Review of Portfolio -40%+ compounded over 3+ years - Model after Warren Buffett

[Guest Schwab711]

Cash - 22.2%

BRK.B - 14.9%

ELDO - 20%

FICO - 16.2%

MCO - 26.0%

 

Any thoughts?

 

With the market at such high valuations, I've completely moved away from short-term value situations and I haven't liked any arbitrage situations of late due to risk/return reasons. Since I've moved to a strong businesses investing strategy, I've researched ST vs. LT vs. holding forever from a tax perspective. I don't think I could ever invest in a company without holding the stock for at least a year, although I'd like to get money in forever stocks early and often. Research into companies that can compound internally at 15% - 20% (or more) makes it nearly impossible for short-term trades so possibly match up. There is incredible leverage for investors when a stock can maintain a high P/B valuation due to high ROIC. I can't understand why anyone would ever pay taxes due to short-term stock purchases when forever-type businesses are plentiful. I have lists of dozens of businesses I believe have a conservative outlook out at least 20 years (the list has a lot of overlap with WB, Ted, and Todd). Anyone else buy into the Warren Buffett philosophy?

[Fat Pitch]

If you can find companies to hold for an extended period of time you gain about a 2-3% annualized advantage over someone who incur more transaction costs. The companies you mentioned above will not make any investor wealthy, but it will keep them wealthy.

 

I find it easier to look for companies with high FCF yields and use the growth as my margin of safety. More difficult to pay for growth unless you are absolutely sure about the company's position. Remember your return as an investor is based on the price you pay. Paying 15-20x FCF only works out if you get 15%+ FCF growth for an extended period of time. Doesn't work out so great if growth is only 7% unless you bought it at 10x FCF.

 

[bookie71]

IF you read and look at enough 10-K's and annual reports every once in a while (infrequently) one will jump out at you as a real bargain,  It won't need a "story" or a "catalyst".  Then you just have to have patience until Mr. Market goes crazy.

There have been several on this board, BUT you have to do your own due diligence.

[Kraven]

Anyone else buy into the Warren Buffett philosophy?

 

Sorry. I think you have the wrong board. No one here buys into Buffett's philosophy.

[Uccmal]

Anyone else buy into the Warren Buffett philosophy?

 

Sorry. I think you have the wrong board. No one here buys into Buffett's philosophy.

 

Troublemaker! lol,  ::) :-X :-*

[Kraven]

Anyone else buy into the Warren Buffett philosophy?

 

Sorry. I think you have the wrong board. No one here buys into Buffett's philosophy.

 

Troublemaker! lol,  ::) :-X :-*

 

You should know that you have used up 3 emoticons on your 20 emoticon punchcard.  Use them wisely, my friend.

[Palantir]

I think you have the Warren Buffett philosophy mistaken....the WB philosophy is to invest in microcap special situations. He did not become a billionaire by holding conservative stocks forever. This conservative hold forever works great if you're using leverage like WEB is.

[jouni1]

well a fifth of this warren buffett portfolio is in a micro cap OTC traded water bottler that has a unique water source with arguably the world's (second) best water. i'd call it special, if not a situation.

[matjone]

I am more of a follower of Kraven.  In my short investing life I've used about 4 emoticons and bought about a hundred stocks.  Sometimes I sit around kicking myself about the mistakes (the emoticons, not the stocks).

 

Seriously though, the buy and hold strategy does have some appeal to me.  It is low cost and you can be lazy.  .  But I'm not sure it's optimal for everyone, especially in a tax deferred acct.

 

I almost posted about this the other day, but I saw a blog post the other day about how the success that investors have enjoyed during the 20th century in the U.S. isn't representative of what investors earned worldwide during that period.  It would be interesting to get some stories from other times and places.  Almost every investor I've seen people mention as worth studying earned their returns during this period in the U.S. 

[netnet]

I almost posted about this the other day, but I saw a blog post the other day about how the success that investors have enjoyed during the 20th century in the U.S. isn't representative of what investors earned worldwide during that period.  It would be interesting to get some stories from other times and places.  Almost every investor I've seen people mention as worth studying earned their returns during this period in the U.S.

 

What conservative investment beat the pants off the US market starting say in the late 50's?? Cover the answer below while you think about it.

 

 

 

Hint: remember currency devaluations

 

 

 

 

 

 

German gov't paper --Bunds!!!

I have not looked it up but Swiss government paper probably did quite well as well.

 

[netnet]

You should look at Buffett's partnership days for more relevant advice.  He did a number of little funky OTC type deals.

[Zorrofan]

Anyone else buy into the Warren Buffett philosophy?

 

Sorry. I think you have the wrong board. No one here buys into Buffett's philosophy.

 

LOL - that made my day.....

 

;D

 

cheers

Zorro

[NeverLoseMoney]

You should look at Buffett's partnership days for more relevant advice.  He did a number of little funky OTC type deals.

I agree. For individual investors it makes much more sense to ask yourself what Buffett would do if he where in your shoes.

 

Buffett's investments in Bell Industries in 1999 and 2000 were an eye opener for me:

 

- http://articles.latimes.com/1999/dec/14/business/fi-43809

- http://articles.latimes.com/2000/jan/18/business/fi-55214

- http://articles.latimes.com/2000/nov/09/business/fi-49227

 

This certainly doesn't fit the narrative of a buy and hold forever investor of wonderful businesses does it? It looks much more like the classical Graham style of investing: buying cigar butts and selling them after you've had your puff and your "investment goals have been met". And this was in 2000, so it's not ancient history.

[merkhet]

You should look at Buffett's partnership days for more relevant advice.  He did a number of little funky OTC type deals.

I agree. For individual investors it makes much more sense to ask yourself what Buffett would do if he where in your shoes.

 

Buffett's investments in Bell Industries in 1999 and 2000 were an eye opener for me:

 

- http://articles.latimes.com/1999/dec/14/business/fi-43809

- http://articles.latimes.com/2000/jan/18/business/fi-55214

- http://articles.latimes.com/2000/nov/09/business/fi-49227

 

This certainly doesn't fit the narrative of a buy and hold forever investor of wonderful businesses does it? It looks much more like the classical Graham style of investing: buying cigar butts and selling them after you've had your puff and your "investment goals have been met". And this was in 2000, so it's not ancient history.

 

That's a great find! Thanks!

[stahleyp]

It's kind of odd that he's buy barely over 5% of that Bell holding. I'm assuming the 5% is what's triggering the filing. I wonder why he didn't keep it at just under 5% if that's the case.

[Guest Schwab711]

http://www.sec.gov/rules/final/34-39538.txt

 

Less stringent laws at the time if he filed 13g? Or did he think he could make a quick buck do to the reaction to a filing? I like to think WB is badass enough to do the 2nd