randomep

Ya the media is doing what it does best, sell papers or airtime. The hot topic now is pessimism. But like Buffett says we have more economic activity than ever. When there is economic activity there is money to be made. So the question to ask is who is making the money? 1. the majority of employees? definitely not, wages are stagnant, unemployment is high in much of the world 2. large investors? well as we can see, lots of people that we think are superinvestors aren't doing well lately 3. highly profesional workers? yes, looks like banks, doctors, tech people are getting high salaries 4. retail investors? not really, this is the herd and this is a bad time to be in the herd 5. insider shareholders or owners of privately held companies? possibly, I see a lot of that in the world So most of us CoBF folks are 4. and possibly 3, so we can make money if we aren't with the herd, macro is for the politicians and eoncomists and the big investors......

I like how a 0.22% move is indicative of a crash. Wonder what this algorithm thought when it went ex-div at the beginning of the year... this thread just cost me 2min of my life

Ya some stocks in Japan are absurd. I have one 8159:TYO: price/shr: 1060 yen equity/shr: 2180 yen EPS: about 180 yen and earnings are growing, and no debt! I am glad to see the company bought back 3% of shares a week ago. But seems like to me management has little motivation to return money to shareholders. I wish Japanese executives are compensated like the west. As it is now, they seem to be content to just hoard money and keep the enterprise going. I don't know how this company will play out. Of course my worst fear is if they start squandering money going into areas outside of their area of competence. What we need is a fundemental change in attitude in this Japanese companies!

Why do you think this company has hope? Looking at yahoo finance it has $1.25 cash per share. sells for $0.79 per share and lost $0.45 last year. So another year like last year and the netnet margin is spent..... When I consider netnets the company has to be profitable

Buffett's Berkshire was acquired because of anger.....

I am still reading an absorbing it but I don't understand or agree with one thing he says: He says low/negative interest rates causes companies to use debt to buyback shares. That is clearly true, companies are swapping equity with cheap debt. But he then says that this is causing a hallowing out of the companies. The companies are using cash to fund buybacks instead of investment for growth. I don't see that. What caused the past two crashes were over investment and wasteful investment in tech and housing. If anything we need to tone down on trying to grow to fast....... any thoughts? anyone?

I can't answer that. I can only check the "I have no idea" box.

Just be aware that these are two conflicting statements. Because "inflation swindles the equity investor" and rates won't stay low when inflation pops up. It sounds conflicting but it is the world we live in.... Actually what I am saying is that there is no inflation of consumables. So a company's balance sheet will get killed by inflation, but it isn't happening. COG isn't rising...... think of oil, or any other commodity..... even salaries aren't.... But real estate, stocks and bonds are rising in price. Which in my opinion justifies a higher PE. So the net effect is that this is a massive re-distribution of wealth from the common person who doesn't save and invest, to the wealthy who do.

adding my 2 cents here....... For all the talk about CAPE, we must be mindful of the 10yr interest rate which Schiller includes in his data. It has rarely if ever been this low. Buffett said the future is great for stocks if interest rates stay this low. And I firmly believe this is the case. Another fact is that the world is awash with money but inflation for consumables isn't there. But there will be inflation of investments assets. So there is money to be made despite low GDP growth.

Hi where did you find the above quote? But ya I agree with you, the guy wanted instant returns. His fund NAV went from 10 to 18 back to 10 in a little over 2 yrs. It hardly proves anything.... Alot of people got the same type of returns...... maybe the disappointment was going +80% and blowing it all in the space of two months.

I saw KCLI go from 52.5 to 36, it was selling at 1/2 book. So I bought a whole bunch with money designated for cash. I believe (hope) that the stock can't go any lower. If market goes south I can sell it to raise cash. Wonder if anyone has done something like that?

yup, the man Buffett cloned is Gurdon Wattles, who own American Manufacturing, which in turn owned Crane, Mergenthaler Linotype, and Electrical Auto-lite, so it was like one company in side another and inside another, hence the reference to Russian dolls I think this gave Buffett some of the ideas of making Berkshire a holding company.

yup gotta love this forum

I believe Snowball made reference to that. They called it coattailing back then. He was coattailing somebody and made reference to some kind of doll that has a doll inside it that has a doll inside it... forget what the doll is called. Let me search the pdf when I get home....

That's a great question BPCAP, unfortunately, I have no answers but more questions. 1. how do you even buy the yuan, if you aren't in china aren't chinese and don't have a chinese bank account 2. can you explain, slowly, what is rolling? thanks

Fortuantely, the Bruce Fund exercised its right to run a fund that lagged horribly in a bull market and was down to something like $2M AUM...... back in the late 90's

