bargainman

Given the recent news of Fairholme's soft closure, I'm considering if I should shift most of my FAIRX into FAAFX. Wondering what people here think.. FAAFX: (# is %) Holdings: http://portfolios.morningstar.com/fund/holdings?t=FAAFX&region=USA&culture=en-us Mostly: MBI(30), AIG(15), SHLD(9), BAC & WFC wts (6.6,6.5). Expense ratio: 0.75% assets: 267 million http://quote.morningstar.com/fund/f.aspx?t=faafx minimum initial purchase of 25k!!! ========= FAIRX: (# is %) Holdings: http://portfolios.morningstar.com/fund/holdings?t=FAIRX&region=USA&culture=en-us Mostly: AIG(37), SHLD(10), BAC(8.8), GGP(7.6), JOE(5.8), CIT (5), AIG WTS (3.78) Expense ratio: 1.01% assets: 7.6 billion http://quote.morningstar.com/fund/f.aspx?t=FAIRX minimum initial purchase of 10k ===== I'm kind of surprised that FAAFX is cheaper than FAIRX given the size difference! I have almost enough of FAIRX where if I redeemed most of it, or all of it I could get into FAAFX without too much more of an investment. but the question is.. should I? Clock is ticking to make a decision.... thoughts?

At this point, I don't think the hedge fund route would provide him any more comfort than running the mutual fund. A 2-year lockup would not have made a whole lot of difference to him, but it probably would have saved some fools from selling out before the rebound. I suspect he is going the permanent capital route, and it very well may be through St. Joe. Cheers! Oh goodness, that would be awful if he turned his back on the mf.... I really hope he doesn't even if people do want to pay him more... But the way he said that did seem worrisome...

Yes, I think this is what is happening. He learned a very tough lesson with the amount of redemptions he had to deal with. I think he may have been at the point where "how do even my long-term investors lose faith in me? Time to reduce that risk." Cheers! As a shareholder who was with him for the whole ride down as his assets ballooned up, all I have to say is it's about time! He shouldn't have had to learn the tough lesson, he should have closed it the first time to prevent the fiasco.. 20/20 I guess... Sorry, if that's harsh, but I was not impressed with his allowing it the balloon up the first time...

Maybe this is what Sanjeev meant by the insurance funds, but 'guaranteed return of capital' funds have been around for a while now. At least 10 years I think. It's simple really. Just put x% in a bond that matures at the final date, then use the rest to buy long call options over the time period.. The $ value is guaranteed as long as your bond doesn't default. That said that's just the $ amount. You lose to inflation. Of course this just guarantees that you'll get your money back, not that you'll make a certain return...

it's worth watching/reading Greenblatt's take on this last book and funds: http://www.forbes.com/sites/steveforbes/2011/07/05/joel-greenblatt-interview-transcript/ Definitely get his funds in a tax advantaged account. He walks through the value indexes and the equally weighted funds/etfs and their faults in his book. I would agree with index, and maybe even some vanguard target retirement date funds. Wellington is a good boring balanced fund. If you want some growth, go with the Primecap funds which you can get directly from Primecap since vanguard's Primecap is closed. Dodge and Cox tends to be ok but they are so big I doubt they'll perform that well going forward. I'll second Kinetics Paradigm. Tilson Dividend (Not run by Tilson but by Zeke Ashton) is quite good and uses both value and options to enhance returns (but fees are high). Another that's been mentioned is Wintergreen, he can short too, but he's expensive.

Right now the ones I know of are for university level courses: coursera, udacity, edx, udemy for slightly younger crowds there's also Khan Academy and for professional stuff there's Lynda.com, teamtreehouse, codeacademy There are many others. It's a wild world out there. Access to educational material is becoming ubiquitous. I really wonder how things will be for higher education in 10-15 years..

My guess is that "Civil servants" == "Politicians" on the list.

Well the article is not the source, as others have pointed to. The source is the book/research: http://www.amazon.com/The-Wisdom-Psychopaths-Killers-ebook/dp/B007NKN9U8 by "the renowned psychologist Kevin Dutton" And believe it or not there is probably a definition of a 'psychopath' in the annals of clinical psychology somewhere. That definition may not be what we think of as laymen, or the extreme cases we think of as the one you pointed out, but I'm sure there are plenty of studies and clinical cases supporting said definition.

