enoch01
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Posts posted by enoch01
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so how many of you do not own a house and are renting in the Toronto and Vancouver area?
The house market is just red hot in these two places (other cities like Calgary, Montreal, Ottawa have been slowing down already). In Toronto, almost nobody thinks this rise is going to stop anytime soon. House are selling with multiple competing offers even in the suburb area, 15% over asking is becoming a norm.
Is it a good time to keep renting? Or just jump in the band wagon as the foreigner money and cheap rate will be around for quite a while?
I am renting and feel pretty confused.
It is always darkest before dawn.
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Luck be a lady tonight...
The parties in the above-captioned case have filed a joint status report requesting a status conference with respect to issues outlined therein. The court is unavailable to conduct a status conference at the times proposed by the parties, with the exception of March 31, 2015. Accordingly, a status conference shall be held on Tuesday, March 31, 2015 at 11:00 a.m. EST at the Howard T. Markey National Courts Building, located at 717 W. Madison Pl., NW, Washington, D.C., 20439.Since I'll be back in DC by then, I'll report back what I hear.
Thanks in advance merkhet, looking forward to it!
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Hilariously, Mr Market is still pricing Canadian banks at about 2xBV.
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Mrholty, welcome to the board. I sympathize with your DIMEQ experience. I lost 90% of my position. I remember judgment day very well.
Thanks for your story.
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If you really want the most basic of books that will explain all the different concepts in a general way (albeit with far too much simplification), you have to go with Value Investing for Dummies. It provides a survey of all the general aspects of value investing and is easy to read and can be read in bite sized pieces from time to time or to cover a specific topic. I've recommended it several times.
In a similar vein, I cannot recommend "Value Investing for Dummies, for Dummies", enough.
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Frommi,
I think the 50% put protection is a wise idea. It's all about protecting tail risk. Tail risk by definition is often unknown and unpredictable, rigs blowing up, medical devices resulting in death etc.
By definition, if you're putting 50-100% in 1 idea, most likely it is a 3X or a 2x with a clear catalyst. Either the deep undervaluation itself is a catalyst or there is some sort of corp event that will re-rate the stock. Personally, I wouldn't mind paying 10% cost of ATM put to hedge a 100% position. I would also argue that the optimal put protection is likely somewhere between the ATM strike and 50% lower. The rationale being that the upside is so large relative to downside that it should take care of itself over time. Why buy the put and own the stock? I think it gives you an undistorted view of your exposure. Also, it's often much easier to enter/exit the common shares when needed. Getting in and out of LEAPs can be tough in size.
Academic studies have shown that there is no benefit of owning more than 20 stocks and you get the most benefits of diversification already with 5-8 stocks. I think Pabrai and Mecham do it this way,so thats probably not a bad idea. Mecham had at one point 50% in BRK, but he argued that BRK in itself is already diversified so that makes sense to me.
Everybody talks about Schloss as the most diversified investor of the past, but i found no evidence that he was not concentrated in some stocks. In one interview he mentioned: "Generally, we are happy with a 5% holding but we can go up to 10-12% if we really like it.". Yes he told the interviewer that he is in 100 stocks, but does it really matter when most of the positions are just to follow the stocks and get annual reports? In current times i don`t see a reason for these toehold positions anymore.
Putting 100% in one stock and securing it with a put option at 50% loss looks like a smart idea, but when you look at it its just a barbell strategy of holding 50% cash and 50% in a LEAP call option. Any way you turn it, you have to pay the cost of leverage which is bad when the stock goes sideways for a long time. So you have to have a pretty sick confidence that your catalyst will play out.
@jmp8822 You wrote that you had more than one stock going into 2008 and you averaged down into one stock, but have you realized that that was only possible because you were diversified before? Imagine your only 5$ position would have gone down from 5$ to 0.5$, you networth would have tanked by 90%. I can`t imagine how depressed i would have been at that point, losing savings of more than 15 years of hard work.
