What's your current portfolio?

[Guest cherzeca]

The surest way to become a millionaire is to save and have no kids for sure.

 

QFT.  8)

 

Children are the greatest treasure by far . . .

 

yes, but a costly treasure

[james22]

18% BRK

8% FRFHF

6% MKL

 

12% PM&M

9% ENERGY

 

36% STABLE VALUE

10% CASH

 

(7 figure portfolio)

 

Would add to BRK or MKL or take a BAM position if fall, otherwise waiting for the market to correct.

[Dynamic]

Do yourself a favor - half that position in BRKB and buy some FAIRFAX!!!

 

Maybe one day when I feel I understand Fairfax Financial enough. Right now, I'm not even sure what the different Fairfax tickers on various markets represent exactly, though I keep a loose eye on a couple.

 

I certainly feel happy about the Fairfax approach in general, Intrinsic Value and capital allocation. Not sure about how it actually plays out. It seems like they're currently forced to hedge against falling markets and look at macro trends because of needing to be able to pay out insurance claims and don't have the capital buffer and earnings gusher that Berkshire does, but I'm wondering if this hedging comes at a significant cost to their investment returns. Hedging is not something I'm especially comfortable in my understanding of, and neither is forecasting macro trends. Is Fairfax managing for lower downside risk at the expense of upside gains?

 

They certainly did wonderfully in spotting and profiting from the 2008-ish credit crunch and counterparty/credit-rating risks there, and they clearly have some great minds at work and recognised the madness. Then again, Berkshire, while it didn't profit from the decline in credit-ratings or the downward move in the market directly, also grasped opportunities to put vast sums to work at attractive returns that have helped grow Intrinsic Value and the subsidiaries continued pumping out cash for investment.

[wachtwoord]

Saving is way overrated.  The cheapskates i know put so many limitations on themselves.  I can't eat here, or vacation here, or buy that bc it is $200 extra....how can you live that.....to me it is a trait that was passed down from our early resource greedy ancestors and it warps people's minds. 

 

Another thing about these cheapskates i know, they would make terrible investors.  If any of the cheapskates I know bought a value stock and it went down 50% afterwards they would implode, panic and sellout at a loss.  I think the best investors also have a trait where they are emotionally detached from money.  An emotionally detached investor can put 50% of his net worth in one stock and do it rationally (accepting it will go lower), not to get rich per say, but bc the probabilities are so much on their side that it would almost be irrational not to.  If there is a 90% chance you get a multi bagger (the energy crash had these opportunities), and you did all your work you should go all in. 

 

People who think this is too risky I just look at it this way.  If I work 9-5 there is say a 90% chance I get paid a steady income going forward.  But there is also a 10% chance I get fired, laid off or want to quit bc I end up hating my job.  But nobody thinks working a 9-5 is risky.  To me it is all same, you have a 90% chance here and 90% there. But with the 90% multi bagger you have the chance to literally change your life forever.  Maybe my brain is twisted, idk, but this is how i view it and this is how i invest.

 

PS i know you can't attach exact probabilities to anything but you can approximate an outcome based on all the relevant information.

 

I'm a cheap skate in the sense I hate useless expenditures because they limit my freedom without adding much to my life. I dont own a car for instance and I prefer ordering stuff from China and waiting two weeks to get it over buying overpriced stuff at home.

 

At the same time I dont limit myself much and certainly can't find myself in your opinion with regard to investment. My biggest investments (and gains) have been on stocks that went down in price a lot first because it gives you the chance to average down. It also doesnt make me nervous (unless somethibg changed or I made a mistake in my original thesis).

 

I think the cheap skates you know are simply irrational people and dontvrepresent frugal people in general.

[Dynamic]

I agree. My wife and I are both frugal and like the value of savings, living below our means and some spare liquidity, which helps make a harmonious relationship, but we' still take plenty of trips and vacations each year, eat out, go to shows and have plenty of fun, but we don't tend to overpay for things or buy much stuff that doesn't add much value to our lives, nor do we live in a place much larger than we need. We also try to be generous with friends, family and guests.

 

When we've lost a smartphone or had a bike stolen or suffered some damage to our car, we've been surprisingly blasé about it and didn't even let it ruin our day. (I was surprised how we weren't worried, and actually that was a really great day when we found we'd had the bike stolen overnight). We're now waiting for an opportunity to buy a replacement at a good discount.

