Picasso

What's amazing is that a lot of the women who are coming forward share very similar features. You can tell that Trump has a certain type...

Good stuff as usual.

I am definitely not posting my portfolio in this thread. It is far too short a list and someone is going to get some bad ideas and over concentrate in 2017.

What are you talking about? Sears has lost something like $9 billion over the past several years. They're torching whatever asset values Berkowitz identified years ago. He was right about the real estate asset values but dead wrong about the operating business. It doesn't take a $20 billion master of the universe fund manager to realize this has been a disaster of an investment for all parties involved.

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I'd let Trump run Berkshire only to see if it's really true that a ham sandwich can run Berkshire Hathaway.

I read the title and thought Bill Miller was going back to 8 mile to relaunch his career as a freestyle rapper/DJ.

This xkcd puts the scale and destruction into an interesting format. http://xkcd.com/1732/ Other issues too: http://news.mit.edu/2015/ocean-acidification-phytoplankton-0720 That kind of stuff is scary because it's fairly probable to kill off massive amounts of life resulting in death by suffocation across the world, mass extinctions, etc. Or glitches (bad AI?) sending us back into the stone ages: https://en.wikipedia.org/wiki/1983_Soviet_nuclear_false_alarm_incident It's really amazing how close we are to being wiped off the planet. The risks keeping going up every day.... Then again we've wiped off countless other species on this planet ourselves... Hopefully karma isn't a thing :) God forbid some other alien specifies thinks we're a threat and sends relativity bombs our way. https://en.wikipedia.org/wiki/Relativistic_kill_vehicle Weapons like that seem easily feasible for a somewhat advanced species. They might look like firecrackers to something that developed over another billion years... Yeah I hope we have more than a couple hundred years. Given the current trajectory, we should be on track for some real advancements in the next hundred years.

Yeah just life in general, it's in the hundreds of millions of years area. On an evolutionary scale it's a really small window. I'm reminded of this quote from Bill Bryson: A lot of the resources it takes to get to the point where we can actually launch into space are insanely long in the making. If something bad happens and we have to "start over," we might not have the resources to get off the planet anymore. In general we're in this small window where we have a real shot at becoming multi-planetary. It might seem like we have a long time to figure it out (the earth will be livable for many millions of years as long as we don't destroy the environment, develop killer AI, get hit by an asteroid, etc.), but I think that's more of an illusion because from our standpoint a million years is a super long time to accomplish this task. Because of how our world operates, we might only have a couple hundred years to make this happen. If that window passes we could very well be locked out forever. Edit: More simply, the closer we get to inhabiting other planets (as technology continues to advance at incredible rates), that technology becomes an increasingly more problematic danger to staying on just one planet. It's a real tricky thing. Not sure you can plot out that probability chart over a million years before you almost positively wipe out life as we know it. I'm not sure our species has the maturity to handle that responsibility for those kinds of time periods, but we'll see. If guys like Elon and Bezos can accelerate the multi-planetary outcome they will deserve a tremendous amount of credit.

Looks like a low budged Sci Fi movie. The theory well known, but making it happen is hard. Thank you Elon for trying. I was exhausted just thinking about what it's going to take to make it happen. I can't imagine what it's like to actually work on it. I remember reading how we're somewhere in the last 10% of the time period where Earth is capable of sustaining life. If you just think of the intensive/limited resources it takes to launch into space (like fossil fuels which take forever to form), if we wipe ourselves out in the final inning there isn't enough time to restart the clock. We'd just be another example of life that couldn't make it off the planet...

Oh we have a contract?

This interview doesn't sound like someone who is just promotional either. It's kind of hard because on one hand Elon does strange things (like being misleading with statistics such as a tweet he sent out on the resale value of the Model S, or saying the only maintenance is replacing a tire) but those things are dwarfed by a lot of positives. It's easy for someone who shorts a lot of scams to see those negatives and then use it to justify the promotional behavior. On the other hand Elon's competitors don't exactly play fair either, so maybe he feels like he needs to throw back punches even if the arguments aren't always kosher.

