matjone

I am wondering if the move to cash is just so that if a crash does come he doesn't have investors freaking out and redeeming. Individual investors and buyers of private businesses wouldn't need to worry about that.

Please excuse my ignorance, but how does the pdf reader work? The sec files are html. Do you need another computer to convert? Do the tables and financial statements come out looking alright?

My browser crashes every time I try to. I've tried everything amazon said, and even had them send me a new one and it is still doing it. If anyone has an idea of how to fix it I'd love to hear it.

Yeah I do too. But I sometimes think about what Buffett would do - I don't get the impression he ever kept much in savings until he got rich. Hopefully you're wrong on your prediction about not getting wealthy.

I guess it is true, every situation is different. I have this fear that as soon as I go down to 6 months expenses great depression #2 will come and I'll be living in a tent like Tom Joad. You have to balance that with the risk of doing like buffett said and waiting for the crash that never comes.

I have always had the feeling that the three year rule seemed a little high for people who are getting started. For someone fresh out of college earning 60k or so and living where i live they'd probably have to wait 2 years or more to even get started investing, which would probably make a huge difference in their eventual net worth. I am thinking about reducing it down to 2 year's expenses. One good thing about the rule is that you get to reward yourself for reducing your expenses - for every dollar you cut expenses you free up three dollars for investments. Of course only a freak would consider that a reward.

Maybe you should wear shorts. If anyone complains just tell them that you are the owner and you'll wear whatever you feel like. :)

A lot of personal finance advice says to keep 6 months or a year's expenses in savings. I remember tweedy browne saying to keep 3 years worth - their reasoning was that 3 yrs was an a typical time frame for undervalued stocks to recover, so you would most likely never have to sell stocks at a loss to cover expenses in the event of job loss, etc. Have you always followed this advice, especially in your early years? To what extent? I come pretty close to the 3 year rule (I have probably 30k expenses and keep about half of my 160k of funds in cash, other half in stocks), but sometimes I think that it is excessively conservative and I am just making myself poorer over time by keeping this money earning the currently pitiful return on cash.

Yeah I should have clarified, when I said maintenance I meant a figure for repairs. I have figured 10% of rent for property management, plus about $3 a s.f. for repairs. That seems high, but the info I could dig up said to figure 1%-4% of the value for repairs, which seems in line withmy. experience as a homeowner.

Moorecapital, if you don't mind me asking, what kind of cash flow return do you get out of these properties relative to the money you put up? I understand if you don't t want to talk about it but it might give me a good check on what I think I can get out of the properties I see. I also wonder what type of percentage you figure for maintenance.

Is anyone taking Buffet's advice and buying single family homes? I am seeing some in my area that seem like they would deliver excellent cash flow yields. The difficulty I have is getting comfortable with the leverage and the concentration of so much capital in one investment, especially since I live in a rust belt city that may not have good economic prospects in the long run, and have no experience managing rental properties. If anyone operates in this field and would be willing to share their knowledge, either on here or through pm, or even give some good book recommendations on the subject, I'd appreciate it.

[amazonsearch]You Can Be a Stock Market Genius[/amazonsearch] Picked this up at the library this week and realized it did not have a thread on here yet. Some of the strategies seemed to make sense, but I wonder if the price/value gaps have narrowed on these types of situations now that he has revealed all his secrets. Some of the strategies seemed to me to be speculating rather than investing. In one part he says he bought call options that expired two weeks after a spinoff was scheduled to happen, on the expectation that the price would jump in that time frame. I'd appreciate to hear what others thought of it, and whether anyone has tried any ofthese techniques.

From what I understand GNP includes foreign earnings of U.S. companies, and GDP does not.

It seems like you are doing your research. I don't think Graham would say you are speculating. If I remember right Graham's stock selection technique for defensive investors didn't require reading any reports.

I wondered the same thing.

I am also wondering if you include debt, which gurufocus does not. The reason I thought you would is that in the article buffett said "all publicly traded securities", and not just equity securities. Also, he said that the ratio was close to 200% in 99-00, and the only way I could get that from the data I was pulling up was to include debt. Plus it makes sense. Would the market suddenly become cheap if everyone borrowed and bought back shares till the ratio was down to 70?

Thanks for the replies, guys. I will take a look at both of those sites.

well, from the world federation of exchanges the 2011 eoy market cap values are NYSE 11.8 Tn Nasdaq 3.8Tn I'm having trouble finding current data for corporate bonds, but I think this would be around 8 Tn. GNP for 2011 was 14.6 Tn so the ratio would be around 160%. I am not at all sure if I am doing this right though.

This is what Buffett says is the single best valuation measure for the whole market, but I don't know where to find it. Does anyone else? I can find GNP, and I can find some info on stock market cap, but I assume he includes debt in this too. It would be interesting to see the data for other countries as well.

I'll have to try these out. I read some of these, and used to read more until google phased out rss feeds in gmail. Hopefully they don't phase out google calendar or I'll never remember another birthday again. I also read these frankvoisin barelkarsan distressed debt investing (never have any idea what he's talking about, but hope to someday)

(1) In the past, Buffett himself has said that an insurance business that shows an underwriting profit on average, over time is worth its investments. Add to that a multiple of 10 of the pre-tax operating earnings (outside of insurance) and you have intrinsic value. The multiple of 10 pre-tax is like 15 post-tax, the average of the S&P 500 over time. Tilson adds underwriting profit to the pre-tax operating earnings in method (1). Probably too liberal. (2) He has also said that value can be gotten by using the right side of the balance sheet. All capital that is costless is akin to equity and therefore of value. So, Berkshire's float, its deferred tax liabilities associated with its investments, and its common equity are all costless over time and therefore considered a measure of intrinsic value. Either way, you come up with the same number at the end of 2011. Under (1) 168,266 and under (2) 168,003 That's a 70 cent dollar. Would it be better to take berkshire's share of the operating earnings of its common stock investments, plus the interest on its fixed maturity securities, and add the operating earnings of the wholly owned non-insurance businesses, to get the earning power of the whole company? This way you aren't letting the market decide the value of the investments for you. I assume you would also add up the cash and try to come up with some value for the "other" category of investments. And I guess you would want to include the insurance somehow too. I am probably not smart enough to pick through their 10-k and do this though, is anyone else? (if this has been done here or somewhere else please let me know)

so if this isn't the way to value berkshire, what is?

It certainly would be nice to find something that you could put money in when the market is high. I've bought tax liens before and made 12% (in Louisiana). But last time I went to an auction in IL all the good ones were going for 1%. You could make personal loans to people on prosper.com (not saying that's a good idea. I've never tried it.) Buffett seems to agree with Racemize that single family homes would be a good bet right now.

I wish they would quit talking about taxes. If I could interview the greatest investor ever that's the last thing I'd be asking about.

S&p earnings are currently about $87 according to Shiller's site. I guess anything can happen if panic sets in but it seems unlikely.