randomep

http://www.newrepublic.com/article/117088/silicons-valleys-brutal-ageism My least favorite quote of the entire article, After making computer chips for 15yrs in silicon valley, and just generally getting older, I have found there is no substitute for experience. If you look closely at the world trend, I think you'll find the opposite phenomenon more accurate than what the article says. The world is harder and harder for young people to get ahead. They lack knowledge and experience and blue collar jobs are harder and harder to get and lower and lower paying. The established and experienced can get richer and more successful. The world favours the incumbent.

Bitcoin is not about technology, it is about mania, bubbles, money laundering, tax evasion, human psychology etc, Buffett knows more about these things collectively than anyone in the world

here is mine, discussing primarily my investments bovinebear.blogspot.com

We have a winner for the cheapest guy on the COBAF message board. After reading your message, I feel like I'm not worthy! SJ LOL I disagree. He decided to get a cab instead of renting a car, asking a friend/family member to pickup or using a airport to home shuttle service. Now if he had hitchhiked home that would IMO qualify for cheapest guy. :P Give him credit, it was a lapse of judgement to take the cab and he came to his senses 1 mile from home!

We have a winner for the cheapest guy on the COBAF message board. After reading your message, I feel like I'm not worthy! LMAO SJ

Absolutely. I did not buy a house in silicon valley for 14yrs, I was sick watching people buy houses and double their money. But I couldn't see the value and kept my money in stocks. At the ridiculous rate they were running in this area, I was seriously willing to move to Idaho or Manitoba if I had to. Well, turns out I was right, things can change fast. And then 14yrs after moving here, I bought a house that was foreclosed on. I am kicking myself for not buying it at auction though. I got it after someone flipped and make 100k off me, but fortunately, the house values have continued climbing. Also my mortgage interest rate is 2.75%, it is like the government is helping me live in the house for free if inflation can run at that rate. The financial crisis and all the money printing is just creating a crazy redistribution of wealth.

Thanks for your sincere response. That is very interesting how you got started full time. I truly recommend "Free Capital", it talks about how 12 people in Europe got started investing full time. So are you saying you manage money for other people? For me one thing is the opposite though, I hated trying to invest full time. I just couldn't deal with the pressure and the apparent idleness. I find that working at least helps me be more patient and take my mind off it, esp. when there is a market pullback. In terms of my getting started - I consider it "fate meets luck" - it was not planned, but worked out well that I was sort of forced to make a decision. Investing full time leaves me plenty of time to work on other peoples portfolios, friends and family. Since that can occupy plenty of time, and I like it, I am less likely to do I something stupid, like trade. I agree with you - the idleness can be filled up with something really dumb - like trying to "make things happen". Idle time is better spent reading, thinking, going over models a second/third time, and research. Patience and good decision making is a critical element. So I spend lots of time attending conferences as well - there is a lot of time for learning. But I agree - the people I have seen "blow up" are the ones that try and make things happen by trading when they get bored. I'll check out Free Capital - thanks. I don't understand how is managing other's portfolio work? If you trade for them don't you just shadow your own porfolio? Trading is zero work.

You only consider it to be market timing if it doesn't involve fundamental analysis? I can see why you would define it that way but I don't think that's the widely accepted definition. From Wikipedia: "Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis" As talked about in the original article, The Prudent Bear Fund was managed in accordance with market valuation and their timing strategy has been a disaster. The thing is, not even Ben Graham's market valuation/timing techniques were reliable, if I remember correctly. Prices can look high and stay high while fundamentals catch up, interest rates can continue to drop thereby increasing multiples, etc. I think this is why it's recommended that you choose a given stock/bond allocation and rebalance to maintain the ratio rather than try to pick your own ratios based on what you think each asset class will do. If pulling 100% of your portfolio out of the market because you think the valuation is too high is considered market timing why is doing the same thing with a lesser percent any different? It's the same principle. The reasoning, purpose, and outcome of both decisions are the same. As you said, if you have an absolute standard you'll find fewer investments that clear your hurdle as the market goes higher naturally building a cash position. Or maybe the more important implication for us folks with small portfolios is that we should always be invested since we can almost always find opportunities. Buffett's 'retirement' in 1969 was on account of him being unable to find good investments. You only consider it to be market timing if it doesn't involve fundamental analysis? I can see why you would define it that way but I don't think that's the widely accepted definition. From Wikipedia: "Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis" As talked about in the original article, The Prudent Bear Fund was managed in accordance with market valuation and their timing strategy has been a disaster. The thing is, not even Ben Graham's market valuation/timing techniques were reliable, if I remember correctly. Prices can look high and stay high while fundamentals catch up, interest rates can continue to drop thereby increasing multiples, etc. I think this is why it's recommended that you choose a given stock/bond allocation and rebalance to maintain the ratio rather than try to pick your own ratios based on what you think each asset class will do. If pulling 100% of your portfolio out of the market because you think the valuation is too high is considered market timing why is doing the same thing with a lesser percent any different? It's the same principle. The reasoning, purpose, and outcome of both decisions are the same. As you said, if you have an absolute standard you'll find fewer investments that clear your hurdle as the market goes higher naturally building a cash position. Or maybe the more important implication for us folks with small portfolios is that we should always be invested since we can almost always find opportunities. Buffett's 'retirement' in 1969 was on account of him being unable to find good investments. So you are saying what Buffett did is not market timing then? The right strategy for the future is unknowable, but you are saying most value investors know this doesn't work. I dunno, I can't be sure .....

