Jurgis

One thing: if you can squeeze in before the $7.5K federal tax rebate ends, clearly the price math gets better. I doubt that I'm there in the queue. Although it will depend on what options you want: long-range means you get moved closer to top of queue, being in CA means you get moved closer to top of queue, 4 wheel drive means that you most likely won't get rebate since it's only gonna be available sometime in 2018. Here is the explanation how the rebate and rebate phaseout works: https://cleantechnica.com/2017/01/20/predicting-us-federal-ev-tax-credit-will-expire-tesla-buyers/ I am sure updated numbers will be available - please post if you find a website keeping up to date tally.

Tesla Model 3 new info: Standard Battery: Price: $35,000 Range: 220 miles (EPA estimated) Supercharging rate: 130 miles in 30 minutes Zero to 60 mph time: 5.6 seconds Long Range Battery: Price: $44,000 Range: 310 miles Supercharging rate: 170 miles in 30 minutes (Same as Tesla’s Model S) Zero to 60 mph time: 5.1 seconds A $5,000 premium options package includes an all-glass roof, open-pore wood decor, premium sound, heated seats, and premium seat materials. And of course this thing is autopilot-enabled. You'll just need to plunk down $5,000 for the Model 3 to get it to "match speed to traffic conditions, keep within a lane, automatically change lanes, transition from one freeway to another, exit the freeway and self-park at your destination," according to the company. The Model 3 can even offer "Full Self-Driving Capability" at some point "in the future" but it'll set you back $3,000 in addition to the five grand you dropped on the Enhanced Autopilot package. so... top everything: $44+5+5+3 = 57K basic + autopilot = 35+5+3=43K basic + premium options + autopilot = 35+5+5+3 = 48K And 4 wheel drive is probably gonna be another 5K when available (2018 sometime?). And custom color is 1K. So... I'm probably gonna chicken out for now and not take delivery. Wait until I really need a new car. We'll see when they gonna start bugging me to commit. OTOH, I think they probably gonna be losing money on this, so... don't expect prices to drop. They might go up instead - like it was with Model S. Some info from https://www.engadget.com/2017/07/29/tesla-just-delivered-the-first-round-of-model-3s/

They reported today: http://www.businesswire.com/news/home/20170727006048/en/Verisign-Reports-Quarter-2017-Results I only glanced, but did not see anything bad there. So... either something in conference call or you have broken quote? Google finance shows 0.6% down after hours...

As I've said, I'm not a local expert, but from what I remember if you looked at Tencent for last 10+ years, you'd see similar picture. More expensive usually, but great numbers and great stock performance. So, yeah, it could be real and not too good to be true. But there's also Chinese company risk that we may not know something and it is too good to be true. You need boots on the ground or somewhat blind trust.

All of them sound high. But if you really trust them and think they are going to produce great results, then maybe. 8) There may be people to whom I would pay such fees. Very likely these people would not need/want my money.

'Go not to the elves Howard Marks for counsel, for he will say both no and yes.' 8) Am I the only one who thinks that dissing FAANG and not even mentioning that Apple was cheap enough for Buffett to buy makes the argument rather superficial... Oh right Howard says he does not diss FAANG... though he does... but not in bold ... so it does not count? ::)

Drop the mic. Maybe I'm the only one who agrees with Vampire Squid. 8) Anyway, assuming total market returns going forward to be 2-6% (haha let me be more conservative than GS/VS) and potential drawdown 20-40% in the meantime (but with 40% being relatively low prob), what do you guys propose to do with your portfolios? Some ideas: 1. The easy alternative: huge percentage into BRK and go to the beach. Gives possibly ~8-10% return with possibly similar drawdown as the market (don't expect Buffett to buyback support the price on large market drop). Still not a bad choice perhaps. 2. The cash alternative: huge percentage in cash, rest in whatever. Even if the rest outperforms market X0%, you still are likely to get market returns due to cash drag. But lower drawdown. And if-nimble, you might get market beating return by buying during the drop (if...). 3. The "great cheap your-special-insight investments" alternative: pick the stocks, outperform the market, ... , profit!!! Clearly gives outsized return (or at least that's what investor expects). May give lower drawdown, may give higher drawdown than the market. Since market is "expensive", likely the "special-insight" investments are not so cheap either. Or they have warts. Or both. At least that's what I see both in my portfolio and in the ideas other people suggest. So maybe outperform the market, maybe not. Maybe lower drawdown, maybe not. 4. All kind of macro, long-short, etc: not my pony, no comments. Edit: 5. Non-US investments. Some markets may be cheaper. International has underperformed for years (but not this year AFAIK). Go there, beat US. I'm in the mix of 1-3 and a bit of 5. Some BRK (but possibly not much enough). Some cash (but not that much). Some (a lot) of investments that I won't sell (even though they are not so cheap). Some international investments, but not really so cheap either. Or should I start a different thread about this?

Great story, great guy. Thanks for posting.

