yadayada

I think there were 700 idea's posted on VIC last year. Could have made a mistake though. I like to be concentrated, so if I find 10 idea's im more then happy. Probably 100 idea's were shorts though. And maybe another 300 were crap. So that leaves like 300 idea's. And this website, and various funds and blogs. So probably about 350-400 idea's that could have potential? So if you can literally afford to discard 97% of those idea's, not being very picky is a big mistake. Just jumping in something where they state 100% upside that looks decent can be costly. Another big mistake iv made a few times is not to do your own due dilligence. Treat it like a idea generator, not something you read and blindly copy. Sometimes their idea of fair value is 15 or 20x earnings when it is trading at 10, and they don't really have good reasons why. Another thing, pay extra attention to idea's that are not rated, they can be the best ones if your small. Ones I like a lot that were not rated are Globus maritime, enterprise and Emeco. Often these things are illiquid and small, and in unpopular industries so they get little attention and receive no rating. I generally find that low rated ideas are crap though and mostly glance over them. Seems like they are sent in to keep the membership going. Finally I would add all good ones to your watch list. Especially volatile stocks in volatile markets, or stocks that might be surrounded by too much emotion and fear. If you build up a effective watch list over the years, this could pay dividends. Now you not only profit from reading about new idea's, but you could potentially pounce on old idea's that might have fallen out of favor for non fundamental reasons.