Thanks for your sincere response. That is very interesting how you got started full time. I truly recommend "Free Capital", it talks about how 12 people in Europe got started investing full time. So are you saying you manage money for other people? For me one thing is the opposite though, I hated trying to invest full time. I just couldn't deal with the pressure and the apparent idleness. I find that working at least helps me be more patient and take my mind off it, esp. when there is a market pullback.

There is a fallacy to what your saying Eric, you are saying you produced this money and the government gets a cut, as well as those who produce goods that you buy. But what about the capacity that you took it away from. What you said could apply to playing poker. I don't think poker is doing good in the sense of the title of this thread, although it seems to be digressing. Now I am not saying you aren't doing any good. I just asked you and all here what they think of themselves. It is subjective. I just find your argument puzzling. I mean, you could have taken it away from some hedge fund that manages some old lady's pension. Mind you still in a perverse way I feel that hedge fund and even that old lady deserved it!

+1 very very interesting point, never thought of it that way!

+1 I think almost all value investors recognize that market timing doesn't work, yet they seem to do it with their cash positions all the time. Decreeing that 15% of your portfolio should be in cash, for example, because the market looks frothy is still market timing. But that's what Benjamin Graham talks about a lot: allocating bond/stock mix, the stocks should get a lower allocation when the market PE 's are high..... I don't think considering market valuations is market timing, you may also not be able to find good stocks in those times which also results in less stock allocation.

Well Watsa, I think this is a digression about any profit is good, and eventually we will have a thread about the meaning of good. I mean this can go on and on, I mean I could respond but then it will just continue and continue. But the topic that really interest me and the subject of this thread is: How you YOU feel about minority stake shareholding as a part-time or full-time job. Do you feel good about yourself that you are doing good for society? It is a subjective question. I think I got an idea from the responses so far, most feel as I do, that we are doing something good.

+1 You've got to be kidding me. So the following are doing good for society? - the lobbiest who pushes for oil companies to drill everywhere - the late Senator from Alaska behind the bridge to nowhere - the folks who put do whatever to put their servers closer to the exchange so they can peek and get ahead of other traders - oh those 80% of bankers that munger says we should layoff and so on.....

Assuming that you are a small time manager of your own portfolio, and so you are always a minority shareholder, do you think the time you spend (possibly full time) doing investments is doing any good for society, assuming you make a decent return. Let's restrict the investments to long stocks, so no shorting, options , etc etc...... I think we are but wonder your thoughts..... maybe this could be a poll!? thanks

To be honest I've never understood how inflation impacts stock prices and returns, especially for banking and financial services industry. Yes growth in GDP will foster faster credit growth and higher interest rates should help interest margins for all banks, but beyond that ROE and underlying profits is a factor of good management, operating/lending practices and competitive advantage of the company. Higher input costs should net off higher revenues due to inflation. A high CASA ratio, extremely low NPA, increasing interest margins and growth even during crisis is a clear sign that HDFC bank has sustainable moat versus peers, and most of that is attributed to a very strong management and really good business practices. This may be a digression but inflation is a very important indicator of economies and stock market performance. I think economists were puzzled in the 70's because stocks performed so badly during inflation. Then Buffett went on to explain (see below) why inflation will erode stock values. That's why when during the 80's after inflation was tamed the stockmarket took off. Regarding what you said about rising sales offsetting rising input costs, there is a problem with that. The business has to buy the raw materials before it is sold. The business uses money from earlier sales which appears smaller now with inflation taken into account. So it is hard for the business to pay the bills. I focus on what inflation is good for the economy and stockmarket, it seems like 2% is a good number (hence the fed's target) too much inflation will doom a economy and deflation will also doom us to a Japan scenario. http://features.blogs.fortune.cnn.com/2011/06/12/warren-buffett-how-inflation-swindles-the-equity-investor-fortune-1977/

Sorry but..... leasing what??

