alwaysinvert

Maybe we can stake you in WSOP instead. There is another poker player on this message board who seems really good. I was going to suggest in that thread that we stake him for WSOP. I might as well admit it here. I'm guessing you are referring to me. The idea might hold some merit, but I have been mostly out of the poker scene for about 2 years and I never was a tourney player to begin with, but a cash game specialist. While tourney play is mostly similar to cash games in the earlier deep-stacked stages, I'm not particularly adept at short-stack all-in poker, although it in theory is an easier game than deep-stacked poker. On a more serious note, staking is very, very common in the poker community, but I myself have never staked another player. Why? The incentive structure does not appeal to me. In most cases players get stake for higher games because they either have grinded lower or have lost their bankroll at the same or a higher level. So if there is either a problem with money management or the prerequisite skills/experience, the proposition is not mouth-watering. In general, staking is at best a high-risk, high-reward activity and at worst a high-risk, low-reward one. I have also seen more players running away with the stake money then I can care to count, even some people I thought I knew as better people. But to be fair, the WSOP ME is crap-shoot money management wise for any player who would care about the payouts. In order for skill and luck to even out with that huge starting field you would have to run it a couple of thousand times, and you can see in how big a hole that would take you if you hit on a string of bad luck... Anyhow, I think you might be better off buying Berkshire stock for $10k :)

http://www.huffingtonpost.com/2012/08/25/joseph-carmadre-robin-hood_n_1829990.html?utm_hp_ref=business I heard about this first on This American Life. A fascinating story that I thought you guys might like.

Me branding him a value investor was not 100% serious, just a reaction to him using the word 'value' over and over :) Yes, Wenger sure is a fine manager - but remember Arsenal haven't won the league for 8 years, whereas Utd has raked a title almost every year since then and the league 4 times (since Wenger arrived at Arsenal in 96 the score is 9-3 in Fergie's favour). And if we are talking purely business, Man Utd is outperforming Arsenal financially, too. Remember, there is no shame in paying up for quality. Rio Ferdinand was purchased as the most expensive defender ever 10 years ago, but he has arguably been the best centre-half of the Premier League era. Sure, hindsight is 20/20 and misfirings are bound to happen in transfers (Forlán and Verón come to mind), but I really don't think Ferguson can be accused of being loose with transfer money. I do however agree that what Moyes has done with practically no funds available at Everton is very, very impressing. It will also be interesting to watch the new reformed Newcastle this year. The bargain signings they have made recently are just ridiculous - Ba, Papiss, Cabaye, Tiote, Krul to name just some outstanding performers. I'm not going to pretend that I know what's in Ferguson's mind when it comes to Lucas Moura, but you have to account for the wages too. I think Hazard's wage bill is bound to be much higher.

http://www.dailymail.co.uk/sport/football/article-2176993/Sir-Alex-Ferguson-defends-Manchester-United-owners-The-Glazer-family.html#ixzz21ITzWMic Arguably the greatest football manager of all time (and probably in the very top across all sports). With his own two hands he turned Man Utd from a mid-table team to the world's most valuable sports franchise - without help from truckloads of outside money. Just like Buffett he is still going strong despite not growing younger. The way he mentions 'value' during every silly season as his reason for not splashing out on flashy signings makes me wonder if he read a line or two from Buffett. At Man Utd long-term thinking is everything, Ferguson has been at the helm for 26 years. Two of the players (Scholes and Giggs) have had 20 year long careers in the club. The club is an odd bird in the league, not taking any expensive shortcuts to glory but still succeeding at the highest level and, as opposed to almost all the other top clubs in the world, being run like a business and churning out profits. Even if you don't care for football, I think reading about Ferguson could be interesting for you. A truly fascinating man. http://en.wikipedia.org/wiki/Alex_Ferguson Well, that got long. It just struck me as a funny coincidence the way he presses on about getting value and there being 'no value in the market' every single summer.

Some of you may have read about about the billionaire wife who sadly was found dead in London the other day. But the business story of the Rausings and Tetra Pak doesn't get told quite often enough, in my view.Not only did they make giant breakthroughs in the packaging of liquid food, their business model is really something else. By selling machinery cheaply, but getting their customers to sign up to use Tetra Pak's materials in exchange, they have managed to get both extremely high marketshares and high margins. Something to study for those so inclined. http://www.chinadaily.com.cn/english/doc/2004-12/05/content_397413.htm http://en.wikipedia.org/wiki/Tetra_Pak

Thats one of the things the prompted the question. I'm trying to reconcile why guys like Buffet, Munger hate it while other value investors seem to rely on it. It think the main point is that depreciation (despite being a paper loss) and amortization are real costs. Intelligent use of EBITDA as a way of filtering out noise is ok but calculating earnings yield on that basis is mad. My take is that EV/EBITDA is useful as a screening tool and as a measure of relative value but it cannot stand alone when you try and grasp absolute value.

