Jurgis

Regarding killer app, it all depends on price. If I could get 1G/10G speeds at <$100 per month, I'd take them. (Currently I am paying something like $80 for 50M speed - US cable oligopoly sucks and must die painful death... or fund my retirement through outsized stock returns. 8) Yeah, I know value investors gonna suggest switching provider or calling and begging for discount every 12 months. Screw that. ) Being able to download 30-100G size game in couple of minutes is good enough killer app for me. I may not do this often, but when I do it, it sucks to wait couple hours.

Liberty and LC, thanks for posting papers of NZS guys. They were an interesting read. Although I am not sure if the 50%gain/40%loss coin toss system is really non-ergodic. Maybe I am misunderstanding ergodicity or maybe they are. Or maybe they meant different system than the one they specified. Or maybe I misunderstood their system spec. ;)

I think that's a nice summary of Softbank, and yeah it might fit the bill.

I agree with the sentiment that finding compounders that will compound 15%+ for next 10 years after 10 years of bull market and multiple expansion is not going to be simple. If you are saying MSFT, then why not GOOG and FB? AAPL if they manage to produce attractive huge market services/products. Maybe TWTR. BKNG/EXPE IAC and its parts (MTCH, ANGI). KKR Exor Naspers ( NPSNY / PROSY ) ICE V/MA IPGP (going a bit on limb here). STNE NVDA Disclosure: I own most of the above.

---Tiffany's is indeed a relevant comparison point but Tiffany's: -'stores' do not define the essence of the brand, they're only a conduit for the sale of the branded products which have a forever feeling. -manufactures most of the products and have been careful not to outsource the high-end exclusive items. -despite the above premium label, has had recurrent questioning around the extension of their offerings to include more mass items, with unconvincing results (unlike ULTA who is an atypical and unusual example of a retailer maintaining credibility while simultaneously trying to reach various levels of customers). -may soon celebrate a wedding with a partner that will refocus on the premium market, with a global scale. So, for that part, unless Micheal Lewis writes Breakfast at Restoration Hardware's and RH starts to manufacture its own products, I doubt RH's ability and capacity to maintain premium pricing power in an enduring way. A link to somebody reflecting on Tiffany's pricing power: https://www.linkedin.com/pulse/luxury-pricing-austerity-tiffany-co-story-amit-mohan-singh ---The Versailles reference is interesting because that word reminds me of a period when people confused finesse, flamboyance and grotesque with fiscal overreach leading to quantitative easing (it was not called that way then) and which eventually squeezed the typical clientele that RH would try to attend to. As the initiator of this thread, I have some moderating responsibility but there is now an 'apartment' with an amazing view on Central Park that reflects an eerie resemblance. Micheal Lewis also wrote The Money Culture; some people suggested that he had not reached maturity as an author, in terms of writing style, but, from a content point of view, that book did a good job at describing the potential outcomes of excessive ambition and folly. ;) I concur.

It is possible that it won't have mirrors. There are upcoming mainstream cars with no mirrors: https://www.digitaltrends.com/cars/lexus-reveals-digital-side-view-mirrors-on-jdm-2019-es/

I think that the smart part of Musk reality distortion field pre-ordering system is that they will see and measure the demand way before they have to make the truck. So I'd hope that they only release it if they see high pre-orders and redesign a lot if they don't. I don't think that is the case, you only had to put down $100 to reserve one, that is not much of a commitment. Sure it's not that much of a commitment. But it's not zero and people are unlikely to intentionally troll. I'd think they have data analysis people who can figure out approximate conversion rate and additional demand after release. Especially if you are talking about orders of magnitude - which is what matters when people are saying "this is colossal mistake, no one's gonna buy it".

I think that the smart part of Musk reality distortion field pre-ordering system is that they will see and measure the demand way before they have to make the truck. So I'd hope that they only release it if they see high pre-orders and redesign a lot if they don't.

Usually none: It is more expensive to transport good, quality wood into San Francisco or NYC, compared to, say, Missouri. It is more expensive to find a few thousand sqft of space for a workshop in those areas. And it is more difficult to find a woodworker in these areas, vs a banker or a tech guy. But, it's a lot easier to ship something from China to NYC or SF than it is to Missouri. You can actually buy quality wood furniture in Jordan's (another Berkshire furniture store company) although they also have composite/veneer stuff, so you have to look and check. And it's likely that cheaper composite is more prevalent. They don't have upscale restaur-chik-experience though.

Cigarbutt, My Louis Vuitton comment was (partially) a joke, but that's what you should be looking at - not Costco. Maybe Tiffany's would be another comp. I'd think RH aspires to be a premium brand with all the Napa Valley, Chicago, NYC accoutrements. For that it should be either building its own premium product brand or selling premium product brands ( get those Natuzzi sofas dudes! ). If they just markup Chinese furniture up the wazoo, at some point the image of the restau-stores and the quality of the furniture will collide. And the superrich will leave. IMO you can't just IKEA or Costco the rich. Sure, there are (crappy) interior designers and Queen of Versailles ( http://www.imdb.com/title/tt2125666/ ) rich who will fill their houses with Chinese-made bling. But it's a fickle and possibly limited clientele to play to. Moving to the high quality, brand, art furniture has its own set of issues to navigate. I think they gonna try to live in and fill the area of premium, but not superexclusive furniture. If they have good/great people and good process, they probably can source products/quality/brands to stay attractive and relevant. It's not gonna be easy, but possible. We'll see. Edit: Lynches (as in Peter Lynch and his wife) ordered custom furniture for their house(s). Which is now on display at https://www.pem.org/press-news/pem-debuts-first-exhibition-of-the-lynch-collection-of-american-art . That's what I call good furniture and interior design by superrich. ;)

