AAPL - Apple Inc.

[hardincap]

I am across the st too. Parsads comment o google is also preposterous. The founders do admire Buffett as any smart businessperson would, but they def have a different culture

 

 

You think Google's business culture is modeled after Berk?  ;D ;D ;D

 

 

Knock yourself out.  Cheers!

 

http://investor.google.com/corporate/2004/ipo-founders-letter.html

 

http://money.cnn.com/2004/05/01/technology/google_buffett/

 

Let me tell you something. I used to work right across the street from Google. I used to go way lunch in their cafeteria sometimes.  I have a lot of friends who used work there, even more who deal with them. You can't go to a party in the Valley without running into someone from Google. I am having lunch a few 100 yards away from Google offices as i type this.There's more I can't disclose.

 

I KNOW Google. Google is not modeled after Berk in practice.

[Guest wellmont]

I think engineers make great investors. :)

 

Henry Earl Singleton (27 November 1916 – 31 August 1999) was an electrical engineer, business executive, and rancher/land owner. Singleton made significant contributions to aircraft inertial guidance and was elected to the National Academy of Engineering. He co-founded Teledyne, Inc., one of Americas most successful conglomerates and was its chief executive officer for three decades. Late in life, Singleton became one of largest holders of ranchland in the United States.

 

John Malone was born in Milford, Connecticut.[4] His father was Daniel L. Malone, an engineer.[5]

 

In 1959, Malone graduated from Hopkins School in New Haven, Connecticut. In 1963, he graduated from Yale University with a B.A. in Electrical Engineering and Economics, where he was a Phi Beta Kappa and National Merit scholar. In 1964, Malone graduated from Johns Hopkins University with a M.S. in Industrial Management. He also received a M.S in Electrical Engineering from an NYU program at Bell Labs in 1965 before receiving his Ph.D. in Operations Research from Johns Hopkins in 1967.[2]

[Parsad]

I am across the st too. Parsads comment o google is also preposterous. The founders do admire Buffett as any smart businessperson would, but they def have a different culture

 

 

You think Google's business culture is modeled after Berk?  ;D ;D ;D

 

 

Knock yourself out.  Cheers!

 

http://investor.google.com/corporate/2004/ipo-founders-letter.html

 

http://money.cnn.com/2004/05/01/technology/google_buffett/

 

Let me tell you something. I used to work right across the street from Google. I used to go way lunch in their cafeteria sometimes.  I have a lot of friends who used work there, even more who deal with them. You can't go to a party in the Valley without running into someone from Google. I am having lunch a few 100 yards away from Google offices as i type this.There's more I can't disclose.

 

I KNOW Google. Google is not modeled after Berk in practice.

 

You two are confusing business/investment culture versus operational culture.  I'm not talking about the day to day operations and dealings with employees.  I'm talking about return on invested capital, building competitive advantages, creating businesses that would be hard to displace by others while maintaining a shareholder friendly corporation.  Google is all that and more.  You don't have to eat lunch in their cafeteria to figure that out!

 

You're both so wound tight about engineers and Apple, that you can't even see any one else's point of view.  I like Apple.  I like their products, which I believe are very well engineered...imagine that and I don't even have an engineering degree.  I think they are deep in talent as well.  But so are alot of businesses. 

 

I don't think Berkshire will be quite the same without Buffett.  I don't think Fairfax will be quite as good without Prem.  And I don't think Apple will be quite as good without Steve Jobs.  Is that so preposterous?  And wait a sec and think about it before you reply, because you don't really have to reply.  I'm making a statement...a personal opinion.  It's neither right, nor wrong at this moment, just like yours.  It's just a difference in opinion.  Time will eventually tell the truth.  Cheers! 

[alwaysinvert]

Engineers for the most part are absolutely brilliant people. Problem is they often know it all too well. Supreme confidence and overreliance on models -> man with a hammer.

[Guest valueInv]

Engineers for the most part are absolutely brilliant people. Problem is they often know it all too well. Supreme confidence and overreliance on models -> man with a hammer.

I guess Watsa, Jain and Welch are doomed then.

 

On the other hand, engineers feel that business people think they know a lot of things they actually don't.

[hardincap]

a really good example of this is the american car companies vs japanese. japanese management is largely made up of R&D graduates. american management is largely made up of bean counters, aka MBAs. Of course Mulally is an exception (engineering trained). He's fantastic.

