Jurgis
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Posts posted by Jurgis
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COST? WFC (might not make 17% cut)? AAPL (what was Jobs' stake - really low AFAIK)?
Anyway, what time period are you looking at? 5 years? 10 years? Forever?
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A single middle aged lady
And BTW, depending on the state... in MA you cannot discriminate against families with children, so you cannot tell your rental agency to rent only to single middle aged ladies.
And again in MA, if you rent, you have to delead the whole house... since you might not care about your own kids, but you can get sued for $Ms if your tenant kids get lead poisoning.
So kinda state-specific issues :)
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A single middle aged lady
Would a single middle aged lady rent a $5000 per month house? :o
If she does, can I have her phone number? :-*
..............
Seriously, the situation is rather tough. Like Buffett said, currently 30 year mortgage is one of the best investments. So you don't want to lose this asset (even though it's a liability theoretically). However, you might be better of selling and buying while mortgages are still low. Especially if you don't plan to return.
If you decide to rent, you either rent for market price and accept that some tenants may cost you (a lot) - there's randomness involved. Or you rent way below market and expect the tenant to be your property manager. This may or may not work - depends on location/etc. Or you leave it empty - which also has costs and issues depending on location, etc.
I was looking into a reverse of this: buying property in Florida and being out-of-state landlord. I decided that it's not worth the trouble. However, it depends on what kind of person you are too. Usually this works best for hands-on handyman types even if they manage from out-of-state. They at least know the warts of the house and know if the tenant is scamming them or ruining the property.
I've heard some positive stories about using pros to manage the rental, but not many.
Good luck
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Thought I had better provide examples on my ten year assertion:
KO, TD, RY, CM, BNS, BMO, SBux, Pepsi, JNJ, P&G, MCD, AAPL, WDC, ORCL, Gen, Mills, Hershey....
Can you elaborate?
I did the annualized rate of return on KO assuming $20 to $43 in the last 10 years. Assuming current divvie of 1.22 per share and $20 rock bottom, gives me barely 12% annualized.
Are you counting something else when you claim
12% return over the last 10 years is nothing to write home about. There are many companies that have exceeded these returns.In fact, this shows that 12% annualized is quite hard: buying one of the best companies in the world at the rock bottom price and finishing at the end of major bull market (right now) barely gives you 12% return...
Thanks
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meanwhile, the levered players will continue to drill to stay alive.
This is already not true. Look at the announcements of levered players that have cut 2015 investment budgets by 70%+.
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$2100 on $280K property is not that bad. Good luck.
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Yes, I forgot Amazon Chase card. I have that too for 3% on Amazon. Have it since it was 5% on Amazon. They cut it down to 3% ... probably 7 years ago or so. :)
I don't fly Southwest and don't consistently stay at same hotels, so no to these cards. Not even sure if I wanna keep United Explorer - will decide next year.
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In 2012, Buffett talked about buying single family homes. That resonated with me. I looked at real estate 10 years ago and couldn't make the numbers work. So I found a Realtor and looked around. Real estate was down, rates were low, and the numbers worked. So I bought a couple of rental properties that are within a 1/2 hour of my home (Fannie's HomePath properties that were in foreclosure). I liked the idea of borrowing at low rates for 30 years.
If not a secret, which state/area? What is the "numbers worked"? What's the rental yield unlevered? What rates did you get on mortgages (IIRC rental mortgages have higher rates than owner-occupied)? Did you have to renovate? Self-renovated?
I was thinking of buying RE in Florida after crash. Waited too long. I'm in MA and numbers definitely don't work here. :-\
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If you are doing international travel, I would get the Barclay's Arrival card:
http://www.barclaycardarrival.com/arrival-plus/?campaignId=1729&od=bcarrival&cellNumber=24
It is a true chip and pin card so it will work everywhere in Europe and no foreign transaction fees. Its a Mastercard too, so you should have no problem with the network.
It is a points type card, but it's not hard to keep up with. 40,000 points when you spend $3k in the first 3 months. 2% back on all spending and a 10% bonus if you use your points to pay for travel (becoming 2.2% cash back on all purchases.
