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txitxo

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Everything posted by txitxo

  1. Exactly, uccmal. I fully agree with you. What happens if the CAPE goes to 100? Passive investing tells you to keep putting *all* your savings into those crazily expensive stocks. People think that buying the SPY is as safe and worry-free as buying houses a decade ago or tulips in Amsterdam. We all know how that ends.
  2. txitxo

    Brexit

    As a Norwegian minister once put it, “if you want to run Europe, you must be in Europe. If you want to be run by Europe, feel free to join Norway.” http://www.economist.com/news/briefing/21693568-david-cameron-will-struggle-win-referendum-britains-eu-membership-if-he-loses
  3. 51.6%, in euros. Most of my portfolio was in European small caps, which did very well.
  4. 32% YTD. ~40 stocks, mostly European, also a few Aussie ones.
  5. ...we have quite an urgent scientific problem they may be able to give us a hand with... Cheers, Txitxo
  6. Paramés may still take a while to open a new shop. They are looking to buy an existing investment firm so that they do have to go through the lengthy process of registering a new one in Spain. http://vozpopuli.com/fondos/58023-los-socios-de-parames-en-bestinver-crean-advalor-embrion-de-su-futura-gestora-en-espana
  7. How many scientists do you know personally? I know plenty of young scientists, and disagree with you completely. You’re creating an exaggerated caricature here. Sagan wasn’t a brilliant scientist either. Some of this is just an increase in specialization, not “Aspergers” or anything else. That’s not to say that your caricature doesn’t or can’t exist, as it certainly does. But the politics involved in being a scientist do not lend themselves well to the kind of people you describe, either. I think there are waves of focus in particular sub-fields, then counter waves where people bring together scientists in different fields to collaborate and work together. That’s just how it goes. Well, I've worked about 20 years as a scientist (h=47), I am married to a scientist and practically all my friends are scientists. In fact my children were astonished when they learnt that some grown-ups do not have a PhD. People were complaining about specialisation 50 years ago. It is not a new phenomenon. What is new to me is that, generally speaking, the young people coming in (and there are of course some exceptions) do not seem so bright as the people who got into science a few decades ago. It is not so difficult to see. Just sit them side by side at a conference dinner and float different conversation topics. For example you will see very few well-read postdocs (and I am not talking about Stalin's 500 pages/day quota which is often mentioned around here). I don't think it is so difficult to understand. People with high IQs are also affected by incentives. In the sixties, a household with two Professors at a top university were upper middle class. Now they won't make it into the top 1%. Look at the houses old professors bought when they got tenure and compare them with what young assistant professors are buying now. So you tend---and remember I am saying "tend"--to get smart people who are dysfunctional and would not fit in a corporate environment, or absolute fanatics, who live science as a cult, I know of a guy who abandoned his pregnant wife because it thought it may hurt their career. Which, in the best case scenario would end up with him working 60hrs/week and earning 150$/year. Politics in science is very amateurish. The kingdom of the blind. Although some of the older folks are really good.
  8. The jobs being eliminated are those of people with low to average IQ, and no redeeming graces like people skills or iron-clad honesty. That population group is fast becoming unemployable in developed economies and most of them will have to live on welfare. Automatisation is also putting strong pressure on the middle. Salaries are shrinking there. Of course the counterpart is that very high IQ, creative people never had it so good at making a living. This is being felt in academia. The best scientists used to be people with well-rounded intelligences, very good at research but with plenty of other intellectual abilities. It was obvious they could have succeeded in many other fields apart from science. Think, for instance, of Carl Sagan. What you see arriving now, more and more often, are terminal Aspergers with a zealot's mindframe (you have to be highly ideologized to resist the call of the "dark side"). It is quite revealing that the new Cosmos had to be done by a guy who is very good at science outreach, but who is not a brilliant scientist. There are very few people left with a whole brain. You could have many of the discussions in this forum (about books, history, etc.) with scientists in the 60's, people who have plenty of interests. It is almost impossible to have them with postdocs or young assistant professors. Don't get me wrong, they are very smart and good at what they do. But most of them have not read a book outside of their particular scientific area in their entire lives. That produces tunnel-vision and solidifies paradigms. Many of those people won't recognise the next scientific revolution even if chews off their asses. The younger ones are even worse. So the future of research may resemble old Rome, a long stagnation because the best minds were building bridges and aqueducts, not doing "philosophy". I think that trying to make money from the worsening conditions of low classes is very bad karma. Don't go there or a flower pot will fall on your head. Or at least it should. But a sure bet, although on the long-term side, is looking for companies which maintain a core of very well-paid, "blue sky" basic researchers. It has always been difficult to make money from that, but with the dwindling competition from academia it will be become easier in the future.
