scorpioncapital

Nobody says it but Germany is equally to blame in this crisis. For a decade, they have been overstating their exports. The greeks cooked their books, but in my mind, the Germans did too. 40% of their exports went to their Euro friends. But since the money to pay for that was partly a fiction/vendor financing, then German exports was partly a fiction. The difference is they got the money in Euros up front and now don't want to give part of it back - that's money that should never have been made because the buyers of the goods didn't actually have the money to buy them.

Phenomenal interview! At the 24 minute mark, he names two (French?) philosophers about the truth being in the details. Did anyone catch the two names and if so could you post it here?? Thanks!

Interesting, so perhaps the massive inflation came during WWII?

Google says that $1 is 80 yen. That's an 80:1 ratio. Many major currencies don't have such a huge conversion of nominal figures. Does this mean that even after 20 years of deflation, Japan must have had a massive inflation before that?

there must be an asymmetry of information between buyer and seller. If there isn't, don't expect a good deal. Without a good deal, don't expect an outstanding return. Usually, the seller has better information, but not always. If you see something they don't see, you can negotiate the types of deals that are worth making.

Your tax reporting currency is what matters. If the stocks you trade are in another country, you will most likely have to convert it back to home currency, so I don't really see a way around it.

The cost basis is in the base currency. Unless they changed it, all they do is use the forex on the date of the report, not the date of the purchase of the stock to calculate cost basis. For what it's worth, what I do is use Excel. I use a VLOOKUP and download forex data, then I download the statement data and use the function to convert every open lot basis to the desired currency and the sale price as well since IB statements have the date code for the transaction it can be matched up with the forex for that day, the difference is the actual gain in the desired currency. Takes about 30 minutes to do per year.

") if you hold foreign securities, once they are sold take the IB sales price minus the IB realized gain equals your cost basis (i.e. IB does the FX calculation for you" Are you sure this is true? Purchase Price : $40/share * forex = adjusted cost basis (ACB) Sale Price: $50/share * forex = adjusted sale price Realized Gain = adjusted sale price - adjusted cost basis If you use F/X mark to market data can you associate that with individual lots, unless you sell your entire stake?

http://www.bloomberg.com/video/91747701/

He's right... and a very smart man from the books I've read by and about him :)

Asian culture has been eating lots of carbs in their diet for centuries, diabetes has been low and you don't see much obesity. I think it's something else...maybe glycemic index?

Ian was the older one, perhaps we'll get another 10 years from the current president who is his close partner!

"I kind of like the Kelley bet, which is 2*conviction - 1 for how much to bet/invest. e.g., an assigned 60% chance of success gets a 20% position (120%-1), though I might set the bar a little higher in general" I'm not sure how correct this formula is in the real world. Conviction = 100%* 2 -100 = 100%. But this is crazy, the amount to bet in this situation in a margin account should always be > 100%.

can't delete msgs here?

Derivatives can be excellent financing vehicles, but other than that, the analysis is exactly like buying the company's stock.

moore_capital, I understand your frustration. They have bought and sold dozens of investments over the years. Their target return is 20% per year, sometimes more sometimes less. I think there are many ways to reach that goal.

"However, the latter two documents are filled with charts proclaiming the company's bright past and bright future, and the former two are more about the company than the individuals that run it" You've answered your own question :) If your mental model says that an annual report should be written in a certain way and that glitzy charts are a bad sign, then you might decide to pass. I think Buffett once said that you want an annual that speaks to you as opposed to be a marketing piece created by the PR department. Conversely if you see nothing wrong with this, you may consider meeting them in person at a meeting. Watch words, body language, dress, everything, you want signs of things that translate in your mind into integrity, skill, genius, and drive. I tend to look for interesting eccentricities, especially if they suggest a correct, but minority point of view.

This is a good strategy. I posted it here somewhere else but Ian Ayres and Barry Nalebuff from Yale have done a study that shows young people should absolutely use margin to invest and that even accounting for all the margin calls and having to sell out, the net gain was still higher than a cash only account. I've always wondered why people are so afraid of margin calls. You get a call, you sell stock, and when the stock recovers, you buy it back. *All of this assumes you choose the right, relatively solid companies, and not basket cases headed for bankruptcy*

Omission bias. If you make a mistake by your actions it is perceived as worse than if you make a mistake by not acting. Thus, being average, while just as bad, is considered less of a failure than swinging for the fences and being wrong.

