Jurgis

Are glassdoor reviews a useful investment tool? Ignoring the risk of fake reviews, I sometimes think there is an inverse correlation with good capital allocators. A company that buys unwanted companies, cuts employees, and manages expenses will likely have disgruntled employees. A company with private jets, excessive stock options, ping pong tables might get very good reviews. OT? Glassdoor reviews are probably not useful investment tool. But you are being too simplistic too. Employee satisfaction may be a large part of company's success. Penny pinching, crappy salaries, crappy benefits, no future can be both signs of downward spiral and push the company into it even more. This is especially true for tech companies where the labor market is highly competitive. If the word on the street is that company is walking dead with crappy environment, they will not get any A tech people. They'll get B & Cs at best - if they have offices in less competitive markets. And if they get mediocre people working on their products, it's likely competitors will eat their lunch really soon. I sometimes wonder how Constellation does it. I guess their stock performance has been a large attraction so far. Maybe the environment is not bad (I don't know). And I guess they are in some niches where you can live without much new development, so perhaps they don't need that many great people. Plus if their niches are in old tech, they may get older people who are familiar with that and prefer stability of being in that area and company. Disclaimer: No opinion about OTEX.

;D ROFLMAO ;D

A lot of people make this claim and use it as a shortcut to find investments with "moats", but I believe this is false. Companies can have high margins for sustained period of time without having sustainable competitive advantage or moat. Capitalism and free markets are not perfect and hyper efficient and niches can be high-margin for long time without being moaty.

Way OT. Removal from index will not happen for megacaps except possibly removal from DJIA, but I doubt there is much money in DJIA funds. Removal from SP500 happens on the lower fringes. So we are not talking Exxon, but rather CHK, ENDO, DISCA, URBN ( see http://slickcharts.com/sp500 or similar ). So, yeah, if CHK gets kicked out, it may go down more, but then companies are usually kicked out because they went way low already, so I am not sure the effect will be very big. I guess the spinoff effect should strengthen if the spinning company is in index, but spinoff isn't. Even more so if company before spinoff is in index but afterwards neither part is. So wait for spinoff price drop before buying. Anyway, these are just potential icing on the cake for people picking the spinoffs or companies dropping out. Nimble traders could try to sell (or short?) spinoffs as they occur and pick them back later once the index funds dump. That might be complicated by funds preselling and doing other things to lower the impact of the selloff due to removal.

Forget steps 2 and 4. If he can even do just step 1 or step 3 that would be awesome. Agreed. 2 and 4 are meh and possibly distractions. I still think 1 and 3 should be two different companies and I still don't like TSLA buying SolarCity, but OK power to him. If he succeeds, it will be huge.

Mr Money Mustache saiz: Why shave? You don't shave, you save! About 12 years ago, Gillette had a great idea to sell the razor with 2 blades with free movie ticket. The cost was less than the cost of the movie ticket by itself. I bought as many as I could. Emptied the shelf. Still have some (I don't shave often). Gillette caught on at some point. True story. Movie rights available on request. Contact my agent.

OK, anyone want to make BILLIONS? 8) ;D We start RSWE - Robo Suit Wrestling Entertainment. People wear these robo suits and dish out stage breaking damage. Like KPOOOOOWWW! We get Scott Hall as promoter, Picasso as asset manager, BG2008 as Chief Compliance Officer. Whatcha y'all think? 8)

I'll answer to everyone and not post-by-post. Sorry if I miss your point and don't answer it. Feel free to remind me. Volatility and low probability of 100% loss - yeah, sure you are right. But that's an argument against any leverage. Also please read up on Thorp. He used Kelly's, modified Kelly's and way-modified Kelly's for investing with great results - mostly arbitrage, which is more calculable, but still. He used large leverage (over 1.5x) in some cases. And arbitrage can blow up too, so he's a great example of someone who successfully used levered results from Kelly's even with possibility of loss. So there's at least one example that this can be used successfully. I'm not saying you should use it, but I'm trying to understand if/when I should use it and how. ;) In terms of volatility, correlations, portfolio sizing, etc. that people brought up, please read Wiki and Thorp. I'm feeling this conversation is a bit just skimming the surface if we are not even acknowledging and understanding readily available material. There are formulas that account for volatility and correlations (see the "Application to the stock market" section on Wiki and corresponding parts of Thorp's paper). I mentioned this already in my first post. BTW, this also addresses somewhat the questions about time and about the fact that in betting you make repeated bets (and in stock investing you might not). Now, arguments can be made that these formulas are artificial and that Brownian drift plus volatility coefficients are hard to estimate, and that correlations are hard to estimate, etc. I don't necessarily disagree with these arguments. What I am looking at is not mindlessly applying the Brownian motion Kelly's, but rather if using these formulas and putting in actual numbers in them would provide some insight into stock selection or allocation that I did not have before. Also I am looking if they can be modified further for the exercises I am interested in, i.e. where I don't use historic drift and volatility, but rather use my future estimates based on some kind of fundamental insights about a business. BTW, there is an actual example in Thorp's paper of allocating money into BRK (page 29, example 7.3). There's even a real case study (section 8, page 31) of allocating money into BRK, SP500, Tbills and BioTime (something that client owned and wanted to keep). Thorp's paper is a pain to slug through and I've only done cursory read so far, but for me this might be interesting to go through in detail. I'll see if I can allocate time to do it sometime in the near future. :) So far for me I feel that thinking about Kelly, its variations and applications is a time well spent. For other people it might not be. :) Peace, Brownian motion and partial derivatives

