Gregmal

On the index vs active discussion, I think an interesting aspect that many flip into a conventional wisdom but ultimately detrimental narrative is that an index is an unguided ship and with active management you have someone captaining that ship for you to navigate tough times. However, this assumption I often faulty. Index funds dont make decisions, which, bringing this back full circle to Buffett and Munger; sometimes, in fact a lot of the time, the less decisions you have to make, the better. And more often than not, sitting on your hands and doing nothing, is the best move. Sounds obvious but on a deeper level, its actually quite contrarian.

Gregmal can, of course, speak for himself, but I think he's suggesting that that's not the real world alternative for many people, who would actually be choosing between Miller and something like a CD. I don't know if he's right about how many people see their real world alternatives, but you seem to be talking past each other with your question. Yea I'd probably just take the index. But I'd also probably watch Millers portfolio and occasionally margin up to steal a few of his ideas!

I'm actually surprised you're supporting Miller here. I've seen plenty of times that you've talked poorly about how fund managers are paid for their underperformance. What if we didn't get the TARP bailouts? Miller probably wouldn't have even lasted to 2012. His drawdown was almost 70%! You can't just compare Miller against his peers and determine whether he was "elite" or not. Those peers didn't start at the same time, they could have different mandates, less clout within the organization, etc. Like I said, discount his first couple months and he trailed the market. Look at a different fund (with few assets and no fees) trailed the market. Look at the amount of risk he took and he still trailed the market. It was fairly well known that index funds beat active managers even in 1982. I'm not comparing him to a market time strategy, different allocations or what people stick to or not. We're comparing US long only stocks vs US (mostly) long only stocks. If you can't beat a simple index, with vast resources, why are you elite? Because you might have beat some guys that didn't have the same slack from their employers? If you had to take Miller vs an S&P 500 index fund over say, the next 10 years, which would you choose? The reason I feel different here is because Miller isn't Einhorn or Paulson. He has a much more challenging vehicle to operate than just a standard run of the mill hedge fund. He also doesnt consistently make the same mistakes. I think guys who are flexible and adapt deserve credit. Right? Lee Cooperman, great track record, how many times Lee are you going to buy some pos energy company and watch it go bankrupt? Icahn too? Einhorn; how long are you going to short Amazon because its PE does make sense, to YOU! John Paulson, awesome you did 1000% annualized for a few years starting out and nailed the big short trade, but -30% a year for the bulk of the recovery while popping up new funds every other year banking on marketing your trades from yesteryears? Get the fuck out. Miller is IMO of course, higher quality than those guys who rightfully deserve lots of criticism. Your point on the bailouts? Well, part of the game was predicting that would happen. Again, case in point, David Tepper. No bailout, Tepper is just another guy with a fund and sneaky good returns rather than the guy holding the current heavy championship belt.

So it coincides with the data from the countries who have been in lockdown? Interesting. As I originally said, probably to the delight of many, Trump fucked up and panicked because it came time to either make a decision, or pass the buck. Allowing the shutdown was catastrophically stupid. Just use common sense. "Every 1% increase in unemployment means 40,000 people die". We just increased unemployment, 100% willingly, by a gazillion million percent, because a low 5 figure number of old people and folks with conditions might die... Donald Trump.... "I'm not responsible for that"