Only those who are long-term financial investors pay the low 15% rate. Therefore, Buffet's argument is to raise taxes on LONG-TERM investors, not short-term investors or millionaire entrepeneurs who pay the standard, higher rate. I find it interesting - does he believe that long-term investment in America is taxed too little and short-term investment in America is taxed just right? In all his other interviews, he claims that short-term investors should be TAXED MORE than long-term investors. Or maybe he's just talking about billionaire long-term investors only which is a limited pool but somewhere to start.

"Therefore, if CRA wants to say your trading is business income, just put your assets into some sort of trading entity, such as a trust or corp....of course there are costs involved but the concept seems sounds, which makes CRA's position a bit...dumb. " The same issue, profits on account of income or capital gains classification occurs in a Canadian controlled private corporation.

I've read dozens of cases on the tax canada website a year ago regarding this issue and the US judgement seems almost identical to the Canadian cases in terms of criteria. The biggest red flags are trading the same stock on the same day, or trading in and out of it within 30 days on a relatively large scale. The whole issue is also complicated by superficial loss rules, if you sell a stock within 30 days and buy it back, you are deemed not to have a loss and add the loss to the cost basis of the stock - for capital gains treatment in the future! Regarding T-123, view: http://www.cra-arc.gc.ca/E/pub/tp/it479r/it479r-e.txt , it explicitly states that if you elect this method, you will get capital gains treatment even if you are a trader. This is a benefit Canada gives to Canadian security investors vs. foreign. Another reason to own Canadian stocks if you trade in and out frequently.

I spend time around investing subjects for entertainment purposes, it does not necessarily involve actions on my portfolio. I find it very hard to believe that gaining "knowledge" alone, for fun or potential profit can be used against you in this way. And that's the point, it's a conjunction of factors, not just one. Just buying a stock for long-term holding on margin is unlikely to trigger this distinction either. Just buy insurance...obviously transaction volume is most likely the largest input, so trade less and when you want to sell part of a stock, don't sell it in little lots over several days, just sell all that you want to sell in one transaction. Go to financialwebring.org, they discuss this topic extensively in the message boards, you can do a search. You can fill out form T-123 and PRE-CLAIM all your security transactions on account of Capital instead of Income IF the securities are Canadian! No such benefit for trading in US stocks. This analysis of a tax case may be instructive of the thought process, there are many cases on tax court of canada website: http://www.deloitte.com/view/en_US/us/Industries/Private-Equity-Hedge-Funds-Mutual-Funds-Financial-Services/c1d38d52c7171310VgnVCM1000001a56f00aRCRD.htm . Notice in this case, the person was classified as capital gains instead of a trader. You can see that the criteria for trader status is quite high. I mean, in my book this guy was definitely a trader, but not for CRA! I think for all intents and purposes, only a day trader would fall under the business income rule. I mean all you have to do is not buy and sell the same stock on the same day and hold if for 30 days or longer. Not hard to meet this criteria at all.

The difference between investing and other games is that in other games you actually have to work just to get average - since everyone else is trying to do the same, you have to think just to tread water and not do anything stupid like jump in and out of stocks cause you're panicking. What makes investing an easier game is that to be average you just have to buy an index and do nothing. I know of no other game that is quite that easy - to get average that is. As for talking fund managers I find many do have open houses and you can just go up to their office and talk to the manager, don't be shy.

For managers less than 10 years, I would track -incremental improvement. Say 2% above average in first 3 years, then 3% in next 3 years, then 4% in next 3 years. Actually it doesn't matter as long as the number is going up. -I would track number of decisions made because one can be lucky and just "play once" and outperform big. So set a minimum number of investment decisions made that you would like to see that you think would cut out the noise. - I would track a third variable, not related to investment selection but impacting on it significantly which is (mental) concentration ability and this can best be seen if you can somehow meet the person or read their literature to see how they interact with partners and how they think about the investment process.