Kiltacular

I like it. You're doing a good service. I don't think it is too aggressive given that you'll monitor the portfolio and are conscientious. Plus, cash and bonds rates can stay low for a long, long time -- rehash Japan, et al. Don't forget about the uncallable preferreds from WFC and BAC... WFC-L and BAC-L. They give a nice goose to the bonds / cash given that they're yielding over 6%.

http://www.bloomberg.com/news/2014-01-31/bnsf-wins-appeal-of-u-s-rule-lowering-coal-rail-rates-1-.html

Two recommendations: 1) On Feb. 12, NOVA/PBS will air "Great Cathedral Mystery" about Brunelleschi and the building of the "Il Duomo" in 15th century Florence. I've read a book on this...fascinating story. National Geographic had an article this month introducing the subject and mentioning the upcoming NOVA. 2) Today, "Tim's Vermeer" is released. This is a documentary about a former software guy's obsession with how Vermeer might have painted. It is going to be cool. Includes Penn Jillette and directed by Teller. L.A Times yesterday: "'Tim's Vermeer' takes an engineer's approach to painting" http://www.latimes.com/entertainment/arts/culture/la-et-cm-tims-vermeer-penn-and-teller-20140129,0,2717643.story#axzz2s0cPAyqu WSJ also had an article yesterday. For non subscribers, google: A Magical Tour of 'Vermeer' Mystery

Thanks.

ASTA / Tombgrt Very cool links...thanks

Funny and appropriate coming from a Scandinavian -- makers of the best furniture designs in the last 100 years

JEast, I much enjoyed this paper. Thanks for posting. This is the type of thing that one wishes he read when he was just beginning to learn world history / economics -- in a few words, it lucidly answers a lot of "whys" I had at that age.

I think tipping should be banned in favour of higher wages for people in the "tipping" industries. No tip restaurants have a record of better service... look it up. I am not talking about low end places. I wonder if a psychologist could study the brain waves of big tippers -- perhaps tipping makes them feel superior/powerful (over the servant) and they derive extra reward from it -- being "the boss" for a moment at the end of the meal. I wonder if it leads to greater pleasure (for some people) and thus brings more enjoyment to the dining out experience. Personally, I find tipping awkward but I have to take part in it because that's the way the system is set up in this country. I happen to agree with both of you. It would nice if tipping was banned but if you ask people who rely on them, they would hate for that to be an excuse not to leave a tip. I also feel that tipping can be awkward and that's why I mentioned that in situations where you will not engage with the recipient again you can get rid of most of the awkwardness and the idea that you are trying to influence. I suspect that tipping may have become common in order to buy influence in the case of repeat encounters -- that does make it uncomfortable.

One way to spread your wealth is to tip big (especially in situations where you will not engage with the recipient again). If you get good service, a large tip is both earned and encourages pro-social behavior. Plus, a lot of jobs depend on good tips -- see the opening scene of the movie Reservoir Dogs (a great flick...but parts are extremely violent for those who would want to know). For charity, because our large taxes today do much of what charity used to do, I like to generally support merit based situations that give a boost to people that already show aptitude. If you look at what Pabrai is doing at his foundation -- boosting up poor but extremely smart and hardworking young adults -- you can imagine that that's where your cancer cure might come from (if even indirectly). For the super rich, it does seem like giving a lot of money to universities and children's hospitals sure isn't a bad way to spread the wealth.

This is a very good question and the answer is: profit margins will keep getting higher! ;) But this doesn't invalidate Mr. Hussman's historical data. Which is what I am trying to do! Gio I think his correlation might just be completely full of shit. Does Japan have record profit margins? http://boards.fool.com/the-most-recent-personal-savings-rate-just-came-in-30965776.aspx

Very interesting insight.

Great thread -- classic, useful and hysterically funny & entertaining!!

Watch this 4+ minute exchange between Santelli and Fama (I think you'll have to endure a 30 second advertisements before it begins). http://video.cnbc.com/gallery/?video=3000211021&play=1#eyJ2aWQiOiIzMDAwMjExMDIxIiwiZW5jVmlkIjoiU0JzRHZBQjM5clBiWWYydkdPRXVYUT09IiwidlRhYiI6InRyYW5zY3JpcHQiLCJ2UGFnZSI6MSwiZ05hdiI6WyLCoExhdGVzdCBWaWRlbyJdLCJnU2VjdCI6IkFMTCIsImdQYWdlIjoiMSIsInN5bSI6IiIsInNlYXJjaCI6IiJ9 At about the 3:45 mark, Fama says "It's not like it was in the old days..." and Santelli interrupts him (beyond annoying). Does anyone know what Fama was likely going to say? How did it work in "the old days"? You'll have to watch the entire exchange to get the context but the overall gist is that Fama is saying that the Fed's action are not going to be a big deal. It is interesting.

Under no circumstances -- NONE -- should a person ever consent to talk to the police, federal investigators of any kind -- FBI, IRS, etc. without advice of council -- EVER. Never say a word....especially if you are, or believe you are, innocent. NEVER agree to a search of anything without a warrant -- EVER. Again, this is especially true if you are, or believe you are, innocent. I would also never consent to a dna test or a lie detector test without the advice of council. Once they have dna, they can use it against people even loosely related to you or as yet unborn. It isn't like fingerprints. And, yeah, bring a jacket if none of that works. 2cents from a lawyer friend.

