Jurgis

IMO online groceries are either in the Chasm or at best in the Bowling Alley ( ref http://boards.fool.com/gorilla-game-faq-version-10-12756024.aspx http://boards.fool.com/the-technology-adoption-cycle-talc-14336664.aspx?sort=threaded ) area of TALC. And Whole Foods purchase is either an attempt to knock down a pin and to get across the chasm. It's definitely not in tornado. It may never get there or it may not get there for another 5-10 years. And, yeah, I am abusing GG terminology a bit, but I still think it's possibly useful to describe this area.

A few things that seemed key: - Strong balance sheet - Brought in turnaround CEO who confronted the "brutal facts" - Price match guarantee with Amazon - Lowered prices to be more competitive with Amazon (~2% higher from one) - Invested in customer service and product lines that needed service (e.g. cellular) - Strong integration between online and offline - Extended warranties and services? - Extensive cost cuts - A willingness to take a short-term hit to earnings and margins A company that might be going through a similar turnaround now is Grainger. They are systematically lowering their list prices to make them more competitive. They are also streamlining their branch network. I should have been sure that you'll have more in-depth arguments and models. ;) As I said on BBY thread though, for me, their turnaround is unlearnable and untransferable to other companies. Perhaps because I am not willing to spend enough DD or I'm not interested enough in the sector(s). So I'll bow out from comments on your more in-depth models. Good luck 8)

To answer your first question just off the top of my head I would think that Best Buy is selling expensive products in comparison to others that have been killed by Amazon. This was sort of the theory that Barnes and Noble had, they said people would want to touch and select books. I think this is only true when the price is over a certain threshold. Are you just going to shop online and compare products that may cost a thousands dollars without seeing how they look first. The best two examples I can think of is a TV or a Camera, a really good camera isn't just pocket change, they can go for thousands of dollars, I would certainly like to see how it works in person before I just willy nilly bought one. Maybe. Counterarguments: independent camera stores pretty much died. And the people I know who buy expensive cameras seem to buy them online... but maybe I just don't know the "right people". I bought my last X laptops ($300-$1100 prices), cameras ($500 area), TV ($800 IIRC) online. If I were to buy top level DSLR, I'd buy it online too. But, yeah, I'm not selective (in things or stocks haha), so perhaps I'm wrong anecdotal person too. ;) I've argued "touch" argument for clothes and shoes in the past. But I really don't know anymore... ::)

Some people think they can predict BRK return in next 30 or 50 years... :o Good luck.

IMO if you guys want to get some serious value from this, you should think about the following questions (some of which KCLarkin asked or maybe had in mind): 1. What made Best Buy successful while others weren't? Was this predictable when everyone was crying Best Buy BK? 1 a. What made the companies that went BK go BK? Circuit City, Radio Shack, Borders, maybe other recent retail BKs (Sports Authority? Not sure if it's Amazon related). 2. Are lessons from 1. applicable to other areas? How/when or why not? 3. Are any other areas as Amazonable as electronics? (This is where a lot of opinions and rehash go... but that's only one question out of 6. ;) ) 4. Are any of the companies / stocks in Amazonable (or non-Amazonable) areas cheap enough based on Amazon panic? 5. Maybe even if they are not cheap (as KCLarkin implies with BBY example), they could be still great investments? 6. Can you predict their business trajectory to answer questions 4. and 5. and avoid 1.a.? Have fun

Yet another thread on Amazon that will rehash previous threads and won't provide any new insights. ::) I think KCLarkin asked interesting question about Best Buy but then muddied the waters by attaching the second wider question. Best Buy question is possibly a good case study. Perhaps the short explanation is "last man standing" in bricks and mortar category that was Amazon'ized. Like Barnes & Noble although more successful. Likely because some products are more tangible and customers require more support/help in choosing/buying. Note that this did not save Circuit City or Radio Shack.

