oddballstocks

1) Sure 2) Teach me marketing - All of these guys became wealthy from raising money and being asset managers. They aren't wealthy from working a 9-5 and investing their savings. They are all out there talking their book, raising money and earning fees. Performance is secondary, they make fees in all markets. The 'gurus' are gurus because they market themselves like crazy, not because they're better. There are unknown investors with great track records who are wondering when they'll be discovered. The gurus have let the world know about themselves. This is why they're gurus, they understand the power of a brand and marketing.

1st and 2nd edition of Security Analysis. I believe the 2nd edition is a much better chapter, it's refined and has better examples.

The CFA texts are great for simplifying DCF calculations. I don't remember if it's L1 or L2. The question is do you need to do a DCF to arrive at a value? I remember cranking out all sorts of DCF valuations on companies and arriving at very precise values that could have been wildly off due to a change in one or two variables. There was a Morningstar book that was great for understanding valuation. It's probably 10 years old now, but it's an easier read. It's the Five Rules for Successful Stock Investing by Pat Dorsey.

+100

I'm not entirely sure why it matters? In 'home' markets the market can value these properly. It's only the weird tax system in the US for investors who decide to buy a foreign stock. I know Fidelity allows you to buy ETF's on the Japanese exchanges. These are all PFIC's, as expected. But it doesn't matter. Japanese investors, in Japan are buying them in the normal course of business. It'd be like asking if some obscure tax in some other country has an effect on US stocks. It's not likely. The ONLY case where I can see that this matters is for cash rich American companies that listed on the AIM 2006 and 2007 during that boom.

Didn't listen, but Doug's a great guy. Have had drinks with him a few times to talk investments. I love talking to people who came into investing via a different path in life, seems like there is some richness there that career investors don't have.

I wouldn't describe his activism as "low key". He has deep pockets, expensive lawyers, and uses both. Search a legal database and you'll find out a lot more about him.

I'd invest in BRK, FFH, Liberties. 8) How I would do valuation? Yeah, that's a problem, isn't it? Here I assume that nobody has filings, so secondary sources (Google, M*, Bloomberg, CoBF posters) are not available either. Without filings you don't even know sales, income (FCF), book value. So, perhaps you still can buy BRK, FFH, Liberties based on past history of "good corporate performance". Perhaps you can buy GOOGL/MSFT on moat or growth. But you may be hugely overpaying (or underpaying). Still, if no info existed, I'd guess people would buy based on past history and rough estimates (how many piano tuners are in Manhattan? 8) ). Some people do that even now. 8) I have done this, it's challenging but you can find things. You can find out a lot about a company with some creative searching and inquiries. You can figure out sales, you can figure out growth, and then estimate margins. I've done this with private and public companies. Filings are a red herring, they focus investors on the wrong things. If you started with a blank slate and were given a company and asked "would you invest?" The questions and how you'd find the answers are different than what's in the filings. By the time you decided whether you wanted to invest the financials would be useful, but they wouldn't make or break the deal. It's easy to be blinded because you have easily accessible numbers in front of you. You can make assumptions based on the numbers and project your own reality from the numbers. But that isn't reality. Sometimes there are millions of moving parts, and investors get caught up trying to figure out all of the loose ends. I came to a conclusion years ago that I'd like to stick to investments where there was a single or double fulcrum point. That is the investment hinged on the answer to a single question, or two questions. If a company is at 50% of book value it might be: is it worth 100%, and is it going out of business? If I can say yes to the first and no to the second then I buy. Does it matter if they're selling Persian rugs out of a semi, or selling telecom equipment..nope. Boiling things down to a few easy to answer questions reduces the potential for errors. Successful investing isn't finding winners, it's eliminating losers. You will stumble onto winners, but a few losers will torpedo any hope of outperformance. Most of my holdings are small companies. I read most of the annual reports. But there is a lot of boilerplate I skim or skip. When looking at a new investment I look for a few known areas of landmines before committing to reading something cover to cover. Cover to cover is the biggest waste of time if you don't know if landmines exist. I'd rather skip to known bad areas before reading 45 pages to discover it. But then again I'm not trying to read 500 pgs a day. I guess if I were then I'd mindlessly read from start to finish as well.