  9. Well, I don't follow their strategies exactly, I don't know how an ETF will do, specially if it starts getting big. Most of the most interesting companies I find have relatively small volumes. But it is a very interesting compendium of what works and what doesn't. You can use their results to build you own screens or to modify existing ones. They look in detail at the MF performance, and I love their study of Graham's very simple, p/e<10, debt/equity < 50% strategy: "Graham's simple strategy sounds almost too good to be true. Sure, this approach worked in the 50 years prior to 1976, but how has it performed in the age of the personal computer and the Internet, where computing power is a commodity, and access to comprehensive financial information is as close as the browser? We decided to find out. Like Graham, we used a price-to-earnings ratio cutoff of 10, and we included only stocks with a debt-to-equity ratio of less than 50 percent. We also apply his trading rules, selling a stock if it returned 50 percent or had been held in the portfolio for two years[...]Graham's strategy turns $100 invested on January 1, 1976, into $36,354 by December 31, 2011, which represents an average yearly compound rate of return of 17.80 percent—outperforming even Graham's estimate of approximately 15 percent per year " In their approach they "clean" their investable universe by eliminating questionable stocks (bad accrauls, Z score, beneish score, etc) It is a little hard for a small investor like me for replicate as it requires a sophisticated database and a ton of programming to trim the universe. I strongly recommend that you only use value-based screens. If you play long enough with the data, you will find some weird combination that worked in the past but will disappear as soon as you try it. Value investing has worked for 80 years. So pick your parameters. You still have to do your due diligence, make sure than the numbers in the screener are correct, that they are truly representative, that there is nothing fishy about the company or management which doesn't show up in the numbers. Buy at least 30 stocks per year as high in the list as you can, keep the winners for 1Y+1 day (so you pay long term tax rates) and sell the losers at 1Y-1day (short term tax loss). You should easily beat the index (unless you investing 100M)
  10. Well, I don't follow their strategies exactly, I don't know how an ETF will do, specially if it starts getting big. Most of the most interesting companies I find have relatively small volumes. But it is a very interesting compendium of what works and what doesn't. You can use their results to build you own screens or to modify existing ones. They look in detail at the MF performance, and I love their study of Graham's very simple, p/e<10, debt/equity < 50% strategy: "Graham's simple strategy sounds almost too good to be true. Sure, this approach worked in the 50 years prior to 1976, but how has it performed in the age of the personal computer and the Internet, where computing power is a commodity, and access to comprehensive financial information is as close as the browser? We decided to find out. Like Graham, we used a price-to-earnings ratio cutoff of 10, and we included only stocks with a debt-to-equity ratio of less than 50 percent. We also apply his trading rules, selling a stock if it returned 50 percent or had been held in the portfolio for two years[...]Graham's strategy turns $100 invested on January 1, 1976, into $36,354 by December 31, 2011, which represents an average yearly compound rate of return of 17.80 percent—outperforming even Graham's estimate of approximately 15 percent per year "
  11. Well, the median household income of Chinese americans is about 30% higher than the US average. So maybe not all regions in China will reach 20k. But the average will certainly get there. India is more complex and diverse, but come on, Indians are the top earning ethnic group in the US, it is a country with world class brains and a very inexpensive workforce. With the right changes it would explode economically. It reminds me a bit of Russia in the 2nd half of the XIX-th century. It had similar ingredients, and underwent massive spurts of growth after every round of reforms. My point is, you are going to have 2-3 billion people doubling or tripling their GDP per capita with respect to the rich countries in the next 20 years. In a sense, those 200M in the rich regions of China are just the tip of the iceberg. The changes won't be lineal, they won't be smooth, but they are unstoppable. I see them as the safest bet for the next two decades.
