ScottHall

I agree with you Premfan. I am of the view that ecommerce growth could possibly be tiered, where we see slower growth ahead... before accelerating to a much faster pace than before. Or, it could just accelerate from here without the slowdown in between. The reason being that as ecommerce grows, more and more sales are removed from physical retailers. We're already seeing that happen. But despite the headwinds, many retailers are still profitable. They haven't yet been hammered hard enough by operating leverage to turn enough of a loss to go out of business, despite business getting consistently worse. Sears is still around, for fuck's sake. Right now Amazon is taking share from these guys, but they still have share to give. What happens when these guys lose enough sales that the operating leverage kills them? They don't have share to steal anymore; it goes to zero and is going to be reallocated really quickly because the underlying demand hasn't gone away. So if Amazon is doing this well when it's still having to compete against a lot of retailers... imagine what could happen when there are fewer and fewer in-store alternatives for people because they couldn't maintain the volume to stay profitable? Effectively, it will have to go online at some point. And Amazon will probably capture most of it. I guess what I'm saying is that I think there's a case to be made that there could be a step change here that I haven't seen mentioned much, if at all.

What if the Technological Singularity is leading to a Financial Singularity as well? It has long been assumed that companies cannot grow in excess of their cost of capital forever, and this makes sense or else that company would soon own the entire world. But there's also never been a time in history when we've seen $100 billion businesses grow sales at 20% per year like clockwork, and we've certainly seen that happen now. New shit happens all the time; just because our mental models of the world don't permit something to happen does not mean it's impossible. Economies are made up. The screen you're reading this on exists because we've all agreed to work together to make it exist; it took coordination of effort on a massive scale to make just about everything you see in your home on a day-to-day basis exist. And all because we believe in the intrinsic value of green cotton as a means of exchange. There's no natural law that says this has to happen; the concept of currency at all is entirely intangible. In a sense the world only works because we all collectively agree not to look under the hood and freak out about how fucking insane this all is. Since economics is essentially an applied form of psychology, and because people are predictable, but not too predictable... the concept that there are iron laws of finance seems incredibly stupid to me. So if Amazon can grow at 27% a year to hit $136 BILLION of revenue, I don't really think it's impossible for g > WACC until it totally collapses belief in the economy. How much of Amazon's valuation is the market giving it credit for dominating the retail market and how much of it is Wall Street realizing that Jeff Bezos is a fucking ruthless serial monopolist who will grow in excess of his cost of capital for close to forever? Or like Liberty was saying the other day that Facebook could become, effectively, a global dictator. Or Google's seemingly-unbreakable grip on search force businesses to spend a bigger and bigger share of the economic pie on their advertising each year? There are no capital constraints for these businesses. There are fewer and fewer capacity constraints with each passing year. That's what's allowed Amazon to get to where it is in the first place. Why can't we take that to the logical extreme? That these monopolist businesses, and the other handful like them, in a world without many of the boundaries it used to have, could quite literally consume the world and end up breaking the economy. I hate to say it, but I think it's more likely than not. And you can bet that I'm positioning my portfolio accordingly. It is important to always remember... All becomes One, when g > WACC.

This seems too risky for my blood but GL to all.

You guys need to stop being marks. All of this shit is fake. The whole world, in a sense, is fake. As long as you give a shit, you will be taken advantage of.

I knew you'd get the reference. But I still mean every word... What is going on with you two? Scott had a few thread titles designed to get people to click through recently, and so I playfully wrote this: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/wrong-again-idiots/msg289606/#msg289606 When I used a similar approach for this thread, he wrote the same thing to me. Yeah, we're just having fun.

Having fun with your copywriting skills, eh?

Tested Advertising Methods in particular is very good and, along with guidance from other CWs, took me from 0 to 60 pretty much immediately. Copy is an interesting space... there is a lot of luck involved, but a huge amount of skill too. The best performing messages will be 10x or more the weakest ones. Everyone in the field that I know loves Tested Advertising Methods... the best copywriter I know said it was the only book that was useful to him. Other friends have found others useful, but most say TAM is their favorite. Other than that, I'd just go read controls. Agora has the best ones in the industry at this point, IMO.

