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Packer16

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Everything posted by Packer16

  1. I have re thought in light of how much outperformance you think you can get. For example, let's say stock expected returns going forward are 6% & you think the manager can outperform by 5% per year (B. Graham's minimum per the Intelligent Investor), then with a 1% & 20% over 6% you are paying the manager 40% of the excess return. What business do you know of that you can invest in & get 60% of the incremental return for just providing the capital & collecting the check in the mail? Not too many being a passive investor. Now if you are adding to the outperformance then you can expect more. If you want to DIY you can save the fees but those are the alternatives I see. Packer
  2. Bloomberg has become a anti-Trump political news organization with more opinion than facts in its reporting with out stating which is which. This is sad for a formerly fact based news organization. Packer
  3. Great book. I have not dog eared as many pages since The Most Important Thing. Packer
  4. IRR since inception (2000) has been about 26% per year, 41% per year over the past 5 years & 29% per year over the past 10 years. Packer
  5. Thanks guys you have provided some great feedback on ideas and friendships over the years thanks to Sanjeev for starting the ball rolling here. The funds namesake is Dietrich Bonhoeffer. Quite an inspirational guy whose sharp & frank logic about faith and its impact on society and life in general has inspired the approach of the fund. Here is a great quote from Bonhoeffer that many value investors can relate to “We must learn to regard people less in the light of what they do or omit to do, and more in the light of what they suffer.” There is nice book about Bonhoeffer that Jeff Moore found at the airport leaving the last shareholder meeting - The Story of Dietrich Bonhoeffer by Micheal Van Dyke. Packer
  6. These articles are from "Ben Graham on Investing" a book published by David Darst. This is a great set of articles and shows Graham's evolution from a bond investor to a stock investor. It illustrates how he analyzed securities across the capital structure to find mispricings. Packer
  7. He referenced buying a group of stocks at a discount to NCAV in an article for the Magazine of Wall Street in July 1924 & subsequent performance reviewed in a 1925 article for the same magazine. He does mention in 1934 Security Analysis that many more asset bargains were available in the Depression than in the past. Packer
  8. Does annual income include investment gains?
  9. If you have a passion for this stuff go out & do some analysis and build up a portfolio of ideas that you can share with other. Start with an area that interests you & research stocks in that area. Find out what makes firms tick. This will also provide you some interesting topics of conversation for networking with others. If you have something to provide someone else it always is a good conversation starter. IMO if you are truly interested in this field & can speak intelligently (because you have done some due diligence beforehand) then you can do some pretty good networking. As LC has stated you can do alot of the analysis from your couch using frameworks from other value investors. I am always amazed at how much of a paper trail exists today with the internet. Also as BG2008 has stated there are two ways to build an investment team, the Billy Bean way or the expensive B-School route. I think the Billy Bean's will win in the end. Also, you may want to attend one of the yearly investor get togethers at Daily Journal, Fairfax, Berkshire, Premier Diagnostics or Sitestar. These are great opportunities to meet a self-selected group of folks who have a common interest of value investing. I would also try to be flexible in where you end up. In my case & many others here, we work in other fields (outside asset management - IMO because it is easier to find a job using a similar skill set) but use funds generated from those fields to invest. The advantage with this approach is you can develop your own investment style & be less constrained. If you work for someone else, you are going to be constrained by their investment mandate. Packer
  10. I do as I have found it to be a great resource as time has progressed vs. other resources which have lost their depth. As stated above, they are very open to suggestions & have been responsive to my requests & inquiries of others in their network. Packer
  11. I have never met more interesting folks in one place, it is even better than Berkshire, who are interesting in talking about investing for 4 days straight. It is like the message board on steroids. If you have not attended I would recommend. Packer
  12. I think some who will not go because they are no longer invested in Fairfax, IMO just miss the point of the weeks festivities. I think it provides an opportunity to build friendships & get some good ideas face to face. Just my 2 cents. Packer
  13. He is holding cash but for reasons that are N/A to me. He owns an insurance company & has claims to pay & owns businesses that generate tons of distributions. He also has been explicit that he does not think stocks are expensive if interest rates stay where they are today. I agree that comfort is important in selecting asset allocation but do you want to do this or do you want your fund ymanager to do this. The Buffett compensation scheme of incentive fee above a certain floor incentivizes the manager to invest versus hold cash. Packer
