flesh

How do I back into corporate expenses that aren't included in combined ratio? Is a tax rate of 25% conservative considering most business is done in countries that have a lower effective tax rate? If doing a steady state/owners earnings type of analysis isn't it safe to assume runoff is replaced with organic growth at least? If we assume 25% cash (2 years or less), 50% bond(and divi/interest paying instruments), 25% equities, with 40b in investments (inclusive of holdco cash) and a conservative (based on recent five years) 98% combined ratio on 12b premiums written and a 25% tax rate. 10b cash @ 2% = 200m 20b bond @ 4.5% = 900m 10b stock @ 7% = 700m underwriting profit =240m +non insurance profit=? = 2040m -corporate/what else? - 242 m interest = 1798m -25% tax = 449m = 1348m -67m preferred = 1281m Trying to wrap my head around this from a what will I be paid, conservatively, in the next few years standpoint. I'm still digging into this, just thought I might accelerate the answering of these questions by farming it out here.

I read the 17' letter. He's making them shorter now, doesn't want to divulge much, don't blame him. Nothing in there anyone's missing. He did say that all the recent small positions are thought of as low downside with upside optionality as opposed to high conviction the upside is there. He glanced over all the large positions and didn't mention MNRO at all.

Not sure Pinker would call himself a lefty. He gets attacked by both sides. I think the left dislikes a lot of his evolutionary psychology stuff... That's when you know you're an independent thinker: Once one side accuses you of being on the other side and vice versa, and all you're trying to do is figure out what's what on a case by case basis, so you don't fit into the nice arbitrary binary tribal divide that most people slot themselves into. I thought he considered himself a classical liberal. His views on gender certainly aren't post modernist. It seems many independent thinkers are finding themselves in no man's land lately. It's interesting how often people's thinking is binary. It's to the point where I have to couch everything I say in "insofar" "inasmuch" "to the degree/extent". It's really bizarre to me folks can't contextualize anything I say and consider my implied probability, but they can't! If they would just listen it would be clear i was speaking of a small majority or a substantial minority etc. About a year ago having dinner with two couples from SF in france after a day of climbing we had a conversation that ended, reductio ad absurdam, with me asking them if it would be okay to transport (a la star trek) an unwanted baby from a pre abortive mother. After overcoming their objections regarding the safety of transporters, they all said no, it's the mother's choice. In deep space 9 this was done between Nourice and Kaiko. There's no room for nuance in a binary party line. The beginning of the conversation started with, "is it a human life at 8 months". Anyways, Steven is a interesting guy. Thanks for the reminder.

Just ordered on audio. I'm really liking the rise of the honest, thoughtful lefty's.

I think industry resources would make a great new sub-forum. I rarely use them and generally rely on MOS and what I can know about the future however I'd like to improve beyond this.

Degree of Competitive advantage = long term value. If there's another way to think about it that's useful as a forward looking measure.. I haven't found it. Buy with a MOS sell when in full bloom... if it's a compounder the dcf is as strong as the competitive advantages are. The rest is portfolio mgmt and psychology..... knowing is half the battle... psychology is the other half. GI joe was brilliant.

https://www.amazon.com/Financial-Statements-Step-Step-Understanding/dp/1601630239/ref=sr_1_1?ie=UTF8&qid=1515188961&sr=8-1&keywords=how+to+read+financial+statements https://www.amazon.com/Why-Stocks-Go-Up-Down/dp/0989298205/ref=sr_1_1?s=books&ie=UTF8&qid=1515189040&sr=1-1&keywords=why+stocks+go+up+and+down

29% equities account. 14.5% average cash position 1 loser No down years or s and p under performance years since I switched from indexing in 12' Continued 7-8% out performance average. Another good but not great year. Fewest sins of commission in a cy.

