BG2008

A $699 Weber grill that will likely last 20 years for the family but also bring a ton of joy and fun for having BBQ with friends and family. It's a lot cheaper to cook at home than eat out in Queens NYC. So, it may wind up saving us money. We've discussing doing meal prep on Sundays by grilling some chicken thighs. I tend to view purchase lately by judging the amount of time saved. Sure I can make a meal at home, but it will take me off course from doing work. If I get Chipotle, it allows me to plow through listening to a conference call etc. I've found that it is more cost effective to pay for the meals. Other discretionary purchases, taking my family out for dinner. It's an Asian communal thing.

Jay Z is known to extract everything he knows from his mentors and then disregard them and move on. He's done it a few times. I've known some talented people like that in the investment business. If you're discussing possibly giving them money to manage, just keep in mind that they may see you as a stepping stone as well. People who have no moral qualms about stealing stuff, forks, plates, etc from fast food joints/restaurants. Stealing is stealing whether it's $5mm or $5 plate from a restaurant. It is not yours. If you're renting a house/apartment to someone and they say they will be back with the deposit. if they don't show, don't give a second chance unless something really extraordinary happened like a car accident. They are already telling how they will be as a tenant, unreliable. A girl who had one asshole boyfriend maybe unlucky. A Girl who has had two asshole boyfriends may or may not have bad luck. A girl who has had three asshole boyfriends or more is actively looking for asshole boyfriends. She's not looking for the nice guy who is going to care and provide for her. People who are so philosophical that they refuse the social norms, such as chipping in $10-20 for a pizza dinner. Because they are so technological progressive and the reason being cash is stupid. Everyone should pay with digital. My view is "F*)* your philosophy, throw in a few bucks and be nice." If you can't be nice, you're likely too Sheldon Cooper for my taste. If your girlfriend/wife cheats once, she'll do it again. I had to explain this concept to a fund manager once. He was involved in a situation where he lied to by CEO once already (assets transfered out of the company). He quoted some book that he read about China. I told him that's the same as your girlfriend cheating on you once. He insisted he won't be wronged again. People post non-stop on Facebook with memes cannot objectively assess a situation. If it's never their fault, never become acquainted with them. If someone has to win every argument, they've got a big ego. If you say "fine, you win. I do not want to argue or fight." and you see the excitement drain from their face. They are not worth your aggravation. The fight and the argument is the glue of your relationship. Unless you want to bath in that toxicity, you're better off ending it. Saying I'm sorry, I messed up, I was wrong, and then correcting their behavior are great traits.

Fatal Risk is good. It's about how AIG went under. It gives good back story to the financial crisis.

OMG...that's like soooo 2016 (in Kim K's voice)

Since no one mentioned this, I thought that "Rich Dad Poor Dad" was a good book even for me in my 20s. Yes, the guy made up stories. Munger said that even bad people can say some really helpful things. The author really stressed the concept of assets and owning them. He goes into the concept of owning your own home and how one can get into trouble thinking you own an asset when you really have a liability.

Is there a way to generate a Tax Lot Report in IB? There is a tax optimizer that shows the tax lots for existing positions. But is there a report generator for tax lots for realized positions? Thanks.

I second people's suggestion that you should write up your best ideas and share it with people. This process is difficult but certainly doable. My suggestions are: 1) Don't do a MBA because it cost a lot of money and it is more to train people for traditional roles 2) If you are young (younger than 35) and do not have a ton of debt or dependents and you are willing to live frugally for a while, you have lots of options 3) I would recommend that you go to some combination of Daily Journal, Berkshire Hathaway, Fairfax, Leucadia, shareholder meetings etc 4) Have 2-4 ideas that are your highest conviction and well research. Even better if you have at least 20-30% of your networth invested in them. 5) Tell people about them in your conversation during these meetings. Like someone else said earlier, good investment ideas are like currency in this business. What it also does is create conversation rather than filler material like "how are you? What's the weather like?" If you can say "X is a good investment, trades at 5x EBITDA for a 10x business, the market cap is 1.5x of EBITDA, natural deleveraging, good CEO, and will be a 3-5 bagger if held for 5 years. Here is the reason why the market is missing the data point. Complete turnover of investor base. etc" The latter is a much more interesting conversation. Make sure you cover the important stuff such as "why is it cheap, what's the rest of the market missing, is it hidden? Wrong investor base?" 5b) It's harder to pitch ideas like Apple, JPM, etc. I think $100mm to $5bn companies are targets where you can actually demonstrate skills. 6) Figure out who you really admire and reach out to them 6b) Go to value investing meetups in Boston and keep in touch with people 7) Keep re-iterating 3-7 and you will likely land something soon

