clutch

Here is the reason for today's drop :o http://business.financialpost.com/news/economy/some-real-problems-with-canada-muddy-waters-founder-says-home-capital-selloff-among-nervous-investor-signals

Looks like an algorithm-caused crash...?

Whut, whoa, wait a minute....I am confused! Your buddy, who opened a car repair shop...was not trying to make a profit. He was trying to grow it and take market share. So he took as little salary as possible and invested as many of the PROFITS as he could so he could grow the business. I don't get it...if he was not trying to make a profit....how would he have anything significant to reinvest in the business? Shouldn't he have been working for free/almost for free to build it up? I should have worded it more precisely (i'm obviously not strong in accounting). Yes, he was working almost free to maximize profit. So I'm assuming he wasn't trying to take any free cash from his business at this point, so spend most of that profit as cap ex. But he was also using operating expense to "grow" his business (stock up on inventories, lease additional equipment)...but obviously i didn't see his financial statements to know the exact details. Come to think about it again, probably not the best analogy for Amazon, but a general reflection of a growth-minded entrepreneur.

Correct. It's easy to beat your competitors on price and grow if you don't need to make a profit. For now Amazon is not a business. It's a non-profit. You're looking at it wrong. For sure I am. After all a company is not supposed to make money. A company is supposed to create value. Reinvesting all your earnings internally is one way to create value. TCI didn't have any earnings either. A buddy and personal car mechanic of mine opened his own shop a couple of years ago. It was interesting to hear from him that his goal is to take as little salary as possible to support himself, and to reinvest all the money he makes on growing his shop. He wasn't trying to make profit at this point. Now he never had any business education nor heard about how companies like Amazon operate, but he just understood that for his business to grow and achieve his goal, that's what he had to do. So when I hear a story like this, I completely understand giving up profit to grow the business value. In fact, it could be the default startegy for many entrepreneurs. Not sure why one cannot see this from what Bezos is doing, especially when he continuously preach that that's what he is doing.

I wonder if people's perception on these valuations would change if they instead read "service provider valuations"?

Well articulated. 1 company from the original DJIA is still around and its in a completely different business than it started as. Things change quickly. 30 years ago, MSFT - tiny startup: Apple- same 20 years ago: Apple - Tiny, Google in the works; MSFT a juggernaut with an unassailable monopoly: Amazon a tiny startup 10 years ago: Iphone; Google goes public; MSFT losing its monopoly slowly; Amazon growing; No FB yet. So things changing over a 10 year period is considered quick now? :o Think about that time frame in the context of typical cyclical businesses / commodities...

At 1:20:40, there is particularly interesting discussion of "faith" in valuation. I've been thinking about this for a while as well. In value investing, figuring out the intrinsic value is the key. You benefit from the mismatch between the price and the intrinsic value. Yet, there is no scientific way to validate any method of computing intrinsic value. After all, the concept of intrinsic value itself is intrinsically subjective and never manifests itself in reality (in contrast to an objective phenomenon such as gravity or even socially constructed reality such as stock price). So you can never measure it to confirm / disapprove your method. So what do we do? We have to have faith in our process... Otherwise the whole idea of value investing falls apart.

I bought RL. I believe RL has one of the strongest brand values among clothiers and that is what will help them survive during the downturn. Also, if you assume eventually everything will be sold online, I think brand recognition becomes even more important.

Hence I own AMZN and GOOGL. :D

This was the same impression I got when I looked at this business a couple of years ago. Talking with a couple of civil engineers in the field, they really don't have any preference on which company they use for hydro excavating, and they simply choose whoever that's available and cheapest for the given job. Although Badger's scale could be an advantage in ensuring they'd have a truck available whenever someone calls them...

Nice call, Cardboard. And thanks for the idea!

My minimum standards have deteriorated drastically since 2013 or so when I first wrote them down. A friend's email from the other day made me realize how many of my "rules" I'm breaking at the moment. I will probably be raising more cash in the near future. I've been above 10% cash for at least 2 straight years now. I am right there with you. No good ideas and my current holdings are not ideal. Because I couldn't find good ideas within my typical investing framework, and to make use of the excess cash, I have started looking into m&a arbitrage opportunities for short-term returns. It is a new area for me (and fully knowing that I could screw up) but trying to learn from the experience and hoping to make some returns until I can find better ideas...