I do not claim to be able to get those returns, I do think that if I try hard enough I will come close over time. people think, well few are able to get those returns, so therefore it is difficult! Doesn't mean it isn't, but I don't think it is nearly as hard as most think. This also becomes self reinforcing. Better not expect it, or really try it even. It is an evolutionary instinct, few are able to do it = probably very hard. So better not put a lot of energy into attaining it. Good example of thinking fast and slow where thinking fast is a mistake imo. I have seen this also so many times outside of investing. It is just mindblowing. Very few people seem to have to 'i can clone what this guy is doing' attitude. Think about it, everything you learned in the past seemed at some point hard and difficult. But once you started breaking it down piece by piece it became easier to understand. The first time in school you had algebra, solving y=2x/x+3 seemed like chinese. But once you break it all down in easy pieces after a while more complex math concepts start to become easy to understand as soon as it all clicks. The moment you get it, it stops being difficult or mysterious and it seems very easy. I like to divide the world into easy things I do understand and I do not understand yet. Time, motivation and energy being the only barrier. I studied a bunch of people who outperformed by a very wide margin and try to see what buffett did in the early days. I think the way to go is find the most mispriced stocks (not necesairily the best companies or business models!), this is almost always small and micro caps. There are more of them, and they get less attention. And CATALYSTS. They are very important I think. And also concentrate. And finally, be willing to say next a lot. Be very picky. For example, an idea with 70% upside to fair value (where massive outperformance will stop becoming likely) will not put the odds in your favor to get a 30 40 or 50% annual return if there is no clear catalyst. If your ideas take on average 3 years to pay off (which a lot of case studies show), then to get 40% you need to find idea's that have on average 170% upside total. Probably more because some will not work out. Or a high probability of less upside being made very obvious to the market in a fundamental way. Preferably some growth that can add to longer term upside if you have to wait. But probably more because some will not work out. BUT if you say , well I don't expect more then 20%, you will probably stop looking once you get a portfolio of slightly mispriced stocks. And usually those very large returns require you to constantly turn over more rocks. Bias will kick in and you will not dig very deep for new an better idea's. And you often need to look more closely then just look at an income and cash flow statement. Because the best idea's are often hidden. Paying up for a great business will not get you those returns imo. That is good if you don't want to put in a lot of work down the line (because you have other things to do or dont care for the process) or if you have a lot of money to manage. But with a small account to maximize returns you usually want to pick the idea's with an ok moat that are priced like they are trash. Or trash that is about to be liquidated or sold that is priced too low. over time you will make whatever Return on invested capital is if you pay up, and that is usually not 30-40%. And catalysts. I get the idea that catalysts are like a forbidden word for buffett followers and grahamites. It somehow implies short term thinking and trading. But that is not true, it simply means having the odds in your favor by not having to wait for potentially 5-10 years and sitting in value traps. I noticed several ways where you can usually find the stocks with the most low risk upside. -Operating leverage kicking in with a business model that doesn't seem very high risk (GNCMA is an example of this I think), or faces large industry tail winds. -Doesn't screen well on PE ratio or book value -A lot of new capacity coming online with lot of demand for the service or product. Especially for some small companies with high ROA. Enterprise is the perfect example of this. New patent protected capacity coming online. -Mispriced cyclicals. Schuff at 9$? Usually short term thinking at work here. They start moving up usually a year or so before the cycle kicks up. -Changing strategy to make business more lean, spin offs or activist investors, or simply cutting fat (have to be somewhat sure this will happen). -Non cash charges like depreciation for some reason much lower then actual capex in the long run. -hidden assets that are being monetized (steinway piano's with that valueact guy that had a very good track record?) and Keck seng? -negative publicity where suddenly almost nothing good is reflected anymore in the price due to law suits or regulation threats. Altisource and Ocwen perfect examples of this. If you dig down on these stocks, you see that it is all pretty much bullshit. Usually best to stay away, but sometimes it is so obvious that the price overshot downwards if you look closely. -Threat of replacement of a better alternative. Outerwall a good example. A lot of panic, price crashes to a point where valuation makes zero sense and no possible good thing is being priced in. This is not even a full blown cigar butt. Yet it is priced like one that will go away only a few years from now. -Growth and usually a combo of ROIC being mispriced due to too much short term thinking. -Markets with a lot of trash (canada) or fraud. A lot of low PE stocks in hong kong market because a lot of them don't pay out the cash they earn. So sometimes good stocks with low PE ratios are hidden between those. Almost all these type of mispricings usually have a catalyst that is very likely to occur somewhat soon. This will make the stock a lot cheaper due to buybacks, dividends or visibility on the usual screeners. Or if emotion goes away the market stops the black and white thinking. Fear is usually only a temporary emotion. And it goes away once the market sees the business isn't going anywhere. Obviously because these things are usually hidden and there are like 50k stocks out there and they usually don't screen that well they are very hard to find. That is also why returns on these things can be so high. But I think I found a decent way that still seems very overlooked by the market. A study on VIC idea's showed that the high rated idea's did something like 22% a year between 2000 and 2009. There are about 2-3 idea's posted there every day? Links if you are interested: http://www.retailinvestor.org/pdf/HedgeFund.pdf http://mpra.ub.uni-muenchen.de/12620/1/MPRA_paper_12620.pdf That is at least several 100 idea's a year. Another 50-100 idea's a year from this website? add in blogs and hedgefunds to follow and you have almost 500 idea's where the ground work is already done which saves a lot of time (can sift through trash faster). You only need about 5-6 new ones each year, given that you hold them more then 1 year on average if you want a 10-15 stock portfolio. I think key is to focus on high upside idea's and keep saying next if they don't seem very mispriced. And catalysts. BTW a good example of the above points is AIQ I think seemingly crappy business -check doesn't show up on easy screeners -check looking at it on the surface a year or so ago wouldn't say it is a good investment -check Capex going forward lower then actual depreciation -check Business being cleaned up and made leaner -check catalyst - check Hitting all the marks, but it looked like crap. But if you followed Howard mark's oak tree (or packer) and dug into it you would have made a huge return of several 100% with relatively little risk (or not as big as perceived by the market). I personally didn't but I like to study these cases in hindsight. And you had Oak tree on your side as investor as a safety net against their debt load. Just look at oak tree's portfolio, most of it looks like trash at first glance. You only need to find a few a year, and in a market of 50k stocks, there are always idea's like this somewhere. So I don't think that starting in a bear market is that important. Again only relevant if you manage a billion dollars or so.

