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Hundreds per year?? Please show evidence. And they have caught no MAJOR public fraud I am aware of, that was not first highlighted by a market participant. Enforcement actions often (frequently) come after the house has already burned down, and most of those 760 are minor. An enforcement action is not = catching frauds as they operate. I am aware of some of the penny stock stuff and I'm glad they perform that service. When you say "short sellers are corrupt" you reveal that you dislike the entire concept (rather than "some" short-sellers). I'm sure some of them are. Also, the DOJ probe has gone nowhere 2 years later. I don't short at all and have no skin in that game but the anti-short thing on this board stemming from the 2005 FFH debacle needs to be pushed back on.

Longs make up utter bullsh*t all day long on CNBC and Twitter, and Prem has made up a whole bunch of his own, so this whole idea that short sellers are some unique demon is nonsense. Even if MW is incomplete, he's allowed to go out there and say, with a great deal of backup "Here's why I'm short". If he's wrong he'll eventually go out of business. But he's called out a LOT of bad actors in his time (no, he hasn't batted 1.000 - have you?) and Fairfax is not some innocent lamb. If shorts are out there getting "100 wrong for every 1 right" A. No one would trust them and B. They'd lose a lot of money fast. Chanos is a good example - he made a career out of calling out bad accounting and bad actors, but in the end the totality of his analysis wasn't good enough so he went out of business. Prem has been wrong again and again, and publicly so - why is Chanos the bad guy? Bulls don't get a monopoly on the microphone.

Practically every fraud is first caught by short sellers. This argument holds no weight. The SEC and Deloitte are sure as hell not out there calling out the Wirecards, Enrons, Valeants, Sino-Forests of the world.

It's a conspiratorial post about Muddy Waters supposedly manipulating FFH's stock so he can buy call options and make money on the bounce. Written by James Joyce.

Would you share the investments made in the last few years with this approach? Thanks in advance.

Interesting. I ask not to dredge up painful memories - just wondering that if the big drop was an indication that you'd been taking more risk than you thought in the Up Years - or simply a bump in the road. Sounds like the latter. Thanks again for the openness.

Thanks so much for sharing - very interesting strategy (and history!). Before I let you go, how did the portfolio down 50% end up recovering in the end?

I hear this a lot, but primarily from people who haven't tried it and aren't doing it. Thus the thread. But cigar butts =/= NCAV stocks. Wonderful job. Can I ask why you stopped for well over a decade if things were working so well? And how concentrated have you typically liked to be?

Fair enough. Have you been happy with your own returns pursuing it? (Not compared to WB - compared to your expectations.)

Did you land in this territory by design or by accident?

Yes good discussion. I think of a cigar butt as a business you don't love but the stock is an interesting trade based solely on valuation. One puff and gone. Truly the mirror image of the "Find quality and then pay a fair price" type attitude.

Kuppy blew up on junior gold miners in Canada. It wasn't like Munger where his Blue Chip (now BRK) got marked down in a massive bear market for small caps (-80%) and then became a legendarily good investment for the next 50 years. The money was gone at Praetorian. Then the MGG blowup. He's doing better now clearly.

One thing to remember about Abel is that he's *currently* in charge of all the operations he'll be in charge of when he's promoted at WB's death. Any changes you think he's gonna make, he'd presumably be making now.

Just curious. This is not a pissing contest on what's the "best" way to do this. Just wondering if anyone buckets themselves in that way any longer.

Thanks!

Care to share?

Slow Horses S3 is ace. Love it.

This is exactly what I do as well. Compounded monthly returns with inflows/outflows intra-month left out of the calculation. The only more precise method would be to do it daily, but as you said, doesn't really gain enough useful precision unless you're a professional fund manager.

I have the Catherine book and been meaning to read it, Massie is great. Empire podcast recently did a series on Russia that re-piqued my interest in the development of Russia.

In fact he was arguing at the time they should have been buying more AAPL.

So let me get this straight. After 25 years in business for himself, Pabrai is starting a new fund by pitching...Berkshire? And after comparing his approach to Warren Buffett and "circling the wagons" around very long term compounders, his initial allocation is to put a third of the fund in coal companies? How deep is the well of suckers?

I don't think what Buffett does is any more complicated than looking at the market itself, cash, and long term bonds as alternatives and then assuming he can do better, so what is the most attractive thing he can find better than 16x P/E for a 6.5% grower with a 12%-15% ROE (the market)? Apple when he bought it was <10 P/E growing around the same 6-7% rate with an infinite ROE and he deemed the moat to be solid (and was correct). It didn't take a DCF to see it was mispriced on a relative basis if his qualitative judgment was right. Obviously relative to a 3% long bond (then) or 5-6% long bond (now) it was still a much better investment. Obviously relative to cash earning zero (then) and earning 5.5% (now) it was a much better deal. And he must not have had any superior stock ideas, or he wouldn't have bought so heavily. So relative to all alternatives he understood equally well, it was a bargain and he bought it. Obviously all of the assumptions above only make sense if you're thinking in a DCF-adjacent way, but you wouldn't need a model. Valuation becomes more relevant when you have to sell and we all do that poorly including Buffett himself arguably.

This is slightly incoherent. There have been many systems of ethics in human history. Why would "biology" defend the current Western one? The Spartans thought it made "evolutionary sense" to leave weak newborns out to die because it would improve their stock. There is no such thing as ethics derived from biology.

This is fairly simple to explain. The Dawkins’ and Harris’ of the world are simply Protestants who simply left behind the idea of God, but not the morals, values, and expectations associated with a Christian world. It’s not magic - it’s been bestowed on them by a long monotheistic tradition. And they rightfully see it as a pretty good system of ethics. (I say this as an atheist.) When they say “morality” they never really say which morality they mean - because they’re referring to Christian ethics. See the Nazi regime for an example of a truly Christian-repudiating world where people are not held to have equal right to life and liberty.

The % of money you have in stocks should be heavily influence by your spending rate as % of your net worth. If I knew someone spending 15% of their money per year, I'd have them at least 50% t-bills/short term bonds. If they were spending 1.5% of their money I'd have them 90-95% stocks. You never want to be selling into an extreme drawdown. This is why WB provisioned for his wife to be 90% S&P/10% t-bills. In a serious downturn where stocks are very undervalued you just spend the cash-t-bills for as long as you can.