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Everything posted by Kraven

  1. 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!).
  2. 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!"
  3. 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
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. Nothing like the airing of grievances to spice things up a bit. Add a little alcohol and you've got yourself a real celebration.
  11. 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.
  12. ;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.
  13. 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.
  14. 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.
  15. What is interesting to me is the number of posters whose biggest regret is having missed out on the bargains of 2008/9. It was just so obvious they say how cheap things were. Of course hindsight is always 20/20. Things could have turned out differently than they did. BAC, etc could have been nationalized. Other things could have happened. In any case, since it was so obvious that there was extreme value then, I am surprised that more people aren't salivating at oil and gas. Sure, there will be losers, but there will also be many winners. There will be any number of stocks that bought today will be worth multiples in a few years most likely. But wait, you say, it's not obvious which ones those will be. Who knows what will happen with the price of oil. Exactly. But it wasn't any more clear in 2008/9. There were winners with banks and losers. There were winners with leveraged companies and losers. So you have your chance. You want a return of those bargains, you've got them. People say oil and gas is too hard, it belongs in the too hard pile, it's outside of the circle of competence, insert your favorite cliche. Don't forget, the exact same things were said about financials, etc a few years ago. You don't get to pick your crisis. When it comes that's your opportunity. I suspect in a few years when some of these stocks have become 10 baggers and more people will declare how easy it was back in those days to know that. A lot of people will probably decide to start looking into the names then. It's just never easy.
  16. I think the Professor in the Sure Thing said it best - Loosen up . . . Have some fun! Yes, sleep when you feel like it, not when you think you should. Eat food that is bad for you - at least once in a while. Have conversations with people whose clothes are not color coordinated. Make love in a hammock! Life is the ultimate experience, and you have to live it.
  17. You will get a lot of replies to this I'm sure. In advance, I will summarize them for you. "Buy BRK! Let Warren and Charlie do the work for you. I have 99.95% of my portfolio in it (the remaining .05% is split evenly between FFH, MKL and IBM). I sleep great. If the market closed so that only Methuselah was around when it re-opened I would be thrilled. It's going to be $300,000 soon!" "Buy FFH! Let Prem do the work for you. I have 99.95% of my portfolio in it (the remaining .05% is split evenly between BRK, MKL, BBRY and IBM). I sleep great. It's going to compound at 15% a year guaranteed. It's going to be $1,000 soon!" "Buy SHLD! Let Eddie do the work for you. I have 99.95% of my portfolio in it (the remaining .05% is dry powder to buy more when it falls a bit). Eddie is a genius's genius. I sleep great. It's worth about a million billion dollars." "Buy BH! Let Biglari do the work for you. I have 99.95% of my portfolio in it (the remaining .05% is to buy copies of Maxim as soon as they hit the shelf to read while I eat at Steak & Shake). I sleep great. Sardar is a misunderstood genius." "Forget all of those other guys. They don't know what they're talking about. You have to buy something no one knows about like MKL, L or LUK. If you do what everyone else does, you'll get the same results."
  18. I don't think anybody is trying to hate on Pabrai. I have learned a lot from Pabrai as well and he seems like an incredible human being. However, those things are independent of the performance cited in the article. I hope he continues to do well and outperform--but hopefully by more than 1.5% over the next ten years. I've learned nothing from him and he seems like a pretty regular human being to me with good points and bad points, just like all of us. Sometimes we all grow a mustache or do something we think looks good until our wife or a friend tells us it's ridiculous. All gurus are guys sitting in an office (albeit a nice office) making their investment decisions the best they can. Why anyone would attribute some kind of super power to them is beyond me. I will say he was disingenuous in not revealing his performance by stating it's illegal to do so. It is clearly not. If he doesn't want to say it, fine, that's his right. Then just say it's not his policy to do so.
  19. I am not a fine-lady but that sounds pretty dismal to me too. Maybe worth spending a little time today cleaning? Oh, I thought he was saying that the many a fine lady recoiling in horror at the conditions fits his personality so it's ok. So it sounded like this is the kind of thing he looks for.
