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Barry Ritholtz' new podcast series is really quite entertaining. Thank god for the internet and the quasi infinite air time that comes with it. 1h+ interviews are a much better format for interesting interviews than the usual "your three favorite stocks" in 5 minutes. http://www.bloomberg.com/podcasts/masters-in-business/ Ritholtz explains the idea behind the series in the first episode with Gundlach (which has already been linked here).

You are right. He seems to have been the CEO until 2008. This company had €636m in assets in 2013 – so it must be a fund or his family office. In his German Wikipedia entry it is mentioned that Rentrop sees himself as a value investor. Supposedly, he has been owning BRK stocks for 20 years and goes to the annual meeting every year – I don't know what this means for this company though.

This is not exactly the center point of my expertise. However, I think these are the 6 largest listed residential RE companies in Germany (by number of apartments owned – left scale): http://de.statista.com/statistik/daten/studie/185020/umfrage/groesste-boersennotierte-wohnimmobiliengesellschaften/

This could be a family office or just friends pooling their money. They don't share their annual reports publicly. There are certain tax advantages to pool your money into a Investmentaktiengesellschaft. The corporation can buy and sell shares in other companies without paying capital gains tax. You only pay capital gains tax when you sell a share in the corporation. Initially, this legal structure has been introduced to make it more attractive to launch investment funds in Germany. You can use it for your family office though, if you have enough money to bear the ongoing cost of it. Edit: In essence: These are not well known value investors (or at least I don't know them). However, there was a letter on their website addressed to business owners wanting to sell their businesses while staying on board as managers – BRK style. That doesn't mean much, though.

BTW not sure if it lists all drawdowns >10%. For example, seems like 2011 and 2010 had drops > 10% as well. By the way this is for the January 15 puts. We have June now. And at least as far as I'm concerned it's only interesting to look at the hedging cost on a per year basis. The June 15 155 puts trade around $2.85 which is more like 145 bps.

I don't know what would have to happen that I'd go outright short anything. 100% if I am right, unlimited downside if I'm wrong? I never understood how you want to go short anything if you could just buy a put on it and only risk the premium. Usually, puts are expensive, though. Whether I go into cash or puts depends on the price for the puts and my expected returns going forward. Momentarily, I decided to stay fully invested and to put about 4% of my portfolio into LEAP puts on CRM and IBB (on margin). This gives me a 10-15% "cash" cushion in case of a 50% CRM/IBB decline from current levels, while being a 2.5-3% performance drag (annualized) if I loose the premium. Whether this is a good deal depends on the expected returns on my portfolio. A 10-15% cash position would be about the same performance drag if I expected my portfolio to make 15% per year. I expect higher returns, so I go for the options. There's a certain chance of winning on both ends and of course the risk of losing the premium while not achieving 15% on the long side… What matters to me, though, is that I can't lose more than 4% of my portfolio on the short side.

Gio, I side with you 100% in this. I also wish it would work out but I just can't see it. It's clearly unsustainable in the mid to long term. Apart from a political and a fiscal union the only way this situation could sustain itself is if creditor countries would be willing to take haircuts time and time again – I can't see this happening. This might be feasible once or twice with smaller countries but at the latest when it comes to Italy's and France's debt it's just not possible. You can't build a political and monetary system on it. Packer, don't forget how small the Greek economy is compared to e.g. France, Italy or Spain! Greece is not a model for the rest of the debtor countries. Greek public debt is around €300 bn, Italy's debt is more than € 2 trillion, France's also around € 2 trillion, Spain's around € 1.3 trillion.

Thanks, that's really great!

I think something like this: http://www.theatlantic.com/business/archive/2013/04/spain-is-beyond-doomed-the-2-scariest-unemployment-charts-ever/275324/ Sustaining high unemployment rates in southern Europe – especially among the youth. This and other economic pain is going to provide fuel to anti-European parties in debtor countries. Fear of loosing their savings is the fuel for equivalents within the creditor countries. The results of the European elections link directly back to this: http://www.marketwatch.com/story/far-right-parties-post-strong-gains-in-europe-elections-2014-05-26

I agree completely, only adding that European politicians tend to underestimate market forces and vastly overestimate the efficacy of their possible courses of action.

[amazonsearch]House of Debt[/amazonsearch] Larry Summers wrote a review in the FT calling it the possibly most important book to come out of the 2008 financial crisis and subsequent Great Recession: (http://www.ft.com/intl/cms/s/2/3ec604c0-ec96-11e3-8963-00144feabdc0.html – paywall) I haven't read the book yet but this sounds very interesting to me. Here's an interview with the authors. http://video.ft.com/v/3591277989001

I don't think that this is contradictory. Why should Germany leaving the Euro be bad for Spanish RE?

One of my favorite movie lines is from the movie Rising Sun: "Fix the problem, not the blame." Unfortunately, I don't know how to fix the problem without breaking the Euro currency bloc apart because a more intimate Europe is not in the cards. I only know that austerity is no solution at all and I think of the German course as a very dangerous one. Completely agree, Gio, that Draghi's actions take only palliative effects. Interestingly, both George Soros and Ray Dalio think that Germany leaving the Euro is one of the more probable outcomes: http://blogs.wsj.com/marketbeat/2012/09/12/ray-dalio-southern-europe-is-about-to-enter-a-lost-decade/ and http://www.cnbc.com/id/100629323 If you're looking for some risk averse people outside Japan, Germany might very well be the place you're going to find them.

