rohitc99

i have a very close relative who has suffered from depression and schizophrenia. For almost 10 years, I characterized his behavior as irrational and selfish. Its only when I started reading up on the condition and putting myself in his shoes, that I realized he was in incredible pain and suffering. Even today, I cannot imagine what he goes through each day but I try to be compassionate about it. I still remember a comment he made about the level of suffering one goes through - imagine you lose a parent or a spouse and suffer because of it. make it 10X. its like a nightmare you never wake from. Personally I feel due to stigma attached to these illnesses, it only makes things worse for the person and his/her family.

I would say this is not really macro, but a case of healing some self inflicted injury. It got extremely bad with the previous government. No clearances and a complete decision making paralysis. Even something close to normal level of action (by indian standards) would improve the situation. So if modi does even 30% of what he has promised, then the impact would be big. In addition, if you look at the track record of the previous BJP government (the party to which he belongs), it is quite good in terms of investment in infrastructure etc. The previous government has set such a low bar, that is close of impossible to go below that.

You are right, there is no good evidence of it yet. I just am reading about it some in different places, and thought that people need to consider it when debating this idea. Just one small part of the pro/con on this question. One trend I see is that in the IT space, earning power tends to stagnate or reduce with age (may due to stagnating skills or age bias or something else) and as you get older (40+ or more), the chance of getting replaced by a younger person is quite high. Unfair as it may seem, I think it is quite rational for a company to replace someone with 30% less skill but being paid 50-60% less. reason for bring up is that becoming a full time private investors, looks like a good option as one ages in tech space as the opportunity cost is going down (unless you have the passion for tech and are acquiring the latest skills)

isn't the advise for the know nothing person ? someone like buffett may not need any advise :)

Hi ben thanks for sharing ..very useful to someone like me who plans to go down the same path. the usual stories of 0 to 1Bn AUM in 2 years are very discouraging and makes you feel like it can never be done

I'm interested in the response to both this, and a related question, what's the AUM point where the fund will pay the bills as well, say a $100k salary? Well, this is mostly just a mathematical relationship. A good estimate of start up costs (in the US) is ~25k. Run-rate for very cheap fund (including Audit, Administrator, and whatnot) is 15-20k. So then multiply expected returns after those costs by fee structure and AUM and get your result! thanks racemize. I think it comes to around 1-2 Mn AUM to break even (With several assumptions ofcourse). So to give up your day time job , I think we are talking of 5Mn AUM or higher if you have to support your family and feed them something beyond ramen :)

this is a very useful discussion. I thought I was crazy trying to bootstrap a fund. the media does not help as it glorifies the 20 somethings who went from 0 to a billion in AUM in no time and are now masters of the universe. considering the amount of experience, can someone give pointers on how to start a fund on a shoestring budget ...or put it another way ...what is the minimum AUM one needs (assuming a 1-10% kind of structure) to break even (on running the fund and not to sustain yourself)

+1 great letter

I ran a small experiment in india. portfolio 1 was high quality companies (with good growth) and portfolio 2 was the cigar butts. both the portfolios did better than the market, but portfolio 1 did far better than portfolio 2. The other difference in india is that high quality companies with competitive advantage can easily grow at 15% for a long time which lets the value compound. in case of cigar butts, one needs to constantly rinse and repeat in contrast, in the US generally something event happens which unlocks the value ...in india that is a rarity

you have to look at the presentation in an indian context. In india, low quality cheap stocks do not reach their fair value or the value does not get recognized, because it is close to impossible for an outsider (hedge fund, activist investor etc) to rattle the management or push for a change. in addition bankruptcy laws are absent, so you have zombie companies holding onto and wasting capital. as a result, it is far better to buy higher quality companies than the cigar butts in india. I think mohnish mentioned that he had similar experience with his basket of net nets in japan.

I would add it does not even come close. this is learning in real time from others investing their own money. that is very different from the analysis by an analyst who is writing a report for a pay. and as another poster said in another post ...you are getting paid to learn !!!

thanks Jbird. does it mean that the same rule applies if i sell a put and buy a call on the same stock if i buy a put for 100$ and sell for 80. incur a loss of 20$. at the same time i buy a call for 80$. the wash rule will imply, that i cannot claim the tax loss, but can step up the tax basis for the call to 100$ ? thanks in advance

I have question on options and taxes and would appreciate if someone can answer or direct me to the right source for it - If i sell an option at a loss and buy the common on the same stock at the same time in a 401K or similar tax deferred account, does the wash rule apply ? - does the wash rule apply if i sell the option at a loss and buy the common at the same time in a regular brokerage account ? thanks in advance

how about buying whatever jim cramer recommends on his show ? if that does not work, sell at the slightest drop - rinse and repeat !

In india, the asset quality of most banks and financials is suspect. In addition, disclosures are poor (case in point - the annual reports of most banks have way less disclosure than the 10Q of a bank like BAC). On top of the above problems, there is a tendency to extend and pretend (with support from Reserve bank of india). So we may end up with a japanese type situation, where banks will not write down bad loans and wait for these loans to get cleared off slowly.

you will have to look at the company level to make that determination. The 'market' is basically 30 top companies or 50 companies (NSE index), followed by most foriegn investors. However there are several companies in the midcap or small cap space, which savant mentions which have dropped by 50% or higher. These companies are domestic, not exposed to exchange risk and other than the economic slowdown, should do fine over the long term. the situation is like nov-dec 2008 in the US. question is how soon will the march 2009 happen :) ...though in all fairness, majority of the banks dont face that level of stress (other than the public sector banks)

BAC puts have an implied vol of around 20 now. if i recall correctly, 6-9 months back it used to be 30+ and even higher earlier maybe buying these puts could be a less expensive hedge against a long position in BAC and the market too ?

i feel like a slacker today :) no skimming- actual reading. that's why they made $50m each last year and you maybe slightly less. :) i read 10% of todd combs and make .000000001% of what he made ! not fair :)

i feel like a slacker today :)

i am mostly a lurker since the original msn board. visit few times a day ...this board is more addictive for me than facebook (in a good way) thanks sanjeev

I have been investing in Indian markets for over a decade and have done a few net-nets, but as gopinath has written, there are quite a few companies which are growing at 2x GDP , have a tailwind and a long runway ahead of them. Some of these sell at reasonable valuations and have decent managements too. Of course the accounting is suspect in a lot of companies and so is the management, but if you turn enough rocks, there are enough good ideas to get very good returns. 15% returns are par for the course Net-nets or the cheap stocks are usually so for a good reason and can remain cheap for ever

prof bakshi takes classes for students too. you can find the presentations here http://www.sanjaybakshi.net/bfbv/ i think they are great

I guess a lot has changed since he wrote Dhando Investor where he uses calculations to calculate intrinsic value. I think even buffett talks about DCF and other types of calculations when he talks about valuing a business, but supposedly has never done one in making his investments (i think munger said so in one of the annual meetings) I suppose the same holds for mohnish too ...when you write a book, you have to write it for the know nothing investor, but for an experienced investor like him, he may not need to run the numbers in a spreadsheet. in some cases, he would looking at something where the valuations kind of hits you on the head (or screams at you)

can anyone share any notes from the AGM ?

this reminds of the book - the big short :) ...except that this was a big long ! now only if we can get michael lewis to write a new book on this !