Cigarbutt

In the cycle, it’s Christmas time, once again, Time for family reunions, lively discussions, not meetings, Forget the mixed signals that will always remain, And enjoy, hopefully alive and well, this year’s Greetings. The security, not trading over the counter, More value tied to the exchange with another, Like in investing, the ideas not found in manuals, But in rituals and the appreciation of fundamentals. Merry Christmas!

-----)side note vs above I've looked briefly at EW a few times (including after some comments of yours). It makes sense that this company has done very well over the long term (that's easy to say now) and it is reasonable to expect that the future will look like the past. The Fogarty and the Swan Ganz catheters were landmarks and they seem to be a the right place with their newer valves (really fascinating stuff). I understand that they had developed peripheral blood vessel stent technology which they sold to Bard and that ended up eventually in BDX's portfolio. It seems that management felt that they had not achieved sufficient scale for profitability. Some could say that this looks now like a nifty-fifty stock after such growth and such recognition of growth. Obviously, the best time to buy these kinds of stocks is during downturns but that's obvious mostly in hindsight. If you have a long term mindset, if your return objectives are relatively reasonable and if the future ends up similar to the past, a PE of 61.1 can make sense. https://www.macrotrends.net/stocks/charts/EW/edwards-lifesciences/pe-ratio http://csinvesting.org/wp-content/uploads/2015/03/valuing-growth-stocks-revisiting-the-nifty-fifty.pdf Congratulations for this pick and good luck for the future. -----)Back to a better health...

Re the recent transaction: mixed feelings. I remember very well around 2002 when TIG was put into runoff and when Riverstone was formed. The turnaround that occurred was highly linked to performance at that relatively obscure sub. They very efficiently handled claims and capital and eventually became an acquisition vehicle. The 2010 AR summarized well how this is a gem of a business even if results tend to be lumpy and sometimes messy (at least on the surface). Anybody here remembers ORC Re or nSpireRe? Or the TRG acquisition (with the final payment in 2017)? It seems that there will be (are already?) huge opportunities for profitable runoff transactions. It makes little sense to sell an interest in one of the crown jewels and the argument of transacting for value surfacing is not convincing. The deal may make sense if they expect to raise capital ++ in order to grow ++. Also, building ties with OMERS is a way to become too large to fail.

Buybacks are not a cause, they're a symptom. Symptom of lots of cash on the balance sheet that can't be reinvested at good returns right now, so returned to shareholders. If it didn't come out as buybacks, it would either be higher dividends (which also tend to increase valuations as they rise), or more investments which would probably lead to higher growth, which also has an impact on valuations (unless the ROIC is under WACC or generally destroys value). My first reflex was to say that the post was only factual (basic data) in nature and that I did not necessarily agree with the interpretation or the conclusion but, of course, you're correct in the sense that I wonder about the symptom-disease conundrum that may exist. i hope to become a holder of a basket of long-term compounders (if i can find them) and the potential bias may have something to do with the fact that the underlying framework for stocks is a supply and demand function and there have been several opportunities where estimating who was on the other end of the trade was critically important. Despite the above, the 'demand' table is interesting in several respects. In the past, share buyback activity has been significantly pro-cyclical which goes against a contrarian bias and is possibly a cyclical trend that will continue. Also, retail investors are typically trend-followers and I don't understand why (apart from net positive ETF funds flows) why there has been a net negative outflow of funds during an episode where momentum was clearly a fundamental factor. I think i understand why pension funds and other institutions have decreased their direct stock exposure overall because of a growing attraction to various alternative assets (private equity, real assets etc) but the trend is significant nonetheless. Another interesting feature that does not stand out is the fact that the absolute value of stock exposure may increase even with equity withdrawal as long as price appreciation remains larger than the withdrawal rate. I remember also studying this phenomenon (the reverse phenomenon) when markets go down when some people tend to think that there are more sellers than buyers which does not really matter from the angle of a single one-to-one transaction.