From what i learned from other investors is that a maximum limit of 10-15% for normal businesses and 25-40% for diversified businesses or funds is a good compromise between diversification and outperformance and that is what i am using for the future. But i don`t regret being very diversified when i started because that has given me a lot of opportunities to learn and at the same time reduced the magnitude of my mistakes.
My biggest argument against concentrated investing is why not go all the way. If you have three ideas why dilute your best with your second or third best? So here we have it, someone is finally doing that, and amazingly this concept seems to be gaining traction. Buy one stock and buy a put. Sounds perfectly foolproof, nothing can go wrong, losses are protected and gains are ensured. As long as we can all pick the stock that will go up the most each year this strategy is foolproof.
Do you use a max position size? If so, what is it and why? Sorry if you've talked about it before and I missed it.
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I wouldn't put all my money in stocks like BAC. there is always some possibility it goes wrong. especially if you made serious bank. Why risk losing your big bankroll on some black swan event, just to get 20% extra per year?
There is always a possibility something goes wrong with any stock.
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As expected a few 30%+ returns and the obligatory 70-80%+ returns. I know it's great to be on top but just watch, someone is going to roll in here with a 100%+ return. It never fails, this thread always makes me envious, I'd love to compound at 40-70% a year, but I also realize it's unlikely to be sustainable (for me at least). I'm not even sure what I'd have to do to double my portfolio in a year, maybe trade options or something.
For those of you at 70% or 80% did you use leverage? If not was your portfolio completely concentrated in one lucky stock, or two lucky stocks for the year? How repeatable do you think the results are?
The past couple of years, most of the time I've had a lot of cash (say 50% to 60%) and a few positions that I thought had really good chances of being 5X, 10X, and low chances of being zeroes. Trading Sears calls this way has worked very well in 2013 and 2014, and the large cash percentage has helped me sleep until it has worked out.
I haven't always done it this way, and maybe I won't ever again. I seriously doubt it's repeatable.
Right now I have almost 70% cash.
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I'm really excited for the airing of grievances. I've got a lot of complaints about you all this year
Ah, the airing of grievances. The highlight of the celebration. Here's several.
1. If you're part of the seemingly every growing contingent of younger posters still living at home, please don't offer life advice.
2. For newer posters, please don't feel the need to weigh in with your views on every single thread.
3. If you post about how much angst you have with your investments and you don't know if you're investing properly, etc, please don't then 5 minutes later offer advice to someone else who asked an investing question.
4. If you're under, say, 30, please feel free to get rid of the world weary tone like you've seen and done it all.
Ah the good old sarcastic holier-than-thou tone, every time I look up for the poster's name it ends up being the same guy. Do you ever contribute anything besides complaining about other people's posts? This board is free to leave if it's such a drag on your life, you know.
LOL. This forum is morphing into a strange beast. I don't know if it's the bull market, Sanjeev's more reduced role, or something else.
As oddballstocks said, go read Kraven's post history - one of the sharpest guys in the forum, and probably has one of the best long-term records.
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+70%
Sears, the gift that keeps on giving.
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Author Topic: How Are You Thinking Bout The Drop In Oil Prices?
Mainly by vomiting in a trash can.
LOL! Mainly I've just been shrugging my shoulders. How about waiting for the bankruptcies, and then seeing how things shake out?
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A Treasury Department spokesman on Friday said the Obama administration wouldn’t consider ending government control of mortgage-finance companies Fannie Mae and Freddie Mac without legislation.
“The administration’s position has not changed,” the spokesman wrote in an email. “Comprehensive housing finance reform legislation is the only way to end the conservatorship responsibly and transition to a new system that brings stability back to the housing market while protecting taxpayers.”
The comment came after Sen. Tim Johnson (D., S.D.) in the opening remarks of a Senate Banking Committee hearing on Wednesday called on a top housing regulator to “engage with the Treasury Department in talks to end the conservatorship” of Fannie and Freddie if Congress doesn’t proceed with legislative reform.
Interesting response from Treasury.