I agree with your broader point (which I don't think is disputed) that beating an S&P 500 index fund over 30 years after fees while running a U.S. open-end mutual fund (with all of the '40 Act constraints that entails) is very difficult. See, for example, the long-term returns here: https://www.tweedy.com/resources/vf/FactsTWEBX,%2020200331.pdf https://southeasternasset.com/investment-offerings/longleaf-partners-fund/ https://fpa.com/docs/default-source/funds/fpa-crescent-fund/literature/fpa-crescent-fund-update-q1-2020.pdf?sfvrsn=2 https://www.sequoiafund.com/Performance This list is cherry-picked from a group I've heard of (which suggests they're fairly well regarded) and that have lasted decades, so its got a big survivorship bias, which ought to bias the returns higher. Yet still the performance is underwhelming. But if an individual investor is incapable of putting $1,000 on the 1st of every month into an S&P 500 index fund, come hell or high water, then that investor also isn't going to continually give that money to Bill Miller either for the same reasons. So, what is Bill Miller's active management doing for them? Also, if Bill Miller has amazing analytic ability as you suggest, do his returns suggest to you that analysis actually isn't worth very much? I mean, the names you quoted I hold in high regard as well. Definitely upper echelon. Ive read about a few dozen firms the past few months that went into business in the past year or two looking to exploit a market downturn, that are already out of business. I think an individual should be capable of putting $1000 a month into an index fund, but how many actually do, consistently? The biggest reason for a manager, is to make decisions for you. There is an underlying psychological truth applicable to most human beings, especially coddled North American ones; they HATE taking responsibility or making commitments to anything. Look at Dalal in the coronavirus thread for the most blatant example of failing to commit. EVERYONE talks, IE "oh the index would have done better", but many refuse to back it up. There is no single greater commitment than putting ones money to work, and no more "real" and "personally challenging" way to do that than directly hitting the buy/sell button oneself. One of my favorite quotes of all time is from Tepper and its along the lines of "there is a certain rush when it comes to putting in your orders. When you hit the buy or the sell button, you are effectively betting that the guy on the other side of the trade is an idiot". Not many people are wired like that and that is why things like index funds and mutual funds exist in the first place. Look at how many people post here... now look at how many post in the buy/sell threads? So in a round about way, is buying Miller's fund efficient? IDK probably not. That said would I pay what I charge people to manage their money? Probably not. But having someone else do the work for you is always expensive. Ever get your brakes done? $300 do it yourself but then be accountable for the performance of your work. $800 for a guy with barely a high school diploma and a drug habit to do it, but most walk away with peace of mind...

The evidence that he is a superior investor is no more apparent than simply looking at all the failures during even a fraction of that timeframe. Then look at the guys who got by, but trailed miserably. If you can put Miller up against peers and show me he is nothing special, I am open to changing my opinion of him. But the guy definitely has been in the upper echelon of investors. Fees are part of the game; everyones returns would be different without them. Most people, honestly, probably cant even buy an index fund. Things are always presented as "well ya coulda bought an index fund and done better". But thats hogwash because no one does that and sticks to it. You've got folks who want to time the markets, folks who are too scared of everything to put in a full allocation, folks who try to make buying an index into a complex strategy with hedging techniques, etc. Everyone makes that claim. Ive yet to meet many who strictly just "buy the index" without any of the above issues. Saying "oh but fees" IMO is silly. Thats how these guys run a business. My dining bill would be much more economic if not for tips...my insurance would be cheaper if not for agency markups...my home sale proceeds would be greater without realtor commissions...thats life. You need a service, you pay for it. If you can do better yourself, then do it. But the number of people who think they can do it better and the number that actually can are very different. Miller also has shown a remarkable ability to go anywhere and analyze anything in any sector. Compare that to guys like Buffett who immediately write off half the investing universe because they dont get it, or guys like Icahn who are undoubtedly rich, but cant seem to get out of their own way and continuously make the same mistakes with shit like energy stocks.

Come on... you're substantially underselling Bill Miller. Managing money, charging the fees he does, and still beating the markets over a multi decade period is pure insanity. As money manager, especially of non private vehicles, having your cake(taking down the fees) and eating it too just doesnt happen very often, if at all. He is certainly a unique investor and sees things in a different light than most. Look at when and where he figured out RH, and compare that to the BRK position taken last fall...

+1 on that buffetteer1984. Others have clearly surpassed him and its a sorry state when the best deals, while also the only deals, he can muster are garbage like OXY... Would have just been better off buying SPY or QQQ. Which ironically enough, is often his advice he gives to everyone else. And I say this with BRK about an 8% position. I dont mean to shit on him, but my bullshit detector has been going off for a while here and this recent downturn to me is make or break for determining where this guys head is really at. There's no excuse if he didn't at the least, buy back some stock and pick up some of the easy stuff. I believe he did.

