Gregmal

August is off to a good start with Tesla and GM. I have typically been a fan of Einhorn, but this stuff from him is inexcusable. As things shake out, and guys like Ackman and Tilson do what they do, I'm beginning to wonder if that age of hedge fund "stars" was really just a result of being in the right place at the right time. It was impossible not to outperform as a value investor in the early 2000's. If you were shorting it you looked even more genius because we all know what kind of stuff value guys would be shorting during that time frame too. But longer term this period IMO just reinforced arrogance and the textbook teachings of "value investing" which in turn probably hindered these guys ability to adapt or change on the fly. I mean between Tilson, Ackman, and Einhorn, I don't think any of them ever had a real job or relevant experience coming out of school. They basically lived spoiled rich kid lives and then played hedge fund manager with family money instead of getting real jobs. To their credit, they were bright enough to run the gauntlet and become insanely rich and popular, but I don't think they have the same hardened mentality or intimate understanding of how things really work to be sustainable. Looking at the real deal guys, Buffett, Cohen, Tepper, etc, they all did their time on the street and earned valuable life lessons before striking it out on their own. In terms of "fight" I think this goes a long way in shaping an investor vs a rich kid who's always gotten what he wants.

At this stage in the game I'd add GOOG to that. They are so stealthily diversified in terms of future home runs and involvement in major trends its unreal. BRK to me, at this point largely relies on the glory of past decades and the auro of Buffett and Munger. 10 years, heck 5 years from now I'm not so sure it's profile carries the same luster. I'd even go as far as to describe it as a wonderful collection of great Old Economy companies. I'd be almost certain it doesn't beat GOOG over that time frame. Frankly I don't care if it beats the S&P as thats never been a metric I've found useful.

I had several vets from WW2 in my family. It was always one of those known but not spoken subjects. I don't know if it's part of the code, or just a biproduct of the experience, but I've never met a vet who openly wanted to discuss these things. And I think thats understandable.

https://hbr.org/2018/07/the-real-story-of-the-fake-story-of-one-of-europes-most-charismatic-ceos Pretty fascinating

I think "value investing" is largely misunderstood. Or maybe I am misunderstanding it. Whatever; my understanding works for me. Value to me is simply seeing that something is mispriced. Seeing what others don't. I feel like too often value investing gets mistaken for buying x below it's intrinsic value, which is kind of narrow-minded IMO and typically reserved for businesses that face headwinds/ questions about their existence. This is why many value investors end up watching an obvious investment like GOOG or ISRG for a decade constantly bemoaning how it's just too expensive, but how they hope to buy it on the pullback or whatever.

http://www.espn.com/nfl/story/_/id/24058233/carolina-panthers-owner-david-tepper-contract-keep-statue-jerry-richardson Article itself is pretty bland, but read the below and just kind of chuckled. Some guys, the wheels are just always turning. "He is considering moving the team's practice facilities to South Carolina, in part to keep both states interested in the team. The Panthers currently practices on three fields within walking distance to their downtown stadium. Tepper said that valuable land could be then used for developmental purposes." This guy just prints money. Even a football team he just paid 2.2B for, he's already finding value plays for.

I've read the book and it's a good read if you are into investing but nothing spectacular and agree it's only regarded the way it is because of it's rarity. Klarman himself seems to be a bit of a jerk. Just like Paul Tudor Jones supposedly buying all the copies of his PBS documentary on the 87 crash, how friggin narcissistic do you have to be put something out there(presumably for money) and then later go out of your way to prevent people from using it?

