bizaro86

Thanks so much for sharing, and congratulations on your results! My % returns were spectacular in my older sons RESP prior to executing this strategy. Basically I just did odd lot tenders. Now there is too much money for that to provide effective percentage returns, and odd lot tenders are less frequent as well. Concentration is an interesting one (and very contrary to the consensus advice so far which has been to index). On the one hand concentration seems likely to increase volatility. On the other hand this is a small percentage of my total assets and has a long time horizon, so increased volatility for higher returns would be worth it. So far I'm happy with the returns from this strategy (all have outperformed the Canadian indices materially since purchase, except the ETF which matched). I expect to wait for a bargain, but will take your advice about waiting for a very fast pitch to heart. I dont see anything that is a true no-brainer right now from a long term perspective (and PVF.UN and DIS at the prices I bought them were obvious values).

Interesting! Thanks for posting. My children are very close in age, and I expect to access the full grant for both prior to the older graduating high school. I agree that is a creative way of maximizing grant money! I agree that these grants largely benefit people who dont need them. I think the other thing they do is encourage people to get involved with some of the borderline-predatory organizations that sell plans. From a public policy point of view they probably aren't ideal. From a personal point of view I pay enough tax I dont feel bad maximizing value to myself. I appreciate the commentary on the children's interest. This seems like a more approachable portfolio design as compared to my "regular" portfolio, which has similar names plus special situations and deep value stuff. So using it as a teaching tool is definitely part of my motivation here.

Interesting. Our mortgage is paid off already. I only bought on margin during 2008-2009, and had it paid off very quickly. I would expect to use the HELOC capacity from our house (which is already arranged) to make investments if/when there is another large downturn.

I like an international index more than I like SPY right now (because I think valuation matters). And obviously I'm going to continue watching these, and if something happens to go Tesla-Parabolic I would sell, or sell if the thesis changed etc. The goal would be to hold them all for the full time period, but I'm willing to pay attention. The Voya trust is exactly the idea I'm going for here, with hopefully a more updated group.

This is something I have considered, and is why I'm planning to mostly do the same positions (3/4 identical right now). These portfolios are already getting diversified and will continue to get more so over time, which should help as well. The dollar amounts are small enough here that I will make up any differences for fairness purposes. I'm willing to take more risk than an index here, because effectively this money is mine with a long time horizon. It will almost certainly not cover the cost of school/starting-in-life, so I expect to add funds for both from other resources, and this is a small portion of total assets. Your point about equity is well taken, and you've convinced me to make the positions the same this year/going forward. Even perceived unfairness is probably a bad idea, and it's hard to feel two accounts that are exactly the same is unfair...

Reasonable choice and would be easy. I have an index fund in there already, want to do one new position per year, and this doesn't seem like an optimal entry point into SPY to me.

Yeah, I could merge it into a family account. Except they're held (by historical mistake) at 2 different brokers and 1 in my name and 1 with my wife. The cost of getting it merged exceeds the present value of the commission stream I expect to pay. I like this idea anyway, because it isnt very much work, and I think it will be useful as an educational tool when they're a bit older. Both because it is an understandable strategy and because it will show significant gains on single positions, which hopefully helps underscore the value of compounding.

I manage very small portfolios for each of my children in Canada's RESP program. It is designed to save for children's education, and comes with a government grant on contributions, as well as tax deferral (and eventual taxation in the children's name). However, the limits are relatively low, and so each year I have a few thousand dollars to invest for each child in their account. Because of the small-dollar annual investments, I've been trying to do a "keeper" stock strategy to keep trading costs down. Essentially, buying one stock per kid each year and holding it until maturity. Therefore, I'm looking for quality businesses that can reasonably be expected to have decent business results for a long period of time, trading at reasonable valuations. (Simple, right?) Anyway, my picks so far have been: Year 1) Canadian index fund Year 2) Partners Value (a leveraged play on BAM) Year 3) DIS Year 4) One kid got CNQ, one got AER This is year 5 of the portfolios, and I'm not sure where to go next, so I thought I'd throw it open for discussion. I'm considering Viacom, although I'm not sure if that has the set-it-and-forget-it business quality I'm looking for. I'm also thinking Fedex will be a reasonable compounder after they get past their fleet renewal capex. I still like COST but the price is too high to add here. Probably right now I'm leaning BRK.B, but would love suggestions/comments. I might split between the kids again as well.

