Klarman Holding 50 Percent Cash

[Vish_ram]

A decade ago I used to be like Blake. Totally drunk on value investing and Buffett. I had a contempt for gamblers who own anything that had P/E of above 15.

 

over time I came to realize that hard core value investing is a disease, a kind of mental retardation. This afflicts lots of folks and makes them underperform major indices.

 

Most of S&P firms are in land grab mode. A race to invest and ward off competition. This makes metrics look overvalued. Last 15 years has seen the emergence of platform companies that have enduring moats.

 

another factor is inflation. This is what opened my eyes towards BTC. Real returns of S&P is hardly 2-4%. Most real estate match inflation of 7-8%. 
 

high quality are the best way to beat inflation. If someone is between 30-50 years and say own significant  VOO QQQM, assume whole market drops 50%, then you keep investing from your income. 
 

Even then you end up being fine. You get normalized returns, more dividends etc. 
 

I wish I never picked up Buffetts aversion towards tech. It has costed me 5-10M.I recovered from Buffetitis (not Buffetts tits) soon enough. 

Edited Saturday at 07:35 PM by Vish_ram

[cubsfan]

@james22

 

1. There are questions waiting to be answered that no one in human history has been able to answer.

 

2. It's possible to think for yourself, reason through first principles, and solve these kinds of problems.

 

^^^ This is so good - it's the insights, circle of competence.

 

In 2012, I wrote up a valuation for a friend of mine for ServiceNow. I used to work for the CEO and understood the business model/technology.  It was May 2012, IPO's were dead. This was one of the few. The IPO price was $22 - all the metrics were outrageous. But the growth rate was 100%, the problem they were solving was covered by #1 basically. So my model showed him - if the renewal rate stayed high, and the growth rate was intact, $50/share was entirely possible. He worked for them and was incredulous. I just told him, all he needed to worry about was whether his customers (he was a sales guy) were happy and renewing.

That was it. All the employees were selling their stock, becuase it was an IPO desert and they were terrified of the stock collapsing.

 

Fast forward 1 year - stock hits $50, he sells all his stock. AND I SOLD MY 2000 shares that I owned at $22.  

 

I'm like - well - the stock has 2X in 12 months - and the valuation metrics don't make sense.

 

Yesterday NOW closed at $1225/share.  So I missed out on $2.5M because the valuation was high, but I understood the business.

 

Business insights are what matter.

[Vish_ram]

I joined Oracle and got stock at split adjusted 2.5 (1999). It went to 48 and then collapsed to 8. I became a value guy and when it recovered to 12 got out. I bought all value crap. 
 

I used their software day in and out. It was painful, crappy, buggy, slow to embrace latest tech, everyone hated it …..

still a friggjn sticky software that just keep moving higher and higher. 
 

One thing I learnt is that no one knows shit. Learn things for yourself and develop conviction. Fill your mind with your knowledge else it gets filled with outside crap.

Edited Saturday at 08:02 PM by Vish_ram

[cubsfan]

Since @james22  @Vish_ram @Blake Hampton  are making me re-live a very painful investment mistake - I thought I would post my valuation that I am referencing. My good friend was a sales guy and understood nothing about valuation. He only though about stock prices.

So I wrote this up for him - so he wouldn't sell his stock.  I wrote it March 2012, about 30 days before the IPO.  He got me a copy of the red-herring, and after I read it - I'm like - dude don't sell this stock.. here's my analysis.  This took me about 10 hours of work - but MOST importantly - I understood the business having sold for the CEO previously.

 

Maybe you will enjoy this huge mistake of mine.  

---

ServiceNowForm S-1.webarchive ServiceNowDoc.pages

[james22]

This what Gregmal mentioned earlier, cubsfan?

 

16 hours ago, Gregmal said:

I am quite certain if you shared some of the details and personal experiences you had that you shared with many of us(I’ll refrain from hash-tagging like 15 COBF members here) on the yatch at the St Joe AGM, many would appreciate your journey and take that wisdom with more than a grain of salt. It was awesome and quite entertaining to say the least. 

