Prince Alwaleed and the fight with Forbes richest people data

[hyten1]

liberty

 

i am sure this is nothing new, its new to me, prob people are doing it

 

also the leverage/option going in at the right time is in itself not trivial

 

also the amount of free time you have sitting around waiting, prob most people can't handle, people are trigger happy.

 

hy

[jay21]

i wonder what if you let picking the stock to Berkshire

 

and implement all the other stuff (leverage, concentrate, options etc)

 

that is prob all you need to do, go into BRK maybe 1 or 2 other at the right time and lever up :)

 

this will prob get a better return historically than my 18% annualized, haha, and its less work :)

 

hy

 

This begs the question though, if it's so obvious, why aren't most people here doing something like that?

 

Actually, twacowfca made a thread on the idea and a lot of people followed it.

[CONeal]

i wonder what if you let picking the stock to Berkshire

 

and implement all the other stuff (leverage, concentrate, options etc)

 

that is prob all you need to do, go into BRK maybe 1 or 2 other at the right time and lever up :)

 

this will prob get a better return historically than my 18% annualized, haha, and its less work :)

 

hy

 

This begs the question though, if it's so obvious, why aren't most people here doing something like that?

 

Probably b/c the survivor rate of this type of strategy leaves behind a trail of ruined finances and eating Ramon Noodles for every meal.  Not only do you have to be right on the stock, you have to be bullseye accurate with the timing.  Ericopoly is a real outlier in his strategy and its a strategy not for the faint of heart.

[onyx1]

i wonder what if you let picking the stock to Berkshire

 

and implement all the other stuff (leverage, concentrate, options etc)

 

that is prob all you need to do, go into BRK maybe 1 or 2 other at the right time and lever up :)

 

this will prob get a better return historically than my 18% annualized, haha, and its less work :)

 

hy

 

This begs the question though, if it's so obvious, why aren't most people here doing something like that?

 

Actually, twacowfca made a thread on the idea and a lot of people followed it.

 

I was one of those and it has worked out very well.  70 days ago, I rolled a BRK long into the 70 strike LEAPS when BRK was offered at WEBs buyback price.  As luck/skill would have it, the LEAPS are up 56%.  Additionally, a majority of the implied financing costs have been retired.

 

Twacowcfa's return is even higher as he bought a short term OTM calls at the same time.

[enoch01]

i wonder what if you let picking the stock to Berkshire

 

and implement all the other stuff (leverage, concentrate, options etc)

 

that is prob all you need to do, go into BRK maybe 1 or 2 other at the right time and lever up :)

 

this will prob get a better return historically than my 18% annualized, haha, and its less work :)

 

hy

 

This begs the question though, if it's so obvious, why aren't most people here doing something like that?

 

Actually, twacowfca made a thread on the idea and a lot of people followed it.

 

I was one of those and it has worked out very well.  70 days ago, I rolled a BRK long into the 70 strike LEAPS when BRK was offered at WEBs buyback price.  As luck/skill would have it, the LEAPS are up 56%.  Additionally, a majority of the implied financing costs have been retired.

 

Twacowcfa's return is even higher as he bought a short term OTM calls at the same time.

 

I did something similar (thanks for the idea twacowcfa!).

 

This is an interesting thread, and I don't have much to add.  But one thing to remember is that if we treat investing like business ownership, it really isn't that crazy to concentrate in very few ideas.  There's an added benefit of the prudent use of uncallable leverage with investing that I suppose you can't really replicate with private business ownership.

 

Great point about survivorship bias, CONeal.  Now I'm getting nervous that this thread about leverage is getting a ton of attention.

[ERICOPOLY]

I asked this a few pages back, but maybe you missed it (or maybe you don't know), in any event, here it is:

 

Are you really going to be out of investing and go into buy and hold after BAC (e.g., BRK/FFH)?  Or perhaps you will set aside a new portion to keep going with?

 

That has been my plan, but it's hard to keep myself on a plan.  I would like to keep maybe 10% for myself to play with.  I plan to pay for a house fully in cash.  Then there shouldn't be any worries.

 

[premfan]

so in summary, what eric do

 

- pick the right stock / concentrate / high conviction

- leverage / using options when appropriate / taking advantage of mis price option to get cash etc.

- fully invested

 

sometimes i wonder

 

1) if you just invest in index fund (basically means you are not picking stock) you prob do what the market does, lets say its historical 8%. no leverage/option/etc

2) now if you pick stock (no leverage/option/etc) many people do 12% to 25% on this board (i am included)

3) now what if you do #1 with leverage (what would the return be?)

4) now what if you do #2 with leverage (what woudl the return be?)

5) this is erics which is #4 + concentrate (we know what this is)

 

obviously it depends on the person, how its implemented etc etc.

