Good article on NFLX

[Myth465]

This is all very interesting. In hindsight Blockbuster should have paid 100 times earnings for Netflix or even Red box in the early days. It would have saved the company. Any number of companies probably should have bought Google or Apple in the early days as well. They could have paid upwards of 100 x earnings if they got in early enough and would be better off today.

[opihiman2]

Google tried selling themselves to Alta Vista, Yahoo, and Excite for a million dollars back in the day (1999).  Of course, hind sight is 20-20.  I don't think it's helpful to look at what-if's.

 

Blockbuster has many challenges.  I hope it survives after the pre-pack Ch. 11.

[Guest HarryLong]

Sold my NFLX today. SURW is slightly cheaper  ;D

 

As for what-ifs, they are only important to study if history is important to study  ;D

[opihiman2]

Harry,

 

A butterfly flaps its wings and a tornado may result.  To determine the path of a dynamical system, such as life, is nearly impossible given the numerous variables and initial conditions.  In the context of Myth465 and my discussion, what-ifs are the realm of fantasy, regret, and speculation.  I don't see the parallels to the study of history.

[Myth465]

I guess for me its not so much a what if but a way to think about value / competition. For us or me something looks expensive if its above 10 - 20 Earnings or Cash Flow, but in the scenarios outlined above or to the right acquirer it may be justified to pay upwards of 50x CF / Earnings. That was more my point, and not so much a what if.

 

My point was that many value guys would have taken issue with Blockbuster overpaying to buy a small netflixs a few years back, but in hindsight they could have paid just about any price and been better off.

[Guest HarryLong]

Ok Harry, I see you're going to talk about whatever you want to talk about, which is as far as I can tell incoherent ramblings about 'risk control' and 'what people need to hear.'  You've said nothing of substance this entire thread.  Pardon me if I will abandon any further attempts to elicit an argument from you.  Clearly you're not getting it.

 

Get it through your head, another poster has been short NFLX since $110. NFLX closed today at  $162.21. If you care at all about these guys, risk control is not an incoherent rambling, it is necessary to have a written risk control plan when shorting, which is followed rigorously, for investment survival.

 

When people disagree with you, clearly they must be fools. That is a very sad way to see the world. I truly feel sorry for you if that's your reaction to principled, sincere, and honest disagreement.

 

Minds are like parachutes, they only function correctly when they are open--J.T.

 

 

 

T-Bone and Stove, let this be a lesson to you. Wouldn't you have rather learned from me, rather than losing money? As Benjamin Franklin said, only a fool needs to learn from experience. Risk control.

 

I tried to help, but y'all didn't want to listen. I hate to say it, but I told you so. The pain of loss should sear the lesson onto your memory.

 

As Sir John said, "Minds are like parachutes. They only function correctly when they are open."

 

You should all be men and post apologies to me on this thread for abusing me when I tried to help you.

 

http://finance.yahoo.com/q?s=nflx

[maxprogram]

T-Bone and Stove, let this be a lesson to you. Wouldn't you have rather learned from me, rather than losing money? As Benjamin Franklin said, only a fool needs to learn from experience. Risk control.

 

I tried to help, but y'all didn't want to listen. I hate to say it, but I told you so. The pain of loss should sear the lesson onto your memory.

 

As Sir John said, "Minds are like parachutes. They only function correctly when they are open."

 

You should all be men and post apologies to me on this thread for abusing me when I tried to help you.

 

http://finance.yahoo.com/q?s=nflx

 

It's hard to come to a conclusion off a one-day price movement. As Ben Graham said, "In the short run, the market is a voting machine. In the long run, it is a weighing machine."

 

The same could be said about every value investor who didn't purchase tech stocks between '95 and '00. They were wrong until they were right. Give it 3 years or so, and if thats still the case, judge all you want.

[StubbleJumper]

Ok Harry, I see you're going to talk about whatever you want to talk about, which is as far as I can tell incoherent ramblings about 'risk control' and 'what people need to hear.'  You've said nothing of substance this entire thread.  Pardon me if I will abandon any further attempts to elicit an argument from you.  Clearly you're not getting it.

 

Get it through your head, another poster has been short NFLX since $110. NFLX closed today at  $162.21. If you care at all about these guys, risk control is not an incoherent rambling, it is necessary to have a written risk control plan when shorting, which is followed rigorously, for investment survival.

 

When people disagree with you, clearly they must be fools. That is a very sad way to see the world. I truly feel sorry for you if that's your reaction to principled, sincere, and honest disagreement.

