randomep

ARE WE IN A BUBBLE YET! And if we are what asset class?

I own morningstar premium for over 10yrs. Don't pay attention to it anymore and won't renew when it expires. I've notice when their fair value diverges from the market value, they'll tweek their calculations to close the difference. This probably another case in point.

Hi all, I finally gotten around to making a list of Buffett's partnership investements. The follow is the start, I'll add entries as I find them.... http://bovinebear.blogspot.com/2015/04/warren-buffett-partnership-investments.html comments are appreciated.....

Ya I was going to ask about that, to avoid saying something stupid I take a while to type up something. If you don't type your message within 3 min it'll timeout. Does everyone type their messages in 3min? I know one fix is to preview before the timeout..... but how do you type your messages?

Every market looks different, so this bull market is different from 2006 is different from 1999. What helped me in the 2nd bull versus the first is that I had a rough plan for contingencies. This way you are ready psychologically. I think people panicked in when bull markets crashed because they weren't ready psychologically. I think of my world view in the event that the S&P crashes 20,30 or 40%. The only person who predicted both crashes is Shiller afaik, he even elaborated on them in two books. So I really pay attention to his thought process, and he says he doesn't see a bubble because he doesn't see the irrational euphoria like before. So I must be prepared if a perennial bull like Miller is actually right and PE expand to 20, or even 25. But I really don't pay attention to Buffett and hedge fund managers when they say there aren't bargains. They are in a different league, there are bargains all over the world for small player. Something is happening all the time. Right now Europe, Russia, Greece look cheap to me. If you say, oh but those markets have serious macro issues. Well ya, that's the name of the game. If the S&P 500 PE goes to 10, you'd know there is a crisis in the US!

I really took this to heart: never argue with stupid people, they will drag you down to their level and beat you with experience, mark twain. But it is so hard to do!

I think the biggest trend of all for investors, and that nobody has mentioned, is that the rich are getting richer. I mean by the ratio of wealth of richer classes to poorer classes. And I presume all of us are on this forum to keep ourselves in the richer classes :)

] I would think that statement is so obvious it needs no defending. Looking at the experience of people on this forum is not a good proxy for the world. We are afterall value investors so we look for value in everything. Not so for the world. With gobalization the world is coming down to less and less brands. For example, there are only two makers of large airliners, Boeing and Airbus. I think most people in the world would think twice about boarding a new airliner made by say China..... even chinese people would be nervous. There so so many examples, think of generic drugs. They are so much cheaper than brand name, yet when patents expire, brand name drugs do not go to zero! You know mainland chinese would ask doctors to mail give them perscriptions to take back home, even though the same thing is available at home. I see there main factors, one is advertising, you just are used to thinking of a certain brand when it comes to a certain product. The second is status, people in poorer countries especially want to show they are higher class by following western ways. And the third is trust, local products may be unsafe, for example think of something as simple as baby formula in china. I am a long term investor in PM, and I cannot understand really the appeal of Marlboro, I mean it is supposed to be crappy tobacco, but when I ask people why they smoke it, they just say it is the most common, the default choice. Think of processors, I've always used AMD because it is cheaper, and my personal view is that based on quality and price it should get a larger market share. But everyone knows intel. Must of the S&P 500 is exporting names, even though their products may not be superior. Is gillette really worth the price, and Coke? The only product line that is not brand dominated that I can think of right now is wines, that's a strange one.

8-9 hrs a nite If I am disciplined with my CPAP machine and sinuses are clear, I can make do with 7. We sleep to rejunivate our brain and body, I honestly don't think depriving ourselves of sleep to get more done is overall productive.

Yes that's the key thing that doesn't get mentioned by these folks, share appreciation via stock buybacks and consolidation. But occupying other solar systems........ I don't think so, I estimate it would take 3months accelerating at 10Gs to reach 1% of the speed of light, and you need to travel that fast to get to another solar system...... hmmm I don't think our bodies can handle it despite what star trek says......

Ok I'll think with you. But first can someone summarize this 1hr video? I saw the first 5min and it was belabouring very obvious points... I just couldn't sit through the rest of the video.

Of course its useful. I am not really even that interested in Malone but I will read through them!

I am going to the SEB annual meeting. This is the only chance I will have to learn something from the Bresky family.

Ohhhh, in that case the easiest remedy is to take up poker to get the rush. Actually I don't know if playing poker tames risk taking or fuels it, but it definitely trains our mind on evaluating risk. http://www.cnn.com/2012/11/21/health/cnnheroes-exercise-addiction/ One of his first preclinical studies on the subject showed lab rats that had access to an exercise wheel in their cage were much less likely to self-administer cocaine than their sedentary counterparts. Other addictions, like gambling (probably the driver of indiscriminate leverage for many people), are perhaps managed similarly. poor rat! but seriously, thanks for the idea, this definitely makes me think.......

Ohhhh, in that case the easiest remedy is to take up poker to get the rush. Actually I don't know if playing poker tames risk taking or fuels it, but it definitely trains our mind on evaluating risk.

