JAllen
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Posts posted by JAllen
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"Uber/Lyft have profoundly improved San Francisco. They've made large swaths of the city accessible at times they used to be a huge hassle"
https://twitter.com/mat/status/488184644311859202
It's true. We would call cab companies and not have any idea if they would come get us or find better rides on the way and never show up.
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If you want prices to be irrationally cheap some of the time, you have to have them irrationally expensive some of the time too. It's not like anyone is twisting your hand into buying into those things. Humans are emotional creatures, don't fight it just take advantage of it.
The prices aren't irrationally cheap, they're just cheaper than taxies now, because Uber can offer more rides per hour.
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Right, but at what point does the network effect cut rates such that Uber becomes less appealing to the marginal driver?
Couldn't you lower the prices an amount that increases rides/hour but not enough to actually reduce total driver pay? I don't know the exact elasticity, of course, but my guess is that a 10% reduction of prices leads to more than a 10% increase in trips.
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Here's a very interesting and very detailed post on Uber by one of the early investors and board members:
Regardless of whether you are interested in the company, I think it's an excellent read. Thanks to Whopper Investments for pointing it out.
As is typically the case with VCs, however, he has no discussion regarding the economics of the business itself.
He probably can't discuss Uber's financials, as he's on the board, has been for years, and Uber is private, right?
found his own conclusions a bit lacking. Effectively, he's saying, "hey, look at all these cool things Uber could do to massively grow its TAM.
Except there is evidence that the TAM is already larger than pre-existing taxi markets, like in SF, where Uber's revenue now exceeds the entire pre-Uber taxi-market here. Which parts of his arguments do you disagree with?
I found his arguments to be very convincing. Maybe it's because I'm an Uber user myself and live in SF, a dense city where it's firmly established and I'm weighing the idea of getting rid of my car and just using Uber, transit and Zipcar/Getaround. I could use Uber 3 times more per week for $20 each than the number of trips I use my car for and still not pay as much as it costs me to own my car right now. This is huge, and I believe is the future, at least for the millions of Americans that live in cities.
I was just in Bogota and Panama City where we used Uber tons, because it was so convenient and I trusted that at the very least Uber had more information about the people driving us around than a non-Uber driver.
Another thing: people say there are no network effects, I disagree with this too.
If you don't have a ton of demand from riders, your drivers require more payment per trip; but if you have a ton of riders constantly requesting rides like Uber does, drivers have more trips per hour (this is discussed in the link above) so the price can be lower per ride, for both Uber and the driver, and they both make the same amount per hour. This obviously creates a virtuous cycle by increasing the number of riders and drivers in the network, reducing wait times, and further increasing demand. Imagine trying to start another Uber right now. How would you compete?
Why does it bother so many people so much how much others pay for their investments, especially people that haven't actually seen the financials at all and that don't specialize in investing in young tech companies?
I believe Uber will be absolutely enormous and the current valuation will seem cheap in a few years, just like Twitter and AMZN now.
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I still mourn the loss of Google Reader, but alas, I must go on. At work, my PC has Internet Explorer which is pretty lame except for the ease of subscribing to SEC RSS feeds under the 'favorites' button.
At home I have a mac that can run safari, firefox, and chrome. Chrome is my browser of choice but Firefox is a close second. Any suggestions on the best, cleanest, simplest RSS reader for SEC feeds for either of those browsers? I'll even use safari if it has a simple reader.
Thanks in advance.
Are you looking for company-specific feeds, all new SEC filings or both?
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I suspect that the engineering link is because the margin of safety concept is key in both disciplines.
I think along this same line is that both engineers and investors are 'optimizers', or at least that's how I've often thought about it.
Investors optimize for cheapness and quality over tens of thousands of available stocks across the world. This is obviously quite a difficult optimization problem, but also a fun one.
Engineers constantly strive for other things: performance, strength, scalability, cost, etc.
And yes, we often reduce our optimizations to numbers which gives us comfort.