Thanks Jurgis. I may try that for myself; seems like a low risk thing that could pay big dividends. One thing I wanted to mention too, in case anyone here is struggling with weight loss... I really give La Croix sparkling water a lot of credit for helping me. I used to drink a ton of soda each day. 5, 6, 7 cans. It was almost always diet, so it didn't cause the weight gain directly... but my understanding behind the artificial sweeteners is that they don't really satisfy you, and leave you craving more sweetness. I think that's true, because I would eat a LOT of sweets when I was on diet Coke. I still do, but not nearly as much, and I don't have an insatiable appetite for it anymore. I don't think it's a coincidence that when I cut down my diet soda intake to one a week (or less), my appetite for sugar tanked. I credit the La Croix beverage for helping that happen, because it's carbonated just like soda and has a flavor to it... I kind of used it as a half way house for my soda addiction. I still drink it regularly, too. When I saw how much it helped me to STOP drinking the soda, and by extension, to help cut down on my sugar intake... well let's just say they've got a customer for a long, long time.

Great job Schmucko (stay douchey!) Some people just can't have fun. ¯\_(ツ)_/¯

I've had a huge reduction in suicidal thoughts since I started smoking weed on the regular. It's harmful for some people - I believe the science suggests smoking before the age of 25 can fuck up your brain development. And there are definitely side effects that could be negative depending on the context... but on the whole, for me, all I can say is it has helped me become a better copywriter and has reduced my depression substantially. As with anything, your mileage may vary.

I'd ask Warren to give some examples of where being a better businessman has made him a better investor. Are there any specific skills that were helpful in the regard, or is it just a broader understanding generally? I've started to find some benefit from this myself, as I've been able to use my understanding of DRM to make very successful investments in FB and GOOG, so it's a topic on my mind ATM.

Between the HBO doc and this, does anyone else wonder if something is going on with WEB's health that could be imminent?

I'm glad my stoned thoughts were useful to you. They're useful to me very often, especially in copywriting. I don't think so. I think the tech bubble people were right, just early. I think the world changed in a big way sometime around the turn of the century, and has added a higher class of business economics than was possible at pretty much any other time in history. Companies exist now that are cheap at 30x, 40x, 50x earnings because there is essentially no capital constraint or capacity constraint on their runway, which didn't used to be true. I guess I'm fucked, then, because I'm not giving up my treats. I might even die. Do you still eat fruit? In 2010 I became clued in on health. Let me backtrack, I grew up in an athletic family, was an athlete in high school and stayed active in college. But after college I sat in a cube and became pudgy. I didn't really know what or how it happened. Then in 2010 a co-worker made an off-hand comment about calories and how drinking a Coke at 140 calories would require about 1.5 miles of walking to burn it off. He said "it's a lot easier to not drink a Coke vs walk 1.5 miles." I'd never made that connection. Long story short, from there I lost 45lbs, became active again and have stayed that way since. I'm back to running 6-8 miles a day at the same pace (and sometimes faster) that I ran in high school 20 years ago. In terms of diet I try to avoid carbs like pasta outside of dinner. Breakfast is eggs, lunch: fruit, veggies and nuts, and dinner is whatever my wife makes. She cooks everything from scratch, I watch my portions. I've worked to cut down and mostly eliminate sugar, except I recognize I'm getting it in fruit and honey (mentioned below). I'm on the fence about this. Supposedly fruit is ok because it's balanced with fiber. When you don't eat as much sugar and then do you can see the difference. Here and there I'll get this urge to pig out on some candy or something (usually at holidays). I'll be like a drunk at the bar except my drink is having cookies and cake and seconds and thirds of both. It tastes awesome, and about 20m later I feel like trash. Now the converse theory to this is if you're always in a calorie deficit (such as Scott) it doesn't matter what you eat. If you're in balance what you eat matters, but if you're in a deficit your body will be much healthier. I used to keep myself in a slight deficit but as I ramped up my running I kept finding myself either bonking on long runs, or extremely fatigued the next morning. I wasn't eating enough. Once I increased my intake all of that went away. Here's a pro-sugar tip. The BEST energy drink/item is pure unfiltered honey. I'll have a tablespoon of honey right before a long run. Honey doesn't spike your bloodsugar and there's something about the type of glucose that gets to your muscles quicker. We buy some local stuff, it's very thick. Stay away from the grocery store crap, it's basically bottled yellow syrup. I do the honey thing 2-3 times a week, yes it's sugar, but I have perfect blood pressure. I have no idea if I have inflammation or not. How would I tell? I always like to hear other people's weight loss success stories, to see what changes they made from my own plan and how it has worked for them. It sounds like your system has worked wonderfully for you, congratulations! I might try that honey trick... I do love honey. I find it incredibly useful. I wish I started smoking pot years ago. It helps me with writing headlines for copy, and also coming up with ideas. My head is usually racing a lot of places at once... when I smoke, it slows down my brain and I find that I'm able to explore my thoughts more thoroughly, because I don't zip off to the next thought that comes to me nearly as much. Sometimes I get interesting investing insights, other times I get marketing/copy ideas, and sometimes I just get really stoned and watch reruns of Gilmore Girls. Buffett has burgers and coke, I've got granola and weed. Whatever works! I agree with that. I am planning to try some hallucinogens later this year; my shrink thinks it's a great idea. She says it may end up helping with my chronic depression.