So in Canada there are all these pathways to $80-100k careers. Plus benefits of course. So many options to get to those numbers. There are quite a few options to push that out to $150k if you excel in your field as well. All without capital risk or other business risks, just an investment in a career. Meanwhile, when you look at owner earnings on businesses so many fail to consistently exceed that $80-100k level even with you managing the company. That is the main problem I see in Canada. You are generally better off to go the career route unless you are willing to own multiple small businesses or do exceptionally well. Yes, I know there are exceptions of course but these seem to be the average numbers for businesses. Not sure how that compares to the US. This is so fascinating to me, it completes part of the puzzle of something I'd seen while there, but couldn't put a finger on. When visiting over the past few years I had this sense, or feeling like I was in the US in the 1980s or 1990s. People all still dress nice for work, it seemed most everyone had a nice office job. It was this blast from the past. But it was more then that. I think your comment hits it. Most Canadians have a safe income, or a higher safe income from a company. They're medium or larger companies that provide this. Because of this you have a very homogenous work environment, similar to what we had in the past in the US with more bigger companies. Now in the US it seems we support more of a hustler mentality. Even downtown the only people in suits are lawyers and bankers. Places are filled most hours by people supporting themselves a variety of ways. From working at home to stringing together jobs etc. The freelance/entrepreneurial culture is strong, and not just in the Bay Area. I hired some guys to put up a new fence for me. This was a lower class guy who had a crew of neighbors and family working for him. He did the fence cheap, he worked his own hours. Sometimes they'd arrive at 8am, other days at noon. Some times they'd disappear for two hours to get coffee. The guy pulled together jobs and did alright for himself. I have a neighbor on my street that does something similar. There seems to be a lot of diversity in working situations here. A lot of people working for themselves, or working in small groups. I know my dad went from working for a company to just doing consulting on his own for a few years and now he's back with a company. The go on your own route is popular. Same with side gigs, I know a ton of people who do stuff on the side to make a few extra bucks. I'd wager that 20-25% or more of the work force has a side gig. Of those I'd say 90%+ are hoping the side gig turns into something real. We're friends with a doctor and his dentist wife, they were growing shrimp in their basement for a while. These are people making deep into the six figures each, and in their basement they had invested tens of thousands building a pool to grow fresh gulf shrimp in the north. I asked him if the shrimp business took off what would he do, he said he'd quit being a doctor and run the shrimp thing. Another doctor who's a neighbor runs a pool cleaning business on the side. It's really like entrepreneurism is baked into our culture. From your comment it seems that isn't the case in Canada. People make really good money working for someone else and there's no motivation to do something on the side. In the US it seems everyone has some moon shot project they're brewing up. My sense from reading is that China is similar, the Chinese are doing the same things we do, and I'm guessing the outcome will be the same eventually.

BG2008 hit on an interesting point. The ease of doing business in the US. I've heard it said that the biggest place for shell companies is the US...we are the world's greatest tax shelter. Setting up a business is easy here, it requires nothing. You just take money and file as a sole proprietor on your taxes. As long as you give the gov their cut they don't really care what you do. Creating an S-Corp with a legal shield is $100, an LLC similar. That's it, a few hundred dollars, some papers and you're on your way. I had naively assumed this was true worldwide, but it isn't. It's hard to start a business in other countries. I've talked to Canadian investors who are shocked that you don't need to do anything to start a hedge fund in the US. You just create a corporation for the fund, create the partner and you're on your way. If your only client is your fund you don't need to register in any state either. It's harder to start a RIA compared to a fund, but even then it's only a few grand in fees. A guy off the street can be managing millions with just a few forms, that's all.

