Shane

This has certainly been a great year thus far!

If your constantly finding ultra cheap companies then I guess no need to spend much time. It would concern me that the company is that cheap and I would likely spend a lot of time paying attention to the details. Debt covenants, notes on the financial statements, gathering industry knowledge from suppliers and large customers... I have a paranoia that I have missed something I guess Once I knew that I hadn't missed anything I would feel fine building a huge position - but it does take a certain amount of time to build the confidence that I have been absolutely thorough. A lot of that might come from knowing your investing someone else's money and not your own. One of the PM's I interned under would start a small position after a few hours, but I doubt he would ever put much weight on something without mulling it over for a while...

I recently interned at value focused mutual fund and It took me about 3 weeks to do a write-up, experienced analysts spend between a few days to 2-3 weeks depending on the scenario. For the record people worked between 10-12 hours a day, so they could spend up to 200 hours analyzing a firm. I used to be pretty quick with my analysis but now I have realized the work it takes to really look into a company. They read 10K's, 10Q's, 4+ conference call transcripts, industry reports, 10k's of their competitors. Model out various revenue scenario's and margin scenario's. It is extremely rewarding work but I think it has ruined reading free reports forever for me haha

I understand the convention of using publicly traded companies, but to me this seems like there are a lot of obvious flaws. Maybe in the U.S. this has worked but what about if Private companies become a large part of the GNP? Anyone have input on this?

Do most of you screen based on criteria or simply read and network for stock idea's? I'm trying to move away from watching 13F filings for stock idea's and become more independent, mostly because I think I can gain an advantage by looking at the very small companies most of the people I follow would not even notice. I would be interested to know what criteria you use for screens? Magic Formula I know is a good one but i'd be interested in creating my own!

Racemize I know a TON of people who are careless with their money who were raised in a family that is less fortunate. I would say being of higher socio-economic status would make you more aware of finances and the need to save actually. Having said that, I agree with you that it is hard to have a sense of making it on your own but mostly that is instilled because people always look at you as if you had a silver spoon. The facts are the facts - did you make it off hard work or was it a gift.

EDIT: I Had a comment but have decided to retract. That is a really heartbreaking scenario and I would feel betrayed if I were your wife's mother. FWIW i don't blame the allowance I blame the upbringing.

Maybe because you want a sense of self worth and accomplishment in life. There are plenty of ways to instill that into a kid, the individual I mentioned was encouraged to hold summer jobs since he was 16 - He learned who he idolized and who he did not want to be. Even if your parents would give you free room and board I don't know many people who would take it - moving away from home has huge appeal at 18. I think there is a difference between irresponsible pampering and a trust fund...

I side with Misterstockwell on this. I personally know someone very well who was given a trust fund at birth and has still accomplished more than 99% of his friends. He graduate college with honors, was a state champion athlete in highschool, and landed an excellent job at a major investment company. His family built their wealth as scientists and he had NO help finding his career. The money he inherited did nothing, to accumulate money on his own he held a job every summer during college. He had no 'need' to do any of that. Instilling your kids with a sense of pride and purpose has much more to do with their motivation in life than gifted money. I can give countless examples of people my age that are very unmotivated and were given nothing. I think you will find a very weak correlation between gifted money and life accomplishments.

Eric - how much of your wealth do you personally manage? Your ability to handle concentrated bets is amazing to me. Just an interesting note: There is a wealth management company in my home town that specializes in developing options plans for CEO's of public companies who have a very high percentage of their wealth in 1 stock. I always wanted to intern for them and learn about their process but its a small operation

As far as fund suggestions: Wintergreen does offer a great fund but the expense ratio has kept me away. AKREX is a fund I think very highly of. Don't let the short term record trick you, he also ran FBR focus fund which has a tremendous track record.

I love hearing about these inspirational business related stories. Thank you.

I can't make a lot of sense out of what the prof is saying. Criticizing Wells Fargo for concentrating on their core business? What? They were hugely successful. I'm assuming he would also criticize Buffett for concentrating his investments.

Vinod1 - I could see that happening to a small extent, but unless the windows phone is truly better I don't know if they will get enough for them to get a good IRR. If people are only switching to try something new then the revenue stream created from the windows phone might be extremely short if another company introduces something else. I'd view that as a kicker more than anything I would count on. It is interesting to think of china and india though, evidently the iPhone isn't as much of a contender there so there can be real opportunity. This has been a helpful discussion for me, thanks.

valueinv - Thank you for that, I agree with everything you posted. To me Office is the critical component of MSFT's moat. I do not believe that the laptop will be replaced by tablet's or smartphones as I use excel everyday and need the operating space, as do many others. Apple's slight changes to excel have made me keep two seperate laptop's, one for entertainment (Apple) and one for work (PC), if I had to choose it would be an easy choice to keep my work laptop...

QLEAP - That makes a lot of sense, I was wrong to take a US centric view!

Does anyone have any thoughts on MSFT's strategy to compete in markets where a clear dominant player already exists? The people I am around LOVE their iPhones, my friends say "Google it" instead of search it. I see those two businesses as highly entrenched. Bing has been gaining market share but it is still a small player to Google globally. I don't see anything that MSFT is bringing to the table to convince people to leave the products they have a strong affection for. I don't know much about Window's new phone, but I suggest it may be very hard to get people to part with their iPhone's. Are they addressing any problem that apple does not address or add features that the iPhone cannot compete with? I looked up Windows 8 phone and it appears details are lacking from MSFT on it so far, anyone have a useful link they care to share? Maybe I was wrong to say they haven't done anything innovative, they just haven't done anything innovative that I have found impressive. I don't have much confidence in their ability to compete with google in search of apple on phone's and wish they left that money to shareholders. I think there is money to be made on MSFT at today's price, but I would say that is in spite of their capital allocation.

Although that article was written to improve Ballmer's image the jury is still out for me. He may be brilliant and enthusiastic but I feel his strategy is to catch up with Apple and copy other tech companies rather than to introduce anything innovative that would tip the scales in MSFT's favor.

Jacob that first link came up "Page not found" Your european page is very informative though. I wish that P/S or EV/EBITDA was more widely available as I think these could be more useful to compare companies with different accounting practices.

Ericopoly - good point there, much appreciated. rranjan - I had some trepidation when referring to whether or not Buffett thought the market was undervalued. I am currently building a list of high quality companies that I would like to buy in the instance they are priced low enough... I doubt any of these firms will hit my prices unless the market as a whole becomes undervalued or a unique situation occurs. I think keeping an eye on overall market valuations could be beneficial if I were to ever buy into these firms. Learning about long term valuation trends could help me put things into perspective.

How many of you follow Shiller's PE? Judging by this method the market has been overvalued for a while now... What other methods are there to monitor market valuations? Parsad and Buffett seem to both be of the opinion that the market is not overvalued and judging by Buffett's buying spree he might even be of the opinion that the market is undervalued.

frog - mind giving out some examples?

David Swenson outlines some guidelines in his book "Unconventional Success" I do not have the book on hand but you might want to check that out.

Moore_Capital - Did you watch Gartmen this morning? He predicted gold going down to $1,450. I wonder if you try to profit from these moves or just hold on to your position and buy in dips?

Oddball - Yes I do have your blog bookmarked, it is one of the favorites. I agree with what your saying. I see very few net-net's out there that are really compelling and usually these are very complex, which is probably why they exist. I've only ever invest in 1, and looked at 40-50! It seems to me in order to really build a portfolio you can't just focus on net-net's anymore unless your comfortable being very concentrated on complex situations and are a very confident analyst.