 

I think there are cheapskates who take it too far, but frugal and seeking value can be very rewarding and remove stress.

[Liberty]

I "retired" (became a full time investor) earlier this year at 34 mostly through frugality and saving. Investing returns are just the cherry on top.

 

To each their own. To me the value of money is peace of mind, independence and freedom, not buying lots of shiny stuff. There's not that much shiny stuff I want anyway once I have good computing devices (I do) and all the books I want to read. We still travel and buy everything we really want, but that's surprisingly inexpensive when you understand that past a fairly low level, there's little correlation between spending and happiness.

[JRH]

We still travel and buy everything we really want, but that's surprisingly inexpensive when you understand that past a fairly low level, there's little correlation between spending and happiness.

 

I feel like I had to do some serious "de-programming" of myself in my 20s, but now I am 100% of this mold, as well. I didn't increase my willpower to resist buying things I want, so much as I came to realize just how few things are ultimately worth the money - the value is either illusory to begin with, or it is offset by less direct and more insidious things that you don't notice at the time of purchase. Realizing that has reduced the number of things I want so significantly that I don't need much willpower at all.

 

(sorry for being off-topic... I'm about 25% owned real estate but would like that to be closer to 50% - balance is mostly esoteric global value plays)

[valcont]

Saving is not an issue. The problem is focussing the energy.Money mustache and all these blogs focus on cutting spending to the bone by mowing your lawn, changing your car oil, cutting your hair, hacking the credit cards bonus points. Thats stupid and backwards. You may live in 1900s and sew your wounds. These blogs are such downer and energy saps. Where is the optimism and focussing your energy on bigger and better things. What really gets me that most of these blogs recommend to ***Invest All your savings in the stock market**  Yeah right like there will be any market if no one is shaving and everyone is living off someone's used crap . Thats not progress, that's Third world.

 

And I agree that these guys would make terrible investors and entrepreneurs. When you are so attached to the money that even spending a dollar is such a struggle, how can you risk your capital on these unknown situations.

[wachtwoord]

And I agree that these guys would make terrible investors and entrepreneurs. When you are so attached to the money that even spending a dollar is such a struggle, how can you risk your capital on these unknown situations.

 

Very simple: by knowing you are making educated gambles with an overall positive expected value? Don't be results-oriented.

[Liberty]

Saving is not an issue. The problem is focussing the energy.Money mustache and all these blogs focus on cutting spending to the bone by mowing your lawn, changing your car oil, cutting your hair, hacking the credit cards bonus points. Thats stupid and backwards. You may live in 1900s and sew your wounds. These blogs are such downer and energy saps. Where is the optimism and focussing your energy on bigger and better things. What really gets me that most of these blogs recommend to ***Invest All your savings in the stock market**  Yeah right like there will be any market if no one is shaving and everyone is living off someone's used crap . Thats not progress, that's Third world.

 

And I agree that these guys would make terrible investors and entrepreneurs. When you are so attached to the money that even spending a dollar is such a struggle, how can you risk your capital on these unknown situations.

 

All of your criticisms are convincingly addressed numerous times by Mr. Money Mustache, and the picture you paint is a strawman, so I'm going to take a wild guess and say that you haven't read very much of his stuff (maybe you don't have time because you work a full-time job). It's the traditional approach of throwing money at everything, and imagining that making as little effort as possible will lead to happiness, that is stressful and demoralizing. Regaining independence and control is the energizing and uplifting path. People are frugal not because they "struggle to spend each dollar" but because they are rational about it and decide that they'd rather buy their time and freedom rather than more stuff that doesn't make them happier.

 

If you ever have the time, start at the bottom here:

 

http://www.mrmoneymustache.com/all-the-posts-since-the-beginning-of-time/

 

The first few posts aren't as good, but he gets his stride pretty quickly.

[TwoCitiesCapital]

There's great blogs on being frugal. There's great blogs on "living richly."

 

I read both and apply both. Instead of cutting back on latte's, I'd rather focus on getting that 10-15% raise at work OR increasing revenue in my side business. But, I take subways and buses instead of blowing $20-30 on cab rides. I also live in one of the cheaper parts of Manhattan and take subways 10-15 minutes anytime I want to go somewhere to save a few hundred a month on rent. 