Johnson asks FHFA to consider ending the conservatorship by entering into negotiations with Treasury. Watt says that the negotiations have to be initiated by Treasury. Treasury then says that they're waiting for Congress. Oh, politics.
After the hearing, Mr. Watt seemingly left the door open to the FHFA and Treasury’s ending the conservatorship without Congress. “It’s something that would have to be initiated by Treasury, not by me,” he said. “In the short term I would rule it out, in the long term, I might not rule it out.”So now the President will have an out when the GSE's are released: He really wanted to work with the Republicans (really, he did), but the Republicans just weren't able to "come to the table" and "work together" to accomplish housing reform. Therefore, he really had no other choice but respect the FHFA's decision to release the GSE's. He'll be "proud of the work" that Watt has performed during the conservatorship in setting Fannie and Freddie on a safe, solid path for the future.
"If you like your 30 year mortgage, you can keep your 30 year mortgage."
I have been buying more of the preferreds recently.
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I may be dense, and I apologize in advance if this sounds like cold water, but isn't the conclusion trivially true?
"...this essay is not focused on remaining fully invested at all times, but instead advocates remaining fully invested when there are still compelling investments to be made."
If compelling investments can be made, then by definition they are better than cash, right?
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Congratulations!
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Allowing these huge bubbles in residential real estate is insane. It destroys the middle class; they get extraordinarily angry; the search for a scapegoat. The young people who feel it is a bubble have to argue with wife, friends, family and look like idiots if they don't go along. It is nothing like the stock market.
If Canada is allowing HELOC's and all the attendant things that went on in the U.S., the pain will be massive.
The whole U.S. stock crash was caused by the housing mess. (Whereas, the huge correction in the early 2000's was caused by a massive bubble in stocks in 1997-1999.) The real estate mess in the U.S. practically cratered the world.
Sell Canadian banks? Or, does the gov't underwrite?
I've sold the banks. I've been early.
What's interesting is that CMHC insurance in force had been holding steady, and actually has been shrinking a little recently. CMHC historically has been about a 10% ROE business (your banks thank you). So someone has been willing to take in less premium to insure riskier than normal mortgages these days. More evidence of irrational behavior.
The government effectively underwrites. Look at Tangible Common Equity / Assets and then Tangible Common Equity / Risk Weighted Assets in the Canadian banks and compare to JPM, BAC, etc.
Canadian banks have some of the thinnest direct capital levels of any financials on the planet. The question is if/when the Canadian economy faces a recession, will the banks be bailed out of mortgages at par by the government or will they have to raise capital. If a large hit to real estate happens nationally I think the public outcry would be that shareholders are no longer entitled to 20-30% ROE's on obscene amounts of leverage on tangible common.
BINGO.
The Canadian government has been gifting to the banks to such a degree that it is almost comical.
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Allowing these huge bubbles in residential real estate is insane. It destroys the middle class; they get extraordinarily angry; the search for a scapegoat. The young people who feel it is a bubble have to argue with wife, friends, family and look like idiots if they don't go along. It is nothing like the stock market.
If Canada is allowing HELOC's and all the attendant things that went on in the U.S., the pain will be massive.
The whole U.S. stock crash was caused by the housing mess. (Whereas, the huge correction in the early 2000's was caused by a massive bubble in stocks in 1997-1999.) The real estate mess in the U.S. practically cratered the world.
Sell Canadian banks? Or, does the gov't underwrite?
I've sold the banks. I've been early.
What's interesting is that CMHC insurance in force had been holding steady, and actually has been shrinking a little recently. CMHC historically has been about a 10% ROE business (your banks thank you). So someone has been willing to take in less premium to insure riskier than normal mortgages these days. More evidence of irrational behavior.
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I recently moved to Washington, DC, so I was able to sit in the joint status conference in Judge Sweeney's courtroom today. A few things struck me as interesting:
- Judge Sweeney seems to be trying her best to be fair to all parties.
- Charles Cooper is a far better attorney than (I think it was) Gregg Schwind.
- Judge Sweeney mentioned the possibility of sanctions on the government for non-production.