  20. Are you sure? I thought there would be no tax until you sell. Just like an ordinary stock holding. Or even worse a PFIC. That's a separate level of hell altogether... If this is a PFIC and you're in the US avoid investing in this in a taxable account unless you have a killer accountant, or want to mess with the taxes on this on your own. If this is a PFIC (from some Googling I believe it is) you have to pay taxes on the increase in NCAV over the year regardless of your holding period. For example, if the fund trades at $10 on Jan 1st and $12 Dec 31st you have to pay taxes on the 20% gain even if you purchased at $11. If you purchase at $11 and sell at $10 you still pay taxes even though you lost money. Brokerage fees aren't the issue here, it's the tax classification. For many investors this is stuffed in a trust, or in a fund where the manager/custodian doesn't worry about these issues. For individuals it's a different story. This is why many fund companies list the management company to get around these restrictions. Yes that would be bad, but any type of pass through would be annoying if PSH didn't distribute everything. And I would hesitate to buy this in a retirement account without fully understanding the ERISA restrictions (as I don't). I suggest people read the prospectus ... I read through the prospectus but didn't see any mention of PFIC. If this is indeed incorporated as a PFIC, I would at least expect some mention of that in the prospectus. Weird.... http://pershingsquareholdings.com/media/2014/09/Prospectus-Dated-2-October-2014.pdf So what you are saying is that if this is a PFIC, and someone bought in January and sold in Feburary to another guy. The NAV increased from $10 on Jan 1st to $12 on Dec 31st. Then at year end, both persons are subject to paying that 20% increase in NAV? I was suggesting reading the prospectus for the ERISA stuff. There's nothing in there about U.S. tax treatment because I believe they specifically avoided selling IPO shares to U.S. individuals. Oh... I see. PSH NAV increased a lot this year. Does this mean if I hold it through year end, I have to pay the tax on the NAV increase from Jan 1st to Dec 31st? What if I sell now? I don't know the tax treatment of this investment for U.S. people. That's why I asked! I know nothing about this investment and haven't read through the thread. I just skimmed a couple of the last posts that caught my eye. In general a retirement account would be subject to ERISA for these types of purposes. Typically, it's a representation that you (the investor) must make so if you answer incorrectly you could have contractual or legal issues because of that. But the reason for the rep is that issuers don't want to be subject to the erisa regs. So they want to prevent or limit participation. In terms of a PFIC, Oddball is correct, you do not want any part of that unless you are of sufficient size to have tax and accounting experts dealing with it for you. It isn't an issue for an H&R Block preparer to handle for you. Seems like they don't want US investors anyway. But for all of this, you should double check with someone who knows what they are talking about. I do not and could very well be wrong about it all.
  21. I just liked it better, but think he's generally boring and long winded. He reminds me of writers from the 19th century when people had nothing to do other than read a book that was 3 times longer than it should be and was a combination of story, travel guide, etc. In Business Adventures, the Edsel chapter almost killed me. About 60 pages and nothing happens. Here's the synopsis - it was a crappy car and they didn't research it properly or roll it out properly.
  22. I am apparently in the minority on this one, but I didn't like this book. I liked Go Go Years from him much better. I thought each piece here was long and boring. If they had been cut in half they still would have been long and boring.
  23. You've gotten a lot of good advice here. At the end of the day it's obvious that it comes down to the decisions you and your wife make. No one can make those decisions for you and whatever advice is given is colored by that person's personal experience. But by weighing it all in the aggregate hopefully it helps you reach your own conclusions. Just from reading through the thread it strikes me that the only reason for moving is your career. Your wife's career, family situation, etc seems to all be better where you are. So you need to think about whether it's worth upsetting the existing balance in order to move a notch up yourself when no one else in the family gets anything and in fact may suffer a "loss". That's not to say that it's all about keeping score, that isn't my point. And it would be different if you were the sole breadwinner, but you're not. At the end of the day you want to get to a place where you have no regrets. You want to make the best decisions you can with the information you have in hand. It may turn out to be incorrect, but if you can honestly say you did the best with what you had at the time hopefully that is satisfactory. Try to look deep into yourself and figure out why you want to make this move. We all have ambition, there's nothing wrong with that. But make sure you're doing something for the right reasons - "right" being personal to you and your wife and family. These aren't easy decisions. Good luck.
  24. I looked forward to this book very much. After about 100 pages or so I have put it to the side. It's not often that I wish I hadn't started a book, but this one fits in that category. It's not that it isn't well written - it is. It's that I find the more I learn about Cundill, the less I wish I knew. The books falls into the category of too much information. There's his angst. His angst about women, dating, relationships, marriage, etc. His angst about angst. His dabbling in bad poetry. His observations on art. There's very little about his career or investing here (there is some, but not that much). After reading There's Always Something to Do I really liked him. After reading part of this book I can't stand him. I've never seen someone theoretically traveling on business, but really on vacation more. All I could think about was where did the funds come from. He ran a tiny little fund (to start) into which he put his savings. Yet, he would be gone for weeks on end all over the world. All the time. Between his manic exercise, his skiing, hunting, non stop randiness, etc I have no idea how he got any work done. The stuff about women is the worst. Every story has the evening ending in "romance". Picture a slightly more sophisticated Benny Hill running around chasing women. He's the kind of guy who would have winked and told his buddies it's "skirt chasing" time. Other than that, it's pretty good.
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