The guy has numerous times stated he missed GOOG and AMZN, MSFT, etc. There would have been zero reason not to be able to deploy at least some capital during the sell off into those. Personally, I think he probably did. If he didn’t, there’s no excuse about scars from the past or limitations on size...even novice investors saw pretty quickly those businesses would be ok. And many of the pros like Tepper nailed the bottom, almost to the day. Or maybe the greatest investor of all time was just sleeping?

I mean this is exactly what you'd expect to happen when you give too much weight to a bunch of dorks from academia. These guys arent used to their 15 minutes of fame, but then enjoy it. They get egged on about their "models" and then get carried away, no different than when you ask a 14 year old about what video games they like just to make conversation. Then academics need to stay in the classrooms. Not always the case, but some of the absolute worst investors Ive ever met in my life are teachers, doctors, and scientists. They get way too hung up on ideas and "possibilities" and often lose grip on reality. The type that invest in clean energy stuff because climate change is a certainty even though that has zero correlation to the fact that the business they are investing in are an unmitigated disaster. I had a investor once talking to me about his side portfolio. Keep in mind this is a US Navy Seal with a Degree from Yale that works at the same company Edward Snowden used to; smarter on his dumbest day than most of us are on our best days.... Owned CLNE and WPRT in 2013 because it was inevitable natural gas was the solution to the fossil fuel problem...

Well orthopa, we already know Dalals deal... as for many of the others, the data and facts are only useful when they support a certain political narrative. That is all.

I'd also point out that a long sung tune of failure and caught with your pants down syndrome involves preaching caution and conservatism AFTER THE FACT. When things go down, if you played it right, you should be on offense. When things get wild, defense. Investors probably have a somewhat better excuse because its often subjective where the turning points are. But boy does it piss me off when I hear CEO's and business managers, who several months ago were loading the boat on buybacks, AT THE HIGHS, now preaching "cautiousness" and "taking measured approaches" when their shares are down 30-50%+...Its IMO immediate grounds to fire the asshole.

So I agree, we hear a lot of folks talking about "worst recession since".... but how is nobody able to differentiate what is extremely obvious? Most recessions, or even depression, happen on their own and are largely unavoidable. This is entirely different than temporarily FORCING everything to stop, and companies to layoff/furlough for the time being. To summarize the sensationalism, I ll point to an example. I saw a headline last week, "biggest wave of unemployment in history!"...and my first thought was, what idiot wrote that headline? The second, not f*** shit, we chose to shut everything down. I guarantee the first day or weeks following things opening back up, we may see the single largest hiring sprees EVA!! Will we get back to normal right away? No, but the sensationalism is just bullshit and a huge distraction.

Not directed at you, but the general question you raise: Well, then what is a good buy? A month ago the entire market tanked. OK - let's say BRK has totally sour views on banking, energy, and anything travel-related. What about the rest of the economy? Surely there were some bargains in unrelated industries? I think if they are holding their breath for desperate business owners to call them up, begging to sell out, then they will go blue in the face before that phone rings. If they can't find bargains as investors in public markets during a viral market rout, then go run a PE shop. Indeed I think you hit two major points. 1) Any idiot could find SOMETHING to buy a month ago. I just posted on FRP. They sold a PORTION of their business, the warehouses, for $350M+ a couple years ago and sat on the proceeds specifically because they thought the market was overvalued. They still have other business segments easily worth a few hundred mil. Last month, it briefly traded below the value of just the warehouse proceeds... idiot, no-brainer territory. There were plenty others. 2) Cash back in 08 was expensive. Judging by Buffetts refusal to make investments, I'd also imagine he's waiting for deals to fall into his lap that simply won't happen because Berkshire simply is not the lender of last resorts anymore; too many folks have money. Banks have tons of liquidity right now, not so in 08. PE is loaded and ready to go, something heard plenty about as BX and BAM even boasted this a few times. Those guys are getting Buffetts deals.