+1

How could we answer this kind of question without discussing politics? :|

Of course, I'm assuming people will be honest and use the same method to calculate the past performance. But would this be a good / bad thing for the board like this? At a superficial level, this will help people decide which person's idea they should value / neglect more. So this could be a good thing in terms of helping everyone maximize their returns. On the other hand, my feeling is that this will instill a dominance hierarchy within the board - people with better records will be respected more, and hence encouraged to post more, etc., while people with bad records will be ignored and disrespected, etc. ::) There would be even greater survivorship bias, and eventually the benefits of having diverse opinions would disappear... Anyways, I thought it would be interesting...

I agree with this approach. For larger companies, I feel like there are thousands of others who are also going to read ins and outs of financial reports, so reading all that doesn't give you much edge. More important thing is your own qualitative interpretation. For obscure companies, you could get some information edge by reading through their reports, talking to management, listening to earnings call, etc., because I assume not many other people would follow them.

Yeah, this makes sense to me, and the "pairing" strategy you talk about is new to me, and an interesting idea. (That said, I think socialism is stupid also--there needs to be great rewards for innovation.) I think your argument about why the right tends to have religious values is probably flawed. I suspect it's actually based on attributes of the individuals involved (e.g. belief in authoritarianism, belief in luck vs. hard work responsible for success, intelligence etc.) rather than a deliberate pairing. It may not be deliberate, but probably chosen based on the necessity. It's very easy for individualistic society to turn into complete chaos without any commonly held values. It's sort of like people want to be as free as possible, yet they cannot depart the foundational ground they have been standing on for thousands of years (otherwise they all descend into chaos). I should point out that socialists (or many of the radical lefts) also seek out for the commonly held values to tie them together. The core value is obviously the equality of outcome (hence, caring more about sexism, racism, etc.), but it has also morphed into other values such as environmentalism. And one could argue that these values have simply replaced the traditional religious values among the lefts, as they have become more secular yet they needed something concrete to stand on.

You're right--railing was the wrong word. Sorry. It's because I'm reading a book by Guy Gavriel Kay, so I naturally become flowery. Overly, in this case. It's hard to understand your position because, if you a deep evil being committed against someone and have the ability to prevent it, and yet choose not to, then you are complicit in the evil, and I believe that most people recognize that. There actually isn't that much to discuss, simply because the case is so clear-cut (which I think was the point of that case). One thing I was thinking about last night is this core belief and how it negatively impacts the communication of the libertarian message. (I'm going to take at face value that you guys actually want a libertarian state, and aren't simply espousing libertarian beliefs because it's fun to complain about taxes.) One seems to need to have these sort of core beliefs to be a libertarian. But, to a great majority, some of these core beliefs are abhorrent (ignoring a child rapes) or impractical to the point of ridiculousness in the real world (taxation is theft, government exertion of force is almost always unethical), or inconsistent (people shouldn't hurt other people, but regulations that stop people from polluting shared resources are bad). So then, if you're trying to persuade someone that libertarian ways are good, but you don't see any problem with ignoring a child rape, you're probably going to have a hard time persuading them that libertarianism is good, simply because child rape is so abhorrent. In other words, your core beliefs essentially make it hard to persuade anyone to agree with you politically. It puts you on par with the communists--passionate about their cause, consistent in their beliefs, and utterly unable to convince anyone because of the impracticality in the real world. So your options seem to be persuade people as children (akin to organized religion), or deviate from your core beliefs enough to be able to make reasonable arguments (which most libertarians I've met don't seem to want to do.) Neither one of these possibilities seems promising, but maybe there's a third option I'm missing? It is interesting, because I think there's a lot to like about libertarianism, and people who believe in the free market should be naturally receptive to it. But, if I look at myself, maybe the difference is that libertarians believe in the free market because of ideology, while I believe in the free market because of evidence that it works (and would be willing to abandon free markets if something better came along (and in fact do abandon free markets in medicine where better options have been proven). I guess from my perspective, this is a pretty good outcome--the world gets to learn the libertarian ideas that work, and ignore the ones that are goofy. But looking at it from a libertarian perspective, it would be frustrating, being unable to convince people of the rightness of libertarian ideas because the core beliefs prevent that. I'm curious if you guys (wachtword, rkbabang, onyx) have a perspective on this. (For you, is it as simple as believing your beliefs are so clearly correct that everyone should be persuaded by your arguments, so my point about problems persuading people doesn't make any sense at all?) Do you mean libertarian as someone who considers the classical notion of liberalism as the utmost value? If so, John Stuart Mills gives you a clear solution to resolve the types of problems you identified (e.g., preventing child rape). The most sacred value is individual freedom as long as one's freedom does not infringe or harm other's freedom. The society facilitates this by creating and enforcing laws to prevent harms against individual freedom. So in your problem, anyone who commits child rape should be punished according to the law, because that person harmed the child's freedom. There are a couple of tangents I'd like to add: - So what if someone (non law enforcement citizen) watches a child being raped and decides not to do anything? With just the libertarian framework, it seems to me there is nothing wrong with this. But that's why you often pair it with some other moral framework, e.g., religion, to fill those gaps. So now you have not just completely utilitarian framework around liberty, but also some moral duties to do "what's right" for the humankind. This is why people on the right also tend to hold religious values. - Libertarianism (at least the version I'm talking about here) is not anarchism. In libertarianism, there is a role that a state plays, which is to protect individual's freedom. But note that if you remove that particular role of the state and any religious framework, libertariansim degenerates into a complete anarchism. (By the way, a similar analogue is also found with socialism. You want to achieve equality in a socialist society, but who decides and how do you achieve that equality? In the extreme case, you may say that a single most competent person should decide this (e.g., a philosopher king or Stalin) and you degenerate into totalitarianism. So you need a another political framework to make progress in a more "reasonable" way, hence you pair it with democracy).