Of course he doesn't give a crap about posters on the internet. This thread is productive probably only in two aspects: 1. Don't clone Pabrai. 2. Don't expect to make 26% a year by cloning (Pabrai or not Pabrai). and maybe: 3. Don't invest like Pabrai: questionable since some of his investments are very good. 4. Don't invest into Pabrai funds: questionable since most of them are closed and his returns might be OK/good. The rest is Internetz banter. Peace. 8)

I hold ISTB. There are pros and cons.

To be a devil's advocate in this BRK love fest, I'll just note that Buffett has been buying AAPL, BK and LUV instead of buying BRK: http://www.dataroma.com/m/holdings.php?m=brk Maybe he knows better? 8) Personally for me it's very hard to do relative valuations. If I was faced with firing squad and had to choose between AAPL, JPM, BRK and GOOGL (screw LUV), I'd probably choose... no wait... don't shoot me yet... let me think... wait... ::)

Great post, rb.

I also time-travelled back to the 1800s and tried to buy bitcoin, but the Amsterdam folks were all talking tulips to me... Oh wait... NVM. 8)

To be fair, people may have been buying BRK at $70 whenever that was. And people are looking for investments now when BRK is at $16X and may still be relatively attractive compared to other opportunities in the market. Sure it's not gonna return 20% or probably even 15% a year. But it could return annual 10% and outperform the market (and a lot of other ideas). Yes, of course. I just meant that people didn't even discuss the much bigger margin of safety back then except for a few members. Now they are starting to compare it versus BV of tech companies and making silly assumptions concerning what Buffett thinks BRK is worth. I see. Yeah, comparing BV to tech companies is not very productive.

To be fair, people may have been buying BRK at $70 whenever that was. And people are looking for investments now when BRK is at $16X and may still be relatively attractive compared to other opportunities in the market. Sure it's not gonna return 20% or probably even 15% a year. But it could return annual 10% and outperform the market (and a lot of other ideas).

Damodaran does something very similar to what Lehrskov described: varied growth periods, varied reinvestment percentage periods, etc., then discounted back. One issue with this approach - and almost any DCF actually - is that usually terminal value dominates the overall value or is a large chunk of the overall value. And if your terminal value comes from 10+ years in the future I would say that it is likely to be a wild ass guess.

I'll +1 this. However, OP should be asking two different questions: what it will take the market cap of XXX be higher 50% and what it will take the stock price of XXX to be higher 50%. The answers to these are not the same (hint: think stock buybacks for example).

I see what you mean. I don't know if I agree, but I think that this is something that you don't need agreement from others. Like you say, this will make people uncomfortable. So you can't expect them to easily agree. And that's possibly a great opportunity for you. :) From my side, I can't say I have a deep insight to offer to you. :-\ I'd prefer to buy great businesses with great management at OK prices. But doesn't everyone? I currently mostly avoid areas with tough economics even if they have great management. I.e. retail, commodities. Which means I won't get 20%+ or 50%+ returns that someone might get if they pick the right company there. I might be overpaying for good businesses... which may yield subpar returns. I still have some investments where I bought soso businesses because of great (?) management. Exor - great return so far. Goodwin - ~50% loss so far. Tessenderlo - OKish return so far. ODET.FR - good return so far. PDER - mostly wash. Teeny tiny bit of IDT. Not adding to any of these. Maybe should put QVCA and LGF.B in this basket too. Might be forgetting some others. So, I'm just thinking on how to look at these and if to buy these and similar in the future or not. Or just buy GOOGL and MCO and BRKB. 8) Thanks for discussion.

Publisher gives you much less, but then you don't pay for editing, marketing, etc. And possibly reach/sales are much higher. Possibly. All depends.

I think it's harder than you suggest Peregrino. Take Tesco, for example. It was maybe similar to Couche-Tard. And then finally crappy business got to it. I wonder if this will finally happen to WMT (Buffett sold) and Costco (maybe not?). Clayton is a bit different story. I think it's like railways and airlines: Buffett waits until all competition in crappy business self-destructs or consolidates into oligopoly. Then he buys. But then, of course, Clayton is different from railways, different from airlines. And airlines Buffett buy is still work in progress. Anyway, I think I'll still skip investing in situations "when a management with a reputation for brilliance tackles an industry with a reputation for bad economics". (E.g. MTY.TO too). But I am aware that I may miss huge outperformance by doing so.

