KJP

This is an area of significant current research. Here, for example, are recent thoughts from someone researching this question: http://www.latimes.com/opinion/op-ed/la-oe-singh-food-deserts-nutritional-disparities-20180207-story.html Lazy and stupid don't appear to be the reasons. Instead, the reasons appear to be deeper and, in my view, profoundly sad. At the end of the day, I think the poor are essentially the same as everyone else -- same hopes, same dreams, same love for their children, same fallibilities -- they just have a lot less money. If I was working two minimum wage jobs while taking care of a few kids, and the only respite I could find was a bit of nicotine, maybe I'd smoke too. The store I shop at in the poor part of town has plenty of healthy, fresh food. Yet, many $200 grocery bills of Gatorade, Ruffles, Krispy Kremes, and Totino's. Perhaps the 'food deserts' are part of a brand new concept called supply and demand. Maybe if you opened a well-stocked farmer's market in poor parts of town it would simply not get enough customers. Seriously, that author seriously believes there isn't one entrepreneur willing to make a fortune opening a healthy store in a poor part of town? BS meter going off. Victim mentality runs deep. I think we read different articles. The author is saying that "food deserts" are NOT the whole story.

This is an area of significant current research. Here, for example, are recent thoughts from someone researching this question: http://www.latimes.com/opinion/op-ed/la-oe-singh-food-deserts-nutritional-disparities-20180207-story.html Lazy and stupid don't appear to be the reasons. Instead, the reasons appear to be deeper and, in my view, profoundly sad. At the end of the day, I think the poor are essentially the same as everyone else -- same hopes, same dreams, same love for their children, same fallibilities -- they just have a lot less money. If I was working two minimum wage jobs while taking care of a few kids, and the only respite I could find was a bit of nicotine, maybe I'd smoke too.

Based on what i know longevity has nothing to do with healthcare costs, its much more a factor of what you eat, drink, smoke and how much you use your body. No drug in the world will deliver what not smoking and drinking, eating healthy and running/weightlifting 2-3 times a week does for you. And the richer you are the more you know and care about that, its not even about the money directly. It's quite difficult to tease out the effects of lack of health care access on mortality versus other factors, but to my knowledge the existing data suggests there is a relationship. See, e.g., https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2775760/ If you are aware of contrary studies that suggest no link in the US between access to healthcare and mortality, I'd be interested in seeing it. More anecdotally, do you really believe that poverty has nothing to do with, for example, having hookworm, or that having hookworm has no impact on overall outcomes: https://www.theguardian.com/us-news/2017/sep/05/hookworm-lowndes-county-alabama-water-waste-treatment-poverty You also didn't mention a few other factors associated with poverty that likely increase mortality: (i) more environmental pollution; (ii) more dangerous jobs; and (iii) more overall stress. Regarding the "self-discipline" argument, I think it's easy (and perhaps comforting) to say that the poor die sooner because they are lazy, impulsive and stupid. I personally doubt that account and the policies based upon (or justified by) it.

Complementary info: https://www.ncbi.nlm.nih.gov/books/NBK62584/ The first two paragraphs summarize well. Basically, at the individual or "mutual level", it boils down to an NPV decision to see if potential useful life lost is worth the investment. The Constitution mentioned that all are created equal and can have a free and happy life (duration not mentioned). Life expectancy, when the document was written, was estimated in the mid 30's but recently, after incredible progress, in the aggregate, has been dropping for two years in a row. Multi-dimensional problem but America's best days lie ahead (ref: Warren Buffett). "In the aggregate" there's been a dip recently, but under the hood there's a more disturbing longer-term picture for some: https://www.vox.com/science-and-health/2018/1/9/16860994/life-expectancy-us-income-inequality Of course, there's more than just less access to healthcare driving the growing disparity in outcomes.

Margin of Safety is basically just an $800 copy of You Can Be A Stock Market Genius IMO. Both books cover a lot of the same sort of material, but I thought Greenblatt's was better. I enjoyed all the case studies. MoS is not bad necessarily. But there's not a lot of "new" in there to justify the price if you already have had a broad exposure to value philosophy. Yes, that's the issue with MoS. If you know of its existence, then you won't get much (perhaps nothing) out of it.

eBay, but it's vastly overpriced.

