Green King

Thanks. That made my day. I laughed hysterically for a bit. I guess this is how you print great numbers in a bull market.

I am sorry I am extremely slow and I want to know this for sure. Is this right? Payoffs Is it like this At Par 20 to 30 bps negative carry with call duration 2 years At .5 Par you make 5000/20 250X of outlay In years 2 still at par you call back you CDO and loses 40 bps. Call back costing you BPS extra. You can do this because you are the dealer. People assume the housing market was going to move up. Who is taking the other side? this is LTCM like trades. I am assuming only AAA would want these.

So are you saying the call feature effectively lower the pricing on the short because if something goes wrong the CDO manager can buy it all back effectively squeezing the shorts? But in the Systemic market event, they could not since no one would have had the money to and you rip their face off. Or are you saving you can short super senior with a synthetic put @ a few hundred to one pay off? If the underlying goes to zero.

Yeah, but how valuable can that real estate be if it's next to a latex factory? You guys are forgetting the hidden cash cow - bottle collection and transport to Michigan for that 10cent recycling windfall. $$$ That loop Hole has closed. http://www.npr.org/sections/money/2013/02/20/172512177/why-people-smuggle-empty-cans-into-michigan

Things that are worth doing are always murky. Once a problem is solved or verified the value get arbitraged away. IV is based on the result all possible outcomes. That is why there are many layers of heuristics after the initial IV is done. Position sizing, Margins of Safety, handicapping and most importantly the expected businesses characters in the years follow the investment. (to know when to sell) The principles are easy to understand but hard to apply in real life. You are always taking on risk when you make an investment the most important question is, are you correctly compensated for taking it or Is it mispriced? Damodaran and most people spend too much on coming up with a believable number to show people. When in reality he should spend almost all of his time on the risk or the characteristics of the cash flow. Which is beyond the realms of numbers.

format it please I can't read this.

I mostly do this. Great. Do you have examples...more is better. No. Examples or evidence won't change your mind, you will block it out and look for evidence that aligns with your view. Unless you understand & acknowledge anchoring bias... This is the hardest thing of them all. This is what Makes Buffett and George Soros great the lacking in path dependence. It is best to try and avoid it with a good process than to think you can have such power of clarity.

Since we are near the note of smoking week and watching cartoons. You need to do things to recharge your batteries. For me, it is walking watchings movies and playing games. Sometimes I go on week long bike rides where I do around 70K a day for a week. Investing is not about quantity of work but the quality of work and that resources at least for me drains quickly. There is also faults on doing too much work when I was starting I once read 15 years of annual reports to do an investment in an oil company. The reports didn't matter only one thing mattered the price of oil and their cost of production. I lost around 50% of the investment. The management has lost their shirts. They got lucky with oil prices back in the 2000s. Investing are about heuristics that are time tests here are some. Sometimes doing to much work also hurt you due to consistency and commitment. Sometimes talking about your ideas to the public hurts you since you are pounding it in when you share an idea with others making it hard to sell when more information is revealed. There is also a difference between knowing something and having evidence of something. If you look at enough companies you can tell within the first few minutes of looking at the financials and price, to continue or pass. There is also a difference between having evidence and knowing something. Knowing something takes months to years having evidence takes a few hours to a few days.

You are supposed to do both. The 10-Ks are just homework. But on the next level investing is allocation time and money. In some investments, the 10-K doesn't say much. You have to effectively allocate all your resources. On another note, there is also execution. If you are making 1to 2 percent bets on multi-baggers with high convexity exposure to the upside you don't even need to be right half of the time.

It's hard. I've looked. Also, China is in early stages there are not many great companies. I just looked again they look overvalued ATM. In retrospect, I did miss a lot of opportunities back in 2013 to 2014 period when I look at a few hundred companies. But I was just young and ignorant back then so maybe next time.

Nail, head... I think they are serious. when Buffett said the best way to learn about the stock market is to look at companies from A to Z Which I did, I have looked at all the companies on the TSX. It was an extremely rewarding experience once I got to the last 100. But there is no way for me to do 12 hrs on a long term basis and absorb the information. They must be pretty special like major league athletes. I am a bit skeptical of its returns on time spent since most of the world's information and insight is run by 10% to 20% of the ideas. He should be getting to diminishing returns pretty quickly at that paste.

