Uccmal

If the CEO is sitting in an office waiting for the phone to ring, don't invest into his company. ;D Honestly, I'm not a CEO, but I know how busy our managers are and the VP level management too. So unless the CEO is a dunce, he's not sitting in an office waiting to talk to you. Maybe it's different in other industries. It might be cultural thing too. Maybe Americans love this. If someone asked me the questions you suggested, I'd tell them that they are wasting my time and to go bother someone else. :) (Yeah, and here I'm on the internet forum wasting my time without anyone even asking, oh, the irony :)). Anyway, I said, go ahead and do it if you are a person who likes doing it and sees a benefit in it. I have met dozens of company owners, and operators, and been in hundreds of companies over the years in my other jobs. Ontario is a hot spot for high tech Automobile operations. I have seen every part of the automobile supply chain. I can tell you why Magna, Linamar, and MartinRea sit in the sweet spot of automobile operations. Its not one reason but a whole series of reasons that have alot to do with using high tech in their own plants, and manipulating their own supply chains. Their workforce is highly skilled and well compensated. What I cant tell you is why I didn't buy Magna stock in 2009 and just hold it. I have been in small companies that make office furniture, gone home and read their annual report afterward and run for the hills. So, in some sense I have benefitted by understanding who makes money and why.

We need to speak the same language. Cardboard lives in Canada. There is no long term capital gains versus short term. He was waiting into the new year from June. I suspect your basic thesis is correct though. As Opihiman has suggested taxes need to be a part of the equation from the time we buy. I have been managing my 2015 taxes since January 1. I have been shifting around positions and taking some capital losses right now. That will offset gains at some other time. i.e. I have sold all of my Pwt common position and some Leaps on the same. I have also sold all my $20 Bac leaps, and bought $15s instead - all 2017 expiries. If I so desired I could buy back Pwt in 3 weeks and get the wash. Unlikely though as I think they will dilute at the request of bondholders.

I am solidly in the Jeremy Grantham camp on this one. At the moment oil is the driver of the world economy. The worst recessions have always occurred after a huge run up in oil prices (mid 70s, early 80s, and 2008 till now). Up until Christmas the major economies of the world have been flirting with recession more or less continuously since 2007. The only bright spot was the United States and it wasn't exactly bright, just sort of less dim. I think the US was helped by the shale boom, but I dont necessarily think that the shale boom is necessary to the overall health of the US economy. I think that the lower oil and nat. gas prices will finally pull the EU out of recession. I think it will help alot of the rest of the world as well. The US dollar is going up as a flight to safety reaction. Ultimately, with other economies improving, the flight to safety will be less pronounced, bringing the US dollar in check. It hasn't done much for PWT. Taught me a lesson though. I am just going to stay out of commodity value plays forever now. I have been stung in the P&P industry, and now the oil industry. Thats enough. Fortunately, I have always had the wherewithal to never go near miners.

Your avatar? Yes. I am guessing we have a cultural disconnect around groundhogs.

I have had reasonably good luck with LemonAid by Phil Edmonston. He gets you away from the worst buys at least. These days I wont buy a GM, or a Chrysler, on Ford I am kind of agnostic. Recently I have owned a Mazda Van (trash), Mazda Pickup (okay), Honda Civic (awesome and made in Ontario), Honda Accord (reliable - a bit tortuous to drive), and a Hyundai Sante Fe (awesome). The Accord came from a dealer I met in my day job. The Sante Fe we bought at a new car dealer that gets alot of ex-airport rentals. It was 10 months old with 20000 km and $12000 less than new. I was worried about it being a rental but this appears to be an asset rather than a detriment. The rental companies at the airport all do the full maintenance, and take pretty good care of the vehicle. I didn't vote in your poll. I have had success buying cars every way you mention, and some dubious acquisitions as well. The worst are the dealers or salesmen who bring their dogs home and try to sell them privately. The stories I have.

and apparently a ground hog with sunglasses....