1. McKinsey's valuation treatise 2. Competition Demystified 3. You Too Can Be A Stock Market Genius Also useful: Quality of Earnings Creative Cash Flow Reporting Here are some other ones that I did not find useful: Margin of Safety Security Analysis Intelligent Investor Dhando Investor Howard Marks's Memos Value Investing: Tools and Techniques for Intelligent Investment (James Montier) Contrarian Investment Strategies (David Dreman) Value Investing: From Graham to Buffet and Beyond (Greenwald) Reminiscences of a Stock Operator Manias, Panics, and Crashes: A History of Financial Crises

Does the chart reflect actual net worth data, or simply what you get by multiplying the income by the multiplier? As for where the multipliers come from, a quick review of the links in the article suggest some financial advisor made them up as guides. The multipliers come from this article: https://www.financialsamurai.com/the-top-one-percent-net-worth-levels-by-age-group/ Here's how that article describes them: "The top 1% net worth figures are based on my latest net worth target income multiples. I believe most of us can achieve these income multiples if we meticulously track our net worth, invest our money wisely, and spend extra effort earning. One income stream is often not enough." So, they appear to be just made up "targets," not actual data.

Clarus Judges Scientific Volvere Clarke, Inc. FRP Holdings

KJP, I am curious to know why you think Indian OTA's are under earning. How do you think about competition from booking.com in that space? I think indian OTA's also don't have an agency model. They buy inventory and guarantee revenue to the hotels. This is not very capital efficient. Sometimes they sell at a loss to gain market share There are other players like ZO rooms ( Backed by Tiger Global) and OYO rooms that are competing with YTRA and MMYT. Seems like a competitive space in a nascent industry Curious to know your thought process Thanks The Indian OTAs are more of a mix with a respect to an agency model than Priceline. For example, Yatra appears to do air and hotel on an agency basis, but take primary risk on packages. See, for example, the description of "net" versus "gross" revenue recognition for the various revenue buckets on page 60 of Yatra's Form 20-F. More broadly, I think you captured why the industry as a whole is currently underearning -- right now it's a fiercely competitive land grab where companies are spending money hand over fist on marketing and promotions to get scale and, hopefully, customer loyalty. That's causing everyone to lose money right now. I don't believe the capital spigots will flow forever. So, eventually things will shake out and somebody or a few somebodies in the industry are going to make money. That's what ought to happen where you're talking about a distributor that sits in the middle, with millions of buyers on one hand and more than 100,000 hotels on the other hand. That's the basis of my belief that the industry as a whole is underearning what it should. Unlike many of the other industries mentioned on this thread, the underearning I'm suggesting is coming from the immaturity of the industry, rather than cyclicality. As for Priceline (booking.com and Agoda), do they have the stomach to throw money at India like MMYT, Yatra, et al. are doing? The commentary in Priceline's Q2 call about the difficulties public companies (particularly mature ones) have with pursuing that kind of strategy suggests it may not. Moreover, other than deep pockets, Priceline has no special advantage in India. Instead, it's got to get on the ground and build its hotel network and brand awareness just like everyone else. Even if they are correct (and they may not be), are any of the thoughts above actionable? I haven't yet invested based on them, because I'm not smart enough to figure out who will be left standing. MMYT may also spend Yatra into oblivion, forcing it to be bought out on the cheap.

Perhaps Dream deserves it's own thread, but I have followed it for several years and don't understand the capital allocation, in particular the huge amount of capital they've devoted to buying shares in what ought to be the retail-oriented REITs they manage.

