Gregmal

If your job(the one I am employing you to do) is to responsibly manage my money, your performance against the index is irrelevant for 1 year, 3 years, 5 years, 20 years. Because I am not paying you to simply chase some collection of assets that I may or may not want exposure to. If a manager returns 50% vs 10% for the index but I found out he did it by concentrating in out of the money options, I'd probably either send him packing or allocate a much less meaningful percentage of my assets to him. If I have a guy who consistent buys low risk value securities and can consistently return me high single digits-low teens with little market correlation, I'm there all day. If I have a couple income properties that are generating 8-10% years returns for me I don't really give a hoot what the S&P is doing. Finding a good manager is much more like finding a wife than finding a stock to buy. You need to be able to trust them, and they need to be skilled with the things that are important to you. If my money is with somebody I know is talented, trustworthy, and patient, I sleep well at night knowing my money should do ok. The index syndrome to me is really just indicative of where we are in the current cycle, the prominence of ETF's, the ease with which one can make outsized returns for taking huge risks, etc. Someone mentioned earlier the lost decade; good comparison. Surely in 2011 and 2012, none of the S&P fan boys had wished the owned the almighty index. This is all very much cyclical and part of the psychological element that make markets efficient over time.

Personally I think the excuse that Tilson uses about holding too much cash because of Trump is bullshit. First, hardly anyone expected Trump to win. Literally no one. So why would you be all in cash as if it was a given? If you did think Trump would win, how in the world would you think it would be bearish when his entire platform were things like tax reform, deregulation, and pro-business? Icahn saw it right away, as did many investors. I think it's just the latest round of justifying his inability to invest in the current market. Certain people have spent almost a decade being scared of their own shadow when it comes to the market, or blaming the Fed for their inability to take advantage of a very robust market. Not just being wrong but then compounding that by being short and not knowing when to throw in the towel. To me, investing is a lot like fishing. Sometimes the conditions are right and you can pull in walleye all night. Other times you throw 100 casts and maybe pull in one. Sometimes you can go days and even weeks without catching anything. But patience is a necessity and knowing the landscape/environment is a huge plus. Having a passion for it also helps. And when catching fish is your job, and the walleye are not there, maybe it's time to go to the shallow end with a worm and catch bluegills. With Tilson, and quite a few others, "the market" isn't an excuse. Your job is to find ideas. Finding ideas is not necessarily dependent on "the market". If ideas aren't plentiful, you can always do fixed income, merger/arb(which for the past 2 years has been filled with great opportunities), and easier, lower return strategies to at least do something for your investors while you wait for the environment to be better. What's interesting about Tilson though, and why the more I think about this, the way he closed his fund almost comes off somewhat sanctimonious, is that he was ALWAYS out there pitching his ideas. It wasn't that the environment wasn't right, it was that HE WAS WRONG. The thread is about Tilson although the same applies to plenty of others. Guys like Tepper and Loeb are so dynamic because they are constantly adapting. One minute Tepper was "balls to the wall" levered, the next he's short Europe, then going activist, then he's squeezing currencies and short bonds, etc. Granted those two are probably some of the best ever, but the contrast that with some of these slugs who just consistently get it wrong and then make excuses and you can see the difference. I also think there is a certain type of investor, the academic type, usually the ones from families with money who give them seed money straight out of Harvard are way too textbook in their approaches. They've never had to grind it out on a trading desk or get their hands dirty. They just use metrics and analytic skills they learn at business school and that only goes so far. So when presented with a market that is kind of unique, they don't know what to do. Guys like Pabrai(BG too) sit back and wait for a fat pitch and when they get it their batting average is great. Meanwhile other guys are coming up with new ideas every few weeks, not getting the results, and then blaming the market. Massive difference.

