ccap

I have a long background in quant funds. My thoughts: 1) Simons properly solved the research part of running a quant fund. Most quant funds do not setup research as a collaborative organization; therefore, the knowledge base of the whole organization is lower. This is much more important than non-researchers recognize. 2) Simons could have open research by pairing it with a never-work-in-finance-again non-compete. 3) Medallion strategies can only handle a limited amount of capital. I'm surprised it is working with the amount of capital currently invested in it. 4) If they are running 20x leverage, they are doing a good job. He mentioned in one interview that the risk management was the mathematically most complex aspect of their strategy. 5) I suspect the strategy has a base in hidden Markov models.

On the ObamaCare exchanges, there is a battle for market share. The companies that got a lot of market share last year by offering a low prices raised their prices in hopes of making money. The companies that didn't get volume the first year dropped prices in hopes of getting filled. You are basically forced to change carriers to get a consistently low price.

Some general advice: - Minimize your expenses. It increases the odds you will be around later. - Get fixed cost agreements from your 3rd party providers. Avoid by-the-hour quotes.

I've seen other weird stuff this last week. My email notifications have been broken a few days.

I think you first need to decided if you are going to work for yourself or someone else. If you are working for someone else, how you look on paper is worth a lot... so an MBA may be good. If you are going to work for yourself, what you know matters most. Having said that, you can learn a lot trying to invest or start a business with the $50+k that business school would likely cost.

I don't know how betting against Chinese housing works out. My understanding is that the housing sector may not be as bad as portrayed in the media. I think industrial debt is more interesting -- although I haven't looked at how to make money on it. There has been massive allocation in the industrial sector. For example, there is something like $380B of debt for the Chinese steel industry, which is losing money. They are high cost producers. Chinese nitrogen fertilizer companies use a coal based process which makes them high cost producers as well. I'm sure there are other examples. In a capitalistic world, the high cost companies with excess capacity go out of business and the debt gets marked down. In a communist world, the government props up the industries in some top down way -- at least until the whole communist system collapses. I have no clue where China falls on this spectrum. Shorting Chinese debt is outside of my scope, but maybe someone here has some thoughts.

I'm working my way there. I avoid things that depreciate and otherwise rot -- especially clothes. If I buy something, it is a tool or vintage car. The tools don't depreciate too badly, and I buy below fair value on the cars. I have found that I am willing to pay for experiences for fishing trips. Somehow I need to broaden that to other areas. If you're in the market for a great experience, try sturgeon fishing on the Columbia river. Well worth the money.

Because of the dealer incentive structure, it is possible to buy under invoice. The dealers get kickbacks from the manufacturers for volume. If your car pushes them over the threshold, they may make more by locking in the volume and selling you the car at a "loss".

I spent a decade running an option market maker. Being a market maker gives you a lot of perspective on all kinds of markets. As a result, it gives you advantages when buying a car. If you walk into the dealer to buy a car, the dealer has one item (the car you are looking at) and many potential buyers. As a result, the dealer can sell it to you at whatever price they want. There is no competition. The trick is to flip things around in your favor. Here is how you do it: 1) Find the exact make, model, and features you want. 2) Go home. 3) Wait until there are 2 weeks before the end of the month. 4) Call all of the dealerships within a few hundred miles and talk to the sales manager. Ask the manager to give you their best possible price with all applicable fees in writing (a fax). If you don't do this step, you will be screwed. Also mention that you want to get the deal closed before the end of the month to help with their quotas and manufacturer incentives. 5) Wait 2 days. 6) Collect all of the bids (faxes) you have to find the best. 7) Repeat steps 4-6 letting the dealers know what your best bid is and how uncompetitive they are. Repeat this step about 3 times. This process turns the normal procedure on its head. You have now created an auction between the dealers to get the car you want. You aren't waiting in the dealership while they "talk to the sales manager" or write the price in big marker. In doing this process a few times, I've found that you typically get a 10% spread between the high and low bid. The high bids are ALWAYS the no haggle dealers. They screw their customers because the customers don't want to negotiate. When I bought my wife's CX-9, we bought from the next state over, and they delivered it to our door without us ever entering the dealer. It is hard to beat that. I was also able to use this tactic on a used car. I was in the market for a Crossfire SRT-6. These were given to the Chrysler execs. A bunch of these cars hit the market with 8k miles. At that point, they were a commodity if you approached the process right.

Take the IB risk results with a grain of salt. They make a lot of assumptions, which may or may not be accurate. For example, option volatility and stock price are correlated, but I don't think this is included in their calculations. Also, they make various beta assumptions. The numbers are certainly better than most brokers give you, but make sure you understand them in great detail before betting the farm on them.

This is an interesting article. I've spent quite a bit of time thinking about this philosophical question over the last few years. One observation I've noticed is that different people discount the future at different rates. For example, I'm always looking at my finances on an infinite timeline. This leads to me living well below my means, investing almost every cent I have, and skipping out on potentially beneficial experiences. On the other hand, I've noticed that many friends look at finances from the point of view that only now matters. These friends do great and exciting things but always have the debt wolves at their door. Unfortunately, I think that we are both wrong. People live finite lives. Somehow striking a balance seems nearly impossible for those I know. We all fall to one side or the other -- with most people in the "now" boat. Another interesting observation comes from the psychology literature on happiness. Studies have shown that we overestimate how much "stuff" will make us happy in the future. At the same time, we underestimate how much "experiences" will make us happy in the future. As value investors, I'm sure the bias is more extreme because we don't want to spend on something as fleeting as an experience. I know this is the case for me. The janitor may have been making a very rational choice. His spending power may have been irrelevant to him, but every day of his life may have been improved by the experience of knowing that his assets were going to a worthy cause.

I'm interested in finding a complete historical list of holdings for Buffett, Greenblatt, Tepper, Pabrai, etc. Buffett's holdings of Wells Fargo, Moody's, etc. have exhaustive coverage, but I haven't seen a good consolidated list of all businesses he ever owned. For example, what was he buying in 1974? Anyone have a link to someone that has already put such a list together?