Kraven

This book was a good recommendation. It's a quick and easy read and was enjoyable. As an aside, it struck me that if I was a regulator I wouldn't have been too thrilled about how Beal was conducting himself at the bank. He essentially seemed to dedicate most of his waking hours to working on his poker play and even turned a conference room into a poker room. He was then flying in various people to play him and corralled his chief risk officer into playing with him as well (although it was "understood" his duties to the bank would have to be satisfied as well!).

I would say that no one ever arrives. There is always more to learn. When you think you know it all that's when you get your head handed to you. It's like life. When you're 18 you know everything. When you're older, you realize that your 18 year old self was full of crap and you know nothing. Try to learn something every day and get better. That journey never ends. I don't think one can have a goal of beating the market. That's a number you can't control. All you can control is your process and your own thinking. If you put up returns you feel are satisfactory, then you've accomplished something. Of course the meaning of satisfactory may include a look to the market returns, but that's after the fact. To comment on another point made in the thread about looking back at 90 to see if one beat the market, clearly that is tongue in cheek. While determinations of success must encompass longer than a one year period, perhaps even a 3 year period, there has to be some kind of realistic time frame in which to reach the conclusion about whether returns are satisfactory. I would posit that 3-5 years is long enough to make that determination. There has to be a balance between the view of value investing as the hanging of beautiful art in a museum and real life. What good does it do anyone to say on their death bed "well, I guess in the final accounting, I lived a good life, had wonderful children and a beautiful wife . . . and the final numbers are in, and I guess my returns from investing were good after all!"

You fool yourself when you think that way. See it as 50% of your net-worth in call options and then ask yourself if this is a prudent thing to do. 2 full losses after one another will wipe out 75%, after 3 you start from 12.5% of your net-worth again. According to Kelly formula you can be sure to over-bet in most scenarios with this allocation. When you do it with 25% you are closer to the optimal bet, but i am pretty sure that these 100% returns are not achievable that way. 10 stocks diversified over different countries and truly different businesses is safer, because what counts is the permanent loss of your money not the volatility. Would you invest 50% of your net worth in call options? I think we can both agree that a deep in the money call options are much different than out of the money call options. That is a misleading question, a scare-tactic type of question, aimed at people who don't easily understand how options work. That said, would I consider it? I would consider any position in relation to the estimated risk of loss. It sounds like you think a 50% loss is too much - no problem - I agree that is a lot to lose (although everyone who owns stocks un-hedged is currently taking that risk). How about you buy the put strike at a 30% loss? 20% loss? The idea is simple - if you have lots of great ideas and can keep the running estimated value, certainly buy all of them. You likely would have a great result. If you don't have lots of great ideas, in relation to each other, it might be cheaper and less risk to the future value of your portfolio to own just one idea, with a put option that protects the amount you are willing to lose. This conversation isn't for the person trying to make 15% per year. That person might find lots of stocks with 30% estimated upside, buy the basket, and do well over time. Or you might find one or two stocks with 100% estimated upside (50% discount), while all the others now appear much more expensive with 30% estimated upside. Why would you take on the opportunity cost of buying all the other stocks with 30% upside, when you could certainly be wrong on those as well, and they are the riskier stocks? We can choose to hold cash, buy puts, and diversify. Opportunity cost is real - just as real as the money I can lose in worst case scenarios. "Just like a young man coming in for a quickie.... You must feel proud and good. Strong enough to beat the world." - Teddy KGB

Mrholty - thank you for sharing your story. I am surprised that it isn't getting more traction on the board. It should be required reading especially for many of the younger posters who don't realize that sometimes things don't work out the way they should or the way they anticipate. The best laid plans and all that.

If you really want the most basic of books that will explain all the different concepts in a general way (albeit with far too much simplification), you have to go with Value Investing for Dummies. It provides a survey of all the general aspects of value investing and is easy to read and can be read in bite sized pieces from time to time or to cover a specific topic. I've recommended it several times.

Maybe it's my faulty memory, but do I correctly recall you also dislike emoticons? I'm morally opposed to the use of emoticons. For example, whenever I try to post a negative string of numbers that ends in "8" using the format with parentheses, as in (0.7) for negative 7/10th, I get this annoying guy (0.8). Maybe trying to ban the use of emoticons is as quixotic as Munger wanting to ban derivatives, but here goes: "6. Only Giofranchi is allowed to use emoticons." (I think this is reasonable, since we cannot see Gio's hands and arms while he is making his emphatic points. Perhaps Sanjeev can find some emoticons that are based on hand/arm gestures, including the gesto dell'ombrello.) :-X Your memory is quite fine ;), lol, fyi Kraven hates emoticons...Dont know why :) ;) :D ;D >:( :( :o 8) ??? ::) :P :-[ :-\ :-* Emoticons should be subject to the 20 punchcard. If they were, people would think long and hard before using up one of their allotted emoticons.