  14. The real question you have to ask those funds who hold large amounts of cash, is the manager an asset allocator or a security selector. For most folks, the decision is two decisions. The first is asset allocation between a risky asset (like stocks) and a less risky asset (like bonds). The growth objective & volatility tolerance will determine the allocation between the risky & less risky asset. The second is the specific funds used for each asset type (risky & less risky). It is a challenge to have funds that straddle the two asset types. Also, there is the issue of fees & paying fees on cash. As LC stated above the opportunity cost of holding cash is high especially if the fund is in the risky bucket & is expected to obtain a return to meet a growth objective. Racemize's study is also insightful in that in all cases of trying to time the mixing of cash & funds do not provide higher returns. Damodaran has tried to find a system based upon valuation metrics to time the market & has found none. The best strategy appears to be exposed to risky assets unless there are extreme valuations as the opportunity cost of cash is high. Two of the smartest guys I know (Buffett & Bogle) have provided rare signals of overvaluation that should be heeded. They both gave signals that the markets were too high in 2000 & they have not given these types of signals to date. Packer
  15. The question you need to ask yourself about the Trump issue is if the candidate who won had Trump's popularity but not his personal negatives would you have made the same conclusion about Fairfax's decision. There is alot of media induced negative sentiment towards Trump. This is consistent with Prem's actions in India were a business friendly politician won election & the same happened in the US with the US candidate having personal baggage, much like Bill Clinton. Packer
  16. There is another way to participate beyond starting your own firm or working for another. There are careers in business appraisal & loan underwriting that apply value concepts in a different context. These can be nice careers in themselves but can also lead to running across interesting ideas that you can invest in the public markets also. Also another thing you can do is network with other investors at events like the Berkshire & Fairfax annual meetings. This will allow you to discuss ideas with others and find other information on value related careers or even if any if these fields appeals to you versus your current job. Working for someone else can be difficult if you are not in sync with their approach to investing. And in investing for others (your own firm) you are constrained by how the customers want to invest. Both of these can lead to investing in the others want to, which can lead to group think & is not the best way to develop a variant perception required to outperform for the most part an efficient market. One alternative is to generate enough wealth in another related field, then start a fund or firm on your own where you are not dependent upon receiving investment fees to live. Having a frugal lifestyle can help here as your income required & thus your required nest egg is small. You are looking at the MBA the right way. I used it to transition from engineering to business appraisal but had a specific goal in mind beforehand & was able to get my employer at the time to incur some of the cost along with the GI bill. If you do the MBA route, you may also want to identify financing alternatives as well as the prices are pretty high there days. Packer
  17. I agree that the press has the freedom but the President also has the freedom to defend himself. This is just an extension of what Obama did to the Supreme Court justices. In the end the voters will determine who they listen to & believe. One fact I did not realize is the amounts Dems pay per vote is almost 2:1 versus the Repubs, this is for the last 4 Presidential elections. This may be an economic reason why the press has so slowly changed to be balanced. It also has some interesting investing implications for the next 4 years as the media machine is ramped up. Packer
  18. CNN can have a rationale discussion about the issues. Most of these issues have portions that both sides can agree upon and some they do not. If you had a balanced discussion you would get more viewers & be part of the compromise. If you watch their programming, you would think Trump had no good ideas and was the second coming of Hitler (which we can now see was nonsense). I know this is not true and treating viewers like this is condescending & only appeals to true believers. CNN is not the only one doing this. Some of Fox programs are similar (like Hannity). Packer
  19. Interesting point about the ACA. IMO the name Obamacare was more marketing than anything else. The Dems were capitalizing on the Obama name to sell the program. Congress had to approve something before it effected folks & the truth is that even with approval without consensus from the Reps is leading to a dismantle today. It will be interesting to see if the Rep plan is more dependent upon state & local control or some other mechanism than rule making from Washington. IMO ACA's major flaw was not the concept but the idea that the national government could enforce national rules on all the population. Without these national rules, ACA is easy pass. As to the Spicer interview, I really do not see the big deal here. Obama selectively chose who he wanted to speak to also & am I sure favorites were given access others did not get. As a matter of fact, one of Fox's reporters (Rosen) got on the Justice department's bad boy list under the last admin. I think the main difference with Trump is that he will be more overt about his biases than Obama. Just because you are covert about your biases dose not mean you do not have them as we have seen the Obama exec orders & legislation. They key here IMO for the press is to facilitate compromise for benefit of all Americans. Why would you even try to deal with people who are not even open to this possibility? Packer
