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Posted
54 minutes ago, backtothebeach said:

"a bubble is when basically a very high percentage of  

the population buys into some originally sound premise
and –- it’s quite interesting how that develops –-
originally sound premise that becomes distorted as time
passes and people forget the original sound premise and
start focusing solely on the price action."

 

The sound premise in the 90s being "the internet will change the world."

Before 2007/2008: "Housing prices almost always go up."

 

I have a hard time applying this to the current market as a whole. Maybe to pockets of the market.

 

Sound premises that may have been distorted:

 

-Large tech companies with network effects are almost unassailable and will always keep growing. (So let's give $250B to  multi T$ market cap companies P/Es of 35-100).

 

-SaaS companies get entrenched in their customers' systems, will have hypergrowth for more than a few years, and recurring revenue is worth more than one time revenue. (So let's give it a market cap of 60 times revenue.)

 

Thoughts?

 

 

First one that comes to my mind is the sound premise that the easiest and best way to own a safe, diversified stock portfolio is to invest in an index fund (like the S&P 500).

 

Sound premise right up until the market was distorted by so many people following that advice and mindlessly investing money into the index funds.  Now many of the index funds have a huge percentage invested in fewer stocks and/or they are "market cap weighted" and thereby overinvested in obviously overvalued stocks (well, obviously overvalued to a value investor anyway).

 

When I looked last summer at the S&P500 I think 20% of its market cap was in the top six stocks.  The bottom 250 (251-500) combined were equal to the market cap of the top two I think.  So operating under the "sound premise" the average person thinks they've got their money spread out among 500 companies but the reality is they are in a top-heavy stock fund.

  • 4 weeks later...
Posted

This is a story about a company that presented to Charlie and the board at the Daily Journal.  It was a venture style investment (note: Buffett has invested in new companies)

Quote

In January of 2016, I and my co-founder, Nik Reed, found ourselves walking into the board room of the Daily Journal to pitch our legal research and analytics startup, Ravel Law. As I sat down next to Charlie, he scrutinized me with eyes magnified large behind thick eyeglass lenses.

url to Linkedin article

Posted

 

This Twitter thread is a very interesting story I hadn't heard before about Merchants National Properties $MNPP

 

This reference to a footnote is amazing

 

 

 

Posted

Five Times Lucky

Charles D. Ellis | Jan 29, 2022

Snip...

"I was pleased to be invited to lunch by Sandy Gottesman, the much-admired senior partner of First Manhattan and one of Greenwich Associates’ clients. I hoped this would give me an opportunity to get him to adopt our recommendations for the firm’s stockbrokerage business.

As we sat down at his regular table at his club, Sandy said, “We are not going to renew our engagement with you in stockbrokerage this year and I’d like to tell you why. Our research is focused on creative investment ideas, but your research shows that institutions want us to organize around coverage of whole industries. We don’t want to do that. You also show that clients want us to get into block trading, which we also do not want to do. It’s too risky for us.”

I was about to offer Sandy our program on investment management for large corporate pension funds, but he said, “I know you have a great program on big pension funds, but that’s not our market. We focus on smaller funds.”

The conversation was effectively over and our lunch orders hadn’t yet come. To fill the void, I said, “Sandy, thank you for being so open and courteous with me about your decision.” Then, knowing Sandy was a very successful investor, I asked him to share his experiences with great investments.

He replied with one word: “Berkshire.”"

https://humbledollar.com/2022/01/five-times-lucky/

  • 1 month later...
Posted

Don't about untold, but I ran across these relatively unknown interviews from the Kunhardt Film Foundation with the people that interacted with WEB:

Warren Buffet: https://www.youtube.com/watch?v=ieXLNVwshRU&t=31s

https://www.youtube.com/watch?v=cd-w9H0G6nQ

Charlie Munger: https://www.youtube.com/watch?v=F6s2HAzMeL0

Sandy Gottesman: https://www.youtube.com/watch?v=7WGC69B3tWE

Peter Buffet: https://www.youtube.com/watch?v=Y1bOnkLh_9E

Doris Buffett: https://www.youtube.com/watch?v=6C5IuD6rZjc

Howard Buffet: https://www.youtube.com/watch?v=9SY1OCV0vko

Carol Lomis: https://www.youtube.com/watch?v=3F7SN3ID420

Bill and Melinda Gates: https://www.youtube.com/watch?v=kBAiRcDzZ7U

 

 

The one from Howard is probably really relevant to shareholders of BRK

 

Possibly more that I might've missed.  Most of them are on my backlog.  Please share if you find any interesting nuggets in the videos, and if anybody have any interesting speech from Peter Lynch, I would appreciate some links to that.  The ones I've come across seems like they have the same standard speech material and jokes that Lynch uses.

 

 

  • 1 month later...
Posted

Two great stories told at the meeting this year. Both in the afternoon session if you scrub the video you should be able to find them. He tells them better but the summary. 1)WEB was talking about the strange purchase price net of fees for Allegheny and how someone has to pay those. On the topic he mentioned how they had to get a fairness opinion for diversified retail and another company. Not wanting to pay $2m for a garbage opinion from an investment banker, Charlie told him to go through a list of 10 bankers starting at $60k and the start at the top again with a small increase if no one said yes. Lo and behold the first banker agreed. Would be interesting to see what the$1.94m of retained capital did over the years. God bless him. 2) Someone asked about accounting rules. Warren referred to the fact that Charlie was on solomons audit committee. Charlie referred to the fact that they had a plug in the numbers. They then revealed that for 12 years solomons balance sheet had a plug number because the settlement of trades were done differently upon an acquisition (think it was an acquisition) and no one ever figured it out. They called it the floating plug. Hilarious and shocking.

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