So I got stoned again, and I had this great realization. It is largely accepted as belief that being wrong is undesirable, because when you're wrong you aren't seeing the whole picture and will presumably make more errors because of this. Especially as investors, we're encouraged to admit that we're wrong quickly in order to maximize the power of our capital. Well guys what guys? The status quo had it wrong, again. This thought first occurred to me just minutes ago as I was remembering my struggle with weight loss over the past year. Over a period of several years, I allowed myself to balloon up to a high 170 from my "normal" of 150. It was the only time in my life I had ever been fat, even if it was only a little bit. It freaked me out, and combined with the joint pain I had been experiencing, I decided to call off the weight gain effective immediately, because I did not want to let this go and become obese. This was last last spring, if memory serves me correctly. To accomplish my weight loss, I created what I like to call the Scotty System. I cut out a lot of red meat (for the joints), but for everything else all I did was calorie count. I had done the math that at 1,200 calories a day, I would be happy with my weight loss. What I didn't do was avoid anything; I continued to eat cookies, ice cream, pizza, and potato chips. I just made sure that I had 1,200 calories per day, or less. Sometimes I would eat 600 - 800. Occasionally I would have to go over the 1,200 due to a road trip, but I'd make it up by undereating the equivalent amount the next day. In other words, no matter what, I made sure that the books were balanced and that my plan would succeed. And it did; it took about 2 weights to stop gaining from when I started, but when the tide turned, it turned in a major way. I somehow lost 20 pounds in just two or three months, which is quite a bit above what the math indicated I should lose if I recall right. I lost a substantial amount of muscle mass, probably from the cutting of red meat (used to eat steaks 2 - 3x a week). I got to 150, and my family was concerned about the rapid weight loss and asked if I was going to slow down at all, or attempt to stay at 150. I told them there was no way, because that was at the very high end of a "normal" weight range for someone my size. I told them that it was too dangerous; eating even two cookies could make me overweight. And I really convinced myself of this. This is obviously wrong, as my family rightly pointed out. Weight loss doesn't quite work that way. But I convinced myself that it did, and I kept up on my Scotty System. Even though I could maintain my weight at a higher calorie limit, I thought it was too risky to attempt for a really silly reason. But being wrong about the impact two cookies would have on my weight actually did me a solid, because not longer afterwards I hit a plateau. I continued my calorie counting, but the scale just wouldn't budge. Being so afraid of getting fat by eating two cookies too many helped me keep my calorie consumption lower than it "needed" to be, which kept up my resolve when confronted with my plateau, and probably stopped me from gaining some back and becoming demoralized. Eventually, the weight loss continued and I am now down to 137 pounds. It's as light as I've been since I was a teenager, and although I've had more plateaus, lately I've continued losing about half a pound a week. Although in hindsight my concerns about eating two cookies were silly, they helped give me that extra margin of safety I needed to psychologically stick with the Scotty System. Being wrong actually made me more effective at achieving my goals. I think there are applications in this for investing, too. I know a lot of times in the past, I've looked at how a fund manager invests and think that it's suboptimal and almost scoffing. For example, one of the things that used to get me was people who would only invest in companies that had little to no debt. I've known several. I think this philosophy is weird, because when used properly, debt can really be used to enhance shareholder returns. But it also carries a lot of risk. Is the chance of missing out on the next TCI worth excluding all debt-financed companies? Probably not, for an investor who has the ability to pick the good from the bad. But for many investors, it may be a blanket good policy if you're not comfortable with the economics of highly leveraged companies, and probably helps your performance if you can't distinguish between companies where it makes sense, and companies where it doesn't. Die hard value investors have been WRONG in recent years, when growth has beaten the pants off of value. And if you ask me, I think we've seen structural changes in the way the world operates that make growth more likely to continue winning in future years. But although they've been wrong, it doesn't mean they've been ineffective. It could be that many people who are wired for value investing either don't have the analytical capabilities or the risk appetite to invest in growthy companies, even if the expected value from doing so has been and may continue to be positive. If you don't understand them, even if it's strategically correct to invest in growth, you may well fuck it up. Even if the EXPECTED return is lower, you may be more analytically inclined towards those types of companies and deliver excess returns over the value benchmark. And even if not, if the returns would be worse for you investing in growth, it still makes sense to do it. Even if the average for growth is higher... the median may not be. It's the same sort of argument for the stock market. The studies have proven that most people can't beat the market; they're even worse than most people expect. But that doesn't mean it's impossible for people with certain traits to do so. You're betting against the base rate if you're even reading this right now, and most people report better-than-average returns here, for whatever that's worth. Maybe not much! I suppose this is a long winded way of saying that being wrong and being ineffective are not necessarily comorbid. I think it's important to make sure we don't confuse being wrong with being ineffective; in some cases, being wrong can help make you more effective.