Not unsurprising, but certainly not that encouraging either: http://www.sfgate.com/jobs/article/Jobs-fit-for-a-psychopath-4172506.php The following jobs have the highest rate of psychopaths, according to Dutton's research: 1. Chief Executive Officer 2. Lawyer 3. Media (Television/Radio) 4. Salesperson 5. Surgeon 6. Journalist 7. Police officer 8. Clergy person 9. Chef 10. Civil servant The list is scattered across several fields, but Huffington Post blogger Eric Barker notes each of these professions "require an ability to make objective, clinical decisions divorced from feelings." In a more straightforward way, the traits that define psychopaths are also the skills that can make people successful in the workforce.

Talk by Seigel addressing the 'death of equities' http://new.livestream.com/livecfa/Siegel/videos/7432965 slides http://bit.ly/TZqUDa Choice quote regarding Bill Gross: "I should invite Bill Gross to my econ 101 class". Ouch!

It may be worth asking the broker if they'll buy it off of you... see this article here: http://www.kiplinger.com/columns/ask/archive/2008/q1222.htm

I preferred the way he addressed the shareholder meeting. Tough contrast. http://www.youtube.com/watch?feature=player_embedded&v=p7rvupKipmY#!

So all the bugs with Android will be more visible and the pixelated apps designed for phones will look better? :P well I suspect that's part of the point. Google is hoping that with their version of the retina display that will incent developers to develop apps for that resolution.. It will be interesting to see if they follow suit or not..

Speaking of Friendlys, they filed for bankruptcy: http://www.reuters.com/article/2011/10/05/friendlys-idUSL3E7L51GD20111005 Also when he took over SNS they were apparently very close to bankruptcy as well. He basically dodged the bullet through some creative maneuvering, but he admitted that he had underestimated the danger going in.

What I found interesting is the lack of mention of MBI. If you look at his smaller fund: http://portfolios.morningstar.com/fund/holdings?t=FAAFX&region=USA&culture=en-us MBI is his biggest percentage holding at 30+%. One can perhaps infer that this is his greatest conviction holding for a smaller investor... AIG in this port is about 20%, although he also has 2% in warrants...

Except in practice, both parties end up making decisions that lead to very similar outcomes (ie. despite the rhetoric, republicans bloat up government size - and thus money printing - via f.ex. wars, and limit individual liberties via things like the patriot act and war on drugs). So I agree with you; both are atrocious. That is my beef with the Republican party. They seem to say one thing, stand for one thing, preach it endlessly, and then go out and do the exact opposite! Listen to Ron Paul rant against the Republican party and you'll understand. That's frustrating. It seems that neither party is fiscally conservative, even if republicans claim to be, but it seems to me that the democrats are less hypocritical. I just can not understand how Republicans claimed to be fiscally responsible, but in debates have said they would not back a plan that called for 1 unit of tax increase for every 8 units of spending cuts. (I don't remember the exact numbers). To me that's incredibly fiscally irresponsible. Not raising taxes does not equal fiscal responsibility!

Just like the debt ceiling was a non issue? Everyone knew that they wouldn't put the country in financial danger just over a debt ceiling debate,right? I wouldn't write off a fiscal cliff disaster yet. If Obama wins he'll have to deal with the fillibuster happy Republican congress. If Romney wins he'll have to deal with the Democratic Senate. All in 2 weeks time right before the holidays...

Send it my way and I'll take care of that for you ;) What was that quote about being worried about the return *of* your capital vs *on*? ;-)

Ha! I doubt I need a book. What needs to be done is very simple and could fit in one sentence. It's the execution I have trouble with. ;) Hmm how about a support group for those with too much cash? I'm sitting at about 50% cash :-P

I think linkedIn is a different beast from FB. Facebook has admitted in their prospectus what their purpose is, and the fact that they are a public company is secondary and a vehicle for them to accomplish their 'connection of people' of whatever their stated purpose is. LinkedIn on the other hand is a networking tool for professionals. They know a lot about you and in particular your professional profile. If I remember correctly they are starting to sell mined data and advertising to very targeted groups, professional groups. They are also linking groups in actually useful forums related to specific technologies etc. I haven't done a valuation at all, but their money making model looks a lot more promising at first blush. The fact that Theil sold his FB shares, but I think he continues to hold his LinkedIn shares says a lot.

I'd be interested in the answer to this too. I know for a fact that for adwords (Google's search based ads), an advertiser definitely has to pay per click (sometimes big big bucks...). I wonder how adsense works especially for revenue sharing. Is it per impression, per click, per conversion?