Indian OTAs

I own some shares of iStar... it's an interesting asset recycling idea... My biggest concern is that they've made little/no real progress on winding down these land/development assets ($965m in 2013 and $933m today). The idea is that if they sold all these non-core/non-cash-generating properties and rolled it all into the RE finance/net lease business they could generate some $1-2+ in FFO per share. I plan to give them a bit more time to execute on this but the portfolio hasn't really been simplifying as fast as it could. The timing isn't going to get a whole lot better to start unloading some of these things. Yes, I have similar concerns. I created a thread for iStar in the Investment Ideas section.

thepupil or anyone else: Any thoughts on iStar? It's a non-dividend paying REIT that's using NOLs to avoid tax. There's a decent argument that it's trading for ~50% of asset value, but it has a large amount of "transitional" and "development" assets left over from the crisis that are currently generating costs but little to no NOI. G&A is also running ~$70-75 million a year, and it's unclear to me how much of that could be cut out once the "transitional" and "development" assets are turned over into real estate finance and triple net lease assets. Today it's basically cash flow breakeven if you put aside asset sales. The future is hazy, but you can see an outcome in which the current capital structure produces ~$125-150 million in pre-tax cash flow. The current market cap is ~$720 million. Much more detailed writeup that's over a year old is here: http://clarkstreetvalue.blogspot.com/2016/08/istar-non-dividend-paying-reit-with.html I put the basic math behind the ~$125-150 million pre-tax cash flow in one of the comments to the blog post linked to above. One major update to the blog post is that last year iStar IPO'd its ground leases into a dividend-paying vehicle called Safety Income & Growth (SAFE). It currently has 40% ownership of SAFE and a contract to manage the assets. Finally, I'm not sure about management -- will Sugarman stick to the basic blocking and tackling of running a real estate finance and triple net lease business? Will he shrink the balance sheet if that's the right thing to do (they have been buying back shares)? Also, is now the right time to be trying to recycle ~$1.5-2 billion in capital into real estate finance and triple net leases?

You've missed the joke. https://en.wikipedia.org/wiki/Rickrolling

I know you could research this pretty easily for any particular model just by looking at local prices for used cars, but is there a public data source that tracks and aggregates this data for all models in one place?

Under GAAP, changes in working capital are already included in operating cash flow, so historical changes in working capital are already included in the reported cash flows. To project normalized future working capital requirements, you may be able to look at historical working capital needs as a percentage of revenue, e.g., average inventory over the year has historically averaged X% of annual revenue, average accounts receivable over the year has historically averaged Y% of revenue, and so forth. If those ratios are relatively stable over time, they can be a useful starting point for understanding likely working capital needs at various future revenue growth levels.

Is that really a typical hypothesis? Or is a typical hypothesis something like: "Company X has competitive advantage Y, which should lead to measureable good operating outcome Z," e.g., circa 1980 a hypothesis might be "Walmart has strong local economies of scale, which should lead to increasing net margins and returns on capital far in excess of its cost capital as it expands into geographically adjacent markets." Or the typical value-investor regression-to-the-mean hypothesis: "Company X is in Industry Y. Companies in Industry Y typically earn Z margins. Company X has been earning .5(Z) margins because of Fixable Issue 1. Fixable Issue 1 will be fixed, leading Company X's margins to increase to Z." The difficulty is that these are statements about the future, but all we have is data about the past, so we can't test it today.

I don't understand what point you're trying to make. I don't think it can be disputed that $1 will buy you far less milk or eggs or bacon or subway rides or movie tickets today than $1 would have bought you 100 years ago. See, e.g., https://www.bls.gov/opub/btn/volume-2/average-food-prices-a-snapshot-of-how-much-has-changed-over-a-century.htm The link illustrates why I think USD is not a good store of value. If you think it's a good store of value, then I suspect we're using "store of value" to mean different things.

