Life is Crazy or Ask Scott About Life

[cobafdek]

No, I wouldn't be.

 

My statement there comes down to efficient allocation of capital. What does having free cash flow mean?

 

You've anticipated my next question (you've got pretty good tarot cards!), which had to do with fleshing out your thought process, so thanks for that.  And thanks for correcting me awhile back on another aspect of FCF accounting.

 

Very quick turnaround time on my ideas these days... I've learned most aspects of businesses are completely irrelevant. If I get the main couple of things right, it'll probably work out favorably.

 

Do you have any use for any quantitative metric on your checklist, such as sales growth rate/PE which Lynch talks about?  How do you go about pricing your potential quality stocks to include in your portfolio?

 

 

[buylowersellhigh]

W/R/T investing generally: one thing that I see way too often with value investors is that they focus far too much on a company's financial statements without giving real thought to underlying business economics.

 

This statement may apply to me.  Guilty as charged, if I understand you correctly!

 

But do I understand you correctly?  Would you be saying the same if you hadn't evolved into a more GARPish style?

 

In terms of value investing gurus, would you say you're less Ben Graham (of whom I am more of) and now more Phil Fisher/Peter Lynch?

 

Anyway, thanks, Scott, for this unique and most refreshing thread.

 

No, I wouldn't be.

 

My statement there comes down to efficient allocation of capital. What does having free cash flow mean? That cash is piling up in the bank, essentially. That cash can be used for a number of different things - dividends, share repurchases, acquisitions, debt repayment, and so on.

 

That sounds unambiguously like a good thing, and generally it is. The trouble comes when you have very high quality businesses that can invest at high rates internally. For example, Chipotle Mexican Grill has amazing unit economics. Their restaurants have something like 27% operating margins on over about $2.5 million of sales each.

 

It costs Chipotle something like $843k to open a new restaurant, so, the returns there are pretty damn amazing. Somewhere in the mid-to-high double digits

 

That's a crazy amount of money, and each store provides Chipotle with a lot of cash flow. That's great. What isn't so great is letting that sort of money pile up when CMG can reliably earn returns stock investors can only dream of by putting it to work opening new stores. Ideally, Chipotle would have no free cash flow because it would be able to continually reinvest with those economics.

 

Unfortunately, we don't live in Candyland, and there are major bottlenecks towards opening new stores. They have to scout locations, train employees to ensure the quality is what consumers expect, and so on. So they can only allocate a portion of their cash flow to new locations each year. But if they could get away with it, they'd be nuts not to spend as much as possible on new locations so long as they can continue scaling.

 

And here's the thing. That would make the company's financials look ugly. There'd be no cash flow. Sure, they'd be generating profits, but none of it would make its way to the bank. And that'd turn a lot of investors off. But really, if that were to happen, they should be salivating over the returns their capital is earning.

 

For an even better example, look at Netflix. I haven't looked at it in a while, but they were acquiring customers for somewhere between $30 and $40 just a few years ago. And those folks stay with them for a long time, delivering, generally, multiples of that value back to the company over the life of their subscriptions. And those subscriptions? They can last for years.

 

All of the hundreds of millions they're throwing at acquiring customers? It's expenses on day one, as advertising typically is. There are narrow exceptions to this granted, but as a rule of thumb, advertising is expenses. It's not amortized. Think about that for a moment. They're buying members, many of who stick around for years. But the ad spend shows up as an expense entirely in the first year.

 

What are the implications of that for Netflix as a business? It means that, so long as the company keeps growing, its income statement will lag the true economics the company is generating. That's true of all subscription businesses, and is why looking at profitability and free cash flow alone for them is absurd.

 

They're buying a stream of cash flows. A stream. More money for years. And that ad spend makes each year they grow look like shit, but what do they care? They're creating a lot of lifetime value for their business by doing it.

 

Put it more simply... if I gave you the opportunity to shell out $100 for income streams that would pay you $50 per year indefinitely, would you snap at it? Think of how that translates to GAAP, though. If you had to expense that like Netflix does its advertising, you'd show a loss.

