PatientCheetah

Yeah, Russian stocks are stabilizing.

What the heck does that mean? I think he is using that as a proxy for how popular the guy is with the ladies which is another proxy for his net worth

Would you say the same about momentum-driven strategies? Palantir: what do you mean "say the same", say what? I have never looked closely at momentum or day trading, but I GUESS momentum requires some underlying knowledge of the security, but nonetheless it is a strategy that is based a lot on the quoted price. So you are trying to outguess what they think, so it needs the "sucker" and is similar to day trading. Its not guessing. Its a statistical tendency - positive/negative information tend to cluster together/exhibit autocorrelation. Sort of common sense - well run companies in good industries tend to expand in value and badly run companies in declining industries tend to shrink in value (e.g. Google vs newspapers). Why are you dissing quoted price? You don't think long term price trend convene information (5 to 10 years charts)?

If you can make money on a consistent basis, why cares what the underlying strategy is? Most of us are drawn to value investing because it makes intuitive sense and has a very good record of making money. There are clear suckers in value investing, particularly with cigar butts. With compounders, you can still argue that it's an investment horizon arbitrage. If you lose money, you are the sucker and vice versa if you make money.

It could be profitable. Day trading has a bad name because it attracts many new comers with little experience/strategy/capital, thus the high failure rates. Sophisticated guys like HFTs, DE Shaw, Renaissance Tech, etc seem quite prosperous to me.

Thank you for sharing, some bits of gems in the speech.

Thanks patientCheetah, looking to do that as well. Link to his SI profile (you might need to register): http://www.siliconinvestor.com/profile.aspx?userid=690845 You need full membership to access all the post - you can either buy the membership or post 20 messages -PC

one of the main advantages of democracy is that you can have bloodless revolutions. say hello to 60-80% top bracket marginal tax and 30-40% capital gain tax. I think its a good bargain vs social unrest french revolution style - "Keeping up with the Joneses" syndrome

I started reading his 3000 something posts on SI. I am pleasantly surprised by his aptitudes in timing stocks/option strategies. He fits the traits of many great investors - flexible, have multiple mental models to deal with different situations, respectful of the market. -PC

Isn't he a dumb dumb?

if china does have a real estate meltdown or something smaller, the ones that are getting hurt are the real estate developers with too much inventory and the commercial banks that provide real estate loans. individual mortgage lending standards are much stricter - 20% down payment (the average down payment is in the 40%+) and no mortgage for second homes so mass foreclosures are unlikely. in the end of the day, China is not democratic, the state guarantee to the state banks are explicit, it does not need public consent to recap its banks, it has done it before (recapped the state banks in the mid 90s due to a massive amount of non-performing loans from the state owned enterprises), it will do it again because it has the capacity to

When China does reach parity of U.S., each Chinese citizens are still 5-6 poorer because China's population is 5-6x larger. Same issue with Japan - India's population is growing while Japan's is shrinking.

When was he a comodities trader? I think he was doing it on a non-professional level - trend following type of trades.

depends on your pedigree and connection/how much you are starting with/how good of a salesman you are/and a big dose of luck. assume you can raise 10-50 mil from yourself/family/connections, you basically have 3 years to show strong (30%+) and consistent returns. If you are still in the business after 2-3 years, your fund should be at least $100 mil by then. Then you are investable to the institutions. Good fortunes can snowball from here. That's my understanding of the state of the industry right now. Vast majority of the potential investors are outcome focused and only care your performance so luck plays a big part especially you only have a year or two to show good performance

The situation is similar to Fannie/Freddie. The industry depends on liberal lending to students that are on the bottom of the barrel. Currently, most of the lending are done by the government. There could be a public outcry if default rates become bad enough. The recent example of winding down Fannie/Freddie shows that the public has no tolerance for socialized loss and private gain anymore. To build a sustainable business, the student and the school both need to sustainable ROIC. The students are not getting their returns.

The blogs are defunct. Anyone saved a copy? Might be able to find it on Archive.org. F.ex, here's a snapshot from 2010: https://web.archive.org/web/20101202022255/http://robertpiomolloy.com/blog/ Thanks Liberty, this is really cool.

The blogs are defunct. Anyone saved a copy?

After reading this one and Einhorn's book, you have to wonder how much it pays to be publicly shorting a stock. IMO, its much less painful do the research and wait to short into an decline.

The whole book is summarized in the last few pages.

Seems to be money is actually flowing from high beta stocks to dividend and boring companies. Btw, holding cash seems far away from risk free to me, especially, for us live in Canada. The inflow into E&P is puzzling for me. There are also a lot high leverage companies still trading at high valuation. Stocks like MSFT/CSCO/ORCL/GE make sense to me. Hope this reversion to quality/value last a while.

I think there are many parallels between today and 1998 - Russian devaluation/Russia vs. Ukraine, Asian financial crisis/China slowing down, LTCM/Tiger club funds down big in March. For those that are older/wiser/invested in the late 90's, it took the market 9 months to regain its footing. How did the dusts get settled? What were the triggers for the resumption of euphoria? Market became parabolic after 98.

I did a lot more research. If you can't hedge out Weibo (I can't get borrows from my broker), Sina is likely to be a value trap. Sina and Weibo's businesses are both going downhill based on recent quarter performances. Social network is a winner take all industry.

I agree that you can decrease your volatility and particularly the "worst case risk" by holding some cash the more expensive the market becomes. But I would note that the year 2000 must have looked far scarier in terms of the overall market than it does today and most top value investors actually racked in great performances as the market dropped (e.g. Greenblatt was up +100% in 2000). It's true that back then the discrepancy in valuation between "cheap stocks" and "expensive stocks" was probably at its extreme, but I learned from it that it's not a given fact that your portfolio has to decline with the market. These guys would have been far worse off had they not bought their good opportunities because the general market looked extremely overvalued. I guess the more overvalued the market, generally the bigger is the discrepancy in valuation to your portfolio (at least if you invest in 12 stocks or less) and thus the worse the overall market risk will serve as a proxy for the risk of your portfolio. So I will have a more careful attitude when the market is high than when it is low, but as long as I do find that 50 cent dollar I will buy it and not worry about the valuation of all these other businesses. If you lived in a town and someone you know offered you a part interest in a business that you were familiar with and where you thought the deal was very favorable to you, should you not take it because the stock market currently is at a high level? Charlie Munger once said at an annual meeting that the idea basically is to grow rich enough (by fully exploiting the value of your opportunities) to be able to stomach the inevitably higher losses (that will arise at some point from being fully invested in not too many positions). Unless you get unlucky right away by the time the feared decline comes you may already have earned enough extra money to be better off even at the worst point of the decline and it is extremely likely that you will do better this way over a very long period. That thought reasoned very well with me, but I can understand if people are afraid of "being unlucky before the aggressive approach starts to pay off". That is a really good point and resonate with my experience. Everyone needs to understand themselves and how their psychology work. When you are starting out and have limited capital, there is only so much pain before your inner daemon takes over. I think environment matters, individual security matters (if the business is in a upwing/market agrees with it/then no hell with the overall market, if this is not the case, be cognizant of the potential market absurdity). In the end of the day, mental models are here to enhance your chance of winning - use them, be flexible with their premises, and good luck!

Thank you for taking my idea

For those with longer term experience with Japanese stocks, how were the distribution of your returns like? Was it more or less random based on each companies' own fundamentals? Did them cluster like the case of last year?