  12. 1. "Probability Theory: The Logic of Science", by E. Jaynes. A jewel of a book. A bit heavy on math, though, have a look at it before you buy it. 2. "The Misbehaviour of Markets." by Mandelbrot. It makes you lose all respect for the current paradigm in Economics. Cauchy distributions are much nastier than widened Gaussians. 3. "Fooled by randomness", N. Taleb. Not for his investing advice, but because he makes you think about the application of the ideas in 1 and 2 to real world situations. I think this is the best of Taleb's books. 4. "The intelligent investor", B. Graham. If only for the Mr. Market analogy, crucial psychological help to endure the vagaries of stock prices. 5. "Quantitative value investing", Gray & Carlisle. Best recent reference on mechanical investing.
  13. The safest bet are probably natural resources. China, India and Latin America have about 3.2B people, three times more than Europe and the US put together. The average GDP/person of China and Latam is about 9000$, India has 4000$. If, in the next 20 years, these countries get close to, let's say, typical Southern/Eastern Europe GDP/person, 20,000-25,000$ (and I don't see any reason why they shouldn't), they will need to spend a tremendous amount in infrastructure. The china-induced boom we have seen during the last 10 years has only been the beginning. So regardless of what happens in the short term (China's credit problems, etc.), 20 years from now prices for iron ore, oil, gas, etc. must be much higher than they are now. This is such a clear conclusion that I don't see what could change it, not even a major catastrophe, like a war in East Asia. So, if I had to buy something now, and leave it there for 20 years without touching it, I would get a basket of companies with lots of stuff in the ground, which are reasonably well run (honest management is essential) and which are undergoing short term problems. Even if the CEOs are not geniuses, the tailwinds will lift them much higher in the next two decades. One such company I like is Corridor Resources (although it has more than doubled since I bought it). If Altius were to remain an independent company, that probably would be another good option. More speculative stocks are Mobius Resources or Petrobank (now Touchstone). I have also been looking at companies with oil in places undergoing turmoil, like Yemen (Calvalley Petroleum). The cheapest mining company in the world is RAND mining. But I don't think they pass the honest management test. Of course it is much easier to make 20% a year "trading". But some people seem to consider that as sinful as going to a steakhouse during Lent.
  14. And now, Americans cannot use these rockets anymore because of Russian sanctions... http://rt.com/news/158680-russia-usa-rocket-gps/
  15. I don't think it will go anywhere, even if the Russian troops cross the border in force. The French are selling *warships* to the Russians http://www.bloomberg.com/news/2014-05-12/france-rejects-blocking-mistral-warship-sale-to-russia.html and the US industrial-military complex is fighting tooth and nail to keep using Russian rocket engines: http://www.bloomberg.com/news/2014-05-08/boeing-lockheed-wins-end-to-ban-on-buying-russian-rocket-engines.html. Sanctions are just a big farce. The Ukrainians are on their own.
  16. Russian authorities have been trying to suppress "mat" for centuries, with very little success. http://en.wikipedia.org/wiki/Mat_(Russian_profanity)
  17. This is war, in all but name. Kiev is in a catch-22. To recover the Eastern Ukrainian cities, they need a full scale military operation, with tanks, helicopters. The pro-russian forces have military training (advantages of universal conscription) and heavy assistance from Russian spetznaz. Even if they could be expelled militarily (which is doubtful) it would mean many civilian casualties and justify a Russian invasion. But if the Kiev government keeps muddling through, they will lose more cities and eventually risk a coup from the right-wing radicals, what given their pro-nazi history would also trigger a Russian invasion. So far the US sanctions are mosquito bites, what Putin really fears are sanctions from the EU, i.e. Germany. He has a very good connection with Merkel, they both shared many years in Eastern Germany, Putin is fluent in German, Merkel is fluent in Russian. All German business leaders and even retired politicians as Schroeder or Kohl are heavily invested in good relationships with Russia, EU sanctions would harm the EU (specially Germany) as much as they would harm Russia, so it seems that Putin is just making sure his case is defensible in front of the German public opinion if he has to cross the border. All the Ukrainian army units in fighting condition seem to be concentrated around Slaviansk (instead of defending Kiev), and they would be easily cut off by Russian forces coming south from Kharkov and north from Crimea. Militarily, it would be a walk in the park for Russia.