 

Minds are like parachutes, they only function correctly when they are open--J.T.

 

 

 

T-Bone and Stove, let this be a lesson to you. Wouldn't you have rather learned from me, rather than losing money? As Benjamin Franklin said, only a fool needs to learn from experience. Risk control.

 

I tried to help, but y'all didn't want to listen. I hate to say it, but I told you so. The pain of loss should sear the lesson onto your memory.

 

As Sir John said, "Minds are like parachutes. They only function correctly when they are open."

 

You should all be men and post apologies to me on this thread for abusing me when I tried to help you.

 

http://finance.yahoo.com/q?s=nflx

 

 

Harry, put it back in your pants. 

 

Until your most recent post, everybody in this thread had conducted themselves with politeness and dignity.  Sometimes we're right, sometimes we're wrong, but there's no need for an apology when the discussion is polite.

 

SJ

[Parsad]

T-Bone and Stove, let this be a lesson to you. Wouldn't you have rather learned from me, rather than losing money? As Benjamin Franklin said, only a fool needs to learn from experience. Risk control.

 

I tried to help, but y'all didn't want to listen. I hate to say it, but I told you so. The pain of loss should sear the lesson onto your memory.

 

Harry, how is Contrarian Industries record against the S&P500 TR since inception?  If you ain't killing it, then a bit of humility will go a long ways.  Cheers!

[T-bone1]

I thought this was an interesting article/report on NFLX report

 

http://www.zerohedge.com/article/reading-between-lines-netflix-ugly-earnings-report

[opihiman2]

I'm with Harry on this one.  You've got to be nuts to short something like NFLX. 

 

Anyways, Harry, Parsad makes a good point.  What are your #'s like?  I don't mean this in any offensive way.  I'm just curious.  It seems like all of your stock picks on here have drastically outperformed.  Much kudos to you.

[rranjan]

 

T-Bone and Stove, let this be a lesson to you. Wouldn't you have rather learned from me, rather than losing money? As Benjamin Franklin said, only a fool needs to learn from experience. Risk control.

 

I tried to help, but y'all didn't want to listen. I hate to say it, but I told you so. The pain of loss should sear the lesson onto your memory.

 

As Sir John said, "Minds are like parachutes. They only function correctly when they are open."

 

You should all be men and post apologies to me on this thread for abusing me when I tried to help you.

 

http://finance.yahoo.com/q?s=nflx

 

Harry - What did you take it in this thread as an abuse?  They were not asking for risk control advice at any time but you were still talking about it. It's good thing to remind a fellow poster about the risk control but making a point once is enough. It's obvious that for any short, the upside is limited but downside is unlimited, so nothing new here given that Netflix is a profitable company.

 

I noticed only two things, you kept talking about risk control and they kept asking about why do you feel that Netflix is not overvalued. Two totally different points but some heated exchanges took place.

 

Nothing to do with this thread but in general, the only question of interest should be if we are willing to pay current market price for the whole company and still safely expect a decent return. If answer is no, then short term price movement should not be used for making a point. I would think that most of us are mainly  interested in knowing the rational for specific idea. Having said that , you can still make money with short term price movements but that's a different  topic.

 

There is no need for an apology as long as the line was not crossed during the discussion. If you felt that line was crossed any time, you should have asked for an apology immediately. People can be wrong or right about their predictions/analysis but crossing the line should have absolutely no relationship with current price of Netflix.

 

All of us can be bit civil with each other even if we have opposite views on something. If I missed something, please point it out.

 

Harry, how is Contrarian Industries record against the S&P500 TR since inception?  If you ain't killing it, then a bit of humility will go a long ways.  Cheers!

 

Sanjeev,  Just to add to your point -  even with a killing record, bit of humility will go a long ways.

 

[Parsad]

Sanjeev,  Just to add to your point -  even with a killing record, bit of humility will go a long ways.

 

Rranjan, I couldn't agree with you more.  Young, eager managers should take a lesson from the last two years.  There were a lot of fund managers who thought they were always right, lacked humility and could do no wrong.  One third of hedge funds that were operating in 2006 were out of business by the end of 2009!  There's been alot of posters on this board like that, and they too disappeared...no I did not ban all of them!  ;D 

 

The greatest leaders I know, and aspire to emulate, are the ones that are ubiquitously humble, giving leaders...Buffett, Prem et al.  There are alot of things you cannot teach, but humility is one that you can...often it is learned in the most unpleasant of ways through unintended consequences.  Cheers!

