zippy1

I guess this above quote may be the reason why some have the wrong impression that the suggestion is to wait for coke to go to ~5X cashflow to buy.

Ha! Ha! 2009 must be a good year, you know. ;)

Hawk: I guess our opinions are not so different as I also have some cash (25%) that I did not deploy right now. The idea like you say is that if the market stumbles, one would like to be able to take advantage of the market decline. However, the return on cash is low. The policy response by goverments for the European debt problem, the state and municipal deficit and debts that you cited likely are to print more money. That further dilutes the purchasing power of cash. As we wait for these issues to be resolved (and the market decline), the cash's purchasing power is going down. This is actually reflected in the spiralling food price that you mentioned. Personally, I am willing to hold some cash but I am not comfortable to hold a large amount of cash. I prefer to hold undervalued securities/businesses if I can find them. Also, everyone's risk tolerance is different depending on factors such as age, income, spending, financial obligation to children/parents.... I can see why someone want to hold a large percentage of cash in their portfolio.

If I am employing this strategy, by Oct 2008, it should be clear to me that market was getting cheap. I would have try to squeeze myself to further curtail my expenses so that the amount needed for a 3 year buffer also shrink. This is nothing new. Many people around me started cutting down their expenses around that time just because of the uncertainties.

I am currently about 25% cash for investable part of networth and I am not sure I would feel comfortable to go to 100% cash. Several reasons, 1. the purchasing power of cash appears to be going down fairly quickly. If the market dont' crash and I am holding cash, I will see my purchasing power going down. 2. I can't time the decline. 3. there are still some bargains in the market such as P&C insurance companies. 4. other stocks that I own are at reasonably valuation but not crazy valuation. ( Ok, I admit I still hold a few share of Contango spinoff thing, but we are talking about a couple hundred dollars.) If they reach my sale targets, I will sell. 5. Even if I took a 30% correction and never bounce back, it would mean that I have to work 3-4 extra years. It is not the end of world. 6. I lost ~10% in 2008 and made 50% in 2009, thanks to this board, with a big chunk of portfolio in Fairfax. I was not and am not owning the index. best regards, Zippy

I would like to thank board members for sharing with me on this so generously. The experience and advice sharings are really beneficial to me. I will definitely get Dr. Miller's book. Interestingly, even though it is out of print in US, it is still available here in Taiwan in a Chinese translated version. One aspect to "retirement" though is that I am not looking forward to sitting in my house doing nothing. The kind of retirement that I look forward to is the kind that I think I can do something positive. So one task is to find something that I think I can really contribute. In terms of how confident that I can be of my finance, given a few bad years. Honestly, I don't know. I started picking stocks in a small scale in 2000. I was doing it in small scale till 2005. I started to do it in bigger scale following the move back to Taiwan in 2006. It turns out that the results are quite "lumpy." 2009 was a good year and I got 50+%. 2008, I lost about 10%. 2007, I only got about 5%. The geomertical mean is about 16-17% for 2006 to 2010. However, as the result are so diverging, count on the geometrical mean as the performance expectation appears to be quite dangerous. I undersstand that investing full time vs. part time "should" improve performance but I am not sure what assumption should I make on the difference. I can only live life once so I got to make it count.

Sharper, thanks for a very well thought out input, as you always do. Indeed, as I became more financially secured, I have become more willing to express my view at work. Knowing that I have a second set of skills do help. I am lucky in that when I came back to Taiwan, I was asked to set up an engineering department in a major company. Over the past years, I essentially staffed it with the top ranked students from the best local graduate schools and have coached them more or less the way I want. If I quit, I know that I will not have the opportunities to work with as talented a group of people. As you said that I can change the game but can't leave the court. That is really an excellent piece of advice. I think what I should do is to figure out what game I want to play if I quit my current job. Beyond investing in my spare time, do I try managing money for people? (Munger did not like it, though?) do I register in a seminary to study theology and become a missionary worker? do I join a non-profit organization to work on a cause that I am passionate about? Again, thank you for your excellent piece of advice.

Thanks for giving me this very nice piece of advice. My wife and I actually have been thinking about this for sometime and there are several aspects of it make me undecided. One aspect is, of course, will we have enough assets? We live in Taiwan, where the living cost is somewhat lower than the States, so this part is much easier. However, what makes her uneasy is to have me being a fulltime "home maker." Here the society values "corporate titles" very much. When I told my wife I think I should eventually quit my job and manage our investment full time, my wife actually wanted me to form a small company, a small investment partnership, so that I can: 1) keep the "going-to-work everyday" routine and have a job title and 2) keep relatives from thinking I am lazy to retire when I am 45. I wonder whether other members who work for oneself full time have to fight this stereotype or not. What will you suggest me do?