 

Engineers for the most part are absolutely brilliant people. Problem is they often know it all too well. Supreme confidence and overreliance on models -> man with a hammer.

I guess Watsa, Jain and Welch are doomed then.

 

On the other hand, engineers feel that business people think they know a lot of things they actually don't.

[alwaysinvert]

Engineers for the most part are absolutely brilliant people. Problem is they often know it all too well. Supreme confidence and overreliance on models -> man with a hammer.

I guess Watsa, Jain and Welch are doomed then.

 

On the other hand, engineers feel that business people think they know a lot of things they actually don't.

That's two strawmen in two sentences. I'm out.

[DCG]

As a side note, I'd love to see Apple come up a way for the iPad to switch between a backlit display to eInk display for certain apps. They filed a patent at some point that indicates that they might be working on trying to pull this off.

[Guest Dazel]

 

Apple's business is deflationary...it is one of the greatest business stories of all time...but it has peaked.

 

Engineers, culture, r&d will not matter...The fact that Steve Jobs is not around and that the employees are all rich which will make the slide more pronounced. When you see key employees selling and exiting you will know where it is headed...I will buy out of the money puts at that point.

 

Dazel.

[ERICOPOLY]

Which discipline makes great investors?  (question posed at those who say engineers don't)

[Palantir]

You guys are still arguing about this?

[Myth465]

You guys are still arguing about this?

 

I keep asking the same thing.

 

Cant Parsad have a personal opinion?

 

[ERICOPOLY]

I just posed the question because I've heard some people say that lawyers and doctors make poor investors, then engineers, so I'm wondering who makes good investors.  I think even investors make poor investors (if you look at the relatively few who actually outperform the index).

 

I actually agree that engineers make poor investors.  I worked with tons of them at Microsoft, and they either liked the idea of using statistics and modeling of charts and patterns, or they believed they had an edge and wanted to invest in technology companies.  I think the large swath of them suffered from various degrees of Aspergers and unfortunately weren't indoctrinated first in a better model -- like a valuation model of buying low and selling high relative to a fundamental business value (in other words, value investing).  It's like turning the titanic, whereas I think with other types of brains it can be easier to introduce a new concept.  Sort of like a baby goose gets imprinted and later can't be convinced otherwise.

[vinod1]

I just posed the question because I've heard some people say that lawyers and doctors make poor investors, then engineers, so I'm wondering who makes good investors.  I think even investors make poor investors (if you look at the relatively few who actually outperform the index).

 

Psychopaths :)

 

http://socialize.morningstar.com/NewSocialize/forums/p/155516/155516.aspx#155516

 

And anything that blocks the emotional response to investment results-positive or negative--is a good thing; there is nothing so destructive to returns as "human nature."

 

I've always believed that the best investors are somewhat psychopathic and antisocial, for much the same reason; a belief that everone else is wrong but you is an excellent antidote to herd behavior. - William Bernstein

[vinod1]

I just posed the question because I've heard some people say that lawyers and doctors make poor investors, then engineers, so I'm wondering who makes good investors.  I think even investors make poor investors (if you look at the relatively few who actually outperform the index).

 

Psychopaths :)

 

http://socialize.morningstar.com/NewSocialize/forums/p/155516/155516.aspx#155516

 

And anything that blocks the emotional response to investment results-positive or negative--is a good thing; there is nothing so destructive to returns as "human nature."

 

I've always believed that the best investors are somewhat psychopathic and antisocial, for much the same reason; a belief that everone else is wrong but you is an excellent antidote to herd behavior. - William Bernstein

 

Eric,

 

If the above is true, you must be a pretty scary guy to be around :)

 

Vinod

[Uccmal]

lol, Vinod, that is priceless.  Of course it is also hogwash.  You need fear for the risk management process. 

 

Doesn't one just need to be selectively antisocial?  Friends ask me from time to time to help them with investing.  I steadfastly refuse.  I will only recommend one investment to anyone on the assurance that they will hold FFh at least 5 years, and dollar cost average into it.  No takers so far.

 

I believe Sanj. and I both have Physical Geography/env. science backgrounds.  What about you Eric?

 

 

[bookie71]

The one best trait for an investor is old fashioned common sense, followed by patience.

[ERICOPOLY]

lol, Vinod, that is priceless.  Of course it is also hogwash.  You need fear for the risk management process. 

