ageofsocrates

Gio, Would it be possible to know how you went from 25 k to 1 million? Sounds like an interesting story.

would it be possible to set up a tag cloud. Good to see where the main discussion is taking place with that

Munger always said Invert. So wanted to start a new thread to focus on the worst capital allocation ever as a way to dissect investment mistakes. My pick. Time Warner/AOL Merger. A decade ago, America Online merged with Time Warner in a deal valued at a stunning $350 billion http://www.nytimes.com/2010/01/11/business/media/11merger.html?_r=0&adxnnl=1&pagewanted=all&adxnnlx=1401962619-JOAjptD+WWsNWXwVBWmRZw

read case studies from value investors club. Plenty of accounting material that's covered. cheers

I think watsa has the right to be cautious. There's been an unprecedented buildup in credit within the world banking system and on governments' balance sheet. http://www.zerohedge.com/news/2014-03-14/chinas-credit-nightmare-explained-one-chart http://www.bloomberg.com/news/2014-03-10/debt-exceeds-100-trillion-as-governments-binge.html

I think the big difference is that Klarman is willing to invest in various asset classes (i.e junk bonds such as enron bonds, cds, real estate, ) over the years. Perhaps it's probably due to the size of his fund.

guy spier

he found it too complicated to understand after reading its 10k

VIC is a good place to learn how to value companies in various industries, analyze capital structures and decipher footnotes. The really good posters are just a handful and it would be wise to hear what some of these guys are thinking.

there's no single metric. One problem of the p/fcf as highlighted previously by packer16 is the growth component. Companies that are cheap may not be good investments. At one point, for-profit education companies were trading at extremely low p/fcf valuations. However, some of 2nd/3rd tier companies were in terminal decline and could not sustain the growth that they had experienced before. They were generating strong FCF but at unsustainable rate. EV/EBITDA allows one in a way to identify cheap companies that may have a growth component. However, it's one of many financial metrics that a value investor will need to look at before deciding whether a stock is a suitable investment. my 2 cents.

Hi Benhacker. Just a quick question. How many hours did you put in researching companies when you were working at a fulltime job?

Hi returnonmycapital, Just curious. how's your track record? Where do u normally find your ideas (i.e gurufocus)?

Thank you Eric. But waiting for a day still sounds inconvenient to me. because in my Fido cash account, I can sell a stock and immediately use that unsettled proceeds to buy anything, be it option or stock. Are you using portfolio margin? Aren't you worried about their instant liquidation policy? I was terrified of the instant liquidation policy before I understood was portfolio margin is -- then I switched from Reg-T to portfolio margin and I don't worry anymore. Thank you Eric. could u please tell me a bit more about portfolio margin? I don't plan to actually use margin. I am just worried if ib platform would have a bug and force me to liquidate Scneario: 1) $100,000 cash balance initially. 2) I purchase $190,000 worth of common stock, and $10,000 worth of puts using a $100,000 loan. $200,000 total invested 3) The puts are at-the-money Okay, under Reg-T margin the account could be liquidated in a flash crash. Under Portfolio Margin they can see that the puts completely protect the value of the loan they've extended me. So I'm safe in a flash crash. From their perspective, it's the same as if I invested $90,000 into the common stock and just put $10,000 into at-the-money calls (without taking a loan). But instead of doing that with calls, I have the outstanding margin loan hedged with at-the-money puts. It's non-recourse leverage at this point -- they know that and I know that. In my example I'm assuming puts and calls are at the money, and there is pricing parity. Hi Eric, Just a quick question. How far out do u usually buy the puts for (i.e 6 mths or 1 year)? I am holding 2015s presently. I will roll them to 2016s within a few months of their issue. Hi Eric, Just wanted to hear your thoughts on this. Selling at the money puts in a margined account as a way to open a stock position (using margin). Subsequently, then using the premiums collected (from selling puts) to buy at the money puts to hedge

Thank you Eric. But waiting for a day still sounds inconvenient to me. because in my Fido cash account, I can sell a stock and immediately use that unsettled proceeds to buy anything, be it option or stock. Are you using portfolio margin? Aren't you worried about their instant liquidation policy? I was terrified of the instant liquidation policy before I understood was portfolio margin is -- then I switched from Reg-T to portfolio margin and I don't worry anymore. Thank you Eric. could u please tell me a bit more about portfolio margin? I don't plan to actually use margin. I am just worried if ib platform would have a bug and force me to liquidate Scneario: 1) $100,000 cash balance initially. 2) I purchase $190,000 worth of common stock, and $10,000 worth of puts using a $100,000 loan. $200,000 total invested 3) The puts are at-the-money Okay, under Reg-T margin the account could be liquidated in a flash crash. Under Portfolio Margin they can see that the puts completely protect the value of the loan they've extended me. So I'm safe in a flash crash. From their perspective, it's the same as if I invested $90,000 into the common stock and just put $10,000 into at-the-money calls (without taking a loan). But instead of doing that with calls, I have the outstanding margin loan hedged with at-the-money puts. It's non-recourse leverage at this point -- they know that and I know that. In my example I'm assuming puts and calls are at the money, and there is pricing parity. Hi Eric, Just a quick question. How far out do u usually buy the puts for (i.e 6 mths or 1 year)?

Personally think the wsj is a great magazine. Probably need to retune the method of delivery i.e push for epaper format rather than print...