MVP, it's definitely and 'alternative investment'. My yield is about 7-8%, which looks like it's on the lower end of average: https://www.lendingclub.com/public/diversification.action and most of my notes are 3 years (they have 5 year notes too). Generally speaking you can't get your money back right away. There is an 'aftermarket' where you can sell your notes, but the last time I looked at that it didn't look particularly appealing, but that was at least a year ago, maybe it's improved since then. https://www.lendingclub.com/public/mainAboutTrading.action In theory the aftermarket makes sense since some people want to wait a few months or a year before investing so they can get notes that are more stable. But in practice I remember seeing more notes that had failed to pay.. That said, I've found that at least some percentage of notes you 'bid' on don't get issued, and that there are probably enough people who buy out their notes early. As such, I'm always rolling over some portion of my portfolio. I could guess it's 5% a month turnover. Also I focus exclusively on Credit card/debt consolidation loans, since as I mentioned, those actually reduce a person's payments which in my eyes makes them become more credit worthy than they were before. But that's just opinion, not backed up by any serious research :-) That said, I totally agree that it's not for everyone (even for me :-) I sometimes go back and forth on whether I should jumped in or not.). The taxes are a bit of a hassle too.. But it's kind of nice to have one part of my portfolio earning a steady return, never fluctuating with the market!

Well i wouldn't write them off on the basis of one borrower. I think most of the loans are credit card/debt consolidation in which case you'd actually be lowering the person's monthly payments. See here: https://www.lendingclub.com/public/steady-returns.action We approve fewer than 10% of the loan applications, based on stringent credit criteria designed to focus on the most creditworthy borrowers. The majority of our members use the loans to pay off high interest rate loans, most often credit card debt. As of August 14, 2012, the average Lending Club borrower shows the following characteristics: 715 FICO score 14.25% debt-to-income ratio (excluding mortgage) 15 years of credit history $69,274 personal income (top 10% of US population) 2 Average Loan Size: $11,750 Here they have a graph of all the rates and how they set them based on FICO scores https://www.lendingclub.com/public/how-we-set-interest-rates.action They give an example of how they evaluate a borrower at the bottom. Here are some more stats: https://www.lendingclub.com/info/statistics.action "71.34% of Lending Club borrowers report using their loans to consolidate debt or pay off their credit cards.1" The other thing is that these are 'real loans' in that they will do collections, and they will report the person to the credit rating agencies if they don't pay. They also use all sorts of historic & industry date to calculate their lending rates. Anyway, I've been investing with them for about 2 years I think. It's a small investment, in the alternate/just for fun category :-) And it hasn't had a single down month since I started! If anyone wants $300 on their initial 10K notes investment pm me. I'd be happy to send you a referral which will give you that. (of course that 300 will have to be in notes, so it's not like it's cash up front, and I don't get anything for the referral either.). Oh and if you think lending club's borrowers are bad, you should get our prosper! Although I think they've cleaned up their act in recent years. Here's an article on the way lending club calculates things vs prosper: http://www.doughroller.net/p2p-lending/prosper-vs-lending-club-smackdown-who-has-the-best-interest-rates/

often I'm able to repeat it through multiple cycles on the same stocks...the stock may be even flat over a holding period, but I end up with gains in the IRA and losses in the taxable account. Just make sure you don't sell in taxable account, then buy immediately in the IRA. I believe you'd run into the wash sale rule here even though one is in a taxable and one is not. Not 100% sure but I'm pretty sure...

I think there is still a lot to be said for EMH. Vanguard and Bogle have been preaching low cost index investing for decades, and honestly you, and the average Joe investor, could do a lot worse. Consider that the vast majority of all fund managers don't beat the index over the long term, and also that with fees and taxes they'd have to beat the index by a large margin to even match a simple index fund strategy, and as I said, you could do a lot worse. Also note that Buffett has said he thinks the average investor should just diversify widely and buy the S&P 500. Add some simple dollar cost averaging and some asset allocation, and you get a reasonable return with some reduced volatility, and you beat the vast majority of managers out there. Plus how do you account for all the time you spend researching companies, there's an opportunity cost to that... Even with value managers I suspect you'd have a hard time consistently beating the index. I think you'd need to not just look at the 'long term' but look at rolling long terms, since just picking this date and subtracting 10 years from today is really just taking one random 'long term' sample. WRT the BRK vs SP comparison I'm not sure if that's completely valid. It is valid in that a retail investor can only buy BRK. But really you'd want to either compare just Buffett's equity investments vs the S&P, or you'd also maybe want to somehow account for the extra leverage that BRK gets from its float, and maybe do some risk adjustment.. not sure.. maybe not..