merkhet

Along the same lines, http://www.farnamstreetblog.com/2015/04/ray-dalio-not-knowing/

Isn't the defining characteristic here how good your a priori discriminating works? If you can do so, then you should. If you cannot, then take the Carlisle method.

It looks like most of the home builders have actually run up through multiple expansion such that even if we were to increase our housing construction, it would not necessarily make for the best way to participate as an investor. It's beginning to look like residential housing related stocks (like USG) or maybe even in regional banks would be a better way to invest in this.

Shane Parrish has some very nice things to say about this book as well. It's on my list to read. http://www.farnamstreetblog.com/2014/02/kathryn-schulz-being-wrong/

I'd exercise some caution here. In 2009, investing in net-nets was likely shooting fish in a barrel. Over time, the healthier fish have probably jumped out of the barrel this far into a bull market.

Google kept metrics on brian teasers. They stopped using them because they found no correlation to workplace performance and solving stupid riddles that have nothing to do with your career. Nice to know that Google puts its money where its mouth is when it comes to A-B testing. :)

Yes, I go to the court to get my updates. It's only about a mile from my apartment. Not much movement at all.

lol, yup -- ya got me! Here's my view on why Cooper wants the depositions to occur prior to the privilege fight, and, concomitantly, why the government wants to wait until afterwards. Imagine you're a former government official, such as DeMarco, and you're called to show up at a deposition. Opposing counsel is basically going to try and push you to the point of perjury (much like the Starr case) and you'll have to ask yourself whether you're willing to risk flirting with perjury on the possibility that privilege gets lifted later down the line. Of course, you could sit back and say that you're not going to answer any questions, but then that provides Cooper with the ammunition to go back to Sweeney and say that lifting the privilege on those documents is the only way to get at the truth. It's rather shrewd.

Here's my brief update from the status conference: (1) Apparently, some crazy person mass faxed everyone at the Court of Claims a few days ago. Seriously, there are some nutty folks out there. Sweeney called in the U.S. Marshals to investigate. (2) The disagreement between the government and Cooper seems to be on the timing of the depositions. The government would like to wait until after the document production is finished AND they've settled all the issues with the privileged documents. Cooper wants to be able to depose the witnesses immediately after the document production with the ability to come back to those witnesses if he is able to successfully challenge the privilege on various documents. Sweeney basically said to wait until the document production is finished, and we'll go from there. (3) The government has stated that document production will be finished by the end of April with the final privilege log done by the end of May. If Cooper needs more time for the depositions, Sweeney will grant an extension to the end of June deadline.

Best of luck with that. Many of my relatives said the same thing about China's housing market... (multiple bids, etc.)

I struggle with this too. Recently, I've been a bit more open to paying for experiences -- but even then, I try to go about it in a value investor way -- went to Europe a few weeks ago because the dollar is strong. :)

Luck be a lady tonight... Since I'll be back in DC by then, I'll report back what I hear.

This should be interesting. Sadly, I'm traveling this week. Anyone else willing to take notes?

Mephistopheles is being sarcastic. I was just playing along ;D Damn, hoodwinked, lol.

Mephistopheles is being sarcastic.

Not necessarily. See http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D=HOUST

Doesn't have to be homebuilders -- though I'm sure there's a few that are better capital allocators than others -- for instance USG would be another possible place to look.

Is Bill Miller still around and running money? The real estate market got really hot when people didn't have to do this. ;) On the origination side, credit is getting tighter because nobody with a brain wants to make subprime loans (QM rules, reps and warranties, dramatic increases in the cost of servicing delinquent loans, etc.). On the inventory side, foreclosures are finally working their way through the system. --- Here's my opinion of the management of homebuilding stocks: The best - NVR Above average - TOL, LEN (especially the B shares) Average - Pulte Below average - KBH, AV Homes Bad - HOV Really bad - CHCI A year or two ago, it was easy to figure out the quality of the companies by simply looking at the return on assets. Thanks for the list. I'll take a look. I previously looked at Brookfield Residential Properties, but its been a while -- I suspect they're probably above average.

If the domestic (U.S.) economic growth continues for a few years, housing might come back in a pretty big way -- once people are able to save up for down payments, etc. Anyone have domestic homebuilders or residential housing related stocks that they particularly like?

Yea, it's a pretty bad piece -- the author has no sense of second-order thinking.

Respectfully disagree. Best BBQ in the country is rightfully The SaltLick (or maybe Frankie's) -- both in Austin. http://www.saltlickbbq.com/categories/Sauce,-Salsa,-and-Dry-Rub/

Oh, I actually agree with you, Nate. I didn't meant that all you do is wait for something good to happen to you. Merely that you try and stay alive so that whatever it is you do has a chance to work. I'd also say that a lot of startup fund managers who raise a lot of money without a track record do so because of "pedigree." Tiger Cubs, former Managing Directors of Goldman Sachs, etc. The struggling managers with great returns are probably a result of a lack of effective marketing, but I'm not sure that I'd lump the "pedigree" people with effective marketing -- to me that's more like having gone to Andover or Exeter so that you have a bunch of rich friends -- some marketing was required to get them into the fund, but a large part of it was just being in the "right place" -- if that makes sense.