GM just announced that the Bolt has 238 miles of EPA range. That's heavily weighted towards driving in the city, not sure what the range is on the highway. FWIW, I also own a Chevy Volt from 2013 (my pick up things from craigslist car) and while it had 40 miles of EPA range on electric, I would normally get between 50-75% of that on the highway. Uphill and cold, probably less than 50%. Still no mention of DC charging other than optional for a price... Edit: sorry, didn't see that hyten1 just mentioned this.

There are different scales for this, but say Tesla has a vehicle that is 95% autonomous. But GM has one that is 99% autonomous. I think that last 4% gap is going to feel like the grand canyon to a driver/passenger. The "automaker" with nearly perfect autonomy will get the vast majority of the sales. Because one will drive you to the grocery store, and the other will only allow you on certain white-listed highways. The dominant player in turns collects more and more data to widen that gap. There are a ton of advantages to doing this in EV vs. ICE. ICE players will have to decide whether to take all their cash flows from the dying golden goose to try and compete, or just go into runoff and die. I can't imagine that Tesla would ever want to license their autonomy tech to any company that gets most of its cash from ICE sales. I do tend to agree that the time before these things happen can take a while. Buffett did buy a large dealership, so he doesn't think it will be mass destruction either. I simply take issue with Pabrai saying these things can be copied. Auto stocks seem to me to be some of the most difficult investments to underwrite at this point in the cycle. Beyond just the autonomy/EV's are better but not as profitable/peak SAAR/etc. Maybe more brain damage than the returns are worth.

Maybe that's what makes the Tesla so different. You don't feel like you're in a golf cart. My wife drives a high-end ICE and I loathe having to drive it. I don't think any high-end ICE is better than a comparable Model S. But you also have Woz who decided to endorse the Bolt over the Model S. Not sure what's up with that. I mean we'll see. Even if I'm right about the probability of Tesla completing their mission (around 30% or greater) it doesn't necessarily mean go long TSLA. I think it more implies that these other automakers are going to have a really, really hard time. Anyone that looks like the marginal player will almost surely be out of business. It's sort of a dangerous game because in 30% of various outcomes you'll get absolutely crushed in GM or FCAU. In the other 70% you'll probably do well. Yet I get the sense that various investors (short TSLA or long GM) think it's more a 1% chance. Even at 10%, would you play Russian Roulette with ten chambers? Not for a double. So my point is that the odds of Tesla destroying others (and possibly even themselves in the process) is too high to go long GM or FCAU. Your view may obviously vary...

How has resale value been on the Volt ? It's awful. Ones that sold for $40k in 2013 are now selling for $10k. It has the worst of both ICE and EV. What do you think the resale value on a Bolt versus Model 3 will be? I personally think the Bolt is a nice golf cart with better range. My dad always had this idea to ride golf carts to work so maybe he's their target market. A billion dollars for the worst of both ride sharing and autonomous is a lot of capital to spend. I bet Tesla could get a lot more results by spending that $1.1 billion for software engineers. Anyway, yes, we can agree to disagree :)