No, I'm not implying that at all. Even when I was agnostic, I lived a more "moral" life than many religious people (ie not cheating, stealing, lying etc). However, if atheism is accurate, none of that stuff is even "wrong" - especially if it helps you out. We each determine our morality. Funny things is, we also do a great job of rationalizing our faults. So many times I hear secularists talk about "we define morality by whether or not something harms someone" as some type of ethical standard. For one, that is completely arbitrary. Secondly, let's use an example of a husband and wife. Let's say the wife cheats on the husband. Now, since the wife has a new romantic fling, she treats her husband better and he is happier. She's also happier. Now, if he finds out, he'll be devastated. For the purpose of this exercise, let's say he never finds out. They both are happier however, trust was violated (but never known). Are her actions moral or immoral? Depends on what is important to those individuals...honesty or happiness. I know of people who were devastated by a cheating spouse, and believe me, neither spouse was happy when it was happening, because one knew something was different and was trying to figure it out, while the other one was preserving one lie after another to avoid detection. And then I know of couples where one of the spouses has/had a mistress or partner outside of their marriage, somewhat openly, and yet they remained married happily or relatively happily. God played no part in their decision...rationality of how they wanted to live their lives and what was important to them decided the eventual result. Cheers! Sanj, thanks for your thoughtful response. However, to be fair, you kinda avoided the original premise. We're not talking about people who weren't happy by the cheating (the premise was that the cheating spouse was happy) nor was I referring to a couple that was cool with the other's infidelity. Let's say that she is happier and the husband is happier (per the original situation). However, he would not be happy if he found out (unlike the second thing you wrote about). However, he never finds out. He is happy and she is happy. Is her cheating a moral or immoral act? Secular ethicists normally say that if "harm has to be done in order for something to be immoral." By the way, I'm not saying that God played any part in their decisions. I'm implying that if God doesn't exist, nothing we do (or not do for that matter) is inherently "good" or "bad" objectively. We can rationalize anything and everything to fit our whims. I would suggest that it is neither moral, nor immoral. Simply an act. The eventual view by her spouse when it comes out, or by others decides whether it is moral or immoral based on their secular or non-secular view. For example, killing another human being would be normally deemed immoral by most people, but what if it was in self-defense? It's neither moral, nor immoral, but only in the eyes of others would it deemed one or the other. It is simply an act. Cheers! yeah if more people would view the world this way, we would probably get along much better. It is good to have morals, but better to also realize that they are not absolute truth, and know why you have them.

That's from the article. I'm sure his returns are floating somewhere on the internet. Before fees about 20%.

A lot of similarities on Catmull's book https://www.youtube.com/watch?v=ixci-5EAkWA

well with that attitude you will never get those returns! ::)

Not that poppycock again. http://en.m.wikipedia.org/wiki/Secular_ethics Frankly, I'd rather live in a world where people are ethical because they use reason to realize that it's the better course of action (empathy tells us most of what we nee to know) than live in a world where the only reason people are ethical is because they're afraid of a security camera in the sky threatening torture, and if that camera was to disappear, they would lie, cheat and steal in a heartbeat (is that really your case? that's what you imply). That's a depressing worldview. I know, I know. Best not to write about this stuff. But some strawmen need to die. Liberty, this is not a strawman argument. I'm fairly well versed in secular ethics (for what it's worth). I think that's poppycock. If we look at things with reason, ie rationality, how is this incorrect? And no, I'm not referring to a "security camera in the sky." I'm simply saying that if we're animals we should, rationally, act like it. We shouldn't let emotions dictate rational decision making. If all we are is material beings, lying, cheating, and stealing doesn't mean much of anything - whether you'd like to live in that world or not. Indeed, perhaps life is better for the people who are lying and cheating. Why is your view more valid than theirs? I think this whole argument hangs on your definition of rational. What is rational? If I shoot myself in the foot, is that irrational? If for no reason at all I would cut my own ear off? If you say so, then something is rational in your reality if it makes you feel good (and not just short term), and irrational if it makes you feel bad. So by your logic, stealing and lying etc would be irrational. Because most normal people would feel bad doing it. It would make their life worse, because it would give them many negative emotions. And emotions, especially strong ones, are not exactly easy to ignore. Well, what I'm saying is that if stealing or lying puts you in a better position for material wealth (all we are is material beings after all) then we need to realize that the negative emotions are simply evolutionary instincts that we can ignore. Sure, it would take practice, but ultimately you'd be more of a master of your emotions and maximizing your material well being. A simple example I like to use is humans desire for fat and sugar. When I was a bit heavier, I'd eat a good amount of both Once I realized that the desire was simply my evolutionary instincts talking, it allowed me to overcome the desire. I don't see why other emotions/desires can't be dealt with in the same way. I'm happier now and in better shape. If someone lies to make a sale and feels bad, they could simply translate that "feeling bad" as an old evolutionary instinct and then ignore it. yes but we are social animals. You cannot simply ignore your nature imo. It will not make you happier in the end. If you isolate me from other people (what will happen if you lie and steal all the time) then I will not be happy long term. My animal needs are not being met. Empathy is basicly a mirror neuron, and I am not sure if that goes away if you just ignore it. You feel what the other person feels essentially, and this feels bad if you treat them badly. Im not sure if you can actually repress this instinct succesfully long term and be happier with it. basicly the materialistic way of becoming happy and trying to ignore all my instincts is more difficult then just not being an asshole. Wouldn't it be irrational to try it the hard way if there is an easier way? Even if you succeed, you probably spent more time in your life being unhappy then if you just weren't an asshole. On the other hand if you are a sociopath, your an idiot for not making good use of that.