The topic is interesting. I could ramble in many directions but decided to take it from the following angle. There are specific risk factors for defensive medicine from the provider's point of view and health preservation/restoration has significant intimate value but my opinion (and this somewhat validated) is that, outside of basic competence, basic physical skills and exposure to idiosyncratic risk, the most significant factor is the quality of the human interaction. In the last two years, I moved to the other side of the mirror and accompanied my in-laws into the meanders of the health care system. This confirmed my view that ordering tests in a defensive way does not really protect from litigation. Avoiding eye contact with the 'client' and focusing on a computer screen as well as the complete absence of physical contact (I don't even mean the absence of any physical exam, which was frequent but the actual absence of any physical contact {ie basic human interaction skills}) in fact constitute significant risk factors for litigation and, unfortunately, the recent experience confirmed a previously held assumption that medical staff who had poor human skills tended to be the ones ordering unnecessary tests the most. Atul Gawande has talked about this, if you're interested. This is a huge question but basically the underlying work implies aligning the incentives. I could give you many examples but let's go back to the heart stent example. Warning: I'm comfortable with the assumptions mentioned but cardiology is not my forte and I could possibly be ridiculed. Given that everything looks like a nail if you hold a hammer, given the human tendency to follow the path of least resistance (and the path leading to higher earnings) and given the information asymmetry, it is easy to understand why heart stents would be recommended and performed. And defensive medicine is not even a major factor in this specific equation (stable patients). The amount of potential savings only in this segment is huge and this can be reproduced in other areas where the defensive aspect plays a larger role. Now you'll say that the poor incentives are deeply woven into the complex web of interactions build over decades. The simple answer is that people respond to incentives (both good and poor). To align incentives, you need data, good analysis and some kind of leadership. I think this is coming to fruition and perhaps (forced) realization with a crisis would help. As I've mentioned elsewhere on this Board at some point, as part of a self-regulatory effort, I was part of a committee establishing tariffs for various procedures. For a rarely performed act, after a revision, an error (a typing error) was introduced (resulting in a much higher tariff) and, the following year, billing for that specific procedure increased considerably (are you surprised?). The billing statistic came back to normal after the error was corrected (!) and, recently, I've been told that the price of the act had been reduced because it needed to reflect its real clinical 'value'. So, how to make money here? If I were 22 or something, I would drop out of university, move to the US and start a venture going along a third-party handling of claims formula and would not worry too much about the deeply needed tort litigation reform that your country needs at it is part of its charm. Because I've become lazy, I'll watch from the sidelines and try to pick the winners. The exercise may also help to spot losers in the overburdened supply chain. I think the only fear you'll have to fear is fear itself. Espouse reform!

An interesting aspect is that all attempts aiming for cost containment that have been tried have not been successful so far. A strategy would be to try more of the same with an expected different result, another strategy would be to reframe the foundations which is basically not possible. Still, using the heart stent example below, it appears that the system may be ready for some significant (and constructive) changes. If you play with the link provided by Spekulatius, you can find that the cost to insert heart stents (cost of procedure and estimated cost of stent) is a large multiple compared to other countries. Because of innovation, it is understandable that the cost may be superior but clearly not enough to be a multiple. Also, it is becoming increasingly clear (evidence-based, multiple references available upon request including a large international study just published last November) that stents mostly do not result in significant benefits in chronic and stable heart disease. Despite this, in all countries but especially in the US (by a large margin), stents continue to be inserted without any restraint. Finally, some groups, who are aligning incentives, are designing ingenious protocols to replace invasive procedures and expensive drugs. We are only at the forefront of this wave but it is coming. If I'm right, you may want to adjust sales and profitability for those involved in the stent market: Medtronic (MDT), Cardinal Health (CAH), Abbott (ABT), Boston Scientific (BSX), Becton Dickinson (BDX), Terumo and MicroPort Scientific on the OTC market. https://www.eurekalert.org/pub_releases/2019-08/kp-kpr082719.php

^The following table could be helpful: https://www.marketwatch.com/story/buybacks-are-the-dominant-source-of-stock-market-demand-and-they-are-fading-fast-goldman-sachs-2019-11-06

^So is it: believing is seeing, or is it the other way around? :-\ I've always thought that there'd be less chaos if more people could accept that both concepts can be reconciled.

