Morgan

I think he's saying that Koreans of all income levels generally value education more than low income American families. Which over two or three generations would make the Koreans quite wealthy, just as you say. I think the whole thing is dominated cultural influence (in other words, the parents). Completely agree. Don't know about the rest of your questions though. If I understand correctly, student loans (at least my students loans) are not forgivable in bankruptcy. Everything else though is pretty true. Everyone has many choices, people just need to live with the consequences of thier actions.

I think he's saying that Koreans of all income levels generally value education more than low income American families. Which over two or three generations would make the Koreans quite wealthy, just as you say.

Congrats on the new job!

Just out of curiosity oddballstocks, and maybe this is a silly question, but how would you go about actually harvesting the timber to sell? Hire a company to do 50 acres? Hire a team, rent the equipment and give it a go? Just thinking about it here - if you can buy land for 1k/acre and the timber is worth 5k/acre(?) and it costs 2-3k/acre(?) to harvest it you could definitely make some nice money. Especially so if you used some leverage.

I wonder about about that sometimes too. When getting loans to buy apartment buildings at 4%-5% thinking about the future where the rates may be 10% or 15% or higher... I mean, it seems crazy to buy more property. The purchase price of the building would need to be significantly lower to keep the financing costs in line. Maybe I'd get edged out of a high rate market, but who knows about others. People can be crazy. To counter that though, I know a guy who way back in the day got a loan for ~20% to develop some property then refinanced when construction was completed. He has been very successful, but he said he hardly slept during construction. Crazy, but doable I guess.

From what I know, he's published four books: 1. Real Estate: A Case Study Approach by William J. Poorvu (Mar 1992) 2. Real Estate Challenge, The: Capitalizing on Change by William J. Poorvu (Dec 22, 1995) 3. The Real Estate Game: The Intelligent Guide To Decisionmaking And Investment by William J. Poorvu and Jeffrey L. Cruikshank (Sep 13, 1999) 4. Creating and Growing Real Estate Wealth: The 4 Stages to a Lifetime of Success by William J. Poorvu (Feb 27, 2008)

Thanks for the list of books Liberty. Also the video was good too. I can see why Gates likes him. Smart guy. Thanks for sharing.

When you say newest one, do you mean "Creating and Growing Real Estate Wealth: The 4 Stages to a Lifetime of Success" from 1999? Or does he have a new book out? I just realized I didn't have one of his books, "The Real Estate Challenge: Capitalizing on Change". Has anyone read it? I just ordered it for a penny. Since this is a general RE thread, has anyone been involved in RE development? It seems to be filled with uncertainty and significant pressure to get space leased or face serious CF problems (you start from 0% occupancy!). The main benefits of developing over buying are that you get exactly what you want where you want it and it's cheaper? Does anyone know what percentage of developments fail compared to buying and managing?

Ah, didn't see the rights offering. Don't follow BH too closely though. Or Cracker Barrell either. Good to know. Thanks wecobrk!

BH has $100m in cash? I just checked their latest 10-q (July 2013) and it says $22.358m in cash and equivalents. Have I been looking in the wrong place all this time? I was unaware of the special dividend though, where did you find that info? Thanks!

What is Biglari's angle here? He owns ~6.3% or has ~$1.5m invested in CAW. BH has $23m in cash and equivalents and $131m in investments. How will a double, triple or even a quadruple in CAW move the needle at BH? This doesn't really seem like a good use of time for Biglari. Is he simply chasing sales? Add another $50m in sales to boost his ego? As arrogant as he can be, he's too smart for that. The products the company sells seem to be low quality with poor ad/packaging designs, silly (although usually descriptive) names and almost a gimmick of a product (Mood Magic - "color changing lipstick works with women's body chemistry to create the perfect shade"). It would make more sense, I think, if Biglari wanted to buy the company, revamp the product line over the next few years and focus on creating global brands for the long haul. This might be a cheap way to get into that business. Surely he could seriously boost the margins in the meantime for the company. Proctor and Gamble, Colgate-Palmolive and Johnson & Johnson have ~10%-13% margins. If Biglari could get CAW to half of that, say 6%, CAW's NI would go up ~6x from ~500k to ~$3m. That seems like it might be interesting to Biglari. Especially if he thinks he can grow sales 10x-20x in the next 5-10 years. It could be a nice company to own.