 

If not, please share.

[cubsfan]

12 minutes ago, james22 said:

This what Gregmal mentioned earlier, cubsfan?

 

 

If not, please share.

 

Shit - I'm glad your enjoying my post-mortem. I try and forget about this one

 

I will gladly write up the conversation from the St Joe yacht and post it.

[vinod1]

On 1/24/2025 at 2:39 PM, boilermaker75 said:

 

I read the book a long time ago. My recollection is that I didn't get what was so great about it. Maybe I need to reread it.

 

Glad I am not the only one who felt like that. 

 

It is an ok book, but nothing stood out to me. I always write up notes on a book that I really liked and want to incorporate it into practice. I think I have notes of about 10 investment books, this did not make the cut.

 

Vinod

[73 Reds]

35 minutes ago, Vish_ram said:

A decade ago I used to be like Blake. Totally drunk on value investing and Buffett. I had a contempt for gamblers who own anything that had P/E of above 15.

 

over time I came to realize that hard core value investing is a disease, a kind of mental retardation. This afflicts lots of folks and makes them underperform major indices.

 

Most of S&P firms are in land grab mode. A race to invest and ward off competition. This makes metrics look overvalued. Last 15 years has seen the emergence of platform companies that have enduring moats.

 

another factor is inflation. This is what opened my eyes towards BTC. Real returns of S&P is hardly 2-4%. Most real estate match inflation of 7-8%. 
 

high quality are the best way to beat inflation. If someone is between 30-50 years and say own significant  VOO QQQM, assume whole market drops 50%, then you keep investing from your income. 
 

Even then you end up being fine. You get normalized returns, more dividends etc. 
 

I wish I never picked up Buffetts aversion towards tech. It has costed me 5-10M.I recovered from Buffetitis (not Buffetts tits) soon enough. 

Successful investing is always about evolution.  What worked when Buffett got started no longer works because technology leveled the playing field.  Everyone has the same information.  That doesn't mean sound investment principles disappeared.  To your point, I read long ago that the unlucky sucker who buys the same amount of an S&P 500 index fund every year at its exact high price still outperforms most professional money managers over time.  That takes [less than] no skill.  But really good investors find their sweet spot.  It differs for everyone.  Those who don't have the time, patience or inclination to devote to investing can do just fine with a portfolio such as the one you poster earlier.   What I don't necessarily agree with is that value investing is dead.  Personally, when it comes to public equities I only buy low hanging fruit.  It still works, particularly when you have other places to invest spare cash, my own personal sweet spot.  Nearly everything I know about investing started with Buffett, perhaps most importantly the benefit of owning [private] operating companies as opposed to entirely public stocks.  That is one way Buffett evolved.  As many have suggested in the past, follow Buffett's lead, not just his words and never sell him short. 

[james22]

20 minutes ago, 73 Reds said:

I read long ago that the unlucky sucker who buys the same amount of an S&P 500 index fund every year at its exact high price still outperforms most professional money managers over time.

 

Yep, the bar is very, very high.

 

The cost of waiting for the perfect moment to invest typically exceeds the benefit of even perfect timing.

 

https://www.schwab.com/learn/story/does-market-timing-work

 

 

Etc.

 

 

We should add Vish_Ram's suggested portfolio to the yearly scorecard.

 

6 hours ago, Vish_ram said:

A portfolio of 5% IBIT, 50% VOO and 45% QQQM will outperform 99.5% of all COBF readers.

[james22]

31 minutes ago, 73 Reds said:

That takes [less than] no skill.

 

I believe holding is a skill (as it can be learned/developed) and more important than security selection (especially if young).

[Paarslaars]

Holding requires conviction. This can be due to blind faith or competence in the subject matter. One of those is a skill, the other a bad habbit. So let's say you're both right.