Many of these points are very relevant. In the last years, the redesign of their distribution footprint has played a role but they also have been able to capture additional wealthy consumer surplus through shrewd manipulation and effects on margins seem to indicate that the investment in costs (image manipulation has a cost that will eat some of the unusual keystone mark-ups) resulted in a positive leveraged NPV. https://www.macrotrends.net/stocks/charts/RH/restoration-hardware-holdings/profit-margins But the effects of manipulation are hard to predict and often come in cycles. Customer pricing strategy is key for a retailer and there are many strategies when dealing with rich people. For the sub-segment that still has residual consciousness about value, the retailer may strategically position an obscenely-elevated-priced product beside other products that are only extremely elevated in price and the customer may (secretly) think that they are making a good deal. Another trick that works at all levels of wealth is to show two options at the same time and describe "special" features about the more expensive (even higher margin) option implicitly suggesting that only losers would buy the lower priced option. Like you mention, a key aspect of pricing in this exclusive category is that the value that the customer puts on a product may have little correlation, if any, with the underlying cost. RH has figured this out quite well lately but there are a lot of good salesmen out there. If interested in the above, there is a small book that tries to address those issues: https://www.amazon.com/Priceless-Myth-Fair-Value-Advantage/dp/0809078813/ref=sr_1_1?keywords=priceless+the+myth+of+fair+value&qid=1574210349&sr=8-1 Nobody likes to be fooled but rich people are sometimes the easiest people to fool. Potential bias here: When we "redesigned" our kitchen a few years ago, one of the options meant to go to a "concept" store and then to have a "designer" come to our house. The salesman started with the statement: "List 5 words that describe your expectations about the project". When my turn came to answer: "A place to make food". The salesman was disappointed and my comments ruined the 'experience'. Great post. 8)

Restaurant food delivery was there before Grubhub/UberEats/etc. I'm sure it will be there even if any of these disappear. Maybe not for marginal $5 deliveries... but I think some people here forget that restaurants can have minimum orders and charge delivery fees. At least on Grubhub. Not sure about UberEats - have not used that yet.

If it did, then prospectus writers would lose their heads. In Saudi Arabia prospectus writes you!

Yeah, definitely. This is being done by a lot of companies in a lot of medical areas.

I agree with you that going early stage might be one way to go. Just a note on biotech/healthcare - I think this is an area that is ripe for AI to outperform humans. Basically you have probability based outcomes for a wide spectrum of prospective drugs/devices. I'd think that slurping in research papers + FDA results/documents + any additional info available ( chemical/bio similarity and related info? ) would provide machine way more info than single person has about the field. And that results in better probability prediction IMO. If I was doing investment AI ML, I'd possibly do biotech/healthcare. ( Klarman might be doing a similar thing by having human biotech team. )

I agree with the author that it will become harder and harder for humans to outperform computers. I also agree with the author (although he might not be saying this much) that outperforming indexes is hard. However, I think that author's arguments why AI can do better in exploiting and removing value advantage vs. growth advantage are weak. The author tries to provide some basis for their arguments, but I don't think the private equity comparison strongly confirms their hypothesis. I'm not saying there is an easy way to validate author's claim. Maybe the right thing to do would be to see how value returns in less-information-available area vs more-information-available area compare to growth returns in less-information-available area vs more-information-available area. But there are many factors that might skew this too. Personally, I'd hypothesize that growth outperformance might be due to (a) zero-marginal-cost growth in software (b) cheap capital. Though (b) applies to value companies as well. So maybe it is just (a).

Long time ago I have invested in Natuzzi ( https://www.marketwatch.com/investing/stock/ntz ) - Italian leather sofa brand. Did not go well. Chinese knockoffs kicked Sean Connery's butt. :-\

8) <---- (these are Vutton sunglasses on the smiley)

As long as they have ads with Sean Connery and Angelina Jolie lounging on their stools and couches, they gonna do well. (Gratuitous reference to Louis Vutton)

Yeah, my relatives tried building similar business and they've struggled with this issue. They did not get to the scale of UPWK ;), so it's possible that UPWK is doing fine with just some slippage on this. A company that I worked for also was using contractors. They usually started contracting them through an agency, but then quite often went direct after some time. And the agency could not (and did not) do much. I guess the agency also just worked with such slippage.

Thanks vinod1 for your posts. This is a very recommended thread because of your input. 8)

Wow, John Huber. Nice to see you here. Welcome, welcome. 8)

I sometimes feel like that's my style of investing. ::)

Tequila producer and distributor. https://www.cuervo.com.mx/ir/ I'm starting a thread, since I talked with Spekulatius about this one. And he periodically mentions it in other places. I took a cursory look so far at the company and financials. Positives: pretty good sales growth, though mostly before IPO. Last couple of years flat. I think Spekulatius said that was due to agave shortages and/or price going up. Possible tailwinds with more worldwide tequila consumption. Negatives: Even in the good years (2016-2017) FCF was ~1B-2.5Bpeso. Market cap is 121Bpeso (~6.xB US$). So valuation is really high even if I take peak FCF / current market cap. Questionables: They bought some non-tequila assets. Not sure if this is good investing or diworsefication/empire building. There may or may not be reported breakdown of their non-tequila ops numbers. I'm gonna pass on this again. Sorry, Spek. 8)

Killing PACB may actually be an Ok outcome for Illumina, which is a scary thought for OACB shareholders. the Brits wouldn’t care too much about killing an US company either. No company - especially one with bleeding edge tech and patents - is ever "killed". Even if it runs out of money, someone will scoop the assets. I am not a lawyer, but it might be possible even for ILMN to buy the assets out of bankruptcy.