I've looked at a few but admittedly spend less and less time there. Like rb said, there's just too many other opportunities out there and it just doesn't make a while lot of sense to me to spend time somewhere that has an incredibly high hurdle. I've liked Yandex, and looked at OGZPY before, but at the end of the day I try to be impartial to names and businesses I like and instead break things down to a number. Total expected return. And if I can find the same number elsewhere, with less risk or headache, that's were I go. FWIW I remember Jim Grant pitching OGZPY several years ago at Sohn or one of those conferences. The thesis was that oil was bottoming and it traded at 4x earnings. Well the thesis was right and you'd think three years later with the massive oil recovery, not to mention when something is trading at 4x earnings you'd think after three years of earnings it would be at least 50% higher, nevertheless its substantially down and in the toilet. I have not followed super closely so if there was a large capital return I stand corrected but as of now the shares are at $4.50. It was at $7 when he pitched it. Numbers just don't add up and that's why it's just too much hassle to do Russia right now. Even the good ideas can be a disaster. Instead I bought BP at 33 without even thinking and have had an effortless return.

Corporate governance is responsible for protecting the interests of shareholders. When that fails the courts are there to do so. In some countries, not only does an investor not have the assurances of either, they have the expectation of neither. This makes it a "no go" zone, for me at least. Similar thing as walking into a US investment with concentrated management ownership or dual class structure. You better be familiar with the terrain otherwise you are in for a rude awakening.

I think the bigger thing is simply that in many countries you have laws and/or various systems of checks and balances that protect shareholder rights. In countries, and with companies where there isn't confidence in the system, what is your recourse as a shareholder? Good luck with a poor corporate governance campaign, proxy fight, court case in Russia...

Not sure how it works at Expedia but rental car insurance through the actual car companies is a total waste of money. Not only should your standard auto insurance policy cover rentals, but many credit cards also offer it for free. I've been told the rental car agents get 1/3 of what you pay for the insurance in commission. I went on a week long trip to the Florida Keys and the total for my rental car was about $250. Then these idiots offered me the insurance, along with the whole scare story about "what if something happens", for another $100-$150 for the week(my auto for the entire year is about $1,800) along with the "option" to pay $50 for an unlimited SunPass to cover the three $1.25 tolls I would be traveling by...

This is just another area common on Wall Street where there is massive conflict of interest. Not to mention that companies(just like money launderers) who are engaging in wrongful behavior are typically very generous when it comes to compensating those that facilitate their schemes. I remember hearing years ago about a couple brokers who had a client letting them charge around 5% a transaction, multiple times a month to buy various different equities. A few years later I heard they got caught up in a money laundering scheme with the client who happened to be from South America. Same thing can be found reading through various reports from Mox or Muddy Waters, etc. These audit firms who get paid hundreds of thousands from micro cap companies who eventually then get busted for illicit activity. This stuff is also fairly common with lawyers and "legal opinions". Or doctors writing bogus scripts. Bottom line, is if you want to do something, there's someone out there willing to help you, IF you pay enough.

Sounds a lot like Regus, which is valued at 1/10th of that...

Haven't been there in a while but Southern Hospitality in NYC was always a favorite. Hunt & Fish Club is my wife's favorite; food is great, the atmosphere is cool and you always run into famous people. I'm a burger and Bud Lite guy though so not my first choice. Never had a bad time though.

The jump for the decade covering 30-40 seems crazy. Not much growth in income, say 50k to 35 and then another 70k by 40, yet net worth increases nearly ten fold. That's odd.

Just curious what you consider reasonable. I know this varies substantially.

So according to you, he should simply "put an outrageously large one time payment together" (that likely represents a lifetime of saving+patience+discipline+foresight+risk taking+luck, that may or may not be repeated in the future) without thinking it through...just because...he's crazy smart and figure out to make money back in the future? And also because "kids are more important" ? Except the law is pretty straight forward in most cases and generally ignores the dollar figures; instead focusing on percentages. For instances a wealthy young man can find a hot piece that dropped out of college and stripped/waited tables prior to their getting together. He goes on to make millions. She still likely gets half assuming no prenuptial agreement despite the fact that she'd never come close to earning more than $25 a hour... Sometimes you just have to bite the bullet and hope for the best. Also, not that I'm advising it, but if you have private/illiquid/hard to value investments, I'm sure an intelligent accountant/capable lawyer can find a way to "mark these to market" in a way that most normal people, let alone a housewife, won't be able to really contest. Then just divy up the easy to value stuff fairly and don't liquidate the private stuff in a conspicuous way.

