rranjan

Harry - It's true that you can find more mispriced securities in less liquid situation but from time to time you can find some in large caps as well. Also the notion that after you buy something , it should not get cheaper is pretty useless. Only way to see effectiveness of any process is to check the overall results after a minimum of 3-5 years period and also on longer terms. It is also important that people can duplicate the system otherwise it will be the case of some one getting lucky. Last few years we have seen some large caps being mis-priced time to time and they might have even become cheaper after you purchased them but what matters is return expectations in 3-5 years without taking very high risk. Yaah, it will be always nicer to buy at lowest point but that will be mostly luck and not possible to do consistently. But it's always possible to buy at big discount which can provide pretty good returns over the 3-5 years even if you might look like an idiot for next few months or even a year. I am not saying anything new here but if you can get good performance over long term without any computer based system then absense of computer based system does not really matter. On the other hand, computer based system should be based on logic and also have to do well over long term to be taken seriously. It's not enough to make case for them selectively. Logically, I find buying at big discount easy and simply to execute. I can do it consistently and expect decent retuns without taking high risk. I don't find any rationality in computer based system so it does not click with me. Some computer based model might even take some aspect of valuation but I prefer to make my own judgement looking at several factors. It does not mean that some people might not find computer based model useful but everyone has to pick their spot. If you go to some gold bug sites , you are likely to see a group thinking. Most people, who already think in certain way, are participant there. Same way, in Value invetment board you will find group think time to time. Now calling groupthink wrong or right is wrong way to go. Right way would be to point out negatives in the idea which you term as group thinking. Also keep the short term price movement seperate because that has absolutely nothing to to do with idea being good or bad. Main thing is if group thinking is based on any logic? It just happens to the case where more people arrive to same conclusion while thinking independently. Stuation can be termed as group thinking but there is nothing illogical about it. Only for the sake of having a different opinion is also wrong if it is not backed by any logic. We are not right or wrong because majority agrees or disagrees with our view point. We will be wrong or right only if our logic was wrong or right. If you put top 100 computer scientists in a room then majority of them might think independently and come to similar conclusion. Conclusion migth be termed as group thinking but that does not make it right or wrong. I do accept that it's easier to find mispricing in less liquid stocks but I don't accept that we should ignore large caps.Buy whatever seems good risk/reward sitaution. Who cares wher you find them. Also , If you want to make any case for specific computer based modelling then bring the logic built in computer based model up for discussion otherwise it's impossible to comment on their merits.

INTC might not have as strong moat as MSFT but they still have decent moat in my opinion. You can argue that people don't go and buy Intel product directly but that has been the case for a while. I don't think these large caps are value trap at all. Market is very pessimistic about large tech companies at this moment and most of them are selling very cheap. Some of them have more than decent moat as well. These large cap techs are not value trap. I don't hold any DELL rigth now but I think there is very good chance of making more than decent returns at current price. As far as DELL being cheap for a while argument goes then I have hard time imagining DELL selling at 2 times their FCF in few years.

Some patience. Not for holding the purchase before reaching the good price but just watching it for 25 years.

No surprise here based on their focus on shedding non-core assets.

They have been tracking for non-GAAP earnings in excess of $5 in FY11. And management continues to claim $7 in 2014. Will they make deals that will jeopardize the EPS targets they are promising? In the end, they will be graded on only one thing. Eric - Well, down the line they might use these changes as an excuse if they can not reach the target in timely fashion. They could have easily reached the target without doing anything different. VAL9000 - Yes, HPQ is cheap and there is no doubt about it. HPQ price dropped more than what they paid for Autonomy. Infact I added some more around $23 to my small initial position. Management does not instill confidence in me to make it very large position otherwise I would have added substantially. Still it's cheap.

Val9000 - HPQ decisions might work out fine in long term but the best capital allocation decision would have been to continue buying their shares at bargain price. In fact their current decision will work out only if everything goes well and still I think it's bit of a stretch. They just had to make simple decision which would have produced almost guaranteed results.

I am open to buying anything as long as I get it at good discount. From your list, 1) Can spot and get good price time to time but it's difficult to get them consistently. One more problem is that you need to be more careful with value trap in this situation if not holding a basket. 2) Very rarely. 3) Majority of portfolio here( Not exactly all of your names but idea is same). I am not sure why lot more people don't use them because time to time you do get no brainers in this pool. Some additions, 4) I went through 60% companies listed in nasdaq one by one during that last 2 years and prepared a list of companies I would consider owning if price was right. List mainly has less known companies. Have been able to use it only few times so far but they were profitable. 5) During the mini panic, I do sell cheap to buy cheaper. Many years ago, I was not good with this but with time I have imporved. I prefer to always keep 10-15% cash to take advantage of crazy valuations. I try to average in and average out because it keeps me in check and makes my emotions less of a factor once I am sure about the valuation range. I need to get bit better at deals coming to me. I would like to improve on number 4 by making the list bit bigger in coming years. I am also guilty of buying early and selling early but when I see very good chance of good returns over the years then can not stop initiating a position. I think averaging in works better for me because I often intiate some positions bit early based on valuation. As far as selling early goes, I think I will continue selling early and have no problem with it. Last but most important for me is that I enjoy the process.

