tede02

I also think its interesting how Buffett's timing was off when he bought Conoco Phillips (in 2008 I believe). Oil prices were near historic highs. His Exxon Mobil bet surely will be impacted negatively, at least in the short-term.

It is interesting to read about the economic damage low oil prices do to counties such as Russia, Iran and Venezuela. From what I've read, all of these countries need oil prices to stay well over the $100 per barrel mark just to pay their bills.

The chart of lawsuits is amazing. Common sense would seem to suggest that at some point, the pressure will be so great, a resolution will have to reached.

The Forbes article was an excellent read. Another example of how being a contrarian or unconventional thinker is a prerequisite to extraordinary results. I had never even heard of Singleton until Munger fielded a question about him at the last Brk annual meeting.

Across my various accounts (qualified and non-qualified), I'm probably about 50% cash. I think I made a mistake by selling two of my favorite businesses in late 2012 (GGG and BRK.B). They made up a significant portion of my holdings at that time. I partially sold them for tax reasons. Looking back, I think it was the wrong decision. Both of these companies should have stayed in my portfolio as permanent holdings. They will compound for years to come. Now I have to wait until they are available at much more attractive prices (which could be a long while). Meanwhile, my cash sits earning nothing.

I recognize there is no correct answer to this question, but I'm looking for some opinions. I believe Buffett has stated he thinks 3 years is appropriate. I've always thought that the best time-frame is an entire market cycle (top to top or bottom to bottom) because one hot asset class that the market runs up (and eventually down) can really distort relative performance.

Yesterday I read two Howard Marks memos: Dare to Be Great and Dare to Be Great II (highly recommend especially if you're in the money management business). Marks discusses all of the trade-offs investors and portfolio managers must make to generate superior returns. For example, you have to do things that others aren't if you expect different results. The problem is, these are often contrarian bets and or unconventional strategies that look stupid in the eyes of the crowd. And you can look really stupid for a long time (sometimes so long that your clients leave you before a correct bet pays off). Additionally, Marks talks about the necessity of concentrated holdings. Too much diversification dilutes away all of your winners. Conversely, a big mistake can kill you (or being too early like Bruce in 2011). The memos by Marks perfectly describe the issues all FAIRX shareholders must confront. I'm sticking with Bruce because I think his logic is sound. But I also recognize that things might now pan out. That is just the nature of the game (and it's not for everyone).

Exercise is an amazing thing. I truly believe the excess blood flow through the brain makes a difference. I keep a note-pad and pencil in my work-out room at home because ideas seem to pop into my mind frequently when I'm working out. A technique that helps me keep on-track is recording my activity throughout the day in 30 minute increments (I practice this on and off). It's eye opening to see how you spend your time. I think most people don't realize what they do all day.

Gio, how much time do you spend on investments vs. running your businesses let's say on a weekly basis? Also, how much time do you devote to an individual idea, on average, before making an investment? This is something I always struggle with. Thanks, Ted

I always understood that some real estate was carried on the balance sheet of corporations at cost. I recall Seth Klarman talking about this as something that investors need to understand because of the potential for an asset that may be far understated on the balance sheet. I'm trying to remember the context of the discussion. I think the classic cases are where companies have owned large tracks of land for decades. There were a few instances here in Minnesota that may be good case studies. Back in 2008, the state purchased several thousand acres from US Steel in northern Minnesota to turn into a state park. I believe the company had owned the land for many years. Also, a Ford plant that had been in operation since the 1920s was closed in 2011. The plant was right in a nice area of St. Paul along the Mississippi River. I believe its now mostly been leveled and is being redeveloped. Both of these properties surely had dramatically appreciated in value since they were purchased. Not sure how they were carried on each respective company's balance sheet.

LOL! ;D

Good interview with Steve Ballmer: http://www.charlierose.com/watch/60463433 He was very forthright with the fact that he owns two investments, Microsoft stock and a global index fund. This is right at the 6 min mark in the interview. That was just kind of interesting. The entire interview is pretty good. They discuss the Clipper's deal, Ballmer's history with Microsoft and the tech industry generally. I also learned that Yahoo had a chance to buy Google for $1b in the early days and they though it was too much. These are always fun stories.