The part dealing with the causality aspect of WWI is interesting (assassination of Austrian prince) but the Balkan region was called the power keg of Europe. Sometimes all you need is a match. When outcomes become known in multi-variable and complex systems, humans may find patterns when, in fact, there are none or the perception and the interpretation of the pattern may be highly tied to prior-held beliefs. The book is interesting if you have an interest in trying to understand chaos. Didier Sornette is another who's tried to correlate complex manifestations to mathematical formulations, with an uneven success (especially 'predictive'). Strikes me as design in the midst of perceived chaos. Hi MrB, To be clear, the following is submitted as a learning tool. (and for fun) If you have 10 seconds, click on the following link, look at the fifth image without reading the text below before looking (although your unconscious eye may not collaborate) and try to see a pattern. Then read the text below. https://earthsky.org/human-world/seeing-things-that-arent-there The whole thing strikes me as design in the midst of perceived chaos. Post-scriptum: I'm planning to read a book over the holidays that I thought I had read before and may suggest it here at some point.

There is another thread specific for Reitmans but there is the smell of blood and will take it from here. https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/ret-reitmans/msg273985/#msg273985 Long story short: Long story and very competent managers but retail is tough and all good things must come to an end. Short-term problems are turning into intractable issues and I think that, given the present momentum, the turnaround will be very difficult. This is a first shared shot at it and expect to potentially meet interesting entry points in the next few months. 3 scenarios: 1-They sell or turnaround the maternity segment and somehow save the brand; then market price should converge to book value. 2-They try and try and this becomes a value-trapped melting ice cube with accelerating negative cashflows (the transition from slow to fast may be short) 3-They decide to enter BIA, define a SISP pathway and rapidly liquidate through a receiver (the Danier Leather story) For scenario 3, comparing Reitmans now to what Danier Leather looked like at the end of 2014 is instructive. There are balance sheet differences but IMO differences tend to cancel out in terms of the liquidation value. I assume Reitmans could terminate or assign leases in a similar way. I come to a liquidation value of +/- 1.40 per share if things go south in the next 6 months. I assume the liquidation and distributions would happen over a two-year period. That's it for now and will reconsider with further developments or if/when share price goes below 0.70.

The latest 'agreement' dealing with individual wildfire claims was felt by some (some Seeking Alpha contributors and some others) to lessen the pressure on the equity backstop reported last September. http://s1.q4cdn.com/880135780/files/doc_downloads/wildfire_updates/2019/09/2019.09.17_Plan-Financing-Summary_FINAL.pdf The agreement, simplified, implied 6.75B to victims in installments ending in early 2022 and 6.75B in company stock that would result in a significant stake in the 'reorganized' PG&E. Gov. Newsom, after a solicited debtor request from the party looking for a nod of approval, gave the following answer: https://htv-prod-media.s3.amazonaws.com/files/letter-from-governor-newsom-12-13-19-1576295434.pdf This remains complex++ and anything can happen but the Governor is, in a simplified form, asking for a more significant commitment (governance and new equity). There may be another interesting entry point if PG&E does not respond fast enough or in an unconvincing way. It seems to me that PG&E is positioned to deliver a reasonably sufficient message (more essential governance change, more 'new' equity commitment in order to have a less leveraged phoenix entity and perhaps a specific equity commitment for the wildfire fund to come that will deal with future costs). I keep my baseline requirement for +/- 17B in new equity. IMO, there continues to be a window of opportunity for a white knight such as BRK energy who could supply sufficient equity capital, management capacity, governance reassurance and long-term stability for cost of capital not even considering the reinsurance expertise that will play an increasing role going forward, given the wildfire context and the inverse condemnation rule. I understand the Governor's tone, given the noise at the constituency level but the public authorities have to get their act together and it is difficult to explain how the insurance department does not seem to understand that they are more a part of the problem than a part of the solution: https://ktla.com/2019/12/13/insurance-plan-fights-california-commissioners-push-to-offer-homeowners-state-wildfire-coverage/ Unrecognized costs remain so qualified until the forces of nature start to send invoices. It looks like old PG&E will 'pay' perhaps more than its 'fair' share of 'natural' costs due to its bad-boy and rogue behavior and attitude and it may recapture some of these costs over time but the state needs to remember that they can't have their cake and eat it too. I would say the bankruptcy is likely to discover the best outcome but an adult in the room would help.

