schin

Setup a competing business is an interesting thought... But, very capital intensive. Grocery stores and hotels are generally bigger than I'm targeting. I'm talking about poorly run restaurants that aren't clean. There's generally a plethora of good restaurants, so I don't want to start a competing one. My thought experiment is how would one benefit (make money) on a small business (which by definition fail more often than succeed)... when just by walking into the store, you feel you know enough about the economics/fundamentals to make a call. Using a Buffett analogy, you buy more when things go on sale. I know some people who purchase clearance items that they know they can sell on eBay for 20% more. Including fees, they get a decent return. Classic arbitrage on a small scale. So, I was looking for a short on a small business scale. Not shorting Amazon, Telsa, or Walmart.. but, a small mom-and-pop shop that selling crepes in a dark alley, with no parking for customers, and overpriced compared to the Morton's across the street.

I bump into a lot of small businesses with inept management/bad customer service, bad locations, and overpriced/shoddy products or services. I know if it's traded in the stock market, i could short a stock. But, is there a way to short local companies? It's like CDS for a small business with no stock? I can't think of any, but would be interested in any ideas people might have. It would be easier for me to track customer volume versus how Bruce Berkowitz going to all these Sears and doing cross country market research. I would love to bet on their lease not renewing or vacating before it's all done. I guess it's the John Bury conundrum on how to short "the housing market". GS is not going to make these CDS on a small scale, but how would one bet against on a small business with obvious faults in their approach? TIA.

LOL! I still have hope I could be the next Forest Gump of investors.

WJS Partnership (Walter Schloss) o Run by one man who once worked for the Graham-Newman Fund o Not too bright, knows little about investing. I added the bold. "Not too bright, knows little about investing" Wow. I didn't think WB called people out (except for David Winters, of course) ;D I thought WJS and Buffet were friends. Buffet went to WJS' funeral too.

+1 I would be interested in people's opinions too. I know Long Term Capital Management (LTCM) blew up because they had to add more risk when they grew larger. Seems Jim Simon's figured that out.

The physical element is big in sports. But, for hedge funds, intelligence is accretive.... like what Charlie says about Warren.. but, I think assets under management is the killer in money management vs physical degradation.

Is anyone surprised that Jim Simon's Renaissance Hedge Fund is not there?

I just switched to IBKR this year. Actually, the import of 1099 is really helpful for me. Does TaxAct import from IBKR? HR Block? TurboTax online? (that's just the web version? Or also, the one you can purchase from Staples and install on your PC) Otherwise, it'll be a lot of typing ahead... Would like to streamline, if possible.

This kinda has been irking me a bit lately. How can a value investing fund with a somewhat conservative approach on debt have to shut down... this not an over leveraged, hedge fund like LTCM or an novice dot.com fund manager who took on too much risk.. This is coming from a value investing house that espoused being "an aggressive conservative investor". It wasn't run by Marty Whitman, but his tenets run all over the place. I was a big fan of Marty Whitman and can accept all his funds have been underperforming lately.. but, I don't think they threw the value investing concepts out and became a momentum fund. I was not invested in it, but, were they really that off the mark? Did they stray off the game plan and stretch for yield? I don't think so.

Hi, My nephew wanted to learn more about investing. He is only 12 years old and as such, I don't want to overwhelm him at an early age. I want to buy him some books on investing. Any recommendations for good starter books for teens? I am thinking of both these books for Xmas: 1) The Little Book on Common Sense Investing by Jack Bogle (if he just becomes an indexer, I'm okay with that... Although, I would love for him to catch the Value Investing Bug) 2) Dhando Investor by Pabrai (This is one of my favorites, but not sure if he'll get it. As his first or second book on investing.) Thanks in advance.

