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WarrenWatsa

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    On Starting a Company

    in General Discussion

    Posted

    this is great...watch this from the point it starts (24:45) up to 30:47

     

    a total of 6 minutes

     

     

    he explains how he started his first business while working (took him 10 months and about 25-35 hrs per week)

     

    after 10 months, he quit his job and focused on his new business full-time (at that point he had two clients)

     

    he later sold this business for $1m cash

    Valuation Techniques Help Please

    in General Discussion

    Posted

    And, I believe Buffett is a heavy user of multiples (derived based on his experience)...

     

    I don't know if you are right or wrong about this statement. But is there evidence to back this up? Quotes?

     

    He has spoken in terms of multiples if you follow his writings / quotes.

     

    eg. "I love newspapers and, if their economics make sense, will buy them even when they fall far short of the size threshold we would require for the purchase of, say, a widget company. …At appropriate prices – and that means at a very low multiple of current earnings – we will purchase more papers of the type we like."

     

    At the 2012 shareholder meeting, one analyst asked Buffett how he would value the non-insurance operations. Buffett responded that he would look to buy similar businesses for 9-10 times pre-tax earnings.

    Valuation Techniques Help Please

    in General Discussion

    Posted

    Does anyone believe that Buffett (arguably the greatest investor of all time) does more than back-of-the-envelope calculations when making investment decisions?

     

    He barely knows how to use Excel and rarely touches a computer, so, think long and hard about that.

     

    The complexity of the calculations he uses when making investments are limited.

     

    Either he veers away from overly complicated businesses that he cannot value with his relatively simple methods or he figures out what kind of back-of-the-envelope calculation makes plenty of sense for the business he's considering.

     

    If it takes a Masters or PhD caliber of person / knowledgee to arrive at your valuation, the market will definitely never look at it like you do. Most market participants can't think on those levels and will never be comfortable with your thought process, therefore.

     

    I believe Buffett's purchase of Bank of America, despite the company's complexity, was based significantly on a back-of-the-envelope calculation that made a lot of sense...a la Bruce Berkowitz.

     

    And, I believe Buffett is a heavy user of multiples (derived based on his experience)...Alice Schroeder has said that all Buffett wants to do is make a 10% pretax return on his investment with little risk, for example. In his younger days (when he had less capital to manage), it was probably 15-20% instead of 10%.

    Seth Klarman's recent views

    in General Discussion

    Posted

    Thanks for sharing this.

     

    Great read.

     

    But, but...

     

    I would never look to Klarman for anything macro-related. It's simply not his forte, nor the forte of most value investors, for that matter.

     

    Few, very few investors can do both macro and micro investing well. The latter is much easier while the former requires much different knowledge and methods, IMHO.

    I Worry About "The Shot Heard Around The World"

    in General Discussion

    Posted

    An interesting chart for all the current bears:

     

    http://www.multpl.com/s-p-500-price/

     

    It shows the inflation adjusted S&P and doesn't appear to show overvaluation in real terms.

     

     

    Packer

     

    How can looking at a chart of inflation-adjusted prices alone tell you whether something is cheap or expensive?

     

    A comparison to normalized earnings (or, to be even more conservative, replacement cost) makes a lot more sense.

    What that shows as at the end of 2012 (good bookmark to keep): http://www.smithers.co.uk/images/150313115226.jpg

    Bloomberg Terminal Privacy Breach

    in General Discussion

    Posted

    Just an FYI. Whether a person has logged in or not is not really private info in bloomberg terminals. Any user can find that out. User profiles even used to have phone numbers.

     

    Whether they are logged in while you are logged in is not private. But, when they last logged in is indeed private - as far as I remember.

    Animated GIF of HFT volumes from 2007 through 2012

    in General Discussion

    Posted

    I beg to differ. Daily on-exchange volume isn't that big (and surely an algo can be stopped within a day). Exchanges are extremely transparent, there are circuit breakers, trade cancellations and a lot of regulatory oversight. I think it is extremely unlikely that a bunch of market makers are a "systemic risk". Even the "original" flash crash (which in the end turned out to be a human error) was almost completely negated in two days.