This is exactly why congress can't figure out how to get rid of Freddie and Fannie.

I have experience with Ameritrade, Schwab and Fidelity. Honestly, I've been happy with them all. However, I don't do a lot of fancy trading. Mostly long positions.

You must be an attorney ;D Hopefully most people got my point that the cost of capital to start a law practice is minimal. Not saying being an attorney is an easy path to riches. My dad and grandfather both (dad still practices) had their own law firms by-the-way.

One thing I should probably mention however is that even though many small service firms have no marketable value, they can be extremely profitable nonetheless. What's also nice is they typically take minimal capital to start. To be a lawyer for example, you basically need a computer, phone and an office. Even a lot of the trades require little more than a truck or van and a bunch of tools that are relatively inexpensive. In any of these professions you don't have to be a genius to make a pretty good living.

This is an interesting discussion. Munger also always says "invert." Some have already done this a bit, but what would be the worst business to buy? I would say the majority of small white collar and blue collar service firms are basically worthless (lawyers, chiropractors, accountants, plumbers, electricians, etc.). The reason is that virtually all of the value in these small companies rests in the relationships the owner(s) have with customers, suppliers, etc. Clearly that's why so many of these companies can be bought for the net assets on the balance sheet (and this may be over-paying). I've also worked in both retail and food service. The hours and margins of these businesses always suck.

Does anyone have experience with the paid version of GuruFocus? Is the paid version worth it? I'm always tempted to sign-up in January when they run their once-a-year promotion.

I am a subscriber. We use the service primarily for mutual fund data. I really like the service. I totally agree that the ranking system should be ignored. However, the tool is so handy for finding lots of information in one place as well as looking at comparative performance over custom time periods. I also used to look at my local library's Value Line subscription. Also a great resource, particularly for individual equities. I learned about it by reading Peter Lynch's "One Up On Wall Street." I think Walter Schloss used to rely on Value Line pretty heavily.

I've been using Quickbooks for about six years. It's the same software most small businesses use. I track all of our expenses so it works really nice. The software creates an income statement, balance sheet and statement of cash flows. Plus I can reconcile my bank and credit card statements which is handy. A CPA friend suggested I go this route and I'm glad I did. It's probably not worth it though unless you're inputting all of your expenses. If you want to just track account balances, there are better programs.

I was having so much fun I decided to add the 1950s as well to capture most of the post-WWII era. I condensed the spreadsheet a bit too so it can be printed on 4 sheets of paper. Enjoy. Recessions_and_the_stock_market.xlsx

So a client of mine was surprised to hear me say that stocks don't really correlate with the economy. There certainly is a relationship but virtually no predictive value. This client challenged me to look back at the data, so I did. Attached is the spreadsheet I created that turned out pretty cool. It shows data going back to 1960 including annualized returns of the S&P500 and every market correction (defined as decline of 10% or more), bear market (decline of 20% or more) and recession. I basically set it up in a timeline format so you can see the variable side-by-side. Feel free to make it prettier if you're an excel whiz or just have a better idea of how to display the data. Recessions_and_the_stock_market.xlsx

What is your favorite investing quote or quotes? I'll start us out with a few of the famous ones that everyone knows: "Be greedy when others are fearful and fearful when others are greedy." Warren Buffett "The key to making money in stocks is to not get scared out of them." Peter Lynch "Investment is most intelligent when it is most businesslike." Benjamin Graham

This is an excellent book. I would especially recommend it to business owners and those in sales and marketing positions. As you read the book, you'll think of all the different ways you've been influenced by the various factors the author lays out. One of my favorite parts of the book is when I believe he is talking about scarcity. He tells the story of how his brother sold used cars during college. His method was very clever. You'll have to read the book to get the whole story. :D

I would agree that this is an excellent book, especially for those who are new to the general subject of investing. I started with Lynch's book, "Learn to Earn" at 18 and graduated to One Up On Wall Street as the second book I ever read on the subject of investing. This book ingrained in me the two basic, yet extremely important concepts, that there is a real business behind every stock ticker and to invest in companies that you're familiar with.