BG2008

This is awesome. Do you have kids and wife? I love the be dispassionate about the brand and make. If I were a bachelor, I would totally utilize this strategy. Frankly, I can give two sh*t about cars. It gets me from A to B and as long as it's got enough HP to make lane changes safely, steady enough on the highway, and same enough in an accident, I really can care less.

I went into the same Acura dealership today where I've bought/lease cars from the last two times. I spent 20 minutes looking at the model and features that I wanted (frankly wife wanted a specific model and this was really just a formality). Then I went to a sales agent and told him that I've done all my work and I know exactly what I want. Instead of haggling over different things, fees, add-ons, etc. I basically told him that I'll be his easiest transaction. I'm ready to buy. So, let's cut the BS back and forth and just show me the numbers. If the numbers make sense, I'll buy today. I believe this approach cuts through a lot of the "emotional hooks" and haggling back and forth and it tells the sales person that this sale transaction is his "to lose." Just don't F*** up. I've found that the salesperson tends to only add the real fees and tend to give very competitive prices. We also bought in an existing car for an oil change. It turns out that it needs almost $600 worth of services between oil change, new tire, tire rotation, directional fluids, etc. Once the salesperson shows me the numbers. I thought it was very fair and lower than what I had anticipated via research and about $93% of MSRP (may have to do with end of month and quarter as well). Fees were $595 bank fee (apparently non-negotiable) plus $345 DMV (title, registration etc) and upfront taxes. There weren't other destination, regional, advertising, documentation, prep, ADM, Admin, Fuel Charge, Floor Plan or other weird sounding fees. I told them to cover the $600 service charge and I'll sign all the document right then right there. They agreed and I'm in and out of the dealership in about 2 hours with pick up scheduled tomorrow. I think my negotiation tactic is getting me a good price. But I would love to hear how others negotiate. I figure that doing your homework (took me 2 days of researching and build a spreadsheet) and negotiating the right way can literally save you $2-3,000 on a large ticket item purchase. Would love to hear some feedback. Another things that I want to bring up is that it appears that the residual used in the lease calculation has dropped significantly in the last year. I tracked an Edmund's website where a moderator provides people with 36 months residuals for 15, 12, and 10k miles. I believe the moderator has access to the system and provides residual % on a monthly basis. Within the last 12 months, it seems like the residual has gone from 62% to 57-58% for the same mileage. I believe this is due to large volumes of car leases that result in large volumes of 3 year old cars available for purchase when they come off leases. However, the APR has lowered from 4% to 1.9% during this same time frame. http://www.latimes.com/business/autos/la-fi-hy-used-cars-20170526-story.html

Guys, this isn't a pissing contest between the US and Canada. I mostly love both countries with some slight issues (bamboo ceilings etc? Don't know what it is? I don't bother loudly protesting it because I'm busy working). Canada is also a destination for some of the people from my hometown. For some reason, they can't seem to accumulate wealth in Canada. Some context is important here. RB's parents are software developers and engineers. Those are typically middle upper class background and training. Let's be objective. The fact that RB's family emigrated to Canada and they can 1) land jobs and 2) do not need to resort to washing dishes and 3) send a bunch of kids to college and 4) the kid become investment manager means that the Canadian system is working. Now let's analyze what happens when you're a rube rice farmer from China and emigrate to Canada. Some of my friends/relative from China who emigrated to Canada generally cited a few issues. 1) The benefits are so good that it's comparable to minimum starting wages, this creates a lot of incentive to not work. Additional hours really aren't available. This isn't a capitalist assault on social programs. These are feedback from people on the ground who can't seem to "work as much as they want and move up in society". 2) None of them seems to be able to start businesses. Capital doesn't seem to be an issue as there is a robust pool of credit among friends and family from the US. I've just never heard of one of them saying "I'm going to open a Chinese Take Out and I need to borrow $100k" This happened all the time in the US. People needed to borrow money between friends and family to open a restaurant or invest in real estate. Our relatives in Canada just never approached us. Whatever the reason, this is indicative of some sort of either "low expected return on business" or some "high barriers to entry for startup". I think it's good for incumbents, but tough for newcomers. As a aggregate, it likely lead to less wealth creation. 3) Most of my friends and relatives in Canada do not own real estate or businesses. I doubt it is a due to foreigner restrictions. It is more likely they simply did not accumulate enough savings to put a down payment down. 4) Most of them would emigrate to the US if they can. They typically emigrate to the Canada first and then attempt to move to the US since Canada has a more welcoming policy. From the take away, I think that Canada works for the engineer and software designer's family to emigrate. But I don't hear a lot of stories where a rube farmer with a protestant or hardcore Chinese rice farmer work ethic can rise up and achieve upward mobility. Some of the direct verbal feedback are that Canada does not have a lot of these low level entry jobs which probably point to more regulation making it hard for business to hire. The good benefits is often cited as a reason why small business doesn't exist to provide entry level jobs. Now these are on the ground stories, they are not controlled study by the economics departments of some reputable Canadian universities. So you can calibrate the information yourself. Some times I prefer on the ground stories because they convey a true sense of what's working and what's not. Not having to pay an arm and a leg for university is a major plus. I think if you are a 3.9 GPA student and you are going to be the top 5% in your field, it doesn't matter as much to have $100k in student debt in the US. But as an aggregate, Canada likely has an upper hand in this instance.