There is something wrong with Morningstars Total Return Calculation for Coke, or at least it is not the number we are after. I am getting slightly over 14% for Coke. Here is how I did it this time. I took 100 shares, which cost $2100 in 2005. I reinvested the dividend each year which gives a new share total each year. After 10 years, start of 2015 there were 166.5 shares (the split was accounted for). 2015 value = 166.5 shares * 43 = $7160. This is slightly better than 14%. Ignoring taxes of course but fund managers dont pay taxes so its apples to apples. My other method of adding the annual dividend increase plus annual stock appreciation works as well, but is not as accurate because I didn't sum the dividend increases for the ten years. I took 3 and assumed it to be consistent. The dividend increase drops in later years. So I am a couple of percent high there. Unless, I am totally out to lunch the numbers I am calculating are what I would call total return. Morningstars numbers are something else. By definition total return is required to include dividends. I don't want to sound harsh, but Morningstar is less likely to be wrong than you are. I know with Coke you are using a split adjusted price. You should use the original $41.64 to close out 2004, and then the actual dividends up through the stock split in 2012 when you then adjust the number of shares. Roughing it out I get 10.4% through year end 2014, which is much closer to Morningstar than your numbers. The beginning of 2005 was a nice trough for Coke too. It fell nearly 20% in 2004. BTW you might wan to double check that Buffett has shown this. BRK-B 10 yr return was about 9.8% As to your main point yes I agree that a good stock picker should have done better than 12% average over the last decade, but it is not as easy as your comments suggest. You are correct. I was using two different data sets for Coke only. The others, using the quick method are okay on an approximate basis. Contingent on todays dividend yield being representative. When I meant that Buffett has shown that returns are better with a company than a fund I certainly meant earlier in his tenure, not the last ten years. The thesis is intact. With permanent capital that a company provides you can do the following that a fund cannot do: 1) Borrow - within reason, and without the risks of a hedge fund 2) Collect cash to deploy at opportune times. Seth Klarman is the only fund manager I know who does this and he invests in non-conventional investments. 3) Not be forced to redeem cash and sell stock at the worst possible time. This is why Giofranchi and others on this board have invested with capital deployers.

RY - Royal Bank is also over 14%. Using the quick method. Annual stock return + div. yield % ~ 14%. Sbux = 14.5% by same method Mcdon = 16% CM not so good. A couple of others I missed on. As I said I put it together in 10 minutes. If I really dug I could find dozens, a couple of which I hold. I think morningstars total return is missing dividends or something. Anyway, my point still stands. 12% and much higher is easier to make as a company than as a fund manager. Buffett and many others have shown us this.

There is something wrong with Morningstars Total Return Calculation for Coke, or at least it is not the number we are after. I am getting slightly over 14% for Coke. Here is how I did it this time. I took 100 shares, which cost $2100 in 2005. I reinvested the dividend each year which gives a new share total each year. After 10 years, start of 2015 there were 166.5 shares (the split was accounted for). 2015 value = 166.5 shares * 43 = $7160. This is slightly better than 14%. Ignoring taxes of course but fund managers dont pay taxes so its apples to apples. My other method of adding the annual dividend increase plus annual stock appreciation works as well, but is not as accurate because I didn't sum the dividend increases for the ten years. I took 3 and assumed it to be consistent. The dividend increase drops in later years. So I am a couple of percent high there. Unless, I am totally out to lunch the numbers I am calculating are what I would call total return. Morningstars numbers are something else.

Can you elaborate? I did the annualized rate of return on KO assuming $20 to $43 in the last 10 years. Assuming current divvie of 1.22 per share and $20 rock bottom, gives me barely 12% annualized. Are you counting something else when you claim In fact, this shows that 12% annualized is quite hard: buying one of the best companies in the world at the rock bottom price and finishing at the end of major bull market (right now) barely gives you 12% return... Thanks I am getting around 16% per year return on Coke. 10% increase on the dividend each year, and 6-7% increase in stock price. I pulled those companies listed above in 10 minutes and very quickly estimated that the return beat 12% (some may be close but not there). I deliberately handicapped them by choosing across the market crash time frame. KO was not rock bottom in 2005. It visited $20 before 2005, after 2005. I didn't cherry pick KO or any other. This was during a time when Coke has been allegedly suffering. Its not hard to beat 12% return per year for large companies. It is very hard for fund managers. Irwin Michael of ABC funds got slaughtered this year by redemptions and forced selling. He was heavy into oil. Chou and Pabrai got slaughtered in 2008/09. Bill Miller got killed in 2008/09. Berkowitz has done it repeatedly. In order to really outperform you need unencumbered capital. Buffett and others have shown us that this is the best way.

Thought I had better provide examples on my ten year assertion: KO, TD, RY, CM, BNS, BMO, SBux, Pepsi, JNJ, P&G, MCD, AAPL, WDC, ORCL, Gen, Mills, Hershey....

My bet for the next 15 years is already in: PDH. There seems to be an upper limit in dollar value to the success you can have in the fund/lp format. I haven't done an exhaustive analysis but beyond a certain dollar value you run into capital issues. Committed capital can be had at very low dollar values (perhaps sub 10 million). Beyond that you begin to run into periodic liquidity issues. Not to denigrate several famous value managers but a 12% return over the last 10 years is nothing to write home about. There are many companies that have exceeded these returns. The only one I am aware of who seems to outperform is Greenblatt but his results aren't public. This is a round about way of saying that operating a company that throws off cash is the best way to keep the returns well above the indexes.

This move was done to drive down the currency on purpose. I cant really see any other reason. The lower currency will insulate the Canadian patch versus the US shale patch. In one fell swoop the Bank of Canada accomplished a great deal to TEMPORarily boost the Cdn. Economy.

