prunes

I agree, and would add TV (maybe we should generalize this to entertainment) and cell phone service.

Thought some of you might enjoy http://finemrespice.com/node/128

Selfish Gene is so good.

I thought it might be fun to have a general thread devoted to what we're currently reading, to serve as a complement to the one-off book review threads that we have. This doesn't have to be investing focused. Most recently finished: http://www.blackgate.com/wp-content/uploads/2011/01/rediscovery-of-man.jpg http://cache1.bdcdn.net/assets/images/book/large/9781/8793/9781879384620.jpg Just started: http://upload.wikimedia.org/wikipedia/en/thumb/3/3f/Earth_Abides_1949_small.jpg/200px-Earth_Abides_1949_small.jpg Unexpected Returns was a very illuminating book about market cycles. Recommended.

Alchemy of Finance summarized: investing requires second order thinking ;)

I won't endorse Niederhoffer as an investor. I will however endorse his book Practical Speculation. You guys will have to ignore the slam he makes about Ben Graham ;) Practical Speculation is great though because he stresses the importance of actually testing ideas with empirical evidence. Unfortunately for him, I would guess that the reason he went bust two times is because of his over reliance on historical data and being unprepared for fatter tails than previously observed ala what Taleb warns of.

In the same vein of books unrelated to investing being applied to the field, Victor Niederhoffer made all his employees read Secrets of Professional Turf Betting.

Even if the SEC doesn't force Cohen to shut down the fund, I don't see how SAC isn't finished. What institutional investor can justify leaving its money in a fund with serious corruption charges being levied against it?

I was hoping any current T-Mobile customers in the NYC area could share their experiences. I did the math and would stand to save a good deal of money switching from Verizon. Not getting locked into a two-year contract doesn't hurt either. Based on what I've read, T-Mobile's network is supposed to be pretty decent in NYC, but I'd appreciate hearing your personal experiences.

I'm curious what people's experiences have been like with what I'm going to refer to as "lottery ticket" stocks. Distressed securities with favorable risk/reward profiles but with with a high likelihood of loss of principal, e.g. (shamelessly cribbed from Michael Bigger's blog) PLUG, APP, CRMB, etc. If I had the capital I'd perhaps be interested in buying a basket of these stocks but feel that with how much diversification I'd need to feel comfortable that too much would be eaten up in transaction costs. Instead I adhere to the maxim of not buying a shares in a company unless you'd feel comfortable owning it in its entirety for several years. For those of you that deal in this arena, I'm curious what approach you typically take to position sizing, how well in practice this strategy works out, and so on.

Enjoying this much more than I expected to. My favorite book of his, having previously read Fooled by Randomness and The Black Swan. To put it mildly, Taleb has a tendency to get carried away with his own brilliance. Reading the book, I frequently think of a quote from The Big Lebowski: "You're not wrong, Walter. You're just an asshole." You all might be interested in the following, which Taleb posted to his twitter feed today: https://docs.google.com/file/d/0B_31K_MP92hURjZxTkxUTFZnMVk/edit?pli=1-- "textbook-style Lectures On Fat Tails and (Anti)Fragility"

Anyone know anything about this fund or it's manager Salman Khan (no relation to Khan Academy)?

Off topic but the blog self evident has been doing a great series of pieces on how Bitcoin works https://self-evident.org/?p=982

I don't short but if I did I would look at GME -- business in terminal decline due to digital downloads. Expensive though as the company is FCF positive currently and pays a 4% dividend.

http://marginalrevolution.com/marginalrevolution/2013/02/will-health-insurance-premia-rise-for-young-males.html http://americanactionforum.org/sites/default/files/AAF_Premiums_and_ACA_Survey.pdf For young healthy males, health insurance premiums may rise from an average of $2,000 per year currently to as much as $5,000 as a result of the new health care legislation. (I regard this as a high end number due to the bias of the source.) This is because health insurers can no longer cost discriminate on the basis of gender (child bearing), preexisting conditions, etc. Further, an insurer can't deny coverage. So young healthy men may end up subsidizing the system. But what if you created a health insurer domiciled in say Bermuda, not subject to US laws, that marketed insurance specifically to this segment, perhaps via the Internet? It's not even clear to me that under current law that doing this would be illegal (this would be a question for an attorney). Such a company could then undercut the majors on price and win the segment's market share. Now, I'm obviously hand waving a lot, and I'm typing this on my phone so I can't go into a ton of detail. Personally, I think it would be very difficult to make the above work. Still, I can't help but think about the size of the opportunity and how disruptive it would be if it could be pulled off.

With how many different offerings there are, I'd be interested in any exceptional courses anyone can recommend.

Interesting blog post on China http://ftalphaville.ft.com/blog/2012/09/10/1152171/how-technology-is-killing-the-asian-growth-miracle/

I have a question about the EV/EBITDA ratio. I understand how it allows you to eliminate the effect of leverage on earnings. But doesn't it at the same time ignore the fact that some debts are riskier than other debts? Case in point: assume I have two companies that are completely equal in terms of leverage and earnings except for the magnitude of interest payments and therefore debt coverage. If the first company has an interest free loan, for example, it doesn't really matter what the leverage ratio is (as long as you don't get clobbered by the debt maturity). Compare this to a company with 20% interest payments. Are there similar metrics that attempt to incorporate this subtlety? Edit: I suppose this is to some degree accounted for by the necessity of marking debt to market in calculating EV. Doesn't seem to completely solve the problem to me though.

I frequently read John Hempton's blog and am impressed by how often he identifies dodgy companies. One of his methods is tracking the current business ventures of managements / stock promoters with a known history of unethical behavior. I was wondering whether any of you have any suggestions for developing a process for identifying companies worth digging into further. I spent some time earlier going through FINRA press releases from a few years ago to research what barred brokers are up to now... doesn't seem like the best way to go about it. Any suggestions appreciated.

Where do you find these great charts (this and the one of RIM vs Nintendo)?

In another thread one board member talked about the merits of buying coal companies due to long term contracts in place. How much of a risk is companies walking away from contracts? I think I saw articles about some firms in China doing so. Conversely, I also saw an article in today's FT about Indonesia looking to build coal power plants.

It's not about hitting every pitch, just hitting out of the park the pitches you do swing at...

I play around with the Kelly criterion calculators online sometimes. A minor question I have that I never see addressed is this: Kelly's formula is based on parimutuel odds, but these odds don't translate well to the stock market where situations often aren't binary. That is, if I think a stock is a double and I'm wrong, chances often are that I won't lose all my money. So how do you properly estimate the odds as an input to Kelly's formula in this situation? Maybe someone can work through an example for me. How much would Kelly say to bet if I thought that a stock had 100% upside, 30% downside and I thought I had 75% chance of being correct?

The one simply titled "Natural Gas."

The nat gas discussion was fantastic, thanks for this.