Some observations in the US 1) There is a general pervading thought that everyone needs to get up and go to work whether you like it or not. This is a striking contrast to Portugal and Madrid where if you walk around at noon, there's literally no one on the street. How do you generate productivity if no one is out about getting lunch in Madrid, the capital city of the US. 2) Most American employees feel ashamed if they are not fully employed. Living at home past a certain age is generally looked upon unfavorably (the Great recession has made this a bit more acceptable). There are cultures else where it is totally okay to live with mama in your 30s. I was reading about this about Italian men in the 1990s. 3) Taxes are high enough to provide social safety net. Unemployment benefits, emergency visits, etc. 4) Structured after school programs in most suburban and rural communities that can cater to kids' interest such as volunteering, athletics, music, etc. The fact that a kid in Cornfield Iowa has exposure to amateur baseball is a big testament to the quality of life here in US. 5) Organized sports - Kids in general learn to work together on a team. Many Asian countries do not have the luxury of playing together on a football or baseball team. These soft skills transfer over to business building or just learning to work as a part of a team as a follower. 6) Taxes aren't so high that there's no longer an incentive to get rich anymore. I think this is a serious issue in many European countries where the benefits are immense. But it takes away people's drive to work hard and improve themselves. If you watch the document about Noma. Chef René Redzepi talk about how it's weird to try to be a 2 Michelin star restaurant in Copenhagen, Denmark. The culture there is for people to be "equal" and "happy". It's a weird to have exceptionalism in a country that values equality so much. Sometimes you forget that there are countries elsewhere where the society as a whole is the equivalent of a giant participation trophy. I don't think ill of Denmark. I would love to visit Copenhagen. These are my observations. I guess Charlie Munger would call them common sense.

Well said Oddball. When I was looking to set up my fund, I was amazed at how little barrier there was. Capital was mainly the issue. But I could've done it cheaper, I ultimately went with a more reputable firm. I am not saying that America is this magical place where people just got wealthy. It's a place where if you pay your price through hardwork and a bit of luck, you can go from "Son of rice farmers to hedge fund manager." Now, I've also spent time at an Ivy League school where 1/3 to 1/2 of my close circle are people with "III" or "IV" in their names and wealth has been passed down for at least 2 generations. Having that kind of head start is immensely helpful. What I find in the US is that Goldman Sachs will hire the perceived highest GPA and most involved student to be their entry level I Banking Associate out of college regardless of whether that candidate was the son of a rice farmer or has "IV" in his name. This is a great equalizer and opportunity for upward mobility. Does the guys with "IV" in his name have an unfair advantage in that he gets an internship as a freshman at his uncle's hedge fund? Absolutely! But the field is still more equal. In terms of people who left in the 90s and regretting it. I think there are two ways of thinking. Those that left could have more than 1 child and if they ran a business and own some property, they can retire in their 50s. A major plus is that the kids tend to grow up working and tend to be a lot more self sufficient. Those that stayed wind up with 1 child and a kid suffering from "little emperor" syndrome which I believe will make China rather uncompetitive going forward. The issue is that you have a higher chance of having children who can't take care of themselves even at 30-40 years old. Again, I think the rice farmers who left did much better. I think the 4.0 GPA college graduate who wind up working in the Chinese take out in the US was a huge waste of human capital. The guys who were doctors who left to work as a delivery guy missed out big. But some scrappy farmers from my hometown did well. Actually some of those scrappy farmers also accumulated a lot of wealth in China by investing in growth industries.

