BG2008

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.

Beat the Streets - Inner NYC Wrestling Program to Keep Underprivileged Kids Off the Street For those value investors who are current and former wrestlers, there's an organization in New York City called Beat the Streets. They intend to get underprivileged kids off the streets in NYC and get them to wrestle. I think wrestling as a middle school and high school activity is particularly important in this day and age. It teaches kids to work hard and teach the correlation between effort and wins/results. Personally, it has made me a better value investor as the endeavor can be lonely and un-rewarding at times. Beat the Streets provides funding in the form of donating wrestling mats, headgears, paying for tournaments etc. Unlike my high school, where wrestling is a well funded activity and we worried more about winning county championships, NYC school do not have the same funding, coaches, and equipment. Beat the Streets gets fringe kids who might've spend time getting into trouble to wrestle. For those kids who would've hang out on the street and start accumulating arrests, BTS gets them into wrestling rooms and teach them about hard work and discipline. These kids may not wind up becoming ivy league hedge fund managers, but converting a potential lifetime criminal into a hardworking blue collar plumber, electrician, waiter etc is a great triumph. Again, most high school wrestling program focus on winning and beating their rival schools. Beat the Street spends more resources on bettering the lives of these kids and they offer more "life skill" coaching than most wrestling program. They offer seminars on how to attend college, eating etiques (knife, fork, etc), writing thank you letters to donors, etc. These are all very basic skills to most people on this board. But these skills changes inner city youngsters' lives because of their family background. http://btsny.org/

Was Macquarie Infrastructure at risk of a default back in 2009? That's quite crazy. It really forces you think about holding cash for those crazy occasions

I think General Growth equity post bankruptcy was a 100 bagger for Bill Ackman SL Green trading at under $10/share in 2009 should have been a no brainer for me. I did the walk of the asset and back into a $400-500/sqft figure for Manhattan retail/office where the market equity was less than $100/sqft. It was easy to conceive that the equity was anywhere 3-10x of what it should've traded at. It trades at $107/share today. Dollar Thrifty - I was not close to this one. But in 2009, it traded down below $1 per share and then got bought out at $80/share. The CEO convince lenders that it's worth more as going concern. Apple - It was a 100 bagger and a company that we all know about and it happened slowly over time Priceline - This one is a bit closer to home, traded to or over $1,000/share in late 90s, crashed to below $10 at one point. Then did a 100 bagger and now trades at $1,463. This one is a bit close to home as the original founder went to the same college and I've seen him on campus to give speeches etc. Valeant - So much smart money and people got it so wrong NYC Multi-family - Had you bought at the peak in 2006, you would've still generated a 10% ROE assuming 20-30% downpayment. Most multi-family had very strong cashflow and vacancy was not that big of an issue.

The problem is when you're on hold and can't get to anyone at all for 15-30 mins

Follow up, just spent 50 minutes trying to resolve a trading issue. They don't make it easy for you to do business with them.

I've had it with these guys. Been on hold for 15 mins to resolve trading issues

First, categorize them. Do you own a multi-year compounder? Do you hold an asset play (50% of intrinsic, but intrinsic won't go up too much over time) or do you hold a call options where time is the most important element? With a multi-year compounder, when the stock work it could be because the rest of the market realize the long term prospect of the company. Your company may have network effects, pricing powers as it grows larger, etc. In this case, you have to ride your winners. In a way, you have to think of a 10 year holding horizon and apply a discount rate and decide if today's price is still attractive. Goog, FB, Amazon tend to fall into this category. Asset play - I tend to own this type of asset. For example, I know company A owns X amount of real estate. I know what's it's worth if it's sold today. The cash on cash return is the cap rate of the RE asset. At a 50% of intrinsic value, I'm comfortable holding X%, at 70%, I'm comfortable holding Y%, at 85%, I don't want to hold any shares. This is perhaps the easiest to add/trim. You simply ask yourself "If I don't own any today, would I buy any and how big would I size it?" It becomes very easy for me to add when the shares trade down and trim when the shares trade up for this category of value investment. Calls/melting ice cubes - I'm still trying to figure this category out. It's tough.

Yes, this can't be negotiated. Both families are here. We like being around our extended family. Keep in mind that I don't live in Manhattan. I live in Forest Hills, NY. There actually is a forest out here about 1.5 miles away. At times, I would go on my walking trip which would total 6-7 miles and take 2 hours. It does wonders to clear my mind and help me catch up on conference call and what not. There are time when i just want to think and contemplate. Forest Hills truly is the best place in NYC if you want to be a start up manager. It's a 20 min subway ride into Manhattan, you're near a forest, an university library, an expressways that can get you access to Long Island and the suburbs. I do own a car. Can you suggest a few places in the Adirondacks that I can Airbnb? I've thought about a getaway weekends for myself for a couple people that I respect to just get away and think deeply and strategically.