I wouldn't get too uptight about the US being given away. It still has the most vibrant economy in the World. 300 million people make up 25% of the worlds economy, more or less. Elon Musk didn't go to India or China to build his dreams and neither do few others. The US strip mines the world for talent which is more important than the actual trade numbers.

Man, complaining on a ski lift... Yes, and yet there is a much greater percentage of the population today that is wealthy enough to get on a ski lift to complain than there was in 1970. I agree and disagree. Skiing is one of those things that has skyrocketed in price. In the 1970s and 80s there were a lot of local cheap ski hills. This opened the sport to anyone. Now those places are all gone, they couldn't afford to buy snowmaking systems that would keep them in business through the dry years. What's left are resorts and giant complexes with huge systems that can keep snow on the mountain even when it's warm and dry (like this year). Skiing is much more expensive, but the technology is far superior. Lifts are much quicker, and the places that are still in business can be open even when the weather doesn't cooperate. In terms of affordability it is probably less affordable to the general population. But the experience a lift ticket purchases now verses then isn't comparable. I was away from skiing for about 20 years and started back 3 yrs. ago with my son. The technology change, and change of experience has been dramatic, for the better. As a kid, and in my early 20 s, I remember freezing my ass off in lift lines. No more, now I freeze my hands and face off for less time on high speed lifts. We do the same number of runs in 3 hours that used to take a whole day. Every hill in Ontario has snow making on every hill now, making for more consistent conditions. The price definitely seems higher though. Still, it is not bad for a days entertainment, especially if you take you lunch.

So, what if they are wrong?

This one hits close to home. I would say that SD is probably the worst mistake I've made since becoming a full-fledged "value investor." I've invested in a few O&G-related companies, and for the most part, my theses were all my own and focused on my views with respect to US natural gas (and not oil). However, with SD, I got pulled into an oil company with the "special situation" lure. I was expecting SD to be sold at $7 to $8, and in short order as well. Why? Because I attended the FFH shareholder meeting/dinner and heard the following: -SD is sitting on good rock. (This is not necessarily inaccurate, but it perhaps reflects too much faith that SD themselves can survive long enough to lower costs and increase their hit rate to make IRRs attractive. It would certainly be good rock for DVN to own.) -Continued support for Tom Ward from HWIC and the view that TPG was just going to flip the company as soon as they got on the board This screamed "special situation" to me, and I got pulled in, despite not being that interested in oil at the time. I also think my natural skepticism of O&G promotion was tempered a bit too much because of the support from HWIC and the very skeptical yet optimistic valuations set forth by TPG and Leon Cooperman. Well, I paid for it with my results last year. So I feel your pain. I was at the same meeting when Tom Ward took questions at Joe Badali's. I have never gone near Sandridge after that. The guy just oozed unbridled greed. BTW, not saying that I am any better than you txlaw. People assessment is something I am good at, partly from innate suspicion, and partly from experience of 13 yrs in pseudo law enforcement. I have other weaknesses.

Awesome post Cardboard. Kind of echoes my own experience. But, you know as Peter Lynch has said "it is darkest before the dawn... or the pitch black". Maybe Passive investing is just really difficult. Maybe, my returns have been 95% luck. I dont suppose I will ever answer that. Perhaps it is instructive to look at what Buffett did rather than listen to his pithy wisdom, like 20 punches etc. Buffett and Peter Lynch had one thing in common. They bowed out at the top. Buffett decided to go the private company route around 1970. Lynch retired before he got bit in the ass. Buffett is renowned for his stock picking but isn't his real skill at identifying and buying good businesses, where he has control. He kept stock picking along the way, but he always had cash flow from his businesses to invest when things looked worst. Buffett managed to avoid some of the pitfalls of the conventional value investor by buying wholly owned businesses. He never had to "hold cash" forcefully. I think one way around our problem is to diversify enough that you generate dividends continuously from your holdings. There is a whole slew of companies that never cut their dividends. I know it is sacrilege to mention dividends on this board, but that is what I am leaning toward. In the past few months I have gotten my dividends up to the level I need to live on. Anything above what I have today, including increases, will be gravy to reinvest. This is essentially what Buffett has done. He has dividended earnings from his investments, and companies up to Berkshire for redeployment. To handle the possibility of cuts diversity is required. I would love to have Seaspan as 100 % of my holdings but it is just dangerous.

