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I've had it...


Mandeep
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You've just defined a bull market. People can't stand to not get a piece of the action, so the markets keep on going up. Conversely, people can't stand to lose, even temporarily, so they can't wait to get out of stocks exactly when it is the best time to get in. There are riches in the market, just because people can't control their emotions.

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This is what is always so damn fascinating to me.  Here we have a relatively well-versed Buffett/Graham disciple who has a theoretical and technical advantage to most other market participants, yet a rising market compelled him to tip his hand (and please don't take any offense Mandeep, but I'm sure many other people have also jumped in).  It's just absolutely weird how our human emotional side will supercede what logic and rationality are telling us not to do.  I truly agree with Munger that most economists would be far better off taking psychology courses!  Cheers!

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Mandeep, good luck.

 

GMO's Grantham just made a relevant observation in the recent Morningstar conference:

 

"Q: Back in March you wrote a piece called 'Reinvesting when Terrified". What adjective describes your emotions right now?"

"A: I suppose you could say 'Revinvesting when... Slightly Disappointed that You Missed the Opportunities"

 

In any case, I deviate from the above critical comments. Market probably still on a fair level, long term. One probably have some cash to invest. Most probably didn't bet their runch last October/March... so what do you do? Grantham recommends: to slowly buy into your preferred exposure... say on a 1 year long plan.

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Patience and discipline

 

Indeed.  For me, the last year or so has been a good lesson in what patience and discipline really mean.  It's very easy to say "only swing at fat pitches; there are no called strikes . . ."  But, the reality is if you feel like you've missed a fat pitch, you might be tempted to swing at the next decent pitch, not wait for another juicy one, just because you feel you missed a great opportunity.  I'm feeling a little of that myself right now.  But, I'm close to fully invested and am largely content with my holdings, so the temptation to chase pitches is in check, for now.

 

 

 

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But, the reality is if you feel like you've missed a fat pitch, you might be tempted to swing at the next decent pitch, not wait for another juicy one, just because you feel you missed a great opportunity.

 

And that my friends is what kills us relative to the index over the long-term.  Good ideas always eventually come along, so force yourself to be patient.  The world won't end because you didn't catch the last wave...but if you suddenly get thrown into the sand...it will take some time to get back up on the board.  Cheers! 

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Personally, in February and March I passed on a couple of hanging curve balls that I might have hammered out of the park.  Instead, I waited for the pitcher to groove a couple of fastballs which I hammered for doubles and triples...  Looking back, it's obvious that I should have swung at the hanging curve balls, but I find it a great deal more comfortable to just sit on the fastball (and then "pull the ball" by using modest amounts of margin!! ;D ;D).

 

Overall, I am delighted by the way the past 3-4 months has worked out...but in retrospect it could have even been better.  I'm back to watching the pitches go past, and I'm waiting for the pitcher to groove another fastball....

 

SJ

 

 

 

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Guest JackRiver

Mandeep

 

I wouldn't pay too much attention to the other comments, but let me ask you this, what is USB worth?  That is, what is your calculated value for USB and what gives you confidence that you have the ability to evaluate USB?

 

Yours

 

Jack River

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Personally, in February and March I passed on a couple of hanging curve balls that I might have hammered out of the park.  Instead, I waited for the pitcher to groove a couple of fastballs which I hammered for doubles and triples...  Looking back, it's obvious that I should have swung at the hanging curve balls, but I find it a great deal more comfortable to just sit on the fastball (and then "pull the ball" by using modest amounts of margin!! ;D ;D).

 

Overall, I am delighted by the way the past 3-4 months has worked out...but in retrospect it could have even been better.  I'm back to watching the pitches go past, and I'm waiting for the pitcher to groove another fastball....

 

SJ

 

I have also been happy with the opportunities that have appeared since September 2008. I was fortunate to be watching the markets and able to take advantage of panic over a few days in September, October, February and March so that I could double my equity allocation at reasonable prices. I still hold more cash than I would like. I will continue to put the cash to work, though more slowly than in the last 10 months. In retrospect I could have been greedier on some of those days--but I am happy to have dry powder for whatever comes next.

