What do you think is true, that most everyone believe the opposite?

[james22]

1. Predicting something will happen at "the end of the market cycle" is not a falsifiable statement. It means whatever you want it to mean. Market goes up? Sure, the cycle hasn't ended yet. Market goes down? I'm right, this is the end of the cycle.

 

Do you imagine your two statements contradictory? There is only one meaning to "the end of the market cycle."

 

Falsifiable: when the market cycle ends (when the market goes down), those following Hussman's advice will be better off than those buy-and-holding the S&P500.

 

We'll see.

 

2. I would reframe your closing statement as follows:

 

But, hey, the end of the current market cycle will demonstrate Hussman right or wrong. He'll be extremely rich and considered an oracle if one would have done better following his advice than holding the S&P500 and if not, his doomsaying got him on television and attracted billions of dollars of stupid money to his funds, making him insanely rich either way.

 

Not much for him to lose.

 

Always be skeptical of loud mouths. Especially if they're after your money. This guy is not properly incentivized to give you good market forecasts (this is apart from the fact that I think macro forecasting is **** anyway).

 

I'm skeptical anyone who reads Hussman would consider him a doomsaying loudmouth.

 

 

[AtlCDore]

There are much higher returns in purchasing, owning, operating private businesses than investing in the stock market. The main surprise to me when attending Berkshire and Fairfax meetings is how many people just want to talk about stock market investing as opposed to owning and operating actual businesses outright.

 

Not sure if it is laziness, ignorance, hubris or fear but never understood why more value investors don't practice the value investing and management principles in investing and operating private businesses.

 

Cevian,

 

Do you speak from experience?  Can you elaborate?

 

The only "experience" I have pertaining to this is a friend of mine has looked at private businesses and has not come across anything even remotely interesting.  As he digs into the businesses he has found numerous issues regarding mismanagement, accounting issues, employee issues. 

 

Thanks,

 

AtlCDore

 

Yes personal experience. I don't mean they are mutually exclusive (i.e. stock market OR private business). We also own stocks. In my opinion all asset classes should be up for grabs for value investors and not restricted solely to tradable securities on public markets. Seth Klarman's book had a big impact on my thinking in my 20s, after having converted to value investing in my late teens. I had a Bruce Lee "Jeet Kune Do" moment where I came to realize that value investing and the concept of Margin of Safety can be successfully applied not only to stocks but to private businesses, cars, real estate, land, and a lot of times with much higher returns than just stocks.

 

Having said that, this doesn't mean it's easy. I love it though and find it more fun and a challenge to see the impact your own direct decisions and management/leadership can make.

 

I attend the Fairfax meetings every year and would love to have a discussion of these types of opportunities.

 

Cevian,

 

What you say makes a lot of sense.  Buy where the opportunity set is greatest. 

 

It would be interesting to hear your personal experiences.  Do you run these all as separate entities, a fund, holding company?

 

Thanks,

 

AtlCDore

 

 

[Nelson]

Here's one that'll create some controversy:

 

Warren Buffett gets too much credit for going on CNBC/FOX/wherever and saying stuff that's basically common sense for most anyone with a brain for finance and a few decades of experience.

 

Not saying Buffett isn't worth listening to, because he's filled with timeless wisdom. But he's also said the same pieces of wisdom over and over again, and it's not unique. It's been a very long time since I've read something Buffett said and really thought it was interesting. Maybe that's because he's so widely quoted, I dunno.

 

 

[ni-co]

Here's one that'll create some controversy:

 

Warren Buffett gets too much credit for going on CNBC/FOX/wherever and saying stuff that's basically common sense for most anyone with a brain for finance and a few decades of experience.

 

Not saying Buffett isn't worth listening to, because he's filled with timeless wisdom. But he's also said the same pieces of wisdom over and over again, and it's not unique. It's been a very long time since I've read something Buffett said and really thought it was interesting. Maybe that's because he's so widely quoted, I dunno.