I think that is true. For a long time people believes that VRX could make great acquisitions, and as a result the stock went on a rampage. I owned it for part of this ride; sold recently for tax purposes b/c I had to offset some big gains this year. The interesting thing to me about VRX is that I think Mike Pearson was basically right regarding his outlook about the drug industry. The incremental returns on capital are total dogshit and have been trending down for many years. Most of the money that goes into research is blown, and it's an industry where you have to run just to stand still when a hit product goes generic. I think the thing that killed him is he basically assumed he could fuck payers indefinitely without there being repercussions. If not for the revelation and shut down of Philidor, I'd guess VRX would be a $400 stock now and potentially a more robust enterprise by issuing stock for a big acquisition. If they'd pulled one off, even with the revelation of Philidor, there'd probably be no doubt about VRX's solvency, enabling even more deals. But that's not what happened, and the rest is history. I think this is actually a really good example of where understanding emotion is very useful, and I've talked about this on Twitter before. So I agree with you on that. On both the way up and the way down, Valeant's swings in share price were changing the range of outcomes for this company. My big mistake here was probably not properly understanding the extent of the rage that VRX, Shkreli, etc. whipped people into, and what other actors in the industry and government may do to counter them. It'll be interesting to see what will happen to it from here; my guess is it's either worth a lot more than the current price or it's worth zero. I have no skin in the game anymore, so I don't really care. But it was probably worth a lot more at $250, in either case. I think that's related, but not the entire extent of it. I think emotion can be quite useful in figuring out just how much companies can fuck their customers and have them take it, as well. I think many people got comfortable with the cable companies because they were customers themselves and knew that the service was fucking awful, but that there was no realistic alternative. I agree with you about creative businesses. It's a big reason why I own shares of IDWM, even though it's a bit difficult to put a valuation on it. Creative people can create some really unexpected outcomes sometimes. After a certain amount, additional experience in a field may in fact be detrimental to your performance in it because you can internalize the existing assumptions really quickly. I think maintaining a growth mindset is critical to success in most things.

