Ross812

Cash 16% Bidvest - 13% Lancashire - 10% Altius - 9% Bac Calls - 8% Petsmart - 5% BP - 5% McCormick - 5% AIG Wt - 4% Fiat - 4% LKQ - 4% ASPS - 3% Pirelli - 3% NOV - 2% Fiserv - 2% AN - 1.5% AL - 1.5% Glacier Media - 1.5%

I've looked at land on the outskirts of existing stone quarries as a potential investment. There are several large quarries in my region that have ~30 years of supply and the city has grown around the quarry over the passed few decades. The land around the quarries sells for about 50% of the land far enough from the quarry to get away from its noise (blasting, large trucks, drilling, etc..) When the quarry shuts down, the pit is filled with water and the land around the quarry becomes lake front property within 10 miles of the city center. This idea may not be a benefit to yourself, but may set your family up quite nicely in a few decades. http://thumbs.dreamstime.com/z/open-cast-stone-quarry-27068533.jpg

http://www.berkshirehathaway.com/letters/1989.html ValueTrap, Add PETM to the list of excellent growing retailers.

Ally money market account. 0.84% with check writing and debit cards. I-Bonds for the rest of it. You can actually put more than 10k into I-Bonds if you request your tax return back in I-Bonds.

Q4 of the Corner of Berkshire & Fairfax Fund is Up! Changes to the fund: Symbol Act - %Ch (allocation) $-Cash (+) - 19% (15%) BAC - Sell - 2.2% (12.6%) AIG - Sell - 3.76% (7.9%) FIATY - Buy - 55.2% (7.7%) GVC.TO - New (7.1%) BRK.B - Sell - 18.4% (5.83%) FFH.TO - Sell - 22.2% (5.83%) AAPL - Buy - 36.4% (5.52%) SHLD - Sell - 50% (5.52%) LRE.L - Buy - 20% (5.21%) LUK - Sell - .06% (4.91%) SD - Sell - 34.9% (4.91%) ALS.TO - New (4.6%) BP - New (3.99%) IBM - New (3.37%) MKL - Sold Out OIBR- Sold Out DTV- Sold Out WFC- Sold Out The portfolio will be public for anyone to see at the following link: https://docs.google.com/spreadsheet/ccc?key=0AivVdWOTQE2JdGQzYkFSQUg2eUR3UVRTcThFYWpBelE#gid=21

Thanks to all who have voted so far! Only 3 days left. It looks like we are going to have some turnover this quarter. Fiat and Glacier Media are more popular than Berkshire this time around!

Buying real estate with a mortgage makes a lot of sense in the US. Borrow for 15 to 30 years at 2.7-4.5% and write off the interest which lowers your effective rate to 1.7-3.5%? If you get in trouble, you can negotiate with the bank to take part of the loss on your behalf. (Not that I endorse this). If you are in the position where you have enough money to buy with cash, you can surely do much better over a decade or two by investing the money instead of locking it into home equity. Everyone here can easily jump a 3.5% hurdle. I have I bonds paying more than my mortgage rate...

Great list.

The Q3 portfolio will be sold, then allocated according to this poll. I suspect many of the names will be reselected by the poll and stay in the portfolio with adjustments to allocation %.

Adding a little to MKC

Above are a collection of 85 companies recently discussed in the investment ideas forum and suggestions from board members. 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 $1,067,000). 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 We more than tripled the performance of the S&P last Quarter.

Bumping. Any more recommendations before I start the Q4 poll?