Thanks for bringing up this excellent point. Actually, a friend of mine used to work for the CPU company on the west coast. That company had (may still has?) this policy of giving a person 2 months sabbatical after working there 6 years. Anyway, the first one was ok. But the seond one drove his wife nuts. His wife asked him to "stop following me around...." :)

Would like to thank many board memebers to share on this topic. I have a question that I would like to ask: At what point, should one quit the "corporate" job and just "manage one's (one's family's) investment?" What criterion should we use to decide on this? I have been wondering about this question and would appreciate any insight on this question.

Glad you won this one zippy. I was on the sidelines, is it already a done deal? Not sure it is a done deal or not as I am not sure any major shareholders may sue or not. However, I am glad to get the money back and move on. I think I am saved by the price that I paid more than anything.

Would like to thank PlanMaestro for bringing up CPD. Bought at $4.75 in December and sold yesterday at $5.15. Not bad for a 8% return in a couple months.

tunar, very much appreciate your sharing. zippy.

Is it possible to share with us about thse discussion board? I am fortunate to find this board and would like to see whether I can learn more from other boards

Is it illegal for non-US citizen living outside of US to melt it? Just curious.

Happy Chinese New Year! I live in a newly built area and indeed there are more than 5 real estate shops within 5 minutes of walking distance. I even regulary receive junk mail from them asking me to sell my apartment, which was just built about 18 months ago. The adjustable mortgage is going to be a big problem once te interest rate starts to go up for many people. I tried to get a fixed-rate mortgage when I bought my apartment but was told that no sane bank will make such kind of loan. So clearly all banks here a betting that the rate will go up. It does pose a delimma to me on whether to pay off the mortgage, though.

In general, housing prices in Taiwan appear to be really nuts. My wife and I moved back to Hsinchu, Taiwan from Dallas TX about 5 years ago. When we started our house hunting, I noticed that the typical price to rent ratio is in the 30s, also. I then found out several friends at work actually own multiple apartment units and are renting them out. I asked them how they feel about this very high (at least to me) price to rent ratio. They told me the property tax rate is very low, the adjustable mortgage rate is also very low (currentlt at ~2%.) The svaing's account is paying less than 0.5%. They just don't know where to invest their excess cash. I fear that this is not going to end well. On the other hand, I ended up buying an apartment as my wife kept bugging me about it. She is tired of moving all the time. The apartment price has gone up 10-15% since we bought it but I just keep telling myself to treat this as an "lifestyle" decision instead of a "finaicial decision."

Thank you for posting such a interesting and intriguing article.

Is Lou Simpson going to invest his own money in this along with his clients? If he is going to invest a meaninful sum of his own money, I would find it hard to say that he can not "lose." Conversely, if I am his client, should I really expect him to manage my money without being compensated? He is probably charging less than the market going rate for someone with his track record.

Does not sound like that he is in it for the money; at least not for getting the maximum amount of money. It sounds like he just wants to have something, which he is good at, to do.

I think the punch line - not much of a fan of moralizing with investments - is that investing is always risky and a large margin of safety has to be demanded. For example, you can also get hit by management doing stupid transactions when control is diluted (ie: Kraft). I actually have a 15% profit since Sept 2009 but I was expecting something much better than that. 5% premium, close to the a 52w lows and well below the 52w high they will probably have to improve their offer ... merger arbitrage anyone? Hmmm. If the deal goes through, you get a minor upside. If it takes 6 months to close, probably a 10% annualized return? If the deal fails to go through and your valuation is correct, you get even better results. I think it is a quite interesting situation. There is a similar situation in BCIS.OB where the majority owner ended up increasing the bid. It would depend on whether the outside directors, I think.

If your friend does not mind a closed end mutual fund, source capital (SOR) may also be a good choice. It used to trade at a premium, but has been trading at a discount to NAV for the past couple years. One essentially will be getting a 10+% discount.

I would like to thank Packer to the pick of VRTS. Truely an interesting situation.

From the above, you must also mean that many other stocks did lose less than 40% and did better?

How do you set up an automatic search string? :-[ TIA cheers Zorro When you do the search on Google News, on the search results, it will put a link for you to set up automatic email alert.