 

It's a balance. Maximize your income, spend lavishly on the things that make you happy, and cut everything else out.

[Liberty]

The whole point of the FIRE strategy (Financially Independent, Retired Early) is: Maximize your income while minimizing your expenses to minimize the time you have to spend working for others and not being in control of your life. You don't even have to actually retire, you just have to know that you can if you want (I'm just as busy as I ever was, but I work on my own projects now rather than on someone else's and that feels great).

 

The real sacrifice is not buying stuff second hand on craigslist because you can get it at 20% of the price of the new item or driving a regular car rather than a luxury automobile, the real sacrifice is spending 8-10 hours a day commuting and doing what someone else tells you to and not being able to just quit your job if you stop liking it and not seeing your family and being stressed about office politics and money because your lifestyle inflates as fast as your income...

[valcont]

Saving is not an issue. The problem is focussing the energy.Money mustache and all these blogs focus on cutting spending to the bone by mowing your lawn, changing your car oil, cutting your hair, hacking the credit cards bonus points. Thats stupid and backwards. You may live in 1900s and sew your wounds. These blogs are such downer and energy saps. Where is the optimism and focussing your energy on bigger and better things. What really gets me that most of these blogs recommend to ***Invest All your savings in the stock market**  Yeah right like there will be any market if no one is shaving and everyone is living off someone's used crap . Thats not progress, that's Third world.

 

And I agree that these guys would make terrible investors and entrepreneurs. When you are so attached to the money that even spending a dollar is such a struggle, how can you risk your capital on these unknown situations.

 

 

All of your criticisms are convincingly addressed numerous times by Mr. Money Mustache, and the picture you paint is a strawman, so I'm going to take a wild guess and say that you haven't read very much of his stuff (maybe you don't have time because you work a full-time job). It's the traditional approach of throwing money at everything, and imagining that making as little effort as possible will lead to happiness, that is stressful and demoralizing. Regaining independence and control is the energizing and uplifting path. People are frugal not because they "struggle to spend each dollar" but because they are rational about it and decide that they'd rather buy their time and freedom rather than more stuff that doesn't make them happier.

 

If you ever have the time, start at the bottom here:

 

http://www.mrmoneymustache.com/all-the-posts-since-the-beginning-of-time/

 

The first few posts aren't as good, but he gets his stride pretty quickly.

 

I don't have a problem with his philosophy. I just think his solutions are sub optimal. Extend them universally and the society will go backwards. This principle has helped me immensely in investing and in life. Think about index investing , it is a better solution than managed investing but if everyone is an indexer how terrible the capital allocation will be. A committee will get to decide what your holdings should look like. But if everyone can value the company and assign its judgement, you have a super efficient capital allocation system. So index investing is a sub optimal solution but learning about business and investing yourself seems to be the best.Their will be winners and losers but it'll be a fair criteria. Same goes for spending,  extreme consumerism is really bad and we see those effects but the solution is not to swing to the other side and regress.

 

Even his strategy is full of contradictions. Basically he recommends you work for a few years , save 50-70%, invest and "retire" and let the market fund your retirement(on a 3% or 4% withdrawal). So he expects his fellow citizens to fund his lifestyle by buying things while he is sitting idle thinking of bigger and better things. Where is the morality in that? And think about how useless this society will be if its full of young retirees twiddling their thumbs.

 

I believe in abundance and scarcity mindset and this ideology reeks of scarcity and small mindedness. Do you really think hacking credit card miles or saving $20 a month on a phone plan would take you to the next level? Scarcity doesn't work well in nature or human bodies. It wouldn't work for an economy either.

 

Since you asked about my job, yes I do work full time but on my business. I quit full time employment 12 years ago when I figured out I can make 3 times the money doing the same thing but operating under a business and assuming some risk. I never looked back since then.

 

BTW I do think MMM is a great marketer peddling his blog and making half million a year. You think its free but imagine the time and energy wasted

on reading that much content. I can get the gist in less than an hour. I would rather spend that time learning a new business or if I'm lazy an annual report.

 

 

 

 

 

 

 

 

 

[Liberty]

If everybody did it it wouldn't work. Isn't that the argument against the US lifestyle to begin with?