In the last few years, I've heard a lot about why America isn't that great. These issues include racial issues, healthcare access, etc. Being a NYC resident, I still see immigrants flood into the city year after year. My family was one of those 25 years ago. Perhaps this is survivor ship bias, but my family has experienced upward mobility over the years. Four kids were sent to college and we all make over six figures today and we all have some sort of equity in real estate ownership. You may say that that's your family. You were a part of an intensely driven family. But is it? I have been thinking a lot about this topic lately. See, I came from a small town in China with a 2,000 population. In the 1980s, it wasn't that great to be a citizen of China. We do not have farmland like the US. We were bordered by water on one end and a hill on the back. Agriculture was not really an option. It was a truly Malthusian situation with rapid population growth and not enough arable land to feed everyone. Being people who lived by the water, people found ways to leave. There were four main destinations. US (almost always NYC), Japan, Hong kong, and Taiwan. Back then, the wage arbitrage was incredibly large. If you worked for 2 days in Hong Kong, it was a month salary in China. People used to take these month long "tours" of Hong Kong and then would proceed to wash dishes non stop. Doctors used to do this. In the long run, people who went to Hong Kong, Taiwan and Japan tend to regret it. People who winded up in the US, on the aggregate, did much better. Why? Despite the fact that American in general think that "my people" all look alike (tongue in cheek humor here), the Japanese are quite xenophobic. They do not grant permanent status to the Chinese. Frankly, they think themselves as superior. If you don't believe me, ask around. Japanese mixed race are treated pretty bad, i.e. Brazilian Japanese. Japan also went through a bad deflationary environment since the 90s. Oh, I almost forgot, you're not really allowed to legally work in Japan as a Chinese immigrant. There is no legal mechanism for you to gain legal status over time. That also extends to home ownership or owning a business. If you think upward mobility is tough here in the US, try moving upward in Japan as a Chinese immigrant. I think Caucasians have an easier time as some sort of high level executive or entertainer. Hong Kong is a tough place. Housing prices are high. If you want to talk wealth disparity, Hong Kong is much worse than the US. Most of my family came here in the early 90s. We run a restaurant like many other families. As a matter of fact, 95% of the Chinese take-out/buffet are run by people in the city where I come from. I was essentially a business manager at the age of 11-12. This is because my parents didn't speak English and I was the most proficient at that age. I didn't say I was any good, but I was the best that they've got. So let's recap this. A Chinese immigrant went to Japan, Hong Kong, and Taiwan and he has a hard time gaining legal status and has to work off the books. Many wind up returning back to China only to immigrate again to the US. There are issues with owning property and businesses. In general, the hurdles are much higher in Asia. Anyway, I was 11-12 and my parents were rural farmers in China. Because we were willing to work 70-80 hours a week, the US basically said "if you can turn a profit selling Chinese food to Jewish housewives on Long Island, more power to you." Now it wasn't all sunshine. It was hard work as I have detailed in my previous rant about the restaurant business. Some of the regulation, fire, health, etc were tough and unfair. At various times, I wondered why do the incumbents not care that some Chinese immigrant came here and just set up shop? I have been witnesses to locals protesting and bashing shops set up by people from other regions trying to start business in my town back in China. People were very protective of their local turf. I also wondered why wasn't the US checking IDs as many businesses hired undocumented employees. Why do the landlord rent to us? My parents can't even pronounce the ABCs. As a 36 year old, I will venture a guess. These opportunities are allowed because of America's business environment. The Jewish housewives wants a meal for $5 per person because she doesn't feel like cooking. It's good value for what she's getting. The landlord rent to us because the Chinese take out is a proven business model and you have former farmers who understand they have to work 80 hours a week to make it work. ICE isn't raiding businesses like us because it's too low of a return on resource. You may feel that this is the case in every country. Then I suggest you travel around and talk to people overseas. In certain areas, just getting a permit can cost an arm and a leg in bribes. While my family has been extremely frustrated by some of the bureaucracy in the US (DMV), for the most part we agree that the US is easier to do business. Subsequent upward mobility came in the form of home appreciation. We made some gutsy calls to take out a home equity loan to use as a down payment to buy in Queens. It's ironic that Queens used to be the place where no white collar office worker would live in. Even Brooklyn was dicey back then. But areas gentrified an the people who benefited were "ethnic folks" like my family. In Japan, this would not have happened because home ownership was not an option. All four of the kids went to college and received merit scholarships and financial aids. But then SUNY schools were dirt cheap and Ivy basically gave you a free tuition if household income is low. The US university system is one of the greatest providers of upward mobility if you know how to fully utilize it. If you want to study literature, Asian studies, or Latin American history, you maybe digging yourself a hole. What is unique is that this isn't just limited to my family. I think that 50% of the families from my hometown owned a Chinese take out business in the US. The outcome is systemic not one-off. I think it's great that in the US you won't be harmed for shouting obnoxious comments about the government and politicians and social injustice. I support people's rights to exercise their first amendment rights. At the same time, I encourage people to look at the situation objectively and understand that for those with a will, the US is likely the best environment for upward mobility. There are some caveat being that I think the US used to attract and were able to keep some of the best and the brightest in tech, medicine, etc. I have noticed that many are returning to their homeland because the opportunities are greater. This could be due to a variety of reasons include "bamboo ceilings" in the US or the graduates having better network/connection/access to start up capital in their homeland. The tech and VC scene in China and India have grown quite robust in the last 4-5 years. Could this be the tipping point? We will see

