matjone

Thanks for posting this. They say their stock has returned 14% vs. 6% vs the s&p 500, but for the 14% figure on their stock they assume that you reinvested all dividends, while for the s&p they assume no reinvestment of dividends. From this presentation it looks like in 2011 their interest in the earnings of their companies was 1.17B, and they also have 3.7B cash. Back out the cash and their mkt cap is 13.1B. So it doesn't seem all that cheap if 2011 numbers are indicative of their earning power, does it? What do you think, Giofranchi? Do you own Loew's? Thanks

Ericopoly, one thing I don't understand - you say you are not good at analyzing balance sheets, but you compensate for this weakness by investing alongside great investors who are. So you read Berkowitz' investment thesis for BAC, decide that you agree with him and buy the stock- only problem is, if I remember right Berkowitz only had about 5% or so of his fund in it, but you went all in. I would think that if you weren't personally able to analyze it you wouldn't want to bet too much bigger than the person you are coattailing (no offense, I only use the term because you have used it before to describe yourself).

"My technique is to recognize the people who do know how" Ericopoly, if you don't mind me asking, who would you include in this group?

Interesting story. I'd be pissed if someone shoved me down from heaven into a room where I had to listen to the Eagles, which in my opinion is pretty close to hell. I know nothing about how the brain works, but I wonder if it's possible her's was working in some other unknown way (besides by using electrical signals) during this near death experience .

I had a savings account with amtrust a few years ago, which I had selected because the yield was higher than anywhere else I looked. They failed and it didn't really cause any hiccups, but this wasn't money that I was using for day to day expenses.

What is interesting about this story, among other things, is that you can walk up to someone and hand them two thousand bucks, and they still end up mad at you because you made more than they did.

The thing I was thinking as I read it is that stocks that are down a lot are usually down for a good reason, which is why most of them underperform, but the ones that were down for no good reason get such good returns that the group outperforms. The best time to find stocks that are down for no good reason is when people are panicking and there is high volatility in the overall market. I would imagine another good time is when there is a panic in one stock or sector like the deepwater horizon incident or the bursting of the tech bubble. Obviously the best thing is to make an independent and correct assessment of the prospects of the business but it seems like it can also be helpful to get an idea of what is going on in the seller's mind/gut. The other strategy would be to focus on the utilities, which would tend to recover more often because they have a more stable business. Is that pretty much what you thought of it?

Financial times' screener has about 9000 european companies on it if I remember right. A lot of screeners I have seen only pick up foreign companies if they have an ADR. If anyone knows of a better one for stocks outside the u.s. I'd like to hear about it. stockscreen123 is a good one for u.s. stocks. What percentage do you guys feel safe putting overseas? I might be a little paranoid but sometimes I think, "what if it's 1939 again?" I don't think it is, but I think history shows that a country can go off the rails quickly if conditions are right, and people don't usually see it coming till it's too late. I've read what some of the greats did. I think Schloss said once that he didn't feel safe investing overseas. But I also read that Buffett said if he were starting now he'd be investing all over the world.

Thanks txitxo. The screen I am looking through is p/b<1.2, pe<7, 5 yr average ROI and ROE greater than zero, interest coverage>5, and debt<equity. I try to find ones that are selling at low multiples of current and average earnings. If they are under TBV that's good, and if they are under ncav even better. I also read the business description and throw them out if I don't understand what the hell they are talking about, which goes against your rule of not inserting judgment. For example, haynes makes auto repair manuals for professionals and diy'ers. They've been in business for 50 years. I figure a business like that might have some customer loyalty. I'd rather see that than some tiny gold mining company. I could be wrong, but this is my way of kicking some of them out, which I have to do because I don't have enough money to take a position in all of them anyway. I don't plan on investing any more than 1% in any of them.

I was thinking about buying a basket of low P/E european stocks. Haynes Publishing was one I looked at. What broker are you guys using to buy these? Especially the small ones?

Thanks. By the way, have you ever seen the letters to Munger's shareholders when he was running a partnership back in the 60's?