Use the card for most everything, then book a few airline tickets for free each year. Fee is $89/year waived for the first year. You don't need a Barclays bank account.
There is also Barclay's arrival card that has 1% back, but no annual fee.
I am CC'holic. Fidelity Amex for 2% back, Chase Freedom and Discover for 5% categories, Barclay's and CapitalOne for international no-fee (and CapitalOne gives 1.5% back), United Explorer for United perks + international no-fee. Plus I usually get new cards that promise $200-500 sign up bonuses. Cancel them later. I guess my credit history suffers a bit, but so far I don't care. :)
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Good reminder that commodity prices are nothing to bet the farm on. At least one lesson learned these last few years!
I feel for those with substantial positions in the sector but would on the other hand like to learn how they deal with it. Partly hedged with weaker juniors, oil itself? Sold some at a loss or holding until the bitter or glorious end? TIA if anyone wants to share his experiences...
10% of portfolio in oil now. Will get to 20%+ if/when it goes down to $35. Will go to 30%+ if it drops to $20 as Barron's now predicts.
Might vary the mix depending on risk/price/quality/etc.
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Saudi prince: $100-a-barrel oil 'never' again
This is like the "Death of Equities" cover page. :) Capitulation and panic.
My guess is that 'never' is shorter than 5 years.
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Oh man, this is depressing! For better or worse, living in SF means that my rent alone is more than the majority of posters' total spend. Married + 1 kid in SF, annual running $100k-110k
-$50k rent + utilities (crappy neighborhood even! wife can't walk alone at night). As an aside, rental market in SF / silicon valley is outrageous. friends of mine signing new leases now are paying ~$2k to rent a room in a 4 br house. Nothing fancy either. Every rental has competition, and bids to buy are all cash. Loco.
...........
Could probably improve the after tax savings by moving to a more affordable part of the country (could buy a great house where I grew up for 4 years rent, for example)--but I love the work out here and there's a lot of exciting companies in this part of the country (not the stupid apps, and ones that no value investor would touch)!
Man, I feel your pain. I'd love to live in SoCal, but Silly Valley is just crazy... I have a job in hi tech in Boston area. Not cheap, but you can get house for 400K'ish in OK neighborhood with <30 min drive to city/tech-corridor/etc. Every time I look at considering SoCal the RE prices just kill any wish to move...
Have a friend Google millionaire - spent all his money to buy under-average house for something like $1.5M in Los Altos. People can retire on that kind of money elsewhere... Crazy.
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I'll post "stocks that I think are expensive, but I hold because I think they might outperform even though they are expensive"
FRMO
Everything Malone (Lalphabetsoup + DISCA)
DISH
TDY
CFX
COST
GILD
BRK :) (not very expensive but getting there)
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BTW, with jockey stocks, you pretty much have to believe in the jockey, and possibly not pay attention to the company's financials.
How about the following thought experiment. Read "Snowball" (pages 406-425 or so in hardcover edition) and go back in time. The year is 1975. Berkshire stock price has dropped 50%, its largest holding Washington Post is on the edge of going down due to the labor strike (with no recovery if it goes down), Buffett and Munger are being charged by SEC (with possibility of being barred from investing). On the outside inflation is rampant, NYC is close to bankrutpcy (well maybe you don't care about that).
Do you think that following Berkshire's business and financials attentively would have made you make the right decision to hold or buy more? :)
On the other hand, this thought experiment perhaps shows why it is so hard to outperform with a single stock without survivorship bias. BRK could have died in 1975 in two different ways and Buffett would have never become the super sensation he is now.
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This is a bit tough to calculate... pretax/aftertax? And since some savings are pretax (401(k), IRA) and some aftertax it's not really the same. I voted ballpark range. :)
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Because I don't know of any case where there has been market outperformance during a sustained period of time by leaving everything on autopilot, at least not with specific positions (stocks).
Daniel, meet BRK, FFH, etc.
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Fitness - 26,000
Is that a goddess level hot personal trainer? :o
(I guess I never paid much if anything for fitness ::) )
Indeed.