I like to read books first and then if they warrant it, revisit them on audible. I done this with many investments books listed above. When I was younger and trying to pull myself up by my book straps.... I listened to Tony Robbins Personal power and get the edge 10-15x each in 3 years. These were his inspired products akin to the first three star wars and everything since was the subsequent star wars. I highly recommend them to anyone who suffers or has a hard time achieving in life. To this day I still have his methodologies guiding me and reverberating in my mind with my own adaptations. It's been 15 years since I've been through them. Some snippets off the top of my head. 1. Using/creating pain to motivate yourself to do something difficult. Pain is a greater motivator than pleasure. 2. Don't major in minor things. 3. With a big enough why the how will follow 4. When things are at their worst, get excited because that's when the tide is about to turn. 5. If you don't attempt to achieve something big, you can't achieve anything big. 6. Interrupt your patterns 7. Act immediately on new ideas or they will be forgotten 8. Many inadequacies can be compensated for by massive action 9. Your success doesn't require anyone else's belief. Often others won't believe in you/your objectives.

With the recent nc spin of hbb..... IB converted my b shares of hbb within a few weeks allowing me to sell at 39/share... meanwhile ally.com (I know I should change) still hasn't done it and it's drifted to 27/share. Just a anecdotal counterpoint. I wonder if other's with different brokers participating in the spin had other experiences?

I really liked it. Its good preparation to understand the mechanisms and psychology/neuroses that are entangled causing crashes.

I've fine tuned my understanding of the co since but there's is a ADS thread I posted in a month or two back that you can look at. I was going to put out a mini write up on vsto at 13/share in the old vsto thread but no one responds to my posts so I didn't.

Added ads. vsto good here, cost basis 13.50. -Steady state fcf 120-140m. Achieved by hair cutting 33% (33% greater hair cut that whats been impaired thus far) of acquired post 13 ebitda and normalizing the ammo side of business for pre obama 10 yr cagr growth in nics data. fcf plus interest to ev is still under 10x (conservative because lots of evidence shooting sports have become more main stream) -New ceo likely sand bagged recent qtr so he can now save the day. -Selling some non core assets, mgmt says sales of 130m in this non core segment, so if sold at 1x sales = 130m debt pay down, focused on paying off debt. -Next two year fcf higher than steady state, receivables much higher than payables, destocking happening, likely 150m+ fcf next 1-2 years = significant debt pay down. -Durable brands that aren't going anywhere (unless all brands do) -capex going down back half cy 18, r and d may go down a bit as well -Biggest risks to my mind are further deterioration in retail that's not compensated for by internet penetration on the outdoor brands side -Possibility ammo sales remain muted if everyone really did stock up although this would be temporary Its highly probable the debt/equity looks much, much different end of cy 18. If my assumptions are correct I see 30-90% gains in 18 months absent economic contraction as a run of the mill outcome.

Good stuff. Seems like many of us are doing the same thing. I often have large positions, 10-35% of portfolio and so it's easy to trim here and there. If I have a 20% position and it's up 30% in a few months but still 30% below a reasonable value and it's at cap gains rate, I may reduce to 15% position or so. Other than that, I'd say sell when in full bloom or close to it. Is it perfectly clear now that others see what you saw originally? Is it in TTM numbers now? etc. I've done quite well trading around large positions, on the one hand it's hurt performance sometimes, otoh it's helped sometimes.... these seem to cancel each other out however by trading around long positions at cap gains rates I generally get nearly the same returns while maintaining a larger cash position.

No offense but you are totally missing the point. At least the point that I was trying to make... Demanding absolute consistency??? Who is demanding that? If you are making speeches here and there all the time, shouldn't we expect some type of consistency between your speeches and what you are actually doing in real life? No one is forcing him to make those speeches at the end of the day. After you tell your audience something you would have a moral obligation to either follow that in real life or let people know about any changes. Of course anyone has a right to change his mind but the problem is making public statements and the responsibility of letting people know about any changes that might follow afterward in my view. I totally agree with the previous comment regarding cloning too. He is always talking about how he is cloning easily etc etc. Is it that easy? come on man, you are supposed to give either full picture or shut up in my view. Actually, he has no responsibility nor obligation to align his action with his words (whether private or public). It is only up to his clients to decide whether to keep their money with him or not based on such a behavior. You said no one is forcing him to make those speeches... so you also can't force him to be consistent... It's his business and life. But the consequences will naturally follow. I don't blame him for some inconsistencies, I think he's a great guy aside from the fact he didn't update his cumulative record after a few bad years. There's good reasons to appear inconsistent. "When the facts change, I change my mind, what do you do sir?" -Keynes "The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function" -F. Scott Fitzgerald "Cognitive dissonance refers to a situation involving conflicting attitudes, beliefs or behaviors. This produces a feeling of discomfort leading to an alteration in one of the attitudes, beliefs or behaviors to reduce the discomfort and restore balance etc."