 

i wonder what are the historical average for the above 5 ways, i know it depends on a lot of things, just trying to get some idea, we prob don't know. just like #1 above we have a historical average of 8%, what are the others? i know its impossible to get.

 

just interesting thought for me at least.

 

i definitely learn from the eric experience leverage/concentration can make a world of difference ( A WORLD) and it doesn't necessrily mean its more risky, more volatile yes! i guess you read about it, but its never the same when you have someone flesh and blood who actually did it that you interact with in real time on the message board that have been doing for over 1 decade.

 

EDIT: I guess another way to think about it if you get the picking the stock right (this is not trivial in itself) the other stuff, makes a world of difference.

hy

 

Great summary man. We can all learn from eric.

[PlanMaestro]

 

3) now what if you do #1 with leverage (what would the return be?)

4) now what if you do #2 with leverage (what woudl the return be?)

5) this is erics which is #4 + concentrate (we know what this is)

 

"What happened to Rick?"

 

And then Warren went a step further. He said that if you're even a slightly above-average investor who spends less than they earn, over a lifetime you cannot help but get rich if you are patient. And so the lesson. My question was, what happened to Rick? The lesson was, don't use leverage, right? And be patient. These are attributes he's talked about plenty, but I would say that it got seared in pretty solidly after hearing the format in which he put it.

 

[ERICOPOLY]

 

3) now what if you do #1 with leverage (what would the return be?)

4) now what if you do #2 with leverage (what woudl the return be?)

5) this is erics which is #4 + concentrate (we know what this is)

 

"What happened to Rick?"

 

And then Warren went a step further. He said that if you're even a slightly above-average investor who spends less than they earn, over a lifetime you cannot help but get rich if you are patient. And so the lesson. My question was, what happened to Rick? The lesson was, don't use leverage, right? And be patient. These are attributes he's talked about plenty, but I would say that it got seared in pretty solidly after hearing the format in which he put it.

 

Margin has that problem too it.  To survive a downturn your broker also has to remain patient.

 

Had he been playing that game today, he could have put 80% into Berkshire "B" common and the other 20% into the at-the-money calls.  Collectively that should give me roughly 180% long notional position.  Then he would only have suffered a permanent loss of 20% at worst.

 

 

[Investmentacct]

Eric,

 

Congratulations for great returns past 10 years.

 

Have you used / do you use leverage from margin loans?

 

Or leverage only consists from options , warrants etc?

 

Thanks for clarifying.

 

Rgds.

[ERICOPOLY]

And compare that 20% possible total loss to other strategies, like Mohnish's.  I think he had 10% in Lear Corporation, 10% in Delta Financial, and 10% in Pinnacle, though perhaps not all at the same time.  These companies it turned out had no intrinsic value (although he thought they did at the time).  I think he made money trading volatility on Lear Corp -- and I think I saw him tell and interviewer (online clip) that he had just captured intrinsic value and that he would pick it up again if it dropped back down somewhere near $20 (but I think he later decided not too as the future became clearer).

 

The point I am making is that perhaps a set % of the portfolio can be in levered calls as long as the rest of it is very solid (like Berkshire).  Compared to other strategies... I don't know, but Mohnish's strategy has also turned up risk of 20% permanent loss here and there (in 10% increments).

 

I once picked up a tracking position in Delta Financial Corporation in my RothIRA because I saw he owned it:

 

[/img]

DFC.tiff

[hyten1]

eric that is what i was trying to get at

 

what if you use leverage on very solid companies like BRK

 

not on some fly by night riskier assets

 

or use part of lever like 50% just equity but 50% leverage BRK, if 50% is leverage at 100% that gives you 150% on BRK

 

something to that effect

 

what are some other investment that can be use for this other than BRK? GE? WFC? buffett said he would go all in when WFC was at $9 back in 2008 or 2009, i am sure if you use leverage (which i am sure he would of done) that return would of been massive (obviously these are all in hindsight)

 

obviously you can't go in when they are at 52 week high (maybe you can depending on what you value them at etc)

 

i definitely will incorporate some leverage using options in my future investment, but not like eric, i am not ready for that, if ever :)

 

the point is apply this to very sound/solid investments and then use leverage (how much leverage? that is up to your comfort level) etc.

 

but definitely leverage is double edge sword, but using it on very sollid investment like BRK, remedy that to some extend

 

hy

[ERICOPOLY]

Eric,

 

Congratulations for great returns past 10 years.

 

Have you used / do you use leverage from margin loans?

 

Or leverage only consists from options , warrants etc?

 

Thanks for clarifying.

 

Rgds.

 

Margin isn't available in a RothIRA account, which bodes well for my future financial survival. 

 

I currently have a margin loan in my taxable account which is fully hedged with puts that match the underlying.  The account is levered 1.3x with margin but it's not nearly as bad as it looks (put option strikes are close to current stock price). 