Yes, I am sure about that. This is exactly the error everyone makes when applying Kelly's in situations where the loss is not 100%. Please read my post, please read Wiki page and read Thorp's paper. Don't rely on people who just parroted wrong formula for the situation where it doesn't apply (or applies incorrectly) based on the way they thought they understood Kelly. (BTW, the leverage is assumed to be free, so you are welcome to change any levered result to unlevered 100%). You get no levered results for original Kelly's because with a 100% loss risk, levered bets always lead to 100% loss eventually. Even if your loss chance is just 0.0001%.

Answer: You'd invest 2.25 of your bankroll. I.e. you'd have to lever 2.25 on 1 if leverage is free. Jurgis- I think your math is incorrect with regard to the above example; isn't the correct answer around 67.50% of your bankroll (based on Kelly Criterion)? The answer 67.5% is based on the bad formula (see fbad in my post). 67.5% is actually incorrect answer.

I'm trying to get my head wrapped up around Kelly and its (in)applicability for investing. One thing that annoys me a lot is that almost everyone uses Kelly incorrectly for non-100%-downside calculations. I'll pick on twacowfca above, but they are not alone. There are lots of others (e.g. https://dqydj.com/optimal-asset-allocation-with-the-kelly-criterion/ ) If you are trying to evaluate a situation where loss is 1-a and gain is 1+b with probability p (and q = 1-p), correct Kelly is given in Wikipedia ( https://en.wikipedia.org/wiki/Kelly_criterion ) and Ed Thorp's paper ( http://www.edwardothorp.com/sitebuildercontent/sitebuilderfiles/KellyCriterion2007.pdf - OK, the man might be a genius, but his paper writing style is pretty lousy ;)). The right formula is f* = p/a - q/b Rewriting it, it is f* = (pb - qa) / ab While most people make a mistake by using fbad = (pb - qa) / b I guess the mistake comes from assuming that Kelly's criterion informal specification: fKelly = expected net winnings / winnings if you win applies to situation where loss is not 100% (i.e. a != 1 ) Actually it doesn't. If you think about it, fbad makes no sense. Assuming a = 0, it becomes fbad = p, which makes no sense: if you can't lose, you should not be betting just p part of your portfolio. You should be betting infinity levered portfolio which is what the correct formula gives. ;) Correct formula also reduces to correct result if a = 1. So Kelly's for the scenario above is even more extreme: Answer: You'd invest 2.25 of your bankroll. I.e. you'd have to lever 2.25 on 1 if leverage is free. What does this show? - People are bad at math. ;D (Actually, I am too, I have trouble following a lot of things in Thorp's paper or even some things in Wiki article) - People are bad at estimating returns and probabilities. - Kelly's as base makes almost zero sense for stocks. For example, scenario above - Kelly's answer is extreme. Yeah, I know, possibly it was a fake example. But let's take a bit modified example from https://dqydj.com/optimal-asset-allocation-with-the-kelly-criterion/ p=85%, d=5%, a=2% and I am not comparing against bonds, but just saying that stocks may return 5% and lose 2% long term. Then Kelly is... drumroll ... 39.5. Wow. 39.5 leverage. Even 1/4 Kelly is almost 10x leverage. But then this assumes that stocks only drop 2%, which might be right on average for 10 year periods, but they could drop 50% in between... Of course, if you use d=5% and a=50%, the you'd get negative Kelly and would not invest in stocks period. (I know I know this is wrong way to use Kelly, don't beat me ;)). - It also makes no sense to apply Kelly that relies on a long series of bets to a single bet that is held 10+ years. You might be able to adjust Kelly or your process to assume you rebet every day, but that introduces other issues (e.g. what is expected win/loss for a one day bet on a stock?). - Applying Kelly to stocks is way more complicated than people expect. Unlike a bet which is resolved in single outcome (win/lose), stock price is continuous and possibly infinite sequence. What does it mean that stock will lose 30%? Tomorrow? In a year? Forever? Do you care if it loses 30% next year if your holding expectation is forever? OTOH, you cannot say that stock has zero chance to go down just because you plan to hold it long term? - There are Kelly's adjustments to Brownian random walk single stock situation and even more complex correlated multi stock portfolios (see Wiki/Thorp for some), but these become even more math intractable compared to original Kelly's. I'm not sure there are many people (if any) that apply these correctly on blogs and forums. There might be quant hedgies that have programmed them correctly (I am sure Thorp did ;)), but I'm pretty sure they don't publish their algos as open source programs. ;) On the lark: does anyone understand and has implemented a single stock Kelly's where you are trying to decide how much of the stock to buy compared to another asset with probabilistic return? Restrictions: the stock return should not be based on past returns and volatility (cause IMO this is worthless), but could be based on Brownian random walk model with directional drift that incorporates some volatility measure. The return of alternate asset could be based on Brownian random walk or just mean/stdev.

