twacowfca

What made you choose those 2 rather than some of the other beaten down stocks around that time? These were the two I felt I knew the best. There's a story, of course.....and it's etched in our family lore. Sunday March 8(?), 2009, the wife and I are at a car wash and I say, "look, I won't do this if you say no, but Wells Fargo and AXP are down to $10 and they are worth probably 3X that amount. The market thinks they are going under. I don't. I want to put 1/3 into each." She shocked me with an immediate "yes." So I was prepared to make the trade Monday morning....I didn't sleep well, and woke up at 3 AM. Absent-mindedly I turned on CNBC, and bam, there was Buffett. And he basically endorsed them both, you know, the way he tells you without actually saying 'buy the stock.' One thing he noted was their $40BB pre tax pre-provision income and how the company was selling for like 3 X that. Every once in a while we go back to that car wash and reminisce ;D P.S. Some one rudely pointed out later that if you just bought an index of small-cap stocks at that same time, you would have made even more. What would have happened, however if the market had really tanked in 09 and 10 as it did in the extension of the 1929 crash? I think it's very likely that the high quality stocks you bought would have been among the survivors, but many of the small caps, especially those with significant debt, would not. Your choice presented what Taleb calls convexity of outcomes, relatively good results under many prospective futures and resistance to failure in the worst circumstances. Congratulations on a fine risk adjusted decision that wasn't all that risky in even worse outcomes than what occurred. :)

That's in effect what I used to do with Buffett. I would ignore his adding to his old stalwarts and zero in on his new positions, especially when he was still active in buying a variety of differently sized companies, including mid caps. Warren typically bought after a big dip in a stock's price, and I was usually able to purchase the stock at a price that was lower than his average cost. :)

There was a study a few years ago that showed when fund managers built up a position in a stock that was a large amount of that stock's market cap, the stock outperformed by something on average about 6% better than the market.

twacowfca, you already know that by “first class management” I meant exactly what you have written! ;) That is much harder for me to do… Though I understand its merit! It is just that I spend my whole life thinking about business. What works, and what doesn’t. Guess simply not much time left to become shrewd and confident enough to grab opportunities like BAC and BP… Who knows? Maybe after some time spent on this board… :) giofranchi Yes. Simple in concept, but not always easy to jump on a bucking bronco at the right time. I completely missed BP because I was wrapped up in something else that was more complicated that took longer to work out with less profit. I bought BAC one day off the bottom, but through flukey circumstances it turned out to be a small position instead of a large one.

twacowfca, you already know that by “first class management” I meant exactly what you have written! ;) That is much harder for me to do… Though I understand its merit! It is just that I spend my whole life thinking about business. What works, and what doesn’t. Guess simply not much time left to become shrewd and confident enough to grab opportunities like BAC and BP… Who knows? Maybe after some time spent on this board… :) giofranchi

That is a good objection! I demand: 1) first class management 2) good business 3) at least 10% pre-tax owner earnings yield in year 1, with an history of growth that, if sustained in future years, could lead to a compound return on my investment of 15% annual. Therefore you are right! Very unlikely to reach 25%! :) giofranchi That's a good basic list. Even more focused would be a good business with a straight shooting owner that had most of his wealth in the business and a long record of superior returns with the prospect that those returns will continue indefinitely. Then, all that's needed is a good entry point and willingness to let the compounding begin. That's the surest way to make money, but not the only way. There are occasionally decent businesses under stress that are likely to be survivors and can be had at a fire sale price : think BAC. One offs like BRK with a free quasi put at a strike price equal to the market price or BP when all the scientists were saying that their third attempted method to cap their well was almost certain to succeed in a couple of days as they had detected that they were only were only a few feet away from it. At such times, putting a huge chunk of assets into such opportunities as many on the board have done isn't as risky as Mr. Market thinks it is.

Wow! You've got us beat, Keith. Over a slightly longer period, 13.5 years, the best estimate for our geometric return is 27.5% per annum, compounded. Of course, Eric puts both of us in the shade. At one time or another since Y2K, we have had more than half the portfolio value in one of five different companies.

Hmm ::) Zero correlation. It doesn't go up when the S&P 500 goes up. It doesn't go down when the S&P 500 goes down. A one off? Or a time series? If so, does it stay right there. If not, where does it go? A vector into another dimension? . . . Shave and a haircut -- ? ? Shave and a haircut -- ? ? ( with apologies to Who Killed Roger Rabbit ) :)

Someone I know once got what eventually amounted to $1,000+ a word for a couple of pages of advertising copy he wrote for a friend on a profit sharing deal. I thought that was exceptional until I learned that BAC 's accountants made $147,000 per word for every word in BAC's 2010 annual report.

Perhaps you are not aware that the author was a daily poster on these boards a couple years back. For those who are unaware of the backstory, he was a frequent poster who had a reputation for arrogance and would rudely insult others for their ideas while contributing very few of his own. He would often refer to his quantitative approach ("our systems") wildly outperforming...but would never share performance data. I believe several times Sanjeev threatened to ban him for using insulting language (I also believe he insulted Sanjeev himself)...though when I search his posting name nothing appears. I'm not sure if his disappearance was due to an actual ban or not, but I would suggest the board is better off without him. As you can tell from his book title and the few pages available on Amazon, Harry writes as though he has a well-established track record and deserves the respect of the investment community. However, in reality he is a kid who graduated from Rice University within the last few years (I believe 2007, but his linkedin profile is no longer public) and has never had a real job (or at least according to his former linkedin profile). I was always suspicious that given his background of no career history that he was someone who was just playing around with family money...and then upon googling his father's name today (whom he dedicated the book to), I found this (which mentions a son Harry): http://www.cruisingworld.com/news/yachtsman-sumner-huey-long-1921-2011 http://sportsillustrated.cnn.com/vault/article/magazine/MAG1081859/ Not that lack of age and experience means anything with regard to potential success (Michelangelo produced the Pietà at age 24)...or that ease of career due to access to family money means anything either...but in a case of an individual under age 30 with no career history and no disclosure of a track record the extreme level of arrogance certainly appears baseless. Which brings me back to the same conclusion I mentioned earlier...Not sure if trolling or just stupid. A web search reveals the fact (?) that there are 897 people in the US named Harry Long or Henry Long. :(