Thanks for the list LC. It's funny how many similarities there are between Italians and Asian families. Both cultures get it when it comes to food. I was going to buy a dozen of roses for my wife and she yelled at me and told me that's a five guy burger and a side of fries there. And she's like 120 pounds. We don't bat an eye for buying $200-300 worth of groceries for the week. The other interesting observation of Asians and Italians is the way we eat. Most of the time, people order their own food and eat off their own plate. Italian and Asian cultures place all the food in the middle of the table and people share it together. The communal element is strong. I wonder how much of that extends to people's personalities and how they behave. Let's not forget the massive amount of shellfish that we eat. My best friend's wife is Italian and we went to their house for Christmas eve fish dinner. It was an awesome experience with octopus salad, lobster tails, crab legs, baked clams. Out of all of that, the baked clams made by the father is the best dish. Btw, Clinton Baking Factory is the best brunch spot in NYC imo. Does it feel weird paying $70-100 for two people to have eggs, pancakes, and coffee? At high level, yes, very weird. But it's worth the 1-2 hour wait.

So what are those 1 and 2 stars that are fighting for their stars?

Some Foodie Instgrammers https://www.instagram.com/theskinnybib/?hl=en https://www.instagram.com/luxeat/?hl=en https://www.instagram.com/davidchang/?hl=en https://www.instagram.com/steveplotnicki/?hl=en https://www.instagram.com/wyahaw/?hl=en https://www.instagram.com/chefjgv/?hl=en

Best restaurant is also situational There are days when you are just craving for a salty fatty bowl of ramen on a cold winter day There are days when you are traveling along the east coast and you just want a bowl of mussels and a lobster roll (foie gras doesn't really cut it) When you want to be dressed up for a special occasion, then yes a 3 Michelin star restaurant experience would be great There's also the evolution of palates, when I was 18, I have woken up and ate a bloody steak for breakfast. Basically red meat was a must for lunches and dinners. As I have gotten older, I appreciate seafood and vegetables much more. I also appreciate what goes into a 3 Michelin star restaurant's preparation much more. When I was 18, I would've said, I still feel hungry after a tasting menu. At my age today, I would note on how the chef prepared the fish. Each plate and each bite is the result of a chef's creativity and their execution. For those of you that want to follow this more There's a Netflix documentary called Foodies. I follow Aiste on Instagram now. BTW, my admiration for TV chefs have gone way down in the last 10 years. Steve Plotnicki has an interesting list for ranking restaurants Andy Hayler has eaten at all the 3 Michelin star restaurants

This might be better use of time than some of the investment (??) threads you know. 8) Yeah, probably true. FWIW I've never been there, but this restaurant in Spain (Asador Etxebarri) where they cook everything on the grill has been on my wish list ever since I read about it. Chef's table on Netflix is great. https://en.wikipedia.org/wiki/Chef%27s_Table There is an uncanny similarity between emerging fund managers and those guys profiled. They are intensely dedicated to their craft. Their restaurants almost failed before they get their 2/3 stars. And the 2-3 star restaurants are probably less profitable than I have originally envisioned. I particularly self identify with Anexandre Couillon (La Amrine in France). Couillon means moron in French (turd according to Google translate). No body cared about his craft for years until a Michelin diner gave him a star. That obscurity lasted 7 years.

You guys are a-holes for having this thread. I'm going to waste so much time on this.

This comment needs to be highlighted. For all of those that thinks buy vs rent is simply a number/financial decision, it's not. This especially applies when the decision involves your SO and your kids.