In the past few days: Mullen Trucking: MTL - originally an oil services trucking company. They have diversified into trucking across Canada, which will do well in the cheap fuel environment. I held this in 2005 to 2008. FFH bought private notes from Mullen in 2009 to help Mullen survive the crunch and of course make money for Fairfax. Really well run and easy to understand. ARX - Arc Resources - Smallish position. I held this in 2005-2008 time as well. Very well run, large E&P company. Well hedged into this downturn. Russell Metals - RUS - huge metal distributor. Trading down due to part of its business being related to the oil industry. One concern: Dividend payout is close to 100% but they can probably handle it. It is basically an inventory turn company. Non-oil business may accelerate in the US and Canada. FN - Canadian mortgage company - 70% privately held. This is my mortgage company, and the largest non- bank mortgage lender in Canada. I am still working on understanding it fully. It is basically a mortgage securitization company. I am trying to determine their liability to the mortgages they have securitized. They dont do commercial real estate at all. I will add that I am not commenting further on any of these for now. If you are interested, read the financials and come to your own conclusions. I dont want to influence anyone with my viewpoints.

A very enlightened question Jawn. I dont really know the answer. I started buying my own stocks in 1997/98. It took 6-7 years before I may have started to become competent at this. Lets say, 20 hours per week over 7 years - about 5000 hpurs of time spent in some form on investing. To add to Picassos' #2) You only know in your gut when you have actual experience. I mean real life experience with real money at stake, not reading and studying others methodologies. Picasso also states that it isn't worth it for 95% of the population of investors. I agree with that. If my results had been poor after those 7 years I would have packed it in and found someone else who does it better such as a good dividend ETF. I think about how long it took Buffett to become a good investor. He tried alot of things before he latched on to Ben Graham. He didn't have the instant success that we see in the rear view mirror. Your dealing with survivorship bias on this board. In its ten years of existence I have seen many, many high fliers crash and burn. Who knows I may become one, one day. I have alot of faith that PDH will be my saviour from myself.

I remember Kresge's, and Woolworths, down the street, Zellers around the block, Eatons, Robinsons on John Street where I shoplifted my only time (scared myself straight). Where are they all now?

I am envious. I have read dozens of trail journals of those who have done it. http://www.trailjournals.com Also, you need light equipment: http://www.backpackinglight.com/cgi-bin/backpackinglight/forums/index.html You will need to think about resupply. Folks on trail journals talk about the best spots for these. The trail is sort of in 3 parts: the desert, the Sierras, and the wet Northwest. I have hiked in the Sierras various times and figure that might be where you want to spend the majority of your time. In normal summers it is fairly dry. The upcoming summer looks to be an El Nino. If that is the case read trail journals from 2011 when folks where post holing their way across the Sierras. The desert portion through southern California sounds dry and gruelling. A few hundred miles. By June it will be brutally hot, easily exceeding 100 F, even at 9000 ft. Given the choice I would probably skip that part. I have hiked in Anza Borrego, near San Diego in November and it was 90 F. The rangers thought I was nuts. I dont know much about the Pacific Northwest except it is wet. I dont mind a day or two of rain but multiple days starts to create its own form of torture. Sounds awesome. You will latch onto people on the way who you can cross creeks and snowfields safely with.

What blows my mind is how cheaply I used to live when I was single: - rust bucket truck that would leave a print of itself on the ground when I bumped a guard rail - 700/month apartment, no home insurance, taxes, ultilities - no day care costs Those were the days. All the money I made investing came from the time Up to just before my son was born - he's 11 tomorrow. Family=Lifestyle Inflation - not that I am about to trade.

Household Costs 4: - 2 adults, 2 kids Mortgage & Taxes: 36000 Cars: 8000 (est) Insurance. 5500 car and home Food. 10000 Daycare (1). 7200 phones/inet/data/cable: 3000 gasoline 4800 nat gas. 1500 hydro 1500 utilities 600 clothes. 1200 travel 12000 miscellaneous. 6000 home maint. 6000 (avg) 105000: round to 120 k for margin of safety. Notes: Car expense is vehicle replacement plus maintenance over 5 yrs. Mortgage: Was much lower but refinanced at 3 % and took cash out of house. Will repay when/if interest rates rise. For the cash value left in my house I could buy a house in a smaller city nearby, outright. Notes: Kids education is fully funded - so once daycare is done 7 k a yr. less. Notes: I suspect clothes are higher but my wife pays for her own. Mine consists of a few shirts, 4 pr. jeans per yr, two pair shoes. Please dont ask about my backpacking equipment. Great Lakes Airlines (Minnesota) lost my main duffel on the way back from Az at LAX last year. When I added the value of the contents up it came to well over $2000.00. Fortunately it arrived a few days later with my gear.

Wow! $15K for property taxes in Arlington...crazy. You guys better have the best sewer system, roads, transit and city services than anyone else I know. Cheers! I wish are services were that good - schools are some of the best in the area, but our services are pretty average, lots of excess spending by the county and excess taxing to keep our AAA rating Hesus Amigo, I live in Toronto. Our house is about 3000 sq. ft, and my taxes are 5100 per year. Probably the highest in Canada. I will never gripe about taxes again.