  18. I am long PBG, also 20% up so far. I think it is still quite cheap, but most people will not touch it because of the THAI stigma. There is a small thread here: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/pbg-to-petrobank/msg139888/#msg139888
  19. Sure. But this is not a discussion about good and evil. There is an overwhelming scientific consensus that global warming exists and it is likely caused by human activities. For an intelligent, rational person, which is the probability that the whole climate science community is wrong on this issue? What kind of solid, comparable evidence do people have against their point of view? Think about it as a bet, and take into account the corresponding outcomes. Even if one does not absolutely believe 100% in the conclusions of the climatologists, the odds are such that it makes investing sense to spend a few % of the world's GDP to avert or a least slow down a possible catastrophe.
  20. Well, I do not expect to find many bigots here, regardless of their position about global warming. Bigotry harms investing returns. But according to the Merriam-Webster dictionary, a bigot is "a person who strongly and unfairly dislikes other people, ideas, etc.". The irrationality and the hatred displayed by most global warming denialists squarely fits into that definition.
  21. Thanks. Most of the deniers are just bigots, anti-evolution, anti-science in general, motivated by right wing ideology. So they are not high on intellectual honesty. But it is legitimate to point at problems with the modelling, as long as they have an empirical or racional basis. For instance some of the problems that rukawa mentions above are real issues. But every theory has them, and they don't outweight all the evidence pointing on the opposite direction. If someone could built a solid model which explained global warming without resorting to CO2 emissions, he or she would receive a deluge of grant money and resources, may be not from public sources (because other climate scientists control that spigot), but certainly from many private foundations. Mainstream climate scientists can not be so dumb when nobody has managed to do so in a meaningful way. And there are many people trying every day.
  22. I have a special place in my heart for QM skeptics like Bohm, Jaynes and John Bell. I am another Jaynes fan. He wrote the best book ever on probability. All investors who can handle the math should read it. The scientific consensus on climate change is crystal clear: science says that the Earth is warming because of man-made CO2 emissions. Nothing to argue about there. So I would frame the discussion in different terms: Which are the odds that the climate science community is wrong? Looking at how science works in general, it is very unlikely that they have screwed up so badly. It is true that after WWII, there have been a few cases in which a scientific area has been proven embarrassingly wrong. One of the best recent examples is the Clovis-only paradigm. Nutrition will probably be next. But it happens quite rarely, and usually in softish sciences. One of the best (and funniest) ways of making your bones as a scientist is proving that all those old professors don't know squat about something important. Of course they fight back like ailing dictators, and will deny grants, positions, recognition, etc. to dissenters; the incentive system favours conformity. But nobody would become a scientist if they cared about incentives, so there is always a significant fraction of the community plotting against mainstream doctrine. That continuous fight is the reason why science gets it right most of the time. I agree that the evidence is not so compelling as the one we have for evolution, let alone QM. For instance, if you look at the historical record, at least in Europe, we've had climate changes not so different in amplitude to the ones we are going through now without any CO2 increases. However, the current warming does coincide with a spectacular rise of the CO2 concentration. So yes, climate scientists are comparing apples to melons, correlation is not causation, etc. But absent certainty, one has to bet on who is right, and climate scientists look by far like the best option.
  23. How have people on this thread been faring lately? My EU portfolio has been doing very well in 2014, 19.6% YTD, getting close to 70% up in the last 15 months. Things like Mondo TV or Montupet just went crazy lately. But I am starting to have trouble finding cheap, solid stocks to buy in Europe. Most of the best opportunities in reasonable CAPE countries seem to be now in Australia and Singapur.
  24. And so it begins... http://www.zerohedge.com/news/2014-04-07/crimea-20-donetsk-activists-declare-kiev-independence-announce-peoples-republic-done
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