The ultimate supply of BTC is fixed. Assuming BTC becomes a store of value and the human population continues to grow, then won't the value of BTC continue to increase in nominal terms? For example, would you expect a gallon of milk to cost less BTC in year 20 relative to year 1, because of the deflationary effect of a fixed supply of BTC versus a growing population of humans? If that is so, why would you ever spend BTC rather than your local fiat currency that has no fixed supply? The fixed supply of BTC (a feature, not a bug to many) is one of the reasons it's hard to see its use as a dominate currency, because I don't think people would accept the consequences of such "hard" money. The "it will be worth so much that no one will use it and that makes it worthless" argument again. Where did I say it would be "worthless"? What I said is that it won't be used as a currency in the sense that it will not be the medium of exchange for small day-to-day transactions. Just like gold today is not a day-to-day currency, but that doesn't make it worthless as a result. Also, I'm raising the point to suggest that people who are focusing on the ability to use BTC as an everyday currency may be focused on the wrong things. Oh, I agree with you then. I don't see many people who still believe that other than those who don't understand bitcoin at all. A lot of those who still want to focus on replacing cash in everyday transactions have moved onto to BCH (or LTC, DASH, XRP, etc) and have abandoned BTC. Understood. My post was in response to someone who asked "Is this going to be something where I can buy a cup of coffee with bitcoin at a sensible price." By the way, I think your posts are quite helpful in understanding why people believe in bitcoin as a store of value, particularly your comparison of its characteristics to gold's. Very useful points in a thread that started with the opposite theory -- that's an item's inherent characteristics are irrelevant to its use as a store of value.

The ultimate supply of BTC is fixed. Assuming BTC becomes a store of value and the human population continues to grow, then won't the value of BTC continue to increase in nominal terms? For example, would you expect a gallon of milk to cost less BTC in year 20 relative to year 1, because of the deflationary effect of a fixed supply of BTC versus a growing population of humans? If that is so, why would you ever spend BTC rather than your local fiat currency that has no fixed supply? The fixed supply of BTC (a feature, not a bug to many) is one of the reasons it's hard to see its use as a dominate currency, because I don't think people would accept the consequences of such "hard" money. The "it will be worth so much that no one will use it and that makes it worthless" argument again. Where did I say it would be "worthless"? What I said is that it won't be used as a currency in the sense that it will not be the medium of exchange for small day-to-day transactions. Just like gold today is not a day-to-day currency, but that doesn't make it worthless as a result. Also, I'm raising the point to suggest that people who are focusing on the ability to use BTC as an everyday currency may be focused on the wrong things.

I have to ask what you mean by "store of value". Has fiat really been a good "store of value" over decades? Even the fiats that are seen as generally stable like the dollar have not retained their value in real terms in the 20th century, e.g., look at the change in the nominal price of a gallon of milk or a subway ride in NYC. EDIT: I do note that you didn't say fiats were a "good" store of value. So, to the extent a "store of value" is anything that allows at least some preservation of value over time, then fiats would qualify, even if they're not great at it.

The ultimate supply of BTC is fixed. Assuming BTC becomes a store of value and the human population continues to grow, then won't the value of BTC continue to increase in nominal terms? For example, would you expect a gallon of milk to cost less BTC in year 20 relative to year 1, because of the deflationary effect of a fixed supply of BTC versus a growing population of humans? If that is so, why would you ever spend BTC rather than your local fiat currency that has no fixed supply? The fixed supply of BTC (a feature, not a bug to many) is one of the reasons it's hard to see its use as a dominate currency, because I don't think people would accept the consequences of such "hard" money.

Yes, exactly. And based on your posts in other threads, I take it that you believe that bitcoin has its own "intrinsic properties" that are also particularly suited for being a store of value, though those properties happen to be quite different than gold's properties.

This is a great question. I'm not a chemist, but I understand that, in addition to its relative rarity on Earth, gold has other useful properties, such as the ease with which it can be minted. I doubt granite has any of those characteristics. But your general point is well taken: Why gold rather some other relatively rare element or substance with useful properties (assuming there is one)? I suspect the answer is a combination of gold's physical properties and the social acts you mention, but I don't know. This relates to a question posted on one of the various crypto threads: Is bitcoin actually rare if you can create something that essentially identical and call it bitcoin2, and then bitcoin3 and bitcoin4 and so on? The only response I saw to this was that human society likely needs only one digital store of value, and if I recall correctly the author of the opinion referred to the long history of gold as a store of value in human societies. The point, I take it, is that once something with the sufficient characteristics (tangible or intangible) becomes entrenched through social acts, it will remain the store of value until something with substantially better characteristics comes along. EDIT: I also note that on the crypto threads the bitcoin advocates are touting its "special intrinsic properties" as the reason they are backing bitcoin over other alternatives.