Hey! At least we aren't Gary, Indiana! But ya, agree with what you said and always nice to read your views on real estate. I am definitely biased against nearly any RE-based investment idea. I think local RE conditions have made me jaded on the whole asset class. Rochester is a particularly unique RE market where prices seem to go up 1%-2% annually over almost any 5-year period. Never much more or less. I mentioned Rochester specifically because I stayed with Packer and we drove around. He mentioned that home prices barely moved during his time there. We drove through endless plots of land and it made sense that there are almost zero barrier to entry. Very few markets are like SF, NYC, and London where people want to go to and live there. I worry about concentration risk. With the new tax policy punishing high cost coastal cities, I wonder if I'm better off with Texas, Nevada, and Florida. What's critical today is that so many jobs can be done remotely. Take myself for example, there is no need for me to stay in NYC. I can run a fund in the states like Texas, Nevada, and Florida. The fact that my whole family is here and that fact that you can get soup dumplings at midnight is what's keeping my wife and I here in NYC.

I will share some personal experience. 15 years ago, my best friend and I were both recent college graduates. We both noticed that our parents and family built up wealth by investing in real estate. We do not really understand why, but people who own real estate just seems to be rich or better off. This is 2004. We were both working in the NYC area. Now, let's put things in perspective, interest rate in the US went from teens in the 80s to about 6% during that time. So any real estate buy decision is a genius move in hindsight. In 2004, the US just lowered its interest rate after 9/11. These are important context. It's also important to point out that the US has 30 year fixed rate mortgages. With family help, my friend and I both bought property. He bought on Long Island a suburb of NYC accessible by train. And I bought in Queens, NY a burrough of NYC accessible by subway. Commuting into NYC cost $2 for the subway and $6 for the train. I bought in an ethnic neighborhood with predominant working class immigrants. My friend bought in a middle class neighborhood where people tend to own. His carrying cost, lawn, property tax, misc fix are rather high. $15k total for a single family home with 5-6 rentable bedrooms. My is less than $2k. His renting window is to get six students at a local college to share the rental of his house. My renting window is constant since my building is a 5 minute walk to the subway station. At one point, we both lived in the city. When stuff breaks, he has to go fix it which takes longer. When stuff breaks, I tend to have some handyman who can go in my place. I tend to have family who can help out. I'm a bit more handy than him. The 2008/2009 recession was really the divider between our investments. I had to deal with some issues like theft/robberies of my tenants. Things got stolen and crime went up a bit. By the way, back when we bought. My neighborhood in Queens would be considered kind of "too ethnic" for most people. He bought in our hometown which is a 1/3 Catholic, 1/3 Jewish, 1/3 Protestant. Over the years, I've had 99-100% occupancy. The longer the years go on, the higher the occupancy rates goes. My tenants don't want to move. If they do, I put a For Rent sign up and I get a tenant in there in a few days. My friend has a 4 week leasing window. If he miss out on that, he loses rent for the whole year. His best outcome is if the existing tenants "pass down" the house to new undergraduate or graduate students. He once rented to the dance team at the local college, as single guys in our 20s it was always fun to go repair stuff and chat up with the gals. As married men with kids now, this isn't a perk anymore. New York City really took off after the recession. The suburbs recovered much later. But the issues of not being able to rent so easily drags the value down. He gets stressed out from having to constantly get tenants every couple of years. Also, his tenant base is very unique. Most people don't rent on Long Island. If they do, you find some of the sketchiest people ever. The one that can pay and makes a lot of sense to rent are servers. But they look to party and will literally destroy your house. We had to rent out our family home when we moved into the city. Our house got trashed and I had to act like an asshole to get the 20 year old party animals to move out. After a few years, his house barely appreciated and my building has appreciated by 80% over 10 years. Given that we both bought at the peak of the housing bubble, I think I did much better than he did. What is the takeaway? 1) What is the prospect for rent growth over time? All real estate is local. You need to pay attention to the local dynamics. Is the area getting gentrified? Is there a big corporate client moving their HQ there? HQ2? Is there an emerging art scene? Is your place hidden? Are they building a new train stop? 2) 30 year fixed rate mortgages are awesome. Exploit them if you can. If you can't get them in your country, the decision gets trickier. 3) Long term trends really matter and probably matter more than the discount you get initially. If you feel that a neighborhood is starting to go bad or start to gentrify, those characteristics maybe more important. 4) Cover your mortgage payment. If you can cover it, then the asset becomes a call options (30 year fixed mortgage, does not apply to 5 year trends). The dynamics that I outlined is very different if you live in a non-land constraint area. If there are endless supply of land, then you need to buy at a high cap rate. What appreciates over time is land value, not the interior decoration. The appliances and interior really do depreciate. As yourself, are there more land? Ask yourself, will it cost more money in the future to put up a structure and pay for all the labor and materials? If you live in a city like NYC, Londong, SF, then the answers point you in a specific direction. If you live in Rochester NY, the answer point you in another direction. This is why I hate those rent vs buy calculators. People need to think, how hard is it to rent? Is the area getting better or worse? What kind of financing do I have. If I need to move, can I rent it to someone in 30 days? For the right situation, buying a piece of RE is a "buy it and forget about it" type of investment that compounds in the teens for 10-15 years. Another anecdote, my family are barely getting by in my teens. We took some risk and bought some properties. We're not the Trump family today. But we're doing okay. We collect rent. As we get older, as I look at my friends from college who are highly educated. They moved to the city and never bought property. They still pay rent today. In away, the poor immigrant family now rent property to the college educated middle class. I think you need to reverse engineer why that happened. I suggest looking at your local town/city and see if it's a high quality compounder with ability to increase rent over time or if it's a suburb where everyone will own their property. If you look at your own town/city and try to determine whether it is a high quality company or a low quality company and think in terms of barriers to entry etc. You may find that buying is a good decision as long as you have the staying power to hold onto it for a long time.