Appreciate the condescending reply - the tone immediately made me realize how everything I wrote is silly and outright stupid. Can you please send me a list of your investments so I can just clone you? Network effect is probably in the top 3 requirements for a store of value asset. Bitcoin is currently winning the network effect game. Once again, I'm not a zealot and my opinions will grow as facts change. I hold some of the smaller coins in crypto as an effective hedge on bitcoin losing its current network effect status. And great idea with the interest earning crypto-asset. Must be nice to be able to just come up with million/billion dollar ideas on the spot and not act on it. I would advise that you create this - but I hate spending time giving advice to people who don't want to follow it. In response to Jurgis, the answer is, I don't know. But I also don't know why gold? vs why silver, vs why palladium, vs why granite? vs why limestone. I don't really need to know or understand to know that they have a value in the market. The internet and tech in general have shown to be a way of the future. Internet real estate, which takes the form of domain names, has shown to be just as valuable as tangible dirt and soil real estate. Why? again I am not an expert and do not know. The only question one should be concerned with, has to do with whether it is sustainable. I have started to believe it might be.

Agreed. Merry Christmas all.

I sure hope so. I'm buying more under $9K, under $5K would be ideal. Just curious, but how are you determining your price points to add? There is no real way to determine an intrinsic value, so is it just based on regressions or prior trading ranges? I can't give you an exact value, but if Bitcoin becomes what I think it will you will have 7 Billion people who want to own and use those 16M-20M coins (depending on how many you think are lost). I don't know if the price in 10 years is $500K or $25M, but it won't be $5K unless my thesis on bitcoin is entirely wrong. If that is the case then you probably shouldn't buy it at all as $0 would be my best guess. I've been buying on the dips since 2014 and it has served me well building my position. I think the real runup is going to be in the 2020s. As we go from way less than 1% of people using/owning bitcoin to 20-40%. Facebook has over 1 Billion users, what happens when a billion+ people want Bitcoin? I still think that there is plenty of time. This drop will be one of many along the way. I tend to (kind of, as I'm not a full blown believer in this but see it's merits) agree with your assessment. However, that isn't necessarily what's opened my eyes to following this a little more closing and even gotten me considering a small position. It's this. Never have I really seen Wall Street HATE something like I have with Bitcoin. It is and has been loathed. However I feel like despite this, Bitcoin has become super popular. And now, IMO Wall Street is on the cusp on embracing it for the simple reason that Wall Street eventually finds a way to LOVE anything they can make money selling. There are not many Bitcoin ETF's or products. Funds have little to no exposure to them. Most banks don't have access to it or trading desks to support it. This is all on the cusp on changing, which I think should create a massive tailwind for the next 2-3 years. This current manic move has simple wet the appetite of a lot of people; it has them paying attention now. So your demand will start increasing substantially and on top of that all the institutional products that will be getting involved simply because they can sell it to people and make money will be significant. The small float(21m or whatever but said to really be maybe 50-75% of that) could send this to the moon. Especially if some of the new products coming out allow people to short this.

I sure hope so. I'm buying more under $9K, under $5K would be ideal. Just curious, but how are you determining your price points to add? There is no real way to determine an intrinsic value, so is it just based on regressions or prior trading ranges?

I think without question the bigger risk is with the guy running his own business. Plain and simple, if the guy loses his business, he loses everything. If one loses his portfolio, he would still typically have his job which provides income. Add in the current environment in which big box retailers and online shopping are annihilating most small, main street businesses, and personally I think it's a tough sell to take on the risk of being a small business owner right now unless you are very well financially situated. As for portfolio concentration, I think it's optimal to own a lot but be concentrated in very few, high quality opportunities. For instance I have investments in 20-30 different companies/products. However about 70%of my portfolio is invested in 3 companies. I think it was Bruce Berkowitz who said something along the lines of "diversification will just lead to average results" and that "only a couple great ideas can make a big difference in one's life". I think both are pretty accurate and good to remember.

