DW1234
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Posts posted by DW1234
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Fundamentally this should definitely be true in some cases. ROIC in new assets could be worse than buying older assets. A taxi company only buying 2-3y old cars could have a higher ROIC than a taxi company only buying new cars. It's up to the CEO to make this capital allocation decision.
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Taleb talks recently about ergodicity, which in terms of math and physics is a pretty tough chew, but in terms of investing is somewhat easier to understand: how best to avoid ruin is to compare two $100 bets on a flip of coin, over a non-infinite time series of flips. investor #1 puts all $100 on the single coin flip...and if wins doubles bet and continues with the single coin flip..and eventually faces certain ruin. investor #2 gives $1 each to 100 participants, and asks them to make same bet strategy. at end of a certain equivalent series of flips, investor #2 is much more likely to have better result than investor #1.
you can say that this is diversification but it really isn't in the sense that all bets are the same...a coin flip, doubling bet, same payoff odds. what is different is the effect of the time sequence. I have been thinking about investing in terms of diversification over time rather than over diversified investment metrics/factors, and the notion of sizing multi-bagger bets over time sequence may be more meaningful than allocating to different exposures in accordance with industry/risk profile etc.
put another way, in the case of every multi-bagger opportunity, there will be a reason not to invest...ie the monster beverage short writeup. think less in terms of the certainty of investment merits (which in the case of a multi-bagger opportunity is always daunting since that is why it is a multi-bagger opportunity) and more in terms of being exposed to a time sequence of acceptable opportunities
edit: I looked over some notes and found this which is a not bad look at the concept in the investment context: http://squidarth.com/math/2018/11/27/ergodicity.html
Interesting post. But isn't this in some way just saying that if you can choose between 1 investment or 5 investments with both about the same EV and uncertainty, you should always choose 5 investments?
Intuitively I feel like most investors use this concept already by having more than 10-15+ stocks in their portfolio.
Could you give an example of when/how this concept can be used in a portfolio ELI5?
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I take back my comment on outsmarting taxes being fun. This is horrible.
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Where do you find the financials for these? They're not on OTC markets or the SEC website....do you have to contact the firm for an AR?
Sometimes you need to buy a share and call the CFO. Seems like a pain doesn't it? It is, but where information is hard to get it's extremely valuable. It's very hard to have an informational edge on Pfizer, but to have one on Thermwood Corporation you just need to spend a few cents for a share and call the CFO.
Bump.
Can it be argued that the people buying these type of stocks all go through the trouble of getting their financials that there isn't as much edge as you think there is?
I find it hard to believe people just buy companies being completely in the dark about their numbers.
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Market psychology is fascinating. People forget that this type of stuff happens, and they make the same mistakes over and over again. If it's not the same generation, it's the next generation.
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I'd like to watch the original interview, but can't find it anywhere online. Does anyone know if it's still available somewhere?
Edit: I've found a transcript: https://mebfaber.com/wp-content/uploads/2019/03/Interviews-for-Intelligent-Investors-Paul-Lountzis-Complimentary-Copy.pdf
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Isn't having the right incentives as a fund manager the most important thing? I obviously wouldn't want my fund manager to index his own money, but I wouldn't even want him to buy something without himself also buying it at the same time. If there's a scenario where the LP's end up owning a certain stock and the manager has a 0% allocation that would be very far from optimal.
By getting the incentives right, you don't have to trust your manager to constantly do the ethical thing against his own (v human) profit motive. A couple examples if the managers portfolio differs from LP portfolio:
- Less time investment in his smaller / missed positions.
- Smaller or 0% positions mean he has cash which he presumably wants to invest, so he might add to existing holdings or even new holdings. Which creates new warped incentives.
Essentially, I think the gain in EV of being the first to buy and the first to sell as an LP, is offset by the loss in EV of incompatible incentives.
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And what about using something like sken.io or trackly.io? I don't have any experience with these, but they send you an e-mail when a certain webpage has been edited.
Btw, I would also easily pay $100+, it's probably worth that in pure value easily. But even if it wasn't, it would still be worth it just to make my life easier.
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There might be a huge opportunity here to fill this gap. I've tried every recommendation here, yet nothing really satisfies me.
Ideally what I want is to create a watchlist/portfolio of my stocks in several different markets (US/Europe/Japan/Hongkong). AND (this is where it get's difficult it seems) I want to be updated of any news (annual reports, dividends) about the companies in my portfolio/watchlist.
Yahoo works great for just the watchlist function, but there's no way to get alerts of news updates (is there)?
Seekingalpha works smooth too, adds some news and of course written blogs about the company. But it looks like they're also missing a lot of news.
Am I asking for too much here? If so, how do you guys keep track of stuff like annual reports and dividends for the companies you are interested in?
ROIC of an older factory is higher than ROIC of a new factory
in General Discussion
Posted
Wabuffo thanks for that post. Really helpful.