But that's what he is building anyway. It's just a question of whether it is better to build or buy. You are completely right. 8)

Yeah, I think we mostly agree. Although it could be argued that conglomerate is not Bezos modus operandi. And yet he bought Whole Foods, so ./shrug

For those aware of the conglomerates from the Go Go Era, there is an interesting arbitrage opportunity here. Express Scripts had $4.5B in FCF last year. It's enterprise value is approximately $50B. It is trading for approximately 8.5x FCF. It has $100B in "revenue". Amazon is trading at something like 50x trailing FCF. It has ~ $150B in revenue. It has market cap of $500B. So Amazon could buy Express scripts for about 10% of it's market cap, but increase revenue by 66%. And increase FCF by 45%. -- Actually, this seems to be the best growth strategy for Amazon. Instead of taking on cash machines like AZO, Grainger, and CVS straight on, it should make loud noises about entering an industry. Wait until multiples get cut in half, and then buy one of the main players. Amazon could easily boost revenue growth to 40-50% per year. The strange thing with their current "your margin is my opportunity" approach, is that they are destroying significant profit pools. Why not just acquire the profit pools with their high priced stock? Surely this would maximize the present value of free cash flows? The risk of this strategy to Amazon is that it leads to collapse of the stock price because investors see "new" company buying "old and tired" cos. Or great company becoming average through acquisitions and possibly not easy integration. Whole Foods acquisition didn't hurt Amazon image, but more acquisitions might. Even though I partially agree with you that it would provide AMZN with "cheap" cash flow.

When Buffett is buying Apple that's a sign ...

Great book. Lots of fun and some good tidbits to think about.

Wow, look at that bubble in June 2009!

At least you got to go to McDonalds. My mother would say "We have hamburger meat at home." And that was that. What is "McDonalds", "hamburger" and "meat", comrade? 8) When first McDonalds opened in Moscow in 1991, we stood 10 hours in line to get in and paid over 1/10 of monthly salary for a meal.

Because stock buybacks above book eventually turn shareholders' equity negative? ::)

Drop the mic.

I'm not a billionaire, so my habits don't apply. 8) Maybe this does, though:

Time to talk to your lawyers again? Quote: Shamelessly stolen from Curreen Capital Q2 letter. I hope Christian Ryther won't mind.

FYI today's Barron's are pushing LUK as mini-Berk with some SOP valuation. Disclosure: No position, no interest.

IMO online groceries are either in the Chasm or at best in the Bowling Alley ( ref http://boards.fool.com/gorilla-game-faq-version-10-12756024.aspx http://boards.fool.com/the-technology-adoption-cycle-talc-14336664.aspx?sort=threaded ) area of TALC. And Whole Foods purchase is either an attempt to knock down a pin and to get across the chasm. It's definitely not in tornado. It may never get there or it may not get there for another 5-10 years. And, yeah, I am abusing GG terminology a bit, but I still think it's possibly useful to describe this area.

A few things that seemed key: - Strong balance sheet - Brought in turnaround CEO who confronted the "brutal facts" - Price match guarantee with Amazon - Lowered prices to be more competitive with Amazon (~2% higher from one) - Invested in customer service and product lines that needed service (e.g. cellular) - Strong integration between online and offline - Extended warranties and services? - Extensive cost cuts - A willingness to take a short-term hit to earnings and margins A company that might be going through a similar turnaround now is Grainger. They are systematically lowering their list prices to make them more competitive. They are also streamlining their branch network. I should have been sure that you'll have more in-depth arguments and models. ;) As I said on BBY thread though, for me, their turnaround is unlearnable and untransferable to other companies. Perhaps because I am not willing to spend enough DD or I'm not interested enough in the sector(s). So I'll bow out from comments on your more in-depth models. Good luck 8)

To answer your first question just off the top of my head I would think that Best Buy is selling expensive products in comparison to others that have been killed by Amazon. This was sort of the theory that Barnes and Noble had, they said people would want to touch and select books. I think this is only true when the price is over a certain threshold. Are you just going to shop online and compare products that may cost a thousands dollars without seeing how they look first. The best two examples I can think of is a TV or a Camera, a really good camera isn't just pocket change, they can go for thousands of dollars, I would certainly like to see how it works in person before I just willy nilly bought one. Maybe. Counterarguments: independent camera stores pretty much died. And the people I know who buy expensive cameras seem to buy them online... but maybe I just don't know the "right people". I bought my last X laptops ($300-$1100 prices), cameras ($500 area), TV ($800 IIRC) online. If I were to buy top level DSLR, I'd buy it online too. But, yeah, I'm not selective (in things or stocks haha), so perhaps I'm wrong anecdotal person too. ;) I've argued "touch" argument for clothes and shoes in the past. But I really don't know anymore... ::)

Some people think they can predict BRK return in next 30 or 50 years... :o Good luck.

@KCLarkin: BBY thoughts here: Honestly, I don't know why they survived and prospered and how. Anecdotally, I have not bought anything from physical Best Buy forever. I've bought things from Best Buy online but only when they had prices cheaper than Amazon after all Amazon discounts/Prime perks/etc. Which does not seem to be great situation for company to be: they are picking the crumbs from Amazon table. But clearly from financial results and stock performance they did more than that. And I don't have answer to that part at all. As I said on your thread, maybe it was "last man standing" syndrome: with very few competitors left, BBY won the brick&mortar customers while doing OKish/so-so online. I'd have to look at their numbers, but I'm probably not interested enough to do a real deep analysis. Edit: I took a glance at 10 year numbers on Morningstar. They look choppy and crappy. So, in short, I would not have invested and I would not invest. And I don't think they are doing great even though the stock has outperformed. Maybe it was a good investment for someone who did deep DD, but really not for me. (And that's mostly true for other Amazonable companies/areas that people discuss too). Edit 2: Here's what Morningstar says about returns. It seems that you have to pick quite specific periods for large outperformance: Total Return % (07/20/2017) 1-Year 3-Year 5-Year 10-Year 15-Year BBY 73.64 24.47 26.64 2.99 7.74 S&P 500 TR USD 16.22 10.03 15.09 7.19 9.62 Best luck.