So I got stoned again and I had this great idea. It is largely accepted as belief that being as dispassionate and emotionless as possible in your analysis of securities is the right way to go about it, because you're less likely to fall for your own mental hangups and biases regarding various companies and/or the people who work there and/or the products. Of course this is actually ALL BULLSHIT the teacher's pets like to say to sound smart and get Scooby Snacks from their PMs & Fintwit friends. Everybody knows emotion is unavoidable as a moist robot, and we like to shun away from it in favor of clear and rational decision making. I think that is incredibly stupid. Humans have evolved with emotion for good reason, and instead of shunning our heritage we should allow it its own time to take center stage. Just as the devil standing on Donald Duck's shoulder inevitably gets his day, I think there are times when we should allow emotion to as well. The reason is that emotion helps us empathize with each other, and some of us are better at that than others. By attempting to lock our emotions in the closet, we start to lose the ability to empathize with the customer of many of the companies that we invest in. If we do not understand him, it somewhat obscures the true prospects of the companies we're watching. Are they fads or legitimate? Is there anything this company can do to upsell to its existing customers by serving even more of their needs, emotional or otherwise? Some of that gets picked up in financial analysis and the sort of thinking Munger encourages us to participate in. Namely, the power of understanding incentives. But many incentives are not financial. They may be social, moral or from latent emotions the customer has brewing inside them. I think Berkshire is better at this than most; I imagine most of us have read Munger's analysis of how to make the perfect company (Coca-Cola), and his use of understanding the imprint Coke's advertising has left on the mind of the American (and at this point, world) consumer. By attempting to understand the emotions they feel towards the product, you can sometimes hit home runs. I think that's a very useful way of thinking. I also think that the concept more broadly can be added to by a sense of immersion, when possible. I would wager Buffett & Munger were able to understand the Coke consumer so well because they are (were?) Coke consumers themselves, and it's been around them and targeted to people like them all their lives. If they were investors born in some remote region of the world, because of its ubiquity, they'd still probably be able to understand the emotions of Coke consumers... but would they be able to understand it as well as they do, having been consumers? I applied this sort of thinking in my own life once, outside of investing. I was working at a company where my job was mostly to write quarterly earnings reports for publicly traded companies, and this company had a marketing department. I did not fully understand the value of advertising or how to do it effectively, and thought many (not all) of the established techniques used in the advertising industry were wrong... largely for the moral lack of regard for manipulation. But I wanted to learn why the industry works the way it did, and why copywriters wrote the way they wrote, so that I could attempt to improve upon it. So I asked one of the senior copywriters who was a friend of mine to let me work on some projects with him. He ended up assigning me a copy of Tested Advertising Methods and entered me into an internal copywriting tournament, which I ended up winning by using the same techniques that had been standard in the industry for 70 years. Techniques I never would have learned without attempting to gain some level of empathy with marketers. I think the same thing can apply in investing, and though Peter Lynch gets a lot of shit for it, I think his concept of investing in what you know goes a long way in that regard. What better way to understand the allure of a company's products than method act as if you are one of the company's customers? I think this has additional implications, too. It's often said that price is what you pay, value is what you get. That in the long term the market is a weighing machine, not a voting machine. And that a company's intrinsic value is independent of the price it trades at. I don't think I've ever heard something so stupid in my entire life. Which is that you cannot be a good analyst of companies that exhibit certain types of reflexivity without first understanding emotion. And there are a lot of companies that share this trait. REITs and MLPs for years have increased shareholder value by issuing equity to acquire or build new assets, and have largely had the benefit of having equity that trades at lower yields than the assets acquired. If you can raise equity at 20x earnings to acquire assets trading at 10x earnings, you're creating significant value for your shareholders all else being equal. Your intrinsic value per share is being increased from the fact that you can sell at 20 and buy at 10. That can create this weird sort of feedback loop where a company can be overvalued on the merits of its own financial performance, but when you account for the fact that it can issue equity at overvalued levels, it is actually undervalued because of the value those overvalued equity issuances can create when invested at relatively more attractive rates. All of this is a means of saying that in investing, emotions aren't bullshit and can be self-fulfilling. Look at the long term track record of the Kinder Morgan entities - up, up, up in a virtuous cycle - until it was faced with the threat of being cut off from the capital markets. The stock tanked, and consequently the value of the company was lowered because the spread in multiples contracted. And guess what? Market prices are driven in large part by... emotion. Getting cut off from your financing b/c investors are scared shitless? Emotion. Celebrities giving Nordstrom millions of dollars in free advertising since they cut Ivanka? Emotion. I think it's dangerous to try to check your emotion at the door every day, because nobody else is going to. P.S. There is no formula.