Can you explain this one a bit more? "Peter Lynch (IMO he got out before his record would have tanked)" I think Peter Lynch is a very underrated. 29% CAGR is very impressive when you buy hundreds of names

Political Correctness be damn!!! If you compare cars to woman, it goes like this: Toyota and Honda are like Asian woman - Good looking/low maintenance and stays that way well into their 50s and 60s BMW are like hot German blondes - Smoking hot and lots of fun in their 20s and maybe early 30s, after that it requires a lot of upkeep, i.e. botox and going under the knife Unleash the SJW!!!

Never got around to calling Hertz. Winded calling Southbay Expressway. They offered to reduce the figures from $85 to $25 because it's a first violation. Given that I'm terrible at following and absolutely abhors talking to "customer dis-service" I opted to pay the reduced fee. In the future, I will take a picture of the transponders and its #s as a record keeping to avoid this kind of crazy BS.

Is 67% over 9-10 years really that good of a return? I will probably get a lot of heat for saying this. But I think if you owned BRK, MCD, Fairfax, and other defensive stocks during 2008/2009, you sell them because they only went down 20-30% while the S&P is down 50-60%. Finding stocks that easily double, triple, or quadruple is fairly easy at that point. So you rotate into something that has much higher risk/reward. I feel like there are still opportunity for you to get back into BRK. BRK was still really cheap in 2011. I remember Tilson pitching BRK as being extremely undervalued at Omaha.

Yeah, I've noticed that before. Unfortunately, I don't even have a twitter account.

The whole thing is a bit ridiculous. Somehow their transponder worked everywhere and it didn't non this particular toll road. Hertz sayd "read the fine print, if you get a ticket, you have to resolve it. It's your problem. We're just gonna charge you automatically. Oh, yeah, you've got like 10 days." Hertz really is a sleaze ball with their tactics. The toll road isn't great either. As an investor, I would be very worried to invest in Hertz or any of the car rental companies as I think it's indicative of their profit generators.

Can you expand on why the niche or "blank" investing should be avoided? I assume you mean the guys who specialize in tech or software or energy etc?

I was in Southern California to attend the Daily Journal Meeting and rented a car. After the meeting, I drove around in a Hertz rental. I saw some charges from my credit card for toll fees from Hertz. Then came the big surprise. South Bay Expressway is looking to charge me $85 total for $5 in tolls that allegedly I did not pay. I did some digging online. Hertz has Platepass which includes Fastrak in California. Since I have a bunch of charges for tolls from Hertz, I deducted that I must have PlatePass and it was functioning properly. South Bay should've charged PlatePass/Fastrak. One way to resolve this is that I can provide the FasTrak Account Number and Transponder No to South Bay. The problem is that I have no idea how to retrieve this data now that it's 6 weeks later. Has anyone dealt with this in the past? Is the best solution to call Hertz and ask them to retrieve the FasTrak and Transponder No associated with the car? Hertz on the other hand sent me a $30 admin fee for passing this problem through to me. It seems like Hertz just passes through the fee regardless. It's about the same as a daily rental. I get it that the rental car company don't make a whole ton of profit, but this kind of underhanded technique is kind of sickening. Apparently, a few years ago there was a class action lawsuit regarding these charges. https://www.consumeraffairs.com/news/electronic-toll-collectors-generate-expensive-surprises-for-rental-car-drivers-052715.html http://www.courant.com/consumer/bottom-line/hc-bottom-line-hertz-platepass-20150514-column.html