A nice obituary with a personal touch: https://www.nysun.com/editorials/paul-volcker/90935/ He enjoyed also fly-fishing. He was a member at the Restigouche Salmon Club which is located in an absolutely beautiful area. https://www.forbes.com/sites/monteburke/2011/01/31/gone-fishing-paul-volcker-retires-from-public-life-heads-for-the-river/#2add45b96ced A principled man, he was one of those who are greater than life: https://www.amazon.com/Keeping-At-Quest-Sound-Government/dp/1541788311/ref=sr_1_1?keywords=keeping+at+it&qid=1575981673&sr=8-1 "If you keep at it, eventually you’ll catch a big one"

This remains very complex but the BK pretty much evolved in a typical way, at least so far. Risks: -nationalization risk -bankruptcy risk -more wildfire risk Late last week, there was an agreement reached for wildfire claims (13.5B). Together with the previous resolution of state and insurance claims (1B + 11B), I would say a significant layer of uncertainty has been removed and the likelihood that oldco (old equity) comes out favorably, given the remaining risks, may now get recognized. Old PCG needs to come out with a reorg plan with a deadline fixed in Q2 2020. Assumptions: -old equity 'pays' for the after-tax total claims of the past -post BK equity valuation at 22-24B, similar to end 2017 -need to raise 17B in new equity -debt raised for future wildfire costs as part of a future effort, rate-backed and state-backstopped So "value' about 10 to 13 per share. It looks like the price may rise to this reasonably conservative range in the short term. NB This is, in large part, an exercise in liability discounting. One liability was easier to discount: https://www.marketwatch.com/story/was-a-280-million-emerald-destroyed-in-california-wildfire-pge-is-dubious-2019-11-19?siteid=rss&rss=1

Thanks! That was an interesting take. Never underestimate people who have drooping eyelids and the value of self-derision, as long as your ability to do so is bigger than your ego. If short on time, the Eton rugby photo says it all.

FWIW, I think this divestiture should not be regretted. In addition to the regulatory challenges associated with their aggressive style, there was another aspect which was questionable and for which recent work suggests that a large part of their clients would be better served by another option. In my jurisdiction, the workers comp insurance market is 100% funded (premiums and payouts) by the government. However, private parties can get 'involved' in the claims handling part and a way to do this is to 'mutualize' the costs and benefits that result from this activity. I have been peripherally 'involved' in this market. California (the main market for Applied) has a large self-insured workers comp market. The advantage of the products sold (aggressively) by Applied implied 1-savings on the administrative costs due to scale, 2-lower premiums by sharing the savings coming from the built-in incentive to self-improve practices and 3-the bright and effective use of reinsurance to deal with the excess of loss component. An essential ingredient was the trust necessary to outsource this aspect of the insurance transaction. It seems that self-insured groups can do a better job at cost savings and how to share the NPV effort. The report has been sponsored by a self-insured group but results correlate with what I've seen in my neck of the woods. For those interested: https://www.dir.ca.gov/osip/AppRequirements.htm https://www.securityfund.org/assets/docs/Bickmore%20Comparision%20Self-Insurance%20v%20Insurance%20-%20FINAL.pdf Note: This is not to say that self-insured groups will take over the traditional private insurance market, it is only to say that many clients presently under the Applied umbrella could get a better (and more transparent) deal elsewhere. I doubt Mr. Buffett wastes his time on such technical details but would not be surprised if he showed an unusual lack of concern (after a discussion with Mr. Jain) when the black sheep offered to fly on his own.

