ratiman

On the day his father died his son Phil liked this tweet: It’s amazing how fast you can go from “a robot is vacuuming my house” to “a robot is doing a bad job vacuuming my house, man fuck this boi”

Why not just look at return on capital? It shouldn't matter how it's funded. I think somebody won a Nobel prize for proving that.

But can't the assets be transferred to another bank?

GS is running the sale process. Why wouldn't GS be the acquirer? It would be a chance to lock in tech firms as clients and GS is a bank. WFC might be another possible acquirer as it's in California but WFC already has a lot of problems of its own. JPM is always at the top of the list but after Bear Stearns I don't think Dimon wants to go through that again. Or will there be no takeover and it will just go into the typical FDIC process, which would be devastating for a lot of startups and VCs.

Thanks, that is helpful.

Thanks. I thought that was the answer but I've run into some companies with such slow turns that I thought it might be that the company was valuing inventory at retail price. Another quick question: if a company ships off the inventory to a retailer, does the inventory shift to the retailer or is it still considered in inventory until the retailer pays?

This is a dumb question but I couldn't find the answer. When a company lists inventory at $10mm, is that the cost of the inventory or the retail price? I would assume it's the cost but if so, many of the companies I follow don't turn over the inventory more than once a year. I know there are some accounting experts on here who might help with this basic question.

Here is his explanation of the non-expecatations approach: https://operators.macro-ops.com/wp-content/uploads/2017/09/Expectations-Investing.pdf "Having been on the sell side for many years and then on the buy side, I can say categorically that the single greatest error I have observed among investment professionals is the failure to distinguish between knowledge of a company’s fundamentals and the expectations implied by the company’s stock price. If the fundamentals are good, investors want to buy the stock. If the fundamentals are bad, investors want to sell the stock. They do not, however, fully consider the expectations built into the price of the stock. Whenever I assert that stock prices are based on expectations, investment professionals shrug their shoulders and say, “Well, of course. That’s obvious.” But as obvious as the assertion sounds, few investors take the time to understand those expectations and determine whether they make sense. So the non-expectations approach is "Buy a good story, sell a bad story," which probably isn't the worst advice, but it's not a position that anybody would defend. I think Mauboussin is actually trying to sneak in a slightly stronger claim under the heading of "expectations investing." The stronger claim is that there is information in the stock price and an investor is better off "updating priors" than dismissing it as irrational. That would be a more interesting argument but he probably doesn't spell it out because he doesn't want to be associated with momentum investing.

If you're on COBF you're probably familiar with Mauboussin's expectations investing. The idea is that you begin with the stock price, figure out what expectations are built in to the stock price, and then compare with your expectations & estimate of stock value. What I don't understand is how this is any different from calculating fair value, and then comparing with the stock price. It's the exact same thing. I've read the book, I've listened to MM's interviews, I've read reviews, and I can't figure out how his process differs from ordinary stock picking. He's rebranded the platitude "hear both sides of the argument" as "Expectations Investing." It really is a great trick.

Interesting, thanks. I think a lot of investors would pass on that business because there's no unit growth and the price hikes are unsustainable. Every high-margin consumer brand attracts very persuasive critics who make some really good points about the margins. In this very thread there is somebody saying that Starbucks relies on the genius of Howard Schultz. It is very hard to get over that skepticism. Maybe the explanation is that the chocolate business is a really good business to be in when everybody in America is gaining an extra 20 pounds.

Every single reason Buffett proposed for the success of See's turns out to be wrong. Scarcity? Lindt is in every drug store. Geography? Every brand comes from somewhere. Freshness? Nothing fresh about Lindt or Godiva.

If a Sees Candy-like investment were to show up today, value investors would dismiss it as being an overpriced & faddish product with no sustainable moat, the same way that value investors dismissed Starbucks in the 90s as overpriced & faddish coffee, even though Starbucks was over 30 years old by then. When people say that Buffett understands the Sees moat, I don't think that's correct. He could read the financial statements, but buying the brand was still a leap of faith because the strength of the brand is mysterious. There is something inexplicable about genuinely successful premium brands. If Starbucks were named Il Giornale or Nike were Dimension 6, they would not be the same brands.

If Sees Candy were publicly traded, would any Berkshire investors own it? "That company has no moat. This is the Harley Davidson of chocolate, it appeals to boomers but to nobody else. You're buying into an overpriced, overhyped brand with no moat that can't grow outside of California. Those margins are indefensible and over time they will be competed away." Maybe the real genius of buying Sees was that ultimately Buffett didn't know what the moat was but he bought the company anyway.

I stopped giving chocolate at Christmas because everybody on my list is either a) fat or b) desperately trying to keep off the weight. Nobody looks at a box of chocolates and says "Oh thank you for adding an inch to my waistline."

I've read that if you show up at a Godiva just before closing you can get the chocolate covered strawberries for free, right before they're thrown out. Just a heads up for the true value investors out there.

Thanks, that's very helpful. But i'm not sure it totally answers the question. The same concerns about freshness would apply to Lindt or Godiva. I had no idea that chocolate could be fresh or not fresh.

I didn't plan this but this is a good story about the growth of Sees. https://thehustle.co/how-a-small-candy-company-became-warren-buffetts-dream-investment/

Buffett has said that it's hard to grow Sees sales but chocolatiers like Godiva and Lindt sell in supermarkets and also maintain independent shops. I've heard that Buffett wanted to maintain the Sees brand and didn't want Sees sold next to Hershey's or something but it works for Godiva and Lindt, it should work for Sees too.

"A police department in Florida once held a "Day devoted to public safety" . . . "

The first words of the first chapter are "A school in Connecticut once held a "Day devoted to the arts" . . . " WHO CARES? I can't imagine an introduction less likely to get the reader hooked.

CB on WSB https://www.listennotes.com/podcasts/we-study/tip438-berkshire-hathaway-0VEjovYZl9c/

I want sites like Koyfin to succeed but my bookmarks are filled with dead links to sites that have tried to replace Yahoo finance (remember Zignals?) It's amazing how many things YF got right and how difficult it is to replace even for billionaires. I think the basic problem is that everybody has very unique preferences and ultimately most people default to a mix and match of different sites. I also wonder how large the audience is. We've all heard the anecdotes that like 57 people actually click on the link to the SBUX 10-K.

GE under Immelt sounds a lot like IBM. Predix is basically Watson, a vaporware AI layer on top of all its industrial machinery. The fact that it took years for GE & IBM to admit that it was all nonsense, after spending hundreds of millions on advertizing, is kind of amazing. Immelt was a P&G product manager in his first job, and that's the mentality he brought to running GE, with lots of consumer advertizing and rapid buying & selling of brands. Unfortunately industrial machinery is nothing like soup or detergent and GE spent billions chasing after fads. It's amazing that Immelt lasted 16 years when he clearly wasn't suited to the job. The biggest difference between Immelt and Welch appears to be be that Welch was willing to hear bad news.

2020 defense budget was $738 billion, according to my Binging. 2023 defense budget will be less than $800 billion. That's a cut in inflation adjusted terms. I don't know how much but it's not a small cut. With Republicans turning against the military, and Democrats never that big on defense spending, I don't see how the defense budget keeps pace with inflation. Even if Russia were to invade Ukraine, I'm not sure it would affect the budget. These things go in cycles.

#nofilter I hope he doesn't shut up because the entertainment potential here is spectacular