 

And if you doubled the amount of income streams you bought each year, you'd keep showing losses. Even though you'd be creating a ton of wealth for yourself, you'd be showing losses and negative cash flow. In other words, your financial statements would be completely divorced from economic reality.

 

This happens in business more often than most people think. It can be in land acquired long ago, or it can be in things like Netflix, SaaS companies, or any other growing business that is creating long term customer relationships that require money upfront to create.

 

And these can be enormously profitable for shareholders over time, regardless of what the financial statements say.

 

This is why, for many businesses, I'd rather they not generate cash flow. Because if they earn great economics and can scale their concept nearly infinitely (Amazon) they'd be insane to do so. Not only will they take a tax hit on earning profits, they'll be letting good money sit idle and lose out on some amazing compounding magic.

 

That's basically what I meant.

 

No opinion on any of the stocks mentioned, except Amazon, which I own.

 

As for Ben Graham vs. Phil Fisher: maybe? My style is my own, and adapts concepts from Warren Buffett, Peter Lynch, John Malone, Jeff Bezos, and my employers (the Gardner brothers), among others. Most of my insights come more from great business creators than great investors, to be honest.

 

Happy you find the thread interesting.

 

Scott,

 

What are the reasons you don't own any CMG or NFLX?

 

Blsh

 

[no_thanks]

Scott, I just realized I intended to harass you with more questions last time I posted here and for whatever reason didn't get to it.

 

I am intrigued by your new quality approach and would like to learn more about it if you wouldn't mind delving into it.  First of all, how long have you used this strategy and how have you fared with it, both absolutely and relative to the market?  Secondly, would you mind providing some examples of past investments or maybe even current holdings?  I imagine these are mostly large caps so you wouldn't have to worry too much about moving the market mentioning them here (I know you mentioned google on twitter).

 

And if there is anything else you'd like to discuss with regards to investing investing, I'd like to hear about it. TIA

 

Sure.

 

To answer your question: I've used it for about two years. So far, it has worked out favorably: investments in Amazon, Markel and Valeant have thumped the market, while Facebook has performed roughly in-line and Google is too new of a position to really say yet, but has outperformed so far. Kraft and Lions Gate are two very recent (and small) positions, and have yet to prove themselves.

 

I also have Optimal Payments, which has murdered the market, but I can't tell you by exactly how much as my account has yet to receive proceeds from a rights offering I was not allowed to participate in as a foreign investor. But substantial outperformance, regardless.

 

All other holdings either predate my move to quality - Pardee Resources stock (which I would actually count as quality), which has underperformed, and Wells Fargo warrants and BAC stock, which have outperformed - or were 1 share work-related purchases and are immaterial (SODA, PRLB, MIDD, and CTSH).

 

Note that many of my high quality names are also some of the companies with higher volatility, so it's no shock they've done well so far. The real test will be over a full cycle, including how well they hold up on the way down. Despite early success, the jury is definitely still out.

 

W/R/T investing generally: one thing that I see way too often with value investors is that they focus far too much on a company's financial statements without giving real thought to underlying business economics. For many companies, I'd rather they generate no free cash flow, not an abundance of it.

 

seems like Softbank might fit in with your strategy?  any strong feelings on it?

 

I must say that I haven't looked closely at it as of yet, but have read some posts on it on this board. It wouldn't surprise me if I loved it.

 

I've read enough. Thanks for inspiring me to do so; will purchase some shares next week. Very quick turnaround time on my ideas these days... I've learned most aspects of businesses are completely irrelevant. If I get the main couple of things right, it'll probably work out favorably.

 

cool, thanks for the reply.  I bought some last week and am now basically 50/50 between it and Markel.  Hoping to use my new free time I used to spend looking into companies learning to build websites. 

 

From PlanMaestro on twitter today

 

https://pbs.twimg.com/media/CFpGUE9VAAAzKSF.jpg:large

[ScottHall]

Very nice insights Scott. You sound like a page out of Tom Russo and his "Capacity to Suffer" thesis on great businesses.