 

You can also get the gist of Buffett's letters in an hour, but that's not the point, is it?

 

And the only person funding my retirement is myself. I deferred spending in the past and made sacrifices to earn more so that I'd have surplus resources in the future. I bought time. There's no such thing as a free lunch. And as you know if you've read Mr. Money Mustache, he's been earning more than enough to live in retirement even if you remove the blog income, just by working on hobbies and side projects. The point isn't that you go to a beach and do nothing, but that you are free to work on what you want to how long you want; spend as much time with your family as you want, etc; for the kind of people who are motivated and disciplined enough to get to the point of FIRE, a lot of those side-projects are going to be good earners. Personally my work now is being an investor, but if I stopped enjoying it, I could index or give my money to Turtle Creek or whatever and go do something else. That freedom to do what I please every day is worth more to me than earning 1 million a year working some downtown 9-5 job five days a week.

 

If you love your current work, that's great. Being in business for yourself probably is more freeing than what most people do all day. But don't try to minimize this great strategy as clipping coupons and mowing your lawn. It's an important mindset change that most people never even consider, because most people who are lucky enough to end up earning "3x more" than they used to just spend 3x more, with little effect on their long-term life satisfaction.

 

I do think you misunderstand my mindset. I don't have a scarcity mindset. I have way more money than I need, and I don't even know what else I'd buy if I had more. My wife and I have a hard time finding gifts to buy each other because we already have everything we want, or if there's something we really want we just buy it, so we usually have it by the time a birthday rolls around. My engineering side finds it elegant to save money and optimize my lifestyle. I get more pleasure out of cutting waste than out of buying expensive crap. Maybe it would be a hardship for you, but it isn't for me, and many others.

[rukawa]

Saving is way overrated.  The cheapskates i know put so many limitations on themselves.  I can't eat here, or vacation here, or buy that bc it is $200 extra....how can you live that.....to me it is a trait that was passed down from our early resource greedy ancestors and it warps people's minds. 

 

I think spending is overrated. Whenever I tell people how much money I save I get responses like "live a little" or "what are you going to do with all that money". I really don't get how spending == living. I mean you obviously need to spend a little money to live but beyond that? I like throwing frisbees, going for walks, meeting with friends, swimming, reading about physics or math, watching TV. Almost none of this requires a lot of money. My most memorable experiences involve people...not money.

[fareastwarriors]

BAC - 50%

AIG - 20%

BRK'B - 8%

FCAU - 5%

AAPL - 4%

RACE - 4%

 

tiny positions in:

BIDU

DJCO

KHC

RYCEY

BCOR

XCO

 

[valcont]

If everybody did it it wouldn't work. Isn't that the argument against the US lifestyle to begin with?

 

You can also get the gist of Buffett's letters in an hour, but that's not the point, is it?

 

And the only person funding my retirement is myself. I deferred spending in the past and made sacrifices to earn more so that I'd have surplus resources in the future. I bought time. There's no such thing as a free lunch. And as you know if you've read Mr. Money Mustache, he's been earning more than enough to live in retirement even if you remove the blog income, just by working on hobbies and side projects. The point isn't that you go to a beach and do nothing, but that you are free to work on what you want to how long you want; spend as much time with your family as you want, etc; for the kind of people who are motivated and disciplined enough to get to the point of FIRE, a lot of those side-projects are going to be good earners. Personally my work now is being an investor, but if I stopped enjoying it, I could index or give my money to Turtle Creek or whatever and go do something else. That freedom to do what I please every day is worth more to me than earning 1 million a year working some downtown 9-5 job five days a week.

 

If you love your current work, that's great. Being in business for yourself probably is more freeing than what most people do all day. But don't try to minimize this great strategy as clipping coupons and mowing your lawn. It's an important mindset change that most people never even consider, because most people who are lucky enough to end up earning "3x more" than they used to just spend 3x more, with little effect on their long-term life satisfaction.

 

I do think you misunderstand my mindset. I don't have a scarcity mindset. I have way more money than I need, and I don't even know what else I'd buy if I had more. My wife and I have a hard time finding gifts to buy each other because we already have everything we want, or if there's something we really want we just buy it, so we usually have it by the time a birthday rolls around. My engineering side finds it elegant to save money and optimize my lifestyle. I get more pleasure out of cutting waste than out of buying expensive crap. Maybe it would be a hardship for you, but it isn't for me, and many others.