Yes. I'm glad that Draghi realizes that Europe's main risk is in fact deflation and acts accordingly – and independently from Germany's stupid position.

This is really great, thanks!

I stumbled upon him through an investment in EGL which was a classical Greenblatt spinoff situation – a nicely profitable business, which was hidden behind a huge one time goodwill impairment charge. At the time, he seemed to be the only hedge fund investing in it – and he bought 10% of the company. He bought better than me and sold better than me (he made 100% within 12 months). Since then, I follow his 13-Fs. :D

Yes, Pabrai's book is another great one that provides a more entrepreneurial perspective on investing that very much resonates with me, too. I think he has distanced himself recently from his use of the Kelly Formula saying that as an investor you don't make enough repeated bets to apply Kelly to them. I don't know about that, though. It's clear that you can't apply Kelly slavishly because you can't know your odds. However, it's a great concept to keep in mind when thinking about portfolio diversification. It shows mathematically that Buffett, Greenblatt and Berkowitz are on the right track regarding portfolio diversification. I also enjoyed Edward Thorp's remarks on it in the Hedge Fund Market Wizards book (another really great book, by the way, that almost made it into my top 5 and certainly is in my top 10). Thanks – put that on my list, too. I read about John Lee in Guy Thomas's "Free Capital" which I enjoyed, too.

Thank you for your lists, guys! I really enjoy them and have already added several new books to my reading list. I'm really surprised to see how influential Joel Greenblatt has been to quite a few board members. Certainly true for me! In my mind, you can draw a straight line from Graham over Buffett to Greenblatt – he really pushed value investing to the next level.

Occasionally, I read somebody's comment here saying "this book is easily in my Top 5". This got me thinking about my real Top 5 – not necessarily the 5 "best" investing books, but the 5 books that have made the largest impression on me and thereby changed the way I invest. I found it surprisingly hard (and fun!) to constrain myself to only 5 titles and I'd be really curious to see your Top 5, fellow board members! This is the list I came up with: [*][amazonsearch]You Can Be a Stock Market Genius[/amazonsearch] – Joel Greenblatt [*][amazonsearch]The Little Book That Still Beats the Market[/amazonsearch] – Joel Greenblatt [*][amazonsearch]Berkshire Hathaway Letters to Shareholders[/amazonsearch] – Warren Buffett [*][amazonsearch]The Most Important Thing Illuminated[/amazonsearch] – Howard Marks [*][amazonsearch]One Up On Wall Street[/amazonsearch] – Peter Lynch No Munger, Klarman or Graham (so please don't crucify me…)

Malone still is one of the most underestimated investors of our time – not on this board but in the public mind. He is a real Renaissance thinker, especially with regard to how to think about corporate earnings. If you think about it it's really crazy to aim for large corporate earnings only to see 40% of it vanishing every single year – money that could be compounding within the company growing shareholder wealth. Jeff Bezos understands this very well, the rest of Wall Street not so much. I found it to be really rewarding to read the TCI chapter in Greenblatt's "You Can Be a Stock Market Genius" side by side with the corresponding passages in Robichaux's book.

SHLDs' market cap is $4.2 bn – that's why I chose it. You need a smallish stock with a huge potential market and therefore upside. AMZN e.g. has $ 140 bn in market cap, WMT $240 bn so that's about 30x to 60x upside – enough room to grow…

SHLD of course :P

The most important thing is that you understand why you are calculating what. I highly recommend Joel Greenblatts "The Little Book that Beats the Market" in this regard. He provides a clear and easy to understand explanation for the math behind evaluating companies. That's his thought process: [*]Assuming no growth, what are next year's earnings of $ 4,000 worth today? If you assume that you can earn 6% risk free on your money in other investments, they are worth $ 3,760 today (= $ 4,000 - 6% or $ 4,000 x 0.94). 6% is your discount rate – you don't actually earn 6% today but 6-7% is the historical average for the 10y US government bond yield (the closest you can get to risk free money). [*]According to this logic, what are $ 4,000 earned 2 years from now worth today? $ 3,534.40 (=$ 4,000 × 0.94 × 0.94). Ten years from now? $ 2,154.46 (= $ 4,000 × 0.94^10). [*]Now assuming 10% growth, what are next years earnings worth today? $ 4,160 (= $ 4,000 + (10% - 6%) or $ 4,000 + 4% or $ 4,000 × 1.04). [*]In your example, earnings in year 10 are worth today: $ 5,920.97 (= $ 4,000 × 1.04^10). Divided by current shares (current share count 465.6?): $ 12.72 per share (= ($ 4,000 × 1.04^10) / 465.6). Slapping a 15 multiple on it, the intrinsic value of one share is $ 190.75. [*]Don't forget: If the company doesn't need to reinvest all the earnings to finance its growth, you earn money between now and year 10. The money is going to be paid out as dividends, they buy back shares or it's simply piling up within the company. Assuming the company doesn't do stupid things with this money you can add it to your valuation (discounted to today's value) . That said, this is the theory – you shouldn't predict 10% yearly growth lightly, but that's a whole other story.

I was wrong. It's true.

I don't believe it's true. John Gruber: http://daringfireball.net/linked/2014/05/08/beats I agree. This doesn't make any sense, no matter how you look at it.