KCLarkin

I find the discipline of tracking long term performance AND writing an annual investment letter to myself extremely valuable. That annual discipline is even more important now that I can afford to be complacent with my portfolio.

A bit interesting to lump in Cisco and JDSU. Cisco was mostly a simple overvaluation story. JDSU was a bullwhip effect story. I do wonder if the AI “bubble” results in a bullwhip effect. And I think AI investors should read the JDSU” case study” so they are aware of the potential risk.

But drawdowns and FU money are different things. And your FU money needs to factor in potential drawdowns anyway. For example, the 4% withdrawal rate "rule" was selected based on historical "worst case" drawdowns. If you have $6M earning $20k/month. And then drawdown (not impairment) to $3M, you are still earning $20k/month. If you can't withstand a 50% drawdown, you need to invest conservatively and your FU number (or FIRE number) must be higher.

Unfortunately, any advice is highly sensitive to your personality and portfolio. You need to match your portfolio to your personality. Personally, I've always been (relatively) immune to FOMO. Watching others get wrecked during dotcom (and other bubbles) makes me almost allergic to chasing "hot stocks". And my returns have probably suffered at times by avoiding great companies just because they were "hot stocks". I also get excited during drawdowns, because that's where the best opportunities are. -- But a few specific tricks I use: 1. When the pain gets too much, I might sell a TINY part of one of my positions. This is a psychological trick. I KNOW that I should be buying. But the act of "doing something" is usually enough to satisfy the panic. Then I can either ride out the drawdown or start buying with a clear mind. 2. I always assume there will be a 50% drawdown in my portfolio (or a specific stock). This is just the cost of buying stocks. It's like a new car. The day I drive the stock off the lot, I assume 50% in depreciation. But it is worth it, given the higher returns from stocks. 3. I like Buffett's idea of "equity bonds". An easy trick is to look at the earnings yield instead of P/E. A 50% drawdown just means your yield doubled. 4. Write an annual investor letter (to yourself). This is the time to reflect on position sizing, etc. Not in the middle of a drawdown. 5. Go "window shopping" for bargains even if you don't have cash. For example, want CSU to $2000 so I can buy more. (never mind that my 20% position in a 50% drawdown). 6. I try to only buy stocks that I would feel comfortable making 100% of my portfolio. And I prefer to invest alongside founders who actually do have ~100% of their portfolio in the stock.

Google seems to be in a ~15%-17% drawdown. That is pretty standard volatility.

If you only have 5 good ideas, it is very easy to create synthetic diversification by buying an index fund. If you want the equivalent of a 20 stock portfolio, that is 5% per stock. So you could put 25% in your five ideas. And index the rest (just need to be cautious if index is top heavy). But diversification is highly personal. It depends on your skill, style, pain tolerance, etc.

This seems like the worst possible trade. Trend is down, so you are pretty likely to trigger stop-loss. But you also don't have conviction, so your upside is limited.

I briefly owned a few shares around the time of the merger. I remember looking at an image that showed all the brands owned by the KHC and realizing that Heinz Ketchup was the only brand we purchased somewhat regularly. Most everything else was a franken-food brand. I quickly sold the shares. I am with Warren: I don't see how any transaction will fix this trash can of dying brands.

Interesting. That was a very good period for BRK. Plus he (theoretically) had some big winners in AN, IBKR, and JEF. But, I think your numbers for SP500 might be wrong? Koyfin is showing SPY +128% (17% annualized).

For this model to work, scale economies need to be real and significant. In most cases, scale economies are illusory. True scale economies are very rare, IMO The flywheel is scale -> economies -> shared with customers -> more customers -> more scale… The businesses you mentioned are pretty classic examples of businesses that don’t have scale economies.

Read the Nomad Letters. It is a simple and powerful concept that could change your life. Honestly, you could probably read a one page summary, it is so simple. But the Nomad writing is so good, you are doing yourself a disservice by not reading them. And I’d say it is a growth strategy, not a value strategy. You find one of these and you can hold it for decades.

+1. I also went big into IBKR before the run-up. I’ve owned it forever but was really fortunate to size it up right before it took off. Reading the Nick Sleep letters played a big part in this. It is now my largest holding.

Do you have a source on this? I can see this being true based on how they are setup, but this doesn't seem consistent with how US-listed ADRs are treated. Is there a difference in structure? ADRs are treated as look-through to the domicile of the underlying. Why wouldn't that be true for the CDRs?

Hmm... I don't think I'd call China a pig. But I'm not sure I'd want to wrestle with them. Remember when they took two Canadian hostages to strengthen their negotiating power? There is a pretty good chance China has outmaneuvered trump here. If these 125% rates stick, they are going to be political suicide to Republicans. And the counter-tariffs will kill U.S. farms. Trump can probably get away with 50% tariffs but 125% is just too much to absorb. He is being too greedy. No way this 125% rate lasts a month...

Thanks Xerxes. It was your post that led me to initially say that RBC DI was the best/only option. I just wanted to make sure there were no other options, as RBC DI sounds like it will be a hassle with non-US currencies. I will look into the possibility of purchasing in IBKR and then transferring to RBC DI for custody.