/bow :)
I settle for Xbox Dance Central :-X
(+ TaiChi, Yoga, but all that in total is less than 2K per year. I am value - I mean "cheap" - investor)
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Fitness - 26,000
Is that a goddess level hot personal trainer? :o
(I guess I never paid much if anything for fitness ::) )
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Funny that this topic came up. I was just about to post the question: Given the choice which is the best meeting to attend Fairfax or BH?
BH? Biglari Holdings? Definitely. 8)
Just kidding. I think you meant Berkshire.
Personally, every year I think whether I should go to Buffettfest and I never go. I think I'd be bored by talking heads and I hate crowds. Shoulda/coulda gone to DJCO/WSC when it was easier/closer by.
I looked at the http://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/10th-annual-cmc-fairfax-financial-shareholder%27s-dinner/ Looks somewhat attractive, but the same thing: I wonder if I'll be totally bored there :) I tried asking people I know from SiliconInvestor if they would be interested to go together. No replies. So probably I won't go. :)
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If the index has a lot of crap then wouldn't buying the entire index except for the worst five stocks provide material outperformance? Seems like an easy method to me, just figure out which five stocks are the worst and drop them..
I've heard this before, but this suggestion is a fallacy for market weighted indexes. If the worst five stocks are - let's say - 0.1% of the index, your outperformance will be at best 0.1%, but your cost to have index minus five stocks will be possibly higher than that.
You probably would have to find "five percent of stocks that are worst and drop them", which might be quite harder.
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I agree with some of the other comments expecting even slightly better returns without committing time basically leaves you contradicting yourself. The extra work done right equals the extra returns.
I wonder how many people expressing this opinion have outperformed BRK (or FFH) in the last 10-15 years.
In reality, if someone chooses jockey well, they can go away and do nothing for 10+ years and still outperform the index. And possibly more than people putting in 20 hours a day into stock analysis.
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did anyone here try sensory deprivation tank? You float in salt water that is the same as your body temperature. In complete darkness without any sound. So it basicly feels like your floating in deep space. And I heard of a few people who said it was actually life changing.
http://i.imgur.com/BHHK7S9.jpg
It is sorta like forced meditation. When your brain does not get new sensory information after a while your head becomes completely empty.
Just read the thread.
Yes, I have done sensory deprivation tank. Nothing special. 8)
Caveat: I've been practicing meditation for over 10 years when I did sensory deprivation.
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Preliminary 2014 results:
Results are preliminary, since Quicken has not updated some of the 12/31 trades and distributions. These should not be large enough to affect much. Also Fidelity does not have their calculation of yearly results yet and won't have them for couple weeks at least.
Other caveats: rates are from Quicken/IRR which I still believe is buggy/not reliable. Couple positions are wide spread micro caps that trade on appointment, so their prices are sometimes misprinted and therefore misaccounted. Couple positions are foreign stocks that may have incorrect final prices. Some results include 401(k) accounts where I cannot invest into my selection of stocks and ESPP accounts where return accounting by Quicken is suspect. So reader beware.
Executive summary: 8.7% return which underperformed market. I am selling my investment portfolios and winding down active investing.
Longer version: Total IRR across all accounts is 8.05%. After removing ESPP and 401(k) accounts, the return is 8.7%. Both of these undeperformed market a lot (benchmarking against SP500 13.7% return). These returns are even worse considering that BRK stock return was 28% and Fairfax return was 31%. Both of these were positions in my portfolios.
Even considering ~16% cash position and ~16% fixed income position, the results are bad. The fact that other active managers did not do well this year is of little solace.
As an aside 401(k) portfolios underperformed SP500 because of: 30%+ bond fund allocation, 30%+ international allocation (VTIAX and FDIKX are both negative for year) and some small cap allocation.
So my plan is to liquidate my investing portfolios in orderly fashion and convert to mostly passive investing. I have some concern that funds that I passively allocated performed worse than my active investments last year. However, there are two solutions to this: 1. Passively invest in BRK/FRFHF/etc. mix. 2. Longer term the non-ideal allocation might even out.
Have fun
Are all Compounding companies owner operated?
in General Discussion
Posted
Exactly. He treated the company as his toy and the fact that shareholders got great return had nothing to do with his "owner's" attitude. People are just trying to shoehorn every success story into "owner operator" box.