 

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In retrospect, I did a little too much thumb sucking in Q1 of this year. I had previously sold out of my Suncor holding when it got pricy (not near the top, mind you, but still made a good profit) waiting to buy lower if the opportunity presented itself. In Q1 it did but I did nothing. I would be lying if I said that there is not temptation now, as I think this is a decent entry price. But I think it best to wait for the proverbial fat pitch.

 

That was an instance where "patience, bordering on sloth" cost me. Will look to apply that lesson in the future.

 

-Crip

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Arbitragr said:

 

Biggest fat pitches this year have been BRKB at the 2000 range, and WFC at 10-14 range.

 

ROTFLMAO...

 

This thread will put that statement in a little context for those who don't remember:

 

http://cornerofberkshireandfairfax.ca/forum/index.php?topic=402.30

 

Favorite quote by you Arb (made on April 13th with the stock above $14/share):

 

I'm not short. I'm waiting for the right data to pop up. I watch the housing market closely. I just don't think we're out of the woods yet. A bull market run isn't going to happen overnight. Bull markets take years to run out.

 

Quite the opposite in fact. I invested in financials in late 2008, WFC included ... got burned b/c of management's bullsh*#t. WFC dropped from 27 to 13 or something. Sold my stake.

Regardless, I am indirectly invested in WFC via BRK-B.

 

When WFC's management comes out and says "everything is rosy" and you have someone like Jamie Dimon coming out and being cautious and not expecting any major improvement until the latter end of 2009, you  know something sounds fishy.

 

Maybe you meant something I'm not getting from your comment but as someone who was massively long and getting longer WFC and preferreds during Feb-April and arguing with you and others about the merit of the idea... your statement above about it being a "fat pitch" (that you didn't own) seems ridiculous at best.

 

Your other post (same thread, April 11th) questioning the integrity of WFC management right after they posted earnings (preliminary) walso seems odd for someone who thought the stock was a fat pitch.

 

 

Cheers,

 

Ben

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When WFC's management comes out and says "everything is rosy" and you have someone like Jamie Dimon coming out and being cautious and not expecting any major improvement until the latter end of 2009, you  know something sounds fishy.

Maybe you meant something I'm not getting from your comment but as someone who was massively long and getting longer WFC and preferreds during Feb-April and arguing with you and others about the merit of the idea... your statement above about it being a "fat pitch" (that you didn't own) seems ridiculous at best.

Your other post (same thread, April 11th) questioning the integrity of WFC management right after they posted earnings (preliminary) walso seems odd for someone who thought the stock was a fat pitch.

Cheers,

Ben

 

Hahah ... I like your humor Ben, even though it's misguided.

 

Who says I bought any WFC? I still don't own any WFC, and I didn't say that anywhere in that last post that I "bought" any WFC ever during that time up to now.

But I will admit that when it was at 10-14 or so it was probably over sold.

I just said it was a fat pitch at those levels, not that I own any - but that was during the Feb-March period, not April.

My quote about WFC integrity and all occured when the stock was trading at the 15-25 levels, where the risk of purchasing was susceptibly elevated:

http://i163.photobucket.com/albums/t314/ripleyx/wfcapril2009.jpg

When it was trading at 10-14 that was Feb/March ... in Q109. That, was when it was a fat pitch. Not April and onwards.

 

 

Anyways why would I need to buy anymore WFC when I own it indirectly through BRK/B??

 

 

Nonetheless I did post this a while back ago:

http://cornerofberkshireandfairfax.ca/forum/index.php?topic=161.0

 

 

 

Bought a bunch today at avg price of $2280. Seriously out of whack just after lunch, when fear of bank nationalization was high. Couldn't believe my eyes what was happening.

 

http://i163.photobucket.com/albums/t314/ripleyx/Finance/brkavsbrkb.jpg

 

I hope this post puts a little context, to the the previous post of yours that was supposed to put the previous post of mine in context. If that makes sense at all.

 

 

Thanks Ben ... for keeping me honest but.  :P

You're keeping tabs on me, good to see you're observant. I like ....  ;)

 

Cheers.

 

 

 

 

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Price is what you pay, value is what you get.

Just hang on, we might see some more bargains. If not then, it's not the end of the world.

 

I'm pretty sure I've said that, I've never been short WFC or anything else for that matter in the current time period.

