Jurgis

In US probably, in Europe maybe, in the rest of the world probably not (but likely you can't escape them if you want to invest there).

Yeah, sure. Go talk to CEOs. Cause they really gonna chat with every value investor doing scuttlebutt. Good luck. It might be a great practice for someone who wants to build up confidence in cold calling and maybe build up their rolodex (haha). But I think that for a huge percentage of individual investors this is not realistic.

Another note is that in the past - and even currently in some countries (China, for example) - the owner operated companies have been a dirty word. The owner operators can treat the company as personal piggy bank, engage in nepotistic behavior, etc. Owner operators can be as bad or even worse as non owner operators. Even the best owner operators can have succession issues. Not owner operated companies can be as good - or as bad - as owner operated ones. KO hasn't been owner operated for ages, though it has not had 17% return for ages too now.

Exactly. He treated the company as his toy and the fact that shareholders got great return had nothing to do with his "owner's" attitude. People are just trying to shoehorn every success story into "owner operator" box.

COST? WFC (might not make 17% cut)? AAPL (what was Jobs' stake - really low AFAIK)? Anyway, what time period are you looking at? 5 years? 10 years? Forever?

And BTW, depending on the state... in MA you cannot discriminate against families with children, so you cannot tell your rental agency to rent only to single middle aged ladies. And again in MA, if you rent, you have to delead the whole house... since you might not care about your own kids, but you can get sued for $Ms if your tenant kids get lead poisoning. So kinda state-specific issues :)

Would a single middle aged lady rent a $5000 per month house? :o If she does, can I have her phone number? :-* .............. Seriously, the situation is rather tough. Like Buffett said, currently 30 year mortgage is one of the best investments. So you don't want to lose this asset (even though it's a liability theoretically). However, you might be better of selling and buying while mortgages are still low. Especially if you don't plan to return. If you decide to rent, you either rent for market price and accept that some tenants may cost you (a lot) - there's randomness involved. Or you rent way below market and expect the tenant to be your property manager. This may or may not work - depends on location/etc. Or you leave it empty - which also has costs and issues depending on location, etc. I was looking into a reverse of this: buying property in Florida and being out-of-state landlord. I decided that it's not worth the trouble. However, it depends on what kind of person you are too. Usually this works best for hands-on handyman types even if they manage from out-of-state. They at least know the warts of the house and know if the tenant is scamming them or ruining the property. I've heard some positive stories about using pros to manage the rental, but not many. Good luck

Can you elaborate? I did the annualized rate of return on KO assuming $20 to $43 in the last 10 years. Assuming current divvie of 1.22 per share and $20 rock bottom, gives me barely 12% annualized. Are you counting something else when you claim In fact, this shows that 12% annualized is quite hard: buying one of the best companies in the world at the rock bottom price and finishing at the end of major bull market (right now) barely gives you 12% return... Thanks

How many shares do you own? I will not answer this question. :)

OK, the cash is in the wrong company ;), but I suggest that Malone & co. start merging content companies to build size and bargaining power. DISCA + STRZA would be the first two candidates. If no one on the outside wants to buy STRZA, why not merge it into DISCA to build size? AMCX could be another candidate. :)

I will vote my shares for Groveland. ... and will get an extra bucket of popcorn! 8)

I have invested in a number of insurance and reinsurance companies since they fell below book couple years ago (AXS, RE, RGA), as well as our favorites (FFH, MKL, BRK) and the new kids (GLRE, TPRE). Overall, I don't see how insurance company can grow book at 15% a year - which is my hurdle - in current environment without having equity holdings. The fixed income rates are way too low even if they start increasing a bit, which is not guaranteed. And the insurance (and reinsurance) pricing is too soft. Neither of these two are fixable by management. And I don't see either of these changing any time soon. (I guess insurance/reinsurance pricing could go up if we have a huge cat, but then that would hit book values of the companies first.) Share repurchases below book was one way to get higher book growth. But this no longer works once the price is above book. So I guess I'll ask the bulls: what is your bull scenario here? Or are you happy with returns to shareholders lower than 15%? Personally, I have shifted my money to FFH. Unfortunately MKL/BRKA are getting expensive and GLRE/TPRE are unproven. But these are for other threads. :)

This is already not true. Look at the announcements of levered players that have cut 2015 investment budgets by 70%+.

http://en.wikipedia.org/wiki/The_Man_Who_Fell_to_Earth_%28film%29 I knew it.

