Ross812

I bought a full position in LMCA over the past two weeks and sold McCormick and CH Robinson to fund the purchase. LMCA is now my second largest position after Bidvest.

A friend and I just had a chat about this over a beer the other night. I approach the question like a geologist looking at trends over long periods of time. My friend is a chemical engineer and approaches the climate debate from the air chemistry side. Below is an email chain between the two of us continuing our discussion the next day. It's a little hard to follow coming into the middle of the discussion but it does sum up two points of view pretty quickly. Moral of the discussion is maybe we should just talk about sports instead! Chemist view: OK – After speaking with you some last night about the your assertion that volcanic activity produces 9-10 times the CO2 emissions annually compared to fossil fuel consumption is wrong! I realize that there are other CO2 breathing emissions by exposed rock formations that science has not completely quantified, but as we understand it now, current volcanic activity is dwarfed compared to anthropogenic carbon emissions. http://hvo.wr.usgs.gov/volcanowatch/archive/2007/07_02_15.html http://www.epa.gov/climatechange/ghgemissions/global.html http://www.agu.org/pubs/pdf/2011eo240001.pdf However, you were right that solubility decreases with increased temperature of water (except when CO2 reaches supercritical fluid stage under extreme high temperature and pressure). (I should know better than that) Unfortunately, the solubility does not significantly decrease over the projected temperature changes within the ocean. (Only 2-3 Celsius) However, the acidification of the ocean from adsorption of increased anthropogenic CO2 emissions from the atmosphere is killing the coral reefs across the world, which will affect the entire aquatic food chain going forward significantly. I would also like to point out that CFC’s, NOx, and Methane are significant sources of heat trapping gasses (20-10,000 times more potent at collecting photon energy from the sun) which are all directly related to human activity. Methane has natural leaks, but every time we continue to frack open wells we leak additional methane that would not otherwise diffuse into the atmosphere. Also, areas like Siberia where methane gases below the surface are now escaping, which had been trapped below the surface for centuries/millennia until the thaw of permafrost; we will have significant atmospheric warming from that massive release of trapped methane gas there too. Earth’s atmosphere has an approximate mass of 5.15×1018 kg compared to the mass of the earth 5.97 x 1024 kg, thus earth’s atmosphere represents 8.6x10-7 of its total mass or less than 1 ppm by weight. (equivalent to the thickness of a piece of paper wrapped around a basketball) If you think that that human activity of the past 125 years has not had a significant effect on the 0.04% of the atmosphere that drives many temperature and weather phenomena, that is naïve. If you think the large scale deforestation of the world’s rainforest (carbon sinks) and rapid expansion/use of fossil fuels has not dramatically changed the rate of natural climate change and the preindustrial carbon cycle, that is naïve. I realize that the earth’s natural cycles will cause dramatic changes in sea level over 10’s of thousands of years due to small variations in earth’s orbit, solar radiation output, and volcanic activity. But large changes in a small portion of our atmospheric chemistry will accelerate changes in the mean air temperature. If the glacial cycle can be affected dramatically by changes in CO2 of 200-280 ppm and temperature ranges of 6-10˚ Celsius , what does the new glaciation cycle look like when we move to 400 ppm – 500 ppm – 650 ppm CO2 in the atmosphere? What does it look like when we increase the global atmospheric temperature by an additional 3-6˚ Celsius over the next 2-3 centuries? Faster than any rate ever Geologist view: Lets first look at sea level rise in the passed 100 years. The trend is up but I fail to see an increase in slope with increased carbon emissions. Now lets look at sea level changes over the last 9000 years. As you can see the trend was up until about 2k years ago. Now notice how sea level in the same area changes by as much as +/- 2m over 1000 year periods. In the passed 100 years we have seen sea levels increase by 0.2 meters, but an increase of 2m (which is what is projected) is not abnormal, and would reverse coarse with a mini-ice age. Now for temperature: (dark blue 1000-1991): P.D. Jones, K.R. Briffa, T.P. Barnett, and S.F.B. Tett (1998). "High-resolution Palaeoclimatic Records for the last Millennium: Interpretation, Integration and Comparison with General Circulation Model Control-run Temperatures". The Holocene 8: 455-471. doi:10.1191/095968398667194956 (blue 1000-1980): M.E. Mann, R.S. Bradley, and M.K. Hughes (1999). "Northern Hemisphere Temperatures During the Past Millennium: Inferences, Uncertainties, and Limitations". Geophysical Research Letters 26 (6): 759-762. (light blue 1000-1965): Crowley and Lowery (2000). "Northern Hemisphere Temperature Reconstruction". Ambio 29: 51-54. Modified as published in Crowley (2000). "Causes of Climate Change Over the Past 1000 Years". Science 289: 270-277. doi:10.1126/science.289.5477.270 (lightest blue 1402-1960): K.R. Briffa, T.J. Osborn, F.H. Schweingruber, I.C. Harris, P.D. Jones, S.G. Shiyatov, S.G. and E.A. Vaganov (2001). "Low-frequency temperature variations from a northern tree-ring density network". J. Geophys. Res. 106: 2929-2941. (light turquoise 831-1992): J. Esper, E.R. Cook, and F.H. Schweingruber (2002). "Low-Frequency Signals in Long Tree-Ring Chronologies for Reconstructing Past Temperature Variability". Science 295 (5563): 2250-2253. doi:10.1126/science.1066208. (green 200-1980): M.E. Mann and P.D. Jones (2003). "Global Surface Temperatures over the Past Two Millennia". Geophysical Research Letters 30 (15): 1820. doi:10.1029/2003GL017814. (yellow 200-1995): P.D. Jones and M.E. Mann (2004). "Climate Over Past Millennia". Reviews of Geophysics 42: RG2002. doi:10.1029/2003RG000143 (orange 1500-1980): S. Huang (2004). "Merging Information from Different Resources for New Insights into Climate Change in the Past and Future". Geophys. Res Lett. 31: L13205. doi:10.1029/2004GL019781 (red 1-1979): A. Moberg, D.M. Sonechkin, K. Holmgren, N.M. Datsenko and W. Karlén (2005). "Highly variable Northern Hemisphere temperatures reconstructed from low- and high-resolution proxy data". nature 443: 613-617. doi:10.1038/nature03265 (dark red 1600-1990): J.H. Oerlemans (2005). "Extracting a Climate Signal from 169 Glacier Records". Science 308: 675-677. doi:10.1126/science.1107046 (black 1856-2004): Instrumental data was jointly compiled by the w:Climatic Research Unit and the UK Meteorological Office Hadley Centre. Global Annual Average data set TaveGL2v [2] was used. All the people hyping global warming use this graph though: The above graph is a cherry pick of data from a relatively cool period in the 1800's to a warmer period now. On a whole, a 1C doesnt seem strange at all over a 200 year period.