[villainx]

6 hours ago, Vish_ram said:

A portfolio of 5% IBIT, 50% VOO and 45% QQQM will outperform 99.5% of all COBF readers. 

 

 

This is supposed to outperform VOO in good and bad markets?  What's the theoretical outperformance from VOO supposed to be?

[cubsfan]

How did I get here - my painful investment journey - as told to the St Joe crowd.

 

Basically, you could call it: Don't try this at home, learn from me.

 

So I started selling software in 1980 after working as a programmer for 4 years out of college.

I sold for 15 years to major corporations - enterprise class systems - and then I managed sales people for 16 years. All until 2009 when I moved on to investing full time.

 

I majored in economics and graduated in 1977, fortunately I took 3 programming courses which I enjoyed immensely and that gave me a significant leg up on technology sales, since no one knew what software was. My liberal arts school had no business or finance course at all, so I didn't understand financial statements and didn't care.

 

As I moved through the late 1980's - I started to make a lot of money - and invested almost all of it into real estate and stocks. That seemed to go "ok" - and I'm like - this is cool to get the money working for me.  Now we get to the 1990's - tech is really taking off..

 

And I know NOTHING about valuation, except watch stocks go up, and perhaps my companies revenues are increasing. Revenues are strong - company stock goes up. That's what I knew. Sales.

 

So in the 90's - I made millions, especially, the last 3 years of the 90's as we approached Y2K.

Everyone was replacing their technology because of huge budgets dedicated to avoiding the Y2K cliff.  I tell people in the 90's, I made millions on the side - and ONLY owned tech stocks. I could not understand why anyone would own a consumer durable or anything. I'm like, I have a leg up.

I'm smart, I'm in the business, I know what customers are buying, I'm leading edge, blah, blah, blah. So this goes on for, call it 13 years - and then BOOM!

 

I get fucking creamed in the March 2000 tech collapse when MicroStrategy does their massive revenue recognition restatement. You had this double whamming of Y2K ending in December 1999, and then Microstrategy shakes the tech world with - the tech party is over and Cisco and everyone and their brother were stuffing the channel and playing fast & loose with revenue recognition. My own company, which I joined 3 years earlier - my stock options were $16 and 18 months later the stock was $325. I had a lot of options and at the height, were worth $8M+.

Only one problem - very few of us were fully vested. Fuck!

 

So over the next 18 months - our stock collapses from $325 - and within another 3 years - files for BK. Fortunately, I get out with about $1.5M - which was life changing for me. Meanwhile, on my brilliant, insightful 100% tech portfolio (self managed) I go from $5M to $1.2M in 18 months.

Don't forget - I'm a tech genius that knows nothing about valuation except sales growth.

 

So what happens?  After 13 years of very bad habits, I'm like "what the fuck just happened?".

And during this period, I start to remember this name Buffett. So I stopped doing any investing for about 1 year or more - and just start to "re-assess" my approach.

 

Why did I go to Buffett, you ask??..    Because he was the last man standing. All the tech bros made fun of him in the 90's (not me, cause I didn't know anyone but my investing heros - Ellison, Scott McNeally, Marc Andreessen, etc). They all made fun of him because he wouldn't invest in tech.  But what I noticed is that in 2000-2002 - Berkshire is making new highs. 

I'm like - something to learn here. So I spent an entire weekend reading the Berkshire Hathaway website. It looks exactly the same today as 24 years ago. And I'm laughing - like WTF - no pictures, no graphics, nothing - this is the most boring, unappealing, plain website I've every seen! This is some kind of joke?? Right??

 

Anyway - I read every section and stumble upon the Owner's Manual.  

I'm like what the hell....  he's saying - I don't care if you buy the stock, I'll tell you if it's cheap or overpriced if I feel that way. We view you as a partner, we don't screw our partners. We don't talk to analysts, we will not promote our stock. We want you forever. If you're a short term owner - we don't want you., etc, etc, etc.