Prasad, Mohnish, is certainly impressive in that he had the integrity to make his clients whole: + 6% / annum after 10 yrs. However, 6% return in 10 yrs is a 80% gain, the S&P 500 TR has return more than that in 10yrs, so as you said, he made a profit something like $8M above expenses, all for lagging the S&P500 TR. Just want to clarify things for real...... thanks I've mentioned it before but it amazes me how misguided the entire "he did/didn't beat the index" logic is. When someone puts their money in a CD, they'd be foolish to then say "darn, I under performed the S&P". If one buys a government bond, I'm sure they are not thinking about "beating the index". It is about risk adjusted returns and ultimately there are tons of different products out there that offering varying degrees of risks and rewards. There is a reason one puts money with, and pays a guy like Pabrai. Maybe it's just me, but at the forefront of the list would be the fact that he is both a talented investor, and a good, honest man, so he will be prudent with my money. There was a time when hedge funds were viewed as alternative investments with little correlation to the markets and security against big declines. I guess now a days there is sooooo much focus on this "beat the index" syndrome that the by-product is 90% of fund managers, guys like Ackman, are just gunslingers who redefine "value investing" so they can sell excessive risk taking as "safe" to the investors, and then swing for the fences with OPM. I have a ton of respect for guys who under perform the almighty index because they stick to their core investment philosophy and er on the side of caution with their investor's money. In relation to this thread, as nice a guy as Tilson was, he was not one of those guys. Pabrai is.

Hm, I would be careful about this. IIRC, Rick Guerin did something similar, and he ended up selling his Berkshire shares to Buffett @ $40 a piece to satisfy a margin call. Works until BRK falls 50% as it has done 2 or 3 times. And when it crashes 50% shift some of your non-equity assets into it and watch it rebound and make multiples on your money! Partially kidding. I guess my main point is that leverage in the right hands is extremely profitable. Ya, ya I know about the banks in 08 but they were levered 40x. Banks have historically been profit machines using leverage. Buffett himself is actually kind of a hypocrite regarding leverage(and derivatives for that matter). He's always used them. Heck his largest investments are WFC and AMEX which are levered. Yea there are different types and whatnot but provided you are buying real value assets(vs bull market fantasies like VRX where you have to tell a story to find some angle to claim "value") a successful investor/competent risk manager should be fine. Again this isn't some off the cuff endorsement of EXTREME leverage. But buying undervalued/ low beta names and being levered 2-1 or 3-1 is definitely not as risky as a lot of people think provided 100% of your personal assets are not in equities and should "the big one" happen you have the ability to add cash to those 50% declines in BRK, BAM, etc.

That's basically it. Higher rates you have to be super short term. The worst I've ever seen is BVSN was 120% during the big Jon Lebed pump in March/April of 2012. But otherwise, it's tricky and it's also why it's dangerous to follow some of the big guys on their investments. I know Ackman, despite shorting HLF in the 40's, now has a break even around $25 because of the huge negative carry and option decay. It's why I don't think Berkowitz or Lampert have really done as bad as some people think on SHLD. SHLD at various points has been 75%+ to borrow, the highest I've seen it was 90% in late 2011- early 2012. Imagine being short SHLD at $30 in late 2011, paying 90% pa to borrow, and getting squeezed to $80?

If the guy did indeed lever a BRK quality position, he made a great move. Many people are terrified of leverage, but if used properly it's a necessity to outperformance. Something like BRK is not going anywhere. So theoretically, if I put 100% of my portfolio in BRK and then with a 1-2% interest charge consistently operated at 1.5-2x leverage buying what I believed where value investments, I'll probably do pretty damn well over the long run.