Bizaro what did you miss with the holoway reit? If the exact same situation would happen, would you buy it again? and if not what would be the reason. Or was it just sheer bad luck in something that you couldnt foresee.

Not that poppycock again. http://en.m.wikipedia.org/wiki/Secular_ethics Frankly, I'd rather live in a world where people are ethical because they use reason to realize that it's the better course of action (empathy tells us most of what we nee to know) than live in a world where the only reason people are ethical is because they're afraid of a security camera in the sky threatening torture, and if that camera was to disappear, they would lie, cheat and steal in a heartbeat (is that really your case? that's what you imply). That's a depressing worldview. I know, I know. Best not to write about this stuff. But some strawmen need to die. Liberty, this is not a strawman argument. I'm fairly well versed in secular ethics (for what it's worth). I think that's poppycock. If we look at things with reason, ie rationality, how is this incorrect? And no, I'm not referring to a "security camera in the sky." I'm simply saying that if we're animals we should, rationally, act like it. We shouldn't let emotions dictate rational decision making. If all we are is material beings, lying, cheating, and stealing doesn't mean much of anything - whether you'd like to live in that world or not. Indeed, perhaps life is better for the people who are lying and cheating. Why is your view more valid than theirs? I think this whole argument hangs on your definition of rational. What is rational? If I shoot myself in the foot, is that irrational? If for no reason at all I would cut my own ear off? If you say so, then something is rational in your reality if it makes you feel good (and not just short term), and irrational if it makes you feel bad. So by this logic, stealing and lying etc would be irrational. Because most normal people would feel bad doing it. It would make their life worse, because it would give them many negative emotions. And emotions, especially strong ones, are not exactly easy to ignore.

I don't think 50% a year on small capital is rocket science. A lot of people actually limit themselve. If you say you are happy with 20% IRR, you stop looking after you find a bunch of idea's fitting that bill. And thus you won't find the best ones. Since buffett picks simple business models, all the skill lies in actually finding them. If I present you a dirt cheap stock and explain why, you probably go, well yeah I guess Ill buy some! When I read 'you can be a stock market genius' I was thinking, well yeah if i had this idea, and I knew what greenblatt knew at the time after reading it all, I guess I would invest too! The trick is actually finding them. And putting in the work. And not settle for anything less then stellar before you find them. That doesn't happen though if you insist you will never be buffett and are happy with 20% or 10%. I like that quote from a ultra runner (like a super marathon) when asked how he did it, he said 'well no one ever told me I couldn't do it' .

I don't think you understand what atheism means. You are implying that you need religion to not fk other people over? I think not believing in a made up higher power does not mean you cannot have morals, it just means you are open to other rational aproaches that are also in line with not being a animal.

SD in what cases where you succesfull, could be a nice reverse case study for the people new at this.