 

I agree with that but it's because of the wide audience. It's not at all true for his letters which often contain very unique and thought-provoking perspectives. Take his remarks on dividends as an example (I think it's in the 2013 letter). When you read them every step is completely logical and yet it's not common sense at all. People love dividends – but they make no sense. Apart from the whole tax advantages, why not let investors themselves chose whether to pay themselves "dividends" by selling shares? As far as I know, Buffett is the first one to have noticed this or at least to openly write about it. Even in this forum, I'd suspect, that's not the majority view.

[Picasso]

That Mohnish Pabrai has poor risk management

 

I'm all about the Pabrai poor risk management hate train. Choo choo!

[Brett]

There are much higher returns in purchasing, owning, operating private businesses than investing in the stock market. The main surprise to me when attending Berkshire and Fairfax meetings is how many people just want to talk about stock market investing as opposed to owning and operating actual businesses outright.

 

Not sure if it is laziness, ignorance, hubris or fear but never understood why more value investors don't practice the value investing and management principles in investing and operating private businesses.

 

Cevian,

 

Do you speak from experience?  Can you elaborate?

 

The only "experience" I have pertaining to this is a friend of mine has looked at private businesses and has not come across anything even remotely interesting.  As he digs into the businesses he has found numerous issues regarding mismanagement, accounting issues, employee issues. 

 

Thanks,

 

AtlCDore

 

Yes personal experience. I don't mean they are mutually exclusive (i.e. stock market OR private business). We also own stocks. In my opinion all asset classes should be up for grabs for value investors and not restricted solely to tradable securities on public markets. Seth Klarman's book had a big impact on my thinking in my 20s, after having converted to value investing in my late teens. I had a Bruce Lee "Jeet Kune Do" moment where I came to realize that value investing and the concept of Margin of Safety can be successfully applied not only to stocks but to private businesses, cars, real estate, land, and a lot of times with much higher returns than just stocks.

 

Having said that, this doesn't mean it's easy. I love it though and find it more fun and a challenge to see the impact your own direct decisions and management/leadership can make.

 

I attend the Fairfax meetings every year and would love to have a discussion of these types of opportunities.

 

I'd be interested in hearing more about this thinking. I've looked at BizBuySell and seen a handful of businesses on there for 1-1.5x cash flow. My concern with many of these is that you're essentially 'buying a job' and often need to dedicate a huge portion of your time too.

 

What sized opportunities do you tend to look at? I've bounced around the idea of buying a small business, but a lot of these opportunities are mediocre businesses.

[undervalued]

Soros: http://www.bloomberg.com/news/articles/2016-01-21/george-soros-says-he-expects-hard-landing-for-chinese-economy

[ATLValue]

 

Not my opinion but definitely a divergent view from most everyone on this board:

 

"Buffett is a charlatan precisely because he hides his secrets behind his Barnum act of public-spiritedness. One secret has been pretty well outed by now, both here on the site and elsewhere– namely, the man is the Capablanca of the tax code.

The other secret is the one he hides in plain sight. He gets extraordinary earnings out of his headcount. For a sane company that avoids stupid leverage on its balance sheet, the employees are the liability that matters most; and the Oregano manages that liability with the same skill that the 19th century Titans did. BRK-A's known earnings (the average of the current year's report and the consensus prediction for the next 12 months) are roughly $65K/employee. GM has known earnings/employee of $28.5K.

As a number, known earnings/employee may seem bizarre but it is the best predictor of how consistently a company can continue to generate profit.

 

We have used the same kind of benchmark in our own assessment of our private businesses; and it has never failed. We have, every time we have gone away from it in the name of "investing in growth", etc.

We don't actually know if this really is Buffett's secret sauce; this is likely pure vanity on our part. But, if, like him, you invest by buying stakes in public companies as if they were private businesses"

 

http://www.dailyspeculations.com/wordpress/?p=10542