ukvalueinvestment

That is familiarity bias :) Truth is, very few jobs these days don't have some sort of stress.....

But everything you've described, I know about from reading the newspaper (might have been the Economist). So these issues aren't exactly secret. We've known the for profits sector is dodgy for years. So if I can sit on my couch in London and know about all these issues, you should know about them if you're actually applying to the university.

But the tbill yield is artificially low because of financial repression?

Let me put it another way. I recently graduated from business school. I didn't look for a second at the employment stats. I knew that if I worked hard and did good things and spoke to the right people, and wrote a good thesis, I would get the right job. I diligenced the university by speaking to employers and alumni. They confirmed it was a well respected school. I don't think I even read any of the university literature. Why would I? They are clearly biased. If you can't see that, maybe you should reconsider attending university. My Grandmother doesn't represent herself as financially sophisticated, in fact she actively says she needs advice. So I think she deserves protection against someone phoning her up, lying and saying they are regulated, and then selling her something based on completely made up facts.

So this student is "responsible" enough to take on a tonne of debt, and "intelligent" enough to get a graduate degree. Yet doesn't understand that perhaps it might be sensible to do some due diligence other than just taking the university's word for it that they'll get X job that pays Y?

DTEJD1997: I'm aware of all the issues with the US educational system and I'm a 35 year old Brit - I read stuff. I'm sorry but if you go to a lower quality university on the basis of a statistic that THEY provided, you've made a mistake. Yes, it's manipulative and wrong, but by going to university you are implicitly telling the world you are an intelligent adult that is able to think a little. We live in a world where we are constantly bombarded with advertising and news that is skewed, biased, manipulative etc. We all have built up protections against that. And then you go to university based on a statistic, and then feel conned when actually 30% of people get proper jobs rather than a stated 40% (for example)? Sympathy is lacking here. rkbabang: This is a different sector of society. Undoubtedly some bucket shops target the old and desperate. yadayada: I don't really understand what your point is.

Ok, things are a bit different in the UK, our universities aren't profit making organisations. Of course, if the university is actually lying, that is unacceptable. In the example given, it was more selective disclosure. And I do think that a supposedly intelligent student deserves slightly different protections to someone that could be quite vulnerable. If my brother went to that law school on the basis of one statistic, without doing other research and thinking things through, I would think he'd made a mistake and a lot of the blame should fall on him. If my elderly grandmother, who is very trusting, got scammed by a boiler room fraudster, I would think that 95% of the blame should go to the fraudster.

I don't agree the schools are lying. Perhaps they are being a bit selective in their disclosure. But at the end of the day, if you're going to university, a) Your success is mostly down to you. b) You should have the intelligence to question what you are being told. A 90 year old woman, whose husband died last year who always did the finances, and may be in the early stages of dementia, needs some protection, I would say.

You're not going to get very far in law if you don't think laterally about what a statistic means and represents. Don't have much sympathy for the students - they should consider it a learning experience. As for the Bucket Shops, they are deliberately setting out to lie, target the ignorant and vulnerable, and misrepresent things. Society would break down if all customers were expected to do full due diligence. Imagine if you had to check the medical qualifications on every doctor you went to, and then medically educate yourself on their advice! The Bugatti guy should go to prison, but it does surprise me that they seem to find so many victims.

I agree that being "cheap" isn't a good use of time. At the end of the day we all think we're intelligent people that can make good investments. Why should I spend half an hour washing my car (for example), if I can read an annual report that might be a great investment? I think that most people worry about the little things when they should save money on the big things. Example: Plenty of people wouldn't think twice about buying a £50k SUV, when they could buy one that does exactly the same thing for £20k, with a different badge. Most people don't spend much time at all thinking about their pension plan. They just put it in default funds, with bad managers and fees. In the Uk, it's the "done thing" to send your kids to private school if you can afford it. This leads to both parents working and being stressed all the time and leading lives that are less happy than they could be. Why not save the money, have one parent work in a less stressful job, but devote all their time to helping academically or paying for tutors here or there. If you're saving £20k per year on school fees, there's a lot to fat to cut. Plus your kids get a more "real world" education. Some private schools aren't even that good, people just don't really think about it. Holidays: Do you really need to go to a plush hotel in the Caribbean (if you're European), if you can go to Egypt and sit in the sun for about a quarter of the price?

http://ukvalueportfolio.blogspot.co.uk/ Here is mine. I try and hold 7-10 positions in a mix of deep value and higher quality stocks. Going forward, I will attempt to do a full write up of each new investment as I did my last one. I report on performance quarterly, I'm up around 11% YTD.

I don't know if this is "cheap", but once I have sold my current apartment, I don't think I will ever own property again. Reason? Over the long term, I target 12% + from my portfolio. Why own property when (long term) it can't return much more than nominal GDP plus a bit. In the UK, as of last week, a married couple can invest £30k tax free, it was around £22k. Thoughts? Does anyone else have this attitude.

I agree entirely. Clearly the biggest opportunities are in small caps. Intuitively that makes sense, and all the great investors say it too. Yet, I see people endlessly discussing the likes of Apple on the investment ideas, and think "whats the point"? Does the average person really have an edge on Apple. Is it really going to be mis priced by the market?

