Jurgis

randomep, Thanks for a thoughtful reply. :) As I said, there are people who can deal with micro caps and their management well. And it looks like you are one of them. :) Personally, I am not interested in visiting the companies and talking to management. So I'd rather put money into FFH/BRK/Liberty though these might offer lower expected returns. Sure, there might be exceptions and I may buy microcaps. I never say never. 8) I also agree with your point that evaluating big cap CEOs is wrought with risks too. Take care.

randomep, you tried to apply logic to life. you fail. ;D In reality, owner operators are not long-term rational. They do all kind of crazy stuff. Some out of short term greed (self-dealing), some out of ignorance or incompetence. If you think this doesn't happen, just find some cash-rich micro cap companies and follow them for couple of years. You'll get enough material for a couple movies and a book. ;) Or even look through companies mentioned on CoBF. IMHO, one of the most important skills in investing in micro caps is evaluating management. Although I guess that's important in large caps too, but in micro caps you have much less info. In large caps you can usually find various mentions, interviews, etc. For micro caps you might have to go and talk to management yourself. There are people who can do this well. For me it's a crapshoot. I rather invest in companies where I know management is trustworthy even if I don't get as much upside. :)

Not my intention..looks like a market order went through. I see someone sitting on the Bid with 5,000, 100 at the Ask. Amazing what my post did that Stahl's letter didn't do. Yes, I was just kidding. Though that's always the risk when posting about nanocaps. :) The first buy of the day was 1 share lol.

I agree. There is a likelihood that Roth will be re-legislated in next 10-20 years. I concur with people who suggest a mix. OTOH though there are personal situations where one might be much better than other.

How to run up a nanocap stock in one easy step. ;)

This is why I just stash money under my mattress. Then I raid the mattress to pay cash for my chiropractor visits for a bad back. Have thought of transitioning to gold bars under the mattress, but early tests deem it too lumpy. You should try bitcoins. They protect you from robbery too - you just tie your mattress to a block chain. 8)

Mostly copy-pasting from PSSR thread since the general discussion might be better fit here. The question for me is how to evaluate management/owner-operators of small companies that have done nothing and gone nowhere for a long time. In case of PSSR, the Chairman has been around for almost 20 years, CEO has been CEO for over 10 years, and yet the company is at 27M market cap (11M sales, 350K income if we don't want to talk about market cap and would rather talk about sales/income). So basically management succeeded of going nowhere in terms of size/sales/income for 10-20 years. Is this an issue and if it is, how do you deal with it? I understand that this might not be an issue for people who buy shares cheap to sell them soon at higher value. It is also not an issue for activist investors who would like to replace the management. It also might not be an issue for people who believe in growth story independent of management: they see an inflection point and go for it. I just look at it from management evaluation point of view. And from that POV, I don't see how suddenly management goes from lousy to great. This came up as I was looking at PSSR and PM.v (same issue) and RSSS (somewhat same issue though shorter time period) and some other companies mentioned on CoBF and elsewhere. As a positive example of this situation, there's PFHO, which had huge insider ownership by CEO, went nowhere for ages and then went up 50x ( http://finance.yahoo.com/echarts?s=PFHO+Basic+Tech.+Analysis&t=my#{%22range%22:%22max%22,%22allowChartStacking%22:true} ). So perhaps sometimes the business becomes good by itself even though management does not get new brains or new Wizard of Oz... Is the approach here that if you want to buy only companies with good/great management, you simply move on. You only buy something like this if you don't care about the management quality and buy on cheap price and/or general business outlook? What people think?

In case someone is in the area and interested in getting together.

OT? First of all, I have to say I am not picking on you Schwab711. :) The following might be OT rant to be moved somewhere else, but I was looking at PSSR in particular and decided to post here. The question for me is how to evaluate management/owner-operators of small companies that have gone nowhere for a long time. In case of PSSR, the Chairman has been around for almost 20 years, CEO has been CEO for over 10 years, and yet the company is at 27M market cap (11M sales, 350K income if we don't want to talk about market cap and would rather talk about sales/income). So basically management succeeded of going nowhere with size/sales/income for 10-20 years. Should I believe that now suddenly they are great and the company will grow gangbusters from here? I understand that this might not be an issue for people who buy shares cheap to sell them soon at higher value. It is also not an issue for activist investors who would like to replace the management. It also might not be an issue for people who believe in growth story independent of management: they see an inflection point and go for it. I just look at it from management evaluation point of view. And from that POV, I can't see how suddenly management goes from lousy to great. Anyway, this came up because I was looking at PSSR and PM.v (same issue) and RSSS (somewhat same issue though shorter time period). As a positive example of this situation, there's PFHO, which had huge insider ownership by CEO, went nowhere for ages and then went up 50x ( http://finance.yahoo.com/echarts?s=PFHO+Basic+Tech.+Analysis&t=my#{%22range%22:%22max%22,%22allowChartStacking%22:true} ). So perhaps sometimes the business becomes good by itself even though management does not get new brains or new Wizard of Oz... How do you know / how do you decide though?

What discount rate are you using?

Right, I was looking to buy some DE/AGCO during downturn, but with the market flying high, their stocks have not crashed so far. With Buffett & co. buying, we might not get a good opportunity unless the downcycle goes longer and/or market crashes. The bear story is that every farmer and their dog bought combines/tractors/etc. in the last 10 years or so. So the equipment age is really low and there is no replacement market if downturn continues. I don't know how much this is true. This should affect DE more than AGCO. AGCO has its own issues in Europe and some emerging markets though. Disclosure: small tracking AGCO position.