As someone who loves seafood, the thought of MCD depleting all the shrimp in the world scares the heck out of me.

Have fun with this attachment guys What was very telling when I analyzed the attached data points is that you can have 10 year CAGRs of -1.4% and -1% in the year ending in 2008/2009 in you own the S&P 500 index with dividend reinvested. The other 10 year CAGR that was negative was the years ending 1938 and 1939 with -2 and -1% 10 year CAGRs. My key takeaway from investing in the S&P 500 index is that when you go out 15 years, the worst CAGR is -0.2% over 15 years and there are some low single digit 15 year CAGRs like 2% in year ending in 1944, 0% in 1943, 4% in 1974, 5% in 1978, between 4 and 5% for the years ending in 2011 and 2015. This was a bit surprising given the preaching of long term holds. I think 10 and 15 years are pretty long and yet the S&P 500 index can produce negative and low single digit returns. What's my take away from this. I think the S&P 500 is not some perfect solution for everyone. In the real world, people have to pay to eat, the IRS, and send their kids to college. So you can't reinvest every single dividend. With the personal expenses and inflation, if you generated -2 to 5% CAGR over a 10 or 15 year period, I think you became a lot poorer. The other take away is that when the S&P hits a hot decade, it can have 10 year CAGRs of 18-19% like the years ending in the 1997-2000. That blows my mind a bit. Historical_SP_500_returns_For_Corner_of_Berkshire_and_Fairfax.xlsx

Rock Pits returns come from the land parcels once they are done mining on them. You won't find that in the ROA. Try using ROA on any REIT. You'll think real estate people are retarded. This is my biggest pet peeves with ppl who overly focus on ROA and ROE. Accounting can be weird for particular industries like RE or companies that are rolling up competitors and have a ton of amortization. Pricing power is volatile? Vulcan Materials increases their unit price in 2009 when their volume got cut in half! I guess sometimes you should just forget about the ROA and look at who's rich and stays rich over time and what they own. I would speculate that there are a lot of 3rd generation "ham sandwich" heir that own rock pits. Do people have other powerful insights from reading that they can share?

