ScottHall

This has been obvious for a long time now. I wasn't so sure. He's done a great job with his restaurant businesses, all things considered, but I think that a different skillset is probably required here. So I think he's probably a good businessman, but not necessarily a good leader.

Biglari sounds like a horrible person to work for. If the article is true, it sounds like he wants immediate results... in a creative company you can't really expect that and you should give your employees a lot of rope to try new ideas. If they were going to redesign the magazine they should have expected to turn off the base... but you have to do that if you want to build a new one. I dunno. This whole thing makes Biggles seem like maybe he's not such a great leader of people.

Hi Marlin. To put links on here, you have to go to the address bar (it's the one on the top of the page where you type websites in), highlight the address you want to post by either clicking on it or by clicking and dragging across the whole address. Then, when the entire address is highlighted, hit Ctrl and C at the same time. Alternatively, you can hit the right mouse button and hit "copy. Then, go to where you want to paste the bar to, and hit Ctrl and V at the same time. Alternatively, you can hit the right mouse button and select "paste." The link should now show up. :) Thanks for sharing this with us, I'll be sure to check it out.

How about Bailey Jay?

Value investing is dead. Long live value investing. I can't even.

Lol, this is so dumb. New_Bitmap_Image.bmp

Uh, what? I don't think I said any of this. When I say we should encourage her, I don't mean with a higher valuation or whatever else. I mean we shouldn't be jerks on the internet & press who seem to get off to the idea of her failing. Also, if you're going to be "condescending" in your own words, then good bye and have a nice day. I'm not going to say I don't have time to argue with you, because I do, but doing so is not worth my time if you're coming at this from a self-admitted negative and "insulting" place. I don't want or need internet drama in my life. It's entirely unproductive. That said, I hope you have a nice day and that you find it in yourself not to be a jerk just because you disagree with people on the internet. I was like this not too long ago, and I came to realize it really didn't do me or anyone else any favors. It just made everyone involved upset and less willing to see the other side of things. Farewell.

ScottHall, what you said makes no sense to me. All progress of society is about incremental improvements, in technology and math and science. When was there ever a giant leap forward? Let's take physics for an example, I guess Newton's principles of physics is groundbreaking (though it was replaced centuries later). But calculus, which Newton gets 90% of credit, was being discovered at the same time in Germany. Also maybe Einstein's papers on relativity. And things like vaccine for polio were known ideas with competing implementations. All these people had tons of help, people help each other with experiments and sharing ideas. The biggest exception I can find right now is the wright brothers. To be clear, I'm not talking about incrementally improving the inputs to inventions here. I'm talking about the output. Technically speaking, of course almost all progress builds incrementally on work done/discovered by others, and must conform to the world's natural laws. That much is obvious, so it doesn't merit talking about. That's my fault, I suppose, for not being clear and assuming people would take my use of the word "incremental" to mean "small improvement." What I'm referring to when I talk about incremental improvements is more along the lines of figuring out how to breed horses that are 2% faster vs. figuring out how to produce cheap automobiles. One of those two had orders of magnitude more benefit to society than the other, and was probably much more difficult to pull off. So what I'm really talking about is basically successfully hitting a tipping point where the benefits of a product or service increase exponentially vs. the status quo. The same is true for air travel, electric power, communications, the internet, and so on. They may have built on existing technology or known theories, but when implemented, they punched so far above the weight class of the status quo that they were game changing. And society was a huge beneficiary. One thing to remember is that the reward of an effort isn't necessary related to how much effort was put in... it is probably much harder to implement world changing technologies than it is to refine existing ones, but that doesn't mean the reward (to society and shareholders) won't be much higher still. It also doesn't mean shareholders are necessarily entitled to anything if they can't defend the market. I don't want to be a dick, but this really comes across as sour grapes. "A real billionaire," seriously? I see a lot of people criticizing Holmes, and yeah she's not beyond reproach, but the tone here is really telling. I don't know if it's career jealousy, people feeling threatened or inadequate because a young woman is smarter & more successful than they are, or what, but Holmes had the conviction in herself to develop her technology outside the walls of one of the existing medical technology powerhouses. That was a big risk to take, so of course she deserves a commensurate reward if it takes off. Maybe more scientists who believe in their skill sets should strike out independently. I don't know. It's a risk; you lose that guaranteed paycheck, but if you hit a blockbuster product, the payoff can be huge. What were her financiers thinking? It takes two to tango. They willing gave her the capital to do this, and these aren't unsophisticated mom-and-pop investors we're talking about. Failure is always going to be a huge part of venture capital investing, and they know this. Ultimately the market sets the price, so if they set the wrong price, that's really their own fault. I'm not saying Holmes will be successful, by the way. Failure is probably the expectation. What I am saying is that I think a lot of her detractors are coming from a very ugly place within their own minds & hearts. Not that you are, necessarily.

I agree with AI Guy, jumping to fraud is a bit much. I think the most likely scenario is that Holmes is attempting to do something very hard and is having to deal with all of the hurdles & stumbling blocks in the way. Anything that wasn't hard wouldn't have them. And if this is true, we shouldn't be pointing figures and going "na na I told you so," we should be encouraging her. Because that is how major societal progress comes about, challenging very difficult problems and accepting that there's a large chance of failure. Failure should be the expectation in these sorts of situations... it doesn't mean Holmes/Musk/whoever aren't smart and aren't doing the right thing. If anything these sorts of bets deserve more hype & glory than they get, because it encourages other people to avoid spending their lives working on incremental improvements in favor of lower probability moonshots that can really help drive society forward.