 

First off I didn't make any comments about you or your mindset. I know you only from your posts and you seem to be an intelligent person. So lets not

take it personally.

 

All I am saying is maybe this MMM guy works for a certain type of people and he may have helped them by showing a different path. But there is nothing revolutionary in the strategy and wouldn't benefit the society as a whole.I would much rather focus on the other side of equation i.e. earnings and growth with some risk involved.

 

A good analogy is going long or shorting a stock. You can only short up to zero but are unlimited on the other side. Then why focus on something with limited potential. That doesn't mean you don't monitor your stock for a potential downside.Its just that your energy is focussed on maximum growth and you are not looking for scams ,shady companies.For a novice both would work well but long only is a better approach.

 

 

[rb]

Let me pile in a bit here as well. To start in my life I am more like rukawa and Liberty. I don't spend much on useless things, but I'm not a cheapskate either. I'm also not a big fan of MMM and some of the followers are a bit out there. I know some people that have cars with AC but won't run it in order to save a sliver of money. I drive a BMW. I'd be insane to not run the AC and sweat like a pig in order to save a bit of money. But I don't think that the premise of communities like MMM is wrong just that they're already picked the low hanging fruit and now they're focusing on marginal things that are a bit ridiculous sometimes and will just have a marginal impact.

 

Can this work for society at large? I think it can. If it's applied at country level what would happen is that the country will start to run fairly large trade surpluses. This means that the country would become an exporter which means that you need to have importer countries to buy your product. But at a global scale exports=imports. So let's expand a bit and say that everyone in the world starts acting that way. Well then you would loose the excess savings and early retirement part. However everyone would work less and have more leisure time. So instead of the bulk of free time being concentrated at the end it's spread throughout. A bit of a different outcome but doesn't sound all that bad.

[petec]

SBUX 25%

MA 25%

MCO 15%

CABO 15%

MKL 10%

Cash 10%

 

Care to share your thesis on sbux?  (Sorry if there is a thread you are active on - I haven't checked.)

[DooDiligence]

Hello to all!

 

I've been reading you guys for nearly 3 years & just recently ponied up for official membership (not cheap, just frugal...)

 

I'm probably not what most of you would consider a value guy in that I don't search out companies like the ones which are predominantly discussed here.

 

I have; however, learned a lot from all of you about how to look at the types of companies which do interest me.

 

I was struck by the comments in this thread on frugality & contentment & feel like these qualities allow us to make better investment decisions.

 

Much thanks to the Zen Masters Liberty, TwoCitiesCapital & rukawa (I'd try to snatch the pebble from your hand but then I'd have to pick up that boiling hot cauldron & burn dragons into my forearms...)

[dyow]

lol there is a difference between being a cheapskate and frugal but there is a fine line there too.  Buffett seems frugal but he doesn't seem cheap.

 

Saving is not an issue. The problem is focussing the energy.

 

That's it right there it is about energy.  Wasted brain energy that could be directed towards more important things like betting on a stock.  You only have so much energy in a day and everywhere you turn somebody is trying to nickel and dime you.  If you want an extra nickel from me here you go, I almost look at it like I have to pay a premium in life to avoid these distractions and focus on what matters.

 

[Guest cherzeca]

"lol there is a difference between being a cheapskate and frugal but there is a fine line there too.  Buffett seems frugal but he doesn't seem cheap."

 

like the difference between the naked and the nude (though neither should be thought of in the context of buffett)

[Liberty]

If everybody did it it wouldn't work. Isn't that the argument against the US lifestyle to begin with?

 

You can also get the gist of Buffett's letters in an hour, but that's not the point, is it?

 

And the only person funding my retirement is myself. I deferred spending in the past and made sacrifices to earn more so that I'd have surplus resources in the future. I bought time. There's no such thing as a free lunch. And as you know if you've read Mr. Money Mustache, he's been earning more than enough to live in retirement even if you remove the blog income, just by working on hobbies and side projects. The point isn't that you go to a beach and do nothing, but that you are free to work on what you want to how long you want; spend as much time with your family as you want, etc; for the kind of people who are motivated and disciplined enough to get to the point of FIRE, a lot of those side-projects are going to be good earners. Personally my work now is being an investor, but if I stopped enjoying it, I could index or give my money to Turtle Creek or whatever and go do something else. That freedom to do what I please every day is worth more to me than earning 1 million a year working some downtown 9-5 job five days a week.