So for how long does XXX has to underperform to be able to shit on it without being judged as harsh? "This guy is a really great investor! He has underperformed for 20 years only! Wait a bit, he's gonna show you!" Again, wrong question. To judge skill by yearly performance alone could require more than a lifetime's worth of results, depending on your minimal required "alpha" for it to count and the level of certainty you're looking for that it exists. Trying to find a 1-2% effect in a data set where returns aren't distributed normally and have an average of ~9% plus or minus 20% (1915-2015 inflation-adjusted) you'd have to wait until damn near the heat-death of the universe to find small and statistically significant "alpha." You've got to beat the market by a lot for a long time for trailing performance figures to say much about your skill at investing. Buffett, Tepper, Greenblatt, etc. and maybe a few vampires (my hat's off to anyone who can beat the market by 1-2% over 600 years) are really the only ones we can assume to be skillful based on past performance alone. As a general guide, if you're looking at trailing results "do not shit lest ye be shat upon." If you want to find someone you CAN safely shit upon, pull up SeekingAlpha and just go wild in the comments section of the first writeup you find by an analyst who hasn't figured out how to read a 10k. Investing is about making good decisions in the future. If you want to judge other investors, do it by how well you understand and appreciate their process, not by what they've done. There are some real dufuses out there who don't do their homework and probably shouldn't be in business, but once you're past that hurdle, it's got to be about what you like. Past performance is just another method of data-mining. +1 ya I think of value investing is like tossing a unfair coin that wins 60% and loses 40% each year. Where winning is beating the market and losing is lagging. I still prefer my unfair coin to using a index fund and matching the market. But if my coin goes against me 2 years in a row, I don't bail. I will only bail if I don't believe odds on my unfair coin. The analogy is I won't quit until I don't believe in value investing, or if I think I cannot implement value investing.

So for how long does XXX has to underperform to be able to shit on it without being judged as harsh? "This guy is a really great investor! He has underperformed for 20 years only! Wait a bit, he's gonna show you!" 20 years sounds about right :) seriously though, we just don't know, but the way to survive this is to look more at the rationale, read Graham and Buffett, and look less at the results which is just market prices, unless of course you have a permanent loss of captial. I remember back in 2008 which was the 10th anniversary of my first brokerage account, I read an article which said that the S&P had gone nowhere for 10yrs, so all the time effort and capital spent on investing was for nothing, but the next year or so it was all worth it...... These guys could turn around in the blink of an eye! So don't sit out!

oooooooooooooooh I sense this thread is going more and more into the realm of efficiency. I totally agree with umccal earlier who said there is always some crises. In a crisis somebody is losing their shirt and someone will rise from the ashes obscenely rich. I just want a anyone to look at the chart of the S&P 500 and tell me it isn't more volatile today than say in the 50's when Buffett started out. The world is growing, and many emerging markets will bring billions out of poverty. In the process there is money to be made. If we are saying it is tough for the likes of Ackman and Buffett to make money, then who is making money? The distribution of rich and poor people must be extreme so there is some group of people getting rich from the current market. I think what we see as harder is really just more painful. We see it is more painful to make money. For example, those who made money through 2008-2009 had scars (myself included). It's like people coming out of prison, it was a good experience and I am better for it but I wouldn't want to experience it again. Also we are looking in the rear view mirror at how various superinvestors made money. But whenever someone finds an inefficiency it gets arbitraged out. BUT more inefficiencies will take it's place. It just will come from a different place. We just have to find it. Look at how John Paulson made his fortune in 2008....... Another contributor to our pain is that it takes a longer period of time for value ideas to play out, I sense in Buffett's day his idea pan out faster than if he did that today.......

LC, I am not a thinker in this area of thought. So I cannot comment much. In the future people may live to be 150yrs old on average. All of earth may run on clean fusion power. Reproductive rate may be 1.2 persons per woman. We may have certain parts of the world living in the stone age due to religous dogma. People may lose all motivation to work hard and devote their lives to having sex with as many people as possible because birth control is no hassle and 100% effective and all STDs have cures. In this context I have no idea what economics and business is like. Also it is just an academic exercise as I'll dead by then. I come to CoBF to get practical ideas to my financial problems. BTW, don't get me wrong, I am strongly against censorship and you are free to post any thoughtful topic you like, I was just thrown off by your post.

huh, can you elaborate?

One of the biggest problems I have as a part-time investor is getting a context of where we are today. I have personally experienced the 2000 bust and of course 2008. I don't see any parallels but that may just put me in a position of complacency. I know the overall S&P 500 is richly valued at 20x earnings. But I think the breadth is small. There seems to be no shortage of cheap US stocks. And so I think this is a stock pickers market. But investing in the S&P500 as a whole seems foolhardy. If I had the time and will I would like to minic Buffett in his younger days and read old copies of the NY times to get a context of things through earlier decades. Where there such cheap companies in other frothy markets? Some cheap stocks now: BAC, AIG, KCLI, ITIC, AAPL, Brk.B

Ok there seems to be a lot of soul searching among members here. So lets put all our thoughts here in one thread. I will leave day trading and speculative growth out of it for now. There is so much to day I don't know where to begin.........

Well, mr undervalued, maybe you shouldn't be so hard on yourself. You said looking back in hindsight you should've picked the S&P 500, however, what would bring you to do that 15yrs ago. S&P 500 is large cap, but why not the entire world large cap? In that case you would've lagged the S&P 500. Would you say oh it is because you are in US that you want to invest in large caps in your home country? My point is S&P 500 is the most popular but just a select index, nobody knows a priori whether an index will do well either. By choosing S&P 500 you are choosing 1) large cap and 2 ) US. However, anyone will agree that S&P 500 has had a great run, choosing S&P 500 now is akin to choosing MSFT after its recent great run, over the next 15 yrs S&P 500 may very well underperform other indicies such as US small cap.

Why don't you ask Uccmal via private message?