 

Russo is an influence. Thanks for reading.

 

You've anticipated my next question (you've got pretty good tarot cards!), which had to do with fleshing out your thought process, so thanks for that.  And thanks for correcting me awhile back on another aspect of FCF accounting.

 

Haha, thanks. I don't recall your FCF question, but you're welcome.

 

Do you have any use for any quantitative metric on your checklist, such as sales growth rate/PE which Lynch talks about?  How do you go about pricing your potential quality stocks to include in your portfolio?

 

For most companies, I just eyeball the valuation. Building elaborate spreadsheets isn't really my thing. I've done it in the past to sanity check myself for some of the companies with more troublesome valuations, but otherwise, everything is back of the napkin.

 

Scott,

 

What are the reasons you don't own any CMG or NFLX?

 

Blsh

 

It has consistently been a huge mistake not to own both of them. For CMG, I wasn't entirely confident on how many units they could scale to. For Netflix, my big concern was that content providers would end up taking all of the economics for themselves.

 

So far I've been dead wrong on both stocks. I'll probably take a closer look again in the near future. Maybe I'll finally pull the trigger.

 

cool, thanks for the reply.  I bought some last week and am now basically 50/50 between it and Markel.  Hoping to use my new free time I used to spend looking into companies learning to build websites. 

 

From PlanMaestro on twitter today

 

https://pbs.twimg.com/media/CFpGUE9VAAAzKSF.jpg:large

 

<3 Plan

[Mephistopheles]

Great thoughts about GAAP vs reality, Scott. How do you value AMZN, if you're willing to share? I too think it's an incredible business, but not sure about the price.

[TorontoRaptorsFan]

Wow! How did I miss this thread!

 

I have a lot of respect for Scott.

 

Scott I know you're a Chipotle fan. What were your opinions on Shophouse? Do you see good potential for CMG's next rollout - Pizzeria Locale?

 

I think CMG is going to scale up by expanding Shophouse and Pizzeria Locale. Locale is now expanding from it's Denver/Boulder base to KC and Cincinnati. I can't see why future developments couldn't have a Chipotle, Shophouse, and Pizzeria Locale side by side.

 

 

[ScottHall]

Great thoughts about GAAP vs reality, Scott. How do you value AMZN, if you're willing to share? I too think it's an incredible business, but not sure about the price.

 

I do have a model for it, which if I shared could be argued as violating an agreement I signed with my current employer. So I won't share it or its conclusions, but I will say that the valuation is entirely ridiculous. Even a small change in sales growth rate or margin can move the valuation by over 20%. So in my view, it's pretty much a waste of time to value, at least in a conventional manner.

 

Personally, I use more of a mosaic approach, and find it far more valuable than my DCF. Amazon is the clear leader in e-retail, at least in the U.S., and that's a massive advantage.

 

As Amazon grows, its scale should allow it greater and greater bargaining power vs. suppliers over time. My view is that this is a sort of self-reinforcing moat, in that it gives Amazon margin that it can either give back to customers, that it can reinvest in future growth, or that it can use to fund new ventures.

 

We see this happen all the time; take a look at Amazon's employee count. In my eyes, it's pretty clear that they're investing ahead of the growth curve to make sure they can maintain a satisfactory service. So long as the ecommerce business continues to grow, I want the company to keep doing that even though it makes profitability and FCF suck. And with ecommerce still in the mid-single digits as a percentage of total retail sales, it can probably grow at a healthy rate for another few decades.

 

It's true that Amazon's GAAP profits and even FCF aren't that impressive, but that's why I like it. One of the things that really reinforced my thoughts here was this blog post by a former employee, indicating that many of Amazon's businesses are already profitable, and the company is reinvesting the cash internally.

 

http://www.eugenewei.com/blog/2013/10/25/amazon-and-the-profitless-business-model-narrative

 

I suspect Amazon will be the largest retailer in the world some day, and when that happens, giving the company any credit for decent margins (compared to other large retailers), and I think the stock looks pretty attractive even now. But you have to believe in the business model to get there.

