Personally I like using cash, because I believe handing it over to others triggers pain mechanisms in the brain which will keep my consumption in check. Paying with a credit/debit card is different for me. Casino's like to exchange people's money for chips partly because chips flow more easily.
Also cash is robust as Nassim Taleb uses the term. Technology is often fragile and with increasing user adoption, the network effects become stronger every year, increasing risks that have not surfaced before. A large bank in my country (The Netherlands) suffered from a major DDoS attack a few years ago, leaving me unable to access my online account for a few days. A family member had trouble accessing a widely used government system called DigiD for about a week, also due to DDoS attack. A lot of stuff is now tied to DigiD here, it is basically your online identity for the government and required to request all sorts of documents and services. These were relatively minor annoyances, but I do wonder how dependable these systems really are.
Traditional, physical and often paper-based systems are being dismantled to save costs, leaving us more and more dependent on a single system with no backups in place, creating a single point of failure. I don't worry too much about cash in this regard, but it is happening all around us and will lead to some major problems.
Here is a relatively recent example from my country. The article is in Dutch, but Google Translate will do a reasonable job for those interested: http://www.nu.nl/binnenland/4017331/luchtalarmsirenes-gaan-definitief-verdwijnen.html . It basically says our government has decided to stop the use of air sirens in a few years time. These sirens are tested briefly every month and that can be a bit annoying:
:). They exist to warn people in the event of a major disaster. They are now deemed obsolete, because people can be warned through SMS, social media, radio and websites. The estimated savings: €3.6 million / year. I think this is a boneheaded decision. I would like to keep certain backup systems in place, especially those needed when disasters occur. Hell, I'd like a designated guy to start hand-cranking some siren on a nearby hill in case the other systems fail, but perhaps that is a bit too much.The first things to become unavailable when a major disaster occurs are mobile networks and certain major websites. When nothing happens for a long time, people become complacent and only see the benefits of new technology, which are great and wonderful. They tend to forget that certain legacy systems have proven their worth and can be essential to keep around, even if it costs some money to maintain and doesn't seem to ever be needed.
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That if Warren Buffett had only a small amount of money to his name he would invest his capital primarily in ugly cigar butts, classic Graham style. Not in quality businesses. He has even said this once publicly when asked by a student (there's a Youtube video), but I think most investors still strongly disagree with this statement.
I think the times were different when he did it. He had an information advantage that doesn't exist today. Genessee Gas was one IIRC, selling for $50 with $200 in cash.
He did the legwork that nobody else did to find these gems. Today every stock website in the world makes it very easy to find this kind of thing.
In the '50's this worked like a charm for him but today the net cash companies don't always work out.
But I think you're right that he wouldn't do that today but if he went back in time he would do the exact same thing.
I would assume Buffett of 2016 would be a micro/small cap investor looking for a fantastic CEO building a business to last decades.
Edit: Actually a quick Google search found this from the '99 meeting notes on doing it the same way or doing it different.
I guess I’’d do it the same way: maybe I’’d start with small companies and buy good businesses.Did some digging and managed to find the video: https://youtu.be/BPTz-jLkPOc?t=9m52s. He also discusses his South Korean cigar butt investments he made in his personal account 6-7 years before.
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That if Warren Buffett had only a small amount of money to his name he would invest his capital primarily in ugly cigar butts, classic Graham style. Not in quality businesses. He has even said this once publicly when asked by a student (there's a Youtube video), but I think most investors still strongly disagree with this statement.
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I like EconTalk: http://www.econtalk.org/
Well Run Banks
in General Discussion
Posted
Trinity Bank (OTCMKTS:TYBT) seems like a well run, micro-cap bank. The CEO writes very informative letters as well.