With MLEdge, I found it hard to find anyone taking ownership and "working the system"/advocating for me. These were my experiences: 1) Lost cost basis from Ameritrade to MLEdge - I did an account transfer from Ameritrade to MLEdge and the equities came over fine, but they lost my cost basis for my options. My first call was to see if the options cost basis for options came later. The easy answer (yet wrong) was yes. "Give it 2-3 more weeks". Three weeks later, I called them. They said it was an Ameritrade issue. I called Ameritrade and they took ownership and finally got the truth that a) the cost basis was sent all at the same time as the equities and b) they can only send it once... MLEdge would just have to reprocess to original file. Called MLEdge and said the cost basis was comprehensive and they said their system couldn't run it again. So, essentially, MLEdge never processed the initial file correctly. I cannot believe others didn't fall into this same situation. So, I had to maintain my own cost basis for options -- but, seriously, I've transferred before and Scottrade, Ameritrade, etc. have never had these problems. Trading 101. 2) Magic number for number of puts (even with plenty of selling power) - When there is a market sell off, I like to sell puts on value stocks. So, BAC under TBV is a trade I would like to do. At Ameritrade/Scotttrade, they check the short position relative to your total account value. So, you don't over leverage. At MLEdge, they put a magic number of 100 contracts per account. For lower priced stocks (BAC), they have lower priced options and thus, more contracts to get same exposure... whereas something like AMZN (which I would not sell puts on) would have high priced options and generally more volitile. So, as expected a 100 contracts on BAC is a lot different than 100 contracts of AMZN (okay, you need to factor in duration and strike price, etc... but you get my point). The margin power needed is different, but if your account can handle it. I found multiple reps that understood the concept, but couldn't change the bureaucracy or the wizard behind the curtain. Even to this day, I have a 100 contract limit and it wouldn't make a difference if I had a 5 million dollar account or 50k account. It's 100 contracts. 3) Crappy executions - Although, I get 100 free equity trades and $2.95 on options... I realized I do not get good executions on options. I have trades clear on Ameritrade and Scottrade at lower prices than ones I put in MLEdge at the same time. You might get free equity trades, but their revenue is built into the bid/ask prices. It's an old trick, but it's there... so, if it's low volume stocks like FRBC or AIQ, you might not get executions or they'll force you to trade in increments of 5 cents or something stupid that Interactive Brokers or Ameritrade would not do... Somehow they get their money. it adds up. Bad trade prices and executions are going to kill you more than "free" commissions. 4) IRS Cost basis fiasco - my latest and probably the last straw is they have a "specify the lots" feature on trades. So, you can do LIFO or FIFO. For BAC, I started as LIFO from my prior broker. So, I need to for IRS keep it LIFO. Good news, you can specify the lot. So, I did that for my trade, but they have a system limitation where you can only specify 5 lots (MAGIC number again)... and all others are default to FIFO... when you want to get out of the position, you don't want to break down your trade in multiples of 5 because that's a limitation of their system. Why not 6 or 10 or 20? So, for large lot sells or if you average in (30 share here or 50 shares there to use the "free trades"... ) you'll get screwed if you sell outside of 5 specific lots. Because the IRS will wonder why you use both LIFO and FIFO. Whatever the case, you'll be realizing too much profit in some cases and it's reported to the IRS. Tried to explain it via email/phone. One rep said he worked something like this 3 weeks ago for a client.. and he will try to help me. 4-5 other reps says... I'm screwed - cannot fight the system. I should have specified it beforehand. I told them I couldn't with the magic number. So, all in all, it's just drama. I'm not trying to over-leverage, but I want a system that keeps track of my taxes correctly, gives me good pricing (free trades, but the commission is now built into the crappy prices), and responsive customer services when there is an issue.

I've been using ML for the past year. One, everyone's recommendation to appear aggressive is right. The evaluation is a black box and ultimately, you're responsible for any trading.. if you're on too much margin, they will sell your positions to cover... But, two, ML/MLEdge's processes are draconian and CS are really difficult to work with. The bureaucracy will kill you. I've run into them 3 times.. and it's always painful. If you're lucky, you'll find someone willing to help and invest time with you. Otherwise, you'll get the run around. I got the Platinum Rewards tier and they're not really helpful for their preferred clients. For TDAmeritrade APEX, they get a special number and they work with you... With ML, I've realized they could care less. Try moving to another brokerage.

