UNF2007

What I do is try to get to a reasonable earnings power value, based off adjusted operating earnings and then capitalize those earnings with a discount rate of anywhere between 10-12% depending on how strong I think the franchise is (if there is one), which is purely a qualitative judgement. I then want at least a 33% discount to that fair earnings value to invest. I don't build growth in as a MoS at all as I am not really that great at identifying those companies where growth is dependable and profitable (I wish I was). As it moves up in price and the MoS shrinks I start asking myself the question, how sure are you this is worth x?, and is it worth it to wait for it to get to x given what has happened since it was purchased, is it better to sell and capture what ever percent of the mispricing has corrected? Obviously the closer it gets, the smaller the MoS gets, and the more anxious I get about selling. I'm usually selling around 90% of intrinsic value and up. Although I have almost always sold to soon, it is a problem with my process, I'm working to get more comfortable holding up to and past 100% of IV on high conviction ideas.

The federal reserve of St. Louis publishes a monthly economic trends report you can get online. Learned about this from listening to the Value Guys podcast, back when they did them...

Took the test... INTJ. How accurate are these things? Kind of reminds me of the Michael Burry interview where he talks about being diagnosed with Asperger's and would have felt better not knowing, maybe not that extreme but similar, lol.

Very interesting, thanks for posting. One thing I found in here was his description of how he viewed the levels of the S+P 500 and DJIA. He came up with a formula which is something quite similar to the Shiller PE. Just briefly calculating the data for today I get an avg S+P 500 earnings of 79.12 over the last 10 yrs capitalized with twice the current AAA bond yield of 3.6%. That gives a normalized level for the S+P 500 of about 1100, with a P/E of 14. Case 2, If you use current S+P earnings of 104 and twice the 30yr T-bond yield @ 2.5% it comes out to 2080 with a multiple of 20. I'm far from an expert on this stuff, but to get to the current valuation one has to assume current earnings which are record high will continue on, and interest rates which are near record lows will continue on, it seems unlikely this can persist. It seems the more reasonable case would be somewhere between the conservative Graham valuation and the current one. With that said Buffett says we are in a zone of reasonableness so I don't know, any thoughts?

Thanks for posting this, lots of interesting information, I found this article buried in there, makes me understand better what all the recent concern about non-sentient AI is due to. http://www.tandfonline.com/doi/pdf/10.1080/0952813X.2014.895111

I'm not really old yet @30, but old enough to have some regrets. #1 not holding onto visa @70 /amex @10 longer, bought both during 2008, and sold out at a goodly profit, but short of the ultimate bonanza as Graham would put it. #2 not leveraging myself, I had the option of a cheap 50k loan at 1.5% from commissioning around 2008. #3 I was blindly passionate about getting into medschool in college, despite the doctors I talked with telling me to avoid it. After going through the process and now almost done with surgical residency, I wish I had explored other options, investing as a career never entered my mind even though I was passionate about it back then. On the plus side I'm debt free, now I just focus on building up a strong capital base and hopefully early retirement.

Really like the "how to get rich book" started it today. For me there is some mental hurdle where I get myself comfortable to the point I feel something is a good bargain and I can see myself holding it for 3-5yrs and averaging down if it falls. Once I own something I continue to read about the company/industry until I sell it, trying to accumulate knowledge for the future. Kind of like reading about your patients in residency. I would guess probably 200-300hr per company, over the life that I own it.

Where did you guys find the first edition? I have searched and only seem to be able to find pricey original copies for sale.

I read through it, it is quite lengthy, mostly because he spends so much time alluding to things, rather then just getting to the point. I mostly read it to see what the pro's he interviewed would say. As far as the interview with WEB goes, Buffett basically told him to index his money, that was it. Tudor Jones told him to look at 200 moving day averages, and sell anything that crosses it. Dalio gave him the model portfolio, and told him to not bother to try and beat the pros at their own game. I don't remember anything else memorable as far as investing advice goes. He did spend some time talking about building wealth, savings, creating a mindset that you can be happy with achievable financial results. Overall I would say good motivational book for the person who is living beyond their means, with basic investment advice. But lacking of any useful information to anyone who has spent meaningful time reading the investment literature.