KJP

Any further thoughts given the recent declines? I'll reiterate my suggestion of Parkit. See its thread for recent developments. A sale of the Canopy lot would be a significant catalyst, assuming the bottom has fallen out of its performance or cap rates for parking lots. For a larger cap, I nominate NVR, but that contains an embedded macro call that new single-family house sales in the US won't decline in 2019. I don't see any hard catalyst that would prevent NVR from staying cheap in 2019 even if the US housing market holds up, but there is the soft catalyst of large share repurchases. EDIT: I'll add another: Command Center (CCNI). See the thread for reasons why. I believe 2019 will see continued significant buybacks and perhaps more, given the make up of the board. I'll also confess that when judged against the criteria of (i) underlying business quality, (ii) current valuation, and (iii) potential catalysts, these are all B-level ideas at best. I don't have what I believe to be an A-level idea.

Mineral interest owners like Black Stone Minerals are similar. They get their royalties regardless of whether the E&Ps make money or not, and directly benefit from higher volumes. But their profits are more exposed to hydrocarbon prices than the typical midstream company.

That historical decomposition of mortgage payments is interesting. Nice example for those who believe the biggest factor in asset prices is the availability of credit. In my experience, most people looking at big purchases (houses and cars) accept the salesman's logic of "What monthly payment can you afford?" I don't think people understand the potential problems if they cannot hold the asset until maturity, just like they don't understand that there's an interest rate embedded in the lease they've been offered.

1. Start an asset management firm and charge incentive fees. Losses on LP capital are non-recourse to you, but you get a nice slice of the upside on any increase in value on that capital. 2. Invest in the equity of highly levered firms. Small changes in their enterprise value will lead to large changes in their equity prices, which would be similar to the effect on the value of your portfolio of levering your own balance sheet to buy unlevered firms, with the benefit that debt at the firm level is non-recourse to you. KJP, 1. In theory true. In practice you have to be very very good at sales to pull it off. Judging from most people on this board, we're mostly doers rather than sales guys. Agreed. You can't take advantage of the leverage unless you have the scale to cover the overhead costs, and, in general, you can't get scale unless you can sell.

1. Start an asset management firm and charge incentive fees. Losses on LP capital are non-recourse to you, but you get a nice slice of the upside on any increase in value on that capital. 2. Invest in the equity of highly levered firms. Small changes in their enterprise value will lead to large changes in their equity prices, which would be similar to the effect on the value of your portfolio of levering your own balance sheet to buy unlevered firms, with the benefit that debt at the firm level is non-recourse to you.

There is another active thread on this issue that began a few days ago: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/yield-curve-inverting/ An inverted yield curve does not cause a recession, as your topic title suggests. It is used as a leading indicator of potential future recession. As for why anyone would buy the 10-year note, a 10-year note is the equivalent of rolling a two-year note several times with a significant difference: The 10-year note locks in a yield on cost for a 10-year period; the two-year note only locks in a yield on cost for 2 years, then you get the two-year yield that exists at the time you roll, not the two-year yield you got when you initially invested. Thus, an inverted yield curve implies that the market believes that, in the future, short-term rates will be lower than they are today. (If the market believed that short-term rates would stay the same, then people would sell their 10-years to buy 2-years until the yield curve steepened.) What typically causes a decline in short-term rates? The answer to that question is why the inverted yield curve is used as a leading indicator of recession.

Like you, my longstanding Flybe holding has been a gold medal winning downhiller, but I don't have the bravery to add to it. I'm sure 2019's biggest winner will be something like Flybe -- an existential risk that never materializes -- or something highly levered. For the same reasons, I suspect I won't own it.

Can you have a large portion of your portfolio in Flybe given the Brexit risk (both risk to operations and effect of likely decline in pound on cost of USD-denominated debt and fuel)? I was going to nominate Parkit for this thread, but decided not to because I don't have a significant portion of my personal wealth in it and can't recommend anyone else do so. But if you asked me what company in my portfolio is most likely to double next year, I'd say that one.

I cannot find the link now, but there was a thoughtful analysis published several years ago suggesting that U.S. regulations regarding pilot training, hours, etc. give pilots tremendous bargaining power over the airlines. As a result, all (or nearly all) economic profits of a airline would be siphoned off to pilots over time via increased pay as their collective bargaining agreements come up for renewal. (This is similar to the theory that movie theaters will always be a tough business because their key suppliers, e.g., Disney, have too much bargaining power.) If true, this would be something that would play out over many years, so wouldn't be immediately apparent during the early years of a change in the industry's competitive dynamics. The theory may be wrong, but I offer it as something to consider.