 

I'm like - this guy can't be real. Every tech CEO I've ever worked for, thought his job was to push the shit out of the stock. Every single one of the sleaze bags. I've sat in those calls with my tech CEO's where I KNEW they were lying out their ass. I'm like, that product doesn't work - why are you saying this shit. Oh, yeah, his job is to sell the stock - that's why....

 

So with Buffett - it was like a bolt of lighting. You mean this guy is the greatest investor of all time and he doesn't push his stock. He doesn't fuck investors. I was always used to "buyer beware".  I got to learn more. He writes this letter so his sister can understand it??? He won't screw his sister!!

 

So I start reading everything I could get my hands on in regards to Buffett. I buy his stock. I go to my first meeting in 2003 in Omaha. And my tech friends are saying to me "You're going to go to a business meeting all day Friday/Saturday/Sunday in Omaha to listen to some 70 yr old - what's the matter with you?"

 

Now I'm really blown away - a stock is a piece of a business, not a piece of paper. Simple businesses are GOOD - because they are predictable -and you should be able to value them.

WTF?  Tech was all I knew - you just gotta get on that rocket ship and hang on....otherwise, get another job when it tanks.

 

All that worked for YEARS until it didn't.

 

So, yeah, I was able to rebuild myself. It's possible to make tons of money doing absolutely the wrong thing. I consider myself lucky to have survived that. But the epiphany was Buffett. I can honestly say, losing the money was bad, horrible, and painful. But coming to the understanding that you were a total, arrogant fool was worse. It could have cost me my wife and family if I had not powered through it and rebuilt myself.

 

Thing is - I've always had the temperament for investing. I am willing to take risk to lose money. I like learning about new businesses, etc. I like the challenge. I find it very exciting, and I know it works when it is done right. BUT - It's not easy. I pride myself on attempting to always be willing to learn.

 

Charlie Munger "Anyone that thinks investing is easy is stupid" - YUP! That was me.

 

But ARROGANCE will absolutely kill you. As has been said many times here - you do not know what the future holds. Anything can happen. We will have bad times, but you can still do very well.

Most of my investing lifetime - the market has looked expensive - and when it's looked cheap - it's looked very, very scary. Those are the times when you are absolutely terrified. The Tech bust, The GFC, Covid - those were brutal times. So take your pick - if you think you can predict it -have at it.

 

David Rosenberg has my favorite saying "You make your most money during bad, bad time - you just don't realize it at the time"

That's why insights are so important. Find a good business, follow it, buy it on the dips, load up when you are terrified.

 

I'm sorry about the long post. Blake is a very smart young man, and should do well.

But getting your head right requires some experience and unfortunately scars.

The perfect times are few and far between.

 

So as Buffett says, I'd rather learn from the investing mistakes of others (like me).

[73 Reds]

8 minutes ago, cubsfan said:

How did I get here - my painful investment journey - as told to the St Joe crowd.

 

Basically, you could call it: Don't try this at home, learn from me.

 

So I started selling software in 1980 after working as a programmer for 4 years out of college.

I sold for 15 years to major corporations - enterprise class systems - and then I managed sales people for 16 years. All until 2009 when I moved on to investing full time.

 

I majored in economics and graduated in 1977, fortunately I took 3 programming courses which I enjoyed immensely and that gave me a significant leg up on technology sales, since no one knew what software was. My liberal arts school had no business or finance course at all, so I didn't understand financial statements and didn't care.

 

As I moved through the late 1980's - I started to make a lot of money - and invested almost all of it into real estate and stocks. That seemed to go "ok" - and I'm like - this is cool to get the money working for me.  Now we get to the 1990's - tech is really taking off..

 

And I know NOTHING about valuation, except watch stocks go up, and perhaps my companies revenues are increasing. Revenues are strong - company stock goes up. That's what I knew. Sales.

 

So in the 90's - I made millions, especially, the last 3 years of the 90's as we approached Y2K.