The human condition. Almost all humans look at themselves in the mirror each morning and think "I look good" yet that's not what everyone else thinks.. this is culture agnostic

Have two Toyotas right now. There are parts to fix, but no catastrophic failures like blowing a head gasket at 100k miles (every GM I've owned). Things wear out, radiators, drive belts. But we push our vehicles very hard too, towing, rough roads etc. They hold up well and just keep working. I take our vehicles to a local mechanic. He said he doesn't recommend people do more than cursory repairs at 150k for GM/Ford, and 100k for Chrysler. He said he'll do major stuff on Toyotas and Hondas to 250k or more. With them as long as they aren't rusting out they'll continue to work forever.

Fascinating thread. This is how these always go, everyone outside the US is blown away that it's costly to retire in the US. US people are freaking out. My parents are retirement age. My dad gets medicare, he's had cancer, hip replacements etc. The guy was athletic, had state records, went to college for free on athletic scholarships etc. He was the ideal of healthy. He ran when I was younger, my mom purchased natural foods at a really off the wall place in the 1980s, we weren't allowed to eat sugar etc. Guess what...time caught up to him. He "retired" for five years. My mom continued to work for health care and finally my dad just got another job. He enjoys doing something, but medicare doesn't cover enough either. Is this typical? I don't know, but anecdotally it is. Every single retired person in my family complains about one thing, the cost of medicare and what it doesn't cover. I know relatives who just nurse injuries forever to avoid paying the doctor. As I said I come from a family of athletes (both my family and my wife's family), people who were healthy and in shape. They were really the model of health, coaches for teams, worked out daily, ate right, but time and age caught up. When you're young you think you're invincible, it's a myth. Even the health can have freak things happen. My doctor said I'm a model of health, every blood test is perfect, heart is perfect, I run 5-6 miles a day. I ran 12 miles today, I eat well. In September I had a stroke, no damage, but still had it. Freaky event. Literally one second I'm perfectly fine, and the next I'm having trouble writing my name and talking. Time and chance happen to us all. Being healthy doesn't protect you from random things like that. Of course there are a ton of really lucky people. Maybe Liberty and MMM are like that. They'll just sail through life without an issue. One of my best friends is like that, no one in their family went to the doctor last year. He's lucky, pure luck, but that's how life works. I've said this in other threads, but people glorify retirement too much. At times I've had terrible jobs and I wanted to retire. I wanted to save as much as I could and get out. The thing is it was the job and terrible circumstances. I work from home now. I see my kids all the time. I can go running at lunch. In the summer if it's nice I might knock off at 2pm and swim with the kids or go to the zoo. I enjoy what I do and I have flexibility. I can also work at 11pm at night after I have a great idea. When I was in some bad jobs I'd dread doing anything a minute past 5pm. Now when I think about it I can see myself working forever. I'd hate to be like my retired neighbors. Like the guy who's out picking up leaves by hand mid-February because he's bored out of his skull. I enjoy challenges and the projects I'm doing. Maybe as I get older I'll slow down, that's fine, but I don't know if I ever want to stop. I enjoy sitting at the beach, but while I'm there I'm furiously taking notes because during the down time my mind is working 200mph. To retire now I'd need a few million dollars, plus money for health care. I've received quotes for health care and it's about $450/person/month. I have a family of six, so $2,700/mo forever. That's $32k per year, and at a 4% withdrawal rate I'd need just under a million to fund it. Except health care increases 15-30% a year, so in reality I'd need $2-3m to protect against future increases. All in maybe I'd need $5-6m to retire today? Of course if I lived in Canada I'd just need $2m or so. Maybe even less in Europe. I live in the East, it's a lot more costly than the Midwest, but not NYC prices. The math on all of this is insane. Except if you keep working. I told my dad if he were to make $20k doing something part time that's like having $500k saved. This is how most retirees do it, they keep doing something, anything part time. For most people in the US making $50k, the median salary it works like this. You work until you're in your mid-60s. You maybe save $30-50k max. You earn $30k from SSN and then work a part time job for another $15k for about $45k total. SSN is taxed less so it's about the same. The part time job is something to do and eventually trickles as they get older. And when they're older they aren't doing as much and can get by on the $30k from SSN. My gut says most retirees don't have their houses paid off. Stats I've seen say about 25-30% of homes nationwide are paid off. To whomever posted earlier about the financial advisor. I remember that post very clearly as well. It was excellent. He said most retire with less than $500k in their 60s or late 60s and do just fine.