 

Rick Guerin could have done that, but Berkshire stock likely didn't have put options back in those days.

 

 

[PlanMaestro]

Margin has that problem too it.  To survive a downturn your broker also has to remain patient.

 

And 1y and 2y options are not very patient either. The non-recourse is nice, but if you cannot see how this can go wrong you are not being imaginative enough.

 

I know that you are not just about leverage. Maybe those calls were cheap for specific reasons (crowded short) or prices were bowed to have a jump (like in March 2009), but that's not the technical discussion that this thread is having.

 

I'm glad for your success, and it looks like you are mature guy that on several posts has showed that he understands than there is a difference between building wealth and keeping it. So in that spirit I'm sure you can appreciate these examples:

 

(1) General Growth GGP: I know several people that stroke big on this one, and others that envied those that stroke big. … only to lose most of it investing in Abitibi, Tronox, Chemtura, and other "sure thing" bankruptcy bets where they went big.

 

(2) Chinese Stocks CCME: I know several smart guys that made lots of money on those Chinese Stocks in 2009, quantitative guys that did not read 10Ks or did due diligence. Many of those, and several that followed Hank Greenberg, invested later even bigger in CCME (I even forgot the real name of the company). Many lost huge on that sure thing.

 

I have to say I don't like returns discussions, but maybe that's just me. But I'm old enough to see how reasonable smart people do unreasonable unsmart things when a pot of gold is shown to them and suggested they can do it too. Envy and greed, man.

 

Then there’s the chasing of the investment return rabbit. What if you had an investment that you were confident would return 12% per annum. A lot of you wouldn’t like that -especially if you’ve done better- but many would say, “I don’t care if someone else makes money faster.” The idea of caring that someone is making money faster is one of the deadly sins. Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?

 

 

[ERICOPOLY]

eric that is what i was trying to get at

 

what if you use leverage on very solid companies like BRK

 

not on some fly by night riskier assets

 

or use part of lever like 50% just equity but 50% leverage BRK, if 50% is leverage at 100% that gives you 150% on BRK

 

something to that effect

 

what are some other investment that can be use for this other than BRK? GE? WFC? buffett said he would go all in when WFC was at $9 back in 2008 or 2009, i am sure if you use leverage (which i am sure he would of done) that return would of been massive (obviously these are all in hindsight)

 

obviously you can't go in when they are at 52 week high (maybe you can depending on what you value them at etc)

 

i definitely will incorporate some leverage using options in my future investment, but not like eric, i am not ready for that, if ever :)

 

the point is apply this to very sound/solid investments and then use leverage (how much leverage? that is up to your comfort level) etc.

 

but definitely leverage is double edge sword, but using it on very sollid investment like BRK, remedy that

 

hy

 

Well, I wouldn't do this in California because of the tax situation, but I have often wondered how a person could do going forward purchasing 10-year TIPS bonds with 100% of your cash and writing deep-in-the-money Berkshire puts for upside (this doesn't require any cash).

 

Should we get the kind of 7% inflation that some pundits keep talking about due to all this "money printing", what a tailwind!  And it doesn't add much downside risk (minimal), you get incredible margin allowance for US Govt Bonds.

 

 

[ERICOPOLY]

Margin has that problem too it.  To survive a downturn your broker also has to remain patient.

 

And 1y and 2y options are not very patient either. The non-recourse is nice, but if you cannot see how this can go wrong you are not being imaginative enough.

 

I know that you are not just about leverage. Maybe those calls were cheap for specific reasons (crowded short) or prices were bowed to have a jump (like in March 2009), but that's not the technical discussion that this thread is having.

 

I'm glad for your success, and it looks like you are mature guy that on several posts has showed that he understands than there is a difference between building wealth and keeping it. So you

in that spirit I'm sure you can appreciate these examples:

 

(1) General Growth GGP: I know several people that stroke big on this one, and others that envied those that stroke big. … only to lose most of it investing in Tronox, Chemtura, and other "sure thing" bankruptcy bets where they went big.

 

(2) Chinese Stocks CCME: I know several smart guys that made lots of money on those Chinese Stocks in 2009, quantitative guys that did not read 10Ks or did due diligence. Many of those, and several that followed Hank Greenberg, invested later even bigger in CCME (I even forgot the real name of the company). Many lost huge on that sure thing.

 

I have to say I don't like returns discussions, but maybe that's just me. But I'm old enough to see how reasonable smart people do unreasonable unsmart things when a pot of gold is shown to them and suggested they can do it too. Envy and greed, man.

 

Then there’s the chasing of the investment return rabbit. What if you had an investment that you were confident would return 12% per annum. A lot of you wouldn’t like that -especially if you’ve done better- but many would say, “I don’t care if someone else makes money faster.” The idea of caring that someone is making money faster is one of the deadly sins. Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?

