tede02

Good discussion. My experience with exercise is the same as Oddball and Merkhet described. When I'm working out a lot, I can strangely get by on less sleep (I'd say about an hour less). On average I work out 3 days per week. However usually a few times a year I'll turn it up for a few weeks or maybe a month and workout 5-7 days per week. This is when I really notice the difference (more energy during the day and less required sleep).

Always wish I could get by on less sleep. I read about some of these people who can get by on 4 hours or less and wonder how its possible. I've found that I really need about 8 hours on average to be 100%. I can go with less occasionally, but if I need to concentrate and do a lot of reading, I need to be rested. Wasn't sure if my question should read how much sleep do you "get" on average or "need".

Nice to see a large publication continue coverage on Freddie/Fannie. For better or worse, you would think more attention would add pressure and lead to a quicker resolution.

http://www.gurufocus.com/news/327623/warren-buffett-exclusive-interview-

Jason Zweig's WSJ column today has some interesting numbers on indexing. Zweig, who generally trumpets indexing, does a good job laying out the trade-offs of active vs passive in this brief column. A few good quotes by Jim Grant and Howard Marks. Nothing ground breaking here but I just thought the article read very nicely and the numbers on indexing's impact on the overall market were interesting. http://blogs.wsj.com/moneybeat/2015/04/03/investing-in-stocks-against-the-indexing-goliath/?mod=WSJ_hpp_MIDDLENexttoWhatsNewsThird

Thanks Nate. The part about ego is interesting and there is no doubt in my mind that its a reality. On the podcast your point about stocks with market-cap <$1 billion resonated with me (I believe Greenblatt has talked about this as well). I think you're right-on about the little guy being able to gain an advantage in this area of the market. I also really liked the point about smaller businesses typically being less complicated. Last question, what is your preferred stock screening tool(s)? One thing I've tried to find without success is something that can find all the publicly traded companies in a specific geographic area. For example, I live in the Minneapolis area. It would be nice to be able to pull up all of the publicly traded companies within the state of Minnesota. Thanks, Ted

Why does a company like PDRX even have publicly listed stock? The company is so small, why even bother? Same goes for a lot of the microcap banks. Any thoughts?

Congrats on your ongoing success! Really enjoyed the podcast!

"Value" strategies certainly have not performed well relative to the market or other strategies if you go back to 2009. Would others agree that this should not be a surprise? It seems that value naturally would underperform in a strong bull market, particularly in the latter stages when multiples get lofty. Value investors are most likely to avoid the sectors that are driving market returns because chances are they are trading at lofty valuations (and can often get loftier as the crowd chases the bull). This is going to drag on relative performance, in the short-term. I think those with a sound process and strategy will be redeemed when the bear finally returns. Many of the shareholder letters I've read from fund managers echo these sentiments. Steve Romick of FPA Crescent had a lot of valuation data in his letter to support the funds conservative positioning. I think he makes a great case even though the fund has suffered in the short-term.

Agreed. I've never read Security Analysis completely through because of this. However, I am curious about the newest version with the updated commentary by today's gurus.

Around the 53 minute mark, he discusses some of the issues around indexing that I've been thinking about and have been discussed on this board.

Excellent video. One of those that I could watch many times over. Thanks!

I was looking at this too and listening to what Buffett said on CNBC this morning. It basically looks like a double, DAY 1! That certainly seems like a hell of a deal for Berkshire. I think it's more like a double, Year 2. Also, on the "2. Over the longer-term, Kraft should be able to leverage Heinz's international distribution. " point - there are certain brands - Philadelphia Cream cheese for example - that Kraft did not retain the International rights to. Perhaps Mondelez will make a deal to send them back to Kraft, but there may be a few brands like Philly that can't just be plugged in to the Heinz international distribution network. Good point on the 2 year double. I'll still take it! ;D

I was looking at this too and listening to what Buffett said on CNBC this morning. It basically looks like a double, DAY 1! That certainly seems like a hell of a deal for Berkshire.

I would suggest reading Nate Silver's "Signal and the Noise" for some context around forecasting the economy. You only need to read the chapter on economics. Anyway, I personally view recessions as inevitable, but unpredictable. The stock market doesn't even really correlate all that well with the economy. Take a look at the attachment here. I've posted this before, but I created a worksheet that compares GDP and stock market growth annually going back to 1950. It's very interesting and may be helpful. All that being said, my wife and I max out our 401k through payroll deferral. That money is systematically going into the market. My wife and I also do Roth IRA conversions every year which equates to $11k. Additionally I try to build up my taxable investments annually at a similar rate. My mentality is our 401ks are buying into the market over time. I don't spend any time monkeying around with them. However, with the Roth and taxable savings, I allow that to build up in cash until I find something that seems attractively priced. This is also the cash that sits and waits for the next correction. To me it seems like a nicely overall balanced strategy. Recessions_and_the_stock_market.xlsx