Can't speak for Jurgis, but to me it sounded like a long and weak excuse for underperformance. That too. :) There are numerous issues if you look at what he wrote from statistical/math viewpoint (I know just enough of statistics to be dangerous, so I'd be glad if real expert corrected me :)). - Increasing correlation with index: in 1994 Apple was much smaller part of market weighted index. Now it is a much bigger part. Of course, its correlation with index increased. You would have to account for the size of the company in index to decide whether the correlation increase is only due to its participation increase in index or not. - He shows value indexes and small cap indexes doing the same return as SP500 in 2014. Then he claims that there is a wide valuation disparity between liquid index stocks and non-index stocks. But if SP500 and small cap indexes perform the same, the valuation disparity cannot be explained by the fact that SP500 runs up leaving behind non-index stocks. - Which is worse Coca Cola then or now? Sure KO is a gigantic slow growing company and therefore might be overvalued at 20PE vs 36PE when it was much smaller. But how does this relate to "one index to rule us all"? IBM, for example, is gigantic slow growing company that is possibly undervalued - is is as much a part of SP500. Why is it not overvalued if index rules everything? - Same questions about his examples of SPG/HHC/DRUNF, CL/JAH, DIS/STRZA/DISCA. I know the last three best, so I'll talk about them. DIS is clearly in the league of its own. Like Buffett said some time ago, parent will pick DIS movie anytime. Does anybody even know STRZA movies offhand? (Yeah, I am sure some people do, but how many?) So saying that DIS is more highly valued because it is in SP500 vs the other two which are not "index fillers" is disingenuous. There are other reasons. :) - He looks at revenue change of the 30 biggest SP500. He excludes FB and GOOG because it's convenient to his thesis. This is blatant data picking. :) Then he does not even look at standard deviation. The lesson from his table is not just that 30 largest companies grew 4.1%, but that some of them grew over 10% and some had revenue declines. Isn't that the normal expected thing? - Three decades data table is also biased. Corporate taxes have dropped to 35% in 1986 I believe, so there would not be a down arrow if he started from 1987. ;) Although definitely there has been support from tax loopholes, so I guess it's fine. 9.3x PE ratio - if he started from late 80s, the PE ratio would have been mostly over 15, so the support would not have been as pronounced. Anyway, these are somewhat minor quibbles - I agree that something (market index in this case) at 19.2 PE is not cheap. ---------------------------- Aside - or one thing to think about: so index (market) is expensive. Which means that there will be a crash at some point. OK, so an investor who does not invest in index should gear up for outperforming market (hugely) in a crash/recovery so that their underperformance to the market in current years would not matter. If the investor will underperform in crash/recovery as well as now, then there is a problem. ;) Another aside: if the small cap / value indexes track SP500 performance, why not buy them? They are not as much highly valued... ;)

Interesting commentary. Although I find some parts questionable, it is definitely food for thought. Thanks for posting.

$2100 on $280K property is not that bad. Good luck.

Yes, I forgot Amazon Chase card. I have that too for 3% on Amazon. Have it since it was 5% on Amazon. They cut it down to 3% ... probably 7 years ago or so. :) I don't fly Southwest and don't consistently stay at same hotels, so no to these cards. Not even sure if I wanna keep United Explorer - will decide next year.

They are listening to your calls! 8) (Sorry, just a joke, no contribution to this thread :)).

If not a secret, which state/area? What is the "numbers worked"? What's the rental yield unlevered? What rates did you get on mortgages (IIRC rental mortgages have higher rates than owner-occupied)? Did you have to renovate? Self-renovated? I was thinking of buying RE in Florida after crash. Waited too long. I'm in MA and numbers definitely don't work here. :-\

There is also Barclay's arrival card that has 1% back, but no annual fee. I am CC'holic. Fidelity Amex for 2% back, Chase Freedom and Discover for 5% categories, Barclay's and CapitalOne for international no-fee (and CapitalOne gives 1.5% back), United Explorer for United perks + international no-fee. Plus I usually get new cards that promise $200-500 sign up bonuses. Cancel them later. I guess my credit history suffers a bit, but so far I don't care. :)

And then the music stops. I am surprised Buffett didn't learn this lesson from KO: financial engineering is great for some time. And then you pay the piper. Which in case of KO was removing 2 CEOs by board backroom deals. Is this what Buffett will have to do with IBM?

$25 for 1M??? Where can I get such rate?? I'm in Massachusetts. A year or so ago got quote for $380 for 1M, $680 for 2M from Geico-recommended company (Geico does not offer umbrella in MA). AAA insurance quoted $200 for 1M but only if I transfer all my house/car insurance to them. I have house insurance with them, but they refused to offer umbrella if the car insurance was elsewhere. Might be MA, but these prices seemed very steep for me.

10% of portfolio in oil now. Will get to 20%+ if/when it goes down to $35. Will go to 30%+ if it drops to $20 as Barron's now predicts. Might vary the mix depending on risk/price/quality/etc.

This is like the "Death of Equities" cover page. :) Capitulation and panic. My guess is that 'never' is shorter than 5 years.