Third Avenue?

And as we speak, 007 has infiltrated the lair with Kate Beckinsale at his side, he'll soon rescue all passengers seconds before the evil underworld is blown to bits......

Securitization of mortgages owned by millionaires who bought commercial buildings though....... Anyway, I just want to focus on the issue of market efficiency, which is pertinent to the reason why we are on this forum. If the market is getting more efficient then we should take up some other job or hobby. I just don't think we are getting efficient. As evidence look at wealth disparity, it is much greater than 100 years ago. To me that shows that there are more opportunities to use the mind for financial gain, and more people who choose not to try financial gain will be left behind. what do you think?

Ok I go definitely acknowledge that, netnets are everywhere in the world. Just hard to find, like it was kind of hard to find in the 50's in the US. But no one can say that collectively the mortgage system's checks and balances did not fail massively. I heard if you go back a little earlier than 50's one couldn't even get a mortgage, one had to buy a house outright. Then came mortgages which probably required a large chunk down. Then came Fannie and Freddy. Then came Bush saying everyone is entitled to a house. Then we had the situation in 2007: NINJA loans (no-income -no-job no-assets), and M Burry found that on some mortgages, people were defaults on the FIRST payment. I sure hope that we corrected that and don't let those people get mortgages again. (the only excuse for missing 1st payment is getting maimed and losing your savings to hospital bills). But yes securitization is the symptom of society looking to screw things up during propsperous times. So yes guns don't kill people, people do. And we will keep finding ways to shoot ourselves. hence I believe the markets are not getting more efficient... I believe mortgages were quite common in the US before the 1950s. They were a different form, much like Canadian mortgages currently are. They would be fixed rate for 5-10 years then would either float or balloon with the balance due. The current 30-yr US mortgage is a direct result of the Depression. Too many homeowners lost their houses when they couldn't refinance or pay off their loans quick enough. The 30-yr mortgage was created to lower payments and give homeowners time and security to pay down their debt. My understanding has been that debt in all forms has been relatively common for hundreds if not thousands of years. Yes just googled it, you are right. Although I always thought a mortgage is you basically pay it till it is all paid off (hence MORT-gage)

Ok I go definitely acknowledge that, netnets are everywhere in the world. Just hard to find, like it was kind of hard to find in the 50's in the US. But no one can say that collectively the mortgage system's checks and balances did not fail massively. I heard if you go back a little earlier than 50's one couldn't even get a mortgage, one had to buy a house outright. Then came mortgages which probably required a large chunk down. Then came Fannie and Freddy. Then came Bush saying everyone is entitled to a house. Then we had the situation in 2007: NINJA loans (no-income -no-job no-assets), and M Burry found that on some mortgages, people were defaults on the FIRST payment. I sure hope that we corrected that and don't let those people get mortgages again. (the only excuse for missing 1st payment is getting maimed and losing your savings to hospital bills). But yes securitization is the symptom of society looking to screw things up during propsperous times. So yes guns don't kill people, people do. And we will keep finding ways to shoot ourselves. hence I believe the markets are not getting more efficient...

thanks!

How do you determine that the market is more efficient now? Is there a study somewhere that proves this? I have thought sometimes that maybe it is. The net nets have mostly dried up in the u.s. at least, except during major market crashes. But aren't stock prices as volatile as they ever were? The massive influx of hedgefunds, CNBC, the fact that legendary funds, like SEQUX, while the performance is still solid, it's not the outperformance it used to be. The same can be said for other older funds. Yes, it is clear that netnets like the ones Buffett described in the 50's no longer exist. The market is more transparent today, and information is much more available. HOWEVER, that is not saying that the market is overall more efficient at pricing. Back in the 50's I am sure there wasn't mortgage securitization and they were much better at vetting mortgage applicants. So as markets are more stable, we invent more ways to screw it up. It is an equilibrium of booms and busts.

Giverny Capital final posted their 2013 annual letter. Wow another year of beating the indicies! Can anyone give me a hint as to what they hold right now? :) http://www.givernycapital.com/assets/documents/184/Giverny_Capital___Annual_letter_2013_web_.pdf?1394797561