I was browsing the reading list and it dawned on me that I owe one of my punchcard investment success to reading Peter Lynch's book. He said that Rock Pits are great businesses because it sells for $10 a ton, but it cost another $10 a ton to ship. So a rock pit owner has tremendous pricing power. He can draw a circle that is roughly 50 miles and no one from outside of that circle can compete with him. He can basically raise his pricing power up to the trucking cost of the competitor bringing rocks into his territory. In short, Rock Pits businesses are either monopolies, duopolies, or oligopolies depending on how many are in a local market. This invaluable concept made so much sense and I was able to absorb it so quickly that it lead me to dig deeper into FRP Holdings Some sell side analyst had valued the rock pits at $25mm based on some DCF with 10% discount rates. I came up with a value that was closer to $200mm. At the time, the market cap of FRP Holdings was only $300mm. So this was a big swing factor in my analysis. FRP Holdings was at one point 80% of my IRA. Are there other concepts like Rock Pits, Mr. Market, Network Effects, etc that are very important yet very readily understood that you have come across either in reading or in business where the light bulb just went on and you're like Holy Crap! Please Share!

Well, at least you have bragging rights, right? Or is it worse to be right but have made almost no money than not to have invested at all..? :-\ Somewhat off-topic, but "having bragging rights" reminds me of this comic about exposure: http://s3.amazonaws.com/theoatmeal-img/comics/exposure/exposure.png This made me feel a little bit better about not having 30 baggers. I've done 2x a few times where I've sized the position at 10, 20, 30%. They really move the needle when they are sized large.

My CHTR thesis is something along the line of: Some business' replacement value is very real and compounds over time. This is typical of businesses that require a lot of blue collar construction labor, materials cost, political zoning, scale, and right-of-way. One way of looking at CHTR is kind using a railroad analogy. No one in their right mind today will go out and build another railroad. It simply can't be done. Railroads has structural advantage over trucks (although self-driving cars may erode or even usurp this advantage) due to lower cost. You can't go through towns etc because they are not the wilderness anymore. They are populated and you can't use eminent domain and get all the politics lined up to build a railroad. My thought is that you can't do that with cable today either. Imagine going to residents and say "I'm going to dig up your roads and bring in all this loud noise etc" to build a competing network" Please give me permission to do it. Also where do you find the labor? Apparently we don't have tough blue collar guys left who knows how to work with their leathery hands. We have a bunch of wimpy millenials these days. They have no efficiency in digging ditches etc. What this all implies is that as time goes on and populations get denser and more buildings get built and the roads gets traveled more, it becomes ever more difficult for people to go out and dig up roads and climb up poles and connect coaxial cables or lay down fiber optics. This is a true case of a replacement cost being real, tangible, and compounding over time. The 5G stuff that could be a threat, if I remember correctly from my "physics of waves" in college. Basically, lower wavelength can't penetrate buildings unlike long radio waves. So you need lots of little antennas and you need lots of power. If you want to build it from scratch, how do you get access to buildings? How do you get permission to mount stuff on buildings, light posts etc? Where do the labor come from? What if YOU ARE the cable company. You have the access point already. You are sending a tech out to repair something already. I think these are overwhelming structural advantages that only compounds over time. This implies price hikes over time. If I learned anything about owning real estate in a land constraint location (NYC) is that if you're able to pass through 3% price increases a year and you leverage your assets the right way, everything else takes care of itself. Rant over.

Is the paint industry really competitive when everyone plays nice? I'm trying to figure out what is it in the structure that allows everyone to play nice? I'm starting to notice that any industry that is heavily consolidated with 3-5 major players where it is hard to bring on new capacity can do quite well over time even if it seems like the industry is competitive. Car rental is heavily consolidated yet they try to under cut each other all the time. Regarding the financials, I simply took a peak year and a bottom year and compared the two. I would beg to differ that painting is not such an expensive product. I would say that it is cheaper relative to knocking down walls and putting in fixtures. But it's still a $500-$2,000 cost to paint a 1,000 sqft space. Where I live, that's really just for the supplies and does not include the labor.

I downloaded 30 year financials on Sherwin Williams from Gurufocus and I was astounded to learn that Sherwin Williams revenue only fell from a peak of $8.0bn in 2007 to $7.1bn in 2009. Given how the housing bubble bursting put a screeching halt to new construction and how most people will probably elect to defer painting their homes in 2008/2009, why did the revenue held up so well? What is it about the paint and coating business that makes it such a good business? The ROA and ROE are just astounding. I know that Sherwin actually pushed through price increases in 2009. Sherwin_Williams_30_Year_Financials.xlsx

It's funny how similar this is to the Japanese acquisition of US RE property at market peaks. History doesn't repeat itself but it often rhymes.