mjohn707

They seem to have a lot of debt and not really high cashflow. Why did you decide to invest in them? I really like their watches so I would really love to know. My stated reason was to buy at the lower end of the historical P/B and P/average earnings and all of that, but clearly I was just looking for a 25% loss in a market where everything else has just flown up With the rise of smartwatches I can't see them having a great future. What would be the catalyst for the company to go back to it's higher valuations over the last 5 years ? I just wanted to have some more context to your investment since I am not able to find out how it would go back up again. I would suspect you'd likely need a rebound in earnings to get closer to historical valuations, which may or may not be in the cards. This issue of the smartwatch is certainly a complication, and probably a bigger risk at the lower end of the market, but I'm just not convinced that it means that they can't do well in the future

They seem to have a lot of debt and not really high cashflow. Why did you decide to invest in them? I really like their watches so I would really love to know. My stated reason was to buy at the lower end of the historical P/B and P/average earnings and all of that, but clearly I was just looking for a 25% loss in a market where everything else has just flown up

Been a bumpy ride, but this is somehow approaching book value at the current price of $19.90 a share, and something of a 45% return from the date of the original writeup compared to 30% or so for the S&P. Probably a decent time to lighten up if anyone was insane enough to just hold this name through that period

Or to steal a line, when Fortuna spins you downward, go to a movie and get more out of life

:D Well done. I guess it's all easy in the mirror, but this checked a lot of good boxes at the time. Of course I didn't buy it. Also note that the option grants dated July, 14 might have been a harbinger of things to come: https://www.sec.gov/ix?doc=/Archives/edgar/data/66382/000006638220000034/hmi8k07172020.htm . After years of granting performance stock units, the board suddenly switches to granting loads of options with a strike at a 10% premium to market price. That's quite rare. A 130% or so gain since it was originally mentioned? And yeah it's the sort of thing you were not sure you were going to make money in at the beginning because of all the covid stuff, and now you're still not sure whether you should have made money. I'm still going to cash the check though, and assume that the goddess Fortuna spins me upwards for now

Hey are we up 70% on this? Score one for careful fundamental research

In my experience, you can lose money with a variety of NCAV discounts with enough luck or skill

Gradually then suddenly?

This particular psychological bias is actually one of the easiest for a value investor to overcome on a personal or internal basis, because in addition to possessing great skill and wisdom in nearly every modality of life, we are also natural stoics completely unaffected by the emotional torrents that bedevil others. And yet one of the biggest issues we face as value investors is not so much our own internal emotional state, which we have of course under effortless and preternatural control, but the curious emotional reaction the practitioners of our art can inspire in others, that infallibly seems to be the very negative emotions, disliking and hating, that we are discussing here. And it is this curious reaction or response that our practitioners engender from others on a social and societal level that is perhaps most worth discussing, to explore what causes such reactions, and to consider what we can do to limit such reactions from others. On the first point, as to what exactly adherents to our discipline say or write when communicating with others that seems to engender the disliking/hating tendency so strongly and consistently, I have carefully examined the reasoning and judgment displayed in my own interactions with others, and I have been completely unable to find any defects in my own logic or arguments. In fact, when I have in the course of a discussion about say politics or race relations referred to the points made by others as “deranged” or “crap,” that has inarguably been the case, even after a second reading and review of the opposing arguments considered in the most charitable manner possible. It can be difficult for practitioners of value investing, that most noble of all disciplines, to understand the great deficits in understanding and conception that most others labor under who have not been enlightened by our principles, and even more difficult to comprehend that some people possesses minds so weak and inflexible that they are unable to see the truth presented there right in from of them, or at least not far behind a stream of our invective and personal insults. As to the second point, what we as practitioners of value investors can do to limit the unfortunate reaction of others to the undisputable truths we alone possess and communicate, this is of course a difficult question. After careful consideration of the indisputably high-quality and second and third-level thinking that practitioners of our discipline produce, and the unimaginable level of ignorance and ill will that most others participating in the public forum seem to possess, it is difficult to imagine an easy solution to this problem. It is perhaps likely that our only recourse and solution to this fundamental conflict is to redouble our own efforts at communicating our own points in longer formats more insistently than ever, and by being even less willing to compromise or read the work of others in any sort of charitable way, and to level insults at others with even less hesitation than we ever have before. And until there is some sort of method or mechanism to prevent the less illuminated from participating at all in such discussions or perhaps any discussions, this is the only remedy that seems available to us.

This does sound like a bear as far as all the complications, but if they’re paying some sort of dividend it can’t be all bad. Do we not know anything about the management and organizers here at all?

aren't these all quotes from "The Death of a Salesman"? It also seems to share some of the same terrible stage instructions as well. What a coincidence! Sounds like something out of Dale Carnegie The American tradition of these books apparently goes back even further than Carnegie, but you’re not the first to notice the similarities: https://www.nytimes.com/1984/05/13/arts/if-willy-loman-read-books-hed-have-read-these.html

aren't these all quotes from "The Death of a Salesman"? It also seems to share some of the same terrible stage instructions as well. What a coincidence!

In the previous thread on incentives I shared an antidote or remedy that I found helpful for combating the effects of that particular bias, so I though I’d share an anecdote or example in this thread instead as per our original instructions. And it just so happens that I had an Uncle, who sadly passed in a tragic way, who made his living in sales during what some might call the golden age of the salesman, when relationships and the personal touch of the occupation were still so important. And I can remember a few things he used to say about the art of selling that stuck with me to this day, and seem to exemplify the bias in discussion perfectly. I can recall today, almost like it was yesterday, that he used to say that “Personality always wins the day,” that “The man who makes an appearance in the business world, the man who creates personal interest, is the man who gets ahead,” and that you only had to "Be liked and you will never want." Finally the line that really sticks out, and that I often heard him mutter to himself over and over when he was suffering from one of those great sadnesses that seemed to overtake him periodically in his later years, was that it was “the wonder of this country that a man can end up with diamonds here, on the basis of being liked.” He would often follow that line by yelling out “Attention must be paid!” while flickering the lights in the room off and on. And in truth my uncle Willy was only a passable salesman despite his apparent deep fluency with this particular physiological bias, and he probably was just not able to get a great deal of traction due to his lack of knowledge of the lollapalooza tendency, which we will no doubt get to eventually in our discussion. And it’s also perhaps true that while my Uncle was liked, he was really never well-liked.

Incentives are incredibly powerful, but there’s one failure-proof way to beat this one. What I like to do at say McDonalds when they ask me to “supersize” my dinner, is to fully and deliberately explain the super response tendency to them, which sometimes might entail a quick remedial lesson in marginal costs and marginal pricing beforehand. In any case, I’ve tested this a few times times and I’ve found that in most cases after five to ten minutes of my explanations the drive-thru attendant not only relented with their spurious extra charges, but often waived the purchase price of my meal entirely. It’s hard to know how much the cars honking behind me contributed to any of this, but experiments in social science are difficult. In any case we can agree that the knowledge itself is an incredibly powerful antidote to this deep-rooted bias

What I like to do is have massive unrealized losses to offset any gains I might have in other names. If you need tips on how to get these sort of losses just PM me for details/stock tips