You are in a sense doing what you suggest when you buy the S&P 500 as the index, while slow moving, is not entirely passive. I don't think the S&P index is similar to this at all. You are buying the 500 largest companies for better or for worse when you buy the index. Choosing 15-25 great companies at a fair or even slightly expensive price is not too hard and should outperform the index in the long term. If nothing else, there are some interesting ETF's that I believe are less risky than the index as a whole. MOAT is one that I recommend to friends. I'm not stoked on Amazon being in the ETF right now, but most of the holdings seem to be high quality companies at fair prices and the ER is only 0.5%.

When you get tired of true value investing, why not buy a basket of good companies and hold indefinitely? There are many companies that can be bought for reasonable prices in good industries that are going to grow earnings at 10% a year out there. I would feel more comfortable knowing what I am holding than buying a passive index containing a lot of companies I wouldn't touch if I were to look into them.

Voting just closed yesterday. I post the poll and it is open for 7 days at the start of each quarter. The poll does have a long basis and I do leave obvious shorts (Tesla in the last round of voting) off the poll. The reason there are no shorts included is because there are not too many shorts discussed on the board; a company receiving 0 votes doesn't mean it is a short or even a bad pick, it just doesn't have the community's following. Also, the accounting, borrow rates, and the assumption shares are even available for shorting is very difficult to track on a google spreadsheet.