There were a lot of calls on the first go around to include more companies in the list of candidates and to allow people to add any ideas I may have omitted from the list. I'm excited to start the next quarter of the fund. Last quarter, we more than doubled the return of the S&P Benchmark: https://docs.google.com/spreadsheet/ccc?key=0AivVdWOTQE2JdGQzYkFSQUg2eUR3UVRTcThFYWpBelE#gid=21 Here is a tentative list of 81 companies. They were the 75 companies last discussed on the board plus the names from last quarter's selected companies. Please let me know of any names you feel should be added that have a good shot at making it to the portfolio during the next poll. I'm looking for 19-25 more names and any names on the list that should be removed from consideration. Thanks for you help! AAPL ACN AIG ALS.TO ALSK ATSG AWLCF BAC BAM BBG.AX BBRY BH BP BRK.B C CHK CIDM COH DLB DTV DXM EBIX ENDP ESGR EXETF FB FFH.TO FIATY FNMAS FOS.TO FTP.TO GE GM GNW GOOG GS GVC.TO GY HLF HMM.TO HNFSA HPQ IBM IDT JCP KR L LMCA LRE.L LTS.TO LUK LUKOY MBI MKL MSFT NCT NBG NFLXZ NOK NTDOY OAK OIBR OUTR PKX RHDGF RHT RJET RSKIA SBGL SD SEB.V SHLD SPRD STX SWY TI-A TPRE TSLA TWGP VOYA VRX WFC WFC WTW YHOO ZINC Edit (1) Changed list up to Sharper's post. We are up to 6 new companies added, 2 removed. The list stands at 85.

You can come up with mental models pretty easily using a simplified PE method. For a 5 time horizon: D = Discount Rate GR = Growth Rate PEt= Terminal PE r = Discounted PE ratio PEd = Discounted PE r = D^5/PEt PEd = GR^5/r Example: Coke D = Discount Rate = 10% GR = Growth Rate = 8% PEt= Terminal PE = 16 r = Discounted PE ratio PEd = Discounted PE r = D^5/PEt = (1.1^5)/16 = .1 PEd = GR^5/r = (1.08^5)/.1 = 14.7 This implies the estimated DCF for KO is 14.7 x 1.91 (earnings) = $28 Now for the compound growth problem made easier use the formula- n= number of years r= rate of growth 1+(n-1)r/72 for n=5 years: 1+r/18 for n=10 years: 1+r/8 If you decide on a conservative PEt to look at companies and set your own discount rate. You can simplify the math greatly. For instance: PEt = 10 D = 10% PEd = 6.25 + .34*GR PEt = 12 D = 10% PEd = 7.5 + .41*GR PEt = 14 D = 10% PEd = 8.75 + .48*GR PEt = 16 D = 10% PEd = 10 + .55*GR

One on one with Harry: http://seekingalpha.com/instablog/279331-owen-bernard/2095302-book-review-youre-welcome-planet-earth-the-most-powerful-trading-system-ever-publicly-revealed

I added too PETM this week, keeping my eye on DFS.

I think he has a twitter account not related to investing... Same guy? Amazon: http://g-ecx.images-amazon.com/images/G/01/ciu/15/b1/fe35f688ad8d0ad8956e21.L._V382023223_SX200_.jpg Twitter: oxy.jpg?t=FQQVBBjGAWh0dHBzOi8vdmluZXMuczMuYW1hem9uYXdzLmNvbS9yL3RodW1icy8wNjdDNjNERUYzOTY1NzM1MjYzNjkzMzYxMTUyXzExMjk1NGUzMzhmLjMubXA0XzNlY3NjcXNuN3FMNXA1RXVncWJGaE5la3FJMkhnbzVqVnR1UmNXbkVRTXJKNWRfdzl5UTZqb1U3SFB5YnJBRTQuanBnP3ZlcnNpb25JZD1laE1zejF0c1NJMGJnRHhTa00xVXp5Y01kMzV1UWk4RxQCFgASAA&s=kI_O_FZcomtP63ca5w7Jp