Ah, the enlightened European attitude once you realize what a mess we have here. The US in many ways is like a start-up country that hacked a bunch of crap together and got things rolling. We grew and scaled and became huge but suddenly all of the pieces hacked together are showing they aren't sustainable. We're trying to become sustainable.. I've had a similar experience with DTEJD1997. I had a house we purchased for $117k in 2005, it had an assessed value of $80k. So far so good. About eight years after moving in we received a letter in the mail, sudden reassessment to $140k, our property taxes almost doubled. I went to a hearing. It was a Kafkaesque experience. I went to some senior center and sat in a holding room. I waited for 45m and finally asked "when is it my turn?" it turns out they had my name wrong. No worries, someone would fix it. I get in there and I sat at a table with some gov worker. They listened then said "we can't actually do anything, we're just accepting your forms." But since they were missing my name I had to go to a different table where someone entered information in on a typewriter. Is it any surprise that they again lost my forms and my appeal was denied? It wasn't denied because my logic was wrong, probably just all of the record keeping errors. We sucked it up and paid the higher taxes and then a few years later sold the house for almost $20k over the assessed value. The value was probably 'fair', but it was also unfair. In Allegheny County (county Pittsburgh, PA is in) they haven't had an assessment since 2002. This means there are $450k houses built on farm land that are paying the assessed value of their property from 2002, so a value of $15-20k. Other PA counties are even worse. There's one north of us that's very popular for low taxes, their last assessment with approved values was in the 1960s. Taxes are low because people are paying on 1960s values, it's insane. I doubt this system is ever fixed because if it was there'd be such massive upheaval that citizens would form to fight it. So we have the status-quo.

I really don't know what the advice is now. I learned to code in the 90s before the web was popular. I learned C and C++ out of the gate. But this was also a time when we had 10 hours of dial-up free internet access per month from AT&T and never even used half of it. If I needed to hire someone right now (and I don't, but maybe will in 6mo-1yr) I'd hire a junior web dev first. Someone who knew Angular and could handle C#. Someone who could fix bugs and build features on existing code, but isn't doing greenfield development. The web stuff is unfathomable for me. But I've moved on from the web dev role, I do some of our systems/data work, but mostly marketing and sales. I understand tech, can sell tech, but when it gets into the weeds I rely on my partner who is the tech person.

Enterprise or what? I guess the question is "are you interested in making money or just playing?" If it's just playing then forget enterprise. If you want to make money learn enterprise level stuff. The money is in B2B. People hesitate to spend $2 on the App Store. But a business will drop $100k without thinking. I've done the full gamut, from PHP/ASP to Java, to JavaScript to C#, I originally learned C then C++. We've moved our business to C# with an Angular front-end. It's high performing and scalable. C# is the best compiled language I've ever worked in. Our data was too large for interpreted languages. We had jobs that would grind away for 45m that are done in less than 1m in C#. We have a typical data warehouse, star schema and all. So data comes in and is then processed. Jobs run over it, aggregate it, create derivatives etc then stick it into the star scheme. The data is never updated, never. Any updates are a new row with an audit record. This means the UI is only reading, never writing or needing to wait for any processing. Obviously user interactions are read/write, but the underlying data is essentially read only. Any computing happens before the user sees it. This provides a fast user experience and also gives us the ability to have a point in time DB. A point in time DB is extremely valuable. In terms of trading etc. I've never built a trading robot. We did some real time strategies with our Bloomberg app for a while. It used their C# library to get real time market data and build strategies out of it. I had built about 25 different strategies that refreshed near instantaneously with their API. I tried to replicate the same thing with an interpreted language outside of the Bloomberg app and it was too slow. It only took about 15s to render, but to a user it seemed like an eternity sitting there waiting. I'm not sure of Bloomberg's API is accessible via Python. I know they support C#, Java, and C++. If you want to build market strategies I'd pay up and buy access to the direct exchange feed. I know Bloomberg offers this, you get the direct feed. My guess is IB delays it, or sells the feed. Better to buy direct. But the key as everyone has mentioned is latency. But that only matters if you're trying to execute instant trades and arbitrage little opportunities. We had some strategies that didn't require instant execution. You could execute as a human if you wanted. Let me take a short trip down distributed memory lane. Years ago I worked on the application the military generals used to coordinate battlefield movements in Iraq, it's called CPOF (it's public now, you can Google it.) The challenge was the app was a real time story board that was constantly being updated from multiple locations around the country. The locations were linked via satellite, but could have a delay of up to a few minutes. This was problematic because troops could have been moved to location A and a different command post might not see the update for minutes. This meant that an airstrike could be called on A that would look clear, but in reality troops were moved there during this delay. To compensate there was an extremely complicated underlying system that ensured everything was sync'ed to avoid friendly fire issues, but also provide up to date perspectives. It was an awesome project to work on, I believe it's still being developed and in use. What's interesting about it is the underlying architecture was built by MayaViz with the intent on being used for trading and exchanges. The finance business never took off, but the military application did. Eventually MayaViz was bought out by General Dynamics.