Actually, GM received 12 votes like AWLCF and FFH.TO. In the event of a tie, I've been using excels random number function to pick which company is added or eliminated. In this case, GM drew the short straw. View the fund with the link and look at the 'Allocation by Quarter' tab to view voting history. kmukul, The fund was created in an attempt to test out how a Corner of Berkshire and Fairfax crowd sourced fund would perform. The methodology certainly isn't perfect, but it is a work in progress. Once I have a year or two of data, I may back test a few different methods to refine portfolio weightings. If the portfolio continues to do well, I'll start a covestor model portfolio (http://covestor.com/) to allow others to invest along side if they wish. Profits from management fees would be donated.

The fund was updated today. Thank you to everyone who voted! The Q2'14 Allocation is as follows: Company Allocation % # of Votes % of Votes BAC 13.59% 56 39% $ - Cash 11.41% 47 33% FIATY 8.98% 37 26% ALS.TO 8.74% 36 25% BRK.B 7.77% 32 23% GNMCA 7.52% 31 22% LRE.L 7.28% 30 21% SHLD 6.31% 26 18% AIG 6.07% 25 18% C 5.83% 24 17% LUKOY 3.64% 15 11% MKL 3.64% 15 11% ZINC 3.40% 14 10% AWLCF 2.91% 12 8% FFH.TO 2.91% 12 8%

Ross, Been thinking about LH - I love the industry. Question though, why LH over Quest? jwfm, The short answer is management at LH is better than DGX. Quest and LH both grow through acquisition but Quest has proven again and again to destroy value when they acquire. Quest seems to take 1-2 years to fully digest a new lab (they have nothing to show for a couple big acquisitions) where LH does the same in 1-2 quarters. I think both companies are in a fantastic business. Together, they have the same kind of moat UPS, MSFT, or even KO possess. Long term, I think North American demographics and universal health care are going to provide a nice tail wind for both companies. Ross, Not that I think you are wrong, but I always look for the possible mistake in my thinking before investing. So let me go all Charlie Munger on you for a moment. What if a company like Opko Health actually manages to come up with a diagnostic test that can be done in your doctor's office (something they are working on) based on a simple blood test? What about the impact of government payment reductions? LH stated that this cost them over $100 million in 2013 alone? Looking forward to your comments as the idea does look interesting..... cheers Zorro Zorro, I'll hit the government reductions first. The Midcare/caid acutually increased reimbursement 1% last year. LH lost money on routine standard tests that were moved onto the governments "not approved list". To give an analogy; there where 10 types of tests approved and reimbursed at $100 in 2012. In 2013, doctors ordered the same tests, LH performed the testing and sent the bill to the government. The government, in turn, decided in Q4 of 13 that 2 of the 10 tests were no longer covered and rather than reimbursing LH sent bills to individuals on medicare. (LH will have very limited success collecting these debts) The remaining 8 tests were reimbursed at $101 each. Management stated that they will simply abandon these tests billed to medicare in the future and stated that this is a temporary problem. Once doctors start getting sued when patients suffer because they are unable to get routine and best practice testing reimbursed; the government will change course. Until then, LH will not be giving any more free testing. HR 4015 passed the house on the 14th of March (this was not expected). This allows Medicare to reimburse doctors and labs at a rate greater than sustainable growth rate (SGR) in the future; meaning LH should actually pick up revenue growth from the government abandoning SGR @ 1% per year to something closer to YoY cost of care inflation - roughly 4%. Regarding being Charlie Mungered on the moat. I tend to think of moats as being sustainable if they can be expanded while under siege. The testing business is a technology arms race at its heart and technology always gets more and more complex as it matures. Opko Health may design a great real time test that replaces an offering by LH, but what about LH's 500 other offerings, or the new relatively complex genomics testing they are rolling out? Everyone expects new technology to replace existing technology, but in most cases, there is room for both. I.E. laptops and smartphones, SSD and HDD, credit cards and mobile payment. We are taking a pretty big leap to assign risk to a technology that a company may develop that may be an acceptable replacement for a current product that may be adopted by the medical community at large. I learned my lesson with inverting investments too much and tearing down moats based on new technology. A few years ago, I could have bought WDC at $23 but I didn't because I was convinced SSD would replace WDC's HDDs. Looking back on it, I missed out on a 400% gain and a position in a consistently growing company with a sustainable competitive advantage as part of the data storage duopoly.

