KCLarkin

I never seen a list with everything written out and explained, but I have seen a list with some explanations from Farnam Street. This is the most complete list I've found. https://www.farnamstreetblog.com/mental-models/ Poor Charlie's Almanack has an updated version of The Psychology of Human Misjudgement speech in it as well as 10 other speeches and lots more information. It's probably one of the best books I've purchased in the last 10 years. If you're interested in mental models, you should get the book. Other than the Psychology of Human Misjudgement speech (I recommend the audio version), this book might be as close as you will get: http://www.amazon.ca/dp/0231160100/ Disclosure: I haven't read it.

It's up. Sold down BAC, added big to Brk, Cimpress, MSC and Dnow There are two threads for Arlington. This is the most popular: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/the-400-man!/210/ Might want to move the conversation over there to avoid confusion.

IIRC, that was a long time ago. I wonder if she is still killing it. I think she was largely betting on fashion trends. One year, ANF might miss the "hit style", write down a tonne of inventory. The next year, the buyers would get it right and ANF would revert to the mean. Now, you are seeing much stronger secular headwinds for the fashion retailers (fast fashion, online shopping, declining foot traffic in malls). In other words, it used to be a cyclical business. Now it seems like a secular business. Retail is generally one of the worst businesses. Turnarounds rarely turn. Together, what's not to like?

Asset Light is not a sufficient condition. You also need negative working capital. If you have an asset light business (say a distributor), you will still need incremental capital for receivables and inventory to fund organic growth.

I don't think there is any legal way to get those US stocks into your RRSP without triggering capital gains tax.

Worldly Wisdom in an Equation - Sanjay Bakshi https://dl.dropboxusercontent.com/u/28494399/Blog%20Links/Worldly%20Wisdom%20in%20an%20Equation.pdf This is a wonderful essay for investors. H/t Manual of Ideas.

Both EPS and FCF. An example that I am involved with is Cimpress. They are opening a new facility in Japan, which has the following impacts: - decrease in revenue while they temporarily halt sales in Japan - CapEx for new factory - operating losses as they scale up - working capital as they scale up - marketing expenses when they re-launch Cimpress has disclosed the expected impact of these investments, so you can normalize FCF.

The Agony & The Ecstasy: THE RISKS AND REWARDS OF A CONCENTRATED STOCK POSITION https://www.chase.com/content/dam/privatebanking/en/mobile/documents/eotm/eotm_2014_09_02_agonyescstasy.pdf This study very enlightening, especially the case studies on catastrophic losses.

It would be interesting to see the results compared to industry comp or S&P 500.

There is a lot to discuss on this, but I would make a few suggestions: - diversify your problem stocks over time. In other words, try to have a portfolio where you have some with negative momentum, some bottoming, some recovering, and some passing fair value. So if you have a three year holding period you have stocks that you think will recover in 0. 1, 2, 3 years. - beware of momentum. Value investors buy early and sell early, I try to slow play a bit. Wait awhile after my initial urge to buy and hold on longer than I feel comfortable. I usually want to buy after the stock has been falling for 6 months to a year. - average into a position and reserve some buying power. - make sure it is really a temporary problem! Avoid high debt companies. focus on high moat companies. Is this a cyclical? Is there a hidden cycle or fad? - add some ballast to your portfolio with good, steady companies and compounders. Obviously we are in rough waters with high USD, commodities in freefall... So there might macro headwinds on top of any company specific problems.

I just mean you don't need an Investment IQ of 150 to do well in real estate. Same goes for indexing. These are smart investments for most people (say 99%). And micro-caps are dumb investments for most people.

This is really my point. With larger companies, most of the material information is publicly available. To outperform, I just need to be wiser and more rational than the market. For small caps, I need to hustle AND be wise and rational. There is no doubt that the payoff for being right with small caps is higher. But the cost for being wrong is also higher. KCLarkin's Hierarchy of Investors: Smart-Eager: Micro/Small Caps Smart-Lazy: Mid/Large Caps Dumb-Lazy: Index ETFs Dumb-Eager: Real Estate

Mathematically, your odds of beating the market are the same, regardless of market cap. The dispersion might be wider. Over a 20 year period, a concentrated large cap portfolio might have hypothetical expected returns of 8-12%. A concentrated micro-cap portfolio might have hypothetical expected returns of -20 to 40%. Both have an average of 10% per annum. According to Loss Aversion, humans feel losses twice as much as gains. So on a psychological level, the large cap portfolio is highly preferred. But due to over-confidence, most micro-cap investors will think they are above average. And due to survival bias, this forum will reinforce that over-confidence. --- Other random thoughts: - The informational asymmetry is not an advantage to most individual investors. In micro-caps, the "smart money" is often scammers, fraudsters, insiders, and cronies trading on illegal information. - The smallest company in the S&P 500 has a market cap < $3 Billion. There are plenty of opportunities even in this limited universe. - Artificially limiting yourself to small cap or large cap will reduce your opportunity set. - The volatility of small caps makes it difficult for many investors to behave rationally.

AXP, AAPL, MA... All very small caps that are up approx 8x or more since 2009.

Please read the performance record of Bill Miller before posting your 9 month record.

Also listen to this once every couple of years: The speech is in Poor Charlie's Almanack, but I like to hear Charlie's voice.

What price did you pay for RYCEY? When I looked, the bid ask was very wide.

If you squint really hard, it sounds a bit like Wayfair. But this is so vague it could be anything.

Should have implemented this: Looks like this would be a good strategy for some ETFs too?

Bought some IBKR and IBM. Sadly missed all the fire sales.

Nothing. My son chose this morning to be home sick with fever. >:(

This sounds like a case study for Fooled by Randomness. If you look at the returns from a selection of other big cap names from that period, you will find that a return of 100% is unexceptional. Compare with UNP, WFC, BAC, AAPL, GOOG, AMZN... The real insight in this case was that the risk/reward was dramatically skewed, relative to the market. Allan Mecham had this insight. He borrowed on margin and made BRK 60% of his portfolio. Rainforesthiker had a similar insight. Of course you can capture the "value premium" without any special insight. That is a perfectly rational way to invest.

Marks has a helpful 2x2 matrix in his Dare to be Great essays. http://www.oaktreecapital.com/MemoTree/Dare%20to%20Be%20Great%20II.pdf Anyway, not saying this is the only path to success but seems to work for me. Before investing, I try to understand the consensus and the bear case. These are usually easier to determine in mid and large caps.

I'm not here to defend the term "variant perception". I think it is an awful phrase. A great example is Netflix. Someone buying in 2012 was clearly going against the consensus. Someone buying today is clearly going with the consensus. Netflix might still outperform but it was a much better bet in 2012. And you might just call this value investing, but then look at IBM. This is a great company which looks cheap. But the consensus is that it is in secular decline. If the consensus is right, this will be a mediocre investment. Knowing that it is cheap, is not sufficient.

Read Munger on the pari-mutuel system or Howard Marks on 2nd Level thinking. Finding a great company is not enough.