Go easy with the hyperbole, no one is calling for his head. I don't think anyone in the thread said anything improper, and as long as no one does, the existence of the thread is good. It makes him think twice and it makes everyone else think about the implications of their behaviour. Today's version of the front page test :) Great! I'm glad the board is on the case. He'll think twice now. The board has spoken. You said to go easy on the hyperbole. Perhaps. But I think saying that now he'll think twice and this is the version of the front page test is equal parts hyperbole. Ok, I'm done. I don't know him and I've never met him. I just don't like some kid getting picked on by a bunch of virtual bullies. If he wants to stick up for himself, he can do it or someone else can step in. I'm sure he's read the thread by now or someone has alerted him to it. No, that really isn't hyperbole. The front page test doesn't deal with nuances, or grey scale or what's objectively wrong - it's all about impressions. And some people who know about this case (not me) says it doesn't look so good. And from that everybody can take what they want.

Go easy with the hyperbole, no one is calling for his head. I don't think anyone in the thread said anything improper, and as long as no one does, the existence of the thread is good. It makes him think twice and it makes everyone else think about the implications of their behaviour. Today's version of the front page test :)

+1 I started to see way too many articles about Facebook. And not even about the stock, just articles about the website. It was strange. I think he's trying to become more of a news site than a value investing site. It seems there is a lot of news about hedge funds and Apple products. I don't fault the guy for trying to make a buck, value investing is a niche product whereas general news an finance have a broader audience. If this is his livelihood then targeting a bigger population makes sense. I don't fault him for that either, but I won't consume that product.

I had his site in my rss reader for a long time. Used to be a decent one for value investing news. I erased it a while ago as it had become way, way too spammy and promotional. Seems like yet another guy who has found a way to make money off the investment community without actually investing.

Interesting assertion. Btw, absence of evidence is not evidence of absence. Given that drive and ambition are based a lot on circumstances and are such subjective ideas that are difficult to define, I am interested to learn more. The only article I could find online was an article from Time - not the most credible of magazines when it comes to unbiased scientific reporting - and that article too couldn't give any conclusive evidence for the claim that ambition is genetically influenced. If you have access to any scientific literature from credible scientific journals, I would be interested to read it. What were the sample sizes used or how were the studies controlled for environment/culture/nationality etc? Was it an observation based study or a questionnaire based study? The reason I am asking is because some similar studies I have come across seem to be methodologically flawed. Of course not, but a causal link can never be established. You can only draw inferences from the (non-)existence of correlations. The thing I quoted about twins I am 99% sure that I got from Bryan Caplan, but I can't seem to find it again. However, he has done no such study so I am gathering he got it from someone else, like Taubman, 1976 (here: http://www.jstor.org/discover/10.2307/1827497?uid=3738984&uid=2&uid=4&sid=56284796393). Of course, since that is a study only on white males in America, it does not deal with extreme environmental differences (of which I am sure we would see different outcomes - sending one child to Somalia and one to Monaco will show up in future income). Overall, I am obviously no expert on the subject but my impression is that scientific consensus has moved from the tabula rasa theory to a worldview of most things about our behaviour being genetically decided or at least heavily influenced. Ambition and drive in particular certainly feel like things that should be under our control, but then again evolutionary psychology predicts that being a very useful illusion for us as human beings, so I stay sceptical of that. However, almost no one is very keen on the idea of powerful genes. Liberally minded people think it makes the world even more non-egalitarian and conservatives are afraid that the image of the self-made man could be tarnished.

No one is saying passion, ambition and work ethic aren't important. But the world is what it is; not egalitarian by design. Intelligence matters, and very much so. We don't need to stick in a 'but' after that acknowledgment everytime it's done, it just obfuscates the truth. And by the way, there are several strong reasons to believe that ambition and drive is mostly genetically influenced too - or atleast not any evidence that says it's environmentally decided :) Separate twin studies suggest that they have pretty much the same lifetime earnings even if they grow up in different socio-economic environments... Ask yourselves honestly how would you think about intelligence vs ambition if the world was differently understood and the former could be trained and perfected but not the latter... twacowfca: I don't think the fact that an IQ test didn't differentiate between Buffett and his sister is some damning counter-example of its effectiveness as an instrument. After all, a high IQ may very well be a necessary but not sufficient attribute for certain tasks (like getting insanely rich, by the looks of it). Saying IQ is flawed because it doesn't catch every aspect of what makes a human being productive or smart is a bit like saying that your high-school grade in geography is meaningless because it says nothing about your knowledge of physics. And saying high IQ won't help you because high IQ people can be/are deficient in other ways also misses the point completely. And no, I'm most certainly not in the higher echelons of the scale, but it bothers me that people takes this clearly false view of IQ 'not mattering very much' because it is comforting or whatever the reason is.