After writing this, maybe this should go into the Investment Ideas board... LEGO is a cool company. Despite being privately held they release financial reports (2012 AR attached), which seems odd to me (anyone know why? For the LEGO foundation maybe?). Just looking at some of the stats for the last five years shows they have a solid business. Ratios (%) 2012 2011 2010 2009 2008 Gross margin 71.1 70.5 72.4 70.3 66.8 Operating margin 34.0 30.2 31.1 24.9 22.0 Net profit margin 24.0 22.2 23.2 18.9 14.2 ROE 66.7 66.8 84.8 82.3 72.2 ROIC 140.2 133.4 161.2 139.5 101.8 LEGO has a few competitors that do blocks. Mega Brands, CoCo and Best-Lock Construction Toys. LEGO has sued all of them and only won against CoCo. Maybe that's why they been expanding into more branded lines (Star Wars, Harry Potter, etc) rather than their own designs. Other relatively similar building toy competitors are K'nex, Erector, and those marble track toys. They're pretty different than LEGO, but are still fun toys for kids. I know my friends and I all had some of them, but overwhelmingly we had LEGOs. From what I know about playing with LEGOs as a kid (the other brands weren't as good) and looking at the current line up of big name products, they seem to have a solid hold on this market. I wonder how long it will last? Big margins and high returns will attract other entrants. What is LEGOs defense? A combination of patents/lawsuits and licensing deals with the hottest new brands? This seems to have worked on CoCo, but not with Mega Brands or Best-Lock Construction Toys. In 100 years I would be very surprised if kids no longer played with LEGOs. Also, I'd be surprised if LEGO doesn't grow hugely all over the world. What do you guys think of LEGOs? I wonder if Buffett would buy this company for the next hundred years?

If you're really going to sell the place in two months don't rent it. Clean it and do some minimal work to make it more appealing. If you think it might take six months to sell, consider it... only if you are really in need of the money. Bad tenants can do a huge amount of damage very quickly. I've heard stories from other landlords about tenants who were doing a rent-to-own deal, and they stole the siding off the building, ripped all the roofing off because they were going to replace it and never did. Not to mention pet damage, plumbing problems, etc. In general I don't let tenants do any updates, painting, anything... who knows what they'll do...

+1 on Ragnar

Poorvu is the "po" in Baupost from what I read a long while back. I think a few families gave Klarman ~27m to manage after he graduated undergrad. He must have been simply amazing to be given that back then. Granted it wasn't a typical 2 and 20 setup like it nowadays. I think he earned a 35k salary and eventually they sold him the company. As for RE, read all of Poorvu's books. They're great and cheap too. Another interesting and old one (1969) is "How to Get Rich in Real Estate" by Robert Kent. This book is about getting 2-6 unit buildings and how to deal with tenants to some extent. It's a cheap book and a fast read. Basically if you're on here you probably have a value bent, know how to do some decent analysis and can figure out how much you're likely to earn from a building. Take that and see what your returns will be compared to how much cash you have to spend to buy it. If you use creative financing (leverage) you can get into more buildings more quickly and thus increase your FCFs pretty quickly. To be honest, arranging the financing is the easiest bit. Dealing with tenants and doing maintenance is far more time consuming than financing. Read "How to Win Friends and Influence People" by Dale Carnegie. Good book regardless which industry you're in. Also get some books from the hardware store on home repair, plumbing, electrical, basic building concepts, etc. Watch youtube videos on specific stuff. In general, get good tenants, be nice to them, fix problems quickly and properly. Don't half ass things. Do it right the first time and you'll probably do pretty well. If you're looking for info on REIT's I'm not the person to talk to. Never really looked into them.