That would be a shame if it is, just when his short would have worked out. I recall Tilson actually writing a great piece on exactly this. Quite humble It was maybe late 2015 into mid 2016 where he acknowledged no longer being able to take it and covering almost all of his short book in November, only to see 90% of them declined by something crazy (like 60% on average) over the next 6 months. Seems like he got whipsawed quite a bit? Was short Netflix back in 2010/2011ish. Realized a good losses on the way up and flipped at the top when he suddenly went long - right before it dropped by ~75%. Maybe he just doesn't have the right personality for being a contrarian? Or maybe should've focused a bit more on risk management so he could stay in his positions? As someone else mentioned, it seemed many of his ideas were derived by others. Maybe that's why he didn't have the conviction to stay with them? He did always seem like a nice and sociable guy, but I never really had any reason to have much respect for him as a "super" investor that he seemed to gain a reputation as within value circles. I think being too giddy, something that plagues a lot of managers, has harmed him. In the GM thread several people were discussing this with Einhorn too. I've never understood how some people so frequently go bullish, to bearish, to bullish or whatever on a specific name or sector so regularly. At a certain point you are gambling. He was never really a contrarian IMO, more of an idea gatherer. I wanna say Pabrai also does this frequently, as do probably a lot of no name managers and investors. The guy was well connected. But I question whether he fully internalized all the work being done on a basis frequent enough to keep up with it. No question he loves investing. He's also a really nice guy from what I've heard, although I've never met him. But his investment results seem to be all over the place fundamentally, informationally dated a lot of the time, and unoriginal(as in someone else's idea). Combine that with smart guy ADD(having to be constantly active with a portfolio), and idk, I can kind of see why he got whipsawed. Reacting instead of acting. The criticisms I've heard are kind of consistent with your last statement. He kind of became a braggart, and promoted himself(as well as being promoted by others) as this super investor when a lot of people didn't think he deserved that credit. LL for instance, he did victory lap after victory lap on, when the ironic thing was that it wasn't even his idea to begin with! And then after the thing tanks to the low teens, there must have been at least 3-4 times when "Tilson covered his short and is now long", only followed by "Tilson is reshorting LL", and then "Tilson is adding to his short", which comes back to basking in the sun light and probably over-analyzing to the point of flip flopping so regularly. I've actually learned a ton from reading his work and especially his reflections on a lot of his mistakes. He's incredibly candid with all of this, especially for a hedge fund guy. Hedge funders are notorious for being non-engaging, antisocial dick heads who avoid regularly engaging with the general public. Tilson was the antithesis of that which was hugely refreshing.

That would be a shame if it is, just when his short would have worked out. I recall Tilson actually writing a great piece on exactly this. Quite humble It was maybe late 2015 into mid 2016 where he acknowledged no longer being able to take it and covering almost all of his short book in November, only to see 90% of them declined by something crazy (like 60% on average) over the next 6 months.

Tilson was somebody who's biggest asset IMO are his connections and ability to pick off other people's investments. That's sounds harsh but I don't mean it in a bad way. His longs were basically Bill Ackman's positions with a couple other big hedge fund hotels sprinkled in, and his short book was basically VIC write-ups.

I think it depends on how far out we want to go. I've said it before but BRK is essentially a collection of great "old economy" brands and companies. If Elon Musk's Boring Company or Hyperloop can successfully send something from CA to NYC in 60 minutes or whatever, couldn't that effect BNSF and all the rails? La Croix and many of the sparkling waters are killing it thanks to newer perceptions of soda that will likely only grow. What will happen to GEICO and insurance companies if people stop buying cars and/or we have predominantly autonomous vehicles? I don't know if these are specifically Amazon threats to Berkshire, but technology is certainly a major threat to the Buffett kingdom if you are looking out several decades.

True, but what is the point of continuing to discuss an investment on a value board if it has already reached (or is near) intrinsic value? There's really not much incentive (for me at least) to continue to discuss value investments that have worked. When that happens, it's time to move on to the next hated stock. Just my two cents. Maybe I'll clarify as perhaps I could have been clearer. Rereading what I wrote may have, although not intentionally, come off a bit schmucky. Ideas that are under-followed or out of favor typically don't have huge followings. Is/was SHLD or VRX really out of favor? Surely it was polarizing but every value investor in the world was in SHLD. FNMA is obviously different. Its either worth 0 or way more than it trades for today. But what I've seen is that a large chunk of the talk and speculation seems counter productive as people obsessively over do it with the speculation. Making things seem more of an issue than they truly are. SHLD again for instance, there was and is so freakin much of the "what does Lampert/Berkowitz have up their sleeve" type stuff that perhaps it blinded people from the obvious fact that the business sucked and the properties were valuable and that time would be a negative carry, especially with a downturn in the economy or retail sector. These are just lazy examples; there's definitely more of them, but I guess my point is that I think people over/under estimate the importance of a lot of the things they spend a lot of time pondering. Hence the huge threads(from my perspective) seemingly having a high correlation to big time stinkers. And I say all this as someone who has owned SHLD here and there over the years and is currently long FNMA.