 

I do. This is a company that requires essentially no capital to scale its ecommerce business; its net negative working capital allows the company to grow to as large as its infrastructure can handle without putting up any more cash. That's an amazing business, and because the business becomes stronger the larger it becomes, these cycles feed on each other.

 

So, that's basically it. There's no magic valuation bullet here; it requires that you believe in the advantages of the business model and that they'll take the business far. Given the track record to date, I think they will. If they do, the stock will look very cheap in hindsight. If they don't, it will prove expensive.

 

Wow! How did I miss this thread!

 

I have a lot of respect for Scott.

 

Scott I know you're a Chipotle fan. What were your opinions on Shophouse? Do you see good potential for CMG's next rollout - Pizzeria Locale?

 

I think CMG is going to scale up by expanding Shophouse and Pizzeria Locale. Locale is now expanding from it's Denver/Boulder base to KC and Cincinnati. I can't see why future developments couldn't have a Chipotle, Shophouse, and Pizzeria Locale side by side.

 

I've been to ShopHouse several times and love it. I suspect it could be large. As large as the Chipotle franchise? Maybe not, but still big. No thoughts on the pizza place.

[Mephistopheles]

Great thoughts about GAAP vs reality, Scott. How do you value AMZN, if you're willing to share? I too think it's an incredible business, but not sure about the price.

 

I do have a model for it, which if I shared could be argued as violating an agreement I signed with my current employer. So I won't share it or its conclusions, but I will say that the valuation is entirely ridiculous. Even a small change in sales growth rate or margin can move the valuation by over 20%. So in my view, it's pretty much a waste of time to value, at least in a conventional manner.

 

Personally, I use more of a mosaic approach, and find it far more valuable than my DCF. Amazon is the clear leader in e-retail, at least in the U.S., and that's a massive advantage.

 

As Amazon grows, its scale should allow it greater and greater bargaining power vs. suppliers over time. My view is that this is a sort of self-reinforcing moat, in that it gives Amazon margin that it can either give back to customers, that it can reinvest in future growth, or that it can use to fund new ventures.

 

We see this happen all the time; take a look at Amazon's employee count. In my eyes, it's pretty clear that they're investing ahead of the growth curve to make sure they can maintain a satisfactory service. So long as the ecommerce business continues to grow, I want the company to keep doing that even though it makes profitability and FCF suck. And with ecommerce still in the mid-single digits as a percentage of total retail sales, it can probably grow at a healthy rate for another few decades.

 

It's true that Amazon's GAAP profits and even FCF aren't that impressive, but that's why I like it. One of the things that really reinforced my thoughts here was this blog post by a former employee, indicating that many of Amazon's businesses are already profitable, and the company is reinvesting the cash internally.

 

http://www.eugenewei.com/blog/2013/10/25/amazon-and-the-profitless-business-model-narrative

 

I suspect Amazon will be the largest retailer in the world some day, and when that happens, giving the company any credit for decent margins (compared to other large retailers), and I think the stock looks pretty attractive even now. But you have to believe in the business model to get there.

 

I do. This is a company that requires essentially no capital to scale its ecommerce business; its net negative working capital allows the company to grow to as large as its infrastructure can handle without putting up any more cash. That's an amazing business, and because the business becomes stronger the larger it becomes, these cycles feed on each other.

 

So, that's basically it. There's no magic valuation bullet here; it requires that you believe in the advantages of the business model and that they'll take the business far. Given the track record to date, I think they will. If they do, the stock will look very cheap in hindsight. If they don't, it will prove expensive.

 

 

Thanks for the explanation, it was very helpful

[TorontoRaptorsFan]

Hi Scott,

 

Can you share some of your ideas re: Facebook with us. I noticed it as one of your core holdings in your portfolio.

 

Thank you,

 

TRF

[ZenaidaMacroura]

Hi Scott,

 

Can you share some of your ideas re: Facebook with us. I noticed it as one of your core holdings in your portfolio.