  20. The other factor for the hedges & leverage is the distressed stuff FFH invests in. I no of no other insurance company that invests in distress like FFH. So I think the hedges may be a blend of a macro view and the amount of cash vs. investments they have to pay claims. Packer
  21. I feel bad for the folks who think Trump is turning the US into a banana republic. They either do not understand the US system where the power of the President is limited more than practically any other head of state & has limited impact on citizens lives, they have allowed politics to pollute their rationale thinking (a Munger observation) or the joke is on me as this thread is comedy that I do not get. As to the separation of church and state, it is pretty far apart now as you have no "state" church & the churches in the US are pretty diverse so the possibility of collusion is pretty remote. Also, folks in the US are pretty independent lot that believe what they want to believe regardless of who is President. As a matter of fact, if there ever was collusion, I think most Americans would rebel against it. I would hardly call questioning the presses right to do what they do just because they call themselves "the press" a bad thing. Who died & made them kings & queens. When the press was more reporting facts versus opinion and channels of communications less diverse, you could make a case for providing a privilege but now with as much or more opinion vs. facts in stories & more diverse sources, IMO this privilege does not make sense. You saw this beginning with Obama & his attitude towards Fox & now you are seeing the opposite with other news outlets. The way out is for news be more facts and less opinion but this is going to be tough sell for those who think they have a right to express their opinions as facts on both sides of the aisle. Packer
  22. I think some perspective is warranted. Insurance is primarily about underwriting & fixed income management. In both of these Fairfax has excelled. The equity/distress is more of cyclical business with long periods of underperformance offset by periods of outperformance. FFH has hit an unusual long period of underperfromance like many active managers. As to the market being near a top, that depends upon interest rates. If rates stay the same or go down (FFH's view) stocks are cheap. If they go up to 5% they are overvalued. Comparing the current earnings yield to historical levels needs to be adjusted for interest rates. Aswath Damodaran does this on his site/blog & the results are that stocks are still cheap when compared to bonds. Packer
  23. Good points about inflation. I agree there will be more inflation in certain limited goods (RE in property constrained markets) & securities (with the ERP at about 5% we have some room here). Offsetting this are the on-going deflationary forces. Given our ability to produce goods and services at low cost and in abundance any additional money spent on capital (physical or human) will cause more deflation. Also more US debt/GDP is deflationary unless you plan on defaulting on it. IMO I think this additional inflation will not in the aggregate create enough inflation to overcome the large deflationary forces at work. We will go from deflation in the steady state to small inflation in the new state. Some scenarios that could create inflation and push us to materially higher inflation: a major war, a major country goes communist, a major pandemic or the US defaults on its debt. Packer
  24. The problem with the media is not the owners its the employees. A large majority come from California or the the DC to Washington Corridor. If more of them were from the Mid West, the South or the West outside the West Coast, they would not be surprised Trump won. As a matter of fact HRC won more of the large city vote than Obama but what pushed Obama over the edge was the small & large towns & small cities. HRC had little to no support there. If you go outside Rochester just 10 to 15 minutes you saw so many Trump signs it was incredible. Also I guy here made a home made Trump sign that a town said was out of code. When you see stuff like that it tells you something. Trump identified with the working folks in these areas & HRC and the Dems did not, instead focused on the city coalition. In Canada and France the city coalition can work as most of the population is there. In the US you cannot. The media became a reflection of big city views where those who disagreed were mocked and made fun of. Some in the media are reflecting on this & making incremental changes (NBC hired Megan Kelly and Greta Van Susstern as an example) but most are doubling down in city values. There is nothing wrong with city values but there is something wrong when you think the answer is my way or the highway. Add to that the power to force your views on others as Obama did later in his Presidency via executive orders & you build up resentment. Trump is the non-city folks' avenger. Trump has delivered for them from day 1 as the avenger and the media has helped him. As an example look at the polling of Trump's acceptance speech. Around 65% said it was good or excellent but the press covered it as thought it was a failure and most of them disagreed with it. What does that say about the press' reflection of the way America feels? Not a very good reflection. Since most of the press is not from the non-city they have no clue about this & are only slowly catching on. This BTW is similar with Brexit and will continue to confound city folk until they realize that mocking & dismissing versus trying to understand the non-city folks views is not very smart. Historically, the strength of most liberals is acceptance and tolerance not mocking and intolerance. Packer
  25. I think Trump sees these straw men for what they are. Those who use these are either deceptive or think people are stupid. IMO most folks are smarter than that & they are ignored & the tellers credability in that area deminished. Packer
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