The average graduate with great science (maths, engineering etc) skills will always find a job. The creative graduate may be brilliant and do something wonderful but may struggle otherwise. I want my kids to have the rigorous academic base and then be freed up to do something innovative, with their academics to fall back on.

Read "Outliers" by Malcolm Gladwell, if you haven't already. Basically the reason Asians are better at scientific subjects, on average, is because they work harder and spend more time at school. When this was replicated in a poor area of New York (I think it was called a KIPP school), the kids had fantastic results. In the UK, kids have about 16 weeks holiday per year. When you think about it, this makes no sense. There's no particular reason why kids shouldn't spent much more time learning and practicing.

I disagree somewhat with what you've said in the first paragraph. But I'll let someone else disagree with you, if they do. Your second paragraph interests me. Why do you think time arbitrage is closing?

Errr, what annual return on capital are you suggesting is possible with poker (and on what capital base)

If you know how to invest, I don't think poker makes too much sense. Especially if you have a full time other job. I can pick up company reports and other reading any time eg, on the train, at home etc. But if something comes up, I can put that reading down. In poker, you can't really stop if you're in the middle of a tournament or good cash game. I believe it's impossible to have a job, a family and be successful at poker. Plus, long term, you can be average at investing and still make money. That money will compound, so really anyone with patience, and a conservative and humble temperament will do ok. With poker, your expected return is less than zero, because of dealer rake. And variance, for all players is huge. It's much harder to compound with poker. So I think value investing is a better way to make money, though knowing poker is enormously helpful because you get feel for odds, and EV, and realising that even if you do the right things, sometimes bets will go wrong.

First, of all, a Value Investor generally doesn't try and predict the macro. Many academic studies show that even top economists are terrible at forecasting, so we shouldn't try. That said, a few (like Klarman) do take an interest in macro and political goings on, though I'm pretty sure this is more to "take the temperature" rather than predict precise events. Buffett has stated he didn't see 2008 coming, although clearly he looks at long term trends. So personally, I never forecast, I just look for cheap companies, and I buy when I think they are undervalued, targeting 12% per year. That said, I find very few interesting opportunities at the moment and, if I can't find 8-10, I will own cash or high grade short duration corporates, or very low beta stocks (no permanent loss of capital). In this case, I am implicitly signalling to myself that valuations are stretched. Unless you are a genius like Klarman, holding cash and waiting for a fall is dangerous, because of opportunity cost. Do you really want to miss out on 5 years of dividends and MTM gains, if the market continues to rise? And if you are holding the right stocks, you should not suffer much loss of intrinsic value if the market falls. In small cap land, some would argue that you should ALWAYS be able to find opportunities, though I'm finding it tough. Value Investing works because focussing on conservatism and intrinsic values means you will live to fight another day when the market crashes. So above all, I don't think you should worry about anything except finding and buying cheap stocks.

It gets really dark and cold in winter though!

I guess most of us have thought about giving it all up and just running a PA account at some point. My thoughts: 1) Just because you don't have a "proper" job doesn't mean you automatically become some sort of recluse where you lost human contact. There's any number of social activities you can pursue to keep in touch with people. I happen to think it's quite sad if you think that quitting work will lower your chances of meaningful human interaction. 2) Value Investing is about margin of safety. That means being conservative at all times. Personally I target 12% over time. I think that's eminently possible given I have some skill (IMHO), temperament, education, and probably most importantly don't have to be fully invested (institutional imperative), and can take advantage of small cap, special and illiquid situations. But I constantly ask myself the question "what would happen if the market went down 75%?". And if investing is your only source of income, I feel you need to be prepared for a massive drawdown in the first few years, through no fault of your own. Markets can remain depressed for many years. I've seen figures like $1mln and mid six figures mentioned. Given that returns are going to be taxed, and you can maybe do 10% at best over the full cycle, unless you are exceptional, I suggest that $1mln is nowhere near enough, if you assume the market could fall substantially very soon. We are in the middle or end portion of a MASSIVE bull market. I would suggest that the margin of safety approach is to make the move to managing your own money only after a large market downturn, when the tide is in your favour.

It seems that Bitcoins are going to die before the mania gets to the size of the Tech or Tulip bubbles. Good. The whole concept was utterly ridiculous.

I guess you mean adjusted book value per share - as lots of the non stock market holdings are marked at original purchase price?

Is anyone else curious as to why Buffett has released this, and released it early? Buffett has never before released part of his letter early, so what does he gain, given he's so resistant to change? And as for writing a handy guide reminding everyone to focus on cash, is he trying to tell us something? Is this some kind of message that the market is bubbly and overvalued, in his opinion? Is there another theory? Or am I reading too much into things?

I benchmark myself against the FTSE All World Index, measured in GBP (I'm based in the UK). My thinking is that as an individual investor, I can invest in pretty much anything in the world, therefore my benchmark should reflect that. I've only just started measuring my performance. Over many years, I hope to beat 12% annualised. My thinking is that long term performance of the index is probably about 6-8%, which reflects GDP growth + Inflation + Dividends. I then hope to make an extra 5% or so through investing in the right spots (bias towards smaller caps, "cheap"), and skill. I feel that there are tens of thousands securities out there and by having the discipline to turn down all of them except the best ten or so, I should, over time, outperform by several percentage points.