- The government has refused to produce documents relating to whether the FHFA was directed to enter into the 2012 Amendment at the behest of Treasury or other governmental branches.
- At the end of the conference, Judge Sweeney directly addressed the government by saying that, while she knows all the government attorneys have the upmost integrity and would never do this, they would do well to inform their clients that they had better not refuse to disclose documents that were detrimental to the government's case.
It does not look like the government attorneys are winning themselves any friends by dragging on production.
Thanks for the notes. This is getting interesting.
- Judge Sweeney seems to be trying her best to be fair to all parties.
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We've been spoiled coming out of the crash with the abundance of good ideas. You could run a screen and within the first five or ten names you'd find a good investment.
There are ideas out there, I revisited my investment in Hammond Manufacturing yesterday, they're still at 54% of BV and 6x earnings. These companies are floating out there, but it takes more work to find them. Maybe you only find an idea once a month instead of once every two days. Is that terrible?
My impression is most people on this board own about 6 stocks. If you have a 25% turnover you have 12 months to find two stocks. Yes, there are fewer opportunities but there are at least two cheap stocks out there over the course of a year.
Was just about to post on this topic. The probability of finding a bargain in this market is much lower than 2009. If you weren't good then, you might want to think about playing it safe now. I chose very well over the past 5 years and I'm basically tapping out now. All new funds or all divested assets are moving into very safe, boring businesses. In short I am turning over my wins into low probability losers.
The real market (meaning american business) is heating up like crazy. The stock market forecastsed this behavior. Chances are if you're spending a lot of time value investing right now, you are missing out on earning potentially greater sums by working/doing business/making moves. That's one of the major reasons I have personally been inactive on the board.
When work slows down, I know it's time to bargain hunt. When work speeds up, it's time to do real work.
This has almost been my exact experience as well. I work in the engineering services field. Backlog is growing by leaps and bounds, and we are hiring the people we should've been hiring probably last year (we were still too scared to hire much last year).
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My eyes are popping out at all these references to 20,30,40,50% returns. Am I the only one not getting these?
That's what you get if you started investing after 2008...
Nope, you're not the only one.
I'm moderately amused with the influx of (predominately new) people on the forum that think 40% and 50% returns are somehow easy to achieve and/or the norm for investors. This seems to dovetail coincidentally with the amount of people looking to start funds because they're sure that they can continue (begin?) to outperform.
+1
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You know what the Stroh's could have used? Some of the good "habits of the wealthiest people".
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Today I am not buying a Tesla. Today I am also not selling a Tesla.
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Another net worth discussion. Maybe we are getting close to some kind of top.
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Another option is to take the money out and just sit on it. Maybe you will get better prices in the future. Is Mr. Market #1 offering you cheap cash for your residence today? Will Mr. Market #2 offer you great prices on securities in the future? Remember you don't have to make both transactions simultaneously. Long-term, non-callable leverage can be valuable.
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The last nail in the coffin of gold and commodities as insurance against catastrophe XYZ for me was when I saw a study that showed that common stocks did better during periods of very high inflation.
The 1983 appendix did it for me. It's so well reasoned: http://www.berkshirehathaway.com/letters/1983.html
"gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold - they invest in productive businesses." - Munger
I think he's right. Probably the time where it is rational to have gold is when the [local] civilization is breaking down. So gold is a bad hedge in periods of very high inflation, but only if you assume that there is no threat to [local] civilization.
The very high inflation is probably a necessary condition to owning gold, but not sufficient. Who cares if you own a lot of Coke if there is no rule of law.
Garth Turner - Real Estate in Canada
in General Discussion
Posted
Several weeks ago I closed about half of my put position on The Royal Bank of Canada (took it down to 2% position of current portfolio), only because I couldn't roll it to 2017. I'll ride the rest of the position into the ground. If the rest of it does go to zero this adventure will have cost me about 3.5% of current port. The funny thing is that all the ingredients are there for a bust, it just hasn't happened yet.
Canadian real estate - to the moon!