Everyone was replacing their technology because of huge budgets dedicated to avoiding the Y2K cliff.  I tell people in the 90's, I made millions on the side - and ONLY owned tech stocks. I could not understand why anyone would own a consumer durable or anything. I'm like, I have a leg up.

I'm smart, I'm in the business, I know what customers are buying, I'm leading edge, blah, blah, blah. So this goes on for, call it 13 years - and then BOOM!

 

I get fucking creamed in the March 2000 tech collapse when MicroStrategy does their massive revenue recognition restatement. You had this double whamming of Y2K ending in December 1999, and then Microstrategy shakes the tech world with - the tech party is over and Cisco and everyone and their brother were stuffing the channel and playing fast & loose with revenue recognition. My own company, which I joined 3 years earlier - my stock options were $16 and 18 months later the stock was $325. I had a lot of options and at the height, were worth $8M+.

Only one problem - very few of us were fully vested. Fuck!

 

So over the next 18 months - our stock collapses from $325 - and within another 3 years - files for BK. Fortunately, I get out with about $1.5M - which was life changing for me. Meanwhile, on my brilliant, insightful 100% tech portfolio (self managed) I go from $5M to $1.2M in 18 months.

Don't forget - I'm a tech genius that knows nothing about valuation except sales growth.

 

So what happens?  After 13 years of very bad habits, I'm like "what the fuck just happened?".

And during this period, I start to remember this name Buffett. So I stopped doing any investing for about 1 year or more - and just start to "re-assess" my approach.

 

Why did I go to Buffett, you ask??..    Because he was the last man standing. All the tech bros made fun of him in the 90's (not me, cause I didn't know anyone but my investing heros - Ellison, Scott McNeally, Marc Andreessen, etc). They all made fun of him because he wouldn't invest in tech.  But what I noticed is that in 2000-2002 - Berkshire is making new highs. 

I'm like - something to learn here. So I spent an entire weekend reading the Berkshire Hathaway website. It looks exactly the same today as 24 years ago. And I'm laughing - like WTF - no pictures, no graphics, nothing - this is the most boring, unappealing, plain website I've every seen! This is some kind of joke?? Right??

 

Anyway - I read every section and stumble upon the Owner's Manual.  

I'm like what the hell....  he's saying - I don't care if you buy the stock, I'll tell you if it's cheap or overpriced if I feel that way. We view you as a partner, we don't screw our partners. We don't talk to analysts, we will not promote our stock. We want you forever. If you're a short term owner - we don't want you., etc, etc, etc.

 

I'm like - this guy can't be real. Every tech CEO I've ever worked for, thought his job was to push the shit out of the stock. Every single one of the sleaze bags. I've sat in those calls with my tech CEO's where I KNEW they were lying out their ass. I'm like, that product doesn't work - why are you saying this shit. Oh, yeah, his job is to sell the stock - that's why....

 

So with Buffett - it was like a bolt of lighting. You mean this guy is the greatest investor of all time and he doesn't push his stock. He doesn't fuck investors. I was always used to "buyer beware".  I got to learn more. He writes this letter so his sister can understand it??? He won't screw his sister!!

 

So I start reading everything I could get my hands on in regards to Buffett. I buy his stock. I go to my first meeting in 2003 in Omaha. And my tech friends are saying to me "You're going to go to a business meeting all day Friday/Saturday/Sunday in Omaha to listen to some 70 yr old - what's the matter with you?"

 

Now I'm really blown away - a stock is a piece of a business, not a piece of paper. Simple businesses are GOOD - because they are predictable -and you should be able to value them.

WTF?  Tech was all I knew - you just gotta get on that rocket ship and hang on....otherwise, get another job when it tanks.

 

All that worked for YEARS until it didn't.

 

So, yeah, I was able to rebuild myself. It's possible to make tons of money doing absolutely the wrong thing. I consider myself lucky to have survived that. But the epiphany was Buffett. I can honestly say, losing the money was bad, horrible, and painful. But coming to the understanding that you were a total, arrogant fool was worse. It could have cost me my wife and family if I had not powered through it and rebuilt myself.