The best part of all this Tesla hand waiving from not just Pabrai but others as well, is that they all seem to highlight how crappy the car business is. Tesla will just be copied because that's how the car business is. They can't turn a profit because that's how the car business is. It's too capital intensive and Elon's wasting money because that's how the car business is. Then they're massively long various auto stocks. It's a weird and arrogant contradiction of this is crappy and this is less crappy. But I don't see enough understanding of what is supposedly crap (Tesla's business model) to know whether the less crappy (GM) should be trading at 10x earnings instead of 5x. And it's also a static way of looking at the auto industry. I don't think the auto business has to be a bad business. Apple is a hardware company but it's not a bad business. The software and brand that turned the hardware into a great business can't be easily replicated . Apple ends up with the vast majority of the profit share without having anything close to that in market share. But we're all so used to these crappy auto stocks that we assume the business will always be crap. And that's a big part of the appeal with Tesla. They're doing things right the first time. Every single car is already networked up together. By the time the Model 3 rolls out, they'll have billions of miles of data sourced across all their semi-autonomous vehicles. For this reason alone their version of the autonomous bridge will likely be much better than the competition. Each day that goes by their autonomous system will get better and better. Anyone not moving as fast as Tesla will be moving behind. That doesn't sound like it will have the makings of a bad business model. I do think Pabrai will be right on the capitalism aspect here. When people are lining up down the street buying hundreds of thousands of Tesla's each year, outside capital will start coming in and taking over where Tesla is forced to invest today. There will be less capital coming out of Tesla to build a supercharger network, others will take their capital and do it for them. Tesla will not have to take billions of its own money to build battery factories, there will be more partners willing to take that on. A lot of the areas where they need to spend capital will require much less capital over time. If the value starts to lie more in the software, maybe someone else will take over a lot of the manufacturing. Tesla needed to make those investments because no one else has approached this problem correctly. Let me explain... Say someone walks on a dealership lot because they want to buy a car. The second they walk on that lot, 99% of the time you will not convince them to buy electric. That product is simply not good enough for most people. Why spend $30k on a car you can't really enjoy? You're stuck in a 100 mile radius unless you want to sit somewhere for hours charging. It's stupid. Fears start running through your head. "What if it's 100 degrees out and the battery dies in as bad part of town with your toddler in the back?" "What if you forget to charge it before going into work?" "What if the power goes out?" How hard is it for GM to understand that you can't properly sell this product unless it's compelling enough for the consumer to know that charging will almost never be an issue? They just don't approach this problem correctly. I see lines of Volts and Leaf's at various public chargers today. And sometimes the owner hogging up the spot leaves it there all day. You can be completely stranded. To work past these issues you need to address multiple issues at once. You can't just build a 200 mile golf cart and assume someone else will solve the other problems. And it does sound like automobiles are heading towards a winner take all business. How much is the typical Chevy you see on a dealer lot going to be worth when it lacks the ability to generate income by being part of a fleet of autonomous taxis? What if highways are restructured where lanes start getting dedicated to "autopilot" instead of just carpool for more than a couple occupants? The carpool system is already flawed, that will need to change at some point. How much more is your car worth if your daily commute times are cut down by 75%? I think there's a reason Apple or others are putting capital behind this idea. The current auto business is asking to be turned on its head. It's ripe for incredible innovation. But guys like GM can't do it. They have activists down their necks telling them to repurchase stock and pay dividends. And the company culture doesn't allow it, they have to go blow a billion dollars on some autonomous startup. And I'm not convinced GM could recreate Tesla with the same capital Tesla used to create their business. There is a tremendous amount of blood and tears that cannot be easily purchased. Now throw in Elon Musk. He's not someone easy to write off. I hear the bears say he's promotional or as Chanos put it "Elon who?" Tell you what. If I ever have 1/10th the LinkedIn profile of Elon Musk, I'd deserve the right to be half as "promotional." Ignoring PayPal for a minute, this guy has been levered up to his eyeballs his entire adult life chasing down his vision. 2008 would have broken anyone else. I can't see anyone else surviving in 2008 in the middle of running a rocket and electric car startup. He sunk every bit of money into them, spoke for money he didn't have to get VC's to put up what he couldn't, and was trying to make a product everyone was crapping over. Rockets were still blowing up, his cars were negative gross margin,and he went through every last dollar he made off PayPal. Bloggers were attacking his company, putting out death clocks, and ridiculing his personal life. And they still are. Yet the companies we see today versus 2008 are simply staggering in difference. You don't just build that off of being promotional. Go and tour the Tesla factory up in Fremont if you think he's being over promotional. Theranos wouldn't let anyone see their labs. Drive a Tesla for a couple months and go back to an ICE to see if he's being overly promotional. And since this is a value investing board that cares about guys like Buffett and Munger. At one point in 2008 Elon had dinner with Munger. Munger spent almost the whole dinner telling Elon about why he was going to fail. Since Elon had always thought highly of Buffett/Munger, he left dinner feeling super depressed. Despite someone he thought very highly of telling him of all the different ways he was going to destroy his life, he went on to do the impossible. And since we all know Mr. Doobert doesn't change his mind easily (thank you Congress for those VRX emails), here is his comment a few years later: But yeah, let's just say Elon is promotional because "Elon who?" Or how about this latest upgrade to a 2-year old autopilot system for every Tesla produced past Oct 2014? https://www.tesla.com/blog/upgrading-autopilot-seeing-world-radar How the hell do you copy this? Seriously? I put the odds of someone ripping out the profits from the legacy automakers as very high. Probably around a 75% chance over the next ten years. But I put the odds of it being Tesla as 50/50. So in my mind I think there's something like a 30% chance that Tesla does incredibly well. But based on the work I see from people either short the stock or long GM while talking down Tesla, I think it might be higher than 30%. I don't find the short sellers work particularly impressive. Things are looking pretty tough for Elon right now, but that's usually the best time to bet alongside him. He didn't think it was probable that Tesla would succeed in its mission, but I think he now sees it as very probable (I mean Apple is a trying to steal his employees for a reason). His willpower to see this through shouldn't be overly discounted. If you keep doubling down eventually you go bust, but I don't think he's too far away from the point where doubling down will no longer be necessary. *walks off mumbling* someone will clone Tesla, indeed.... *mumble mumble*