How do small companies structure their deals to use, within reason, as little cash as possible? Something like a LBO? Some other option? Can you point me to small companies (1-2MM rev or less) that have grown to at least a decent size (100MM rev or bigger), where there is good detail from the early days? That way I can try to understand their thought process and financial picture and how they obtained funding for growth. Thank you for any advice in advance!

Visa/MasterCard seem very inflation proof. They must maintain their network though. Real estate is generally good too. Collecting generally increasing rents. Not as good if there is deflation and there is still a big mortgage attached to the property. I don't have any numbers, but I bet equipment and car rental companies are quite inflation proof. Does anyone have numbers offhand?

Well, I'm just a young guy with no Wall St. experience, but I'll say she is probably a very intelligent person considering she works at GS and has a CFA. Perhaps not, but probably. That said, she operating in a system that has incentivized her to write anything to help sell products. Her incentives are aligned with her employers other business operations. Also, if anyone gives her or GS trouble they can say it is her opinion, not fact. Look at incentives, opinion vs. fact and always do your own research. You probably know that though. ;D But yea, kinda silly sometimes lol

Was anybody able to find a copy of the case study by Thomas DeLong mentioned in the article? I searched briefly and didn't find anything.

I don't know if there will be a major conflict by 2025 that has huge human costs. But it does seem likely that wars will be fought significantly differently than they have been in the past. Going forward, there will almost certainly be a shift to unmanned human controlled fighting machines as well as almost completely AI forces. As this shift happens, it will likely be a war not simply about the number of human bodies, but of economies. Whoever can build and maintain the largest and best drone/AI military force will dominate. Another option, assuming there isn't a radical change to a drone/AI military, is nuclear wars. If it comes to that, hopefully only one nuclear weapon will be launched and whomever is attacked will not retaliate with nuclear weapons. That is is almost certainly the best option for human kind. We absolutely do not need a nuclear war. Lets say though, that the attacked do retaliate and it grows into a global nuclear war. It's likely that the largest cities would be attacked (with nukes anyways). 35 million people, I think, could easily be killed with todays modern nuclear weapons. An attack and a retaliation - two nukes - on any of the top ten metropolitan centers would definitely do 35 million people in. 175 million people would require a significantly larger war, but probably could happen. A long, drawn-out, world war could probably do it. I hope it doesn't happen though, but I can imagine it. Hopefully violence in the world will continue to decline as suggested in Steven Pinker's book The Better Angles of Our Nature, but he also states that it may not continue it's decline. Nor does it seem that humans will collectively decide to abandon violence and wars in the next 12 years.

I'm not sure if this has been posted on here yet - it was just put on YouTube a few days ago. How the Tesla Model S is Made: I know nothing about manufacturing so maybe this is mostly common stuff, but I found the video to be absolutely stunning. And the robots are extremely capable. It's so cool to see how it all goes together. Literally from coils of aluminium to a Tesla. Amazing. I really would love to own a Tesla.

But the ROE must be terrible right? I assume the ROE was pretty decent. I don't know the details of his purchases, but it was probably financed conventionally (20% down) and he didn't blow up. So he had decent leverage combined with good operations so he probably made decent money in the early years and now that his mortgages are paid off, his profits are very high. He has done well on these investments.

It can be a high margin business. I know a guy who has owned some properties forever and has 70%+ net profit margins because he no longer pays a mortgage on them. That being said, I know another guy who developed a big apartment complex that didn't work out and he went bankrupt and the property sold for ~38% what it cost to build 5 years prior. It goes both ways. Be sure to have a margin of safety.

Could you post that report here? Or PM it to me? I'd love to read it over.

Where did you get that data? I'm not saying you're wrong. I'm just curious. It'd be cool if you had some big trove of data on the industry. ;D