Yea I've actually noticed that the most popular ideas/threads here(outside of BRK&FF), the ones with a million comments and everyone frothing about the value, are largely major duds. Definitely some psychological stuff behind it. SHLD and VRX probably the most glaring recent ones. I'll even add in FELP, which while the original posters made money, I'd presume there are a lot of bagholders who got carried away and are now underwater with the stock off 50% from the highs. People get way too attached and biases are deadly.

As someone who has gone through the whole identity theft thing, it's a pain, but in today's day and age, it's inevitable and you are better off getting it over with. Long story short, I was getting what I thought were spam calls. Eventually I picked up and it was a collection agency. They said I owed Verizon $1900. I double checked all the info, and sure enough, my social was on file and shortly after I moved from my college apartment to my house, a Verizon account had been established in my name in Brooklyn(I live in North NJ). I confirmed I'd had a continuous account with another provider for a decade, and that I no longer resided at the address on file when the account was opened. I had to file a police report and contact the credit agencies, and that was it. The collection was removed from my credit report and as a result, the credit bureaus had to enroll me in a special program for people who were victims of identity theft. This included an automatic freeze and verification on my accounts upon any new credit inquiries, plus free freeze/unfreeze of access to my credit reports, all for seven years. It's been a slight hassle when applying for new credit, but otherwise I sleep well at night, and thats the point I guess.

Used to play quite a bit, along with Chess. Both I think are great supplemental, yet fun ways to develop a mental state necessary to succeed with investing. I remember talking to someone who was quite ecstatic about his last couple trades. The subject came up about how there really isn't much structurally different from the trades that work and those that don't; it's really just luck/variance when the framework used for the trade is the same. Which is exactly like poker. You have a strategy and the cards can fall however. You're not great at poker because you hit a straight on the river just as you aren't terrible because your straight loses on the river because your opponent landed his full house/ But over time if your strategy is sound and you have the discipline, you should make out alright.

The retail investor does not really have a fair way to get into stuff like this. If you do, it will be through murky private placements where you're being giving indirect ownership and paying incredibly high mark ups and sales fees. Or at least this is the case 95% of the time.

I don't know if he is out of context, but the idea of throwing 90% heck even 50% of ones assets in an index fund at any one given point in time is asinine. At least, I would say to dollar cost average it in there over a span of 5-10 years if its a large sum of money. If you're a 25 year old kid, sure, throw your $10,000 in starter money there. But any sort of meaningful savings being chucked into anything, let alone an index fund in one shot, is incredibly risky. If the next big crash is right around the corner, you are f***ed.

For some of them, you need to go to HQ with a ski mask and a gun. All kidding aside, typically I've had success buying a few shares, then in direct order depending on results, email, call, send certified mail asking for information on company financials and the date of the AGM.

TPL.

If we're talking about current 2017 investments that have performed the best, NVTR. Although I hate talking about things like performance on the internet because not only is it unverifiable, but its completely useless to me going forward. Telling someone I made x%, or someone telling me they did the same does nothing for anyone. I'd almost prefer hearing from people with losses cuz at least you know they are being honest. Future ideas, which are much more productive discussions, I'd say GEOS and MSGN are things I like. MSGN just because they have one of a kind assets and a motivated seller. Not huge upside, maybe 30%, but I think it's dirt cheap with limited downside. GEOS I think is at an inflection point and with a slight uptick in the sentiment around oil markets, ready to double, at least.

NVTR

AAL

I'd probably say the odds are greater that all of these things, and probably others that emerge, will collectively cause a 25% erosion over a moderate period of time. I think today's market is more-so a byproduct of a lot of conditions and none individually IMO are going to change so drastically that we have a huge and sudden rug pulled out from under us. What's more likely is they have a gradual and adverse impact on global economies and on many companies and as such we get some sort of EPS related correction over the course of a few quarters.

IMO there are specific things that are in a bubble, but the stock market as a whole is pretty fairly valued. Undervalued even if you use the yield based argument as touched on in the above chart.

Dimon is a champ. Hands down one of the best CEOs/leaders in the world. He is 100% right.

North NJ and South FL