Tesla is like a murdering maniac with a chainsaw way off in the distance. It's still just far enough away that investors like Pabrai feel they can get away in time before bad things happen. Or they're hoping it's just a dream. Just a brief recap of what the thesis has morphed into... i. They can't make a compelling electric car people will want to buy. ii. Okay, even though they made a great car they can't turn a profit. iii. Okay, even if they might turn a profit someone else will just copy them. This drives me nuts. It ignores that there is a reasonable probability Tesla massively disrupts the auto industry on orders of magnitude much higher than we've already seen. How does someone like Pabrai know that won't be the case? How can you prove this is not a profitable business model when you don't even know what the business model will look like in five years? When PayPal started, they had to give money away hand over fist to get users. The company nearly didn't survive the dot com bubble bursting before being sold to Ebay. Back then someone would have said "look at how much money these guys are burning, Visa or someone else will just copy them if they ever become profitable." No one knows how much capital Tesla needs before all this investment potentially turns into a repeat of Amazon. What profit will other automakers "clone" if Tesla decides to simply reinvest all future cash flow? The entire industry may become a race to the bottom. Which is actually the intent of Tesla if you read any of their mission statements. Which brings me to the next argument I always hear. "Well Amazon barely issued stock and lived within their cash flows." This is true, but it ignores the pages and pages of dead auto companies since the Ford IPO. It's incredibly hard to produce a mass market car (now throw in electric with limited infrastructure!) without ridiculous capital investment. Amazon started at a fertile time to invest a relatively small amount of capital in a business with decades of tailwinds and that didn't initially require ten billion dollars to double the world's battery capacity or develop charging infrastructure or retool a car factory from scratch. There's some threshold where Tesla *can* start looking like an Amazon if the mass market car turns out to be a great success. They basically have to create their own supply chain from scratch because no one wants to risk investing billions if the company is going to fail, or if there's no end user demand for tons of battery plants. And of course if you look at the first several years of Tesla one can try to extrapolate capital expenses into the distant future. But Elon has approached the business in a fairly logical manner. i) Build a fast, fun electric car with enough range to show it's a viable product. A good part of this was done with Elon's own money. ii) Use that success to build a mid-market car to demonstrate further how viable the product is for mass market. This is where more public capital becomes important. iii) Use that success to build the mass market car. iv) Constantly make your cars better and better until it forces other automakers to do the same thing. Most of those improvements are simply not possible on ICE. We're still somewhere between stage ii and iii. So for the life of me, I don't know why investors are trying to value or extrapolate this business on what is still technically a proof of concept. Now there's clearly risk. But someone needs to prove to me why the mass market car will be a total flop. So far they've already shown tremendous interest in a car almost no one has seen in person yet. Instead the short thesis has shifted around and it's kind of gone into this desperate "well the competition will be better than the Tesla Model 3." And that, more than anything, is absurd. People don't necessarily want an EV, they just want the best car for the value. Everyone keeps pointing to the Bolt with 200 miles of range like someone is just going to spring for it when it's not capable of reasonable long distance travel. The Tesla is fast, it drives itself, it's insanely safe, it has way more brand attached to it than GM, and so on. If someone thinks "You know, let me make the shift to electric," their first thought isn't to check out a Chevy. It's instantly Tesla. Built by the guy who lands rockets out on a barge in the middle of an ocean. The company that lets you drive from LA to NY for free. The company that makes nice looking cars instead of something that looks like a frog. I see kids running in the mall pulling their dads to the Tesla store. The brand value that Tesla has created from solving really difficult engineering challenges and actually making a great electric car is not something to dismiss as "someone will copy them." That's pure arrogance from the legacy automakers. Not too different than when Sergio said "people like driving their cars too much for autonomy to take off." Anyway I could go on with this but it's probably not worth the time. To Pabrai's credit he made a great purchase of Fiat and he's basically saying bad stuff won't happen fast enough (if it happens at all) to hurt my investment thesis on Fiat or GM. But I find his argument for why Tesla is doomed to fail as a lame regurgitation of what the automakers are telling every other investor. We'll see whether that chainsaw maniac is part of a dream or if he's just a few years away...