This is potentially relevant but there are multiple variables and aggregate results may need to be decomposed for application versus a specific sector or specific entity. Also, comparing different sources can be a challenge since different definitions may be used for the critical variables. You may find the following interesting (especially the "Debt to EBITDA is Retreating From Post-crisis Highs" graph). https://libertystreeteconomics.newyorkfed.org/2019/05/is-there-too-much-business-debt.html Interestingly, note that the graph uses debt and not net debt. The recent "improvement", in fact, has not materialized at the net debt level because the lowering of the ratio can be explained by the massive cash repatriation that us firms completed after the last tax reform with funds mostly going to share buybacks and some net debt reduction but the aggregate cash balance has come down a lot and the net debt ratio has not improved. Another factor that is tainting results in the aggregate is the very unusual manifestation, historically speaking, of concentration of cash in the hands of a few. These days, 5 companies hold about a third of the aggregate cash, the top 1% hold more than 50% of and 45% of the cash pile is held by the tech industry. If you look at specific industries, the leverage picture has become somewhat unusual. This creates also a relative game where a player like CVS (pharmacy), despite carrying a high debt load, looks like Fort Knox when compared to one of its competitors, Rite-Aid. Recently, I looked at RH, a luxury furniture retailer. Below are relevant (significance of the relationship between the numerator and denominator) numbers of the analysis: 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 net debt/"adj." EBITDA 2.8 2.5 1.5 0.8 0.5 0.8 0.8 2.7 3.4 2.4 The conclusion that I came away with is that it does not matter that much if leverage increases, as long as the cash flow follows but the company bet that it can capture the excess cash in the top 5% of customers and may have overlooked that debt is stickier on the way down. Because of the cash concentration at the top, an interesting area to look at is the larger pool (larger than the S&P 500). The best way to share an interesting graph coming from La Société Générale is the following link (page 3 of the document showing Russell 2000 {the initial reference mentions R2000 not R200) net debt to EBITDA): https://fpa.com/docs/default-source/funds/fpa-capital-fund/literature/quarterly-commentaries/fpa-capital-fund-commentary-2019-06_final.pdf?sfvrsn=4 In some sectors and for certain specific entities, we are living in interesting times.

^What Rule#1 is saying basically (if I get it right) is to consider jumping off the plane while leaving many questions unanswered. The easy thing is just to ignore as jumping off the plane is the wrong thing to do most of the times but the inputs perhaps incentivize to ask some relevant questions: 1-How much risk can you afford to take? 2-How much risk do you need to take? 3-How much risk are you willing to take? 4-How much do you care about keeping up with the market? 5-Is there a way to make money here? If the inputs make you go through the first three or four questions then the next logical step is to hope for a complete financial striptease which may be too much to ask. The above was inspired by a link read this AM: https://humbledollar.com/2019/12/imagining-worst/ Speaking of humility, one has to wonder about the environment when there seems to be an unusually high number of pilots expressing that flying an airplane is simple AND easy. ----- Who knows what this all means but this thread went from an environment where fund rates were supposedly and decisively going higher to neutral and, against all odds, to easing although the Fed has difficulty finding the right vocabulary. In reply #101, Spekulatius noted: "Maybe they are too deep in? If rates increase, the value of those low/no/ negative interest rates bonds would drop and the bagholders owning them wouldn’t broke. Maybe all that can be done at this point is dig deeper." While not being relayed really by the press (even the financial press), there continues to be a very unusual confluence of circumstances where the Repo market has participants refusing to enter "risk-free" arbitrage opportunities and where massive support is now simply integrated into a new normal. https://ig.ft.com/repo-rate/ And the Fed now put in place 42-day facilities to make it through year-end. This is extremely complex but there is something REALLY weird going on and I wonder if there is a link between the tiny rise in interest rate that occurred since last August and the stress seen at the core of the financial plumbing because, as Rule#1 reports, this tiny change likely had a huge impact on the portfolios' mark-to-market value and these are the typical portfolios that foreign financial institutions use as collateral to enter the US Repo market. Obviously this may be some kind of temporary technical noise but it's eerily similar to the noise heard from the wholesale funding market in 2007, when it was felt that the brutal forces of the market would be contained. ----- Today, I plan to analyze Tech Data in order to do some inversion work. It will likely be a learning experience. However, I doubt that it will be possible, even in retrospect, to find an attractive entry point along the way because there appears to be too much competition as the graph showing competition to outcome is bell-shaped

