BG2008

If you don't think that real estate is a good way to get rich, then I don't think you've witnessed what happened in the NYC area in the last 20-30 years. The act of simply buying and holding onto real estate, not necessarily the development of them, is the way to riches. This does not apply to Long Island and the surrounding suburban areas. If you look at the ROE of holding onto real estate in the last 20-30 years in any neighborhood in NYC that is serviceable by subway, the ROE is likely in the 150x range. This applies to buying a 20 unit multi-family in NYC that was considered too dangerous, Lower East Side, Hells Kitchen, etc for $300k back in the 90s. Now those are worth $10mm for roughly $0.5mm per unit. What happened? The boroughs are equally impressive with 15 year holding returns of 12-20X ROE. Namely, you bought a 3 unit walk up for $500-600k, financed it with 80% LTV, now it is worth $1.5mm. So your $100k equity becomes $1.5mm because it's been amortized down to zero in the last 15 years. Rent increases results in positive cashflow each month net of mortgage payment. Cap Rates went from teens to 3.5-5% - 3-5X in value Area went from "too dangerous" and "too ethnic" to sorted out by white collar middle/upper class resulting in 5-10x in rent -5-10x increase in value Initial LTV was 80% - 5x in value as the debt is amortized Rental Income Along the way That's how you get to a 150X ROE. The crazy thing is that any idiot who saved and was able to ride out dealing with shady tenants for enough years participated in this. You do not need to be a Buffet genius. It equals the since inception return of David Tepper which I believe is 150x. You bought the assets and just sat on it. You didn't have to do much. I do have to warn that starting in 2005/2006, the returns has not be as robust as before. This is mostly due to the fact that cap rates were already low and rent increases weren't as fast.

2.7% annualized since 2009 was down 41% last year thanks nate. Dang, that's worse than I thought. What a turn of fund performance? At one point, Baker Street had one of the most enviable track record in the hedge fund world. I believe their CAGR was around 50% per year for 3-4 years in a row.

If I were a secretary, I will probably win the award for worst admin ever. Every year, I have an issue where I never can get Berkshire to mail me the passes. How do you request the passes if you own shares in your brokerage? I own my share via Scottrade. Thanks!

Obviously none of you guys have ever been to an 800 people wedding in Chinatown New York. Such amateurs. :P

Life gets extremely depressing when you think about the future value of your spending compounded at 15% annually. I once met a guy who compounded capital at 70% a year and he was okay with driving a Tesla.

Value investing is a "single edge form of leverage" For Example: An asset cost $100, you borrow $50 and you put $50 of equity. When you buy a stock/company at 50 cents on the dollar, you are only putting up $50 of equity because someone less intelligent or less patient than you decided to sell it to you for $50 for something that's worth $100. Net net, you have $100 of exposure that you only paid $50 for. Without a lender's involvement, you benefit from the upside of that leverage without the downside of having your loan called away at the wrong time. I like to keep my investing simple. If you can't find value, don't try to juice it by borrowing against it. There's been times where I've thought about borrowing money from relatives at 4-8% APR for 3+ year terms where the aunt/uncle can't force a return of that capital during a 08/09 scenario. They can't trigger a call because the stock price fell. Frankly, I'll be borrowing against my reputation not with margin against my stocks. If one must engage in leverage, there's an amount that's obviously stupid and reckless and there's an amount that's obviously fair (105% exposure). Finding the transition point is hard.

I wind up booking flights into Kansas City and driving to Omaha. Regarding roadtripping, I'm like absolutely the worst when it comes to logistics and what not. Road trip in a RV with some buddies? ;D

It took me 6 hours to book because Priceline wanted to charge me $1,200 for a flight into Omaha plus 3 nights of hotel/car rental. When I went to pay, they said "this deal is not available" anymore. Then it's $1,300-1,400. Then it's layovers at different cities. 7-8 hours at airports. All the available solutions involve a lot of pain points. Looked into Airbnb. It's just gouging all around! It seriously makes me resent Berkshire a bit. The fact that it cost so much and you're sleeping at crappy hotels. Then I played around with getting in on Thursday rather than Friday and leaving on Monday rather than Sunday. It's a giant pain. I dread the process every year. Fairfax on the other hand is like 4 clicks of a button and you're done.

When do airlines typically release their flights? I remember checking about 10-11 months prior to the event and they were not available. Is the strategy to book flights and hotel/car separately? I kept checking and tried to get it booked early. When they were available as a package on priceline, I remember it costing an absurd amount on priceline as a package. This is very frustrating and should not take up 6 hours of my time each year. Makes me like Buffett a little less each year. The improvement in the economy doesn't help either.