John - Can you explain the special tax rule in more detail? I used Google to translate the site, but the translation was difficult to understand.

It will be a sad day for America when Trump leaves office. America's story is his story now, and as the standard bearer of our nation we must do all we can to support and protect the first family while they Make America Great Again. My only fear is that too much damage has been done under 8 years of Obama for Trump to fix all of his messes by the end of his second term, and we'll be right back to politics as usual afterwards with big government bloat, partisan gridlock and an America brought to her knees at the hands of a weak Jimmy Carter-style president who inspires NOBODY. This is our one chance and we cannot screw it up. While Trump focuses on fixing America, we should engage our representatives to repeal the undemocratic 22nd Amendment and allow the voice of the people to be heard again. No more artificial restrictions; leadership continuity is so important as always, but especially now. Eight year terms are simply too short to allow a president to implement the full extent of his world view on the global stage!

+1

Scott is one of my favorite posters here. His videos are so hilarious that I had a hard time breathing since I am laughing so hard. On the other hand, some of his investment thesis are rock solid.Unlike other posters, I just can't put him in a slot. Scott, you should consider poker. Thank you Valcont. It is nice to hear that someone appreciates my efforts to restore sanity in America.

The one thing we can all agree on is that it is very important for each of us to spend our days talking about politics on an online message board with people we've mostly never met. It is our philanthropic duty to America to try to convert illogical liberals into Americans who can be proud of their country and the White House again. So many people feel so guilty about losing the first black first family, they are forgetting their duty to America's new first family. They're just not willing to give Trump a chance, which is a horrifying thing. This society of ours only works if we all agree not to look under the hood... and I hate to say it, but the liberals are looking and trying to convince others to look, too. If they succeed, it could mean the end of America and the world economy as we know it. Once people realize that the world economy is built on a house of cards, it's all over. It is in everyone's best interest to support the President and continue to believe in our economic and social systems or else they will no longer exist. When will you learn that this attempt to discredit the President is a trojan horse by the terrorists and once America no longer believes in him, that is when the attack begins. That's why it is so important that we continue to engage with each other every day about our political beliefs, because the American way of life truly is on the line. I know I personally count the time I spend on here posting about politics as a big needle mover for me personally, and also for the robustness of America's capitalist system.