 

Thing is - I've always had the temperament for investing. I am willing to take risk to lose money. I like learning about new businesses, etc. I like the challenge. I find it very exciting, and I know it works when it is done right. BUT - It's not easy. I pride myself on attempting to always be willing to learn.

 

Charlie Munger "Anyone that thinks investing is easy is stupid" - YUP! That was me.

 

But ARROGANCE will absolutely kill you. As has been said many times here - you do not know what the future holds. Anything can happen. We will have bad times, but you can still do very well.

Most of my investing lifetime - the market has looked expensive - and when it's looked cheap - it's looked very, very scary. Those are the times when you are absolutely terrified. The Tech bust, The GFC, Covid - those were brutal times. So take your pick - if you think you can predict it -have at it.

 

David Rosenberg has my favorite saying "You make your most money during bad, bad time - you just don't realize it at the time"

That's why insights are so important. Find a good business, follow it, buy it on the dips, load up when you are terrified.

 

I'm sorry about the long post. Blake is a very smart young man, and should do well.

But getting your head right requires some experience and unfortunately scars.

The perfect times are few and far between.

 

So as Buffett says, I'd rather learn from the investing mistakes of others (like me).

Great post, Cubs.  Thanks for sharing that.

 

<<Most of my investing lifetime - the market has looked expensive - and when it's looked cheap - it's looked very, very scary>>  The very reason why holding cash for any extended amount of time makes no sense.   Such folks won't buy when the market is too expensive and won't buy when it get's cheap b/c they are scared and waiting for it to go lower.

[james22]

25 minutes ago, cubsfan said:

How did I get here - my painful investment journey - as told to the St Joe crowd.

 

Great, thanks.

 

I started investing mid-90s.

 

100% QQQ

 

Worked great, until it didn't.

[james22]

[villainx]

Thanks @cubsfan!

 

Another important thing is that time + patience can be a great friend. Whether one is in his or her 20s, 30s, 50s, or whatever, there is still time.  

 

 

[villainx]

1 hour ago, cubsfan said:

I will gladly write up the conversation from the St Joe yacht and post it.

 

How many investor dinner/lunch/yacht meet ups are there?  Berkshire, Fairfax, now St Joe, anything else?

[cubsfan]

14 minutes ago, villainx said:

 

How many investor dinner/lunch/yacht meet ups are there?  Berkshire, Fairfax, now St Joe, anything else?

 

I've been to 2 Fairfax meetings and they are wonderful. The meetings/conferences around it are very worthwhile. Figure a couple days if you take it all in.

 

Berkshire week & meeting - been to around 18 - worth it definitely

 

St Joe - was really a great experience first time, going again this year. Figure 2 days. Eyeopening if you are considering or own JOE. Management will surprise you very positively.

 

Plenty of members manage to make these. You'll make very smart guys, and often find an idea that more than pays for your trip.

 

Invest in yourself if you have the time.

 

 

[cubsfan]

1 hour ago, james22 said:

 

Great, thanks.

 

I started investing mid-90s.

 

100% QQQ

 

Worked great, until it didn't.

 

We're more alike than I thought!

[TwoCitiesCapital]

On 1/24/2025 at 3:12 PM, Blake Hampton said:

I think ZIRP has really screwed up a lot in the investment world. You have a real disadvantage when your competition is willing to leverage itself to the sky and you're not, especially when rates remained so low for so long. That said, I do think there were a lot more opportunities pre-2020 where you could've made a bundle. I think it's gotten a lot more difficult since then.

 

+1

 

IIRC, Klarman does quite a bit with distressed credit type situations and doesn't solely stick to public equities. A zero rate world in which every high yield company can refinance at record low rates AND spread is a world in which most of those opportunities don't exist. 

 

He deserves his reputation, but rightfully deserves criticism for not evolving quickly  enough with the times like the other value guys (and myself). 