I like the idea, but how well does it work in practice? Like the garden gnome, they will probably not try very hard to catch the offender?

so the people of those occupy camp parties should read books while occupying. Pull the 1% down and pull yourself up at the same time.

everyone always seem to latch on to buffett's buy and hold, but back when he slaughtered the DOW, he was mostly trading in and out of stocks. If I find something with 100% upside, and discount closes (and compounds a little bit) and now upside is only 30%, and there is no strong catalyst, I will invest in another stock if I can find it with 100% upside. Obviously if the one with 30% near term upside is a compounder and could have 80% upside over 3 years with little risk, and the one that offers bigger upside right now has a deteriorating business or more risk, then you should stay in the compounder with 30% near term upside. He said that buy and hold is his strategy now, but he also says he could do 50% a year now on 1 million$. I can assure you that is not with buy and hold. That is probably by finding microcaps taht are mispriced, and always staying in the cheapest microcaps (up to a point). I think that catalysts and how big of a compounder they are is very important. Also operating leverage, pricing power and risk is important (see's candy's very good example of pricing power). So you have to work on a case by case basis probably. That is probably where true skill of an investor comes in, knowing how to judge these situations and know when to trade them in for another one. Not sure I am at that level yet. And finally capital allocation is important, you can trade in and out purely on multiples, but if capital allocation is really good then that could provide some hidden upside (or downside in opposite case) as well.

the german team will pretend to be human and be happy for a while before being put in their recharge station again for the next match.

packer they constantly seem to issue shares and convertibles. And large exposure to mainland china real estate (with everyone talking about a bubble). They do seem to pay out though and not hoard cash (compared to debt at least). keck seng seems like a more low risk pick. edit: prices of the commercial real estate doesn't seem that out of whack judging by lease yields. But are they going to monetize and pay dividends soon? Seems like hong kong investors only look at dividend yields for some reason, sometimes to a extreme. If they are going to hoard cash and only slowly pay out, price could barely be up 4 years from now.

I can imagine that animators and software engineers have huge leverage at companies like that. once you have a skilled and experienced team, that is very hard to replicate, and the success of the company basicly hinges on it. So i can see how they could squeeze most of the profits away if they work together as a team to get higher pay. Obviously doesn't make it right. I guess what I mean is, untill I read about what these animators were actually making, I am holding off judgement for now. There is this mentality that people blindly want to jump executive's throat and point at them as an example how unfair the world is these days.

I think you need to be good at technical analysis as well to really get an edge. So now you have to do 2 things really really well to not even make that high returns as they are pretty capped. All the extra time spent on crap like studying head and shoulders patterns and really making sure your not missing something fundamentally could be spent finding another cheap idea with a lot more then 50-90% upside. Biggest reason i went into valueinvesting is because 'heads you break even, tails you win'. Or sometimes even 'heads you win some tails you win more'. With shorting it is 'heads you lose a shitload , tails you win a little and get an ulcer'.

with 45k stocks out there, and so many blogs and websites writing up in detail about what they think are bargains, how on earth can you not be 100% invested at all times? I am having problems choosing which stocks I wanna buy to maximize my returns. I don't get how people cannot find good idea's. there are probably hundreds of very mispriced stocks at all times even at tops of the market overall. Law of numbers? They just get harder to find. BUT if you find them, it is more likely they return quicker to fair value in a bull market. So your harder work does get rewarded quicker when times are tougher. something could have 150% upside in a bear market, and it could take 3 years to pay off, but in a bull market it might happen in a year. And then you can try and find the next one that is cheap. Fwiw I think we will see a major tech boom in the next 30-40 years making life cheaper and better. There are people saying that the next 20-40 years will make the last 100 look like nothing. So I am cautiously optimistic.

I love how they also explain what a social network is haha. It is like this is some kind of time travel thing gone wrong. They travelled back from 2004 or something and by accident it is still valued at 5 billion$.

I think the reason it is going so high is because of very bad liquidity. So if you have a take on that, then you can short? Maybe if you see signals that insiders are starting to dump hard.

i loved the steve jobs anecdotes. 'if you do not agree with steve he will explain it a different way so you understand and agree with him'.

but it is a very interesting interview :) Im just thinking about how much damage someone with no morals could do if they ran google. Obviously these guys don't have bad intentions and will only use it for good. But it seems google is like a weapon, and 50 years from now there is a decent chance it is run by some sociopath.

i mean im not a fashion guy. But wearing crocs in an interview like that? Seriously. No need to get on a suit, but at the very fking least wear some sneakers or something.