With value investing, I've always loved it because it truly is a method that delivers superior results, over time. Many people are constantly searching for investments that are too good to be true, and value investing is, to me, knowing that sometimes investments are too good to be true and patiently waiting for them.
Engineering is similar in that we know that if we do certain things like design for robustness prior to construction or development and test thoroughly, we will likely build a superior or stronger product than others that optimize less.
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PLEASE RESPOND TO POLL WHETHER OR NOT YOU ARE AN ENGINEER!
Feel free to comment how we could reduce engineer-selection-bias.
I realize this is far from a scientific poll, but we will at least have a floor of engineers as a percentage of total forum members (wondering about this number) and potentially a more meaningful percentage of members who are both investors and engineers.
I've been fascinated by the overlap of these two domains for a while after seeing so many people that are also engineers in previous threads. I myself have become an engineer over the past few years, after becoming a professional investor and want to appease my curiosity about this subject, thus this question.
Would be great to learn more about your overlap: are you primarily one or the other? Which do you do for work? Which did you start earlier in life?
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Buffett couldn't have sold since it would have triggered a massive sell off. That's life when you become the market, but to say he just sat on the stock is a mistake.
If Buffet not selling KO at 35, 38, 41 back in the late 90's was NOT a mistake, then nothing is a mistake...He could have sold PART of his position, or maybe sold covered calls...
Buffet is pretty darn good, but I don't think he is infallible, he makes mistakes from time to time.
Pretty sure Buffett admitted that selling KO then was a mistake.
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Note the word 'generation'; so I mean over 20-30 years or so. You picked the top of a bubble - when Coke traded for 80 times earnings, so yes, stock hasn't fared well since then, unsurprisingly.
IMO, for a stock to qualify it would have to return a 15% CAGR over twenty years or longer. 14% would suffice as well.
Since most of us will be alive for 20-30 more years why aren't our investing horizons much closer to this length of time?
I bring it up as KO has been a very poor investment for a large group of people, for a large period of time. KO didn't just spike up for a month or two. If you bought in 1996 to something like 2001, you have not really made that much of a return.
Even Buffet made a mistake with KO, he refused to sell at or near the top.
So I question your assertion that KO provides investors to make returns that will make them fabulously wealthy "forever until forever".
I don't doubt there have been poor times to buy KO. The primary determinant of long-term returns is the price one pays for an investment. I very much agree that buying then did not produce great returns, KO was selling for a high multiple. For people that didn't pay an inflated multiple, which probably excludes the time period you mentioned, KO has been a superior investment. Also, 1996 isn't a generation, yet. Ask anyone that has owned longer than say twenty years, when KO was $10. SO yes, there can always be long periods of time where stock prices perform poorly with well-performing companies, but I doubt this happens very often at all over periods of twenty years or longer.
The lesson is definitely don't buy even the best stocks at inflated multiples.
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If you pick something near the all time high for any stock, returns will look less good (google finance tells me 1998 was the peak).
I don't think anyone can argue that Coca Cola has been one of the all time great wealth creating companies - can they?
Do you mean argue against?
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Every generation has a handful of stocks that make their owners fabulously wealthy, even from small ownership stakes.
What are the stocks that will make their owners rich over the next 10, 20, and 30 years? What stocks will be written about in articles - you know the kind that say "so and so bought $10,000 in this stock 40 years ago and now they're a billionaire"?
Some past examples:
- Berkshire Hathaway, obviously - 1960s - 1990s
- Microsoft - 1980s IPO until late 1990s
- Fairfax 1980s - mid-2000s
- Coke - forever until forever
- Walgreen's - 1960s - now
- Exxon - 1960s (or before) - now
How do you figure that Coke has been a good investment? It certainly has NOT been good for shareholders since the late 90's. KO is only now starting to see the high prices it was in 1997/1998. If you have been a long term KO shareholder, you have done very poorly until just recently.
Now KO certainly has been a good investment for upper level management. Shareholders not so much...