Maybe you have your answer. Is there a college library that's open late? Spend the day doing what you want, then go to the library and steal the comfy chairs at night for a few hours. Another option is a co-working space. In Pittsburgh you can get a private office at one of these places for $350/mo. Oddball, Great suggestions regarding the college library. I just realized that Queens college offers a program where you can get 6 month access for $50. It is quiet with large open space for studying. It is located about 2-3 miles from my apartment. This will give me a walking workout in. It truly is the best option. I'm glad that I didn't take that space. I signed up on the spot for the library access. Getting out of the apartment and walking will greatly help with my sleep patterns which tends to get out of whack when you work from home everyday. All in all, this is a great deal and thanks for suggesting the library option. Coincidentally, I looked into local public libraries and they tend to be loud and attract homeless people. I did go out and buy a Bose QC35 headphone which I have already started to listen to conference call while I'm walking and taking subways. When living in NYC, you lose time by sitting in subway cars going from one place to another. I have found the QC35 to do an incredible job at lowering the decibel and allowing me to concentrate. I'm the kind of guy who needs library type quietness to concentrate. Dinner on me the next time we see each other because you just saved me a bunch

I think it is important to clarify one key thing. I live/work in the Queens, NY where space is very expensive. I suspect that many on this board live/work in an area where real estate doesn't cost an arm and a leg. For me, the reason to get an office is that I don't have that extra room in the house. I live/work in a large one bedroom (900 sqft) where the living room and office space co-exist. I am thinking of paying extra for an office literally to create a special purpose "reading room." It's a place with books, reports, and a monitor for reading. Buy a nice comfortable reading chair (still trying to figure that one out). In short, the purpose of being in this office (reading room) is to sit down for hours and read and think. Personality wise, I'm the type that works best in a library. Even small movements in the same room tends to distract me. This is why I tend to do my best work after 10PM when the rest of the world has gone to bed and there is no distraction from e-mail, phones, spouse etc. The large window will help to regulate the body clock. So it maybe a distraction for others, but it's vital for me.

So my fund business has grown a bit lately and I have been thinking about what's the highest return on incremental dollar. One of the things that stands out in the last few years is that I am not as effective working from home versus a purposely dedicated office space. There's been a lot written/said about Buffet/Munger and other respected value investors who simply read non-stop. I want to create an environment where it fosters this non-stop voracious reading habit. I am currently in the market for a 10 ft by 15 ft office with a large window. The question is how would you layout this space to create an environment that would foster non-stop reading and deep thinking. Any suggestions that includes: - furniture - lighting - noise cancelling headphones - reading chairs - TV monitors best fit for reading news, filings, etc - Dry Erase Board for strategizing, war room style boards to show vertical integration of businesses - General Setups etc would be greatly appreciated. Room_Layout.pptx

I think we need to add the element of "people will be hurt" if Buffet doesn't clarify rather than "please satisfy my curiosity". I've looked into this a lot and frankly and can say that concentrating on your best ideas when you can "afford" early on via earnings or young age really does move the needle. But it also depends on your strategy. If you're the 500-hour-per-investment kind of guy with a deep expertise in a particular sector that are not known to blow up or face rapid transformations (this would most likely preclude energy, early stage tech, early stage biotech etc), you can probably compound at high % for a few years. 50% is very hard.

Someone should write to Buffet and say that we deeply respect him but members on the board are actively discussing this and the suggestions were to use heavy concentration and leverage. In the interest of preventing people from taking on oversized risk and losing their shirt in the process, can he provide more detail on what he meant and how he would do it, if it deemed to be sustainable. In the interest of helping some people blow up, he just might respond.

I've been thinking a lot about this. I think if you're going to use leverage there are better ways than portfolio margin. If you typically traffic in extremely large caps like BRK, Apple, etc. You'll probably never get margin called with 10-20% leverage unless you happen to own Valeant and Energy. It appears that a better source of leverage can be achieved by doing a cash out refi on your investment property. Assuming it's not your primary residence (well, it's kind of hard to lose your house. You don't want to lose your equity portfolio and find yourself homeless at the same time), you can do a cash out refi on your investment property, fannie and freddie qualified mortgages are sub 4% interest. Net of taxes, it's closer to 2.0-2.5% for people in the highest tax bracket in states with income tax. Your mortgage is a 30 year fixed rate. The leverage is on your rental property and not your portfolio. Your rental property doesn't get a market to mark once you take out the loan. This allows you to have "leverage" not subject to margin call and you can buy illiquid micro caps. If the market is down a whole bunch and you wind up in an emotional fetal position due to the leverage, then that's a different story. Frankly, I'm probably okay with this on my highest conviction ideas that I've done a ton of work on.

Feels like a late bull market syndrome. Some of the most sophisticated investors that I know of are holding a large amount of cash. Most of them are doing so not by design but because they feel that opportunity sets are kind of poor at this moment. Probably okay following massive market selloff. But then hindsight bias.

Guys, this was really helpful. I booked the hotel at Quality Inn for $102 per night. I may save more with an Airbnb but then I'll have to worry about parking. Net net, it probably cost about the same. By the same token, if any of you ever visit NYC, I recommend staying at hotels in off the Express E,F stops in Queens such as Roosevelt Ave/74th St, Forest Hills, or 61st Street Woodside or even Flushing Queens. They look far away on the map. But if you catch the express train into the city, sometimes it only take you 20 minutes to get into midtown. So there's no need to pay $400 for a hotel in NYC.