I think total addressable market is an important concept for multi-baggers. If there isn't white space in the market they can expand in, it will be hard to get truly large multiples. This probably depends how many baggers you're looking for. A double or triple could be a little bit of growth combined with multiple expansion, but once you are going for 10x or more you need significant business expansion. The only significant multi-bagger in my portfolio right now is ROST. I think retailers/restaurants are in many ways great growth businesses. If they've figured out a plan that generates high ROEs in multiple regions, it seems pretty likely that it would transfer to the whole country. That gives you a potentially long runway for high ROE reinvestment if you catch it early enough. Munger's example of Costco fits this perfectly. I got into that one too late to get to any truly large multiple of my initial purchase price, although I think I'm close to 2X (mostly on multiple expansion...).

Does the building have positive pressure into the hallways? I own a condo where the guy across the hall stays in his unit smoking pot 24 hours per day as far as I can tell. There is makeup air coming in to the hallways that keeps the smell mostly in his unit, somewhat in the hallway, and not at all in my unit. Maybe the makeup air could just get turned up? Super might be willing to do that to reduce complaints?

BG - is there a lot of effort involved with 1031? I thought it was just a form to be signed by the buyer. I've seen a few of those contingencies in listings but nothing we've put a bid on had that stipulation. 1031s are for commercial properties I believe 1031 is for investment properties. A residential property used as a rental could qualify, if I understand correctly.

Xerxes, of Fairfax’s current staple of larger investments it looks to me like Recipe may be in the most difficult situation. Their issues is not Recipe specific; restaurant stocks in Canada are really in a tough position. Here in Vancouver they are being hit with the perfect storm: 1.) big increase in property taxes by the city (8%) 2.) big increases in minimum wage of 6-7% every year for the last 3 years straight (with more big increases already confirmed by the Provincial government) 3.) shift with consumers from eating in restaurant to eating at home (with Skip the Dishes, Uber Eats who take as much as 25% of the order value etc) 4.) steady increase in health care costs What you see across the board is restaurants are unable to increase revenue / cut costs fast enough to offset all the cost increases. 2020 will likely be another tough year for restaurant stocks. The good news for Recipe is the stock has already sold off pretty aggressively in 2019. The question is if we have seen the bottom in profitability or if more bad news is coming in 2020. At some point the sector will be a buy... not sure if we are there yet. (3) is also bad because it hits high margin drink orders. So you get a lower average cheque size with lower margins, plus pay big commissions.

I buy dividend stocks from the USA in my retirement account, because the Canada-US tax treaty means no withholding tax is taken. For countries where that isn't true, I buy dividend stocks in my non-registered accounts. My tax situation is such that I can generally use the tax credit from foreign withholding taxes, so it doesn't change the amount of total tax I pay, it just changes who I pay it to.

Why did they tell you never to do that again? That's weird..... Are your living expenses mostly paid by credit card? There are lot of credit cards that offer zero fee forex convesion. They said they don't have a Canadian banking license. They wanted to know if I primarily had the account for forex or primarily for investing/trading. I said the second, which is absolutely true, the forex was just an incidental benefit. I am going to stop, because IBKR is considerably better than the other brokerage options available to me as a Canadian, and I got the distinct impression that I would be let go as a client if I didn't. I hadn't thought of the credit card idea. I do have a USD mastercard with no foreign exchange fees. However, I checked the currency rates on the mastercard site, and even for banks with 0% fee there is a 0.5% spread. By contrast, I checked IB today and their forex rates have a 0.002% spread from bid to ask (and I often get fills in between the bid and ask). Add their commission and the total cost is generally about 0.02% for the size of trades I do. I've done Norbert's gambit previously, and my round trip costs at my Canadian broker tend to be $20 in commission (2 stock commissions) per conversion. Sometimes I make a few dollars and sometimes lose a few dollars on the trade itself, which seems to average out. Basically just stock movements in the few seconds it takes to exercise the second trade. I tend to do about $10000 at a time, which makes the cost 0.2%. So ~10x as much as IB, but still less than half as much as a no-fee credit card. I've probably unreasonably optimized this, as even the no-fee card version would only be ~$500/year. But IB was roughly $20/year, so it seemed worthwhile to do it.