 

Thank you,

 

TRF

And if you don't mind could you share say your 5 largest holdings - I think you listed a few earlier in the thread, I remember them being an interesting group.

[ScottHall]

Hi Scott,

 

Can you share some of your ideas re: Facebook with us. I noticed it as one of your core holdings in your portfolio.

 

Thank you,

 

TRF

 

Yes. Here is something I sent Liberty via PM almost a year ago, when he asked for my thoughts. The numbers are dated by this point, but the core idea remains. My most recent valuation was more like $120 but I haven't run any numbers in a while.

 

--------

 

The thesis is fundamentally very simple; I think the network effects associated with websites will end up resulting in most of the world's online ad spend congregating at just a handful of companies, creating a power law dynamic where a handful of sites account for the vast majority of the advertising spending while everyone else is going to fight for scraps.

 

If that is true, and you accept the premise that Facebook's network is solid, then the stock is cheap at current levels. Today, the largest website in the world is Google. Facebook is #2. Google accounts for approximately 33% of worldwide digital ad spending today, and around 10% of worldwide ad spending. Facebook, on the other hand, accounted for just 5.8% of worldwide digital ad spending in 2013 and 1.3% of total worldwide ad spending.

 

What's really interesting is Facebook's position in mobile ads in particular. When Facebook went public, mobile ad revenue was a negligible part of its business, but since the third quarter of 2012, mobile advertising has gone from 14% of the company's advertising revenue to 62% today. Although the company doesn't directly break out mobile advertising revenue for you in its press releases, it gives you enough information to do so by giving you the percentages.

 

I went back and sussed out mobile ads from traditional digital ads for every quarter since Facebook started reporting it. In the third quarter of 2012, Facebook generated $152.6 million in mobile ad revenue and $937.4 million in traditional ad revenue. Last quarter? Mobile ad revenue was $1.66 billion and traditional was barely over $1 billion.

 

That means that mobile ad revenue increased nearly 1,000% in eight quarters, while traditional digital advertising was up just 9%. In the past three quarters, Facebook's mobile ad revenue has increased 305%, 225%, and 153% year-over-year. The growth rate is very high, and I expect it will remain very high for quite some time for a few very simple reasons.

 

The first is that mobile advertising is very underrepresented when compared to a consumer's time spend on mobile devices. In 2013, 4% of advertising spend went to mobile, despite consumers spending 20% of their media-focused time (defined as time spent watching TV, listening to radio, reading print, time spent consuming media online on traditional devices and time spent consuming media on mobile devices) on mobile devices.

 

There's a huge gap to be filled just for ad spending to reflect where consumer habits are today, so I expect mobile will continue to take share from the other sources of media to better reflect those habits.

 

The second big driver is that I think the trend towards mobile will continue; we'll keep seeing people moving away from traditional media consumption channels and towards mobile, as has been the trend for some time. So not only will we see ad spending increase to try to more accurately reflect the time consumers are spending on these devices, we're likely to see the time consumers are spending on these devices continue to grow as well.

 

The third big driver is that, as one of the dominant mobile sites, Facebook will be one of handful of players that will capture the lion's share of these ad dollars. We're already seeing that happen; Facebook accounted for about 18% of all mobile ad spend in 2013, but the amount of money advertisers have been spending on mobile ads on Facebook has been growing faster than mobile ad spending has as a whole.

 

For example, eMarketer projects worldwide mobile ad spending to grow about 83% in 2014, but after the first two quarters, Facebook's own mobile ad revenue grew at about 180% year-over-year. So not only are they growing, they're taking huge share here.

 

So now you have the combination of a market that is growing very quickly, that is starting from a revenue base that is well below its fair share as measured by consumer time spent, and a company benefiting from unreal network effects that is substantially outgrowing that market, and that I'd say is very likely to be one of only a handful of winners here.

 

In my model, I assumed Facebook would reach about 11% of worldwide ad spend by 2028. Assuming some operating leverage, that gave me a valuation of a bit over $100 using a 10% cost of equity. That's a pretty big share of worldwide ad spend, but it's only about 10% more than what Google reached in 2013, so it's not unheard of for a dominant digital franchise to hit that mark. If it happens more quickly, obviously the stock is worth much more.

