Buckeye

Not Cool! :( No Cheers! :)

Here's to another 20 years of compounding and to making Irving Kahn look young! Thanks for being such a wonderful inspiration. -Buckeye

I'd recommend reading this speech: http://turnkeyanalyst.com/wp-content/uploads/2013/02/Williams-Trying_too_Hard.pdf Some of my key takeaways (and a humorous line): -Confidence in a forecast (or valuation) comes from the amount of information we put into it. However the accuracy of your forecast/valuation stays the same. -Respect the virtues of a simple investment thesis. Successful investments must have a simple thesis, by nature. -Complication is evidence of a poor thesis Now for the humorous line: "An investor without a forecast is like a fish without a bicycle" Hey LC- Nice find. That talk is great. I like the story of the 75 year old investment manager who had the best ten year returns and had never heard of Ben Graham! Have you ever read the two books that were mentioned in the talk? The Tao of Physics or Dancing Wu Li Masters? That seems like some Charlie Munger titles to me:) Thanks for posting.

Wow! Thank you all for taking the time to reply! JBird- I will be sure to read and reread those years annual reports. I understand the theory of the discount rate it has always just seemed to me as producing a wide range of outcomes. On a side note, I wonder if there is a certain years letter that is Buffett's favorite. We have all heard him repeat over and over that chapters 8 and 12 (I believe) are the two most important chapters in the intelligent investor, I wish some one would ask him which is his favorite "chapter" of the Berkshire letters. LC - Great tip on not trying to focus so much on the exacts of future cash flows, but concentrate more on past and current exacts and be general about future prospects. LanceSanity- I will read your article tonight. Thanks! Icarus - I just added that book to my wish list after reading a review from Jae at Old School Value. Vinod - You just reminded me that I have the book you mentioned. After digging it out of a pile of books, it looks like I read the first chapter or two and some how it got put down and forgot about. One of my issues is starting one book reading part of it, getting excited about and starting another book and then the next thing I know I have about 6 or 7 books I am "trying" to read. Does anyone else do this? Or is it just my attention deficit disorder kicking in? Packer - I guess I didn't realize that the multiples are as valuable as the are. I always assumed that was too simplistic. But now that I think about it, after reading through many of the old Graham writings he used these multiples quite often. I remember and think about the most common multiples and gloss over some of these that may be more important. As part of this learning experience I am going to try to go back through some of my readings and make notes of the mentioned types of multiples. After some of my further research I will list what I found and board members can weigh in on which ones they like or use the most. Thanks again all!!

This is the article that got me started on this topic: http://www.gurufocus.com/news/225351/how-to-practice-valuation He uses a similar company and its multiple of sales and its multiple of EBIT as a comparison and then averages that companies multiples and the one he is researching to find the applicable multiple. So, after reading this I noticed the same thing that ExpectedValue pointed out that you might just end up comparing one inflated value to another. He also seems down on the the DCF model. If I were to use a DCF what is the discount rate I should be using? Is this a dumb question or is this the 1,000,000 dollar question? Thanks for your replies!

Jbird- Thanks! I am reading Max Olsens Compilation of Berkshire Letter and am on year 1982. I will make a note to read those two years extra carefully. LC- When you say owners earnings are you referring to net cash flows? Do you extrapolate that out into the future and the discount it back to present values?

Hello All- Would anyone care to recommend a book/article/publication that would help an investor learn and practice valuation techniques? Also, what are the boards most favored techniques? I know that the technique may depend on the type of security, but it would be much appreciated if members would list their favorite techniques, the strengths and weaknesses of those techniques and the most applicable circumstance for that type of technique. I realized that I spend most of my time (more like all of time) reading ideas and I need to start practicing valuations. Thank you for any help. I greatly appreciate your feedback and value your opinions. Buckeye

I believe it is the one by Raghavan.

That is odd it didn't end up with Berkshire.

Forgive me if this has already been posted. “[Loeb] calls himself an activist investor, and I would call him a carpet bagger, and one who is trying to spread a climate of fear that pushes studios to want to make only tent poles,” Clooney said. “Films like Michael Clayton, Out of Sight, Good Night, And Good Luck, The Descendants and O, Brother Where Art Though?, none of these are movies studios are inclined to make. What he’s doing is scaring studios and pushing them to make decisions from a place of fear. Why is he buying stock like crazy if he’s so down on things? He’s trying to manipulate the market. http://movies.yahoo.com/news/george-clooney-hedge-fund-honcho-daniel-loeb-stop-161611465.html

Constructive- Choose Profile -> Summary -> then right above your board name is "modify profile -> look & layout -> messages to display per page -> choose

Oddball- Thanks for the reply. I do link print materials and I know Value Line has a good history of providing investors wit good information. (I remember seeing an interview with Schloss where he mentions his copy of Value Line and starts throwing out interesting stock picks. Also, I am from Columbus, Ohio. One of my best friends from college (OU in Athens) grew up in Bay Village. He would have graduated high school around 1995. Anywhere close to you? Buckeye

Hey Oddball- I know this has come up in another thread...but what do you think of Value Line? I have come really close to buying the print subscription but am such a cheap ass I haven't bit the bullet just yet. Thanks for any comments or suggestions Buckeye

Good for her...Lean in!

Einstein of Money: The Life and Timeless Financial Wisdom of Benjamin Graham. I am only a couple of chapters in and like it. I thought I remember it not getting great reviews when it first came out, but I am enjoying it thus far.

I have a question for the board regarding cash: Lets say one has 100% of their assets invested in BRK; BRK's market cap is ~ 270B and @50Bil of that (or ~ 20%) is held in cash by Warren. Would anyone look at this as "having" 20% in cash, with Mr. Buffett waiting to invest it for you? Can this act as a type of hedge? Thoughts?

Hi Max- I ordered your book a couple of days ago and should receive it any day. I am really looking forward to reading through every letter year by year! -Buckeye

Looks Like a Royalty Fee!! ;)

Thanks Oracle. Great find. It will be interesting to watch Moynihan in this format. Thanks for posting!

Loews? May have been mentioned before.

Congrats to Mr Chou! I was pretty proud to see him on the cover of the Marketplace section when I opened the paper this morning. Good for him and thanks to Sanjeev and this board for exposing me to him and the other Canadian superstars!

Parsad- Owning this could give a new meaning to putting your money where your mouth is!:)

You should read "Why democrats and republicans are bankrupting our nation," or something to that effect, by Peter Peterson. It's a great unbiased read on the situation and will leave you equally hating both parties, and probably more in the camp with Liberty. :)

Hey Guys- I came across this "Letter to the Editor" from Ben Graham's granddaughter and thought you would enjoy her take on the book! "A Soft Side of the Einstein of Money" http://online.wsj.com/article/SB10000872396390443759504577631612009640248.html enjoy

I think this would be a great experiment. As a novice investor I probably wouldn't be able to actively participate (at least in the beginning), but I know it would help me and the other rookie investors watch and learn the process of how more experienced investors go about valuing a company. I find that with myself I often start with a company name, its market value and any preconceived notions I may have about the company or the industry and work backwards through the financials. I know that my method may lead to a biased conclusion and your idea of a blind exercise may help me and others learn how to approach the valuation through the other viewpoint. -Buckeye