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Spring 2013 Graham and Doddsville Newsletter


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Link: http://www4.gsb.columbia.edu/filemgr?&file_id=7222906

 

Interviews are Preston Athey of TRowe Small Cap Value, Li Lu of Himalaya Capital, and Paul Isaac of Arbiter Partners.  Plus the student pitches are back.  I've skipped ahead and only read Li Lu's interview thus far which was fantastic.  Some gems.

 

Over time, you can accumulate a huge advantage if it comes naturally to you like this. The ones who really figure out their own style and stick to it and let their natural temperament take over will have a big advantage.

 

Three things about shorting make it a miserable business. On the long side, you have 100% downside but unlimited upside. On the short side, you have 100% upside and unlimited downside. I do not like that math. Second, the best short has some element of fraud. However, a fraud can be perpetrated for a long time. Of course you borrow to short, so they could really just wear you down. That’s why I could be 100% right and bankrupt at the same time. But, you know what, you go bankrupt first! Lastly, it screws up your mind. Shorts just grab your mind and take away from the concentrated effort that is required to do proper long investing. So, those are the three reasons why I just stay away from shorting.

 

Intelligent investors are the ones who are always intellectually honest. They can distinctly know whether they know or they don’t know, and know what they don’t have to know, and that there exist unknown unknowns. If you can really put things into those categories correctly, you will pass the test. Otherwise, you will have gotten yourself in trouble.

 

There are plenty more but I'd probably end up just copying and pasting the whole text if I continue.

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Thanks!

 

And with regards to the second comment, can he show me a stock that has gone up to infinity?

 

Don't be a jerk, you know very well what he means.

 

Scott, it's actually an interesting point worth considering. Outside of a few hotels that have been operating in Japan for close to 1000 years most businesses don't last more than 40 years. They eventually go out of business or are merged away into something else.

 

Granted 40 years is a long holding period, but still worth consideration.

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Thanks!

 

And with regards to the second comment, can he show me a stock that has gone up to infinity?

 

Don't be a jerk, you know very well what he means.

 

Scott, it's actually an interesting point worth considering. Outside of a few hotels that have been operating in Japan for close to 1000 years most businesses don't last more than 40 years. They eventually go out of business or are merged away into something else.

 

Granted 40 years is a long holding period, but still worth consideration.

 

Infinity and 40 years? That's nitpicking. Upside and downside possibilities are asymmetrical in big way for any reasonable duration for an investor. That's the takeaway.

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G&D: Is your fund open to new investors?

 

LL: The fund has been closed to new investors for nine years. However, we will open it up a bit this year. We have more opportunities than we have money around, but that’s rare.

 

 

I guess there are still some opportunities out there despite the ever-rising market and new records or the worry from the other thread

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/i-worry-about-the-shot-heard-around-the-world/msg115796/?topicseen#msg115796

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Thanks!

 

And with regards to the second comment, can he show me a stock that has gone up to infinity?

 

Don't be a jerk, you know very well what he means.

 

Scott, it's actually an interesting point worth considering. Outside of a few hotels that have been operating in Japan for close to 1000 years most businesses don't last more than 40 years. They eventually go out of business or are merged away into something else.

 

Granted 40 years is a long holding period, but still worth consideration.

 

I think Rranjan put my thoughts in the most succinct way possible, so to save some time I won't go in to more detail regarding that.

 

I will add that getting acquired or undergoing a merger does not necessarily mean bad news for shareholder returns.

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