I expect to see the 10 year well below 3 percent at some point in the next 6 months, despite the taper and taper talk I was just going to make a post on long dated treasuries (10 and 30 year). IMO, they are pure speculation. The thesis is that the price should move. However, people would not be happy holding these to maturity and collecting the yield to maturity. That to me is speculation. It doesn't seem like a value play. It's a macro call/speculation. I've been thinking about this a bit. I know several people that have shorted long dated treasuries lately and have been doing very well. I think the talk of winding down QE3 has spooked the markets and treasuries are trading off of technicals rather than fundamentals. My understanding of treasuries is their interest rate should be tied to the fed funds rate, plus inflation expectation, with a small bit of premium tacked on. A recent Gross quote: "Yields have adjusted by too much. While T.V. and the press focus on 10-year Treasuries at 2.55% as their guiding star, subjective stabs by yours truly or anyone else are difficult day to day. The technicals, as Mohamed has written, can dominate while the fundamentals are flushed to second page priorities. When analyzing the fundamentals though, I like to point to a "North Star" that is as permanent as possible within the context of current market instability. Tapering aside, if the Fed has consistently informed the market that its policy rate - Fed Funds at 25 basis points - will stay there for a substantial period of time even after the end of QE, then to my eye, Fed Funds will not increase until at least mid-2015 and even then subject to a consistently strong economy that produces 2%+ inflation. I wonder if we can get there in this decade to tell you the truth. But the beauty of this North Star Fed Funds sextant is that it can be rather directly observed in futures markets, either for Fed Funds or for Eurodollars, which are a close companion. Right now, Fed Funds futures markets are predicting a 75 basis point yield in 2015, and Eurodollars validating a similar conclusion. That would suggest a mispricing, despite the obvious caveat of professional observers that some of the 75 is a surcharge for potential volatility. In any case, if frontend curves are up to 50 basis points cheap, then intermediate curves - the 10-year Treasury - may be as much as 35 basis points too cheap. They belong in our opinion at 2.20% instead of 2.55%." http://www.cmegroup.com/trading/interest-rates/stir/30-day-federal-fund.html The May, June, July '15 Contract still at 70, 75, 81.5 basis points restrictively. (take 100-quote) Taking a 25 point volatility premium this implies fed rates will be between 45 and 57 bp in mid 2015. The Fed has stated they will keep rates where they are (0-.25%) until that time. The 10-yr is trading based of technicals right now while the futures market (which is the indicator of the fundamental fed lending rate) is not moving at all. He wrote this when the 10-yr was at 2.6%, its now at 2.9% and the fundamentals still have not changed. The Fed has expanded their balance sheet 400% (if my memory serves) since 2008 and has not been able to manufacture inflation over 2%. It would seem the Fed slowing down their QE is going to cause further downward pressure on inflation. Inflation will come when the economy improves to the point that wage growth takes place. The Fed's QE has only caused price increases in the stock market and housing. A recovery for those at the top, but an appreciable trickle down has not yet taken place. To sum everything up, I think long dated treasuries are a good place to be if you believe inflation will persist <2% or head lower over the long term. I'm not sure buying longterm treasuries is speculative at this point. As Gross pointed out, treasuries are fundamentally overvalued right now. With inflation <2%, the fed funds rate around .25% until mid 2015, and the stock market in a strong rally due in part to QE, I suspect treasuries are in a short term correction right now. The 10-yr at 2.55% to Gross's 2.35% over the next couple years is a good bet. If there is a hard correction in equities once the Fed start pulling QE; rates are likely headed below 2%.

not just IB: http://finance.yahoo.com/blogs/the-exchange/nasdaq-closed-twittersphere-saying-182054064.html

Added the S&P 500 as a benchmark through SPY. $1M of SPY was bought at 164.6. All dividends will be reinvested. I also added the 1-yr US T-Bill Rate on the 'Allocation by Quarter' tab. I added on starting prices for the TSX and LSE. They will be added next time (Q4). The companies receiving no interest will be dropped from the poll and newly discussed ideas added.