This hasn't been a "value investing" message board in a few years. It's basically a politics board with some investing thrown in. I'm not sure that is a fair assessment. Show me another message board or investment website with as comprehensive a database of comments and analysis on equities like we have in the "Investment Ideas" section without "internet trolls"? How about a list of investing/finance/psychology books with comments from readers, other than on sites like Amazon, etc? Politics may seem annoying at times, but history shows that how politicians handle periods of crises, can ultimately decide the severity and duration of the eventual outcomes. Whatever people may want to say about Obama, and really Dubya as well, in my opinion the overall outcome of the financial crisis was handled relatively well by both, when you look at the magnitude of how things could have unfolded and how fast liquidity disappeared. How would things have turned out under Clinton, Reagan, Roosevelt, Nixon, Kennedy...and Trump? Studying the historical actions and outcomes of political leaders, and their parties, actually can provide investors valid information in making decisions. Ultimately, as value investors, we base our decisions on fundamentals. But during some periods of excess or crisis, macroeconomic events can have significant, and long-term effects...such as the Great Depression, World War 2, the creation and likely breakup of the European Union, etc. Cheers! You're right. I was being excessively harsh. But I (and others who have contacted me through PM) feel that the board would be much improved if political discussions were aggressively moderated. You're right that political events can have effects. But that is not close to what is being discussed here. Most of the posts in this thread have absolutely nothing to do with investing. They are attacks on either politicians or other posters. Excuse me. The idea that a bunch of adult men and women cannot moderate their own conversations is ridiculous; it is exactly this kind of nanny state bullshit that got America into this predicament in the first place with the Social Security and Medicare entitlements. It's why we're on the verge of America's first national bankruptcy and it's important to understand that so we never get into this situation again. Now you want Parsad to take the same tactics that have ruined the greatest country on earth and apply them to his message board. If you think the message board has declined from what it used to be now, just wait until we all have to watch our tongues or risk public spankings from the administrator. Give me a break. This kind of intervention does not work and it's important that we are all open and honest about it so that we can Make America Great Again.

This hasn't been a "value investing" message board in a few years. It's basically a politics board with some investing thrown in. It's a good thing, too. I think the rally since the crisis has shown value investing to be a fraudulent practice based off of wrong inputs and no one can really know the value of a business. We all know the value of the United States and it is so important to get the right man in the Presidency. We finally have a White House we can be proud of again and I do not blame anyone for taking victory laps. It's a great thing for America. Where the problem arises is with all the namby-pamby, tootie fruity protests like the Women's March, where millions of people are now attempting to discredit our incoming President on the world stage before he has had the chance to Make America Great Again. We must remain diligent and not allow these radicals to take us off course when we are so close to seeing through our plans of the first American National Bankruptcy. No one understands the knife's edge that America is on like Donald Trump and it is time that those of you who haven't supported him buck up and put nation before ideology.

It is important for a leader to appear to be liked and admired in order to give him the power to get anything done. It's very important that public perception of Trump is shaped in a favorable manner because it will help him achieve his policy goals and get his platform through the Congress. Leadership strength is reflexive, so it's important to look good early on.

Whether they make good returns or not isn't the point. My point is that the Net Income and cash flow dynamics of growing SaaS companies are actually not that attractive. There is no natural float. I remember reading about the early history of Salesforce. They were growing themselves into oblivion because the cash flow dynamics for new customers were so bad. They fixed this by charging annually in advance rather than monthly. They also lowered their cost of acquisition by moving to an inside sales force. So the "float" that the big SaaS players generate is due to the multi-year contracts that they need to cover the high initial cost of customer acquisition. -- The economics of SaaS are generally less attractive than on-premise. Churn, for example, is significantly higher. Margins are lower. However, SaaS is much more attractive to customers. Update: I don't remember where I read about the early history of Salesforce, but it might have been this book: https://www.amazon.com/Behind-Cloud-Salesforce-com-Billion-Dollar-Company-ebook/dp/B002PJ4SU2/ref=sr_1_1?s=books&ie=UTF8&qid=1484321419&sr=1-1&keywords=marc+benioff I think we have very different philosophies on what float is. Coming from a subscription business background, I would count that $500 as very real float. Every time you add a customer it pays for 1/3 of the next one, so you can scale at a faster rate than you otherwise could. The float is real and is generated, it just makes more sense not to hold onto it when you can reinvest at pretty good returns. It's a managerial decision; the float is real in terms of the deferred revenue liability. It's just a matter of what you're going to do with it. I'd be perfectly content for a company with a good subscription business model to show no or negative free cash flow if it can invest its float at very attractive firms. No thoughts on the Salesforce case in particular except that there is a good chance they were acting rationally; I just think it's important that my thoughts on the broader subject are better understood.