Note the word 'generation'; so I mean over 20-30 years or so. You picked the top of a bubble - when Coke traded for 80 times earnings, so yes, stock hasn't fared well since then, unsurprisingly.
IMO, for a stock to qualify it would have to return a 15% CAGR over twenty years or longer. 14% would suffice as well.
Since most of us will be alive for 20-30 more years why aren't our investing horizons much closer to this length of time?
- Berkshire Hathaway, obviously - 1960s - 1990s
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My issue with Tesla is that it is already a 20B firm, and larger in MCap than most car firms, so even if it replaces Mercedes, it will be a 90B firm....which is great, but nothing compared to the MSFT or BRK or AAPL of the world.
AMZN could be up there. Given its growth rate, dominant position in an emerging cloud market, apex predator CEO etc etc. But again, it is already a 180B firm.
Look at the market caps of the largest companies 20 years ago compared with today. It wouldn't be unreasonable to assume that in 2034 there will be a company with a $2.6T-$2.8T market cap. And if you do the same for 30 years ago you could assume that in 2044 there may be a company with a $3.5T-$4T market cap. Still 50X seems like a stretch for TSLA from here, but combine extreme growth with inflation and maybe stock buybacks and re-invested dividends (at some point) and it may be possible.
I think this is exactly right - that the largest companies of the future will be well into the trillion dollar market caps. The largest stock earned $4B in 1980 but most of the top 100 stocks were only earning a few hundred million dollars! Each generation will see at least 10X leaps in largest market caps, if humanity and technology keep progressing.
I also think that it's very possible the stocks to own aren't super young, unheard or and small.
All of the stocks from the 1960s were decades old: Walgreens; Exxon; Coke. These were 50+ year old companies!
And another thing, routinely buying back stock - 2-3% a year or so - will almost surely be a trait of many of the greatest stocks of this generation.
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Every generation has a handful of stocks that make their owners fabulously wealthy, even from small ownership stakes.
What are the stocks that will make their owners rich over the next 10, 20, and 30 years? What stocks will be written about in articles - you know the kind that say "so and so bought $10,000 in this stock 40 years ago and now they're a billionaire"?
Some past examples:
- Berkshire Hathaway, obviously - 1960s - 1990s
- Microsoft - 1980s IPO until late 1990s
- Fairfax 1980s - mid-2000s
- Coke - forever until forever
- Walgreen's - 1960s - now
- Exxon - 1960s (or before) - now
- Berkshire Hathaway, obviously - 1960s - 1990s
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Perhaps it's time for a separate VPRT thread so this one can become un-hijacked for those that only want to be notified and read about Allan Mecham?
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I would never study accounting in college. I studied finance, and am now working with finance and some engineering.
I wouldn't study accounting because:
- It's really boring
- It's not the closest thing to what can really make you lots of money and give you job freedom later, such as finance, law, and definitely engineering (mostly software but there are other kinds). Money isn't everything here, it's just most accounting tracks are standard and there's less rapid upward-mobility in accounting
- It's boring
- I doubt you will be passionate about accounting (I've never met a passionate accountant that goes home thinking about their interesting problem, how they can improve their field and make peoples' lives better ok, except Buffett and Munger, but they didn't train as accountants)
I echo the thoughts of studying something I didn't know anything about. I knew quite a bit about finance from my parents but studied it anyways. I wish I could go back and study something that would help me make the world a better place AND have a nice life for me and my family. This is totally possible today, especially starting out at 18!!
If I was going to college again I would study computer science, unequivocally. CS has by far the most upside for an ambitious person today. It offers creative outlets, and fixing one's problems. You can start dozens of businesses using CS in a lifetime, with essentially zero capital.
- It's really boring
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Great reports. Key takeaways for me: Buffett's average cost was $11.37, but during the very low price times, 73' or so, he was buying for $6.50/share. This was equal to a ~$30M market cap for a company with ~$15M in operating income. There was $38M LT debt in 72' so EV/operating income multiple of 4.6X.
