Uccmal

Shalab, This is not the context in which you originally presented your numbers.

Well articulated. 1 company from the original DJIA is still around and its in a completely different business than it started as. Things change quickly. 30 years ago, MSFT - tiny startup: Apple- same 20 years ago: Apple - Tiny, Google in the works; MSFT a juggernaut with an unassailable monopoly: Amazon a tiny startup 10 years ago: Iphone; Google goes public; MSFT losing its monopoly slowly; Amazon growing; No FB yet.

Berkshire's Market Cap is 400 B. So what. Comparing market Cap to Income (GDP) is simply wrong. Not to say the collective tech. companies are not over valued. They certainly are based on cash flows and the time it takes to get your cash back out. It really depends on how long their runways are. Canada or Germany's runways are likely far longer than any tech.. companies.

Very interesting points. I hadn't really thought of the "everyone wants a ride by themselves at the same time". And of course there will be a constant feed of advertising. The deeper I get into this the more of a non-starter it is. Large usage of EVs seems probable butnthe rest... I dunno. Aint that the truth. We always tend to extrapolate the trends and problems of today into the future.

"Boiling things down to a few easy to answer questions reduces the potential for errors. Successful investing isn't finding winners, it's eliminating losers. You will stumble onto winners, but a few losers will torpedo any hope of outperformance." That says alot. One of my biggest all time losers was Rimm right when the iphone was gaining traction. Reading the filings and knowing they had cash on the balance sheet, and x amount of subscriber growth told me nothing about the reality of the situation. I needed to only take off my RIMM coloured glasses and look around to see where things were headed. Managed not to buy Apple at the same time.

He is wildly overoptimistic. I have yet to have someone show me how autonomous vehicles are going to safe from hacking, or their equivalent of the blue screen of death, or in the case of my Ipad, the assorted screen freezes, and random crashes. The notion of ride sharing services operating in rural and exhurban areas is completely ludicrous. He has no clue how people live and work in those environments. i.e. Repairing a water heater this winter at my cottage: I had to drive down a dirt road four times one day to get parts at the nearby home hardware. I had to go and look at the parts shelf each time to see what would work best. And I am going to call a ride share program each time. Yeah, right. File this whole report in the "I will believe it when I see it file".

I like this idea and will provide tangible examples, as long as I can use non-company public information. 1) Bell Canada: Largest phone company and internet provider in Canada. Has huge penetration, and raises its dividend regularly, and has for 100 years. I am a customer and hate paying the huge phone bills but do so anyway. I am also a shareholder. 2) Enbridge: One of largest nat. gas/oil pipers in NA. Has raised dividend for 100 years, nearly every year. Business protected by regulatory hurdles. Nat. Gas will be used for heating and power generation for decades going forward. Customer and shareholder. 3) Canadian Banks: I, and everyone else in Canada are customers. They are protected by regulations and agreements with government. Before I buy anymore shares I want to see a mortgage correction. Its not that difficult. What it really comes down to is market timing. If one doesn't like market timing you can dollar cost average into moat companies and never read a single financial report. I am willing to bet that if one started investing in RY, and TD, at a rate of 1000 per month, in 15 years you will have outperformed the S&P by at least a small margin. And this assumes riding through a housing crash in Canada, along the way.

Jurgis and Gjangal, I didn't use the word bubble. From an investment perspective which is after all what we are doing here, can you show me how any of the companies on the list will grow greater than single digits going forward. In other words, the best days for their STOCK price growth are behind all of them. It may not be a bubble situation but they are certainly all more than fairly valued.

Following this thread with interest. What is interesting to me is that MSFT is trading at 530 B market cap today. It reached 600 B thereabouts 17 years ago. Accounting for inflation it is maybe 40% cheaper than at that time. To me that kind of shows us the expected returns from this basket of stocks going forward for the next 17 years. But then I have felt that way about everyone on this list, expect MSFT for the last few years, so what do I know?

+ 10 : Awesome story. I met a lady way back who was retired from running a "Chinese" restaurant with her family. She owned all the buildings on half a city block in the downtown of a smallish city in Ontario. Dont how the rest of the family fared... the cheap labour portion. She was probaby from Hong Kong or from the mainland via Hong Kong.