 

On 1/24/2025 at 6:31 PM, james22 said:

 

Investing is about risk-taking.

 

It's about risk taking WHEN you're being compensated adequately. 

 

On 1/25/2025 at 10:10 AM, Blake Hampton said:

Please someone fill me in on how QQQM and IBIT are good investments.

 

I won't defend the QQQM, but if you're absolutely serious and open minded about IBIT/Bitcoin then I'd be happy to discuss via DM. 

[John Hjorth]

21 hours ago, cubsfan said:

How did I get here - my painful investment journey - as told to the St Joe crowd.

 

Basically, you could call it: Don't try this at home, learn from me.

 

So I started selling software in 1980 after working as a programmer for 4 years out of college.

I sold for 15 years to major corporations - enterprise class systems - and then I managed sales people for 16 years. All until 2009 when I moved on to investing full time.

 

I majored in economics and graduated in 1977, fortunately I took 3 programming courses which I enjoyed immensely and that gave me a significant leg up on technology sales, since no one knew what software was. My liberal arts school had no business or finance course at all, so I didn't understand financial statements and didn't care.

 

As I moved through the late 1980's - I started to make a lot of money - and invested almost all of it into real estate and stocks. That seemed to go "ok" - and I'm like - this is cool to get the money working for me.  Now we get to the 1990's - tech is really taking off..

 

And I know NOTHING about valuation, except watch stocks go up, and perhaps my companies revenues are increasing. Revenues are strong - company stock goes up. That's what I knew. Sales.

 

So in the 90's - I made millions, especially, the last 3 years of the 90's as we approached Y2K.

Everyone was replacing their technology because of huge budgets dedicated to avoiding the Y2K cliff.  I tell people in the 90's, I made millions on the side - and ONLY owned tech stocks. I could not understand why anyone would own a consumer durable or anything. I'm like, I have a leg up.

I'm smart, I'm in the business, I know what customers are buying, I'm leading edge, blah, blah, blah. So this goes on for, call it 13 years - and then BOOM!

 

I get fucking creamed in the March 2000 tech collapse when MicroStrategy does their massive revenue recognition restatement. You had this double whamming of Y2K ending in December 1999, and then Microstrategy shakes the tech world with - the tech party is over and Cisco and everyone and their brother were stuffing the channel and playing fast & loose with revenue recognition. My own company, which I joined 3 years earlier - my stock options were $16 and 18 months later the stock was $325. I had a lot of options and at the height, were worth $8M+.

Only one problem - very few of us were fully vested. Fuck!

 

So over the next 18 months - our stock collapses from $325 - and within another 3 years - files for BK. Fortunately, I get out with about $1.5M - which was life changing for me. Meanwhile, on my brilliant, insightful 100% tech portfolio (self managed) I go from $5M to $1.2M in 18 months.

Don't forget - I'm a tech genius that knows nothing about valuation except sales growth.

 

So what happens?  After 13 years of very bad habits, I'm like "what the fuck just happened?".

And during this period, I start to remember this name Buffett. So I stopped doing any investing for about 1 year or more - and just start to "re-assess" my approach.

 

Why did I go to Buffett, you ask??..    Because he was the last man standing. All the tech bros made fun of him in the 90's (not me, cause I didn't know anyone but my investing heros - Ellison, Scott McNeally, Marc Andreessen, etc). They all made fun of him because he wouldn't invest in tech.  But what I noticed is that in 2000-2002 - Berkshire is making new highs. 

I'm like - something to learn here. So I spent an entire weekend reading the Berkshire Hathaway website. It looks exactly the same today as 24 years ago. And I'm laughing - like WTF - no pictures, no graphics, nothing - this is the most boring, unappealing, plain website I've every seen! This is some kind of joke?? Right??

 

Anyway - I read every section and stumble upon the Owner's Manual.  