That was the most interesting part to me. I wish I could just go to a CEO in the industry I'm looking at and ask them to explain to me what's most important, the market dynamics, what they think of each competitor, etc. could learn so much faster that way. Keep up compounding maybe we all can have such edge in 30 years. :)

wow, 12 hrs of reading. That informational and experience edge from owning many private businesses.

wow, that alpha didn't last long. Hope their investors got out ok. edit nvm that was back in 2011

Keep in mind when people are doing new things that haven't worked before. It is not about it working, it is more about trying new things. Since every trail and error brings new information about the world that we didn't know before. New information is what we need to advance the Civilization.

When I first heard about the hyperloop I thought he was trying to Tom Sawyer other people into doing the early Technology for his electric plane idea.

Yeah, I've noticed that before. Unfortunately, I don't even have a twitter account. Get one you are missing out. Fintwit has great information flow if you get used to filtering out the noise.

Hang in there. There is an innate conflict of interest built in the process since your taxes pays their salary. With budgetary problems they are facing dragging their feet is perfectly normal.

LOL, you got me at. Cheers Thanks for the information from the Streetz

Look into my eyes. :D

you mean to say you don't see that in your head when you are reading annual reports. ;D

Sounds like you have insight please elaborate.

Great Book. If you get bored get the audio book. half way done. It has strong familiarity my experiences in the past year. Helping my family build a consumer beverage company from a piece of paper. Leverage, negotiating, positioning dealing with stake holders. Hiring people and getting them to contribute to you vision and actually do work. Working with people getting ideas across and then implemented. Injecting a brand with emotional appeal with the products's natural characteristics and desires of the consumer. overall informative and enjoyable read.

Care to explain the mechanics and reasoning behind doing that ? This was the first oil boom and Calgary had little experience with the boom and bust cycle. Jobs were plentiful, adventure was everywhere, pay was good, and as in booms everywhere; people bought ‘toys’ and expensive houses – sure it would never end. Dome Petroleum was the ‘darling’; and I was a 2nd year petroleum engineer flying up and down the McKenzie Valley pipeline, teaching Cariboo to walk under elevated pipeline, & doing engineering tests on cold weather metal fatigue and heavy drop parachutes (D9 cats yanked out of a Hercules in flight, & dropped softly onto a 50m target, when the plane is going at 200km+ an hour). Then the bust struck. Petroleum Engineers with 30yrs experience couldn’t get a job, & went from king to bum in under 6 months. It lasted a long time, folks couldn’t pay their bills, and mortgage foreclosures went through the roof (often every 2nd or 3rd house on a street). Alberta’s depression era laws were still on the books, & they had the effect of making recourse loans ‘non-recourse’ under certain conditions. If you had title, you could essentially ‘quit stake’, sell your property in a public auction, and just give the banker the proceeds; if it wasn’t enough to pay off the mortgage – the banker had to take the loss. Block party auctions were common, underwater homeowners would put their property on the block, and ‘enforcers’ would ensure that nobody offered more than $1 - or competed against the selected ‘winning’ family (cant bid if you’ve been rabbit punched, & are on the ground with a boot across your throat). It was community action, and it saved a great many people from poverty. I went to university with many of the sons & daughters of these people, and many of their dads owed their companies to a successful win at poker – when it was common for roughnecks to ante up their partial well interests, so that the winner would have a better chance at building something. They were being wiped out, and there were more than a few suicides. I found it utterly amazing, & extremely odious, that Canada’s banks didn’t know their sh1t; and that this level of misery had been allowed to happen. I changed majors to finance, researched what had made it so bad, left Calgary, & swore it would never happen to me. I learnt these things are recurring, what you can do to avoid getting burnt, and how to exploit them. It turned me into a counterculture value investor, & I have been forever grateful for it. Not much different to the experiences of many of the ‘greats’. SD Thanks you that made my day, you always have the nicest things to share. Those bankers were probably under a lot of pressure from Gresham's law, being mostly empty suits with no skin in the game they did what ever the system allowed. This added with Eric house buying story make me question the true strength of large national banks. Will they eventually self implode as success make them large and their size eventually become their greatest handicap? like what happens to most fund managers when they get large.

Care to explain the mechanics and reasoning behind doing that ?