randomep

The other day I just joined www.topstocks.com.au, it is a forum like CoBF, I saw a post about Sterihealth, which is only a $20M company.

I got half way and just could not bear it, these people are billionaires doing this..... they made billions, I can understand someone tipping their brother on some info and the brother trades and makes a million. ... makes me sick..... worse than Dick Fuld

Buffett got his results precisely because of all that he does, including worrying about the market. It is all part of investing I feel. I do agree with your point that an extremely large cash position is counter-productive. All great investors from Graham, Buffett to value managers vary their cash position from 0 to 30%. But when you get above 30% that is market timing. At the extreme suppose you are all in cash. What if the market stays flat or grows ever so slightly, but it never drops below the current valuation? Then you will never be in the market!

A couple of issues on our bins: 1) the poll started before the year ended; 2) There is a dividing line that was right on the S&P returns. So, ours is fairly poor sampling I believe. For example, when I answered, I was at 24.6% or so, and I finished at 28.89%. I think many people ended higher, and that dividing line has some impact. Regarding Packer's comments, of course we are above average. This is CoBF which means we are from the Graham and Doddsville school. And the school does yield superior returns.

Sounds very interesting but unfortuntely I know nothing about them, why don't you tell us what you know thanks

Hi, I encounter a case that really puzzles me. Oi SA owns 10% of Portugal Telecom and Portugal Telecom owns 15% of Oi SA (I made up the figures but the relationship is true). So how do the dividends work? thanks!

Wealthtrack on youtube or PBS is by far my favourite financial TV show. But I hear very little about it. Anyone else watch it or got comments?

Noooooooooooo, there was no agreement by investing guru's or us common folk that financials were going to blow. Sure I heard of people like Einhorn and Whitney, but there is always people on the fringe. Buffett didn't see it, Bernenke didn't see it, so how could I? But you know, even Hollywood knows how wall street works. In the movie Margin Call, the head honcho says after the meltdown, "Nobody knows what's going on, we just react". Buffett got rich from the crisis, because he had a cash cushion, that cash he always had on hand. So he could take advantage. The key is once you have a cash cushion, know to use it. I kept saying to anyone who would listen, this is a once in-a-lifetime opportunity. Because I looked at the DJIA of the last 100 years and I saw that 1932, 1974, 1982 were golden opportunities, I kept thinking man if I could get back to the 80's and bought MSFT. Well I can imagine myself saying the same thing about the market in 2009 if I don't act. Appreciate that insight - thanks. Were financials, in any case, easy to avoid? Not because they were selling for P/E of 100, but more like dividend stocks today? Yielding a pittance for the risk taken. I think the biggest takeaway (even for those who avoided financials) is the blowback and the spillover effect the financials had on all other sectors of the economy. I suppose the only lesson that can be drawn (especially for those running concentrated portfolios) is to have appropriate level of sector-based diversification. I know you are looking for a warning sign of impending bubble. But there is no obvious indicator. Looking in hindsight I think it was the housing valuations that could most likely tip one off about the financials. People were saying their main source of financial gain is from renovating their house or flipping their house. Financials was the only sector with low P/E's I think. All other sectors were very highly valued based on PE multiple. I don't sector-based diversification is necessarily best, but you have to be sector aware. In hindsight I didn't know sh**t about financials. And to this day I am scared to invest in financials because I just don't get it.

Noooooooooooo, there was no agreement by investing guru's or us common folk that financials were going to blow. Sure I heard of people like Einhorn and Whitney, but there is always people on the fringe. Buffett didn't see it, Bernenke didn't see it, so how could I? But you know, even Hollywood knows how wall street works. In the movie Margin Call, the head honcho says after the meltdown, "Nobody knows what's going on, we just react". Buffett got rich from the crisis, because he had a cash cushion, that cash he always had on hand. So he could take advantage. The key is once you have a cash cushion, know to use it. I kept saying to anyone who would listen, this is a once in-a-lifetime opportunity. Because I looked at the DJIA of the last 100 years and I saw that 1932, 1974, 1982 were golden opportunities, I kept thinking man if I could get back to the 80's and bought MSFT. Well I can imagine myself saying the same thing about the market in 2009 if I don't act.