Looking at http://www.horizonkinetics.com/articles.asp?pageID=5 , I am not very happy about the continuous index/ETF dissing. OK, I understand these guys are not happy about indexes/ETFs, index/ETF performance and overvaluation. Personally, I think their time would be better spent on figuring out what to do in current environment instead of writing missives to the misguided (?maybe?) index/ETF/dividend investors. Maybe they feel this is their civic duty, but IMO it's not and IMO it's not very productive. BTW, I don't think this applies to just FRMO. I think the same about Pabrai's recent talk and I think Watsa had some complains about overvaluation of FANG/unicorns too. At least Watsa spends way more time on Fairfax's businesses and investments. We'll see how things look when FRMO reports annual results.

Nope, I think you are right, although this could continue running short term (2-3 months) if the craze continues. I think if I bought July 8th or July 13th when I was thinking of buying, I'd probably have sold by now too. Although the balls of steel would be to hold while craze continues - which would be possibly couple months (or less, or more) and could be another 50-100% perhaps. But this is tough and really not much of a value investing, more like a fad investing. Long term hold is only if you believe this will be long term hit and/or that company turned and gonna continue with hits. Anyway, that's just my 20/20 Monday morning quarterback thoughts. ;) Pikachu!

Wow. On one hand, I like this better than a lot of money losing unicorns. On the other hand, the price is high, the business is competitive even with all ARM moat. Moat is there though it has to be carefully managed. I'll repeat myself 8) but this one of my big mistakes of omission in the past: not buying and holding tons of ARM in 2003 or so. Bought some, sold at minor gain or wash. Stupid me. They should have bought ARM years ago. At least instead of Sprint.

Congrats Picasso! 8) Are you going to hold long term? How long? Do you have a price target? Can I be your slave junior partner? So many questions, so few pokemons. ;D

Barron's says NTDOY may double. ;) Article in today's paper. Edit: looks like just a copy of this http://www.barrons.com/articles/nintendos-monster-hit-just-the-start-1468641746 which seems to be freely accessible.

Pika (Electric sound) Chu (Mouse sound). Pikachu the mascot literally translates to electric mouse. Gotcha-chu! Arigato! :D

So water pokemons are found in the water (with floating bodies). Air pokemons are found in the air (near cliffs). Now I am waiting for news from Hawaii where fire pokemons will be found in lava... together with charred remains of some pokemon hunters. Are there also electricity pokemons? 8) ;D ;D

They weren't kids. They did not die. (Although it's funny that the firefighters found the second one unconscious while rescuing the first one - so the second guy walked of the cliff and fell earlier and maybe would not have been discovered if the first guy would not have walked off the cliff and fallen later...). Want a sad one? http://money.cnn.com/2016/07/12/technology/yelp-executive-grand-canyon-death/index.html She stepped aside to let a guy by and fell to her death. No good dead goes unpunished? :'(

Yesterday I and my wife go for a walk in the evening. I start Pokemon Go on my phone. It still plays crappy - I guess because my Nexus 4 is old - app freezes when pokemon appear. We see some pokemon in parking lot, there's also a pokegym there, but I could not do anything with my phone. Anyway, a car pulls over to a stop sign nearby. And stands there, and stands there some more. I say "look the guy is also playing the game". Sure enough, the car stands there for another couple minutes, then when traffic appears, he turns the corner and parks nearby with blinkers on. This shit is making people do stupid and unsafe things... :( BTW, can you fix your post. The URL is correct, but the underlying link is not pointing to the same page.