Thanks, looks good, ordered a used copy on amazon. Looks like other such similar works put out by Brockman.

https://www.gurufocus.com/news/580392/john-hussman-hedging-and-opportunity-costs It appears to me that you have to assume much more frequent corrections than history provides to do well with excessive hedging. At least his AUM has been killed, if I was him, I'd feel horrible. Alternatively, I'd write weekly letters to keep my delusion alive. He could create two separate funds, one long, one short, and give options. However if he did this, he'd have to come to grips with reality, that evidently wouldn't do. Absent the value nirvana period of out performance during the dot com bust, his ex hedge results would be quite mediocre although above average. I don't want to be negative but he holds a unique space in which he's frequently referenced/held in high esteem yet steals money from his mystified investors..... I don't think that's too strong a word. It's difficult to find greater atrocities even if his hedges created a 50% out performance next year, excluding those temporarily lucky fresh investors. Finally, he could offer a t-bill fund in which the mgmt fee is = to the t-bill return and give his investors some relief. Hopefully, he wouldn't hedge the US govt...... one can dream.

Wait for gov bailout? https://ibkr.info/node/845 Thanks.

What happens in a 30% market sell off when shares sold are greater than short lending capacity? I emailed IB about this, no reply yet. I don't pretend to understand this but it seems like a yuge risk. I suppose IB is automated and forces the shorts positions to be closed out? Or in the case a particular equity sold off or the market, many shorts would cover and therefore the probability of anything catastrophic is muted?

I don't know how it works for institutional investors or hedge funds but I have gotten as high as a 40% rate lending shares on my Schwab account. Always made me wonder what Schawb was charging the borrowers. Majority of time it has been in the single digit percentages. I know that in IB you can setup your account for lending and split the interest with them 50/50. I don't believe Schawb discloses what percentage of the total take they are giving you. Anyone know what precautions brokers take to protect against massive sell offs? If cmpr is down 50% in a day and the sales by IB account holders is greater than the total shares lent though ib, what happens?

This is from memory and I don't want to spend the time to quantify what's implied. Dot com bust, value nirvana period, Arlington did 15%ish a year, so did many, many, value managers, or thereabouts. 08', fairfax odyssey did well, traded brk short term, brk made an offer to buy an energy company, energy company stock price tanked below offer, Allen was confident WEB wouldn't back out and backed up the truck, deal went through. 13' 50 or 55% position in brk, brk did well, also used margin at around 1% cost on brk position, vistaprint and xpo had great years as well. Sold puts on brk position. 16' not sure how they did so well, portfolio returns much greater than picks, maybe was levered part of year with brk..... could have bought a lot in the 120's. Already had an position in brk before 2016 could have sold some long end of 16' to end up with cash position of 20% plus or AUM simply grew from the letter they sent out saying it was the last chance for existing partners. IMO, that explains most of the performance, if you add to that some short lending that helps obviously. 92% in 09 for small aum value funds isn't that extraordinary, I've seen many cases of this.

Very cool. Excited for his new book, I have it on pre order. Don't really know much about the man myself.

One thing that's infrequently mentioned in these conversations is whether or not the correction is economic based or not. If you go back through us history, many of the stock market corrections weren't necessarily based on the underlying economy tanking and/or the corrections magnitude exceeded the underlying economic contraction. If you were strictly a value investor, dot com, 87', nifty fifty, wouldn't have been very difficult. In the future we could see crashes exacerbated due to ubiquity of etf's that some prominent investors have alluded to. Where a minor, say 10% economic contraction causes a much larger sell off. That said, where we are today could be different, as the median stocks valuation is high as opposed to a smaller cohort as in times past.

I have no idea why, but today this site has ad's that keep pulling my screen to the bottom of the page and sticking me there for seconds before I can move back up. This is happening every couple minutes. Driving me crazy.

It seems most of the investors I respect are stacking up an unusual amount of cash relative to their historical allocations as a % of assets right now.........