Hi, this is a great topic! I think alot back to those days. It definitely confirms the saying: bear markets are when you really make money, you just don't know it at the time. I had 25% cash going into the Lehman backruptcy which was fall 2008. I started buying then. My formula was simple, every X number of points drop in the S&P500, I would buy a fixed amount. I would buy at a rate such that my money would be zero at S&P500 = 600. Of course execution and plan are two different things. I started around 975 and made my last buy at a little over 700. S&P reached a low of 666. It mostly just increased my existing positions; eg. SEB @ 900, today : 2700, PM 35, today: 86. My permanent impairments: C, AIG, Countrywide (BAC) The biggest mistake was then selling back too soon. By late 2009 I was selling, then I realized that the market has staying power and I bought back what I sold. One note about what you said about the Hedge Fund manager. An investor performance is the result of his actions and style, if you say in hindsight he should have had more cash, then maybe he would've never gotten the results that made his hedge fund what it is today. I think cash/equity ratio is one of the biggest issues to solve and it can be done using some mathematical tools.

Hi all, I want to revive this thread. I am really curious about Giverny Capital, their results are legendary (if true). Does anyone have any first hand experience with them? Anyone a customer? Also they have stopped posting any reports after the 2012 annual. Does anyone have any quarterly reports they can post? thanks in advance!

Thanks for providing such a wonderful forum! Prasad!

I think to read stuff that brings new ideas... and this is a great one! I think what Buffett means when he says cash is like call options is: - a call option with strike price $10 will expire if it doesn't move, and will net $10 if it goes to $20 - if you hold cash and a stock is $20, it will do nothing if it stays at $20, but you will net $10 in VALUE if it drops to $10

I have heard Kyle Bass's presentations on youtube and it is scary, but when people talk about it there is nothing but total agreement, but why doesn't the market agree with him at least right now. Why are interest rates so low and inflation so low? and why is someone willing to sell him the swaps? In hindsight we know who sold the CDS's in 2007 (think AIG) so they were stupid and bailed out, and many books written about AIG. Will we see the same thing happen to the entity on the other side of kyle bass's trade? If you don't think so, then what is the argument used by the entity on the other side of the trade? I love the markets, you can put your money where your mouth is :)

Great topic! I like certain components of consumer discretionary; something that can affect our psychological or physiological well being such as : pets, alcohol, tobacco, (no porn as someone mentioned because it is very labour intensive)

YES YES I am aware...... I addressed at in my post yesterday......

Oh ok I take back my rebuttal to your critique because I didn't realize you were talking about me talking about Pabrai's cash argument. I don't really know what is Pabrai's current strategy about cash. I don't care. My entire point is Pabrai doesn't deserve mention in such a high quality forum like this, unless it is used to illustrate what not to do. His cash strategy now is probably good, but that is so 2007, yaya tell me something I don't know. BTW, I had cash going into 2008, but you don't see me bragging about it. Nor does Buffett, etc.

fortune is a great magazine because they actually sometimes have in depth investigative journalism that you cannot find anywhere else......