This link might give you some additional detail on whether your particular states protects solo 401ks (and even IRA's). It does state by state and give a summary plus a link to the relevant state statute. There's some interesting stuff in the state statutes. Also, I recall that someone recently asked about trust for creditor protection. Reading the through the New York statute, for example, appears to say (to this layperson) that anything inside a trust or an insurance contract, IRA, etc. is all protected from judgments (excepting a few things and always excepting alimony / child support). Anyway, if I'm reading it right, someone in New York should have some trusts if they have significant assets. http://www.irafinancialgroup.com/solo401kassetprotection.php

Excellent story! Thanks for linking the article.

I think this description -- the last sentence above -- of Graham's contribution fits perfectly. Graham captured an effective way to think about / use effectively what turned out to be not the end of capital market speculation -- the 1920's crash -- but the beginning of a stunning growth in wealth inside a capital markets system that the world -- the merchants and bankers of yore -- could never have imagined. He was the right guy, at the right time, with, it turned out, the right pupil. Buffett always points to chapters 8 and 20 of the Intelligent Investor. Basically, they say: "Buy Low and Sell High" and, since you can't do the former on a consistent and guaranteed basis, make sure you bought really low. He adds some stuff about thinking about a security like a business but basically, that just says it is your analysis that tells you whether something is low or high and not the movement(s) of the market price. Thinking about stocks as businesses is great but often feels useless for us OPMI's -- as comments here often attest. The solution for Buffett was often to buy the whole thing or to get special tax treatment on the dividends from the ones he didn't buy all of. Munger's advice is to look for the cannibals -- so you know, at least, that the manager of a great business will, at the very worst, use his company's geyser of cash in a way that is unlikely to be disastrous. So, the Graham / Munger advice for the current generation of value investors: "Buy Low and make sure it is a cannibal". EDIT: fixed strikethrough

I reposted the original basis for this discussion (which was amended later to add a "per share" idea, IIRC and spawned the rest of the thread). Just looking at the original, I think it is useful. If the business can grow without using the free cash flow to do it (assuming cap-ex = depreciation), you've got a home run (if purchasing a good business / good price). These businesses are typically light on tangible investment. If you can get "growth" from the existing business without the needing to reinvest the true, free cash flow, you've got a winning business. If you pay the free cash flow out, it is a dividend. You still get the "growth" over the original share base -- together, the FCF as a dividend plus the growth will give you the return from the business. If you decide to take the free cash flow and use it to reduce the share count that is also a return like a dividend (as Eric and Rabbit explained). I think where the confusion is arriving is the idea that some portion of the "next year's" growth in per share profits is coming from reducing the sharecount rather than just the "growth" of the business w/out any FCF going anywhere but to the shareholder's pocket. It is better to separate out of the repurchase so that you can see whether the business is growing without it -- such that the FCF is really FCF and growth is really growth (not just growth in per share profits because all the FCF was used to reduce shares). . In any case, using FCF is the same (taxes aside) whether it is used for dividends or share buybacks. The comparative value of each changes depending on the price paid for the buyback, as others discussed. But, as long as they aren't the sole "source" of growth, then the original "equation" -- FCF + Growth -- still makes sense for total return.

I like this comment. But, I do feel that a part of it may be bit harsh -- people come from all different backgrounds with different kinds of pressures (perceived or real) and realities. If they're young, my vote would be to cut them some slack BUT do impart your wisdom -- because you have the privilege of having a lot of it. I'm older than these people contacting you, but I can tell readers here that having exposure to all the different stories here has been extremely edifying and has giving me wisdom about what actually does matter to me. The common thread, in many cases, is the idea of achieving independence and freedom through wealth (not for the sake of Greed) but the real message is to take the wealth and enjoy it and don't sacrifice anything (but your absolute financial security) for the stuff you call "life" . Some of the younger people contacting you may just be trying to figure out what Guy Spier figured out (on display in the recently posted interview). Some might think that they need great numbers to make going on the investing journey worth it. Overall, your response reminds me of a comment Munger made once (paraphrase): "Younger people ask me all the time - 'How can I become as rich as you but just a little faster?'" Wisdom, wit and irony only by adding the phrase "...but just a little faster." Finally, others in this thread commented about Buffett's lack of balance. I would say that I, too, was a bit shocked by the treatment he suffered at the hands of his mother. He needed to figure out how to get the unconditional love he never could get from his mother. His route was better than becoming a serial killer. Still, having an inkling of what a mother like that can be like, I think Buffett handled life pretty well even if, coming from a blank slate, his early years might not be what one would write on the slate given all options. Moreover, it isn't clear to me that he neglected his family but maybe he did. He certainly spent more time with his kids than my pops did with me -- it has only been in recent months, reading this board, that I realized this wasn't common.

Great interview! The beginning of the interview displays the kind of self-awareness that you rarely see anywhere, much less in the "high-powered" world of investing. It is very insightful. Thanks for posting.

This is an intelligent twist -- taking the 'no management / performance fee only' concept one step further.

"Mom, why do we say that?" ....'It reinforces our brand.' -- Two favorite songs of the series: Crystal Blue Persuasion and Baby Blue.

Cool link -- thanks.

Thanks for the genuine replies from you fellows.

The finale did not disappoint! Even though you knew he was going to tie up the loose ends, the writers still surprised and entertained with their cleverness. I envy those of you with unseen episodes ahead. If anyone is looking for a good movie to see, check out "Rush". Great story; cinematography, acting, editing, etc. are all top notch. I don't think you need to be a car person to enjoy it. But, if you like cars, this is a movie to see in the theaters with big screen sound.