"Warren, has continued to use the go anywhere buy a basket of apparent bargain stocks strategy that you describe. In 2000 and 2001 he put most of his personal portfolio into Us REITS that were yielding about 10% after 1999 when the large cap great businesses in BRK's portfolio had earnings yields of about 3%. Then, in 2002 - 2003, he rotated much of his personal holdings into a market basket of beaten down Korean value stocks. Just before the financial bubble popped in 2008, Warren put most of his non BRK holdings into short term US Treasuries." One thing I have always wondered - where does the media get this information about what Buffett is doing in his brokerage account? I know sometimes he mentions things in passing during interviews but I wonder how much of it is speculation.

"His funds returns compare themselves to the indices without dividends reinvested" Really? That kind of puts me on guard about investing with them.

"By 2019 I expect BAC to have earned $7 a share even if their earnings never improve from here. However I expect the earnings per share to more than double by 2019." If you don't mind clearing something up - when you say you expect eps to more than double by 2019, did you mean to say that you thought total earnings would double? Going to 7 would already be a double, no? When I first read it I thought maybe you meant that buybacks alone would increase eps from 2 (I believe that was Berkowitz' number) to 7, and that the overall earnings would double, which would mean eps would go from 2 to 14.

Has anyone gotten a hold of a stock guide for europe? I'd like to get something where you can get a quick description of the business and last few years financials - something along the lines of what Buffett was talking about when he bought Daehan flour and the basket of Korean stocks after their market crashed. Thanks

Thanks for the reply mhdousa. I will check those out. I think I remember reading that the wellington fund had beat the market for a long time so I am going to check it out as well.

My girlfriend just got a new job and has to set up her retirement account and is asking my advice. My first thought was to tell her to stick it all in Vanguard's S&P 500 index, but then I thought I'd check here to see if anyone was familiar with any good managers at these places. If you are familiar with any I would appreciate hearing about it. Thanks in advance.

I've always been confused about this. In the article that I read Buffett didn't really explain the reasoning behind using it other than that it had always been a good predictor of returns. Wouldn't it depend on the ratio of public to private profits? And shouldn't it take into account how much leverage was used to create the profits? Should there be an adjustment for the foreign earnings of publicly listed companies? I figure Buffett is right as usual in using it but I never fully understood it.

Whatever you decide you can't do any worse than I did when I went to angola. They effectively charged me a 100% commission to change back to dollars when I left because they confiscate all the angolan currency that you are holding.

A couple questions, maybe you guys can answer What is berkshires share of the earnings and interest income for their investments (not counting the interest on cash equiv.)? Should the liabilities or at least a portion of the liabilities be subtracted out?

Never mind I missed the word "old".

" not even talking about them quitting their jobs, just roll the $amn old 401K's over" longinvestor, I was under the impression that you had to get permission from the plan administrator to do a rollover if you were still employed and contributing. Am I incorrect?

"However I did benefit from the Roth conversion." - I have followed your story since joining this board - this has got to be one of the all time greatest understatements I have Wells Fargo and have tried to get them to go self-administered, but they would not allow it. I have always thought that 401(k) plans were a little bit of a scam by the banks and fund companies. They force you into choosing between handing your money over to them and letting them skim their half percent, or paying 1/4 of it to the taxman for the right to invest it yourself. Then you sit there and watch berkshire stock selling under book, while you put money into some index fund or hand it to an average manager who probably will be lucky to beat the market by a point. Anyway, sorry for the rant. Did you ask your accountant about it? I would be interested in hearing if this works out for you.

Maybe amazon? I'm probably not smart enough to pick out something like that, but I'm still going to reply to bump the topic up because I 'd like to hear what others think. If your idea here is to add to your watchlist you might also include businesses that earn high returns on capital but have little opportunity for reinvestment of earnings, and who have managements who realize the limitation and return the excess to the shareholders.

I know nothing but I was once searching for the same thing and a blogger somewhere recommended a book called "bank management" by Tim Koch. I've never read it.