 

In any case, it's up for everyone to decide for themselves whether or not Facebook is sustainable. I think it is. It is also up to everyone else to determine whether they think the stock is expensive or not. By the superficial valuation metrics, it certainly looks it. I am of the opinion that the business is actually so dominant that today's price will prove to be relatively cheap in hindsight. I may be wrong.

 

That is a pretty straightforward version of how I look at the business. It is a dominant franchise in an insanely fast growing market where it's likely to be one of a few companies that reaps most of the rewards.

 

And if you don't mind could you share say your 5 largest holdings - I think you listed a few earlier in the thread, I remember them being an interesting group.

 

Sure, though that may not be terribly helpful. I'll do you one better and give you all of them in order.

 

Most of my positions are sized pretty evenly, so the difference could be appreciation or, otherwise, just a couple percent of the portfolio.

 

1. The Motley Fool

2. Facebook & Google (counted as one b/c the thesis is pretty similar for each)

3. Optimal Payments

4. Wayfair

5. Valeant Pharmaecuticals

6. Pardee Resources

7. Markel

8. Constellation Software

9. Amazon (was a small position when I started it but has grown a lot)

10. Softbank

11. Wells Fargo Warrants

12. Lions Gate Entertainment

13. Kraft Heinz

 

All others are small work-related 1-share positions.

[ScottHall]

From ZenaidaMacroura via PM:

 

Thanks for the insight!  I am curious about your strategy of holding quality companies (that a lot of board members think are too rich). 

 

Do you typically sell or lighten up as the position nears intrinsic value, actually reaches IV or have you not yet had to actually make the hard decision to sell (IV has risen with the share price/sentiment)?  I guess what I'm asking is do quality companies not become as readily divested when their value is full (as opposed to cheap cigar butts or second rate cheap issues with strictly quantitative sell criteria)?

 

Thanks again Scott!

 

I don't sell these days, pretty much, in any taxable account so long as I think the shares are anywhere near fair value.

 

Don't want to interrupt the compounding; take a tax hit, and I have to earn that back on any alternative before I start making any money. So I'd have to be pretty sure the valuation gap was large and that the other company was also able to compound for long periods of time. Selling often defeats the purpose of the style. Unless the business changes fundamentally for the worse, I just don't sell.

 

The other reason for this is simple. The world's best businesses can often compound at higher rates, for longer, than we possibly imagined. Think about running a DCF on Coke in the '50s or '60s; any "reasonable" analyst would massively undershoot the terminal value of the business and slap a terminal growth rate of 3% on it after 10 or 15 years.

 

This is all a way of saying that the best companies can outperform all expectations so it makes sense to give them a longer valuation leash than you would for any random net-net. Even at high multiples they could be phenomenally cheap, it's that our own modeling skills are often insufficient to capture that value.

[TorontoRaptorsFan]

Thank you Scott for your feedback on Facebook. I did some research myself and there is a lot to like about the company - well managed, young executives you can invest in for the long term, willing to make investments in emerging technologies, expanding their platform offerings.

 

I really think Rift Oculus was a very wise investment. The only investment I see which was a massive overpayment was Whatsapp.

 

What are your general thoughts regarding Google and Facebook's heavy R&D on Artificial Intelligence. Do you think either company will succeed in the short term or do you think we're still decades away?

 

 

[ScottHall]

Thank you Scott for your feedback on Facebook. I did some research myself and there is a lot to like about the company - well managed, young executives you can invest in for the long term, willing to make investments in emerging technologies, expanding their platform offerings.

 

I really think Rift Oculus was a very wise investment. The only investment I see which was a massive overpayment was Whatsapp.

 

What are your general thoughts regarding Google and Facebook's heavy R&D on Artificial Intelligence. Do you think either company will succeed in the short term or do you think we're still decades away?

 

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.