Spot on, AltCDore. I basicaly tell people to start early, raise as much money as you can, try to stay alive for as long as possible and maybe something good will happen to you. It's no different than any other startup.

My not so short summary on one response to a student question: "How to gather capital base when you are just starting out in the investment business" Guy: Life is hard, you need lots of luck and things to line up... Mohnish: Guy, you are totally wrong. It is actually very easy (class laughter). Let me show you. (To the student) What will your salary be when you graduate? Student: huh.. (class broke out in laughter). Mohnish: OK OK, what is the median salary of a Stanford MBA Professor: 150K Mohnish: Is 150K good enough for you? Student: No, not really. Why are you asking me this hard question and putting me on the spot? Mohnish: Well, you asked the hard question and we need to resolve this now (more laughter). How about 200K? Student: Getting there but not quite Mohnish: How about 300K? Student: Closer but not there yet Mohnish: 350K? Student: OK, I'll take that but need to take off 50% for taxes (He was wrong here, the marginal tax rate is 50% - effective tax rate won't be 50%, but whatever). Mohnish: OK, so you'll end with 175K a year. What will be your living expenses? (Student again squeamish, class in laughter). OK, let's say you live on 100K. Don't spend one more penny than that. Forget the BMWs. Who needs that? That anyway won't make you happy. What makes you happy is another class altogether and we won't go there yet. (I am thinking to myself the student is thinking Mohnish is nuts - all these MBA grads joined Stanford they will be living this fancy life with the BMWs and Teslas). The remaining 75K you just save. Max out your company matching 401K, IRA, Roth IRA and whatever other vehicle you have. Put it all in an index fund. How old are you? Student: 27 Mohnish: Do it till you are 37. How much do you expect to make at 37? Student: $2 - $5 million? (I am thinking wtf. This guy really has his head in the sand). Mohnish: Great. At that point, I let you raise your lifestyle to 200K a year (class laughter). Also, I recommend that you marry up (more laughter). . Your life expectancy is about 50 - 60 years more. If you just do this, you can't help but get super wealthy. Guy: If you compound at 15%, you double every 5 years. If you compound at 11%, you compound every 7 years. Let's say you compound at 11% Mohnish: Guy, can you do the math and tell me how much "capital" (emphasis his) our student here will have gathered (more laughter) Student: No offense, I get the point but that is not the question. I have already taken up so much time, but let me clarify my question (I am thinking this guy is really over his head. The class is super large and there are so many people waiting to get their questions answered). You are assuming I go get another job and save up money like you are saying to invest on the side. But how does one go about into the investment business full-time and gather capital? Mohnish: Very easy. You have a brokerage account? Student: No (wow - this guy does not have a brokerage account, but he has all these ambitious goals. This is what a Stanford MBA does to you? Gives you an entitlement mentality?) Mohnish: TODAY I want you to start an account. Go to www.tdameritrade.com and open an account (more laughter as he spells out the URL). Put it whatever money you have. $10,000, $100,000.. $1,000 whatever. Don't buy groceries from this account and start investing this money. 1.5 years later when you graduate, you will have a track record. Then you approach three kinds of people - Friends, Family and Fools. (very loud laughter). All three should be willing to hand you their hard earned dollars if you have a decent track record and you have this great Stanford MBA grad certificate. Let me give you one more secret from Guy and me. Investing doesn't really take that much time. I suggest you also get a day job. It's free money, take it. Believe me, that's what you want to do. You will have three things going - your day job, your savings, and the investing on the side. Student: OK, I get the point, let's move on to the next question. Mohnish: Have I resolved your concern? .. It showed to me that MBA doesn't really give you wisdom or even prepare you as an investor. In fact, it is quite easy to fall trap into an entitlement mentality. Basis tenets of being frugal can go such a long way that sometimes sophisticated MBA students don't get it. This was super fun imho. Sounds like this particular individual is "special" on a number of levels, but the entitlement mentality is not limited to Stanford MBAs. I've fielded a number of calls from classmates from business school (and random people who find me on the Internet) who seemed utterly convinced that I knew a secret phrase to say to people to raise large amounts of capital (if one exists, which I doubt, I surely don't have it), and that I was merely holding out on them -- maybe if they kept me talking long enough, it would spill out.

I've noticed that AMEX has been running more of those celebrity ads recently. Probably a direct result of Costco'd decision.