Yes, your can definitely get excellent Chinese food in Flushing. Actually, you pretty much can get any kind of food in Queens. I Haare generally found that you need to go or be close to immigrant clusters to get gun or ethnic food for reasonable prices. This means you get Indian food in Hicksville, Vietnamese food San Jose, Koerean food in the Korean cluster in a midtown Manhattan, Thai food in Hollywood (Thaitown). WHenever there is a cluster of immigrants, the quality of the ethnic food they like goes up and the prices often go down - competition at work. This also seems to be a matter of supply chain, such that it's easier to get the ingredients readily and for a reasonable cost. Well at least in Long Island, you get very good Italian food pretty much anywhere. Thai food is really good in Elmhurst New York try (Chao Thai or Ayada, they are both tiny restaurants, but amazing food. Literally like 8 small tables). Korean Food is really good on Northern Blvd in Queens. If you drive, there's a restaurant on Northern Blvd called Tang. Amazing decor, great restaurant, spacious, great service, and you can get a set of grilled Galbi and a Soft Tofu Stew for $20 (both dishes). I kid you not. It's my favorite Korean place.

You should go to Flushing for much better Chinese Food if you're looking for Chinese Food catered to Chinese people. Being from the Bay Area means that you're used to much higher quality. I can assure you that within the "catered to Non-Chinese" Chinese food category, the Long Island Chinese food scene is actually much better than Detroit, Colorado etc.

Interesting that you mention this.... One of the many business ideas that I've had is that in my neck of the woods, I think the Chinese takeout is vulnerable to disruption. Why? Lots of the small takeout restaurants are not well run...They are dirty to downright filthy. A good number are downright rundown. The eggrolls are SHOCKINGLY bad, almost inedible. Sometimes the food is not fresh, ie. frozen broccoli...The fried rice is bad...workers are sometimes rude. Sure, the food is usually fairly inexpensive...but who wants 2 lbs of mainly bad rice? What if a competitor came in...and had the following: A). small, clean restaurant B). well trained, polite workers (at least those that faced public) C). slightly higher prices, but higher quality ingredients....All food fresh, including eggrolls D). Slightly smaller portion size. Who needs/wants 3 lbs. of food? E). Open longer hours, hitting late night eaters (carryout only) F). Smaller menu size for efficiency G). All food prepared fresh, no #$%^ steam trays! I think Chinese takeout operators have gotten "fat & lazy" in my area, no real competition in the space. Vulnerable in my eyes... I'm not sure where you live. If you're in the Midwest or Southwest, then I can see that the food is likely crappy. I laid out some of the economics and the reality of the Chinese take out business in a previous post. The business on Long Island near NYC is still extremely competitive. It's ironic that I sometime order Chinese delivery now when I don't feel like making dinner. In my opinion, the food has good quality, it's just greasy. You mentioned steam trays, that would not fly here in New York/Long Island. The housewives here have very discerning taste for an entree that cost $10 which has freshly cut veggies and high quality protein. I think you're describing Panda Express. They have quite a few thousand locations. I think there are easier things to disrupt than the Chinese take out business. Now, I've heard from friends and relatives that the business has gotten much harder overtime. Why? Look at my family. We were in the business from the late 80s to 2004. That's a 15 year span when we worked crazy hours. Our success is the reason why this business can't sustain itself. All my siblings wind up going to college and we have white collar jobs. Labor cost has gotten a lot more expensive. While minimum wage has gone up not that much, labor cost in a Chinese take out has gone up a very large amount. That staff that we used to pay $1,200 a month now commands 2x that. The problem is that revenue has not risen as quickly. Most town likely has more competition rather than less. Why has labor gone up so much? It is tied to the GDP of China. There used to be a seemingly endless supply of cheap labor via immigration. It's also what the new comers is used to. In the 90s, that new immigrant was a rice farmer and the restaurant work was likely better pay and less work than what he did on the field. In 2017, the kitchen staff is either a single child who has been spoiled or an US kid who failed out of school. Neither sources make good employees. My siblings and I all wind up going to college and work white collar jobs. We are not the exception, we are the norm. There is no cheap labor around. Any sorts of disruption would have to involve a much smaller menu. I doubt that hiring minimum wage employees of non-Chinese origin in the US will never really work. This is partially because the "Chinese Take Out" product itself has such a high value to price ratio. Consumers are conditioned to getting a ton of quality food for low prices. I think the US consumer is okay paying $10 for a scooped tray of rice, beans, and grilled protein from Chipotle. It's a steam tray concept as well. But deep down, US consumer are so conditioned to what the neighborhood Chinese restaurant offers that they are only willing to pay $7 for the same food item of the same quality as Chipotle. I've often thought about this years ago.