Never looked at it that deeply. I am just a poor Canadian who knows more about the US than most Americans.... :-)

Slavery was a major factor in wealth creation at the top end, and led to fast economic development. The whole damn civil war was about slavery allowing the south to economically supercede the north. As to everyone arriving equal: Tell that to the irish who were pressed off the boat in the civil war, Japanese in internment camps, Eurpoean immigrants after WWI, Arrivals at Ellis Island, Black slaves, Jews that couldn't get hired on Wall Street.......

We shall see. I expect to lose money.

Rukawa, The question you are asking could fill entire tomes of historical books. America is rich for a number of reasons and its largely historical, some are positive and some are negative. Some of the most obvious: 1) Huge natural resource base, and great agricultural climate 2) Slavery 3) Sitting out most of two world wars that ravaged the rest of the world giving the US a huge competitive advantage. 4) One of the longest standing democracies with only one minor interruption (civil war) 5) Capitilism - free movement of goods and services 6) Immigration, particularly post world wars. 7) Good old fashioned protestant work ethic. 8) Openness in structure to innovation. There are so many factors I could go on and on, some positive, some, not so much. But the large historical advantages have largely been lost in the last 30 years. That is why the rest of the world is catching up but it will take a long time. I have always seen the military as the palatable version of socialism for the US, hence the huge military expenditure. If you join the military you get great health care, a free education, work for twenty years, and retire to work in the private sector with lifetime healthcare coverage. And as Paarslaars indicates the Us is not number one. Being eleven on the GDP per capita list is not terrible, but we all know there is more wealth disparity in the US than every other country at the top of the list.

bought a tiny number of VIX August Calls late last week. This too shall pass.....

I can give you a couple of examples from this board, niether of which I invested in where it would have been really beneficial to read the reports in great detail, especially the related party transactions: Sandridge (under Ward), and Chesapeake (under Aubrey). Ward was skimming from every successful hole drilled and Aubrey had an expensive collecting hobby financed by Chesapeake, as I recall. Where there's smoke there's fire.

This is an interesting discussion. I try to keep up with Annuals and Qs on companies I hold. I cant claim to be particularly good at it, and I am not sure it matters. Over the medium term the qualitative becomes much more important, and the "knowing" aspect becomes more important. Taking ZINC as an example. I worked a couple of years in a very similar industry. I have seen extraordinarily complex feats of engineering go multiples over budget. From a strictly qualitative perspective I would stay away from anything like that. OTOH, Enbridge is really good at building and running pipelines, from the design phase all the way through the entire process of permitting, lobbying etc. When Enbridge goes on sale I just buy the stock (like late 2015). Brookfield Renewable Energy are wizards at indentifying good assets in the renewable energy space, and or building these assets. So much is qualitative. Someone above bought up the oil industry. With most E&P companies, you really want to know if their resource base is steady, and if management seems capable. Can they service their debt at low price points? Other than that you are really at the mercy of factors beyond your control, all listed in risk factors an infinitum.

Betting against someone who had 50 years of investing and actuarial experience was probably not that smart. The odds were so heavily in favour of Buffett, but of course Buffett wouldn't have made the bet otherwise. Dude got a huge amount of cheap marketing out of the deal.

No thunder stolen Paul. Pretty much what I was thinking. John Neff and Schloss both went decades with 15% plus returns for shareholders.

There aren't many who haven't reverted to the mean, or worse. In Fund management it is very hard to maintain a good record. Just when you need the money most to invest, is when your unit holders pull out. We can probably list fund managers on a couple of hands who beat the markets for more than a decade and exited the business on a high note: John Neff; Walter Schloss; Peter Lynch (IMO he got out before his record would have tanked) , Bill Gross. Seth Klarman has done well. Running a business and identifying a moat is very hard. Most businesses are just not that lucrative. Buffett is so good because he innovates and adapts. He has always stayed ahead of the curve. He was the first to make use of insurance float in a big way to invest in anything other than bonds. Dozens have copied and no one has done as well. After he discovered that, he moved into buying control positions in businesses that generate cash, and then moat businesses. He has an entire philosophy that he has evolved around investing, a circle of competence, and business. It is not duplicable or copyable. Anyone else alive can only hope to do above average, but less than Buffett. Obviously there are single businesses that have done as well or better than Berk. such as MSFT, Apple, but just not as long.