Interesting. I also got a call from IB compliance, but not about 1% of a firm. My business earns most of its revenue in USD but my living expenses are in CAD. So I take my draw in USD and convert it via forex in IBKR, which is by far the cheapest way for me to do so. I got a call asking me a bunch of questions, and saying to never do that again. We aren't talking huge $ figures either, only ~$100k/year. I'll just do Norberts Gambit at a different brokerage, but it'll probably cost me an extra $200/year.

Oh boy. People think the Politics section is bad... No kidding. Somehow I don't think "buy low, sell high" is the optimal mental model for family members...

Oh I didn't notice that, or that mine was a 1st/1st No problem. You can see the difference in this listing here: https://www.abebooks.com/servlet/BookDetailsPL?bi=18075326174&searchurl=an%3Dbenjamin%2Bgraham%26fe%3Don%26sortby%3D17%26tn%3Dsecurity%2Banalysis#&gid=undefined&pid=4 Where under the first edition it lists the printing. Yours doesn't, therefore imo it's a 1st/1st. I'd be willing to pay you $1500 USD for it - it's definitely worth more than that. You shouldnt take me up on the offer :)

That $1500 isn't a first printing. That matters quite a bit.

As an fyi on value, that is easily worth thousands of dollars. The closest comp I could quickly find (the red first/first edition, also ex-library) https://www.biblio.com/book/security-analysis-principles-technique-graham-benjamin/d/951415339 Is listed for $9k USD. I suspect that price to be slightly high, as condition matters a great deal for these sorts of things. I'd guess yours is worth ~$5k USD.

Might be able to get a 0% mortgage on Denmark :)

This is an interesting quote from this article. I can’t say I follow this advice. My buys and sells are mostly based on valuation with perhaps a short term focus on momentum (letting winners run). I also tend to sell if a stock goes up substantially without change in corroborating news or fundamentals. Sometimes, it pays, and sometimes I leave money on the table, especially in bull markets. When markets seesaw and volatility is high, the buying /selling works very well. Also, if not selling based on fundamentals, what other guidelines is one using? Every single time I have sold a great business for valuation reasons I've regretted it. I think the alternative option is to hold great businesses as long as they're great. I have seen both. To some extend, I was playing the 1999/2000 tech bubble and I really didn’t regret anything I sold back then. Many would have lost 90% back. Even with great companies like MSFT, which did. put out good numbers all along, the multiple regression caused substantial losses that took a decade to make up. Current examples are a bunch or SAAS companies or even something like DIS. While I agree thwt DIS has great assets, I do wonder if the stock surge of ~30% has overextended the stock. The streaming competition is going to be tough and DIS estimates thwt it will take a few years to just break even. Then the cash machine ESPN is becoming a wasting assets. So what we have is a stock that may not have any earnings growth for a couple of years, yet trades at ~27x earnings ($5.2 earnings estimate for 2020), which is far above it’s historical range. I‘d rather own FOX or CMCSA Right now at far lower valuations and that’s indeed where I swapped proceeds from DIS sales into. This may turnout out to be a mistake, but I think it is a value approach and protects downside. I think a lot folks that talk about great business here have not really experience when the multiple compression bear raises its ugly head. Great points as always. There is some level where valuation becomes so egregious (==bubble) that it isn't reasonable for even an excellent business to earn it back. Microsoft in 2001 and maybe the SAAS companies now seem like examples. I'm conflicted about DIS, which is a company I do own in this bucket. I swapped my DIS for FOX pre-merger but took shares in the merger to capture the spread. I think DIS is fundamentally a better business than either comcast or fox, but the valuations are certainly divergent. I also don't think 2020 is likely to have much for upside surprises, especially on the first half of the calendar year. Whatever they get for Disney+ subs right away, there isn't really a big catalyst for new people until the fall of 2020. And the movie slate is way weaker in 2020. So I agree DIS is likely overvalued in the near term. I'm reluctant to sell, but have considered gregmal's thoughts from another thread about selling in the money covered calls with interest. The other one I'm having a hard time with right now is COST - great business, but I wouldn't even consider buying at this price. Maybe I should sell, but I felt the same way at $215...

