KCLarkin

True. But I must make sure I don't conflate a right-wing blogger who is "the founder of FantasySCOTUS, the Internet’s Premier Supreme Court Fantasy League" with a legal expert.

Edited for clarity: So an acting Attorney General questions the legality of an executive order (since blocked by several judges) and she is "against the citizens of this country" and a "partisan hack". Either you are trolling us or you don't know the definition of "conflate".

Good point.

Mathematically, this isn't correct. You need to make more from your investments than you would working AND putting your money into index funds.

I thought the analysis of Cap Rate spreads was interesting. Do you see any flaws in that approach?

We know that as a group high multiple stocks underperform, so I don't think this analysis would be useful. Probably the best "simulation" is the Nifty Fifty review by Jeremey Siegel: https://www.aaii.com/journal/article/valuing-growth-stocks-revisiting-the-nifty-fifty This largely avoids hindsight bias since the "nifty fifty" lists were widely available at the time. But note that even though Coca-Cola's "warranted P/E" was 82x, this doesn't factor in the extreme volatility you would suffer if you actually paid 82x. You would suffer many 50%+ drawdowns.

This is a good idea. If you read some of the old Arlington Value letters, he seems to use this strategy. As an example, MSM is an industrial distributor. During the recent manufacturing downturn, they took market share from local competitors, cut operating expenses, released substantial working capital, and tendered for 8% of the outstanding shares. They even did some minor M&A. In this case, MSM is actually pretty cyclical. But also very defensive.

CVS is an interesting option. In 2008 and 2009, the company grew EPS 14% and 20%. Still, the PE multiple collapsed from 22x too 11x. So it didn't work as a defensive stock. But today, you can buy this defensive stock for 13x.

This is largely true with his public equity investments. But I excluded him because he has had blow-ups in private investments and bonds. Specifically, Energy Future Holdings. Still, on a portfolio basis, his batting average is very high.

Interesting that Weitz, Giverny, and even ValueAct managed to do well with VRX. On the other hand, you have people like Yacktman and Russo who seem to buy such safe companies, that they rarely have big losers.

2016 results are impossible without leverage? Or overall results? They've definitely used large amounts of leverage in the past (leveraged BRK position) but he seemed to imply he was net cash in 2016.

Shai, what is the rationale for this? Seems a bit odd.

I assume this is a typo? You mean 900%? I've owned since 2009 and it is up 1200%. Sadly, it was a tiny position.

Assuming houses appreciate at roughly the same rate as inflation, you are taxing "phantom gains". At the end of 20 years, you own the exact same house as you bought (actually a bit worse for wear). It makes no sense that should also need to pay tax on this "gain". Capital gains on stocks make some sense, since the retained earnings are taxed at a lower rate than dividends. So the real value of a company increases over time. There is still a stealth inflation tax though. Which is why capital gains taxes should be much lower than dividend or income taxes. Mortgage deductibility subsidizes borrowers, not homeowners. So if I have paid of my house, I pay the stealth inflation tax. But I don't get to deduct interest.

Ask Steve Eisman. I think a lot of people are looking at Canada as a repeat of The Big Short. But what made The Big Short work was the asymmetry of the bet. You didn't need to worry about the timing of the bubble or even the size of the bubble. You just needed to know that you were buying CDS on subprime debt but paying AAA prices. I don't see that opportunity in Canada. But maybe it exists and I just don't know where to look.

By definition, survivorship bias drives those returns. For each person with a 10 year record that much higher than average, there must be several with below average records. 40% of all stocks lose money over their lifetime. A vast majority underperform the benchmarks over their lifetime. The index returns are driven by a very small sliver of winners: http://awealthofcommonsense.com/2016/05/the-sp-500-is-the-worlds-largest-momentum-strategy/ So, the question is, do you have the capability to pick winners? If yes, then concentrate.

I agree. This is a wonderful event. For those of us who aren't in the Fairfax fan club, we might feel reluctant to attend. But it is actually a celebration of value investing which just happens to coincide with the Fairfax event. You will meet fascinating investors from all over the world.

I made some changes to my portfolio with the assumption that yesterday was the last chance for a T+3 sale.

Wonderful. Thanks!

Great quote, thanks. I'm surprised we don't hear it more often.

Fisher?

This is good. Thanks. Key takeaways: - Available seats are only up 6.7% over the last 10 years. - 3 global hub-and-spoke carriers. Consolidation of these hubs makes the legacy airlines more efficient and competitive. - Cabin segmentation allows legacy carriers to better compete with Low Cost airlines, while still generating premium RPMs - Combination of low stock price, free cash flow, and NOLs allow airlines buy large amounts of stock. - Capacity discipline plus backlogs at Boeing and Airbus mean that good times will last longer than expected - Bankruptcies have allowed legacy carriers to become more competitive Despite the similarities, this is very different from the railroad thesis. The thesis looks sound to me, if a bit late.

Not exactly the same question, but this was discussed here: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/which-5-investing-books-have-been-the-most-influential-to-you/

I can get behind this.

No, we agree on what float is. It's just that the float is not a natural outcome of the SaaS business model. When a customer books an airline ticket, they need to book in advance. When someone buys insurance, the loss always happens in the future. This is natural float. My experience is that most SaaS companies bill monthly in advance. There is no float. Some SaaS companies generate float. But that is because they have the pricing power to bill annually in advance.