 

If you love your current work, that's great. Being in business for yourself probably is more freeing than what most people do all day. But don't try to minimize this great strategy as clipping coupons and mowing your lawn. It's an important mindset change that most people never even consider, because most people who are lucky enough to end up earning "3x more" than they used to just spend 3x more, with little effect on their long-term life satisfaction.

 

I do think you misunderstand my mindset. I don't have a scarcity mindset. I have way more money than I need, and I don't even know what else I'd buy if I had more. My wife and I have a hard time finding gifts to buy each other because we already have everything we want, or if there's something we really want we just buy it, so we usually have it by the time a birthday rolls around. My engineering side finds it elegant to save money and optimize my lifestyle. I get more pleasure out of cutting waste than out of buying expensive crap. Maybe it would be a hardship for you, but it isn't for me, and many others.

 

First off I didn't make any comments about you or your mindset. I know you only from your posts and you seem to be an intelligent person. So lets not

take it personally.

 

All I am saying is maybe this MMM guy works for a certain type of people and he may have helped them by showing a different path. But there is nothing revolutionary in the strategy and wouldn't benefit the society as a whole.I would much rather focus on the other side of equation i.e. earnings and growth with some risk involved.

 

A good analogy is going long or shorting a stock. You can only short up to zero but are unlimited on the other side. Then why focus on something with limited potential. That doesn't mean you don't monitor your stock for a potential downside.Its just that your energy is focussed on maximum growth and you are not looking for scams ,shady companies.For a novice both would work well but long only is a better approach.

 

The common lifestyle of most people is mind numbing and soul killing, as well as unhealthy in many ways. Cranking things up so they make more money isn't a solution. Rethinking the link between spending and happiness and between freedom and happiness is, imo, likely to have a much bigger effect on life satisfaction.

 

I was taking the mmm approach long before his blog ever existed. I just think he's one of the best teachers of this approach.

 

I think the main insight that he, and others, are trying to communicate is that we live in a world of incredible abundance and surplus. We're vastly richer than most people that ever lived, and than most people currently alive around the world. Even kings and queens of other eras had only few of the comforts that we take for granted today. Yet because of a few psychological phenomenons (hedonistic treadmill, relative value, peer pressure, etc), most people inflate their lifestyles to the breaking point, are stressed about money, keep comparing themselves to others who seem to be doing better (or to fictional characters on TV and in advertisment), and have no control over most of their time/life.

 

I see the opposite of your analogy with long/short. Working a typical job can only get you so far because most of your waking hours for all your prime decades are called for. Being independent has so many more ways to be fulfilling, even if you still work as much. Freedom means having a choice.

 

You seem to have found at least some independence through running a business. This is another common path. But I think the freedom probably matters more than the money.  Would you go back to being an employee for more  money?

 

The mmm path certainly isn't the only one. But entrepreneurship isn't for everyone either.

[Liberty]

Buffett is a great example of frugal living, as are many brk executives.

 

He knows how he wants to live and what makes him happy and does exactly that, doesn't spend more just because he has more, doesn't clutter his life with the superficial trappings of success that he doesn't particularly care for.

 

Would he be happier with 10 houses and yatchs and planes, drinking $5000 bottles of wine and eating caviar?

[Liberty]

Hello to all!

 

I've been reading you guys for nearly 3 years & just recently ponied up for official membership (not cheap, just frugal...)

 

I'm probably not what most of you would consider a value guy in that I don't search out companies like the ones which are predominantly discussed here.

 

I have; however, learned a lot from all of you about how to look at the types of companies which do interest me.

 

I was struck by the comments in this thread on frugality & contentment & feel like these qualities allow us to make better investment decisions.

 

Much thanks to the Zen Masters Liberty, TwoCitiesCapital & rukawa (I'd try to snatch the pebble from your hand but then I'd have to pick up that boiling hot cauldron & burn dragons into my forearms...)

 

Welcome to the board, DD. Don't worry, no boiling cauldrons here. Cheers!