Jurgis

Pot meet kettle. Believe what you want. I value Hempton's opinion way more than yours. I am heartbroken. Gonna go and kill myself probably.

Pot meet kettle.

Bank of Ireland http://www.rte.ie/news/business/2015/0330/690933-fairfax-to-sell-2-9-bank-of-ireland-stake/ ::)

I am not VRX bull. However, sometimes smart people do dumb things in overselling. Like the Google driverless car TED talk where the guy had a facepalm slide trying to persuade the audience that driverless car has to make decisions 5000 times a second while the forward-collision-avoidance system has to make a decision once a month or something. That was completely false. Why did he do it? Not really a fraud. I guess he tried to oversell... It's tough to not exaggerate stupidly sometimes. The question for investors to decide is whether this is systemic and whether it crosses a threshold beyond which you don't want to deal with the company involved.

I agree, I feel like I am biased bc of my long position but where are the counter points and arguments? Who do you expect to provide counterpoints and arguments? Who has motivation and time to do that? There is no motivation on investment side: shorting these guys does not work/scale even if you could make a >60% argument that government will win. On the journalist side - who wants to claim that government did the right thing? Where's the story in that? In any case, you don't want a journalist story, you want a legal argument. So that leaves lawyers with a lot of time on their hands, preferably who frequent CoBF to write a bear story. How many do you think there are? The legal arguments on the long side are made pretty much by interested parties with agenda. The government side legal arguments are made in court like doughishere said. Merkhet might be closest you can get to somewhat neutral and legally trained person to provide legal argument here. But I guess he's not into writing bear case. ;)

+1

I won't argue about QVAL. I think it has potential, but we'll have to see how it works out. Overall, IMO it's very hard to beat total market market-cap weighted index for US. So, value etfs or even MOAT may not outperform. IMHO, internationally, actively managed funds are still better than index funds, since international index funds have a lot of issues (i.e. what do they contain, how companies/countries in them are weighted, etc.). I don't know if international value ETFs work well, I haven't looked honestly.

It's not so trivial... I'm not picking on Grey512, since he just presented choices, but Both GLRE and TPRE have crappy reinsurance results while Loeb and Einhorn are both underperforming indexes. Plus GLRE/TPRE are paying 2-and-20 to Einhorn/Loeb. So you are hit with triple negative. Disclosure: I hold some PSHZF. You are paying Ackman 1.5-and-15 IIRC. He holds a lot of overpriced securities. Asset managers are not ETFs. Holding asset manager stock is not the same as holding their mutual fund or ETF. MOAT might work. QVAL from the other thread might work. Some of the smaller/funkier ETFs from other thread are IMO too dicey. But ultimately it's your choice. Good luck

Shilling is an idiot. But at least he's right in the long term... I mean in really long term... I mean like 30 years.

In that case you should be concerned about this quote: ;)

One can only use index as substitute for market if it is market-cap weighted. I agree though that term "indexing" is beyond abused with all the "index of some weird definition and subset of market" ETFs recently. You are right that market-cap weighted indexes won't work if very high percentage of people use them. Unfortunately, equal-weighted or value-weighted indexes won't work for lower percentage of total participants than market-cap weighted. Let's take equal-weighted. Take a smallest market cap company in your index, let's call it Z. It is likely 100 to 1000 times smaller than the largest one in your index (call it A). Then there will be a point where your index will have to have more than 100% of Z shares. By definition, this will be a point where index has only 1/100 or 1/1000 of the company A. So the index size overall will be likely << than 50% of market. If you limit the index to having not more than 50% of Z, then it's even lower. Once you go over 100% of Z, you'd have to market weight at least the smallest part of the index...

It might not depend directly. However, this may affect returns: If he's convinced that indexing is out to get him, he may not invest in companies that are possibly cheap/attractive, but index correlated. He may not admit that some of HK products are subpar and either close them or look for better ones. I will say that FRMO investment is hard to justify on fundamental basis. It is pretty much a jockey investment (or as Stahl fans would say, investment into optionality ;)). So for some people his comments on indexing is just noise and they will believe in him and FRMO anyway. For others, FRMO is valuation-expensive and they will ignore his comments as not related to their investment decision. There is some subset of investors that may become less interested in FRMO/Stahl based on his views and HK fund performance. Ultimately you have to decide which group you belong to. ;)

And how exactly this disagrees with anything vinod said? ::) His contention that active management earns the market/index minus friction. They don't because you can earn something other than the market in aggregate by owning non-indexed securities. He said "market", which by definition includes everything. I confess I am ignorant on indexing and constructing a market portfolio. What is the relationship between indexing and the market portfolio? I am assuming people think they can use indexing to construct a market portfolio. How do you account for securities not an index? Some indexes don't include everything, but you could have a total market index that has everything sized by market cap. Of course, some microcaps/nanocaps might escape even total market index. But vinod1 is talking about aggregates, so he would be right about something like 99.9% of market and similar percentage of its participants. Note that what he said does not mean that you or someone else can't outperform the index. Of course, you can. He is talking about aggregate though.