The other 10% would say "she's a good Chancellor but needs to be tougher on the Greeks" LOL. Good one. :)

I am not sure you understand what "statistically almost impossible" means. Or maybe you are trying to imply something that is not evident from your sentence. The reality is that the questionnaire groups most of the people who come to this site and took the test into a box it calls INTJ. That's it. Nothing more, nothing less. Once people try to imply that it's something more, there are possible issues: - Does the box-called-INTJ-by-this-questionnaire correspond to real INTJ? Possibly yes, possibly not. That's the issue of test correspondence to the ideal test. - How would the distribution of the test used by people here differ from the distribution based on ideal test? - Would retaking the same questionnaire put a person in another box? That's the issue of the test self-stability. - Would taking another questionnaire put a person in another box? This happened to me and some others. That's the issue of test correspondence to other tests that claim to be doing the same. There are also issues of the theory: - Do the 16 boxes correspond to some actual (independent?) phenomena or are they a shorthand for somewhat vague, somewhat dependent things that may or may not be classifiable? I believe you provide some evidence that the theory is not very good. There are also known biases: - Once person gets a result "box C", they read what "box C" is supposed to be and find a bunch of matches. The bias strengthens the matches and ignores the mismatches. Same as with horoscopes. But like some users said, there might be some useful things from getting the "I/E N/S T/F J/P" result. It might lead you to introspection, trying to understand why you behave one way in certain situation rather than other way. And you may decide to change some things. (On the negative side one might look at the result, say "I am X" and refuse to change when they actually need to change for their career, happiness, etc.) Take care Edit: Wikipedia is nicely neutral on MBTI: https://en.wikipedia.org/wiki/Myers%E2%80%93Briggs_Type_Indicator It has criticism, but also shows possible usefulness. ;)

Oddball, Thanks for the post. Good explanations and details. Yeah, I understand that. But my previous points still stand: - the lenders (investors) implode during downturn because they don't price the loans for downturn. The volume for LC dries out. - the lenders implode, they cry to the regulators. The regulators step in to deal with LC derivative notes and regulate them once unsophisticated lenders get hurt. This may or may not happen - perhaps regulators will say caveat emptor and do nothing. But if they do LC suffers. What you described in the post does not seem to save LC from either of these issues. :)

I know I might sound socialist here but maybe we should cap how big Roth IRAs can grow to? 10m? 50m? 100m? It's quite possible this will be done in the future. Edit: this might be a reason to keep a mix of Roth and traditional IRAs and not convert everything into Roth even if it looks best right now. Disclosure: most of my money is in a mix of Roth and traditional IRAs. I might be impacted if Roth gets taxed in the future.

Pretty cute, but legal. And there is some risk clearly: if Medallion crashes, employees could lose that money. "Past returns are no guarantee of future results" and all that. ;)

What makes you say that? If assets start deflating in China, there'll be another leg, no? Even if assets deflate in China, I don't expect Chinese salaries to deflate with the assets. So, no, there won't be another leg of goods-around-the-world-deflating-because-of-cheap-Chinese-labor. Perhaps, I was too succinct when I said "China-deflation". Please substitute with "goods-around-the-world-deflating-because-of-cheap-Chinese-labor"

Vizi1, you are spinning the whole thing as negatively as possible. Of course, it's up to you to think whatever you want, but it's pretty clear that for you it's not a discussion that weighs all the aspects of the situation, but just a defense of your preconceived opinion.

I did not know that you needed a hooker to start a HF. Now I have additional motivation to go pro! 8) ;D

+1 on what Petec said.

Someone suggested to me via PM to start as investment advisory instead of a full fledged HF manager. The cost would be much lower and I would only provide services to manage individual accounts. I log into their accounts and trade, instead of asking them to send me their money. This will be much easier to earn trust than asking people to send me money and just trust whatever I do with their money. IB has an automated feature to support this and it sounds like it can automatically withdraw fees from client's account into my advisory master account. I've considered this, but what bothers me is that the client can see all of the trades being made. What's stopping them from just copying everything you do in real time, while giving only a small amount of money? Also, I fear giving access to real time portfolio value, with all of its ebbs and flows can cause distress to a client, and in turn problems for the portfolio manager. I think this is why Buffett reported account value only once a year, but I might be wrong on that. Not to mention that they will second guess you every step of the way. Value investing often in practice means investing in the shunned and the ugly. Your clients may be calling you every day asking you why you are holding what you hold. Too much hand holding needed, in my opinion I have invested some of my money with a manager who does the IB-managed-account thing. I don't copy his trades. I don't secondguess him. So don't bark on the clients. 8) One issue with IB setup from the client point of view might be the taxes. The trades and foreign currency exchanges that may be horrible to deal with at tax time if I can't get them automatically into TurboTax Online...

OK, thanks for explanation, I think that's fair. :)

I disagree with people above who try to say that only Buffetty (ROE, cash flow) value investing works. There are people who do very well by looking at book value. I personally go for Buffetty approach, but dismissing the net-net, P/book people just because it does not work for you is IMHO condescending. Peace.

+1. In last couple years, the market has not been very expensive and yet value investors (or maybe it's just active managers overall) trailed the indexes. Other than that, nothing wrong with value investing as long as you can outperform. Value investing itself does not guarantee outperformance though.

... during the BRK meeting. ;D ;D ;D Sorry, this was just a perfect setup. 8)