What are you buying today?

[james22]

Informational advantage is the only advantage an investor has.

 

Not the application of value metrics available to anyone. (And applying  without company/sector expertise likely misses more than it reveals.)

 

If you don't have any informational advantage, diversify (indices, BRK).

[james22]

10 minutes ago, 73 Reds said:

Or he can look at some of the Big Tobacco companies for dividends.  The dividend is all but recession-proof and certainly beats cash.

 

Perfect example.

 

Do you know Biden's FDA would likely have banned menthol?

 

https://thehill.com/policy/healthcare/5105771-trump-fda-menthol-cigarettes-ban/

 

That's not captured in any metric.

[cubsfan]

3 minutes ago, james22 said:

 

Perfect example.

 

Do you know Biden's FDA would likely have banned menthol?

 

https://thehill.com/policy/healthcare/5105771-trump-fda-menthol-cigarettes-ban/

 

That's not captured in any metric.

 

Yeah, that's the risk you took. But analysis says they print money, the earnings are almost 100% cash earnings, all it took to be a decent boring performer was healthy dividend & stock buybacks.

Plus the international business was huge and foreignors love to smoke.  So the downside looked like dead money or opportunity cost.

 

But if anything good happened -- well, you were off to the races.

 

Like Steve Romick says "Good things happen to cheap stocks"

[73 Reds]

2 minutes ago, cubsfan said:

 

Yeah, that's the risk you took. But analysis says they print money, the earnings are almost 100% cash earnings, all it took to be a decent boring performer was healthy dividend & stock buybacks.

Plus the international business was huge and foreignors love to smoke.  So the downside looked like dead money or opportunity cost.

 

But if anything good happened -- well, you were off to the races.

 

Like Steve Romick says "Good things happen to cheap stocks"

Not so sure that a menthol ban would not have been a plus in bolstering sales of NGPs  (heads I win, tails you lose).

[cubsfan]

10 minutes ago, james22 said:

Informational advantage is the only advantage an investor has.

 

Not the application of value metrics available to anyone. (And applying  without company/sector expertise likely misses more than it reveals.)

 

If you don't have any informational advantage, diversify (indices, BRK).

 

That's the point.  Look at @Gregmal Ebay - on the surface, looks like no/possibly shrinking growth - but the guys on the board dug in - and you see enormous buybacks, a MOAT that is not in danger, despite the consensus. These opportunities require insight - and the valuation might indicate some margin of safety.

 

Business insights are more important than the surface metrics.

[Cod Liver Oil]

2 hours ago, 73 Reds said:

@Blake What do companies like AAPL, BRK, and even Fairfax have in common?  Answer is optionality.  My own investment thesis for each is highly dependent on what they haven't yet acquired or generated.  You are buying incredible brainpower that is nearly unlimited in what it may yet come up with.  How many companies possess this incredibly valuable variable that cannot be quantified in any valuation metric?

Great point about embedded brain power being difficult to quantify. 

[Gregmal]

12 minutes ago, cubsfan said:

 

That's the point.  Look at @Gregmal Ebay - on the surface, looks like no/possibly shrinking growth - but the guys on the board dug in - and you see enormous buybacks, a MOAT that is not in danger, despite the consensus. These opportunities require insight - and the valuation might indicate some margin of safety.

 

Business insights are more important than the surface metrics.

Yup, it’s about putting in the work and being able to find advantages. 
 

And even if that fails, you can always just trade yourself into a decent return. In fact, for people whom are allergic to actually investing, trading is probably the way to go. 

 

I’ve never seen the point in sitting around doing absolutely nothing while underinvested and pretending like it’s the smart thing to do. I get guys like Klarman and Einhorn, because they’re already wealthy, but the average investor or fund manager? What’s your consolation prize? The Einhorns and Klarmans hob knob like billionaires while masquerading as successful investors, and periodically get to write condescending know it all letters making excuses, but everyone else? You simply have to keep your day job longer? 

[james22]

26 minutes ago, cubsfan said:

Yeah, that's the risk you took.

 

Sure, I'm just saying you'd need be aware of it.

 

The risk doesn't show in any metric.

[james22]

4 minutes ago, Gregmal said:

Yup, it’s about putting in the work and being able to find advantages. 

 

And that it's much harder to find an advantage than you think.