And how exactly this disagrees with anything vinod said? ::) His contention that active management earns the market/index minus friction. They don't because you can earn something other than the market in aggregate by owning non-indexed securities. He said "market", which by definition includes everything.

And how exactly this disagrees with anything vinod said? ::)

I wanted not to say anything... and I might regret saying something... but I thought that Q2 letter was very weak. Digs at indexation are cheap, especially this year when indexes have not been doing well and outperforming them should be easier than last 3 years. So how about outperform them instead of whine about them? I would rather if they said straightly: "We believe market is expensive, we hold cash, we hold non-market-correlated securities, we may underperform, but we won't budge". At least this would avoid the cringeworthy comparisons to mortgages... BTW, they did a rather u-turn on Winland. Their past letter/presentation claimed that Winland has growth opportunities within sensor market. Now they claim that Winland has excess capital that they can't deploy into the company. Anyway, this has been discussed above, my opinion remains that traveling circuses is funny (yeah, a pun here) place for extra capital. I agree with Fowci about most of the other stuff.

OK. :) Both of the above are interesting examples. NFLX was not cheap in 2012. So maybe buying it was going against consensus, maybe not. I am not sure. It worked out well, but coulda worked out badly. Buying NFLX now - well that would be against "value investors" consensus although it would be with cheery Market consensus. :) IBM - valuation wise, probably it is cheap (depends on how you look at debt and various one time items though). Is the consensus that it will have secular decline? I am not sure. Like ScottHall said, it's hard to read Market's mind. Clearly Buffett who owns significant portion of shares does not think that. So is it a consensus of the rest of the market? If I buy IBM, is that a ... OK, I won't use the phrase that you don't want to defend. ;) I think we might be closer to agreement than we seem to be. ;) Unless one uses a purely mechanical approach, one always adds one's "perception" to the buys or sells. Sometimes that "perception" is very different from a lot of investors. Sometimes it's not. I think I am saying that investor might do well if they do company valuation and invest in situations where company is cheap and yet investor's opinion is not very different from majority of other investors. ScottHall might be saying that investor might do well if they do company growth extrapolation and invest in situations where they are not very different from majority of investors. (I might be misrepresenting. That's how I read his position, sorry if I'm wrong.) You are probably saying that most gains are from situations where investors do company valuation and invest in situations where company is cheap and investor's opinion is quite different from majority of investors. (Correct me if I'm wrong). Of course, ultimately it's all a spectrum: some positions are likely more "variant" than others. But some investors are probably overall more "variant" than others. It's still not clear to me that the more "variant" ones do much better than less "variant" ones. E.g. I'd classify Tom Gayner as one of the less "variant" ones I think.

That's called being lucky. Not necessarily. I was there. I could have done that. It was not a difficult choice. Instead I decided that I have "variant perception" and invested in other things... for worse results. ;)

OK. Let's take that as an example. How many positions in your portfolio are such that most people will either not understand why you hold the position or will think that you are wrong (crazy, etc.)? I'm not putting you personally on the spot, this is a question to everyone on this thread. Let me make it even easier: what percentage of your portfolio is in positions where you believe to have "variant perception"? For me personally, the number is 0%. Actually, it's probably negative: I have couple positions where I am pretty sure the market is right and I am wrong, so those would count as negative "variant perception". ;)

Read Munger on the pari-mutuel system or Howard Marks on 2nd Level thinking. Finding a great company is not enough. OK. It's not enough (actually, it is enough if you bought BRK 20 years ago and held, but I won't argue with you). I said so much above. If you are genius and can do "variant perception", great. Edit: reading Munger and Howard Marks in no way guarantees that someone will suddenly be able to do "variant perception" on their investments BTW. Should the rest of us just slit our wrists and buy index funds? Actually I'll add couple more edits: 1. Even someone who bought BRK at the top of past peaks, did really well. So not much for pari-mutuel comment from Munger, although he is definitely right short term and for some companies he's right long term. 2. Most people buy stocks all time (DCA) and not at single moment, so they can get great companies at variety of prices, some better some worse. 3. Buying great company at low(ish) price is not "variant perception". It's just valuation. WTH is "variant perception" anyway? I'm gonna partially agree with Hielko that it's mostly meaningless phrase. Can you give examples? Mike Burry and CDSs? (even he was not alone in that perception, so is it really "variant")? Berkowitz and AIG/SHLD/Fannie? Are these really "variant" either? Ackman and HLF? Or Icahn and HLF? ;) If I bought AAPL in 2013, was that "variant perception"? Valuation? Both? Neither?

And what would have been their reason for buying those stocks? Why wouldn't they just buy the S&P index? So, apparently they do think that they have a variant perception. If you call every buy decision having "variant perception" then this phrase becomes meaningless.

Anecdotal news: got Wayfair coupon/ad in one of these coupon pack books that you get in the mail. First time I saw one. Disclosure: no position, no opinion. :)

Thanks Picasso.

Right. But even that could be considered conflict of interest. As I said, if you invest in Malone cos, you have to live with that. :)

It's also possible that they have both lease and rent-to-own plans with different costs...