A+ comments Oreo. He's clearly a super bright guy. It reminds me of people who say "my mom made me take an IQ test when I was 10 years old, and I scored 180." Buffett doesn't need to tell people how awesome he is because he can show it through his success over time. It was like when he did some super quick calculation in his head at the last Berkshire meeting. You think he's this old man who's losing his touch with IBM, then bam you're like...wait a minute.... All that said, it's easy to be cynical with the Jacob Wohl's and other jokers online. I've never talked to the fellow but he seems pretty level headed. It will be interesting to see how this turns out.

I'm fairly certain losing his child was 1000x worse and 2008 was at least 100x as bad as this week.

Always better to weed out the partners who don't appreciate your process. I have a couple theories as far as why a lot of managers start underperforming once they become popular. Say you manage $20 million and grow it to $100 million over ten years without raising new AUM. Once you have that track record and your first partners can trust your judgement and deal with the volatility a little better, it's easier to stick with the same process and keep doing what you do best. Maybe even take on some investments that other managers would shy away from. But now imagine someone throws another $200 million at you, so you have to manage $300 million. The $200 million investor(s) don't like the idea of losing money. But your original partners are a little better about that because you've already made a ton and proven yourself. Since the fees on $300 million are much higher, you kind of change your process to bend over to the new investor(s) because you don't want to risk losing them. I think this kills a fund or long-term track record. One guy who comes to mind is that Arlington Value fellow. He's raised so much over the past few years that I don't know how one can expect him to keep the same investment process. It's simply very difficult to subject new money to lots of volatility no matter how great your previous track record is. It becomes much harder when your capital base grows five fold. The best long-term track records often come from those who basically shut down to outside capital after a certain period of time. They stop caring about bringing in tons of new management and incentive fees and cashing in on their track record. It becomes more about making money for their original partners and the pure enjoyment of the investing process. Like Buffett. Which ties a bit into my second theory. It becomes much more fun to focus on things other than investing once you've made a killing if you don't love investing. Look at Berkowitz. He's too busy running some art exhibit or something. And the game gets harder over time so you need to always have a passion for the game or you'll end up "being thrown out to pasture." I'm sort of amazed by how many young people I meet that have a great sense for deep, insightful value investing. The competition is so much harder today. Anyway that's my theory. It's very tempting to raise a lot of AUM but I think the slow process of being very mindful of your LP's and when you raise capital is a very big part of a solid long-term track record. And mental health for the manager. Congrats on good results by the way.

It hasn't been a couple years though? CHOEX has compounded between 2-3% with reinvested dividends for the past ten years. It's possible that he's about to swing the other way, but I feel like ten years is enough time to judge someones performance? That said I have tremendous respect for his integrity. It's a rare quality in the investment world.

http://youtu.be/YugzVoOksXg I thought the moment he had talking about his companies says a lot about his resolve to accomplish the next phases of these businesses. Especially since he lost a child to SIDS.

If we're just the boot sequence to an AI operating system, there probably isn't a lot of time left before all our concepts of earnings or markets disappear or become unrecognizable. Maybe a couple hundred years? On a cosmic scale it's basically happening tomorrow. In the meantime we're stuck on this spinning rock being ejecting into the void of space, destined for certain heat death, confined to a fleshy body unsuitable for interstellar travel, and living in the 0.00000000000001% of history that upwards "S&P 500" or "real earnings" even matters. Enjoy the ride ladies and gents. Wait, this isn't the drinking thread?