Thanks all for your thoughts. I think I'll give it a try. Any thoughts on their margin liquidation process? I've read a lot of people complaint about them being liquidated after the margin requirements change. With examples going from 70% marginable to 0% on certain securities (more stringent than the SEC margin requirements). I don't believe to fall in this case, but executing a strategy like ERICOLOPY's BAC strategy, will it kill your account? Or selling naked puts with a minor downturn? I can understand the liquidations during the meltdown, but during a minor correction?

I recently tried Bank America's MerrilEdge, I was disappointed by its bad customer service and especially trade execution on illiquid securities like (options (LEAPS), warrants (e.g. GM+B), ADRs (e.g. FIATY), or low volume stocks (e.g. GNMCA, AIQ). I used my wife's Fidelity account and I get better pricing or quicker execution (i.e. I can see limit trades at market price executed instantaneous. At MLEdge, I could be waiting for 1-2 minutes with no execution.) I did the same experiment at Ameritrade and it'll go through without latency. I called them about the bad execution and they didn't see it. Whatever. I am debating about moving back to Ameritrade, Scottrade, or Fidelity. All are roughly the same in pricing and offering. Fidelity has is slightly pricier in commisions, but has after hours trading and foreign market exposure (but, I don't really use either). Using this forum, I really don't need the brokerages' research or recommendation, so I'm debating about doing deep discount with good execution. Does anyone have any recommendations for someone focused options, warrants, ADRs, low volume stocks? TradeKing/OptionsMonster? Interactive Brokers? OptionsExpress?

+1 on the arcane back office and non-advantageous prices. I just moved from TDAmeritrade to MerrillEdge. MerrillEdge's executions suck and I know my options trades do not get the best price. I'll put a limit price on TDAmeritrade outside of the bid and ask, and it'll get executed. At MEdge, you'll wait for hours, they'll take the order, if it's beneficial to them. Their nickel and dime-ing more than compensates them for their lower commissions. Sadly, debating about moving back to TDAmeritrade, Scottrade, or Fidelity.

We can add BP and Toyota... just pay the fine...be quiet for a while and the beat goes on.

Most appear to have a $25 par value. But, FNMFM is trading at $8 and change and par is $50. Wouldn't that have the largest upside?

I just started reviewing the different preferred shares, but have not finished my analysis. Has anyone done any work on the best one to invest in?

Northern VA

Does the book have an ISBN number? I tried to find it at the Library of Congress and it didn't return any results!

hardincap - One, what is your valuation of SHLD then other than Lampert is a God and it'll go up? Two, I'm just asking what his returns are for ESL since you threw out the 25% YoY for the last 25 years. I thought you would have a spreadsheet or something. Lastly, emotionally the stock market is valuing 30% lower today than 2 days ago. I agree it may not reflect the value of the business.

True, it does not capture certain trades like Seth Klarman's 13F is deceptive because there's a lot going on behind the scenes. But, his YoY numbers people have shown have noted that. I would be interested in the ball park figures for ESL because SHLD has been one hell of a deadweight. I'm assured he can get extra capital if he needs/wants. I'm just saying in the pantheon of investment gods - is he in the same category as Buffett, Klarman, Prem Watsa since there is so much Lampert worship on this thread.

txlaw - you're right on all the counts above. Restoration Hardware is the company I was thinking of. I think his investment thesis is right. I just don't see how those investments have return the "gawdy" 20% YOY numbers most people talk about ESL? HD and GPS have been dead money for quite some time. Although, they are cash flow positive and I expect it'll turn out okay in the future and add SHLD to this YOY return. I don't see how AZO (which has been a good investment the past couple of years) and AN been keeping his returns up there.

hardincap -- 22% /yr for 25 years..I am not doubting he did not hit it out of the park early on with a smaller amount of cash. If you take SHLD at $130pps and where it is now, how does that affect his yearly returns? What was ESL's return the past 5 years? Do you have those numbers? I've been tracking his picks in Gurufocus for the past 2 years and don't see how he can post 20+%YOY numbers with SHLD as an anchor. You tell me. http://www.gurufocus.com/holdings.php?GuruName=Edward+Lampert&sort=position

I'm starting to wondering if Sardar Biglari might be a better investor than Eddie Lampert. I thought Eddie with this GS pedigree and track record at AZO and AN was a better business person.. but, this SHLD is starting to make me wonder.