 

Doesn't one just need to be selectively antisocial?  Friends ask me from time to time to help them with investing.  I steadfastly refuse.  I will only recommend one investment to anyone on the assurance that they will hold FFh at least 5 years, and dollar cost average into it.  No takers so far.

 

I believe Sanj. and I both have Physical Geography/env. science backgrounds.  What about you Eric?

 

So after being a psych major, then an accounting major, then a flight student, I became a math major (I have a BS degree in Math that in total took six years to earn). 

 

Remember Al, I'm the guy that sat next to Danica McKellar (Winnie Cooper) in Linear Algebra at UCLA.  I linked that picture to her from Stuff magazine and you really liked it.

[ERICOPOLY]

I just posed the question because I've heard some people say that lawyers and doctors make poor investors, then engineers, so I'm wondering who makes good investors.  I think even investors make poor investors (if you look at the relatively few who actually outperform the index).

 

Psychopaths :)

 

http://socialize.morningstar.com/NewSocialize/forums/p/155516/155516.aspx#155516

 

And anything that blocks the emotional response to investment results-positive or negative--is a good thing; there is nothing so destructive to returns as "human nature."

 

I've always believed that the best investors are somewhat psychopathic and antisocial, for much the same reason; a belief that everone else is wrong but you is an excellent antidote to herd behavior. - William Bernstein

 

Eric,

 

If the above is true, you must be a pretty scary guy to be around :)

 

Vinod

 

I scored low on the psychopath test that people passed around.   

 

I agree with the comment about common sense.

 

Let's go back a year.  We had BAC at $5 and you could go 100% into it with very little downside (you could write puts on other things and use the proceeds to buy calls in BAC).  So you could have 100% concentrated upside with a diversified downside.  That's how I initially structured it when I was scared.  Later as I gained confidence I bought the puts back in and levered it -- this happened as my confidence increased (helped by a rising stock price).

 

The argument that it could go to zero because of it's black box nature was basically no reason to stay away from it... just a reason perhaps to swap the downside for that of others.

 

Anyway, it was common sense.

[tng]

I think one of the most important attributes for an investor is being able to recognize what he knows and what he doesn't know. A good investor is open to the idea that he might not know everything or that he might even be an idiot on some topics. One of the flaws that many engineers have when they go into investing or business is that they are too overconfident in their own knowledge and they don't realize what they don't know.

 

A popular interview question that some firms currently use for students looking for jobs is to ask the students to compare Apple's iPad and Amazon's Kindle and see whether they are competitors and to see which business they like better. I've asked many of my engineering friends the same question and virtually all of them would start by comparing specs. They would talk about how they are different sizes, they would talk about how the Kindle uses e-ink and the iPad has a color screen. They would talk about how you can play games on the iPad and use all these different apps while the Kindle is mainly for reading. They get extremely confident because they have played with both devices and have read so much about it. But what they forget to think about is the business aspect. How much does it cost to make an iPad and how much does it cost to make a Kindle? The conclusion that the interviewers want the students to arrive at is to identify that there are fundamental differences in the business models of the two products. Apple makes their money by selling the iPad with pretty big profit margins. Amazons sells the Kindle at break even or as a loss leader so they can make the money back on e-books. Most engineers tend to get obsessed with the tech specs and forget about the business and they don't recognize that they are doing that.

 

That is not to say that all engineers are bad investors. Most people, in general, are bad investors. But because engineers are so smart, they can fall into the trap of understanding something so well that it gives them false confidence (i.e. someone knows everything about the iPad, but not the business of selling iPads). I think Buffett once talked about how he knew a guy who knows absolutely everything about Clorox, but kept losing money on Clorox stock because that guy didn't understand the business.

[ericd1]

Ok I are an engineer so I resemble these remarks. :).  I don't think there's any difference in investment ability based on an individual's major in college with a few exceptions. There seem to be some really sharp quants that have made a lot of money by discovering and exploiting market inefficiencies. These guys are typically math or physics majors. Beyond that I would expect to see a normal bell curve on investment returns across all types of majors---perhaps skewed to lower returns.

 

I do believe as Buffet has said, either they get value investing or they'd don't. I may be wrong, but I believe it is difficult to "learn" how be a really successful investor. Look at the average mutual fund manager. Well educated, well paid and they produce average results with a few exceptions--both above and below average.

