scorpioncapital

All investing is giving your money to somebody else to make you more money. Delegation is assumed. The question is who do you give your money to and what do you expect the return to be and what is the optimal strategy given one's knowledge? When you own a owner-manager holding co., you are delegating to an investor who in turn delegates to other managers. If you think this double delegation procedure will return 15% (and all "doubly-delegated" portfolios are diversified) but that direct delegation based on your own research will do 20% (also diversified among 5-10 stocks) the only argument to hold the former is that you are unsure about the second diversified portfolio. Why are you unsure? Diversification is supposed to reduce bad luck, so the only possibility is bad selection - in fact very bad selection. I'm just saying that it would seem a better strategy to know what you want to do - a) become a better stock picker and take all the rewards - and downside of your own delegation or b) let a highly trusted partner do this. Note, however, that in b) you still have to be good at selecting partners! Which in the end may be the same thing as selecting your own investments.

What I'm suggesting is that it is irrational to hold owner-managers and personally selected deep value plays. The question is what is rational. Either you know what you are doing 100% or you don't. If you don't you hold the owner-managers or an index, if you do, you hold 0%. There is no hedging your bets with knowledge. It's not a gambling proposition, a weighted portfolio of well selected value plays ensures against 1 negative outcome, I just don't see how the two "styles" are compatible, it almost seems like people are hedging if they know nothing and gambling that they know something, just learn it well, know your limitations and there's no gamble. Problem solved :)

I think you should be asking a more important question. If the really good owner-partners are going to earn 15%, then why are you having opportunities to make a whole lot more? Several possibilities are possible.. Why aren't THEY earning more than 15%? Some have said 'size'. But does this mean if you are too good you must necessarily be only marginally above average over time? Logic would then dictate that if you are small (most of us are) and good (questionble premise, but let's assume it) then you must not own ANY of these owner-manager companies. Since all of us are small, then the only question is how sure are you that you are good, that is the only question.

I would think so, dividend reinvestment means a dividend was paid (and taxed) and then reinvested.

Buying US dividend stocks on margin can be one way to shield some of the tax to pay in Canada. You are allowed to substract carrying costs (which include interest) from the dividend/interest received which allows you to carry more of your investment than you would otherwise be able to.

seems sensible, growth of people = growth of everything else.

the lifespan is also a genetic limit apparently so until we advance technologically, that is not going to creep much higher than say 125.

absolutely amazing, it's shocking how in 200 years we had more progress than in the last 2000! if this trend continues we may be able to say that objectively we are evolving as a civilization.

darn, as a canadian, foreign dividend income is taxed dearly. LUK always pays yearly dividends, if any, unless it's a special dividend.

moral of the story: consider the risk of a majority-controlled public company in realizing value.

70% expect a return between 10% and 20%, that leads me to believe returns will be below 10% or above 20%, unless of course everybody here has read Buffett and think 10-20% is what they should expect :) Here's some food for thought, maybe the return you expect should be the return you need to get to achieve your goals - like inflation targeting. Maybe you need 4% to get your nest egg because you started early so why not aim for your 4%, maybe you need 50% and realize you are screwed (maybe the only way to get 50% is to start a new business).

is your question nominal or real return? 25% is easy if inflation is going up 20%.

I find it interesting that although this is considered a commercial mortgage operation, it is very much involved in residential mortgages as well: http://www.berkadia.com/Berkadia/wcfNewsRelease.aspx?id=159

there is nothing wrong with zero or less cash but you have to make sure the cost of financing is reasonable and you have a back-up plan so you won't get sold out of your best investment at the worst possible time. 50% down years (for the S&P) are rare - back to back 50% down years are even more rare. There is an argument for not worrying about another 50% drop so soon after a recent one and thus an argument for larger than usual leverage to ride the next bubble.

the only danger is a change in attitude, similar to Japan, perhaps a populist movement (the Tea party anyone?) but the argument is simple - human nature makes it hard for people to shoot themselves in the foot, who wants to reduce their standard of living and go through decades of more recession just to avoid a 2% silent, hidden tax on their wealth in the form of inflation? Everyone is screaming publicly but secretly, passively continuing the inflation attitude. Watch what people do not what they complain about.

Read Philip Fischer, 'Path to wealth through common stocks' he says in America, the seeds of inflation are sown in business depressions when inflation appears very low.

Ok, but where's the investment idea? :)

Why say probably when you can find out exactly? He made a 5% profit on it.

Unless it continues, I don't see how returning $1 billion out of $23 billion is going to solve the problem.

If they were younger they wouldn't be as good, if they were older, they'd be dead :) What's the sweet spot for age? Probably mid 40s to mid 60s. In this sense, LUK's management is slightly on the undesirable side, but about 10-15 years younger than Buffett. Still, no offence, but Mr. Cummings looked a bit portly last year, and we do know longevity is somewhat correlated with weight as well as genes. Steinberg looked in good shape.

It's only the beginning, even though it was as low as $12 during the crisis, at $27 it is still a good deal, if you use margin, given its S&P500 status and larger market-cap there are not many investments that look as appealing even at the current price. I'm seriously thinking of divesting my last batch of berkshire to buy more Lu©k

So if public companies offer owners liquidity, the purpose of the market is for owners to sell businesses, not buy them :) We should learn an important lesson here, use the market to cash out. It makes sense, as is actually happening, that in a world awash with money, public companies are being taken private, and many are.

How come, for over 45 years, Warren Buffett has been one of the few to do this? ??? On its surface, it seems too simple NOT to imitate! It's subtle but I would argue that everyone who is an investor is "trying" to do the same thing. Every shareholder of every company, every mutual fund, every hedge fund, private equity, anybody who is an investor...the only distinction is are you a public company or a private one? Berkshire is actually a bit of an anomaly. Buffett didn't have any problem raising money, just like any hedge fund has no problem raising private money - so if you can start an investment pool privately why go public? Going public is if you can't get the money privately or you need more than the appetite of any given group. This is a profoundly interesting question, in a world filled with money why is any company public?

Republican win - It means stocks are going to do pretty good!

that's the rub with the insurance business, you can report positive operating income but if your reserving parameters change, you have to average that over time, in that sense it's reputational and memories are short.