Yes, most M&A happens in the public market but the other assumption mentioned (which I thought was correct until I looked at the facts, national accounts and all) needs to factor in that higher buyback activity has been associated with higher issuance of stocks through options and other equity grants. For example, in the last 10 years, on a net basis, net share count reduction occurred only at about 1% per year. Even if absolute amount of dollars were allocated to buybacks, the fact that shares were bought at relatively high levels (opinion) helped to mitigate the share reduction.(!) If you look at what happened since the mid 90s (by choosing that initial reference point, there is an embedded starting point bias to some degree because this happened to be a high water mark of sorts), the defining features include declining "death" (all causes included) and "birth" rates but the birth rate has declined more, especially during the decade preceding the GFC. Since then, we've pretty much flat-lined, whatever that means. https://fred.stlouisfed.org/series/DDOM01USA644NWDB Capital does not die and the stock market has not shrunk ($ value) and it seems like the optimal scenario would involve recycling the enormous amount of capital returned to shareholders into new and more numerous ventures that would (eventually) displace incumbents. Isn't that the secret sauce?

^To the question, what's wrong, Warren? I don't know the answer and wonder if he has lost it or if the market has lost it. I guess it all comes down to an individual decision with personal investment implications but here's an historical input that is potential food for thought. The link is an indirect reference to a WSJ article and was supplied by, I think, a COBF member: https://brianlangis.wordpress.com/2018/09/26/whats-wrong-warren/ The question here is not to compare both periods but simply to mention that, for some, in 1999, the obvious choice was to bet on Yahoo. The verdict 20 years later: 1999 2019 MKT CAP Yahoo (B) 120 48* MKT CAP BRK (B) 83 540 *I'm no Yahoo or related specialist and the number represents what I come to as an estimate of liquidation value resulting from relatively recent transactions. A potential message: The environment keeps on changing but some principles endure and the retained earnings aspect may only play out over time.

Will try to go from micro to macro and back and this thread reminds me of one you started recently which dealt with the issue from a regulatory angle. I just arrived at a conference where the title includes "dynamic" and "staying ahead" but even if the title is elegant, it's really about maintaining regulatory capture. There are many reasons/causes but I think this has to do with the fact that we live in a golden era for incumbents (section 4, starts page 23). https://eig.org/wp-content/uploads/2017/02/Dynamism-in-Retreat.pdf An interesting area is that we seem to take for granted that financing is easy (financing is important for entrants) but it appears that financing for smaller players is nothing but easy. One way to gain market share is to be at the leading edge; stifling entrants may help. And I wonder if the Great Recession was not a wasted opportunity. At lunch, I'm sure somebody will take a photo of their meal and send it to "friends" but somehow it seems that the real issues will not have been discussed.

Absolutely.

I am not as familiar with the Ontario-specifics but the regulations are pretty uniform on this side of the border for that aspect and I tend to agree with longlake in the sense that your efforts are unlikely to succeed if your goal is to go through a formal arrangement. You have two hurdles: 1-Obtain an exemption, when you accept money from somebody else to "manage" it, in order to avoid the prospectus rules. This would essentially involve producing an offering memorandum showing that your 'investors' are rich, sophisticated, 'accredited' and are ready to (consent to) lose all their money because they think you are great. 2-Obtain an exemption in order to avoid the need to register yourself as some kind of an adviser. This requires time, potential frustration, fees and your job is then to somehow convince somebody that you have the capacity and ability to do this outside of official bounds. https://www.getsmarteraboutmoney.ca/protect-your-money/investor-protection/regulation-in-canada/types-of-prospectus-exemptions/ https://www.osc.gov.on.ca/en/Dealers_asking-relief_index.htm I hear what longlake is saying about investment managers being stifled but this area has always attracted individuals with poor credentials (and poor incentives) and it may be a price to pay for the collective blanket of security.

