KCLarkin

Over short periods, say 10 or 20 years, starting and end valuation are important. But over longer periods, they become less important: http://www.realclearmarkets.com/docs/2014/04/ac_2014_04-StockMarketCenterfold.pdf

Growth and yield aren't independent. They are a function of ROE, retention rate, and Price-to-Book. -- This is why there is no correlation between GDP and returns. Imagine that a stock index is growing earnings at 12% with an 10% ROE. The index will need to reinvest 120% of earnings to support that growth. The per share earnings will be diluted by stock issuance, so that stockholders will only earn 10% (assuming P/B = 1). Alternatively, you could have an index that is growing 0% with a 10% ROE. 100% of earnings will be paid as dividends. So stockholders will earn 10% (assuming P/B = 1).

Plus net buybacks? What does that actually amount to, net of stock options & restricted stock issued? It's possible that's a bit of a plus factor, but on a net basis I'm not sure that it adds much. If someone has the figures, I'd be interested. I don't know but it better be a big plus. According to Yardeni, 63% of operating earnings were spent on buybacks last year..

Plus net buybacks?

To rephrase this, most investors overemphasize current earnings (or value) and underestimate how future earnings are allocated. $10B cash in the hands of Buffett are worth much more than $10B in the hands of Ballmer.

I know it's not popular right now, but Platform Value is real. I think it's fair to say that BRK's intrinsic value was 1.x book in 1965. And WEB has created enormous value since then.

These are just multiples to median income, so currency is not a factor. Chicago is an interesting case. One obvious difference is that chicago population has actually shrunk over the past couple decades. The us median multiple is really helped by rust belt cities like Detroit. http://www.demographia.com/dhi.pdf

"The most affordable major metropolitan markets in 2015 were in the United States, which had a moderately unaffordable rating of 3.7.followed by Japan, with a Median Multiple of 3.9. Major metropolitan markets were rated "seriously unaffordable," in Canada (4.2), Ireland (4.5), the United Kingdom (4.6) and Singapore (5.0). The major markets of Australia (6.4), New Zealand (9.7) and Hong Kong (19.0) were severely unaffordable." Vancouver is a notable exception. But Toronto certainly seems reasonable, at least relative to other major global cities.

Not sure those are good examples: http://brooklyninvestor.blogspot.ca/2015/01/market-timers-vs-macro-hedge-funds.html Why? Those are top-down managers, maybe with the exception of Robertson. I didn't say they made their money with market timing. There normally is a large difference between theoretical economists and risk-taking macro managers but this doesn't mean nobody's earning money with a top-down approach. That's simply not true. I was discussing the substance of Buffett's remarks. Not the title of this thread.

The Toronto bubble did not self-implode. Rather a combination of astronomical mortgage rates, a massive increase in unemployment, and a major recession popped the bubble. Even then, house prices only dropped 28%. And what happened to the lenders? Mortgage arrears in Ontario skyrocketed to 0.72%. Wells Fargo had 0.52% arrears in 2006? Canada's worst housing crash resulted in delinquencies only slightly higher than America's best bank in a boom year?

Not sure those are good examples: http://brooklyninvestor.blogspot.ca/2015/01/market-timers-vs-macro-hedge-funds.html

"We are classically at the end of a bull market,” Mr. Turner says." - National Post May 2008 He might be right in the end. But he was at least 8 years early.

At least one of your assumptions is incorrect. http://www.thestar.com/business/real_estate/2015/10/24/the-rise-of-willowdale-torontos-hottest-new-neighbourhood.html "Land values alone have escalated so dramatically the last couple of years in this area just east of the North York Civic Centre that Jalali says banks are appraising most original homes at 97 per cent land value."

--Charlie Munger

These different terms are useful mental models, if you use them precisely. Unfortunately, most people don't. 1. Conglomerate - A diversified set of independent businesses. This is usually an agency problem. The management benefits from the size and stability, but shareholders do not benefit. Berkshire is a notable exception (central control of capital allocation adds value). 2. Roll-ups - Try to consolidate a fragmented industry. Goal is to achieve economies of scale, reduce competition, and lower cost of capital. Exxon, railroads, waste management, cable companies. 3. Platform - Set of existing assets or operational knowledge that allow you to quickly add value to acquisitions (or organic investments). For example, Coke's distribution network. Facebook's ad network. Philidor. Restaurant Brand's zero-based budgeting, ownership culture, and master franchise model. The dynamics are very different for each of these. But there are other important distinctions. Small bolt-ons are usually better than large transformational deals. Cash deals are usually better than debt or stock deals.

Where do the 3g companies fit in? Seems like they are just better operators than competitors. But low interest rates sure help.

If you are investing in platform companies, it is worthwhile to study the 60s conglomerate boom: The Go Go Years is a worthwhile read: http://www.amazon.com/The-Go-Go-Years-Crashing-Streets/dp/0471357553

I think there is a difference between coattailing and cloning. With cloning, you just copy someone's idea. With coattailing, you get the idea from someone else, but do your own thinking. Phil Fisher got his ideas from others, but he probably understood the businesses better than his sources.

He has a full-time job. His proposed portfolio is way too complicated. How will he have enough time? If he wants to scratch his investing itch, he should put new money into *one* of those four options. Keep current portfolio until he has clearly established his circle of competence. -- He may have substantial capital gains in his portfolio. If so, he should stick with his current index funds. It is unlikely that his proposed portfolio will outperform enough to recover his capital gains taxes.

I wish. Just a Canadian hedge fund I follow. Unfortunately, they are hard to clone since their 13F does not include most Canadian holdings. And they trade around their positions.

http://www.turtlecreek.ca/uploads/images/comparisongraph.gif

Any thoughts on Jeff Mo?

If you believe stock options are a real expense, you would be safer using PE for FB, AMZN. SBC is very large relative to FCF.

Maybe EV/EBITDA outperforms due to the EV not the EBITDA. If you buy companies with a very low PE, they will tend to have more debt and less cash.

SD, you seem to be ignoring the consumer's incentives. Visa uses kickbacks to reward consumers for using their credit cards. Even ignoring the major avantage of credit, consumer's have a negative incentive to switch to an alternate payment platform. Other technologies may take some share from cash payments, but the likelihood of them signficantly harming Visa is close to zero. There are regulatory risks but the disruption risk is way overblown.