I was reading his blog last night and I don't think I saw exact number but you can deduce it based on some statements. To quote one of them here( not from the post we have it here but from earlier post). " Bank of America is one of two stocks on which Bronte has lost more than 3 percent of the portfolio." Given that they did not add much below 7, I would guess may be 8-10% position based on total cash deployed. becuase they must have averaged in and also to get 3% loss you do need to have pretty decent total allocation in this. Just a guess on my part.

I can understand enjoying someone bashing your ideas or idealogies and thats the biggest advantage anyone can have in any forum. Problem comes when predictable but lame logic gets recycled time after time. I think after some time it loses any purpose and you can't really gain anything by continuing some discussions. I do admit that you might gain some in start though. Huh, How come we did not see you posting in Bank capital thread? :) I had actually forgot about that before engaging in certain discussion otherwise I would not have dared. Also in my honest opinion, you can't really put Harry in this bracket. I do admit that he brags sometime when events are in his favor. Some time he might come off as knowing everything and lecturing others but I have not heard him repeating illogical stuff time after time. Just my opinion. Name calling or throwing abuse is bit different than repeating illogical stuff time after time and then keep shifting the goal post when you get called on it. And when you combine all of this then it might get interesting for a short while but you can't enjoy it for long. I might not like all aspect of Harry's posting but he does bring lots of rational view points. Anyway, let me not stop you from enjoying whenever you can :P

You have a good point here but in certain cases you can be almost sure of content of post without even reading it. Some one might make an statement "Apple starts with A and thats why you should not like orages" and then keep reapeating it no matter how illogical statement might sound. Though I agree that it's rare to find such characters here so you won't have too much of a use for the ignore feature.

+1

Jsut for the information of some people who might not know. Eric has been enjoying his retirement for last few years even though I remember him taking some part time work in the middle with his old company to keep himself busy. :) . You can correct me Eric if I am wrong.

Funny because I was thinking if it's possible to stop people using handle such as Buffet or Munger ot Graham if they are poles apart in thinking. Handle might create an association bias and people might take time to respond which they would have ignored in general. But I guess it's an online forum and people can chose any handle they want.

It might not be so easy for HP to follow the IBM or Oracle though. As Myth pointed out , I also did not like the way they went about this business of getting out of the PC market. No matter how I look at it, they could have added best value by buying their stocks as much as possible during last few months.

I call bullshit on that. +1

TxLaw - BAC might or might not turn out to be a good investment but I have seen many people pretending to be a value investor but you can generally catch them quickly due to passing some silly statements( like judging the investment merit on short term price movements). It's another thing to not have an opinion or different opinion but if anyone talks about the merit of an investment based on stock price being temporarily being up or down in many threads then you do get a decent idea about how a person thinks.

And he also helps to improve a tiny bit the capital ratios. Anyone really thinks that $5B ($10B w/warrants) was a rescue? Not me. No, I don't think it was a rescue.

Ben - I am with you here. BAC did simply hand the money because they wanted to instill confidence.

I also did not think that Buffet will step out at this stage. I did not think that price swing was creating that much of a problem for BAC at this time. Anyway, good to see that Buffet is seeing something we saw it too. his deal is pretty sweet though.

Eric - You are trying to explain asymmetric risk/reward equation here which might be an irrelevent factor for some people. I guess different people have to chose their spot and live with the consequences. Be it good or bad.

+1 Thread is though easier to ignore in any forum except when you are getting the posts via RSS feed. Still if there is an option for ignoring a thread , it will be helpful for the reason PlanMaestro cited.

I have never done it but I think you can do it. They have around 80 international market even though that might be useless for an average user.

Ericopoly/PlanMaestro - Have to commend on your patience. I seriously mean it. Ragnarisapirate - I agree that normalized earnings are not relevent if you don't live long enough to earn.

Txlaw - Intel has always forecasting decent growth of PC. I think we talked about Intel views about PC sometime ago here. In big scheme of things, it's pretty simple concept due to low penetraion in developing countries and no real replacement of PC being present at this time. I picked up some Intel few moths ago and I was hoping to add to it in recent crash but price did not go lower. Michael Dell is though very quick to take a jab at competitors. Around 1997-98, I remember him saying that APPL should liquidate and return the money to shareholders or something like that. I was doing my undergraduate at that time and remember reading it.

Very good interview. While I already hold a view that PC are not going to dissapear anytime soon, I found his Post-PC example numbers interesting.