Liberty

Ok, thanks. I'll give it another chance.

I started reading this one, read maybe 150 pages out of 1300 (ebook pages..) and I can't say I'm enjoying it too much. Has anyone else found it to be slow going in the beginning and not always so well written (they kind of assume - at least so far - that you know who Gupta is, what Galleon is, etc). Does it improve as you go deeper in, or should I just give up because it's all similar to the beginning?

For those who can read french (or use Google Translate): http://www.lesaffaires.com/blogues/bernard-mooney/pourquoi-j-evite-les-ressources-naturelles/573388 This graph basically tells the whole story. It's a commodity composite index of 19 different things: http://www.lesaffaires.com/uploads/images/normal/fa9fe7e8dd8f9eb7b0638345a9588aaf.jpg

I don't know either way. I don't really have an opinion on macro. I just wanted to point out that it's possible for this to be the case. I doubt Pfizer or Oracle will ever have the same margins as retail operations or the steel industry... Lots of mistakes have been made by people who expect things to change too much. But a lot also came from expecting things to be the same (people who grew up with the depression always expected it to continue and the next one to be around the corner, people who grew up with lots of inflation always see inflation around the corner, etc). But I just don't know. I want to be careful not to be too sure either way. There are lots of good arguments either way. For example, have you seen this: http://www.philosophicaleconomics.com/2014/05/profit-margins-dont-matter/

That sounds like "this time is different", heard that a lot around 1999/2000. :) Higher margins always attract competition and when the worker class has less and less real money they buy the cheaper stuff regardless of moats or brands. So in which world should this be sustainable in the long run? "This time it's the same" is just as bad as "this time it's different". Reality is more complex. Some things stay the same, some things change. We have to actually think about which is which to figure it out. So let's think about this: Is it true that the business mix has changed over time? Is it true that there are businesses that have higher margins and that aren't seeing those margins being competed away all the way down (but rather the market gives them a higher multiples, so you might still not make more money by buying them, yet the margins can stay high and this has an effect on the average margin of the index)? Is it possible that automation is increasing profit margins in some industries by reducing the amount of labor needed? I think that with things like software and pharma, margins can stay pretty high, and these things are a bigger part of the stock market than they were, say, 30-40 years ago.

I think common wisdom is that profit margins mean revert, so no. When sometime in the future interest rates and wages go up they will mean revert. Otherwise we get so much wealth transfer from the poor/middle class to the rich that we get revolutions. (And at that point they will mean revert :D) What if the business mix has changed over time to include more high margins stuff (services, software) and less low margin stuff?

Reviving this old thread because I wasn't sure where else to put this: http://www.finextra.com/news/fullstory.aspx?newsitemid=26646

Memory could be failing me, but I think the Google guys tried to sell their technology for $1 million in the early day but were turned down.

http://qz.com/287510/where-in-the-world-you-should-rent-instead-of-buying/

Good job Norm, congrats Packer!

You are a pirate!

http://iextrading.com/insight/stats/ Their volume seems to be going up, so that's good. But for other changes, it could take a while. These things are always very slow, but there are certainly a lot more people aware and thinking of these issues than before (regulators, politicians, voters, investors, etc).

Q: How do you make Sears stock returns from the past 10 years look good? A: You cherry-pick dates! ;)

Thanks, interesting piece, especially in light of what Murray Stahl has been saying about indexation lately.

Even the SHLD thread has spin-offs :P

Hi. If I can ask, how do you think about valuation, especially for MA? For MasterCard and Visa I think more in qualitative terms wrt valuation. They are a very strong duopoly, essentially they receive a royalty on worldwide digital commerce, or act as a tollbooth on worldwide consumption. I don't have the numbers in front of me, but something like 80% of the world's transactions are still cash or check. Those will continue to move to electronic over time, and thus these companies have a long runway of growth. V and MA do not issue cards or extend credit ( unlike AmEx and Discover), they just collect a small piece of each transaction. They generate lots of cash and have been buying back lots of stock. I just think here are great businesses to own for a long time. Thanks, I looked at them a while ago and basically came to the same qualitative conclusions. I was just curious to know if there's a certain FCF multiple or something like that you'd be buying at or under..

Hi. If I can ask, how do you think about valuation, especially for MA?

I swapped my LBTYK for LBTYA when the spread became much narrower than usual. I figured, why not?

http://www.philosophicaleconomics.com/2014/10/how-often-does-the-stock-market-correct/

http://brooklyninvestor.blogspot.ca/2014/10/the-halo-effect.html

On the topic of ROIC, BaseHitInvesting has a great multi-part series on it. The latest post is here: http://basehitinvesting.com/importance-of-roic-part-5-a-glance-at-the-last-42-years-of-wells-fargo/ But if you look back, there's at least 5 in this series, and a couple others looking at Greenblatt's approach and such.

The book Valuation published by McKinsey has interesting stuff on how to think about ROIC and growth. I recommend it, especially the first half. http://www.amazon.com/Valuation-Measuring-Managing-Companies-Edition/dp/0470424656

Tobias Carlisle on buybacks: https://greenbackd.files.wordpress.com/2014/10/the-manual-of-ideas-toby-carlisle-201410.pdf

http://www.philosophicaleconomics.com/2014/10/btc/