This was a good post.

With the New Year almost upon us I was wondering what everyone's new year's resolutions are. If you don't have any, here are some suggestions. Feel free to add some of your own. 1. Try to quote someone other than Buffett or Munger. There is a whole world of great investors out there. 2. Stop referring to well known investors by just their first name. For example, Warren, Charlie, Mohnish, Prem, etc. The exception is if you know them personally. 3. When referring to an event or situation that could potentially be negative or volatile, do not add that you will be happy to just sit back with your popcorn and watch. 4. Do not add descriptions of personal actions to your post along the lines of *slaps forehead* or *shrugs*. 5. Try to break the 500 page per day barrier in reading. Everyone is doing the 500 pages these days. See if you can get it up to 550 pages or even 600 pages. These are just a handful off the top of my head. Hopefully they can be of some help to someone.

That's interesting about Fuddruckers. I think over the years they've made their way through various private equity shops, etc. I haven't had it in a long time. I remember when it first came out in the 80's, I believe, it was pretty unique. The food was really good and there would be lines outside the door. One thing that disgusted me though, which thankfully they changed, was that they had the meat processing area right by the front door with clear windows. So as you waited in line you could watch them cutting and processing the meat and putting it through the grinder. I suppose the thought was that you knew it was fresh, but I don't think people really were interested in actually thinking about what they were eating. At some point they changed it to frosted glass and then I think moved it into the back.

Ah, the airing of grievances. The highlight of the celebration. Here's several. 1. If you're part of the seemingly every growing contingent of younger posters still living at home, please don't offer life advice. 2. For newer posters, please don't feel the need to weigh in with your views on every single thread. 3. If you post about how much angst you have with your investments and you don't know if you're investing properly, etc, please don't then 5 minutes later offer advice to someone else who asked an investing question. 4. If you're under, say, 30, please feel free to get rid of the world weary tone like you've seen and done it all. Ah the good old sarcastic holier-than-thou tone, every time I look up for the poster's name it ends up being the same guy. Do you ever contribute anything besides complaining about other people's posts? This board is free to leave if it's such a drag on your life, you know. New around here? Search Kraven's post history. He's crushed the market investing like Schloss. While most around here are doing 20-30% with 10 stocks or leverage Kraven is doing similar numbers with 100+ stocks and 20-30% cash. I don't care for his returns, he literally just whines like a bitch about other people's comments on every post I see him make. He could return 100000% a day he would still be as useless. Maybe it used to be different eons ago, I don't know but the 2kewl4skewl act just derails threads at best. There's a lot to learn on this board from and for members of all skill levels, if he doesn't want to deal with the lower-skilled among us he can stick to VIC, apparently it's all big boys pants there. Lighten up, Francis. Apparently some of the grievances hit a little close to home.

Nothing like the airing of grievances to spice things up a bit. Add a little alcohol and you've got yourself a real celebration.

Ah, the airing of grievances. The highlight of the celebration. Here's several. 1. If you're part of the seemingly every growing contingent of younger posters still living at home, please don't offer life advice. 2. For newer posters, please don't feel the need to weigh in with your views on every single thread. 3. If you post about how much angst you have with your investments and you don't know if you're investing properly, etc, please don't then 5 minutes later offer advice to someone else who asked an investing question. 4. If you're under, say, 30, please feel free to get rid of the world weary tone like you've seen and done it all.

;D Rule 1, don't lose money........... Rule 2, don't forget rule 1. 8) Rule 3, can only be whispered in Becky Quick's or Liz Claman's ear.

Depending on the size of your cash pile and lock up outlook, pretty much any high liquidity instrument (1) will do since interest rates are volatile at the moment. 1. Probably need assets to be interest rate independent, would be nice if inflation independent, and valued in USD. Try BRK if you want higher returns? I specifically pick BRK because Buffett tries to get returns to match IV growth for shareholders. Obviously no guarantees. I wouldn't buy many other stocks as a cash proxy however. Not the best solution but I'm guessing you've heard of the more practical approaches. Are you honestly recommending BRK as a cash proxy? Personally I prefer BRK over cash. When you think about it it's a lot better. Let me list the ways. One, you get to be junior partners to Warren and Charlie. That's priceless. Two, you sleep better than if you just have plain old cash. Three, you get a ticket to the hottest show on the planet and can go and laugh maniacally every time Warren or Charlie say something remotely amusing and hiss anyone who says anything remotely critical. Four, you get to feel superior to anyone who doesn't agree with you. To me, it isn't even close.

Nothing specific. The main point is simply that there will be winners and losers, just like there is any industry, unless one thinks that going forward we will all drive Teslas and ride bikes.