 

The really good managers recognize their abilities and start their own hedge funds. Even in this group you'll find a normal distribution of returns, perhaps skewed to the high end.

 

As evidenced by the returns earned by members of this board this group is well above the norm and it includes: engineers, liberal arts majors and others. Some here get 'get it' better than others. I know I am benefiting from the board and am a better investor because of it. After all I are an engineer!

 

 

[Parsad]

Which discipline makes great investors?  (question posed at those who say engineers don't)

 

Not so much a discipline as those who practice a lifestyle and carry specific traits.  Even-tempered, entrepreneurial, independent thinkers who live frugal lives.  They have to be analytical, but at the same time can simplify a problem into its most basic components, and take a rational view of the possible outcomes. 

 

To tell you the truth, I think Liberal Arts students probably have the best possible chance at being good investors because they've had exposure to diverse disciplines.  Cheers!

[Guest valueInv]

I think one of the most important attributes for an investor is being able to recognize what he knows and what he doesn't know. A good investor is open to the idea that he might not know everything or that he might even be an idiot on some topics. One of the flaws that many engineers have when they go into investing or business is that they are too overconfident in their own knowledge and they don't realize what they don't know.

 

A popular interview question that some firms currently use for students looking for jobs is to ask the students to compare Apple's iPad and Amazon's Kindle and see whether they are competitors and to see which business they like better. I've asked many of my engineering friends the same question and virtually all of them would start by comparing specs. They would talk about how they are different sizes, they would talk about how the Kindle uses e-ink and the iPad has a color screen. They would talk about how you can play games on the iPad and use all these different apps while the Kindle is mainly for reading. They get extremely confident because they have played with both devices and have read so much about it. But what they forget to think about is the business aspect. How much does it cost to make an iPad and how much does it cost to make a Kindle? The conclusion that the interviewers want the students to arrive at is to identify that there are fundamental differences in the business models of the two products. Apple makes their money by selling the iPad with pretty big profit margins. Amazons sells the Kindle at break even or as a loss leader so they can make the money back on e-books. Most engineers tend to get obsessed with the tech specs and forget about the business and they don't recognize that they are doing that.

If you substitute the term "investors" for "engineers", you have just described the behavior of many people in this thread including your moderator. Read back through this thread and see people talking about Samsung have exceeded Apple because the Galaxy has a faster processor or a bigger screen. How it has this feature or that.

 

I have argued time and again on this thread about how the spec is not important. The "investors" have told me I'm wrong. I guess they won't get the job ::)

[Guest valueInv]

Which discipline makes great investors?  (question posed at those who say engineers don't)

 

Not so much a discipline as those who practice a lifestyle and carry specific traits.  Even-tempered, entrepreneurial, independent thinkers who live frugal lives.  They have to be analytical, but at the same time can simplify a problem into its most basic components, and take a rational view of the possible outcomes. 

 

To tell you the truth, I think Liberal Arts students probably have the best possible chance at being good investors because they've had exposure to diverse disciplines.  Cheers!

 

FYI, Your first paragraph describes many engineers in the Silicon Valley except for the frugal lives part.

 

"They have to be analytical, but at the same time can simplify a problem into its most basic components, and take a rational view of the possible outcomes. "

 

Who do you think is taught more of this? Liberal arts majors or engineering majors?

 

I just learned that Munger studied mathematics, meterology and trained at Cal Tech. And how about your old friend Monish Pabrai? Engineer?

[Guest valueInv]

I just posed the question because I've heard some people say that lawyers and doctors make poor investors, then engineers, so I'm wondering who makes good investors.  I think even investors make poor investors (if you look at the relatively few who actually outperform the index).

 

I actually agree that engineers make poor investors.  I worked with tons of them at Microsoft, and they either liked the idea of using statistics and modeling of charts and patterns, or they believed they had an edge and wanted to invest in technology companies.  I think the large swath of them suffered from various degrees of Aspergers and unfortunately weren't indoctrinated first in a better model -- like a valuation model of buying low and selling high relative to a fundamental business value (in other words, value investing).  It's like turning the titanic, whereas I think with other types of brains it can be easier to introduce a new concept.  Sort of like a baby goose gets imprinted and later can't be convinced otherwise.

 

I've heard carpenters make poor investors too - they think too geometrically. They can think only in straight lines. ;)