I'm like what the hell....  he's saying - I don't care if you buy the stock, I'll tell you if it's cheap or overpriced if I feel that way. We view you as a partner, we don't screw our partners. We don't talk to analysts, we will not promote our stock. We want you forever. If you're a short term owner - we don't want you., etc, etc, etc.

 

I'm like - this guy can't be real. Every tech CEO I've ever worked for, thought his job was to push the shit out of the stock. Every single one of the sleaze bags. I've sat in those calls with my tech CEO's where I KNEW they were lying out their ass. I'm like, that product doesn't work - why are you saying this shit. Oh, yeah, his job is to sell the stock - that's why....

 

So with Buffett - it was like a bolt of lighting. You mean this guy is the greatest investor of all time and he doesn't push his stock. He doesn't fuck investors. I was always used to "buyer beware".  I got to learn more. He writes this letter so his sister can understand it??? He won't screw his sister!!

 

So I start reading everything I could get my hands on in regards to Buffett. I buy his stock. I go to my first meeting in 2003 in Omaha. And my tech friends are saying to me "You're going to go to a business meeting all day Friday/Saturday/Sunday in Omaha to listen to some 70 yr old - what's the matter with you?"

 

Now I'm really blown away - a stock is a piece of a business, not a piece of paper. Simple businesses are GOOD - because they are predictable -and you should be able to value them.

WTF?  Tech was all I knew - you just gotta get on that rocket ship and hang on....otherwise, get another job when it tanks.

 

All that worked for YEARS until it didn't.

 

So, yeah, I was able to rebuild myself. It's possible to make tons of money doing absolutely the wrong thing. I consider myself lucky to have survived that. But the epiphany was Buffett. I can honestly say, losing the money was bad, horrible, and painful. But coming to the understanding that you were a total, arrogant fool was worse. It could have cost me my wife and family if I had not powered through it and rebuilt myself.

 

Thing is - I've always had the temperament for investing. I am willing to take risk to lose money. I like learning about new businesses, etc. I like the challenge. I find it very exciting, and I know it works when it is done right. BUT - It's not easy. I pride myself on attempting to always be willing to learn.

 

Charlie Munger "Anyone that thinks investing is easy is stupid" - YUP! That was me.

 

But ARROGANCE will absolutely kill you. As has been said many times here - you do not know what the future holds. Anything can happen. We will have bad times, but you can still do very well.

Most of my investing lifetime - the market has looked expensive - and when it's looked cheap - it's looked very, very scary. Those are the times when you are absolutely terrified. The Tech bust, The GFC, Covid - those were brutal times. So take your pick - if you think you can predict it -have at it.

 

David Rosenberg has my favorite saying "You make your most money during bad, bad time - you just don't realize it at the time"

That's why insights are so important. Find a good business, follow it, buy it on the dips, load up when you are terrified.

 

I'm sorry about the long post. Blake is a very smart young man, and should do well.

But getting your head right requires some experience and unfortunately scars.

The perfect times are few and far between.

 

So as Buffett says, I'd rather learn from the investing mistakes of others (like me).

 

Thank you for sharing with all of us here on CofB&F, Mike [ @cubsfan ],

 

It's indeed an awesome story of yours!

[cubsfan]

1 hour ago, John Hjorth said:

 

Thank you for sharing with all of us here on CofB&F, Mike [ @cubsfan ],

 

It's indeed an awesome story of yours!

 

You are welcome @John Hjorth - I've learned tons here with all these smart people like yourself.

 

 

[Grenville]

On 1/25/2025 at 3:25 PM, cubsfan said:

How did I get here - my painful investment journey - as told to the St Joe crowd.

...

On 1/25/2025 at 3:25 PM, cubsfan said:

 

 

Thank you for sharing this with all with us along with the write-ups! I appreciate the insight and your journey, thank you for taking the time.

[cubsfan]

32 minutes ago, Grenville said:

...

 

Thank you for sharing this with all with us along with the write-ups! I appreciate the insight and your journey, thank you for taking the time.

@Grenville  my pleasure