     

    In fact, all HFT firms are essentially in 100% cash at the end of each trading day. They aren't going to cause any six sigma event, let alone a three sigma event, given that they close out their positions very quickly. People forget that the cascading of the Flash Crash occurred due to a lack of liquidity (i.e. HFT disappearing) rather than due to the additional liquidity that HFT thankfully provides

     

    Volume is drying up everyday right now and I sure don't want to see what spreads would look like if HFT were to disappear. Be careful what you wish for. I believe HFT has aided most investors, including value investors, on a net basis.

    Animated GIF of HFT volumes from 2007 through 2012

    in General Discussion

    Posted

    higher volume = higher volatility

    higher volatility = greater opportunity

     

    Volatility is a value investor's friend.

     

    This volatility is not the value investors best friend, this volatility is the type that could derail markets for months of not years and only end in disaster.

     

    I seriously doubt that - please prove it. If it did, though, it would provide tremendous opportunity to those who have a 4-6 year outlook as opposed to what is typical of most market participants. A once in a lifetime opportunity, in fact, for value investors out there - if something was to happen on the order of what you suggest.

     

    As Mr. Buffett has opined: "Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."

    chanos interview

    in General Discussion

    Posted

    How often is Chanos actually correct on his calls?

     

    It seems like when he's correct, he's really correct - but, is otherwise normally wrong. I mean, what has he made a lot of money on recently? His last big score was Enron, no?

     

    Just seems very over-hyped to me, but, maybe I don't know enough.

    JPM

    in General Discussion

    Posted

    Mr. B compares JPM London Whale Scandal to the Salad Oil Scandal:

     

    "...and we made a ton of money on that..."

     

    Says it all, folks.

     

    In my humble opinion, there has been too much discussion in this thread about a controllable problem that will soon pass and not enough discussion on just how fortunate we are to see a stock with the value of JPM trade back down to near $30/share.

    Munger Interview

    in Berkshire Hathaway

    Posted

    There are religions out there that allow minors to be married, 4 wives to one man, a virtue act would be to kill those who do not believe the same religion. Or, in other words, a virtue only applies to those of the same religion, because those who do not follow it are not really "human", or worthy of our moral behavior.

     

    I don't know of any religion like that. If you're implicitly referring to Islam, you clearly don't know much about what it teaches. None of what you wrote is allowed in Islam [yes four wives are theoretically allowed for a man, but, only if certain conditions are met with regard to how much time and resources would be spent with (and given) to each wife].

     

    If you're so gullible or arrogant as to believe that a religion such as the one you describe is in fact practiced by even a small part of the world's population, let alone a quarter of it, then you're either a complete fool or an utter bigot.

    Buffett on Bloomberg TV with Betty Liu on for 2 hours beginning now ...

    in Berkshire Hathaway

    Posted

    Well,...now I have found a video clip from today that is 45 minutes long,... if we might subtract the commercial breaks it might be almost the whole interview. ;D

     

    http://www.bloomberg.com/video/jpmorgan-s-reputation-intact-for-him-buffett-says-Fuvdy1F5SoSqYINXCOMk3A.html

     

     

    yup,.. I just did watch the video a second time,...

     

    the BofA part is at 13:21 min/sec

     

    there he is talking about the BofA book

    and also about the $10 billion

     

    Thanks!

     

    If anyone finds a transcript of the interview, please share it here, as well.

    Did a Value Investor Unwittingly Promote a Penny Stock That Crashed?

    in General Discussion

    Posted

    LOL.  Off with the kid's head then.  Let's take him to the gallows pole.  Yes, he is a guy who posts here.  Lots of people do.  These aren't hallowed grounds we are talking about.  Whatever.  So he made a mistake.  I doubt he was forced to post it or his family would starve, but obviously he wanted the money.  At the end of the day, he disclosed what it was he was doing and people are required to do their own due dilly anyway.  It just doesn't bother me.  The uproar about it though is quite humorous.

     

    I'm not going to judge him just based on this situation.

     

    I had his site in my rss reader for a long time. Used to be a decent one for value investing news. I erased it a while ago as it had become way, way too spammy and promotional. Seems like yet another guy who has found a way to make money off the investment community without actually investing.

     

    +1

     

    I started to see way too many articles about Facebook. And not even about the stock, just articles about the website. It was strange.

     

    Fully agree with this. The site continues to become increasingly spammy and increasingly less useful. Less than maybe 10% of the articles Jacob posts each day are actually worth a glance. It used to be that at least a third would be.

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