 

Better to begin with the assumption the market is right than wrong.

[Masterofnone]

51 minutes ago, Gregmal said:

Yup, it’s about putting in the work and being able to find advantages. 
 

And even if that fails, you can always just trade yourself into a decent return. In fact, for people whom are allergic to actually investing, trading is probably the way to go. 

Greg, you are very very good at both these things. Most people are decidedly not. Especially trading. And most managers, it turns out, are about average over the long term.

[LC]

Barring some disability, I think people are generally good at what they focus on. Maybe we just focus on the wrong thing?

[Spekulatius]

21 minutes ago, LC said:

Barring some disability, I think people are generally good at what they focus on. Maybe we just focus on the wrong thing?

I think so, with investing it’s chasing what other people do, FOMO ( am psychological fallacy).

 

I think you have to have a system or framework. Even if it’s just invest in index funds or doing 60/40.

[Castanza]

“Good Enough” 

- entry price

- exit price

- business outlook 

- reasonable hurdle rate

 

Too many people are out there trying to find the absolute perfect company and the perfect price on paper. That just leads to paralysis by analysis imo. You can always find an excuse to not invest imo. Newsflash….everything has a little hair on it….if you can’t handle that then as @John Hjorth said….move on to another asset class. 
 

@Blake Hampton what even are you invested in? 

[Malmqky]

Bought some PDD calls early Friday to scratch that gambling/speculation itch.

________________________________________________________________

 

Not to take this further off topic, but even if you have huge f*ck-ups, you can still do well. I'll use myself as an example, and my worst investment failure.

 

I started buying FB at $300 something per share. Averaged down for a while, then ended up selling at like net-cash and like 2-3x sales (can't remember which). It was a large position too. I got caught up in the pessimism surrounding spending on the Metaverse and TikTok. Basically, pulled an Ackman. Not going to make excuses for this one LOL.

 

Few years later and I still think about this.

 

But guess what? I've still outperformed the market since I had the guts to buy and hold great companies in the aftermath of times like 2009 and 2020. And buying energy in 2020.

 

My point is you can have big f*ck-ups and still do well. You just have to be optimistic, do some work, not outsmart yourself, and have guts. I've had 50% portfolio drawdowns more than once. I've had terrible investment decisions like Meta. I've held too much cash at times, and not enough at other times. Etc. Etc. Etc.

 

@Blake Hampton even if shit hits the fan and we have another lost decade in terms of overall market, you can still do well (15%+ CAGR). You can make huge mistakes and still do well. If you're pessimistic though, you'll end up like Klarman and do ~4% CAGR. You have to be nimble, Peter Lynch like. What worked in the early 2000s didn't really work in the 2010s and I reckon the 2020s will continue to give us unique opportunities. You have to have some faith.

 

Sidenote: I too am interested in hearing about your portfolio if willing to share.

Edited January 25, 2025 by Malmqky

[Blake Hampton]

1 hour ago, Castanza said:

“Good Enough” 

- entry price

- exit price

- business outlook 

- reasonable hurdle rate

 

Too many people are out there trying to find the absolute perfect company and the perfect price on paper. That just leads to paralysis by analysis imo. You can always find an excuse to not invest imo. Newsflash….everything has a little hair on it….if you can’t handle that then as @John Hjorth said….move on to another asset class. 
 

@Blake Hampton what even are you invested in? 

I like energy:

 

- BRY

- ECTM

- OXY

[Blake Hampton]

and cash.

[vakilkp]

Interesting conversation but to get back on track.  Bought (top ticked) 3 shares of FRFHF yesterday.  This was to show kids and get them started.  Been holding fairfax for a while and big thank you to Viking. 

[Blake Hampton]

I’d also be interested in residential real estate if I could get a mortgage to be smaller as a percentage of my wealth. I think the terms for that type of debt are really good, I just don’t want to over-leverage. Prices for good homes are also quite modest where I live (3-4x median household income).

Edited January 25, 2025 by Blake Hampton

[Spekulatius]

4 hours ago, Blake Hampton said:

I like energy:

 

- BRY

- ECTM

- OXY

That’s a very tricky sector to make money in. Why not get your contrarian itch buy buying something that has a good LT record of value creation and trades at lower than historical multiples.

Stocks like ELV, REGN, HSY or MDLZ come to my mind if you restrict yourself to US stocks.