IB offers an API so that implies it is web requests. So the JAVA, C++, Python question might be moot because the bottleneck will always be the network. Figuring you were wondering about speed/efficiency? Network latency will always be several magnitudes slower than running local machine latency. That is why those High Frequency traders have their data centers as close to the exchange as possible. This kinda misses the point. I think DooDiligence was asking what language the program was coding in. Last I checked IB offers support for all of those and a few other languages. Yet, network latency matters, but processing time also matters. There's a magnitude of difference in trying to run analytics on a dataset with Python vs C# or Java. When the datasets get large enough an interpreted language might not be fast enough to make a determination of what to do in enough time.

In a world that is overtly political correct, the observation about the Patels is one of the more interesting observations I've read lately. My family grew up in the Chinese take out business. If any other ethnicity tried to come in, they would get killed. Even within the Chinese community, I would imagine that 90% of the Chinese take out in the US is run by people from FuJien province in China. There are so many interesting dynamics and levers to the story that it would probably require multiple posts. I have mentioned this before. In NYC, you don't ever want to compete against the Koreans on a mid price lunch spot. They have such an efficient systems that sells everything from ramen to salads to sandwiches that anyone else just gets killed. This is partially why Cosi can't turn a profit. My wife has commented how you never want to buy a dry cleaner or a restaurant from a Korean family. If they can't make it work, no one else can. It kind of ties into you never want to buy a regional mall from David Simon of Simon properties. If Simon can't make it work, don't try. The Korean restaurants tend to operate 24 hours a day. The amount of food that they serve relative to the price is insane along with the 10 complimentary kimchi dishes that they give you. I never want to take over an operation from a Korean family. Years ago, I was on the sell side for a portfolio of 50-60 gas stations. I was talking to the MD and he was explaining that a private equity buyer can hold onto core positions and sell the non-core assets via one-off to Indian families. The Indian families will pay $1mm each and have the parents as well as all the children running it and it can generate $250k in EBITDA a year. It's just amazing how certain ethnicity develop expertise in certain sub-sectors that no other ethnicity can compete against them. This isn't to say that these businesses are great. They often involve a willingness of the business owners to work an absurd amount of hours so that no other ethnicity dare compete in the same space. Please retell the take out stories, who cares if it takes multiple posts. This is the gold of this message board. Awesome stories. There are 'moats' in the real sense of the word in commodity businesses. The moat is when there are skills and efficiencies passed down through families. If you are an outsider you can never learn this information, only those in the family can know. What's fascinating about this is the knowledge doesn't escape. I think it's because people know that if it does their advantage is gone. What strikes me about this is "the system", the idea that there is an optimal way to run a business and these ethnic groups discover them. There's a broader lesson here that strikes me as well. The idea that there might be business secrets we learn and that we can preserve by passing them onto children. I've been thinking about this a lot, what secrets or edges I have that I can let me kids in on and no one else. It's a fascinating concept.