I think it's probably very easy for Buffett (who I am guessing is in the 140-150 range) to say that about 120 in iq. He doesn't know the limitations that a 'meager' 120 score gives you! I find it very, very hard to believe that higher intelligence won't make you better suited to become a better investor, holding all else constant. Maybe when you get to the scores which are so high that they are hard to measure, I may grant him the point. On a somewhat related note: http://infoproc.blogspot.se/2009/11/if-youre-so-smart-why-arent-you-rich.html

I pretty much agree and I admit to making the mistake of entering a few pointless political discussions in the past. But you should keep in mind that the purpose of a debate never is to sway the opponent but to influence the people who have no strong opinion.

Thanks Parsad for keeping us abreast of this.

And Germany rested threer key players (Gomez, Müller and Podolski) after playing all of them in all three group stage matches :D Greece were really lucky to go through, they are woeful. On top of that they had their best player Karagounis suspended for the Germany fixture.

The basic concept is still that you are buying $1 at a discount and the fact that the market will ascribe a premium to the $1 or that Buffett is willing to incorporate that into his assessment of value should not confuse the issue. You are in very tough territory when you start assuming growth and what premium the market is willing to put on it 10 years down the road, because these are issues of certainty and when you get your birds as discussed by Buffett when he talks about Aesop. A "value" investor needs to crawl before he can walk and unless you really understand the very basic concept of what "buying a company for less than its intrinsic value" means, particularly if you are using a high discount rate then it will be impossible to appreciate the risk in paying a premium for a company with a good franchise. The basic frame work does not exclude paying up for growing companies with fantastic franchises it serves to highlight the risk of paying up for a heavily discounted cash flow more than 5 years down the road. Hence, it should make one stop and think really hard about why Buffett refuses to buy Microsoft when it is sitting on a EV/NI of 8 times, but was willing to buy Coke in 1994 when it was sporting a PE of 22! To be fair, Buffett has actually said outright that Microsoft is cheap but that it's off-limits because of his close relationship with Gates. I think he would have bought it last year if it weren't for that, but that's obviously just a guess.

Roger Federer, probably.

I'm not saying they wouldn't deserve the money, but they could become billionaires from Berkshire in pretty short order without really taking on any downside risk financially. I think it would be sensible for a significant amount of the compensation to be earmarked for buying BRK stock on the market with a lock-in investment period of something like 5-10 years.

Has Buffett addressed this issue? Surely Combs' and Wechsler's current incentive structure would be very generous when they run all of Berkshire's investment portfolio? While outperforming the S&P will surely be harder, getting paid 10% of the outperformance would produce staggering wages for them. If they racked up 1% better returns than the general market with the current size of Berkshire's portfolio they would gain $72 million. I guess the odds are that they could do a whole lot better than a mere 1% outperformance, however it surely won't be 10%. And how would the performance of wholly bought businesses be measured? Maybe this is part of the lure for these hedge fund managers. While lowering their wages temporarily, when Buffett is gone they will have a great payday (if they perform).

So much o financial media is politics and politics bore me. And most of what is not politics is advertising in one form or another. I space through some newspapers in my rss reader and only stop for company specific news. Meanwhile trying to shut my eyes from the noisy headlines.

I agree with this completely and have no really expensive habits, but I wouldn't necessarily call that penny pinching. I don't mind paying up for things that are material to me such as golf equipment, books, computers, sport channels (and beer). I won't buy gadgets and gizmos just for the heck of it, though. I do own a car which was bought brand new and I would certainly get by without a car, but it would make my life a bit less comfortable. Ordered an Ipad yesterday and I have hopes it will improve my reading efficiency. Maybe there are other cheaper tablets which would serve that function just as well. Owning an Iphone, I decided that I can trust the Ipad to do the things I want without a hassle. If I were poorer than I am, I would certainly explore the matter further but I decided it just wasn't interesting or worth it to me.

I never really came on here for the stock ideas since I'm not really in the markets that most investors here are, but I also find it mind-boggling that the focus is on mega caps to such a hugh extent. Maybe people are covering new ground more than I realize but keeping most of it to themselves?

Thanks for those links!

Will check it out, thanks. $1.4b in total assets, $1b in lending. I am still in the very beginning of looking at it and thought that there may be some resources which would make my work more effective in looking at some of the peculiarities of banking, like reserving, credit quality and such. My other 'bank' investments have been in in companies that had no mortgage business so this is a different animal to me.