[Ballinvarosig Investors]

Harry's a good guy. Even though there wasn't much in it for him, he took a few hours of his time to have a chat recently. The guy is independent, focused, and very driven - so I can see why he would clash with some folks on here. Unlike a lot of stuff out there, his ideas are original, which counts for an awful lot in my book. Things like NFLX and CRM aren't for everyone, but his writings on Fremont Michigan and on insurance were informative and quite frankly brilliant. All his stuff can be found on Google, and is a must read for anyone who has any interest in the subject. This place would be a poorer place without the debate that he generates.

[rranjan]

Harry's a good guy. Even though there wasn't much in it for him, he took a few hours of his time to have a chat recently. The guy is independent, focused, and very driven - so I can see why he would clash with some folks on here. Unlike a lot of stuff out there, his ideas are original, which counts for an awful lot in my book. Things like NFLX and CRM aren't for everyone, but his writings on Fremont Michigan and on insurance were informative and quite frankly brilliant. All his stuff can be found on Google, and is a must read for anyone who has any interest in the subject. This place would be a poorer place without the debate that he generates.

 

Agreed. He is very good contributor, no argument over that. I don't think anyone is saying that he is a bad contributor even if few might not agree with some specific ideas. We are not supposed to have same opinion on everything and having a clash of opinion is healthy for the forum.

 

I was mainly curious about what he interpreted as an abuse during the heated exchange from the both sides. If there was an abuse then we all can learn and avoid in future. On the other hand, extending bit of civility to fellow posters makes it for good read, irrespective of the merit of our ideas or disagreements.

 

Cheers,

[Ballinvarosig Investors]

I was mainly curious about what he interpreted as an abuse during the heated exchange from the both sides. If there was an abuse then we all can learn and avoid in future. On the other hand, extending bit of civility to fellow posters makes it for good read, irrespective of the merit of our ideas or disagreements.

He's gotten quite a bit of castigation for not being a "value investor", which is a little ironic considering some of these people engaged in shorting, a thing that even Ben Graham gave up on.

[Guest Bronco]

I married into an Italian family.  Sometimes what some people conceive as an abusive, heated exchange, others may deem a normal reconciation process or even a plain conversation.

 

Just saying.

[KFRCanuk]

I married into an Italian family.  Sometimes what some people conceive as an abusive, heated exchange, others may deem a normal reconciation process or even a plain conversation.

 

Just saying.

 

Haha! I agree, I'm married to an Italian too! My inlaws are crazy!

[rranjan]

I married into an Italian family.  Sometimes what some people conceive as an abusive, heated exchange, others may deem a normal reconciation process or even a plain conversation.

 

Just saying.

 

Good point and noted. Still, I think one can sometime go overboard with his/her arguments and might not realise that we are not in a homogenious environment ( like family, friends etc). This is more true for a discussion board where people from different background engage in discussions. I have shouted and used very harsh language at times but only with people I knew very well. That way I knew I was not crossing the line with the group. At different place,  the benchmark for crossing the line might be bit different so we just need to be aware of it.

 

Not specific to Harry's last post but given that most of the board members here are very well rounded, it should take very little effort in our part to avoid situations like this. Enough on this topic, let me go outside and enjoy the weather.

[Parsad]

I've spoken to Harry on a couple of occasions.  He is a good guy and a good contributor.  But I put a moratorium on antagonistic and rhetorical posts a week ago, because I received numerous complaints over the last couple of months.  The rhetorical have stopped, but I would like to stop the flow of posts that are sometimes ego-driven as well, or at the very least a bit antagonistic.  This isn't a board about bravado...there are plenty of boards available for guys with big balls who feel like tripping over them.  Rubbing noses, name-calling, etc are posts that will be eliminated.  Cheers!

[rranjan]

 

 

Haha! I agree, I'm married to an Italian too! My inlaws are crazy!

 

By any chance, can we have their contact details  ;)

[Guest HarryLong]

My bottom line is that it's Parsad's board, so I will respect his wishes.

 

Philosophically, however, let's talk about what true humility is. It's about recognizing that no matter how brilliant one's arguments, that one can be wrong. It's about placing the value of capital, and one's partners' capital above one's need to be right (ego), and it's about being brutally honest with oneself and others about the possibility of being wrong. To that end, proper risk control is the ultimate expression of humility. Humility is an action--risk control--it is not a sentiment or a personal style pose.