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. Unfortunately, I think the moat here is from one ethnic group to another. This is the part that I previous did not appreciate as much. However, the restaurant businesses are inherently tough. There is little barrier to entry within the ethnic group. For example, my family moved to the US in 1992. My dad came much earlier. When he opened the take out, there were maybe 5-6 takes outs in a town of 60,000 residences on a predominantly Jewish town on Long Island. By the time I arrived, we were up to 12 or 13. Even though, housewives on Long Island love to order Chinese Food, there is only so much aggregate demand. This means that the overall revenue opportunity is split between all the restaurants. Each restaurant opening is met with disdain among the incumbent. The way a Chinese take out operated was the following (These are all 1990s figures when I was a young teen helping out the restaurant): This is an illustrative example from the 1990s. So today's figures need to be higher in order for the business to work. Gross $30,000/month Food cost = 40-50% Rent = Hopefully below $2,000, over $3,000, it gets really difficult 3 full time Kitchen staff who work 72 hours, paid roughly $2,200, $1,700, and $1,200 (These are mid 90s figures) for different skill levels. You always need the guy who gets paid $2,200. 1 full time customer facing personnel who is actually extremely important position. $2,000 per month. This function is typically filled by the family's children. The parent usually doesn't understand English well enough to handle this task. Nat gas > $1,000 a month Electricity, waste disposal, phone, printing (menus), packaging, misc > $1,000 a month Delivery personnel (usually the owner/wife/driving age children) - $1,000 per month plus tip. Driver usually provide car and absorb car payment, fuel, and insurance cost. From these numbers you can see that if the family has a father who can cook, then the $2,200 cost is eliminated, if the wife can answer the phone, then the $2,000 cost get eliminated. Or if the children can work from 3pm till 9Pm, then the counter staff job frees up, and the wife can deliver and they wind up capturing the tips etc. Let's assume that the COG is 45% and the rent is $2,500, the operating cashflow look like the following: By hiring everyone = $30,000 Rev - $13,500 Cog - $2,500 Rent - $2,200 Chef - $1,700 Sous Chef - $1,200 Helper - $2,000 Counter - $1,000 Nat Gas - $1,000 Utility Misc - $1,000 Delivery Guy = $3,900 By having your family work = $30,000 Rev - $13,500 Cog - $2,500 Rent - $1,700 Sous Chef - $1,200 Helper - $1,000 Nat Gas - $1,000 Utliity Misc + $1,000 tip - $500 car expense = $9,600 On the surface, this may look like a decent business. You're making 13% to 32% pre-tax margin. The reality is that you need to stay on top of your employees. You need to be there in the restaurant. In both cases, there is a management salary that is not paid. The truth is that you can't hire a manager. No one cares about this business as much as you do. You can't just pay $2,500 to hire a manager to do this job for you. Heck, if you hired everyone you wind up with $1,400 monthly pre-tax profit anyway. The cost of setting up a Chinese take out is about $100,000 back then. So a 17% pre-tax return is really crappy for a business where you can go out of business very quickly. Work intensity - How hard was it exactly? It's rough. Days are 10AM to 10PM. If your family worked, the parents tend to work all seven days. People bitch about working 70-80 hour weeks, I did it as a 16 year old during the summer. What's the expectation for children? During my senior year of high school, I was captain of both the football and wrestling team and took a bunch of AP classes, my parents never failed, till this day, to remind me that I worked "the least" of all my siblings. They still say, with a straight face, that I took the easy way out. In season, I would get home from sports practice and make my own meals and do my school work. Saturdays is gameday, so there is no work. I'm expected to work during Sundays. When I'm not playing sports during the spring semester, my parents would pick me up around 4PM right before the dinner rush and drop me home around 9PM. We ate as many meals at the restaurant as possible. During the summer, I'm expected to work 5-6 days from 10am to 10pm. As a side note, going into my sophomore year of college, I would work the 12 hours shifts, go to this 24 hour gym with my buddy, lift weight, and then I will run 5-6 miles. I had a bet that I would get a six pack abs that summer. It was just work, sleep, workout, repeat. If I had to be honest with myself, I was lucky that I got to play sports. My sibling did work more hours in the restaurant than I did. Us kids also work summer jobs to help out the family. I worked as a fish monger since I was 14 years old. My siblings worked at other Chinese take outs during the summer as we have "excess capacity" with four kids off from school. I thought being a fish monger was the best job in the world. It was either over 100 degrees in the kitchen or being around a lot of ice and cold fish. I loved the latter. Most of the time, the summer earnings went back to the parents as we know that paying a house mortgage, cars, and saving for college was tough on Long Island. Despite all of this, my parents worked way more than all of us. They legitimately worked 80 hours weeks for 10 years. I think my dad worked for 2-3 years without