I watched the video. A lot of my style is based on Russo and others in the same genre of value investing. This was one of the better Google value investing videos, because examples are used liberally. I find many such productions to be pretty glib and superficial, relying on the same stale circlejerks we've all become accustomed to in this community. This one was a notch or two above, at least in my opinion.

In my opinion, holding period should only be long term when you're talking about high quality, top tier companies. If you have an indefinite holding period for a commodity business, then your long term investment is a short term investment gone bad. Basically. The reason for this is that the profits of most businesses should generally be mean-reverting over time, so there's no real sense holding them long term. You buy them when they're out of favor and sell when the market changes its outlook and awards a higher valuation. Unless the company has a large competitive advantage, new supply will - over time - enter the market and take away the excess profits of the moment. Look at shipping companies in the mid-2000s. They were earning absurd returns on capital because China joined the WTO... shares were trading at 5x, 6x book value for a time. This lead to increased investment in ships, and along with the financial crisis, sent prices tumbling and the industry has yet to recover. High quality businesses don't really have that problem, because they can't be competed against. At least not very effectively. So they tend to continue compounding owner wealth over long periods of time. These are the businesses you want your holding period to be forever on. Not just any random business.

Thanks LesPaul! I appreciate it. Yeah, that's what not really having to answer to anyone does for you. I get to do whatever I want. :) It's a pretty cool collector's item, Marlin. I bought one awhile ago and I was gifted another by a family, so I have one that is playable and one that is unwrapped and in great condition.

Hi everyone, I thought an interesting topic idea would be one revolving around stories of failure in business, or elsewhere. An obvious one is Long Term Capital, chronicled in "When Genius Failed," but a coworker of mine shared another great story of failure a few years ago. It is from he founder of VeggieTales, and he writes very candidly about the missteps that led his company into bankruptcy. It is an 11 part blog, and the first part is linked below. http://philvischer.com/phil-news/what-happened-to-big-idea-part-1/ What other great stories of failure do you know of? Scott

I don't want to hijack Marlin's thread, but thank you for the feedback. :) Yes.

Amazon, for large businesses. WWE has a pretty interesting little niche in the sense that there are no real competitors, a few small outfits that are more like gnats in comparison. Every once in awhile they get the desire to expand beyond their niche though, and it costs them. XFL and their movie studio being obvious examples. I'm surprised it's even public, honestly.

My results have been pretty good this year, actually. My public equity portfolio's value is up about 17.12%, despite the fact that I've made net withdrawals of 4.2% so far this year. I don't care to run the numbers on it exactly, but suffice to say it has crushed the market. This is despite Wayfair's recent downturn. For the record, I have 14 non-negligible positions, most of which are pretty evenly sized. My non-publicly traded equity portfolio has also done well, so... yeah. Pretty good year over here. :) EDIT: Changed "private equity" to "non-publicly traded equity" to avoid confusion.

Thanks Marlin. I read your other posts, it sounds like you have a ton of great stories. Best wishes, Scott

I quit trying this a year or two ago. It's not worth it; most information is pretty much irrelevant and you're just wasting your own time unless you enjoy it. Let's see, read all day, every day in an attempt to eke out another couple hundred basis points of alpha OR treating time like the finite asset it as and doing things that give me true joy. Real tough call, there.

Sorry for the delay. I've been working on a video and let myself neglect this. I don't really have an opinion on AI either way, at this point. The core businesses should be profitable enough to support moon rock projects or whatever else and still produce healthy returns for shareholders.

It gave me a significant amount of perspective. http://tilsonfunds.com/BuffettUofFloridaspeech.pdf The biggest thing wealth affords is the ability to not have to answer to anyone but yourself, and certain laws. It doesn't even take that much; mid hundreds of thousands at the low end, probably, in certain areas of the U.S. and depending on your lifestyle.

Is it really luck, though? When you're talking about a guy who's made north of $100 million day trading, you must be open to the chance that this guy has a legitimate edge here. More than one way to make money.

I enjoyed this article, thanks for sharing.

That's fine. I guess there's no problem with this approach if you can read minds. No need to read minds. You just need to understand human behavior - how people think and behave, and their various cognitive and behavioral flaws and biases, esp. how they behave in crowds. This should be part of every serious value investor's toolkit. Without it, you are the proverbial one legged man . . . http://www.amazon.com/Inefficient-Market-Theory-Investment-Foolishness-ebook/dp/B00MMV5V3Q Charlie Munger's approach is great, but it's very general and really isn't that useful for finding out what your "variant perception" about a business is. Institutional biases that limit how professionals can behave is also not a variant perception about a business, but can impact pricing of certain securities. There's a pretty big difference between the two.

That's fine. I guess there's no problem with this approach if you can read minds.

I like the business model a lot. They only own a few hotels; most are franchised or operated under management contracts. It's a fee based business mostly, collect royalties off the hotels they franchise or manage. So you can imagine, this is a pretty capital light business. The cash is then sent back to shareholders in the forms of dividends and, mostly, share buybacks. The company targets a 3-3.25x leverage ratio to EBITDAR, so for every $1 increase it essentially can (and does) return $3 to shareholders. Planning to return $2 billion this year alone, vs. ~$20 billion market cap. Even though the P/E is high you're getting a large amount of cash returned each year. The debt they use to finance this is very cheap; recently in the 3% range. So they're issuing debt at 3% to buy back stock with an earnings yield of ~4%, that's growing earnings currently at about 20%. It's a smaller position but I was interested enough to buy a starter stake.