Two trends that seem as if they could hold asset prices up for a while are low interest rates and instability around the world. As long as interest rates stay low, I will not be surprised if risk assets hold up or go higher. Everyone is desperate for yield. As Howard Marks said the mentality goes, "If I can't get safe yield, I'll just have to get unsafe yield." Further, I've read that lots of foreign money continues to pour into the US because it is seen as a safe haven throughout the world. Ongoing capital flight from Russia has been well reported. I'm sure anyone with money in the middle east has taken action to get it out of there. And lots of concern continues to surround Europe, particularly the southern countries. I keep tabs on Shiller's CAPE ratio and market cap relative to GDP. Both are very high from a historical perspective. But I always remind myself that just because assets are expensive, it doesn't mean they can't get more expensive. That's what's interesting about markets, there are really no "rules" like there are in science. Really crazy things can happen for a long time.

I would love to see an updated episode of this titled, "Where are they now?" Here's an article on what happened to Garrett Van Wagoner: http://www.wsj.com/articles/SB10001424052748703954904575109840731853782

As I recall, Alice Schroeder has said straight up that Buffett doesn't use DCF. He agrees with the concept, and has mentioned the John Burr Williams theory many times. However, as I understand it, he does not literally use DCF or any modeling. Actually here's the clip of Schroeder talking about going through all his files when she was writing the biography and never seeing any modeling, cash flow projections etc.: The one thing I've learned is if you are spending a ton of time trying to project cash flow, discounting, etc., that should be a sign in itself that the price is too high. During a shareholder meeting a few years back, Buffett's words were, "It has to be obvious." I think its good to play around with DCF to see how small changes in both growth and discount rates can have huge effects on your calculations. Playing around also gives you a sense of what various cash flow streams are worth generally. But literally applying DCF, in my view, is just a waste of time. There are too many variable. Munger bought Wells Fargo a day from it hitting bottom in 2009. When asked about it, he simply said he had to buy it because, "It was too cheap."

This reminds of a Howard Marks quote: "Unconventional ideas often appear imprudent. The popular definition of "prudent" - especially in the investment world - is often twisted into "what everyone does." When courts interpret Prudent Man laws, they take them to mean, "what most intelligent, careful people would do under those circumstances." But many of the things that have worked out best over the years - betting on start-ups, buying the debt of bankrupt companies, shorting the stocks of world-altering tech companies (I'll add shorting mortgage bonds pre-2008) - looked downright imprudent to the masses at the time."

I think this is a very important point which makes this investment idea so difficult. I totally understand the legal position the hedge fund guys and FAIRX are taking (it seems logical and sound to a lay person). However, the huge wild card which, in my view, makes the odds impossible to know, is the politicians. Few would argue the trend toward populism currently underway in the US (especially as income gaps continue to widen and this issue remains in the headlines). I would absolutely agree that politicians will likely be sensitive to enriching Wall Street, especially as the next presidential election grows closer. But who knows. I own FAIRX so I'm hoping for it to work out!

Joel Greenblatt had some great remarks on his most recent Wealthtrack interview back in November. You can see it here: http://wealthtrack.com/recent-programs/greenblatt-strategy-change/#more-12077 At around the ten minute mark, he rattled off the results of a study that looked at managers who landed in the top quartile of investment performance over 10 years (between 2000-2009. Here's what he said: 97% of these managers spent at least 3 of the 10 years in the bottom half of performers; 79% spent at least 3 years in the bottom quartile; 47% spent at least 3 years in the bottom 10%. These are interesting statistics. As Greenblatt said, performance numbers are really the only metric investors have to look at. But what really matters is process. I think he's absolutely correct. But in the end, you're still betting on the manager to execute. Certainly no guarantees. If they fail, you have incurred significant opportunity cost. This has certainly been the case since the bottom of the market in 2009. Its been very hard to beat the S&P500 since. But I think investors will find out who actually has talent when the bear returns, as opposed to those just rising with the tide.

Followed Klarmen into BXE. But let me be clear, my position is peanuts (and I've learned some lessons about following gurus before)! But I've always wanted to understand the oil/gas industry better. Owning something will give me further incentive to do so.

Unknown unknowns are the toughest. But another trap you can find yourself in, as I did, is thinking you have to know everything. You can read every book ever written about investing, and scrutinize every page of a 10k, but at some point, nothing can replace good old fashion experience. When you're in the game, you quickly learn what the most important variables are and what is really just noise. Think about the returns Buffett, and others, put up when they were in their twenties. Even though he knew a fraction of what he know's today, he was still able to generate great returns.

From a high level this thing does look very cheap. Its also small enough to keep most of the big boys out. I wonder what % insiders own and if they've been buying. Price sure popped up on the Klarman news today.

It's always interesting to hear from even the big guys: http://www.ft.com/intl/cms/s/0/6ab48700-a898-11e4-ad01-00144feab7de.html?siteedition=intl#slide15