Here's a quote that's really a summary of documented facts: "Floyd Odlum: Making the Best of Bad Times Floyd Odlum is sometimes described as the only guy to make a fortune in the Great Depression. (He wasn’t.) James Grant, editor of Grant’s Interest Rate Observer, called Odlum a “salvage artist par excellence.” “None of us can know the future,” Grant wrote. “But, like Odlum, we can make the best of a sometimes unappetizing present.” Grant also managed to scrounge up a pretty good anecdote on Odlum. In the summer of 1933, when all the world seemed to be in pieces, Odlum strolled into his office, looked at his glum partners and said, “I believe there’s a better chance to make money now than ever before.” Odlum liked poking around in the smoking wreckage of the 1930s. Bad times create wonderful pricing. The story of a man with the odd name of Odlum is one of how he got rich in the Great Depression. Floyd Bostwick Odlum was a lawyer and industrialist, born in 1892. He started his investing career in 1923 with $39,000. In a couple of years, he turned that into $700,000 through some savvy investing in deeply undervalued stocks and other securities. Odlum was on his way. All told, in about 15 years he parlayed that $39,000 into over $100 million. His big score came after the crash of 1929. Odlum bought busted-up investment trusts. As Diana Henriques writes in The White Sharks of Wall Street, “Odlum [became] a multimillionaire almost overnight by investing in the undervalued shares of twenty-two investment trusts decimated by the 1929 crash.” He found companies trading for less than the value of the cash and securities they owned. So he bought them, liquidated them and then took the cash and did it again . . . and again. Of course, to do this, he had to have a little money at the bottom. And he did. Odlum was either lucky or prescient, because he avoided much of the pain of the 1929 crash by selling some of his investments beforehand— leaving him with some $14 million of fresh cash to take advantage of opportunities. So, don’t be afraid to hold onto cash until you find those special 100-bagger opportunities. As Odlum’s career shows, bad times create those big opportunities." I guess the limits of copyright use without permission are possibly stretched so here is some justification: -the idea is to share potentially helpful info that reflects generally known facts and that does not include unusual insight or analysis -the quoted part contains only a small amount of text vs the whole book -the reference is listed below -the book is an interesting read and is recommended; I would say it is worth at least 100x the price. https://www.amazon.com/100-Baggers-Stocks-100-1/dp/1621291650/ref=sr_1_1?crid=ZANZ09OV5KVI&keywords=100+baggers+chris+mayer&qid=1574881970&sprefix=100+baggers+%2Caps%2C275&sr=8-1 NB If sufficient negative feedback is provided, will delete the post temporarily until permission is granted.

Of course I support Trump in goosing the market. He needs to do whatever it takes to keep the liars and thieves (Elizabeth, Bernie, AOC) away from the White House. 2 questions: 1-Are you a central banker or something? :) 2-Can you elaborate on the link between your comment and the underlying theme of the thread or did you just want to vent a political opinion?

It's interesting that this thread, which is about a redefinition, barely touches on the father of the definition (apart from a brief indirect mention in reply #6). How you define the margin of safety and its relevance may be epoch-specific. Mr. Graham went through a vertiginous rise during the new era period and became a portfolio manager in 1926. His capital grew, mostly from capital appreciation, and went from 450K to 2,5M in three years. The following three years meant a 70% loss. The fact that he survived with grace is, by itself, an accomplishment but he was wise enough to think about the whole thing and come up with some definitions. A fact that is not well known is that, after the dreadful period, he often acted as an expert witness helping cases to argue that market quotations actually undervalued many businesses. His experience was unique and perhaps not repeatable but the atmosphere of the period helps to understand his tone and his anchor points for definitions. It seems that he was able to grasp concept of resilience, optionality and the nature of growth but he chose to focus on past quantifiable measures, put a high price on downside risk and respected the limitations of evaluating the outcomes of the future which, invariably, are tied to the general level of business conditions. An argument could be made that such a confluence of events won't happen again, that he was unable to recover from the permanent bruising and that we was, in the end and perhaps because of this attitude, an average investor (if one forgets Geico which is an investment that didn't fit his margin of safety definition) but it seems that Mr. Graham was at least right in the need to remain humble and the contrarian side of me wonders if his teachings are not the most relevant when it is felt that he no longer is.