yadayada

if you own a stock and rather get dividends, it means your holding a overvalued stock. You should look at that first. If you do a study on the effectiveness on buybacks you are essentially doing a study on capital allocation skills of managers. And I can predict the outcome, the bad ones will underperform, and the great ones outerperform! And companies with very volatile stock prices that generate a lot of cash will benefit the most. But very few managers fully utilize the market swings to maximize returns to shareholders unfortunately. It is no coincidence that almost all the outsiders in thorndike's book did buybacks at the right time. This is really simple, yet for some reason very misunderstood. People can't seem to grasp cheapness of a stock. Oddball's example perfectly illustrates that. The bad allocators are basicly sheep and dont have this inner voice of logic that dictates to do the right thing. They are swayed by the crowd. They say they base their decision on rational constructs, but are really just sheep.

wasn't that a combination of bad monetary policy and rising oil prices? I doubt oil will go up much in the next decade with all the alternatives coming online. Oil consumption has been going down the last decade in the western world. Also if you hold unemployment next to CPI, you see that unemployment spikes up after inflation went up (and then causing it to go down again). I think the 70's was just a perfect storm of all those factors. For example in 73 unemployment was 5% then as it goes to 9% inflation goes down to 5%. When it is in the 5-7% range inflation starts to spike up to 14%. Following this unemployment shoots up to 10%. But when unemployment is at 8-10% in the early 80's inflation goes down all the way to 1%. Mix this in with bad timing in monetary policy and sudden spiking oil prices and you get wild inflation spikes. I don't think these conditions exist today.

I don't think there will be inflation. For inflation people need to start spending a lot. cost of a lot of things are going down. Unemployment has been steadily on the rise in the last decade. And as for house prices, when a lot of babyboomers start selling their house when they get really old, there will not be as much buyers. So basicly cost is going down, and demand is also not likely to go up, unless there will be a big employment boom sometime soon. Which is not likely with more and more things being automated.

AIQ comes to mind early last year. Bonds had rallied to a premium already. I think for 75m you could have bought a leasing company with stable long term revenue that had been turned around already with oak tree involved, that would generate a spread of about 30-50m fcf normalized. I like to study these things in hindsight and study the conditions where you can find these :) . Probably if you scan over old VIC write ups that did well you can find some insane bargains. My favorite now is Texhong. if margins would get squeezed hard in bear case it is trading at 10x pe now. But I don't think that will be the case. if your more optimistic it is trading at 2.5x forward PE and underlying business is growing. Hard to lose on that one. I think next year margins will go back to normal and this will be a homerun. as for case studies, I think Quilmes and NII holdings were both really really cheap bargains. Both write ups are on VIC by charlie479. These are his holdings now, probably worth to keep an eye on him. Purely following him you will probably be guaranteed at least 1 homerun every decade :) : http://www.j3sg.com/Reports/Stock-Insider/Generate-Institution-Portfolio.php?institutionid=10322&DV=yes Picanol group in 2012. market cap of 194 mill. And business had been turned around already with about 55m in net earnings. and net cash of about 140m! And I think it was known already that management was pretty smart. Conrad industries in 2012. And micron early last year. Trading probably at 3-5x FCF after industry would get rational. Who cares if it's tech at those multiples right :) Another one of current holdings is macro enterprises. If they score some decent contracts, trading at sub 5x earning multiples and relatively safe because it's trading at tang book value. Had a whole list of these historical case studies on my other pc. \I think awilco could be a value trap though. A 4-5x multiple does not seem v low since they are already getting pretty high dayrates currently. If some capacity is moved 3 years from now, day rates could get crushed. You gotta be carefull into buying some of those low pe companies.

I think the thesis here is that almost all the 'needs' type of jobs will be replaced by robots and AI systems somehow. You could argue that a car is a need, but a pet rock or a boat are wants. Sure there will always be more products and services that people want, but most of these will be done by machines anyway. After the average person has his car house food and entertainment, I doubt there will be much more things he/she really needs. Law of diminishing returns. There is simply not that much more valuable things to add after all the abundance we have already. You have only so much time in a day. And materialism is already rampant. If you look at this list: http://www.bls.gov/emp/ep_table_201.htm 80% is services already. And the argument is that they will be replaced. Retail trade: more then 10% of jobs, likely replaced for the most part by either self service or online delivery? Health care and social assistance: 12%, likely partially being replaced by preventive medicine (not a bad thing at all, but not labor intensive). Things like lifting an old person out of bed might not be done by 2 people, but by some robot arm if they do get old. And this is not an industry you want to see growing. Because all those sick and old people do not add value. They only take value and cost us money. Transportation:3 %, likely being replaced for the most part by self driving cars and trucks. So let's say that is -15% work done by humans in these sectors alone. Manufacturing is about 12% still and shrinking. And other sectors will also require less labor in the future. So not hard to see how 20% of jobs will disapear in the sectors that provide stuff that people really need. And unemployment is already something like 20%. So people arguing that new jobs will be created, they have not been created in the past 14 years. if 20% of jobs dissapear in above sectors, that is like 115k jobs over a population of almost 400 million people in the US. You already see this trend in the last 10 years. Job growth lagging population growth. But now it will start to speed up. Im not sure if this is a bad thing in the long run, but in the short run it probably is?

everyone knows the markets are efficient. You can't make money, and all those people trying are just delusional. Or at least that is what that professor tells people on cocktail parties when they ask him why he is not rich yet, despite being a economics professor. I seriously think that is why so many academics liked that theory so much. Imagine being a economics professor living on a meager university salary. That must hurt your credibility.

yeah i think most people have an aversion to copy idea's because in school you always got punished for it. Sort of like pavlov's dog. Like Pabrai said, most people do not have the cloning gene.