taking a day off. This is probably a good place for me to take a break. But I'm happy to answer questions about this business. Overtime, you learn to fix things that breaks. You can't fix the fridge. But if a faucet broke or pipe burst, you learn to solder and stuff. We did a little renovation during my high school years. I remember putting tiles down on Thanksgiving day. That's the one day a year when we close the restaurant. Competition wise - There's no moat. There's no ways around. It seems like there's no shortage of dumb money that would open up a new restaurant in town. I guess it's in the DNA of the people to want to be owners rather than work for others. There is a typical 5 year minimum training process to become a chef in a Chinese take out. You start out as a prep guy, you cut things, moped and cooked the simplest dished like fried rice. Then you move onto having to use a wok which requires a wrist motion that takes some time to master. You need to develop culinary expertise like how to brown the meat in the wok, then cook the noodles etc so that it's done. This is where you start using seasoning. Some people are great cooks and some people just don't have any culinary fiber in their body. Then you move onto the dishes that require sauces. The chef actuallys have to make about 8 different kids of sauces from scratch. One thing that Chinese take out do a terrible job of is marketing. Sometimes I look at Chipotle and I'm like a bunch of Monkeys can run that. In the Chinese restaurant, everything is made from scratch. This means that we will buy the Chicken breast and then debone it. We do not buy chicken breast where an employee in a meat packing plant have added value by removing the skin and the breast. Frankly, it's also higher quality when you get the whole breast yourself. So, there's the skinning, deboning, then freezing, and then slicing it into pieces, marinating, and then ultimately cooking it. All the shrimps are peeled and devined by use. I've developed skills to peel and devine 10 pounds of shrimp in 15-20 minutes. All the veggies are cut by hand. We go through a ton of broccoli, carrots, celery, mushrooms, peppers, onions, etc. Everything is cut by hand. The egg rolls, dumplings (we make our own dough), and sweet and sour (fried nuggets) are done in house by hand. The sauces are made in house. It typically require a rich chicken broth as a base, browning anise seed, scallions, peppers etc. We roast our own ribs. This requires a homemade sauce which requires fresh fruits to be grounded. It is then marinated and roasted once. Then we have to finish it via the salamander made to order. The soups are made every morning from scratch. Everything takes time. Most restaurants have two busy shifts, lunch and dinner. If you look at a menu, there are 3-4 soups that we have to make every morning. There are 20 appetizers that we make in house. We roast the pork ourselves. We debone the pork shoulders ourselves. The bones are used to make stock. There is no waste. There is no down time in the kitchen. If you're not actively cooking for order, you're prepping by either cutting meat or veggie, making sauce, making stock, frying things in advance. I estimate that the kitchen staff had about 3x the productivity of an American employee. That's why I love my fish monger job so much. I just had to smile, weigh the fish, wrap it, and collect payment. My best friend delivered for us when I was in college. From time to time, he would say things like "if I ran your place, I would do so and so as I learned in finance." I think a lot of us finance types think you can just take out certain cost or fire a specific employee. This is a bit of fallacy that we investors fall into. I guarantee you that 99% of the people on this board if they take control of our business and try to improve upon it, sales will likely collapse. The only thing that could've been improve upon is a ordering system. If all the ordering can be done domino style (with apps) without a phone call, it will actually massively improve the experience. Managing people is tough. By the time I was 18, I've dealt with all sorts of employees. There are employees who simply can't produce. They get let go. There are employees who are very productive and they know that you can't afford to fire them. So they wage all sort of psychological warfare on you. This is lesser of an issue if the male owner is the chef. Then he can fire that guy and the business can still produce a good quality product. But if the chef is a hired gun and he unwillingly make it tough on the owner, the owner has to put up with that BS. Unlike an ice cream shop, you can have your chef leave on a Friday night. Who's going to make all that stuff from scratch? Each restaurant is a breeding ground for more competition. This immersive environment where someone rise from prep to chef allows the hardworking and frugal to save up money. Well, there's typically an indenture servitude element associated with paying off debt accumulated from gaining access to the US. Usually by 7-10 years in, a chef would save up enough money that he wants to republicate this with his own family. Because he rise up through the rank, he has also learned every facet of the kitchen operation. Everything that the general public views as positive about hardworking Chinese American also makes this business so darn tough. Most people want to stay near New York. This is how you wind up with 15-20 Chinese take outs in a 60,000 town on Long Island.