I built my own tools with MS Excel/Access and macro. As much as I hate Quicken imo for anyone who has Excel/Access self-solutions are way worse. It's gonna be painful to import, painful to maintain, painful to get reports/graphs, etc. At least with Quicken you can theoretically slurp in transactions automagically (not really, but you can't do this at all with Excel/Access). And you have theoretically correct IRRs, accounting for commissions, inter account transactions, etc. etc. But sure, if you have just few accounts and few stocks and make only few purchases/sales, roll your own with Excel/Access. And have fun. The things you learn will be valuable. The time spent and quality of results will make you appreciate commercial ransomware. 8) Peace and no Quicken Just to be on the same wavelength: My Quicken file goes back to ~1995. It has about ~10 or so brokerage accounts, couple bank accounts, >50 CCs over years, mortgage, etc. Around 200-500 transactions in brokerages per year not even counting the >1000 transactions in 401(k)s and such. ESPP accounting that mostly works. 100+ stock positions probably. Definitely not Excel/Access weekend project. ;)

As much as I hate to advertise this piece of crap, buggy, we-add-useless-features-but-our-UI-continues-to-suck, ransomware: Quicken (For US only AFAIK. Canadian version is even more ransomware.)

Yeah, oddball. After I asked you the question, I thought about it for myself a bit and yeah, I see how sales/marketing knowledge would be useful evaluating companies. Maybe more for small cos, but yeah. You can try to figure out TAM, you can try to see if company is good at capturing it, what they are missing, are the things they missing important or not. I guess PCLN way ago (although maybe even now) could be positive example. For harder (?) examples, maybe NKE and UA and LULU. GMCR maybe. On negative side OUTR maybe. But yeah, I see it.

Originally: Lithuania Currently: Boston area

I have a friend that does that. I was amaze at the spread. Wouldn't that mean Amazon is being out priced? Yes....but no one seems to care. I pointed out in the AMZN thread a bit ago that I was surprised at how much cheaper some items from Walmart.com were. Was shocked because that didn't use to be the case, but Walmart was dramatically less expensive on a number of items. Have been considering getting rid of my prime account in response. Thinking about it Amazon can most likely get away with being more expensive because of the added features of prime. As well as if Amazon has the ability to sell items for more than competitors while at the same time growing revenue high percentage clip you think they would have the ability to post some profits. This is part of the reason I can't seem to understand Amazon, I can find businesses who are far more transparent in their financials as well. Nobody reads shit on CoBF. 8) To recap again: 1. Granola and coffee: was hugely expensive on Amazon. 3rd party prices. 2x Walmart. Was buying on Walmart. No longer true. Now Amazon prices are below Walmart and are true Amazon prices. Good bye 3rd parties. 2. Nikon B700. 3rd parties $100 cheaper than Amazon official. Walmart too. Walmart is using 3rd parties though. And all 3rd parties selling grey market/international version of the product that may or may not be same quality as US version. So bought from official Amazon. No official store has price lower than Amazon. YMMV and all that.

OT. I sold my read books and used computer games on Amazon in the past. Nowadays it's really peanuts mostly. Once it a while there might be price worth going to post office, but mostly not. For most books I can't even donate them, used bookstores don't want them... :(

Right now it almost certainly does. The bullish case is that the costs will come down over time (i.e. computing, electricity, storage) while the benefits will increase over time as more applications for this are found and become widely used. If either of those assumptions doesn't turn out to be true then there is nothing to see here but a big tulip bubble. I'm stepping way out of my knowledge zone here, but isn't the security of blockchain based on high cost? I.e. isn't it by design based on hard (and also useless - which makes this doubly waste) problems to solve? Maybe there are solutions for blockchain that don't require the above while it still remains blockchain. My suspicion is that solutions just make it not-blockchain-that-is-still-called-blockchain-for-sales/marketing-easy-money. But I might be totally wrong. 8)