[ScottHall]

You guys really should ask me more questions.  :(

[Jurgis]

So Master, is the soul immortal or not?  Do we survive our bodily death or do we get annihilated?  Do we really reincarnate? Does our soul split up into component parts which get recycled, or do we as a single unit enter the body of a biological organism?  And do we retain our memories or not?  Or is the doctrine of reincarnation false?  Is perhaps the Christian notion of survival more correct?  And if so, do we get bodily resurrected, or does our soul enter a purely Platonic spiritual realm?

 

Stolen from alt.buddha.short.fat.guy.FAQ http://web.mit.edu/jemorris/humor/alt.buddha.short.fat.guy.FAQ

[writser]

You guys really should ask me more questions.  :(

 

Serious question: why did you start this thread?

[Uccmal]

So Master, is the soul immortal or not?  Do we survive our bodily death or do we get annihilated?  Do we really reincarnate? Does our soul split up into component parts which get recycled, or do we as a single unit enter the body of a biological organism?  And do we retain our memories or not?  Or is the doctrine of reincarnation false?  Is perhaps the Christian notion of survival more correct?  And if so, do we get bodily resurrected, or does our soul enter a purely Platonic spiritual realm?

 

Stolen from alt.buddha.short.fat.guy.FAQ http://web.mit.edu/jemorris/humor/alt.buddha.short.fat.guy.FAQ

 

Yes.

[ourkid8]

Yeah, whats the point of this thread and who really cares of Scott life?  I mean no disrespect at all...

 

You guys really should ask me more questions.  :(

 

Serious question: why did you start this thread?

[augustabound]

Yeah, whats the point of this thread and who really cares of Scott life?  I mean no disrespect at all...

 

You guys really should ask me more questions.  :(

 

Serious question: why did you start this thread?

 

You're questioning a thread that you're contributing to. I never understood why people insist on posting to thread they don't have interest in.

 

Sometimes these are the types of threads that can be the most interesting for a variety of reasons.

[ScottHall]

So Master, is the soul immortal or not?  Do we survive our bodily death or do we get annihilated?  Do we really reincarnate? Does our soul split up into component parts which get recycled, or do we as a single unit enter the body of a biological organism?  And do we retain our memories or not?  Or is the doctrine of reincarnation false?  Is perhaps the Christian notion of survival more correct?  And if so, do we get bodily resurrected, or does our soul enter a purely Platonic spiritual realm?

 

Stolen from alt.buddha.short.fat.guy.FAQ http://web.mit.edu/jemorris/humor/alt.buddha.short.fat.guy.FAQ

 

I am agnostic, personally, and view having a strong opinion of the supernatural either way to be pretty conceited. My paternal grandfather's side of the family was Presbyterian and my maternal grandmother's side of the family were witches & gypsies, so I've gotten religious education from several different perspectives. Ultimately I determined they were all pretty much speculating, and that religion is more useful as a social tool than it is as an actual belief. This also applies to atheism.

 

Serious question: why did you start this thread?

 

Because I was bored and I figured you guys would be interested in talking to me about just about anything.

 

 

Yeah, whats the point of this thread and who really cares of Scott life?  I mean no disrespect at all...

 

What's the point of life in general? You're probably going to die anyway, so there's really not much of a difference between if you get hit by a truck tomorrow or live to be 100. I think asking those sorts of questions are sort of counterproductive, as more often than not there's no satisfying answer if you follow the chain of thought to its logical conclusion.

 

For practical considerations, you probably should care about my life quite a bit. Realistically I am a huge outlier in a lot of ways, not all of them positive. But I do think there's something to learn from that about how society in general could operate more efficiently, and certainly there's something in my life that you could apply on a personal level to do so.

 

You don't have to talk to me about investing. I'll discuss anything that I have any thoughts on, regardless of the subject. I don't have thoughts on everything, though.

 

You're questioning a thread that you're contributing to. I never understood why people insist on posting to thread they don't have interest in.

 

Sometimes these are the types of threads that can be the most interesting for a variety of reasons.

 

Thanks. I agree. Ericopoly's thread is pretty interesting, for example.