In this particular case this might a good advice assuming the universities like alwaysinvert said are not that different in quality. In general though, this cannot be applied indiscriminately. A much better - and much more expensive - university can open a lot of opportunities that cheaper and worse universities don't. The quality and depth of education might be much better. I've been in universities that were significantly different in quality, my wife was too and in these particular cases the better ones were worth way more than they charged extra. BTW, I disagree with ScottHall too. For a lot of people "no university" just means way worse quality of life for the rest of their life. Choose wisely. :)

I'm gonna end this discussion since I really don't know Softbank too much and I don't have time or inclination to dig deeper, but I disagree with the above. Softbank's Japan telco business and Sprint is very similar to Malone's businesses. With these being a big chunk of Softbank IMHO you can't call it VC business since a large part of your returns are not coming from VC. Even the Alibaba and Yahoo Japan holdings are arguably no longer VC-like business since the companies are huge and it's not very VC like to have large parts of capital in huge public companies. I could also argue that Malone also holds positions in Trip Advisor, Expedia and a bunch of startupy companies. But anyway, I don't care. Have fun and good luck. :)

Good article from Economist (par for the course - most of their articles are good). Although Softbank might be cheap based on SoTP, Sprint is a concern and so is Alibaba (to me - others might consider Alibaba great company). New investments are possibly made at inflated prices. Not counting Japanese telecom business, I don't particularly see what Softbank/Son provides. If I compare it to Malone, I see Malone's investments being 1+1 = 3. With Softbank, I see more of 1 + 1 = 1.5 at best... Perhaps I don't have long term view, but I am skeptical. Just wondering - how do you come to these conclusions? Which conclusions? Leaving Malone out, here are pros and cons for Softbank: Pros: - Son's Japan telecom business (past?) - Son's investment in a bunch of successful unicorn like companies in the past (Alibaba, Yahoo Japan, etc.) - Maybe still cheap at SoTP - I did not look recently Cons: - Sprint is a mess (still?) - Alibaba and possibly other old positions are overvalued (arguable, people might think differently) - New unicorn-like positions are bought at the height of unicorn valuations. I doubt they will work out as well as Alibaba did, but that's just a generic observation. I might be wrong. - Arora mess (highlighting some thrashing at the top in terms of future strategy) I will admit that I have not spend much time recently on various pieces of Softbank, so you might have different view of the company and its holdings. If you believe Son is still in top shape and company's progress is fine, then it might be a good investment that will bring good returns. Not for me though.

TREVNI organizes meetings in New Hampshire, maybe he'll contact you with details. I don't organize meetings in Boston area at this time. Have fun. 8)

I hate being negative, so I think I should stop posting here and ... get off my lawn you Pokemon hunters!!! >:( ... just kidding. ;D I read about the game more at http://www.pcmag.com/news/346042/pokemon-go-how-to-get-started-and-catch-em-all and it seems to be casual-solo-gamer unfriendly. I.e. by the time I get to level 5 - a month with my "turn on when I walk" schedule, everyone will be level 50 or whatever with uberleveled pokemons. So forget about winning in a gym unless you descend on it with a gang of friends. One solution is "pay to win", which is good for the company but may not be good for the game. Other annoying drawbacks: weather was mentioned abovethread; annoying locations for pokemons - middle of intersection, etc; annoying milling around trying to find the pokemon after phone vibrates - couple times I had to spend couple minutes looking like a dork on a parking lot to find the exact spot where the pokemon appears; huge battery draw on the phone; other phone apps crashing/failing because pokemon is running; looking like a dork and being unsafe by watching the screen all the time while walking - this is alleviated a bit by the vibrate/sound alerts. Overall, I still vote on fad. But this is not to say NTDOY is buy/sell/short/hold. I think publicity is good for the company and I think it could get some good business results out of this. I won't buy (most likely) but Picasso rationale makes sense. And now ... get off my lawn you Pokemon hunters!!! still kidding. ;D