jawn619

Help me understand better. Tell me where I'm going wrong. Lets say I'm a company and I make per year $1,000,000 in rev $500,000 in gross profit $250,000 in operating profit $200,000 in owners earnings after I subtract what i need for maintenance capex. now as an owner I don't get the $200,000, I get $200,000*(1-tax rate). Say its 30%. Doesn't that means the cash I get out of the business is $140,000? Aren't taxes an expense as well?

I have seen people use operating income - maintenance cap ex as a proxy for what the company earns. How do you guys think about taxes as it accounts to Intrinsic value?

Hey I have a friend who works as an equity options market maker and so maybe I can shed some light.The way it works for equity options is that when you buy an option, it actually implies a certain percentage move in annualized terms. I'm guessing its the same for FX but the volatility you pay is probably lower because its more liquid. It's like buying insurance so say you go out and hedge your Euro exposure with options, I checked some recent quotes and you're likely paying around 10% implied volatility per year so if that means that if the currency moves less than 10% you lose to the premium. Conclusion: like the others said it's probably not worth paying the premium to hedge it because there's a built in hurdle and I'm sure the volatility is pumped because of all the macro news. Hope this helps. P.S. Pumped for Saturday!

http://www.activistshorts.com/ is a great site for people more interested in shorts

Why isn't he simply trying to be buy the best value (defined as expected risk adjusted returns) regardless of the cash he has left? He seems to imply that higher potential returns correlate with higher risk while in practice it can often be the other way around. (A bit in the same league as saying that volatility equals risk, while it's often more an indicator of opportunity that can provide return.) I'm probably misreading what he meant though. well you can't be sure that your estimated "risk adjusted returns" are accurate. Pabrai tried something along the lines of Kelly criterion, the theoretical optimal bet sizing, but in real life there is a lot of uncertainty and I think his current strategy is not as fragile as Kelly or the method you're suggesting.

that white people get punished harder in sports.

A lot of brokerages require you to show ID and do some sort of background check so there might be hurdles for non U.S. citizens. Robin hood would be what you're looking for.

http://www.urbandictionary.com/define.php?term=tinfoil+hat

When it comes to investing for endowments, and generally as you get bigger in size, your options become more limited and the range of your performance gets more narrow. For example, people like Ray Dalio and Swensen who manage 25+ billion in assets have to focus more on asset class allocation rather than individual stocks. Beating the market by a few percentage points is probably the top end of what they can do. If you're a Joe Schmo like a lot of us on these forums, we can see a lot more variability in our returns, and I think that's a huge advantage. Buffett had years earlier on in Berkshires history where he had +70% yearly returns. Now that kind of performance is close to impossible.

some brokers actually get you a very good price. For example when you send a market order to fidelity, you almost always get between the bid/ask and sometimes even at the bid. It depends on the liquidity of the stock but there have been plenty of times where certain brokerages have paid for their fees by just getting a really good price.

so when do we get our money?

So the treasury admits that it was an investment. Still makes the sweep unlawful... They invested in 80% of Fannie through preferreds and it's just a question of whether what happens to the other 20% that belongs to shareholders.

I suspect the OP knows that thinking in percentages is the right way to think about investing and is asking about how to viscerally get more comfortable with handling larger sums. To that I would give the advice of trying to be around the larger numbers more often. Start a mock portfolio with more nominal dollars than you are handling and start playing around with that. What you invest in doesn't matter, just being around the larger numbers makes it easier to deal with. I had to deal with larger sums of money at work and that helped me when it came time to invest my own money.

http://www.amazon.com/Complete-Guide-Bible-Stephen-Miller/dp/1597893749/ref=sr_1_1?ie=UTF8&qid=1429547885&sr=8-1&keywords=complete+guide+to+the+bible friend recommended this and I think it's great. A sparknotes to the bible.

He probably didn't even lose that much in it, if at all. It was a net net and it was one of those stocks that buffet should have sold when it got close to 1x book value. I think he said it was the biggest mistake of his investing career because berkshire wasn't going to compound like GEICO at 20% a year and the time lost with buffet trying to save the business or keep it running could have been spent in a better investment.

I know people use them, and I'm trying to develop one for myself. Anyone care to share theirs?

a prime broker is basically a more advanced version of a regular broker. while retail people use fidelity or td ameritrade, prop firms and hedge funds use goldman sachs, wedbush, or interactive brokers.

i pretty much assume it's worthless. Discount it to 10% of it's stated value maybe. It's probably not the right thing to do, but better to have a high hurdle and if something is attractive despite all the roadblocks, then it'll jump out at you. I also discount AR by 70% and inventory by 50%. I'm usually doing the discounting when figuring out downside.

"Mo Money, Mo Problems." -Notorious B.I.G.

+1

I can sum this book up in a few sentences. People have this visceral reaction when they look at and think about their own mistakes. The author argues that getting comfortable with this feeling is the key to learning and growing.

I read the FAQs and it says the proceeds may not be used to purchase securities or to pay down margin lines, and may not be deposited into Schwab brokerage accounts. >:( :( start a different brokerage account? LOL

Well... a margin loan is callable. So if your investments decline significantly and you can't meet the margin call then you'll be force to sell your securities. This loan is too. But there's a duration on when it's callable. So it's more predictable, and the interest rate is tied to Libor. I think my brokerage is asking like 8-10% interest on a margin account. I'm not expert on this. That's what I got from the short 10 minute speech. This is very interesting. Please let me know what you find out.

Right. I knew that Westbrook's odds of getting triple double were higher than his historical average of 3-5% but I didn't think they were anywhere near 51%. You don't need to know a man's weight to know he's fat.

I found security analysis a lot more useful. Security analysis has more hard numbers and examples and I think that is very useful because if armed with mindsets and big picture things like buy when others are selling or other qualitative phrases, one can apply them in ways that are harmful.