Going to Omaha is a logistics nightmare every year for me. It doesn't help that I procrastinate till the last minute. Just spent 6 hours booking my flight, rental car, hotel. Will be flying into Kansas City on Thursday and driving to Omaha Thursday night. Returning to NYC on Monday. Direct flight both ways but need to drive 3 hours to go from Omaha to Kansas City Airport. Staying at the Holiday Inn Express Cherry Hill which is about 30 mins away from CenturyLink. I have a few questions to other Pilgrimage makers. - When do you start booking flights hotel? - How much does it cost? - Where do you stay in Omaha? - What's your logistics like? I really need to do a better job with the planning etc. FWIW - Direct flight from NYC to Kansas City (3 hours) plus full size rental car $363 Hotel in Omaha 4 nights - $619.20 It's not cheap to go visit Uncle Buffet. For these prices, you can probably go on a nice Caribbean vacation.

This advice is given a bit directly to the OP given some assumptions. 1) If your son has a picture with Buffet and attends NYU, it likely means that either you have a good chunk of resources at your disposal or you're quite well connected into the value investing community 2) Working off this premise, this means that you're likely talking/conversing with the right people already 3) I think that some blue collar work would be good in your particular instance as your son will truly understand the value of a dollar. Too many kids go through life thinking that money comes out of ATMs not earned via hard work. I have a young relative who didn't understand that getting 2 bowls of hearty beef noodle soup, 2 appetizers, and 2 sodas for $20 was a good deal. He's never had to make minimum wage and never really have to watch what he spend. Buying anything was all about getting money from his parents. He's gotten much better over time as he learns to budget etc. Your kid will learn a ton about how hard it is to earn a buck flipping burgers, washing dishes, or helping out in a Chinese take out. I highly recommend the last option. Now, if you're like me who slaved away in the Chinese food business from the age of 11 to 22, you're in desperate need of an office job and white collar association. 4) To sum up 3), if your kid has never had to worry about money, then he should get a blue collar job, flipping burger, washing dishes, construction, etc. ideally with a difficult boss, not with a bunch young 20s who squander their earnings on recreational drugs and alcohol. If your kids has been doing blue collar work his whole life, he is in desperate need of office work/white collar polish. 5) Follow the advice of Oddball and others on initiatives for job searches. They are spot on. 6) I'm going to get some flak for this. But as a last resort, you can probably reach out to a few smaller managers and offer investments in return for an internship. Look what good is having resources if you don't utilize them. As a college student, I had to work 60 hours a week during the winter and summer breaks in order to help make ends meet for my family. Despite good academic performance, this stunted my career development to a great degree. I did not know how to function in an office setting, I did not know how to conduct an interview. The white collar world was really just "this other world" that was very different from a hot kitchen, sharp knives, and lots of yelling during dinner hours. I would've gladly taken any edge/help I can get from my family. Again, this is the last resort if your son can't get any traction.

I was shocked to read Audrey McClendon's lavish spending and intermingling of Chesapeake's resources. Is there a public website where corporate flight records are maintained? I would certainly like to know which other CEO/boards are doing the same. Some of the flights, sponsoring the OKC Thunders, getting into real estate development, running a hedge fund, etc are so atrocious that it almost sound fictional. Let's help each other spot some corporate red flags. http://www.reuters.com/article/us-chesapeake-mcclendon-profile-idUSBRE8560IB20120607 1) I heard somewhere that any company that puts their name on sports teams are great candidates for shorting. I think it says a lot of the company's intentions when they agree to these naming rights. 2) In the course of your due diligence, if no one has anything bad to say about a CEO, you shouldn't invest in the company. The theory here is that the CEO job is sometimes quite unpleasant. You need to be able to fire people, say no to people, etc in order to create value for shareholders. A CEO who can do this will ruffle some feathers. When no one has anything bad to say about a CEO, that's a sign that he's an ineffective CEO. Hope to hear more from the board.

Packer, Thanks for putting this together. I'm still digesting this. I think it's important to take into consideration major trends in real estate in the last 10-15 years. 1) Overall compression of cap rate leading to higher valuation for REITs. If you the REITs just kept on buying and holding, they should've have done quite well unless their category was getting killed. 15 years back would be circa 2001, that's right around the time when 9/11 happened and the US instituted massive easing of monetary policies. This has been a massive tail wind for the real estate sector. 2) Urbanization/cities getting safer - Any REIT that owns dense urban properties should have done quite well. SLG has a decent long term CAGR, but in reality, they would've done much better had they just sat on their properties. Doing too much can be detrimental. Hence you can't really look at all apt reits the same way. You should probably separate out the urban versus garden styles in suburbs 3) In favor and out of favor asset types - Apartments are valuable, anything urban has become valuable, suburban offices have been getting killed. Class B malls are dying left and right (likely structural) in the long run. If you own Class A retail, you've likely done well. If you own Class B retail, it's nothing but heartache. Food for thought