https://ca.reuters.com/article/businessNews/idCAKBN1EE02J-OCABS Down 20% intraday before eventually closing down 4.5% on the day, & suggestions that some of the punters are exiting …… “However, for Japanese retail investors who are estimated to account for 30 to 50 percent of bitcoin trade worldwide, a more worrying warning may have come from a Japanese day trader guru known as Cis. The individual trader, who claims to own 21 billion yen ($186 million) in assets, tweeted over the last 24 hours that he had sold cryptocurrencies.” Maybe Makoto reads this board? …. “The listing of two bitcoin futures makes it easier for institutional players to trade bitcoins. Futures also enable players to go short on bitcoins, which was difficult without liquid futures,” said Makoto Sakuma, researcher at NLI Research Institute in Tokyo. SD I noticed that Bitcoin Cash went up while Bitcoin was going down. This drop coincided with Coinbase adding Bitcoin Cash. It could just be people moving some money around. $ flowing out of the high price Bitcoin & into the lower price Bitcoin Cash, is a sign that the retail demand/liquidity of Bitcoin is slowing; retail is seeking cheaper alternates. Problem is that Bitcoin is driving the tide, so as the Bitcoin tide ebbs; all boats fall - including the price of Bitcoin Cash, Etherium, etc. Hence either sell now & buyback later, or short via the futures/options markets for very high premiums. The 'trading' game has changed, and the professionals are now at the table. Nothing wrong in that, but either know what you're doing or be as least as good as they are. SD I don't follow the BTC price movements all too closely but of late it definitely seems to be displaying the classic "air slowly leaking from the balloon" syndrome. Whether this is just consolidation after a massive move, or the beginning of the end, who knows.

I hope Warren Buffet changes the name of his company to "Berkshire Blockchain", in seconds it will be the most valuable company in the world leaving Apple in the dust. Unless of course Apple changes its name to Apple Blockchain. Its pretty amazing actually. Even stranger IMO is XIN, highlighted a couple days ago by a fairly well respected author on SA, with real assets, profitability, a dividend, and supposedly blockchain technology partnerships with 58.com and IBM... barely budging 10%. Went long yesterday for a swing trade but it seems like people only want crappy, worthless companies to invest in.

Frankly I don't think the technology element is important enough to matter at this stage of the game. It's simply too complex and I'd gander 90% of the people buying this don't have much of an idea how it works. Otherwise, an exercise I have typically found helpful when evaluating something is looking to build a case contrary to the consensus. Consensus is that this is obviously a bubble and therefor, a short(if one is able to). However, I've come up with quite the list of things that to me would indicate this can and will go on for quite a while. -Obviously, consensus is negative -Is it really much different than something like gold? Many people investing in gold do not actually own physical gold. And gold itself is essentially just a shiny pebble. It's use is being a store of value. In that sense, to me, it is not much different than BTC except for the fact that you can make jewelry out of it. Than again I've never been a huge fan of gold so maybe I'm biased. -while it isnt "hard" to buy it, it is still supposedly a bit restricted in terms of amounts the newer BTC buyer can purchase at first. -you can buy it with credit cards readily available to the poorest of retail investors -the "major rally" really has only encompassed the past couple months. Maybe you could say the past year, tops. It really hasnt been that long. -Hardly everyone and their mother is rich from BTC. My understanding from studying most bubbles is that many people typically get rich, at least on paper before losing it all -no institutional investments -barely any acceptance from the big financial institutions(although this seems to be changing) -Such an obvious short that IMO we are seeing the next step of the bubble, mechanisms that allow for one to express a short position; the setup for what could be a massive short squeeze. Institutions have gotten this market sooo wrong(TSLA, NFLX, AMZN, heck even the SPY) it seems to me almost a given they will get their asses kicked with BTC before it implodes -How do you define an IV? Its totally ambiguous, just like many of the things that tend to make insane moves. There is no possible way to set a "value" parameter on this. Thus, any price can be justified. Then I look at what stops it, and... maybe government intervention or a major concentrated holder dumping? That's really about it. As any value investor knows, valuation alone is not a reason to short something, and at this stage in the game, thats the only case