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered). I've also seen you post about FRPH, which I've followed for some time. Any others that you believe are particularly attractive right now? Will open up the book a bit because I've found you to be a high quality contributor to a few ideas I also follow. In no specific order or size; NVR, FRPH (as you've seen) MSG, GM(glutton for punishment), CTO, NXPI, BX, GOOG, XPLT(not really down a lot but GARP IMO), IBKR, AAL(sub in an airline of your choice, I happen to like the shittiest one), CLF(holy f*cking future cash flow machine w/ DTA's)+MSB, and MX... Can get into more detail later but didn't want to write a book write now... Thanks for sharing. I've owned XPLT for years and agree it seems reasonably priced despite the run up over the last year. Given your interest in FRPH and CTO, have you looked at Howard Hughes? It's been written up enough that I'm sure you know the story. I own it for the underlying asset quality (Ward Village and the Seaport in particular, but also the Texas and Las Vegas MPCs, which I believe is a business model that improves over time as the development matures). I don't know whether it's cheap right now, but Old Dominion Freight Lines (ODFL) has long interested me as a high quality, well run business, and it's also down significantly from its highs.

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered). I've also seen you post about FRPH, which I've followed for some time. Any others that you believe are particularly attractive right now?

Wouldn't this same logic apply to cobf? VIC can be used as a source for ideas just like anything else. I've found the comments, message boards, network to be immensely valuable. I agree. CoBF, blogs, VIC, etc. are places to start, and sometimes good comments/discussions can correct errors in your thinking and point out risks you may have overlooked.

Bumping this up to see how it's going with TD Ameritrade. My existing broker has now largely locked me out of grey market, otc, etc. TD Ameritrade's website claims it permits OTC trading and a TD rep I spoke to confirmed that. Can anyone currently use TD Ameritrade confirm that they're currently able to trade grey market, pink sheet and "no information" stocks? Thanks. I transferred from IB to TD last year and so far have been happy. What specific symbol would you like me to try to buy and experiment? I can send in a low priced buy limit order to see if they reject it. Thanks for the feedback. ADVC (Advant-E) and PKTEF (Parkit) are two I've had problems with. I just tried in TD and there are no problems with ADVC or PKTEF. My order for GCCO was instantly rejected. I've seen that kind of case with OTEL and GSUM before, but I can call in to place the order. Thanks for checking!

Bumping this up to see how it's going with TD Ameritrade. My existing broker has now largely locked me out of grey market, otc, etc. TD Ameritrade's website claims it permits OTC trading and a TD rep I spoke to confirmed that. Can anyone currently use TD Ameritrade confirm that they're currently able to trade grey market, pink sheet and "no information" stocks? Thanks. I transferred from IB to TD last year and so far have been happy. What specific symbol would you like me to try to buy and experiment? I can send in a low priced buy limit order to see if they reject it. Thanks for the feedback. ADVC (Advant-E) and PKTEF (Parkit) are two I've had problems with.

Bumping this up to see how it's going with TD Ameritrade. My existing broker has now largely locked me out of grey market, otc, etc. TD Ameritrade's website claims it permits OTC trading and a TD rep I spoke to confirmed that. Can anyone currently use TD Ameritrade confirm that they're currently able to trade grey market, pink sheet and "no information" stocks? Thanks.

I think the best intro depends on the audience's background and (i) how they think/learn/are persuaded, and (ii) what subject matters interest them. For analytical minds that focus on data, I would start them on something that's based on data or mathematical logic. For people more interested/persuaded by narratives, I would start with something like Peter Lynch. Alternatively, if there is something this person is interested in, such as cars, then a good intro might be exploring how CarMax actually makes money. That may spark an interest generally in learning about how companies make money (or lose money). A third alternative is showing them a brief but very good writeup of an idea. Several years ago, I came across this writeup: http://quinzedix.blogspot.com/2012/07/hawaiian-holdings-air-transport.html I probably learned more from, and was more inspired by, that writeup than any of the dozens of investing related books I've read.

