txitxo

Exactly, uccmal. I fully agree with you. What happens if the CAPE goes to 100? Passive investing tells you to keep putting *all* your savings into those crazily expensive stocks. People think that buying the SPY is as safe and worry-free as buying houses a decade ago or tulips in Amsterdam. We all know how that ends.

29.84%.

As a Norwegian minister once put it, “if you want to run Europe, you must be in Europe. If you want to be run by Europe, feel free to join Norway.” http://www.economist.com/news/briefing/21693568-david-cameron-will-struggle-win-referendum-britains-eu-membership-if-he-loses

51.6%, in euros. Most of my portfolio was in European small caps, which did very well.

32% YTD. ~40 stocks, mostly European, also a few Aussie ones.

...we have quite an urgent scientific problem they may be able to give us a hand with... Cheers, Txitxo

Paramés may still take a while to open a new shop. They are looking to buy an existing investment firm so that they do have to go through the lengthy process of registering a new one in Spain. http://vozpopuli.com/fondos/58023-los-socios-de-parames-en-bestinver-crean-advalor-embrion-de-su-futura-gestora-en-espana

How many scientists do you know personally? I know plenty of young scientists, and disagree with you completely. You’re creating an exaggerated caricature here. Sagan wasn’t a brilliant scientist either. Some of this is just an increase in specialization, not “Aspergers” or anything else. That’s not to say that your caricature doesn’t or can’t exist, as it certainly does. But the politics involved in being a scientist do not lend themselves well to the kind of people you describe, either. I think there are waves of focus in particular sub-fields, then counter waves where people bring together scientists in different fields to collaborate and work together. That’s just how it goes. Well, I've worked about 20 years as a scientist (h=47), I am married to a scientist and practically all my friends are scientists. In fact my children were astonished when they learnt that some grown-ups do not have a PhD. People were complaining about specialisation 50 years ago. It is not a new phenomenon. What is new to me is that, generally speaking, the young people coming in (and there are of course some exceptions) do not seem so bright as the people who got into science a few decades ago. It is not so difficult to see. Just sit them side by side at a conference dinner and float different conversation topics. For example you will see very few well-read postdocs (and I am not talking about Stalin's 500 pages/day quota which is often mentioned around here). I don't think it is so difficult to understand. People with high IQs are also affected by incentives. In the sixties, a household with two Professors at a top university were upper middle class. Now they won't make it into the top 1%. Look at the houses old professors bought when they got tenure and compare them with what young assistant professors are buying now. So you tend---and remember I am saying "tend"--to get smart people who are dysfunctional and would not fit in a corporate environment, or absolute fanatics, who live science as a cult, I know of a guy who abandoned his pregnant wife because it thought it may hurt their career. Which, in the best case scenario would end up with him working 60hrs/week and earning 150$/year. Politics in science is very amateurish. The kingdom of the blind. Although some of the older folks are really good.

The jobs being eliminated are those of people with low to average IQ, and no redeeming graces like people skills or iron-clad honesty. That population group is fast becoming unemployable in developed economies and most of them will have to live on welfare. Automatisation is also putting strong pressure on the middle. Salaries are shrinking there. Of course the counterpart is that very high IQ, creative people never had it so good at making a living. This is being felt in academia. The best scientists used to be people with well-rounded intelligences, very good at research but with plenty of other intellectual abilities. It was obvious they could have succeeded in many other fields apart from science. Think, for instance, of Carl Sagan. What you see arriving now, more and more often, are terminal Aspergers with a zealot's mindframe (you have to be highly ideologized to resist the call of the "dark side"). It is quite revealing that the new Cosmos had to be done by a guy who is very good at science outreach, but who is not a brilliant scientist. There are very few people left with a whole brain. You could have many of the discussions in this forum (about books, history, etc.) with scientists in the 60's, people who have plenty of interests. It is almost impossible to have them with postdocs or young assistant professors. Don't get me wrong, they are very smart and good at what they do. But most of them have not read a book outside of their particular scientific area in their entire lives. That produces tunnel-vision and solidifies paradigms. Many of those people won't recognise the next scientific revolution even if chews off their asses. The younger ones are even worse. So the future of research may resemble old Rome, a long stagnation because the best minds were building bridges and aqueducts, not doing "philosophy". I think that trying to make money from the worsening conditions of low classes is very bad karma. Don't go there or a flower pot will fall on your head. Or at least it should. But a sure bet, although on the long-term side, is looking for companies which maintain a core of very well-paid, "blue sky" basic researchers. It has always been difficult to make money from that, but with the dwindling competition from academia it will be become easier in the future.

