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KCLarkin

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KCLarkin last won the day on February 20

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  1. https://www.wsj.com/articles/SB10001424052748703977004575393180048272028 I think it is pretty obvious that he'd be a good fit for the board. But why would he want the role?
  2. I've never understood why Buffett thinks (thought -- has he mentioned it in the last 20 years?) this is a good metric. There are so many obvious flaws, I don't know why anyone takes it seriously. Similar to Lynch's PEG ratio.
  3. To answer the original question, ETF approval increases the likelihood I will start a position in BTC to 0.1%. The fact that Coinbase is the likely custodian knocks that back down to 0.001%. The main use case for BTC (other than speculation and illicit activities) is theft and fraud. Having Blackrock as a sponsor does allay most of those concerns. --- But, I want to own great businesses. I don't have any interest in bonds, gold, commodities, art, or collectibles. For me, the best thing about Crypto is that it diverts many of the speculators away from high quality businesses. The fact that y'all are getting rich quick off of Beenz 2.0 doesn't bother me. I'm okay getting rich slowly... --- Disclosure: I'm from the dotcom, Beanie Babies, Pogs generation. I'll let you get rich off your very wise investments in BTC. I just prefer great businesses at reasonable prices.
  4. Bogle didn't think ETFs were compatible with a buy-and-hold philosophy (and he is correct though the other advantages make up for this). It Boggles my mind that people on this forum don't understand Vanguard. One of the most important financial institutions of all time.
  5. On Invest Like the Best, he said that he would stop active investing if he wasn't getting results. That implies that he is getting results.
  6. Other than the Collison foreward, there is no new content in this edition, correct? "This abridged edition features a new foreword by Stripe cofounder and president John Collison."
  7. When I say "growing mid-teens", I mean past tense (and I'm looking back to the last 10-K so one or two quarters won't cause recency bias). EPS growth is much better but when I eyeball it and try to ignore COVID effects, it's pretty hard to say this thing is not growing at least mid-teens. Agree with you on efficiency. I believe it is both poorly run and unlikely to be better run. So please don't take this as a pitch for GOOG!
  8. Correct. If you are starting with NI, you need to add back depreciation and then you can use whatever number you want for " maintenance cap ex". Just don't double count. You can use depreciation or "maintenance capex" but not both. Inflation is definitely an issue that will distort accounting earnings for many years for most companies. But many of Google's assets are generally deflationary, so the distortion may not be as great as imagined. I'll leave that to your discretion.
  9. There are two mistakes. Net income is after both SBC and maintenance capex. So you have a 4-5% Earnings Yield, cash on the balance sheet, growing mid-teens. With plenty of opportunities to run more efficiently. It is true that "real FCF" is less than Net Income. But that should be the case when you are reinvesting for growth. If growth slows, they should get close to 100% "real FCF" conversion so you don't need to assume a constant "real FCF" multiple as long at P/E doesn't compress too much.
  10. 50% of their U.S. stock portfolio is Mag7. You want them to add more? Munger's been pretty clear on this. They wanted one tech stock and they chose Apple. No need to speculate.
  11. This is all true, in a way. But the problem with DCF is that if you actually knew FCF1....FCFN, the proper discount rate is... maybe 5%....the 30yr treasury rate? The whole point of the risk premium is that you don't know FCF1...FCFN. And if you don't know FCF1...FCFN, you can't do DCF. And intrinsic value is only apparent in retrospect. So the U.S. stock market, over the past 100 years was almost always ridiculously undervalued. And one of Buffett's main insights was that, if you were an insurer, if you bought stocks with reasonably predictable coupons ("equity bonds") with your float instead of bonds you would clean up. And so this gets to the main problem with DCF. If you use a "discount rate", you will almost certainly decide that Costco at 40x earnings is "expensive". And VSCO at 5x earnings is "cheap". But this neglects the fact that Costco is closer to a bond with a growing coupon. And VSCO is closer to an out-of-the-money call option. And Costco probably deserves a 6% discount rate. And VSCO probably deserves a 20% discount rate. And which is "cheaper"? Who knows. --- And so what happens is that price drives sentiment. And the "DCF" shadows price action. And it becomes useless in actually picking investments. --- In the past year, Meta has traded at $89 and at $330. Intrinsic value has probably not changed a single dollar in that time. What is the IV of Meta? Probably somewhere in the range of $50 to $1000. So obviously, you should buy below $50 and sell above $1000. But what the hell do you do in between? --- You mentioned Damodaran, who I admire. I looked up a few of his valuations of Meta: 2018 - $181 (stock at $155) 2022 - $346 (stock at $220) 2022 - ~$100 in a "doomsday scenario" (stock at ~110) And to be fair, he was correct that Meta was undervalued all three times. So I guess DCF does work... if you are as skilled as, perhaps, the most famous "valuation" expert. But it is devilishly imprecise and definitely an art form. Doesn't mean you can't admire and learn from the fundamental truth of Intrinsic Value.
  12. Buffett doesn't really use DCF, at least according to the sources I've seen. He uses something more akin to a hurdle rate. It is easier and more intuitive and I'm frankly baffled that people use DCF*. Company A is worth $100 and is trading at $50, tells me very little. Company B is expected to return 15% per year, tells me a lot. Example A, I guess, makes sense for cigar butt traders. You need a buy target and a sell target. Or if you are doing a private deal where the price is negotiated. * Building a detailed model and seeing how different assumptions impact valuation is a fun and valuable experience, but I'm doubtful it will improve most peoples returns. --- I'm assuming the biographer you were referring to was Alice. Here is how she describes his process: He looked at them in great detail like a horse handicapper would studying the races and then he said to himself, ―I want a 15% return on $2 million of sales and said, Yes, I can get that.‖ Then he came in as an investor. OK, what he did was he incorporated his whole earnings model and compounding (discounted cash flow or DCF) into that one sentence. He wanted 15% on $2 million of sales (a doubling from $1 million current sales). Why does he choose 15%? Warren is not greedy, he always wants 15% day one return on investment, and then it compounds from there. That is all he has ever wanted and he is happy with that. ...You are not laughing, what‘s wrong? (Laughs) It is a very simple thing, nothing fancy about it. And that is another important lesson because he is a very simple guy. He doesn‘t do any DCF models or any thing like that. He has said for decades, ―I want a 15% day one return on my capital and I want it to grow from there-ta da!
  13. I’m looking more at the restaurants on Friday, rather than staples. DPZ down nearly 6%. Wing down nearly 5%. On a day that the consumer discretionary index was green.
  14. Yes, my inclination when stocks are narrative driven is to fade. The same forces that are causing the sell-off in junk food also sold off auto parts and costco due to Amazon threat. Sold off convenience stores due to EVs. Mooned Peloton and 3d printers and tilray. The problem here is that most of these stocks started at high valuations and have plenty of debt. Both aspects that aren’t aren’t appealing at current interest rates. TLDR: the risk is potentially real but market will overreact in short term creating a buying opportunity.
  15. Clearly I am missing something with this premise. Isn't Carnegie famous for giving away his fortune? Oh wait, I think you meant the Vanderbilt's. That makes more sense.
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