I think this is what he means by 'punch card' investing. A good company at a great price.
Also interesting is that the overall operating margin is pretty low at 8%. Would've guessed it would be quite a bit higher.
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How many companies do you actively monitor in your portfolio + watchlist?
Would be great to know how many are in each. For us, it's <10 in portfolio and 40-50 that we loosely watch or have owned in the past and are still following.
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How is the value of the new share determined? Average price over X days? Looked into this and couldn't find how the value/price of newCo is determined.
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Do any of you have custom RSS alerts with Google or any other source?
I'm looking for long lists of RSS feeds pertaining to value investing and companies that are followed here on the board.
You can export your list from Google (just click on the 'Export Alerts' button from the Google Alerts - manage alerts page). It would be great if you could share your list of RSS feeds with me and the board.
Thanks.
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It looks real to me.
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In 1991, speaking with students from the University of Notre Dame, Buffett said,
"In that book Father, Son & Co. [subtitle: My Life at IBM and Beyond] you may have read, that Tom Watson Junior recently wrote, he quoted his father as saying “I’m no genius. I’m smart in spots but I stay around those spots.” And that’s all there is to it in investments – and business. I always tell the students in business school they’d be better off when they got out of business school to have a punch card with 20 punches on it. And every time they made an investment decision they used up one of those punches, because they aren’t going to get 20 great ideas in their lifetime. They’re going to get five, or three, or sever, and you can get rich off five, or three, or seven. But what you can’t get rich doing is trying to get one every day. The very fact that you have, in effect, an unlimited punch card, because that’s the way the system works, you can change your mind every hour or every minute in this business, and it’s kind of cheap and easy to do because we have markets with a lot of liquidity – you can’t do that if you own farms or [real estate] – and that very availability, that huge liquidity which people prize so much is, for most people, a curse, because it tends to make them want to do more things than they can intelligently do."
Thanks Jbird. What website did you find that on?
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CoBF, gurufocus, valuewalk, valueinvestingnews, google finance, cnbc, seeking alpha for their market currents
What do you use gurufocus for mostly?
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Does anyone know when/where Buffett originally said this? The twenty punch card quote that is?
Thanks. I can only find references to it but I'd like to know exactly when and where he said it. Maybe it's from an annual, not sure...
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How do you track the price performance and news of the stocks you own?
How does liquidity of stock effect your target price and weighting
in General Discussion
Posted
It depends on your AUM of course: is it personal or others? For me it's some of both, so I limit illiquid holdings to an amount that is equal to the amount of semi-permanent AUM (I count close to a decade as semi-permanent AUM) plus my amount.
As long as you have quite a bit of liquid holdings and/or cash in a personal or checking account, you know you could sell if you ever had to. Plus illiquid holdings can still be sold, just over a period of a month or two (hopefully at worst).
But my guess is that I'm much more likely to hold illiquid stocks.
One paradox that I've realized: in a meltdown some of the more illiquid stocks we own will meltdown less, because by their very nature they're closely held by longer-term holders who've done the research and are intimately familiar with them.
But in a meltdown the prices will usually drop for ALL stocks, maybe for a few illiquid ones just a bit less, but could liquidity go up, just like it did in 08'-09'? So are illiquid stocks really that risky?
But IMO, if you really love a stock and you truly could go lie on an island for a few years with it, illiquidity matters, but only a bit.
The below post by Barel Karsan really drives the fear of illiquid stocks home and shows that those who are willing to own illiquid stocks might have a very-easy-to-come-by-advantage:
"It had zero volume today!"
http://www.barelkarsan.com/2014/07/it-was-comments-that-lict.html
One can ask themselves, why do I really feel the need to have liquidity? Is it because I'm potentially wrong about this stock? Should those overly concerned about liquidity (this isn't directed at anyone in particular) have more cash lying around and not be investing quite so much in stocks in the first place?