I think it's the right choice to sell at lower price when the following happens: 1) Undervalued but capital allocation is atrocious which will destroy value over time, i.e. Blucora, the amount of value destroyed is absolutely crazy in that situation. If management is hell bent on destroying value, there is NO margin of safety large enough. 2) What you own will go to zero with no chance of coming back, i.e. Pinnacle airline, Bear Sterns, Horsehead, it looked cheap at $10, you should sell at $2, because it will go to zero. I'm not talking about the fear of it going to zero, it's the fact that it will go to zero. 3) You own something that's cheap, a net net that's got a real business. You bought it at $10, it now trades at $8, maybe you're a seller at $12. All a sudden, you find something else that trades $8 but is actually worth $20. You take your loss and you upgrade your upside/downside. IMHO, it's okay to take an actual loss in that scenario. There is no sacred cow in my portfolio. If Kraft sells for 5x cashflow, it will likely sell a bunch of other stuff to own it 4) The fact has changed. You have a thesis going in for owning an investment. Then you realize that the fact has changed. You think something is ironclad, i.e. pipeline contracts, and it really isn't. The company was supposed to be a consumable, but it's actually quite cyclical. Your company lost its pricing power etc. In those cases, you either got the intrinsic value wrong or intrinsic value has actually nosedive and the current market price is no longer at a discount to intrinsic. So you sell. Psychologically, it feels hypocritical to sell at lower prices for value investors. But there are times when it makes perfect sense to sell and preserve your capital.

I think that for anyone to claim that they retired at age 30 but earns $400k or whatever amount he does from running a blog or sponsorship to be an oxymoron. Getting that kind of sponsorship money is not retiring, it's a full time job. Producing all that content is not NOT WORKING. Granting, it can be a very enjoyable job. I think the messages would seem a lot more genuine if he was living solely off his savings and investments. Some of the wording/phrasing sounds a bit too "Amway" which I got involved with when I was 12 years old. At least I learned the power of "selling a dream" at a very young age. This is not to say that his messages isn't helpful. It's kind of like Buffet saying that he ought to pay more taxes, but then he takes advantage of every tax advantage he can.

I think the answer is that the opportunity set isn't "shooting fish in a barrel" yet. I've always hold cash. A lot that has traded down have hairs on them. The genuinely good businesses have held up pretty well so far.

Can you buy these debentures via a TD, Interactive Broker or do you need an actual bond broker to buy these securities?

SIENTRA is a "Gummy Bear" Breast Implant Net Net (Close to it, price has gone up, market Cap = 1.3x of cash less total liabilities). Look at the attached presentation. Sientra_Sumzero.pdf

Apparently this skateboarder won. Not sure if this is authentic. Man, people and their need to broadcast. https://www.instagram.com/p/BAgWxACSYZC/?taken-by=thisguysthelimit

FRPH - The Baker Family and a family trust owns about 49% of the shares outstanding

For my Roth IRA 4% for the year +/- 2% in either direction. Too lazy to calculate the actual result. Have a 10+% position in a workout that no longer trades. Will find out in a few years if I have a multi-bagger on my hand. But there's no liquidity to get out. I have a very concentrated portfolio in my Roth IRA as it's long term capital, small relative to my future earnings and current overall networth.

Apparently weekly prescription for specific drugs are available. Does anyone know how to get them? Does it require expensive subscriptions?

Many have mentioned that it's hard to calculate IRR. I've created a template. Just change the dates and the dollar amount and the IRR figure will update itself. The figures in the spreadsheet aren't my numbers. It's just for illustrative purposes. XIRR_Template.xlsx

At today's prices? Not particularly. I recommended it internally at The Motley Fool when it was half this price a few years ago, though. To be clear, that video isn't a stock pitch. It's just an explanation of a business model. I won't be pitching stocks in any of my videos, just explaining subjects that I find interesting. Scott, Totally understand that wasn't a stock pitch. In my opinion, that was one of the better "dig a bit deeper" type of knowledge that creates a ton of value add. The 20 mins or so made me understand the new WWE business model better than days of reading Qs and Ks. It's the useful wisdom like "Don't buy a mall that David Simon is looking to sell, if he can't make it work, nobody can." From an operating leverage perspective, I think it's interesting that WWE has cross over the breakeven threshold. Please keep them coming. I really do enjoy them.

Any thoughts on WWE itself as an investment? I kind of peripherally followed the company as it ran up to the $30s when investors thought that WWE would be re-priced as a live sports type of investment. Stock came crashing down when they couldn't negotiate the deal. I recall that WWE needed 1mm subscribers to breakeven from their previous model. They've exceeded that figure now and the stock has doubled from its low. Under its current model, it appears that any incremental subscriber will flow down to the bottom line. Any thoughts? I'm a bit iffy about WWE as a product. I think that UFC has taken a lot of the audience away from WWE. However, UFC has struggled itself in recent times.