What is not to like about his ideas? I tried to crack his idea's, but most of his idea's are some of the cheapest stocks that seem to offer very high risk adjusted returns if you analyze them closely. If you are rational you have to at least steal some of his idea's unless you know stocks that offer a even better risk/reward ratio with similar or more upside? I think there is a bias that prevents you from copying too many of anyone's ideas. I think that is mostly irrational. So let's say you steal 2 idea's from a certain good investor, y ou get this urge to look elsewhere. It is like a false sense of diversifying. But if you run his idea's by a check list you see they are almost all high quality. In the end the quality of an idea is determined by how many boxes it ticks off in a list of what makes a good investment. Not by who or what website wrote it up.

have studies been done on how well bookies predict events? Seems interesting, a lot of people putting their money where their mouth is.

Investing in real estate also takes work, and has its own set of risks. it's fool proof. You just need a bunch of common sense. Or you can find a bunch of very well performing hedgefunds and investors over the past 10 years, and just buy their 10 best picks. I would probably do tht with little time. And don't sell unless they sell. op: http://greatinvestors.tv/video/howard-marks-on-the-distinction-between-risk-control-and-ris.html

people either say buy an index if your not good at this, or if your good go ahead and pick stocks. The problem is a lot of people buying the index might panic sell when the market goes down. I think the best solution is, get decent investment advisor or buy real estate if you cannot invest.

wouldn't buy based on dividends. They can easily go away.

im bothered by the overuse of Ebitda. And the abuse. Take note of this gem from the Fiat VIC write up: Note how the earnings get more imaginary , the more bullish he gets! Ofcourse if you say it is worth a 23x earnings multiple in the bull case then readers might deem that too expensive. So let's just put a 9x ebitda multiple on that. Nobody will know what that really translates to in real earnings at first glance. Why do people use Ebitda if there are no comparisons? Or if competitors cost structure looks different? Why use it at all with valuation? Everytime I see someone say 'well this thing deserves a 7x ebitda multiple' I end up having to look up what that translates to in actual real earnings. Might as well use revenue multiples then. Another thing that blows my mind is reading quarterly call transcripts and having analysts ask question about details that just do not matter. Maybe some tiny part of their operation generates like 5% of total earnings and will always stay small. And then some analyst proceeds to ask like 3 super detailed questions because he wants to exactly understand wether that 5% could maybe change into 7 or 4% sometime soon. If that 5% matters that much your looking at the wrong stock.

coal is going nowhere. There is simply no alternative for most of asia. There is not nearly enough gas to make a dent. Only place where you will see serious decline is in the US. But India and China are far bigger energy consumers. You will see usage go up before you will see it go down 5-10 years from now.

did someone study that and write a book about it? Books like outsiders are not very detailed in that regard.

duopolies and oligopolies that can behave in concert are just monopolies. I think there is a very interesting conversation to have about the characteristics of cases where duopolies and oligopolies can't stay disciplined. Especially given the current range for investment theses that can boiled down to "Consolidation = oligopoly = high returns" judging by game theory and looking at these hard drive and memory companies, it seems the strenght of a oligopoly is determined by how much in equilibrium they are (so how strong each player is compared to the other). So if there is one weakling that manages to stay barely alive all the time you will see less discipline in pricing because they want to drive out the weak player and take his market share. Other factor is competency and incentives of management of each companies? If someone knows of some paper or study about this, would love to read it.

What about duopoly and oligopoly

http://i.imgur.com/Wr6Tlv1.png I would be very surpised if this did not mean people spending less time on the internet on average. Or at least less time on streaming services like youtube and netflix. If only it isn't for the entire population having to collectively wait longer to see their content. Also out of western countries, the US is the least connected. There are probably millions of people in the US who would want netflix, but cannot afford a fast connection + netflix.

with youtube becoming bigger, and netflix missing out on revenue due to expensive slow internet, you would say that prices don't have much room to go up. If anything google would roll out fibre and sell at break even and still profit from it in other ways.

well prices for internet are already some of the highest in the US. So I doubt they will go up much. In most other western countries you have like unlimited bandwith and super fast speeds for cheaper. this is basicly cable companies bribing politicians to rape their customers without any signs of a free market. I doubt that is very sustainable. At some point when they pay 10x as much for the same thing americans will scratch their head and get angry about it. Not to speak about powerful companies like google and netflix that will be seriously hurt by this. So at some point it will either be deregulated, or google will roll out their own network and keep the price down. So cable companies must be in a bad spot?

the amount of short term and results oriented thinking in this world is mindblowing. I know we are a bunch of animals that are not wired for that because it did not serve our purpose of survival. But still. Some one time event this year? Oh let's pretend next year does not exist. Only this year counts. An average? WHATS THAT? NEVER HEARD OF IT. Luck? Never heard of that concept either.

where is the letter?

http://www.nytimes.com/newsgraphics/2013/12/30/year-in-interactive-storytelling/ very nicely done.

would like to read their 2006 and 2007 letters.

Solar will be mostly of the grid. So if the value proposition is there for people vs grid power, and if power companies do not get the government to somehow ban solar, you will see a big decline in the need for grid power over the next few decades. So who gives a flying fk what utility companies think, they will be obsolete for the most part within a few decades.