feynmanresearch

The Most Important Thing by Howard Marks. Also, Fooled by Randomness, Anti-fragile and the Black Swan( all three by Nassim Nicholas Taleb)

OK. Let's take that as an example. How many positions in your portfolio are such that most people will either not understand why you hold the position or will think that you are wrong (crazy, etc.)? I'm not putting you personally on the spot, this is a question to everyone on this thread. Let me make it even easier: what percentage of your portfolio is in positions where you believe to have "variant perception"? For me personally, the number is 0%. Actually, it's probably negative: I have couple positions where I am pretty sure the market is right and I am wrong, so those would count as negative "variant perception". ;) I have 10% of my portfolio in Gilead Sciences( GILD)

Read Munger on the pari-mutuel system or Howard Marks on 2nd Level thinking. Finding a great company is not enough. OK. It's not enough (actually, it is enough if you bought BRK 20 years ago and held, but I won't argue with you). I said so much above. If you are genius and can do "variant perception", great. Edit: reading Munger and Howard Marks in no way guarantees that someone will suddenly be able to do "variant perception" on their investments BTW. Should the rest of us just slit our wrists and buy index funds? Actually I'll add couple more edits: 1. Even someone who bought BRK at the top of past peaks, did really well. So not much for pari-mutuel comment from Munger, although he is definitely right short term and for some companies he's right long term. 2. Most people buy stocks all time (DCA) and not at single moment, so they can get great companies at variety of prices, some better some worse. 3. Buying great company at low(ish) price is not "variant perception". It's just valuation. WTH is "variant perception" anyway? I'm gonna partially agree with Hielko that it's mostly meaningless phrase. Can you give examples? Mike Burry and CDSs? (even he was not alone in that perception, so is it really "variant")? Berkowitz and AIG/SHLD/Fannie? Are these really "variant" either? Ackman and HLF? Or Icahn and HLF? ;) If I bought AAPL in 2013, was that "variant perception"? Valuation? Both? Neither? A case of variant perception would be Cheniere Energy( LNG). Carl Icahn and Seth Clarman both have sizable stakes in it, but for the life of me, I can't figure out what they see in that company

Read Munger on the pari-mutuel system or Howard Marks on 2nd Level thinking. Finding a great company is not enough. This. It's not enough to just buy a very good to great company- one must buy it when its undervalued, which often times happens during times of financial distress such as an overall macro crisis or temporary unjust judgement of companys prospects which is not likely to be permanent over the long-term. In short,being an contrarian is often a must if one is looking for consistent, long-term outperformance. Another ways to achieve outperformance would be to detect great companies before the market recognizes them or bet on the direction of the moves of the overall market( I don't think anyone could do this consistently, time after time). Nothing wrong's with buying good to great companies and let them grow, but if you want to manage OPM, its a must that you deliver alpha. For a personal portfolio, I don't see anything wrong if an investor just bought good to great companies and held them for years

I don't know. This sounds pretty ridiculous to me. Humiliated for picking a losing stock? That's completely absurd & irrational. That whole section of the interview comes off as pretty pretentious. I don't think there's any risk of "forgetting the feeling" of losing money in a stock considering no one bats a thousand in this business. My worst picks have been down 80%, my best up 500%+. The individual gains and losses don't mean much; it's what they create in aggregate that counts. Just like a painting is more than just the individual strokes used to create it, so is a portfolio more than the individual winners and losers used to generate its returns. The weighting, timing, magnitude, all these things matter. If you had two stocks allocated 50% each, would you rather have a situation where one went to zero and one went up 10x, or would you rather have each one go up by 10% to avoid the "humiliation" at having been wrong about one? And, just a pet peeve of mine, I hate the concept of having a "differentiated" thesis, variant view or whatever you want to call it. Why? Because it's marketing bullshit that suits use to come across as more insightful than they are. "The market thinks this, but I think that opinion is wrong," conjuring straw men to tear down to make the thesis sound better. When really, you have no clue what every other market participant thinks or if your perspective is truly unique. You can find out what sort of expectations are priced in but not the reasons for those expectations. If you say you can, and then craft some sort of story or narrative for your pitch based on that, you're not really performing analysis. You're marketing. There's nothing wrong with marketing, it's almost a necessary part of business development. But it's important to be aware of the difference when you're reading content that is even somewhat commercial in nature. One last thing, reading can be important but reading everything really isn't necessary. Most content is entirely useless and detracts value. Good for this guy for being successful with his style; seems like a smart dude. Personally? I've found that by cutting out extremely thorough research, my quality of life has gone up and my returns are still pretty good. It's very easy to talk yourself out of a good idea or overthink a problem. More often, the keys to whether an investment pays off are few. I've found focusing on the few things that really matter for each company does the vast majority of the heavy lifting. This is just weird, IMO. Wells Fargo certainly has structural advantages over many other banks and does have something of a moat. Not the world's strongest one, but nothing to sneeze at. I mostly agree with the rest of his comments, but these in particular really stuck out to me. Maybe I'm being too nitpicky, most of this was pretty good. His comment about Wells Fargo was definitely strange. Banking is more complicated than that- if Wells Fargo didn't have an edge, then Buffett most likely would have not invested in it. If his argument holds true, any bank is a strong candidate to invest in, and we all know how that turned out in the recent past

Late 2014, when I was 22.

Thanks for the recommendation. It has been in my to buy list for a while-I'll be happy to finally pull the trigger. I have a very interesting blog on how value investing and behavioral finance interconnect: http://seekingalpha.com/user/37577646/instablog

I agree. I struggled to read the Aggressive Conservative investor because of his writing style. Although that book definitely has some strong insights in it

Consider yourself lucky. ;) Why?

Delirium Tremens

I haven't shorted anything yet, but Zillow Group(Z) and Famous Daves of America( DAVE) are definitely currently priced way above their intrinsic value.

[amazonsearch]Classics: An Investor's anthology[/amazonsearch] This book was written by Charles Ellis, the author of Winning the Losers game. The book has writings and articles from the most successful money managers, starting before World War 2 to late 1980s.Some famous investors profiled are: Paul Cabot, Benjamin Graham, Lord Keynes, Warren Buffett, Philip Fisher, T-Rowe Price, John Templeton etc

[amazonsearch]John Neff on Investing[/amazonsearch] This is really good book, that I think is not appreciated/known as much as it should be.John Neff managed the Windsor fund from 1964 to 1995, consistently beating the market average year after year. He describes his investment philosophy in a very straightforward way. Unlike some other authors, he provides concrete examples of his investment,alongside with his rational for undertaking them.

I actually started reading this book, but I failed to finish it, as I got distracted with work and school. Definitely plan to finish it in the future though

Let me know your final thoughts after you finish reading it. The topic sounds definitely interesting.

If you had to chose between the McKinsey book and Damodaran's book, which would you chose?

This books is on my to buy list. Google is definitely a fascinating modern company that everyone should get to understand, at least on a basic level.

I am looking forward to reading Marks book. I have heard so many good things about it