You are right; I remembered "hedge fund" from reading the article and I assumed 2&20. In any case, if he can remove the 10M compensation limit, his scheme would only return an annualised 1% more to shareholders than a 2&20 statistically. I did a quick simulation and a 15% raw return is turned into 9.1% with a 2&20 and into 10.2% with Biglari's approach. For 20%, Buffett-like returns, you get 13.3% and 14.2% respectively. But he gets paid based on BV, not on actual performance, I don't know how much leeway he has to manipulate the BV.

I really think you are undervaluing Biglari. Tell me of a single person who has become and stayed extremely rich robbing his/her shareholders… To rob your own shareholders simply is not good business… Therefore, you are undervaluing Biglari. Instead, I think: 1) He will become and stay extremely rich, 2) He knows what’s good business, and what’s not, 3) He will become and stay extremely rich, because he knows what’s good business, and will act accordingly. On the other hand, I also think the fact you don’t like his character and behavior is not a predictive attribute: Someone brought him up, therefore let’s talk a bit about Berlusconi! Could you imagine a bigger assh… than Berlusconi?! He is circa 80 and was accused of having had sex with a girl not yet 18 years old…! No, even Biglari cannot hold a candle to Berlusconi, when it comes to building for oneself an ill reputation and a bad public image! And don’t even think of comparing Berlusconi’s bloated ego to Biglari’s… Biglari might think he is the king of BH… Berlusconi thought he was the new king of Italy! Talk about orders of magnitude! Yet, Berlusconi has become and stayed extremely rich… because he knows what’s good business, and has acted accordingly. Needless to say the share prices of his companies have done very well through the years! ;) Finally, also my own experience in business makes me somehow disbelieve your conclusion about Biglari: I have already had many business partners, some were friendly and kind, others were aggressive and arrogant. Everyone of them, with no exception at all, has proven to be reliable, when things were good and easy, instead has proven to be much less reliable, when things went south. That’s why I put much more weight on the owner/manager’s abilities to stir the boat away from any possible danger and towards any opportunity for profitable growth, than on his/her peculiarities of character. Gio Gio, Biglari can screw 18-year old donkeys, put a golden statue of himself in the bathroom of every joint BH owns, and behave as extravagantly/disgustingly as he wants, and nothing of that will make me think he is a bad investment partner. The reason I would never invest with him is the 2 & 20: http://www.restfinance.com/Restaurant-Finance-Across-America/September-2013/Biglaris-Compensation-End-Around/ As he gets more and more of the company, he will keep squeezing the rest of the shareholders. Remember that if Warren Buffett had used a 2 & 20 compensation scheme, he would have beaten the market by only 3%: http://blogs.reuters.com/breakingviews/2011/03/01/imagine-berkshire-hathaway-as-a-hedge-fund/ Biglari is no Buffett, so BH may end performing not much better than an index fund in the long term. Vale la pena?

So no one is picking on Gio...they just don't like what he is feeding us! Cheers! I agree with the critics of Biglari, as I said in my posting: But in this thread I was reading about platitudes, Berlusconi, LRE, etc. I don't think that has anything to do with Biglari.... :)

Come on, guys, lay off Gio. I think that the strategy he is following is quite rational. Most people here will agree that no matter how many copies of Security Analysis are sold every year, there is only a small fraction of investors in the world who can consistently generate alpha during long periods of time. And only a handful of those can work the magic with very large amounts of money. Look at what Buffett has done when looking for successors. He could have hired a small army of smart, highly rational people out of college, and then train them to invest using his style for 20 years. But that does not work. Great investors are born, not taught, and their skill is extremely scarce. Gio's approach is to carefully identify a subset of them, the so called owners-managers, and then make sure, after thorough analysis, that the vehicles they use (their companies) are not too expensive. That's a very solid investing approach, almost guaranteed to significantly beat the market in the long term with a fraction of the work (and the distress) required by other methods. Gio says that he just behaves like a businessman, etc. That's his story, but in the end, what the numbers say is that he is buying consistent, diversified, long term alpha at cheap prices. It therefore makes sense, using his framework, to sell when Brindle retires. Independently of how expensive or cheap the company is, there is no guarantee the new team will produce the same long term returns. Regarding BH, yes, Biglari is likely to keep generating significant alpha in the future. But his long term track record indicates that most of that overperformance will go to his pocket, and not the shareholders'...

Exactly. And not only that, some of them look pretty solid, and make a significant fraction of their money outside mining. You can find very low EV/EBITDAs in the sector, <3 (WDS) or even <2 (Structural Systems, Brierty).

I actually do both, but mechanical (with 90% of my portfolio) clearly dominates.