Gio, The voting is done on a quarterly basis. The 15 companies with the most votes are added to the portfolio and weighted by how many votes they received. Let's say between the top 15 companies there were 100 votes. If Lancashire had 15 of those votes, it would become a 15% position in the fund. This allocation can change each quarter depending on how sentiment changes over time. For instance when we started the poll in August of '13 SHLD was an 8% position. SHLD had a run up and was not as popular after the price had increased and it became a 5% position the next quarter. 3% of the previous position was booked as a profit. Lancashire may be a company you vote on for the next 5 years regardless of price. I'm willing to bet the board would start to up vote Lancashire heavily if the share price falls to closer to book value. It may be a 3% position now with a core group of LT investors interested but could climb to a 10% position once the rest of the community piles on at a lower price. So far, the fund methodology appears to be working; ex cash the boards' picks are outperforming the S&P 500 by 10%.

Ross, Been thinking about LH - I love the industry. Question though, why LH over Quest? jwfm, The short answer is management at LH is better than DGX. Quest and LH both grow through acquisition but Quest has proven again and again to destroy value when they acquire. Quest seems to take 1-2 years to fully digest a new lab (they have nothing to show for a couple big acquisitions) where LH does the same in 1-2 quarters. I think both companies are in a fantastic business. Together, they have the same kind of moat UPS, MSFT, or even KO possess. Long term, I think North American demographics and universal health care are going to provide a nice tail wind for both companies.

We need more than 82 votes!

Started a small position in Lab Corp. - LH

Above are a collection of 96 companies recently discussed in the investment ideas forum and inclusions receiving two or more votes from board members in the last poll. I am going to continue dropping companies that received 0 or 1 vote in the last poll as ~10% consensus is needed before the idea is added to the portfolio. Each member gets 5 votes. Choose the companies you believe will have the best total return. The 15 companies (cash is an included asset class) with the most votes will be bought in the portfolio (balance stands at $1,196,000). Allocation will be determined by the number of votes each company receives. The portfolio will be public for anyone to see at the following link: https://docs.google.com/spreadsheet/ccc?key=0AivVdWOTQE2JdGQzYkFSQUg2eUR3UVRTcThFYWpBelE#gid=21 Since 19 August 2013 the fund with dividends and a 12.5% average cash allocation has returned 19.6% vs the S&P (with dividends) benchmark return of 15.2%. Q1'14 saw nice gains due to SHLD (+36%), FIATY (+29%), and Packer's contribution of INLOT.AT gaining a respectable 16.5%. The forum failed to predict C would fail their stress test (-11%) and GM would have a major recall (-13%). Thanks for voting all!

How is this any different than 30-40 years ago when the majority of investors would make a trade based off of yesterday's newspaper quote. The investor would see a price - 34 1/4 and call their broker in the morning to by 1000 shares at 34 1/4. Unless you were at the exchange you had no way of knowing if shares were changing hands at 33 3/4; your order was filled at 34 1/4. The broker could pocket the $500 and you were none the wiser. I am in the camp that if success comes down to execution to the nearest penny and having a news feed plugged directly into the horses mouth, you are doing something wrong. I have put in many limit orders in based off of IB 15 minute delayed quotes or yahoo. Seven years ago I wouldn't make a trade unless I had 2nd tier quotes and checked the macd.

I feel like I'm in the middle on the frugality scale. I will pay up for something if I am going to use it a lot and the function of the more expensive brand is going to make my life easier. Power tools, rock climbing/camping gear, high quality clothing, liquor, and certain kitchen appliances. My wife and I enjoy going out to eat and do so a couple times a week (though she cooks very well at home). I don't pay up for goods that wear out or serve a similar function to expensive goods. Hand tools, furniture (a $600 sofa looks just as nice as a $4k sofa but only lasts 5 years, I'm skeptical any sofa will last 30+ years), cars, services (no cable tv, cheap phone plan, cut my own hair, do almost all repairs myself, expensive coffee). I don't think I'm cheap, I just know what makes me happy. I drive a 14 year old car worth 4k, but I'll buy a $70 bottle of bourbon.

