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...

If one wants to access the old editions of OID, is there a way to purchase them? thanks

Hi Packer, What are the necessary qualifications to make a switch into business valuation? Masters in Accounting or CFA? Appreciate any guidance.

would it be possible to ask her what kind of checklist that warren goes through when identifying investments

thinking the best approach is still using dataroma.com to identify 7-15 high quality cheap companies and go long. Also, perhaps leverage the portfolio by using a factor of 1.20. my 2 cents

Hi NormR, where is this data on the drawdown from ? cant seem to find the link. Appreciate any assistance.

any data on the maximum drawdown for the magic formula strategy? Can't seem to find any data on the standard deviation..

RIP John

if you're working on buyside, just build your experience and do your CFA. Then network. Greenblatt has told his class the best way to prepare as a value investor..study VIC case studies. cheers

This is a book by a neurosurgeon who experienced a NDE. He goes in detail about Death, Afterlife and the concept of God/Heaven. Gives one a perspective of Life and it's eventualities. http://www.amazon.com/Proof-Heaven-Neurosurgeons-Journey-Afterlife/dp/1451695195 Hope this helps

Got this frm whitney tilson's email. Its taken from another message board. Author: RoughlyRight Number: of 198479 Subject: DJCO 2013 Date: 2/7/2013 12:50 AM I attended the Daily Journal meeting with Charlie Munger today. Charlie is 89 now, but he doesn’t seem much different to me then when I first started attended such meetings (WSCO, BRK) 18 years ago. The meeting was in L.A. My 19-year-old son lives in L.A. as he’s a freshman biomedical engineering student at USC. At my encouragement, he skipped his Calculus class today and caught about 2/3’s of the meeting (it lasted over two hours). My son quickly typed up his notes based on points he thought worth writing down; there was a lot more covered. I’m posting his notes. It’s likely someone will have more complete notes to post. My son’s notes come from the perspective of someone not interested in investments. He’s a fairly worldly 19-year-old, but he is just 19. I’m excited that was able to learn from Charlie. Daily Journal Meeting Notes – February 6, 2013 1. Public notice business–previously highly lucrative, but now being downsized by technology 2. Charlie has not seen a housing bust like the one in recent years at any prior time in his life 3. After the Japanese bombed Pearl Harbor, one congressperson voted against war (used to illustrate the fact that we can never get unanimity) 4. Daily Journal was never used to spew a political ideology a. Charlie thinks this was the best business policy, makes the Daily Journal a trusted source 5. Charlie doesn’t believe in a “master plan” but rather just reacting to the current needs of the marketplace/society 6. Charlie has never taken a penny out of the Journal a. Charlie and his colleagues sincerely want people they barely know (that own stock in the DJ) to turn out alright b. They don’t mind putting these people through a little hell along the way (chuckles) 7. Amazon takes territory from incumbents by brute force 8. The housing bust was created by people who blindly believed mathematical formulas over common sense; made the US pay a dear price for this 9. A good way to think: articulate those things that you do not want (i.e., things you’d like to avoid) and live a life that avoids such things. It seems simple, but many people don’t live their lives this way. 10. Why should criminal law dictate our behavior? We would never behave this way in a relationship, yet it’s common to behave this way in business. 11. Charlie doesn’t think society will function well if a bunch of people are making money simply by being clever (and then get “soft, white, wrinkly” hands) 12. There should always be a category in your mind that reads “this is too tough for me to fix.” 13. The method of corporate acquisitions in America usually hurts the shareholder a. Berkshire seems to be an exception 14. “If you get pancreatic cancer, are you going to buy your way out of cancer? I don’t think so.” 15. If your product becomes a by-product of another company’s main product (e.g., Microsoft packaging a free encyclopedia in Windows) you’ve now acquired pancreatic cancer…but worse. 16. During the construction of the transcontinental railroad, some congresspersons took bribes from people like Huntington and Stanford 17. Charlie likes to live a life that has some fun in it (not all sure things) 18. The wealth of the country is based on the productivity of the country a. Right now, we aren’t a very productive country, so this is bad for our overall welfare 19. If you want to get rich: a. Have a few decent ideas b. Have a lot of knowledge about them c. Stick with it through the ups and downs 20. Charlie never paid attention to the “stupid” things taught in business classes 21. Department stores may not have the world’s greatest future; they realized this upon purchasing one 22. Charlie worst investment decision: he didn’t borrow money for buying stock in Bellridge Oil, and it soon sold out for over 35x what he was going to pay for it a. You’ll only get a few risk-free opportunities in your life to make an investment/decision. Charlie regrets not having made this investment.