Just patient and cautious. i.e. Rule #1 never lose money.

 

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Hey Arbitragr,

 

I read "fat pitch" as an implication you bought at those prices (which I know you didn't).  If you are using the term "fat pitch" on a company you have extensively researched but did not buy at "fat pitch" prices, that seems more than odd to me.  Seems like you need a disclaimer like "shouldn't have missed it" or something.

 

Confused,

 

Ben

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Hey Arbitragr,

 

I read "fat pitch" as an implication you bought at those prices (which I know you didn't).  If you are using the term "fat pitch" on a company you have extensively researched but did not buy at "fat pitch" prices, that seems more than odd to me.  Seems like you need a disclaimer like "shouldn't have missed it" or something.

 

Confused,

 

Ben

 

Well, I did buy BRK/B.

:-\

 

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For the record, I did not participate at all in the market rally since the March lows and it doesn't bug me one bit.  

 

Furthermore, as a Canadian investor with a hedged US stock portfolio, I took a big whack from the currency.  Next, ORH is underperforming the hedge.

 

So I am down 20% this year so far.  But I just don't care - other than I think I made about a 5% mistake on the currency and, at the beginning of the year, I should have sold half my ORH at 55.  That mistake cost me another say 5% although I thought Watsa may have been holding onto the long treasuries and had massive gains - he had sold them off earlier however and not during the massive late November and December rally in them.  So it was kind of a mistake

 

So of the 20%, 10% I think are mistakes and the other 10% is just ORH not popping yet.  And I just don't care that I haven't participated in the rally.  I care that I am making the right decisions at the right price.  I am keeping my portfolio very high quality - ORH, KO, JNJ only.  Just sold my BNI at a big profit - could be too early.  Sold my GE too early too for a big profit.  Have a tad of BRK and COP and agricultural commodities but that's not worth talking about.    

 

ORH is heads you win, tails you win the way I see it.  

 

 

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Been trying to buy OSTK bonds for the last 2 months but they trade once or twice a month, large institutional trades only and its not looking likely.  Would really like to make those about 10% even 20% of my portfolio and 5 to 10% of the other friends and family portfolios I managing now but not looking likely.  I figure if the market tanks again, more sellers will come out of the woodwork and I may get a chance.  May have to buy the main broker in the bonds a crate of his favorite scotch or something so he can tag on my smallish trade to larger institutional trades when the suckers finally trade.

 

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Been trying to buy OSTK bonds for the last 2 months but they trade once or twice a month, large institutional trades only and its not looking likely.  Would really like to make those about 10% even 20% of my portfolio and 5 to 10% of the other friends and family portfolios I managing now but not looking likely.  I figure if the market tanks again, more sellers will come out of the woodwork and I may get a chance.  May have to buy the main broker in the bonds a crate of his favorite scotch or something so he can tag on my smallish trade to larger institutional trades when the suckers finally trade.

 

Just on bonds ...

 

I posted this a while back ago in March, "The Case for Junk Bonds": http://cornerofberkshireandfairfax.ca/forum/index.php?topic=266" data-ipsquote-contentclass="forums_Topic" 1981#msg1981

 

I was suprised no one said anything ...

 

Since the Fed & Treasury's actions, we've seen a bit of a recovery and some stabilization. With credit spreads contracting, and the market fleeing the safety of long-term Treasuries (pushing yields up), corporate bonds in general, and high yield corporate bonds in particular have done extraordinarily well over the last few months whilst long term government bonds have seen a reversal of fortune.  One key highlight of the article was the junk bond ETF "JNK". JNK has appreciated by about 30% since March.

 

http://i163.photobucket.com/albums/t314/ripleyx/Finance/JNKJune1st09.jpg

 

Bonds are about 20% of my portfolio, JNK being about half of that allocation, the others being individual OTC company bonds and short-longterm treasury related bonds/ETFs/instruments.

 

We've been in a "credit crisis" where credit spreads have blown out. We've also had a bubble in treasuries.

It just seemed obvious that those spreads and the low yields of govt. treasuries would have come back into line to more normalized levels sooner or later.

Was quite suprised nobody mentioned the idea of buying bonds on this board until now.

 

 

 

 

 

 

 

 

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