The only leasing I am familiar with is Aircraft leasing. For air leasing the age and models of the aircrafts can be a moat. Many airlines are not interested in leasing an old 737-400 when they can lease a larger, more fuel efficient 737 800 or 900. The make and model is very important to airlines as well. For instance, Southwest only uses Boeing 737's. Management and size is very important as well. A smaller leasor is not going to have the clout to order 125 Boeing aircraft on credit necessary to fill big contracts.

Nestle is a great company I've never bought any though because I thought the withholding tax was 35% and you cannot claim the tax within an IRA. I just looked back and a SA article I read said the tax rate was 15 or 35%. Which is it for US investors?

I was reading some posts on another forum mentioned here a few days ago. One of the members had a cool calculator for coming up with a safe net worth by age to retire comfortably. NW = Salary * (e^(0.075 * (Age - 20) ) -1) @ 100k per year: 25 yo = 25k 35 yo = 210k 45 yo = 550k 55 yo = 1.3M 65 yo = 2.8M The formula essentially simulates someone who started young and saves approximately 10% of their salary compounded at 7.5%. It seems to work pretty well and you can play with the multiplier (7.5%) if you want to match it to your own net worth and see how you measure up to a diligent young saver. I.e. if you used 10% to match your NW to the model you are 33% ahead of the curve. 6% and you are 20% behind.

Are you kidding me?! I put the entire Fiat thread in a word document to read it over the weekend a few months ago. Thanks! I feel a little stupid for never looking for a print all button earlier...

Over the past couple months, the weakness in price in Bidvest, McCormick, Petsmart, and Kinder Morgan allowed me to go from 25% cash to fully invested. The majority was added to KMI which went from a 2% to 12% position.

Parsad, I don't know if this is the right place for it, but I just signed onto the site with my smartphone and the new mobile layout looks great! I was shocked for a second trying to figure out if I had gone to the wrong site. The new layout is awesome on my android phone. No more zooming in and out; I just have to get used to the navigation! Thanks for all the great work, Ross

Have you set up a solo 401k? You could then put in 17.5k regardless of income. Edit: Looking into this further (I could be in a similar situation) You should make your contributions to the Traditional IRA then prior to the end of the year convert the Trad. IRA to a Roth. There are 2 scenarios: 1. You make less that 116k - You can keep the money in the Trad. IRA and take the deduction. 2. You make more than 181k - You cannot take the Trad. IRA deduction. Covert the Traditional to a Roth and pay taxes on any gains made on the 11k you contributed that year. http://www.retirementincomevisions.com/retirement-income-visions/2010/03/two-steps-to-a-nontaxable-ira-for-high-income-individuals.html

The market would react by 2 or 3 depending on the situation. I'm thinking of an insurance company, say Lancashire. If they had a bad catastrophe and paid their entire quarter of earnings to cover the cat, their stock price would absolutely go down. I'm basing this on the last half of the year when we saw good underwriting and an acquisition that was a one off event that lowered earnings and should actually enhance them in the future. The stock price fell by over 10%.

If you make more that 191k you can't deduct your contributions to your Traditional IRA. The phaseout starts at 181k (assuming your wife doesn't still work in which case it is 116k) http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/2014-IRA-Contribution-and-Deduction-Limits---Effect-of-Modified-AGI-on-Deductible-Contributions-if-You-are-NOT-Covered-by-a-Retirement-Plan-at-Work You are allowed to withdraw your contributions to a Roth IRA the year they are made penalty free. So if you did exceed 181,000 you would have to withdraw the 11k you put in the Roth. You would have to pay taxes on the ST capital gains. I may be wrong, but ST capital gains on your 11k contribution is the penalty you have to pay if you have a good year.

Dang it merket! I said the same thing and you didn't even read through the posts to find it! ;-)