This is an interesting quote from this article. I can’t say I follow this advice. My buys and sells are mostly based on valuation with perhaps a short term focus on momentum (letting winners run). I also tend to sell if a stock goes up substantially without change in corroborating news or fundamentals. Sometimes, it pays, and sometimes I leave money on the table, especially in bull markets. When markets seesaw and volatility is high, the buying /selling works very well. Also, if not selling based on fundamentals, what other guidelines is one using? Every single time I have sold a great business for valuation reasons I've regretted it. I think the alternative option is to hold great businesses as long as they're great.

I installed a sliding glass patio door this summer. Myself and my wife were able to do the job in 1 afternoon. It wasn't terribly hard, although if I had someone reliable I thought would have done the job for $400 I probably would have done that instead. It was really heavy, so getting it in/level was the hardest part.

Would you hire your own delivery drivers or primarily use the various services? Skip the dishes is the dominant player in that business where I live. I was at Edo Japan yesterday (a stir fry franchise chain) and couldn't believe how many skip the dishes orders there were. It outnumbered it eat in patrons at least two to one. It seems to me that offering inexpensive options with multiple restaurant names could be very effective. (Ie a thai menu, a pizza menu, etc) I suspect even more niche cuisines would be worthwhile. The margins on a meal of pierogies would be huge, and the fact that you wouldn't sell many per night wouldn't be a big issue if you were splitting the overhead between many cuisines.

As follows 1br $1600-1700(towards the lower end you can take your pick of high quality tenants with 700+ credit scores), HOA $330-$350, taxes ~$4700, market value currently ~$160K per(pre 2008 sales where mid 200s) 2br $2200-2400(same as above wrt tenant quality) HOA $400 or so, taxes $6500, market value currently around $250-270k (pre 2008 300s) Here's the reason those numbers work though.. theres ZERO market for $3000 per month and up rentals here. So under $2500 and especially $2000 per month is super competitive. This is just a specific community I have multiple properties in, but by and large those numbers are in the ballpark for what I look for. Again I would reiterate that the way I am investing in the stock market, I need to be consumed by it and its heavily taxing mentally. So with these, Im not looking to have ridiculous returns, but simply have something simple that takes care of itself and does better than the passive 3-5% I'd get elsewhere putting in no effort. I also try to stay disciplined and avoid concentration risk. I'd like to get a few mil face value of properties; ie something that spits off a decent chunk of cashflow, but also something that is reasonable enough in size to offload to a local HNW investor if I ever wanted liquidity and found selling more attractive than the alternatives. What kind of levered cash yield are you getting including amortization? What kind of LTV do you get? What is reasonable long term appreciation? The rents you mentioned are actually in line with Queens NYC which I am kind of surprised by. What's the time to rent after a tenant vacate? I just rented one of my units in less than 10 days. I have heard stories of very high yields in suburbs but you run into issues with renting to a specific group of renters, i.e. college students and very compressed windows to find tenants. You don't get good yields in Queens from day one, but the long term price appreciation tend to be excellent. When levered 70-80%, the long term IRR are quite good. Would it not be typical to show a place for rental while the previous tenants were living there? The standard here is 30 days notice, and I've almost always found that sufficient to get places turned over with zero vacancy. Ie previous tenant moves out may 31, new tenant moves in June 1st. I've probably turned over my rentals 30-40 times, and this month is the first time I've ever taken a day of unplanned vacancy.