I won't vouch for the quality of all of these, but here are some blogs or newsletters that may interest you: http://www.canadianvaluestocks.com/ http://www.mispricedmarkets.com/ https://onbeyondinvesting.com/blogs/blog http://www.globalstockpicking.com/ http://adventuresincapitalism.com/ https://backoftheenvelopeinvesting.wordpress.com/ http://bovinebear.blogspot.com/ https://cigarrfimpar.wordpress.com/ http://investingsidekick.com/ http://quinzedix.blogspot.com/ http://valueinvestingfrance.blogspot.com/ http://wertartcapital.com/ https://wexboy.wordpress.com/

There's a broader underlying point here about the financial illiteracy of even apparently intelligent people in this country, whether teenagers or adults. As you note, this person made the initial decision to go to NYU and major in journalism when he was 17 or 18 years old. He appears to be an intelligent person. So, why did he (and many others like him) not make wiser decisions? I understand the point about personal responsibility, but most people absorb the lessons they see around them. Interesting question. Looked for answers. https://www.brookings.edu/wp-content/uploads/2016/06/Are-College-Students-Borrowing-Blindly_Dec-2014.pdf https://static.newamerica.org/attachments/2358-why-student-loans-are-different/StudentLoansAreDifferent_March11_Updated.e7bf17f703ad4da299fad650f47ac343.pdf So, this is an issue tied to individual responsibility. But what if everybody around you (parents, friends, social circle, school, government and other institutions) say: "Don't worry, just sign here." Is it reasonable to expect that the average college applicant will behave responsibly? Somehow, I would say that the "system" can be improved and not only through emphasis (and consequences) on personal responsibility. This has a lot of parallels to the unfortunate mortgage episode that happened recently. Doesn't history repeat itself sometimes? Can we learn from mistakes? I read the papers you linked to. Although the New America paper is based on only 59 focus group participants, I think it's more interesting and suggests many causes, including immaturity, financial illiteracy and low agency. For example, look at all the quotes suggesting that borrowers had no idea what their monthly payments would be or didn't know that they'd have to payback the loans if they didn't get a degree. Similarly, the apparent total befuddlement about IBR, even after it was explained, is both sad and frightening. I have no evidence to support it, but I continue to believe that we could address some of the problem by having mandatory basic financial literacy education in high school. For example, with an internet connection, a graduating high school student about to take out significant loans to attend college should be able to figure out (i) the expected monthly payments on student loans at graduation; (ii) expected rent in the city they want to live in; (iii) a rough estimate of additional living expenses (car, food, etc.) and taxes; and (iv) whether all of those expenses are greater than or less than a reasonable estimate of the starting salary in their hoped for profession. I don't actually expect most 17 and 18 year olds to do that on their own. But if they were forced to do it as part of a graded financial literacy class, it would hopefully open their eyes up to what they're getting themselves into. Along the way, they'd learn many useful pieces of financial knowledge, e.g., the effects of compound interest, amortization tables, the actual impact of payroll and income taxes, the actual cost of renting an apartment, etc.

There's a broader underlying point here about the financial illiteracy of even apparently intelligent people in this country, whether teenagers or adults. As you note, this person made the initial decision to go to NYU and major in journalism when he was 17 or 18 years old. He appears to be an intelligent person. So, why did he (and many others like him) not make wiser decisions? I understand the point about personal responsibility, but most people absorb the lessons they see around them.

It wasn't listed above, but Dream Unlimited is a Canadian small cap in which the CEO owns about 30%. The company's capital allocation is discussed on the company-specific thread.

They won't because as amazing as it might sound it is against the law in the US to say that your milk doesn't contain hormone. In US, you can advertise your milk as "synthetic hormone free," or the equivalent. I just confirmed that by checking the milk carton in my refrigerator. To the extent you cannot say "hormone free," I believe that's because the statement is false due to milk containing natural hormones.

Fidelity supports trading on AIM.

I see. I wasn't counting any additional pop. Just the re-allocation alone would be quite useful.

How do you get to only 2%? What is the reallocation you're talking about? I'm not saying you're wrong; I'm just not sure what you are referring to. And your 2% is with near universal coverage, correct?

Is it really true that the US must make these very hard choices? Or is there something fundamentally dysfunctional about our healthcare system that, if addressed, would allow an essentially "free lunch" of more access, better outcomes and less cost? Studies like this suggest there's something fundamentally wrong with what we're doing: https://jamanetwork.com/journals/jama/article-abstract/2674671 [only a summary freely available] How is it possible that we spend at least 550 bps more of GDP and get worse outcomes and less coverage? Studies like this one are also why it baffles me that people think expanding coverage is "too expensive"? It seems clear to me that it's whatever we're doing now that's "too expensive". Imagine all the things we could do if we could free up 5.5% (or more) of GDP ...