Thats hilarious John. At the very bottom, I was on vacation in Mexico with limited Wifi, trying to sell things at huge losses to buy Leaps in "higer quality" stocks. The most exciting few weeks of my life. Not sure I want to relive it, though.

My cars: Pontiac Ventura:'garbage Dodge Colt: ran two years for 950 dollars. Mit. built them. Chevy S10: Actually dissolved Mazda B210: okay, not great (by ford) Mazda MPV: (ford): Garbage - dissolved as well. Honda Civic: Actually made money from this vehicle driving for work and on resale. Awesome vehicle. Ford Escort: Need I say more. Honda Accord (awesome): Oh, it just cost me money, for the rear brakes. Hyundai Sante Fe: good vehicle but some weird quirks. In summary: Will not buy from German cos., or GM, Ford, Chrysler ever again. Of all I hate GM so bad it will take a generation of extreme quality to convince me they have changed. Its got nothing to do with where the vehicles are made. The Civic, and Corrola, are both made close to Toronto. Its the company culture. Honda and Toyota have a reputation for quality and reliability. They can charge more for the new vehicle and dont have to discount to sell vehicles. People have to order Subaru's in advance. Its no different than any other business with high up front costs. People who have more money and patience will wait for the good contractor rather than go with the cheap contractor.

Yeah, the S&P 500 PE is 25 x. That means it takes 25 years,to get your money back if you invest in SPY units for example or any kind if index fund. And thats if you believe the Earnings as reported. Thats a 4% return, which is better than treasuries, at the moment. But, Its priced as if we never see interest rates going up again.

Longhaul. Are you the friend who does the o&g consulting? :-).

So, People ask me what I do these days. I tell them that I manage money, mosty for myself. The response I get varies. But a typical one is "oh, so your retired". Well not really. I run a business managing money for myself, and my family. I am sure that I put in more time doing this than I would at any job I might hold, short of being a senior executive somewhere. Is it all quality work? That's doubtful, but then I have worked in private sector, health care, and government, where the majority of employees do a hell of a lot less useful work than I do. When I worked for a sub of GE on contract I watched engineers go to meetings, walk around with papers all afternoon, go to more meetings, put in 11 hours of face time, and accomplish nothing most of the time. Many businesses buy stuff and resell it at a higher price and "live" off the margins. I buy pieces of companies, collect some of the profits along the way, and hopefully sell them for a higher price and live off the margins. What is the difference? I left my job because I could. I was bored to tears, fed up with mindless number crunching, and in the last 3 years, after tax, I was making 30 k per year. The taxes were so high because of investment gains. Today on an after tax basis I make more than I did from my paid job - My last T4 was 95,000, and take home after normal payroll taxes was about 60 k. So there is your answer. When you can make more from your investments than you did working for someone else then its time to quit, if you want. I make nearly as much from dividends alone as I made after tax three years ago. Add in capital gains and I am fine. My wife still works at a great job she loves which is fine. She could quit today and we would be fine. She wants more security. It is hard for non value investors to comprehend where the money actually comes from. There are caveats of course: 1) Health care in Canada is paid out of general tax revenues. I have paid mine forward for a decade or two, so I dont feel guilty. 2) I have a partial work pension that will kick in when I reach 60, as well as CPP. It wont be much since I didn't work the full 30 years or whatever but its something. Then there is OAS at some later date. Chances are that every cent of this will go in taxes. And no matter how hard I have tried I cant avoid taxes. I paid $4700 this year... far cry better than the 70,000 I paid 3 years ago. One other thing I have noticed from travels in Italy, Spain, and France is the value of real estate. People in those countries have generational real estate. It has survived wars, and dictatorships, and coups. So here I sit typing this is my overvalued house, with my overvalued stocks, and my overfed ego. I am with Liberty all the way on this. I dont really want anything material. And anything I do want I buy. I long ago learned the value of activity versus materialism. And, if I get alzheimers or dementia in my later years I am not sure I will give a damn about where I live as long as they keep me pumped full of valium (which is dirt cheap) until I meet my maker.