Extremely simplified but in theory yes. In reality no. There are a TON of ice cream shops near us, some thrive and others last a few years and go out of business. In business theory these are all the exact same right? They all sell soft serve, their locations are all on the same road. So why do some last and others don't? It's subtle things, like customer service etc. Restaurants are hard, food is a tough sell. You can do well selling alcohol. A neighbor took over the family restaurant. It's a standard type place, dining room, bar, and rental hall. He amped sales by bringing in a ton of craft beer and pumping bar sales. The place went from an old timers place to being hip. You make money on some of the meals. The killer for any of these businesses are employees. That's what kills this guy. He'll hire someone and they'll last a few months, get bored and quit. The costs to train an employee are high, and customer service suffers with constant turnover. You will usually have steady bartenders, but wait staff turns a lot. The same is true for ice cream shops, ice cream especially. Most places hire a bunch of young high school girls during the summer. They are only there for a season. Each season you're trying to re-train for service with an entirely new staff. Ice cream is a really interesting thing, the barriers to entry are low. Yet just buying a soft serve machine and hanging a shingle out on a main road isn't enough to be successful. From afar maybe that's all it takes. But from afar everything looks easy. The devil is always in the details.

There's a lot of love for the concentrated value investing philosophy, which is great if it works well. But if it doesn't you're in his shoes. If you only own a few stocks you look like a genius as they're going up. But as this thread shows the love is lost if you have losses.

I know someone who wrote a script to evaluate this. The correlation between number of posts and returns is almost 1 to 1. The more posts the worse the return. Your best bet is to just look at ideas with zero or a handful of responses. If there is a lot of discussion move on.

contradictory I guess, except it's fairly normal for people in their 30s. A birth isn't even that much, about $3k all-in. We debate taking kids to the doctor because of the cost. Every visit is a $150 hit. The good news is we've started to learn how to diagnose things at home and try home remedies first. No sense in paying a doctor unless you need to. The real scam is if you do anything at a hospital. You'll get a bill for the "hospital facility charge" and then from the doctors, often double. You pay twice. If you have a procedure outside of the hospital it's only one cost.

I was talking to a broker at a happy hour recently. He said 20% of people hit their deductible each year. Over the past three years I've hit the deductible each year. I don't have anything crazy, just four boys with boy type issues (plus a birth). I just look at this like a $7k pay cut, it sucks, but that's what it is...

You bring up an interesting point. It's that of incremental improvement. The current is based on the past, whether the research is flawed or not. And the present is better than the past. So you have to conclude that even if things can't be reproduced exactly that there is enough 'correct' to be pointing in the right direction. Maybe that's what some of this is really about. Now finding that the meaning of life is a precise value such as 42, but rather researching to point in a direction to further explore. I think most articles are looking for '42' rather than a direction. A direction doesn't make a compelling article, but a specific figure does.

I think part of the issue is the incentive to release research that hits headlines. My dad was telling me recently that he's skeptical of climate change because throughout his life there were constantly things being released as science breakthroughs that contradicted. Eggs are good, eggs are bad. The earth is warming, the earth is cooling etc. I disagree, but understand his skepticism. If you're constantly reading the headlines you start to wonder what's really true. I heard a thought provoking podcast a few years ago on research studies. They were discussing how many studies couldn't be reproduced. The researcher and statistician on the show said in many studies there would be more value in seeing what was tried and failed verses what worked. This is because sometimes hundreds or thousands of trials are conducted before they find a success. But knowing what was tried and failed yields valuable information as well. Some of the medical meta-studies are fascinating too. Another issue is the public seems to have more faith in medicine than doctors do themselves. I know some people who believe any medical headline is absolute truth. Yet when I talk to family who are doctors they always state things in much more reserved terms. Someone posted a picture on Twitter recently of the American Heart Association's diet advice from the 1990s. It said people should avoid all fat and instead should have a soda, snack food, or munch on candy. We think we've come so far and are so modern right now. But my guess is in 25 years we'll look back on some of the current advice and think "that really didn't age well at all.."