I enjoy this kind of discussions so... Here is even more obvious proposition than Liberty's. Say your kid has a terminal illness. You just found out that there is a drug that will cure the kid's illness. Will you act or will you omit? Are you still "neutral" if you decide not to do anything? On the other hand, could you say that you are evil because you are not doing anything about the fact that people around the world are dying every day due to various preventable health reasons? I mean you know this is true, and you also know how to make contributions to help them, so what's the difference from the above proposition? Is it not evil to ignore them because your affect will be less dramatic as the magical button that was proposed in Liberty's proposition? Taking it to the extreme, shouldn't you devote your entire life to help whoever less fortunate than you, because otherwise you are doing "evil"? So where do we draw the boundary? You may say, some situations are so obvious to be distinguished as evil or good (or neutral), like the first proposition I gave you above. But wasn't what Nazi's did also obviously evil? Yet there were tens of thousands who participated in the act? Now, I also despise and condemn any nihilist or postmodernist who says there is no good or evil. That's just being completely irresponsible for your action. I just wanted to point out that distinguishing good vs evil is not obvious most of the times... And sometimes what looks to be obviously good can be evil, and vice versa.

I hear you. But at least the trolley problem represents an event that can happen in reality. Your thought experiment is based on a premise that can arguably be never true in reality: Everyone's happiness can be simultaneously achieved. That's actually the problem I have with many of the thought experiments used for moral arguments. Because what's morally "true" or "good" depends on the context and reality. If you abstract it out from reality, it becomes impossible to answer what's right or wrong. Now, this doesn't mean that thought experiments do not have any value, as you suggest. IMO, the value is not in answering yes or no in the thought experiment world (and accepting some high-level truth axioms), and deducing real world judgments / actions based on that answer. That can be (and shown to be) dangerous. Instead, we should be posing such questions in the real world context, enumerating as much details as possible that should be considered, and debating the consequences, so that we can make better decisions when the problems are real. So I was just a bit irked when I saw your post... BTW, "The Righteous Mind" by Jonathan Haidt is a good book if you are into this stuff. Haidt developed the "social intuitionism" model, which basically describes the phenomenon portrayed in the carton from your original post.

Just to follow up, I just wanted to express that even for an action that seems to be completely harmless and for the pure good, it can have very evil consequences.

Thought experiment: There's a button in front of you. If you push it, everybody in the world will stop suffering and be forever happy (kidnapped kids held as sex slaves will be freed, cancer patients will be cured, etc), each according to their very own definition of happiness. There's no catch, no downside, nothing bad happens to you if you don't push the button. You're aware of those rules, of everything that's going on, so there's no confusion. I think that if you don't push it, that's an evil act, IMO. But it's impossible for everyone to achieve their very own definition of happiness without infringing others. In fact, the pursuit of this "happiness for everyone" has always turned into a hell in our history. :'( So if you believe in history, pushing that button would be even more evil...

That was very painful to watch...

Blame the ETFs ;D

ALIOY, ATP.TO, AIM-B.TO