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.

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die. But in reality, if you made mistake, you get the boot or as they say "retire". Despite this, I think Berkshire has some of the best executive/employee retention track record. Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?

I'm surprised that this has not been mentioned on this forum. From a Huffington Post article But in an interview with CNBC earlier this week, the 86-year-old crossed a line. Buffett was trying to explain why he and his investors made a public $143 billion bid to buy Unilever, even though as it turned out the consumer-goods conglomerate was emphatically not interested. When Buffett’s people initially reached out, he explained to anchor Becky Quick, Unilever’s executive was apparently too polite and noncommittal ― leading to some confusion. Then, he tried explain it all like this: “Well, if a diplomat says yes, he means maybe. If he says maybe, he means no. And if he says no, he’s no diplomat. And if a lady says no, she means maybe. And if she says maybe, she means yes. And if she says yes, she’s no lady.” http://www.huffingtonpost.com/entry/warren-buffet-women-comments-business_us_58b59f6be4b0a8a9b78664dc

Costco Great for 1 - Fresh, organic produce in bulk, Fuji Apples, oranges, tomatoes etc 2 - Detergent, soap, Bodywash, toothpaste, stuff that won't go back and you need anyway. 3 - Jackets, clothing, hoodies, 32 degree long sleeve warm wear - they tend to have optimized sourcing process. No style points here. But price to performance can't be beat. 4 - Good meat, but pricey, lack of certain ethnic cuts such as soup bones etc 5 - No need to make decision about 30 types of soap In short, Costco requires that you hold inventory and you earn quite a bit of savings by holding that inventory Not good for 1. Large tubs of mayo, condiments, etc Can't seem to ever finish them 2. Selection if you want a specific type 3. Can't walk out of store without spending $200+ 4. Tend to have leftover 5. Lacks variety, can't buy $2 worth of herbs

I am so fed up paying up my nose for hotels in Omaha

A little late to the convo but 24.99% in my Roth IRA - Portfolio was very concentrated in my best ideas in 2016. Going forward, I will probably look to diversify a bit as the overall dollar amount in the Roth IRA has grown in the last few years.

Seems like a lot of the members with 30+% returns in 2016 had a lot of exposure to commodities in 2016. Just wondering if you guys can provide more details on how you were positioned going into 2016? Did you have the existing commodities position already? Were you able to pick the bottom or come close to picking the bottom? One of the member had mentioned that he was down 40-50% in 2015 and the near 100% was just getting him back into being even. If you can share if the 30+% was just getting you back to even or if it truly built upon your flat or positive returns in 2015, it would be very helpful. I know that FELP was a great trade for a lot of people on the board.