[FFHWatcher]

For practical considerations, you probably should care about my life quite a bit. Realistically I am a huge outlier in a lot of ways, not all of them positive. But I do think there's something to learn from that about how society in general could operate more efficiently, and certainly there's something in my life that you could apply on a personal level to do so.

 

Ding Ding. That seems to sum it up well.

 

#1/ I am like Cramer, I want to make money.  If Scott provides me with 1-2 ideas that warrant investigation, then I am happy. 

#2/ More importantly, if I can try to interpret and process the same information in a different way, then I think there is a potential benefit to that. Thinking differently seems like a good idea to me and from the sounds of it, Scott thinks differently.  Is he Elon Musk...probably not :-)  But I like to hear from Outliers.

 

[eclecticvalue]

When are you coming out with another Youtube video? If so, on what topic.

 

What stock gave you the highest return ever?

[shalab]

I have a few qs - Looking at your writing, can't say your maximum education was elementary school. Anyways - here are the questions:

 

      -  When do you plan to retire? ( or why do you continue to work )

      -  What is your return rate

      -  What are your best ideas for 2016

      -  Where do you plan to retire to?

 

cheers!

 

[ScottHall]

Ding Ding. That seems to sum it up well.

 

#1/ I am like Cramer, I want to make money.  If Scott provides me with 1-2 ideas that warrant investigation, then I am happy. 

#2/ More importantly, if I can try to interpret and process the same information in a different way, then I think there is a potential benefit to that. Thinking differently seems like a good idea to me and from the sounds of it, Scott thinks differently.  Is he Elon Musk...probably not :-)  But I like to hear from Outliers.

 

I agree. I basically view myself as someone who found an exploit in how society works & values people that let me get away with not following some of its rules and traditions. I think that's interesting, for sure, but it's something I think anyone can do if they're willing. There are probably better uses or ways than I've figured out, as well.

 

Thanks for listening.

 

When are you coming out with another Youtube video? If so, on what topic.

 

What stock gave you the highest return ever?

 

Soonish, on the next video. I'd guess by the end of February, but possibly sooner.

 

I am thinking of tackling the difference between professional boxing and MMA in regards to economics for the fighters, focusing on the importance of bargaining power. But I have a dozen ideas; the first one just took quite a bit of effort, so I'm figuring out how to do it without investing multiple weeks into production time. I intend the next one to be much shorter; probably six or seven minutes.

 

In terms of percentage, my highest return ever was GGP. I was very young at the time so my stake was very small, but I bought shares at $2 and sold when they hit $16. Should have held longer as it turns out. After that, of public investments, Samson Oil & Gas, where I earned more than 200% in a year or so.

 

My worst investment was when I was trying to figure out if there was a way to consistently profit from junior mining companies, and I had -70% on some of those before I figured it wasn't worth the hassle to figure out which ones were going to get bought out.

 

Overall (private and public investments) I've generated a little over a 20% XIRR since 2008, which is satisfactory to me.

 

I have a few qs - Looking at your writing, can't say your maximum education was elementary school.

 

Strictly speaking, that's true. I think I have 6 college credits from before I dropped out of community college. Third grade is my highest level of completed education, though.

 

Anyways - here are the questions:

 

      -  When do you plan to retire? ( or why do you continue to work )

 

I continue to work because I like the company I work for and my friends who work there, and it's an easy way to stay in contact. I negotiated a part time deal, so I'm semi-retired as it is. Additionally, so long as I remain an employee, I can trade in shares of my employer, which is a privately held company. I can't really go into more detail about that, though.

 

-  What is your return rate

 

A little over 20% XIRR since 2008.

 

-  What are your best ideas for 2016

 

That's difficult, because I don't really think about investing on a yearly basis, but rather a continuous one. I suppose they're the same companies I own currently. Over the next year, who knows. Over ten? Essentially, my existing portfolio.

 

-  Where do you plan to retire to?

 

cheers!

 

I plan to retire as close to the people I care most about as possible. Right now, that is my family. :)