The fund went live last night with 172 member votes. Data collected from the poll can be viewed on the 'Allocation by Quarter' tab. The final allocation is as follows: Link to portfolio: https://docs.google.com/spreadsheet/ccc?key=0AivVdWOTQE2JdGQzYkFSQUg2eUR3UVRTcThFYWpBelE#gid=21

With 164 votes in so far here is what the model portfolio would look like: BAC 13.7% SHLD 8.5% AIG 8.3% BRK.B 7.9% FFH.TO 7.5% SD 6.5% FIATY 5.0% LUK 4.8% WFC 4.8% AAPL 4.4% LRE.L 4.4% DTV 4.2% OIBR 4.0% MKL 3.1% ___________ Cash 12.9% To get the allocation I took the number of votes the company received divided by the sum of votes garnered by the top 15 picks. I'd like to keep the poll open for a while longer. Hopefully we can get the voting up to 200 members.

Thanks for the encouraging comments. I'd love to turn this into a community project at some point if board members want to continue the idea into something bigger. There are many members on here that have much more experience at setting up funds and non-profit framework, finding investors, and managing funds. If this someday evolved into a charitable fund I would hand the reins off to a board member who was capable of maximizing the charity's mission statement. I'm sure as the idea evolves new metrics for balancing and allocation will emerge. After a few quarters of trial, we can figure out a better way of collaborating between board members. Perhaps, take the poll once a quarter and establish 10-15 chosen stocks, then have a few select board members develop their own replicable algorithms to balance, allocate, and time positions. The 'managers' could run their sister funds based off the crowd sourced stock list and see if their algorithm can beat the crowd sourced allocation percentages. The data collected so far is pretty interesting in its own right. The cash allocation change from quarter to quarter can be used for market sentiment like that at AAII. Changes in allocation could also help signal when ideas are reaching fair value. I suspect that we will observe the in early out early phenomena that plagues value investors. Look at the top 15 stocks right now, they look very reminiscent of Fairholme. I had no idea there was such a consensus on Sandridge, and I suspected Altius and Fortress paper have a lot more votes than we are seeing. All I would ask is any data gathered, the ultimate direction the 'fund', and any techniques developed by the community to further this idea remain transparent to the group. There are so many ideas, countless hours of research, and advice shared between the members of this community that the ownership of any fund based on the board's ideas really does belong to each and every member. Regards, -Ross

rkbabang, I like your idea. There are various survey websites that we maybe able to set something up like that. Maybe even a google docs spreadsheet would work but it could be thrown off if someone was dishonest. My only hangup with an external survey is there is another step to the voting which may drive down participation. Looking at the results, are they along the lines of what you expected? I'm wondering if we may be complicating something that will work itself out. Also as for allocation. I am thinking we either pick the top 10 stocks, or keep all the stocks that received at least 3.5% of the vote. Then divide the number of votes for each stock by the votes garnered by the sum of the selected stocks to get a % allocation. The 3.5% rule would allow the portfolio to be flexible and get very concentrated if there was a large consensus (min. 5 stocks) or very diversified if there was little consensus (max. 28 stocks). I'm guessing the number of stocks in the portfolio would float around 16 in a normal distribution. Thoughts anyone?

How would you vote for new ideas while maintaining vote popularity for your old ideas so that they have time to play out and realize value/growth? I wouldn't want to have to vote for the same 5 time after time, just because the market hasn't recognized their value yet. Awesome idea though, I love this whole concept. This whole idea is a test on crowd sourcing a portfolio. If a poster still believes his (or her) five picks are the most undervalued or have the best chance for total return it would not make sense to choose any differently. The next poster is going to choose their best to pick 5 stocks from the list. Is the collective effort of everyone on here presenting ideas and debating their merits sufficient to build a portfolio with a positive return? I see a lot of votes for SHLD right now. If SHLD was at $80 right now would it have as many votes? It may not even make the top 10 at $80. The thinking is if SHLD goes down to $30 even more members would be willing to select it and the allocation would increase. I'm starting to think 5 picks may be too many. Maybe only 2 picks would be better? Also the Q4 Poll will have 100 names. Packer talked about picking a metric to base portfolio allocation. Maybe an identical sister spreadsheet with a different allocation methodology can be set up to compare the best approach. The best ideas still may float to the top via polling. Taking SharperDingaan suggestion. A crowd sourced portfolio based on the message board has the potential to go a long way.