Oddball, Yes we are in agreement 90%, I am just nitpicking about the statement that being very good at something and working for someone as a individual contributor cannot be beneficial. I say this precisely because I am very specialized, I have worked many years (in my early 40s) and I have a PhD. I don't feel your friend nor myself wasted our lives doing what we do. I for a fact feel fulfilled in a lot of ways but now it is time to redirect my focus, in what others often call a second act. Still, I can see myself doing my job for many more years and even if my net worth goes to say $3M. I am very very specialized doing the same type of coding for so long, I can do it with my eyes closed and still be leagues above 95% of coworkers. But I realize that society tells me ya that's nice, good job, but big deal. It's not that operationally I cannot in theory make the company so much more efficient by leveraging my knowledge. It is that in practice achieving this is impossible because much of engineering is dumbing thing down so that VP's and managers can understand in a meeting and then rally the troops to follow. So I have learned a few years ago not to try to fit a square peg in a round hole and I have redirected my focus in investing. And that's around when I started my blog. Opportunities are hard to find but they exist. I think I have found mine.

Oddball, Regarding your statement about working. Getting a job is working for consitent pay. The company that hires the employee, and like you say, the company has operational leverage, but that company is not sharing the financial benefits of the operational leverage. The flip side is that the company pays for various overhead and will pay about the same during times when it isn't doing well. It is just a different compensation scheme. As for your 50yr old ceramics engineer friend. Well, that happens all the time, if you are a business owner you may not be able to boss everyone around and will leave day to day tasks to someone else when you are 50. The problem I see with your ceramics engineer friend is that he didn't apply leverage in the past. When times were good say when he was starting out and didn't have so much responsibility, he should have worked on the operational/financial leverage by socking his money away to buy a business or investing. Then by the time he is 50 maybe he can just invest full time for example. In this way his financial reward may be the same as if he was a serial entreprenuer all his life. I have been thinking about the same general topic as you but I didn't use the phrase operational leverage. To me the key between working for someone else and working for yourself is the compensation. The compensation is lower because 1) a large organization is inherently inefficient and 2) they are paying you immediately for your labour as opposed to reinvesting it on your behalf. But you can still work for someone else but just don't let the corporate culture lull yourself into a sense of complancency. So I myself remedy this by working 2/3 as hard as someone else to get the same stuff done in my job. And use my extra spare time to focus on investing. I am boostraping my job to be my personal financial consultant.

This statement makes no sense to me. It may apply to marriage, if you marry the wrong person your screwed. After that you cannot really start off with a clean slate. But if you lose your job, just get another one. What have you lost? just a bit of time and stress and aggrevation, but otherwise you are exactly where you started before you got the job. With investing you are risking principle for the chance of a good gain. So job and investing are totally different scenarios. Also over a lifetime you have many jobs, so you have diversified over time. One job is a waste of time but eventually you realize that and you either quit or get laid off and once you get a better job you are glad it happened.

Yes, I imagine that many of us have been hit by cars too. But the goal isn't to minimize mortal risk, but to minimize financial risk given that we live.

Congrats. But how did you calculate your cost base with all the various mergers and splits? It is hard to believe that Kraft has done 16% CAGR over such a long period. Yes I just calculated it from the original MO shares. Each KRFT share came from 33% of the original MO share @ $25. Well this is how I calculate the basis for tax purposes anyway. I wonder how the actual KFT shares did, by itself.

The stock is at 81 now. But the new company will have different shares outstanding. So we can only say 81 is only an indication of what the new company will trade at? Ya looks like the market doesn't know the details of the share structure, it is at $88 now. BTW ( a bit of bragging sorry :) ) KRFT is a 10 bagger for me in 15yrs, albeit it started as a small part of MO.

You have to grow your investments exponentially, not linearly man. 8) Reminds me of another quote I heard on TV. It was a recording of a guy giving a seminar. The guy ran a ponzi scheme that was the subject on an expose on American Greed. It goes: "you want to work for your money , or you want your money to work for you???" I wish I could find people that gullible....

One thing to note with Marks--he is required to be fully invested. When he talks about the pendulum and the corresponding amount of aggression he uses, he's talking about being conservative or aggressive with the hurdle and/or assumptions being made, not holding cash. I think such a strategy makes a lot of sense (i.e., more conservative assumptions for specific investments as the pendulum moves toward greed). With regard to using it for cash holding purposes, it sounds perfectly reasonable. The problem I have, however, is that many ideas that are "reasonable" (e.g., using CAPE or other valuation metrics to move in and out of the market) are not supported by evidence in producing superior long-term results. Basically, I'm taking the stance that there should be compelling evidence to use any particular strategy. I feel like many of us use superstitions and gut feelings for a lot of this area of investing, which I'm not comfortable with, personally. GMO site did a paper on that topic about the mix of bond/stocks and shows that using CAPE to rebalance is an optimal strategy. I tend to think so also, although that may be in question today because bond rates are so slow. I am in the process of simulating using real S&P data for the last 150yrs. And my preliminary results tends to agree with the paper. (It is listed in my blog entry: http://bovinebear.blogspot.com/2015/01/some-reading-material-and-thoughts-on.html) I have also simulated based on only stock market price input and I concluded that nothing beats 100% stocks. Many successful investors like Peter Lynch were 100% in stock and they were very successful.

Hi all, I have always wondered about this but cannot find any source. But I think it has probably been discussed here. How does the law in the US prevent a majority shareholder from paying himself excessive compensation. I haven't seen the amount being too horrible for stocks that I own. But just wondered what are the formal legal protections. And what about outside the US. thanks in advance

Seems like Mr. Circuit Speaker is doing just fine though... maybe our punishments are not harsh enough. I think he got punished fairly. He probably still has money stashed away but at least he went to jail. Many of these guys actually don't get punished. ... and he lost his wife.... who, at least in the movie was hot