That was my recollection. I dont think he was ever banned. No, he was never banned. He left on his own accord because you minions had no way of grasping his ginormous intellect. You fools! You could have had his trading secrets for free...now it will cost you just under 200 bucks! Although, if he could sell his book for $200, what do you think someone with an actual successful and astonishing record like Eric could sell his for? Twacowfca, you guys better sign Eric up now...he has no idea what he's worth yet. Cheers! Yup! Eric's definitely got the mojo. It's called hang in there when you know there is a high probability you're right. And then double down if you get under water! I think his secret sauce would be a hard sale, however.

Oh! Foul company. An undeclared trace of milk in one of their bon bons. What a nanny state we have become.

Did you ask him how he does it? Practice or technique? It's possible through the Dynamic Reading Process to read as fast as one can turn or swipe the page with excellent comprehension. :)

You've got a great idea, but the methodology gives too much weight to "has been's". You might also sort out a list of the twenty most popular stocks over the last three months that don't appear on the list that goes back farther in time and have a separate poll for them. Then we can see if the best of the new kids on the block beats the old gang. :)

The parents of our children were avid young readers who could and did read about anything by the time we reached "school age". One thing we had in common with other early readers is that our parents read to us from the time we became toddlers during a quiet time. Attention, repetition and engagement are key. Discover the books your preschoolers like the most and read them over and over again as you hold your child or children in your lap. Ten Little Ponies was a favorite with our children. Reading it with them engaged them not only to complete the sentences, but to learn numbers and counting forward and backward with basic addition and subtraction at the turn of each page as they realized they could anticipate and solve elemental math problems. They were so engaged that they easily memorized and understood the vocabulary that was far above the usual for first reading books. :)

There is often a signal within the noise. That's a very helpful observation. Even things such as association of up vs down days with sunspots may involve conditional causality. Sunspots are associated with weather phenomenae, a known influence on the direction of market prices. Also. There is strong autocorrelation in the series posted by Beer Barron. This appears to be greater in the up series than the down series. As each series becomes extended, there is an increasing tendency for the trend to lessen and then reverse. This is more apparent in the down series than the up. In summary, It's a classic fractal pattern. :)

Very good. :)

The US system is rigged to discourage price discovery and quality of service discovery. Health care providers are incentivized to provide the most expensive (and profitable) treatments imaginable regardless of efficacy if the treatment at some point in time was approved as having a possible benefit. Many treatments seem to be inexpensive, but have adverse consequences for future health and enormous long term consequences for the financial health of the system. Most drugs that affect cognition and mood do much more harm than good. The US has about 6% of the world's population, but accounts for about 80% of legally prescribed narcotics. This causes dependence and addiction, leading to poor health and multiplied downstream expenses with increased business for the "health" care providers. Patients don't even know that they are being prescribed narcotics. These have been renamed: "opiate agonists" It's sad, :(

By no means. We check it every week. It's still on a tear as shown in the graph. A significant amount is finally finding an exit into M2, the main economy. When the tap finally gets turned down. . . Watch out! Please note the big (for then) uptick right before Y2K. Greenspan thought it was a good idea to put liquidity into the system because of the scare stories approaching the end of millennium. When that proved to be unnecessary, the withdrawal of that stimulus by early 2000 tipped the market into it's big slide.

A non event happened this week. A number of companies reported mark to market losses on their portfolios that lowered book value per share. Normally, such fluctuations should be ignored as being merely noise, but a few companies took hits to their portfolio value greater than they experienced during the financial crisis because they reached into the most risky depths of the debt markets. Allstate, in particular took a massive hit of $2.7 B on their portfolio MTM value compared to their statutory surplus of $17B. They have started to repair their balance sheet by issuing preferred stock. To the best of recollection, not one analyst on their earnings call mentioned that gaping hole as they went along with management's spin of drawing attention to their somewhat improved net earnings. Has anyone else on the board noticed a suspension of critical thinking among the investing community in particular areas?

Paradoxically, it's more difficult to make decent, lasting returns in stocks in rapidly growing economies than in developed economies because profits have to be reinvested to ride the tiger until there is a shake out in a developing industry with only a handful of profitable companies left standing. Think steel, airlines, auto and aircraft manufacturers in 20th century USA.

The US government announced yesterday that the FBI arrested Sandeep Aggarwal in connection with the SAC insider trading investigation.

AM Best also cited the risk that SAC RE might lose key staff.

Ironically, the depositions of Cohen taken in the FFH lawsuit that was dismissed by the judge have become the key to the recent criminal indictment of SAC Capital because the depositions revealed a cavalier attitude by S. A. Cohen toward the possibility of insider trading by his staff, contrary to his responsibility as manager. Gotcha!

SAC RE has been put on watch with negative outlook by AM Best due to reputational risk and questions about being able to execute its business plan as a result of the troubles at its sponsor and investment manager, SAC Capital.