 

I stead of energy, I would get myself acquainted with growth sectors like software, semiconductors, tech (in general) or even industrial or infrastructure that LT likely lead to better returns than trying to pick a bottom with energy stocks that mostly go on cycles.

Edited January 26, 2025 by Spekulatius

[Blake Hampton]

6 minutes ago, Spekulatius said:

That’s a very tricky sector to make money in. Why not get your contrarian itch buy buying something that has a good LT record of value creation and trades at lower than historical multiples.

Stocks like ELV, REGN, HSY or MDLZ come to my mind if you rest did yourself to US stocks.

 

I stead of energy, I would get myself acquainted with growth sectors like software, semiconductors, tech (in general) or even industrial or infrastructure that LT likely lead to better returns than trying to pick a bottom with energy stocks that mostly go on cycles.

 

I guess my general thesis is that inflation is looming and that the Fed can either get control of it or they can't.

 

If they can't: Oil and real estate

And if they can: Cash

 

Anything that doesn't seem to be completely essential turns me off. It can't get any more essential than fuel and housing.

 

Edited January 25, 2025 by Blake Hampton

[james22]

1 hour ago, Blake Hampton said:

Anything that doesn't seem to be completely essential turns me off. 

 

You're making this much, much harder than it needs to be.

[KPO]

2 hours ago, james22 said:

 

You're making this much, much harder than it needs to be.

Insurance. Railroad. Energy. But is he really?
 

Patience seemed to work for Buffett and Munger. Study when Munger bought Wells Fargo and let me know if you disagree. There’s nothing wrong with waiting for a fat pitch or two, even if you have to wait several years. I think many of us (me included) have forgotten about the importance of patience in investing. 

[gfp]

3 hours ago, Blake Hampton said:

 

I guess my general thesis is that inflation is looming and that the Fed can either get control of it or they can't.

 

If they can't: Oil and real estate

And if they can: Cash

 

Anything that doesn't seem to be completely essential turns me off. It can't get any more essential than fuel and housing.

 

 

This is bonkers.  I really get the feeling that you aren't listening to anybody here and your mind is so made up that it could take an entire 15 year market cycle to give you back the humility to realize you have a lot of things backwards.  If you are trying to do this for a living, that puts you out of business and into a different industry.

 

As a side note... for the 10th time or whatever it is...  your understanding of the Federal Reserve's role in influencing inflation is likely wrong enough to be closer to 180 degrees backward.  And if the all powerful Federal Reserve gets a handle on this raging inflation you think is right around the corner, you want to own "cash" in that scenario?

[james22]

19 minutes ago, KPO said:

There’s nothing wrong with waiting for a fat pitch or two, even if you have to wait several years.

 

Sure there is: opportunity cost.

 

And the very real risk you won't swing because fat pitches rarely look fat at the time.

 

Best thing Blake could do is track Vish_ram's suggested portfolio against his for the next decade.

[Dynamic]

It is interesting how different people feel about their portfolio construction and approaches, patience, concentration vs diversification and so on.

 

I very rarely get very high conviction about a new company and a price with a margin of safety that makes me excited, but I'll then go very concentrated and put a serious proportion of my capital into it, the amount I'm willing to risk depending on how much I'm continuing to invest and how much risk of long-term loss of capital I view the position to have. It has helped that Berkshire Hathaway has nearly always been available as a default investment with good return, extreme safety of intrinsic value and hardly ever overvalued. These big concentrated positions at back-up-the-truck prices where I might sell out of other positions to buy more are fairly rare for me.
Feb 2016 - BRK.B to 100% of portfolio.
May 2016 - AAPL to 25% of portfolio and happy for it to grow to over 50%, but concerned over the small chance of it doing-a-Nokia to not start above 25%, the rest remaining in BRK.B.

2018 a private opportunity which I eventually put about 35% into.

Sep 2023 to Aug 2024 FFH.TO / FRFHF initial 17% position, grew to 35-40% then to 50% but willing to let it grow and dominate my portfolio. Still had over 20% uninvested cash.

I have also done some merger arbitrage, a little dabbling in bank stocks and buying and selling via writing short-term Puts and Calls, but nothing with this high level of conviction to back up the truck in a big way.

Edited January 25, 2025 by Dynamic
Typo