IDK but to me that makes perfect sense. With 0 as your interest marker on the bond side, what multiples should people be paying for earnings? 10x? If you have 1% 10 yr, a 4-5% mid cycle earnings yield seems pretty reasonable to me. Not that Im buying into it yet, but in theory I dont see how it doesnt make sense. This is part of the reason I just shake my head when people mistakenly take short cuts and just conclude "we cant be trading here, it's where we were in 2019!"... No, its not where we were trading in 2019, when you account for some very important variables....Coronavirus will just make the companies you should be buying in the first place, better and stronger going forward.

Why is it, that, regardless of content, the majority of the Twitter links you post are filled with losers who's posting history, 90%+ revolves around a Trump obsession?

I dont see what people are complaining about regarding measures and steps to open things back up... Disagree? Continue hiding in your houses for the rest of your life. Re-opening the economy for those whom wish to work and live their lives doesnt force you to do anything.

Sure, on the surface it sounds like it, but removing political biases on the part of those trumpeting this "horrible decision", is it not credible to at least question these people? They've been horribly wrong about things directly related to the purpose of their existence and continuously seem to have a pro China position, even down to the OK being given to re-open wet markets...

LOL yea, or that the government response was a disaster, even though the numbers turned out to be pretty underwhelming. Or that Cuomo and De Blasio did a great just, when NY was the dumpster fire, WHILE broadcasting that the entire US was basically going to be Italy, when in realty it only ended up being his state and his elected officials... He didn't commit to things on purpose though, a lot of hucksters do this. That way, either way, they can claim they were right. Its a very NYer way to behave.

Eh Ill take the other side and say its actually quite easy. I know because Ive done it. By my mid-late 20's I was able to grow from pretty much scratch an investment management business into a low 8 figure AUM. At that point I was able to effectively monetize it in a manner which let me live life the way I wanted to. I really could care less about accumulating money beyond a certain point. But the reason its easy is because the key ingredients are simple. You can work hard to organically acquire AUM, or you can buy it. From there, its networking, and selling either 1) "supposed" strategies, 2) gross returns. This is done by leveraging 1) your access(a key for Tilson whom was boys with Ackman and Einhorn) or 2) your proprietary "research". It really is a pretty simple formula and I've seen plenty of others do it as well. Another dirty secret, is...its even easier if you just sell people what they want to hear anyway and will say anything to get a deal done. Its not hard to make money without ethics or morals. My opinion of Tilson is he's just a leech or a coattail rider. His fund was also basically just a mini Pershing.

Raw land is a really low risk, low cost way to play a boom. Especially in a state with minimal RE taxes. St John/Jax/St Augustine is super hot so buying large swaths of acreage like this and then just waiting out developers is a pretty easy game to play. It might ebb and flow, but it does so ascending from left to right. There arent really many scenarios I can find where FL doesnt greatly outstrip most other states in terms of population growth, and this is going to be the case for a long time or until something politically inspired changes drastically(IE taxes).

What are they buying? https://www.jaxdailyrecord.com/article/new-york-group-adds-4-446-acres-to-its-st-johns-county-holdings Some interesting read throughs. Ive spoke with a few developers and investment firms in FL last couple weeks, this "recession" is largely being welcomed as a last chance to get on the train before it runs away. Florida seems unstoppable and many of the developing trends just make it more so the case. The tax heavy and anti business mentality of the blue states will only become more apparent as things slow down.

https://nypost.com/2020/04/14/long-island-bicyclist-verbally-attacked-by-chris-cuomo-fires-back/ LOL, Cuomo the liar. Sooo sick... yea ok. Its all an act with these folks.

Trimmed a bit off trading positions in GOOG and SPG.

Indeed, but this is what happens when people begin revolving their investment decisions around "IM STAYIN HOME 4 GOOD!". I mean look at even what some folks here are saying... NFLX, CVNA, TDOC, NVAX, all you need to outperform for the next decade!