 

Taking this idea further then, humility is about scenario planning, not projections or prognostications. For instance, prognostications are a form of normative reasoning (ie, "the P/E ratio is high so the stock should drop). By contrast, scenario planning is a form of "if/then" statements. "If X happens, I will do Y. However, if A happens I will do B." Scenario planning is at the heart of risk control and humility. Judged by that standard, I am the most humble person on this board. I am always thinking about scenarios in which I could be wrong, and have a pre-planned response should they occur. That is true humility--rather than a pose, or style.

 

Here are some choice quotes from the thread (bold my own):

 

Watsa_is "Short since 110. Been adding to the short along the way."

 

T-bone1 "I couldn't agree more with your analysis and the article (although I don't think the article gives enough weight to HBO's new online presence) . . . and I have also been short since that level and adding . . ."

 

watsa_is "i think stops are a bad risk control tactic. I think a better risk control tactic is position sizing."

 

T-bone1 "I have gone through and read your blog and your "valuation work" on EBIX as well as your very impressive "more subscribers" valuation of NFLX . . . I have decided you are a windbag who has no idea what's he is talking about. So really I would be interested in discussing the long thesis with some other NFLX owner who actually has a thesis.

 

..."I will tell you what is and is not value investing: It is discussing the value of a company rather than the movement of a stock price. That is all, and this board is the place for it.

 

I think you add nothing to this board because you don't discuss valuation. Your EBIX piece, which you were so offended we didn't all discuss with you, had no valuation whatsoever. EBIX is a software company that has grown through acquisitions."

 

 

Stove "Ok Harry, I see you're going to talk about whatever you want to talk about, which is as far as I can tell incoherent ramblings about 'risk control' and 'what people need to hear.'  You've said nothing of substance this entire thread."

 

As Milton Friedman recollected:

 

There is a famous statement, which I have used many times, made by Pierre S. du Pont almost precisely two centuries ago (September 25, 1790) to the National Assembly in revolutionary France in which he said, "Gentlemen, it is a disagreeable custom to which one is too easily led by the harshness of the discussions, to assume evil intentions. It is necessary to be gracious as to intentions; one should believe them good, and apparently they are; but we do not have to be gracious at all to inconsistent logic or to absurd reasoning. Bad logicians have committed more involuntary crimes than bad men have done intentionally."

 

Judged by that standard, I have shown more care to Watsa_is, T-Bone1, and Stove than anyone else on this board. My intentions were and are pure (I have nothing to gain economically from helping them), and moreover, I have been proven right. I care more about their welfare and the message than about their censure (or that of others). If you don't like my style, opinions are like noses, everyone has one. However, I persisted and do persist in my points, which have been proven correct, despite public or private censure.

 

That being said, it's Parsad's board, so I will respect his wishes.

[hyten1]

harrylong

 

hmmm, i don't see how proper risk control is the ultimate form of humility

 

you can have all the risk control in the word, but be arrogant, rude, put down others etc.

 

hy

[Parsad]

Hi Harry,

 

You weren't the only guilty one in that exchange, but it was one post in particular that was starting to go over board.  I appreciate you respecting the other members, and I would ask that all members try and be respectful to one another.  If you don't agree walk away...there are more than enough participants on this board for everyone to be engaged and entertained.  Cheers!

 

 

[rranjan]

Harry -  Point noted and understood. Although I said enough on this, I will try with few lines. Here is the way I see it.

 

We all have huge tendency to reciprocate. If you take a neutral view and re-read all the posts you may find that some of the bolded parts might have been in response to what you said. May be not exactly in response to what you said rather in the manner they were said or taken. You remembered those bolded parts and asked for apology because Netflix price moved up in short term. Some of the bolded parts were wrong before and after the price movement. No relationship with the price movement.

 

All I am trying to say that, if I some one comes and slap me, I will feel like slapping the person back even if  me getting slapped might  do world of good to me. Don't take it literally and I hope you see my point.

 

You can certainly do great by being honest and telling the things the way you see. But if you don't pay any attention to the manner you convey your points, then sometimes your effort might not come to anything. Yes, some people will still benefit but I am sure you would like to help most and not only the few who might be comfortable with the message, no matter how it was delivered.

 

You might be comfortable with the way you deliver the message. But if you want to help most people then putting the same message in different way, which makes it least offencive to majority, will increase the success rate. Offcourse , it should be done without loosing the message.

 

I am not writing this  based on the merit of arguments presented on this thread rather a general statement. You are an intelligent person, so may be I am stating the obvious.

 

My  two cents ...