Why is it unfair, if he made a monster mistake that cost millions in his fund it should be recorded on his resume. As for your second point that he is addressing this cash issue, I see a red flag. He seems to be a general who is fighting the last war. An unoriginal thinker will not seek to understand the world but to look for a pattern that he hopes will repeat. The secret is out of the bag on that one which is one people had been taking money out of stocks into cash even through 2010-2012. That in part explains why 2013 was such a surprise...... Others like Buffett, Berkowitz, Bruce all had ample cash going into 2008. I am looking for the next great idea from a truely original thinker. 10 yrs from now we will hear about another book of people who foresaw something great, like Michael Burry, Paulson and Einhorne foresaw the mortgage meltdown..... cheers

Hi to all, has anyone attended a shareholder meeting of microcap companies? I am interested in any observations from the meetings of: IEHC, MCRAA, HNFSA, etc thanks!

woah, not me! volatility does not equal risk, but possible permenent loss of capital is risk, Correct me if I am wrong but in 2008 I believe Pabrai reshuffled his entire portfolio. When you close a position on a loser, that's it, that is a permenent loss of capital. In any case, we can look at one example that sticks out in my mind: Pinnacle Airlines. Back in the good ole days before the recession Pabrai gave a thesis about how it was a good investment (which I don't need to get into) and I guess he bought much of his position at the $10-$20 range. He held most of it till last year, when it was $0.10. So I have yet to see an satisfactory post mortem on it. But then again I probably never will from anyone. It isn't enough to say oh I didn't know this or I didn't know that. The key is why did you trust your analysis to make such a bet. The size of your bet should be a function of your confidence in your analysis. The bottom line is, if you made a wrong sized bet before, how do I know you won't do it again. ... and regarding Munger, it would be hard to know his genius back in 1976, HOWEVER, I doubt, he reshuffled his investment strategy the way Pabrai did, so he did not suffer a permanent loss of capital... cheers, and we are all entitled to our opinion :)

Sure! What I meant is we should look at money managers by how many dollars have returned to investors. So for Pabrai's fund in the first year returned say 20% with $1M AUM, so he returned for investors $0.2M that year. In 2008 say he lost 50%, with $400AUM, so he lost $200M. So one can assume that by the end of 2008, he has possibly lost more for his investors than he ever gained from 2001-2007. **note** my numbers are for illustration only, they are my estimates only, so yes I wouldn't doubt you that it is $700M today, I am just saying it is probably over 300M since 2006, so all the more reason to look at his results since 2006.

I also saw another article that talks about how as the world is more developed and has more capital, returns will naturally go down, so the CAPE will fall over time. But ya let's see how it goes twenty years from now...... no sense talking about it before then.....

I have a serious question, why do we care what Monish thinks. His record is terrible. I calculated that his flagship fund from 2008-2013 returned around 3% CAGR. Those five years are a great indication of performance because it is a full peak-trough-peak cycle. He as I recall was fully invested in 2008-2009 so he had so ability to take advantage and had to rethink his whole investment strategy. So he is basically saying he is learning as he goes, so then why does anyone want to learn with him, as opposed to learning from someone else with a good track record, like the Bruce fund, or Buffett, or many others? His annualized return since 1999 I believe is around 26%. As far as the Bruce fund goes (I like those guys) but their returns were terrible, compared to the S&P 500, from like 1987-2000. Your analysis is exactly what I have issue with. What you say is correct but Pabrai had the following AUM: 2000 ~ $1M 2001 ~ $4M 2002 ~ $15M 2003 ~ $60 M 2004 ~ $110 M 2005 ~ $250M 2006 - current = $300M So in the huge bull market when he was a tiny shop he did well return wise, but if you weight his return by the AUM, his return is barely above water. In other words, his typical investors are better off never investing in his fund but rather investing in an index fund. (here I say typical in the probabilistic sense) And speaking of the Bruce fund, it is a fund that is around for 30yrs, so wouldn't you want to take the CAGR of the entire period to guage their results? The last 30yrs have been the most turbulent 30yrs in stockmarket history. The link below is their result for all time vs the market. http://bovinebear.blogspot.com/2012/09/why-i-own-bruce-fund.html Bear markets separate the men from the boys. The following writeup shows who are the men and who are the boys. http://bovinebear.blogspot.com/2013/06/5-years-after-great-recession-whats-next.html

so are you implying it is a contrarian indicator against gold?