 

This is why I have "only" 10% in 2 yr options, and less than 1% in 1 yr options.

 

Then I have BAC warrants (6 yr options) and AIG warrants (8 yr options).

 

Still a risk of total wipeout to be sure, but am free to admit that I am making gambles. 

 

Everything else you said I agree with -- everywhere I try, I tell people that I don't know very much but for a few things and I have done well through a form of gambling, not a form of investing.  I'm not trying to explain what I've done in any other framework. 

[racemize]

I have to say I don't like returns discussions, but maybe that's just me. But I'm old enough to see how reasonable smart people do unreasonable unsmart things when a pot of gold is shown to them and suggested they can do it too. Envy and greed, man.

 

I agree with the sentiment--however, I like seeing returns in an aggregate sense to show that what we are doing has worked for value investors of the individual type, particularly ones I am listening to, e.g., on this board.

 

These 75% returns though, I need to get out of my head...

[hyten1]

i agree with what people said, envy/greed, leverage(double edge sword etc)

 

for me i don't plan to do what eric has done (in terms of 1 or 2 position lever up to 2x), its not for me, i don't think it ever will be :)

 

but for investment that i had fairly high conviction in, investment that i had in the past put in 20 to 35% in, i could  of use some portion of the 20 to 35% and lever it up a little bit.

 

i guess this sounds good because my past investment were i put in 20 to 35% have all turn out well, does that mean they will in the future i don't know. but the point is it will still be 20 to 35%, the only difference is now there will be options involve where time frame is some what restricted (max 2 yr leaps, you can roll over etc.)

 

i wonder what this will do to my returns, hopefully not worst ... long term of course

[ERICOPOLY]

I'm glad for your success, and it looks like you are mature guy that on several posts has showed that he understands than there is a difference between building wealth and keeping it. So

in that spirit I'm sure you can appreciate these examples:

 

(1) General Growth GGP: I know several people that stroke big on this one, and others that envied those that stroke big. … only to lose most of it investing in Abitibi, Tronox, Chemtura, and other "sure thing" bankruptcy bets where they went big.

 

(2) Chinese Stocks CCME: I know several smart guys that made lots of money on those Chinese Stocks in 2009, quantitative guys that did not read 10Ks or did due diligence. Many of those, and several that followed Hank Greenberg, invested later even bigger in CCME (I even forgot the real name of the company). Many lost huge on that sure thing.

 

 

Keep in mind that I've only made the bets on situations that were to the best of my knowledge "inevitables".  Then the only risk is duration risk and I've tried to manage that.

 

You talked about 2 yr options but as UCCMAL would point out, you roll them once the next option series comes out.  You don't ride them into the ground at expiry.  So the 100% risk of loss is sort of a fiction as long as the underlying security is truly solid.

 

Still added risk though -- mitigated by choosing low risk underlying foundation upon which to gamble on it's long-term direction (not short term!).

 

[cemadh]

Normally I do not like "return discussions" as well. Primarily because people tell you only about their winners and do not mention their losers. But Eric's story is different. It is - simply put - FASCINATING!!

 

I do not envy Eric one bit. I am happy for him but I can NEVER do what he did. I have learned a lot from just this one thread.

The best part is - Eric is so down to earth, has a good sense of humor, thinks clearly and is the first one to label his approach as "prudent gambling" as opposed to "prudent investing".  It is like watching Roger Federer play tennis when he was at the top of his game. He makes it look easy. It is fascinating. But you can never do it. It serves only to set a new "high water mark" for everyone else. And it is fascinating to watch.

 

Eric - I cannot thank you enough for responding patiently to everyone's questions and for sharing your philosophy and returns openly.

Sanjeev - thanks for this fantastic board. Truly amazing collection of smart investors (and smart gamblers :- ) )

 

My biggest lesson from all this is - if you have a super high conviction stock that is highly liquid and promises a 20% return as opposed to a high conviction stock that is not so liquid and promises a 50% return, then go for the former and do not be afraid to use LEAPS or margin buying when the opportunity presents itself.

 

[ubuy2wron]

Since this thread has turned into a Q&A with Eric (which I really appreciate, btw! :) ), here's my question for Eric:

 

What would you estimate your record would have been without the use of leverage?

 

The same as Redskin212...over 18% compounded annually!  He sent me his results after he looked at Eric's, and it was like he was a chronic underachiever.  He's in the top 0.001% of investors and he feels like he underachieved! 

 

Eric, I think every guy on here thinks their d**k is a hell of alot shorter than yours today!  ;D  Time to buy a corvette!  Cheers!

Mine has shrunk to peanut size since reading this thread.  LOL Congrats Eric I bought exactly the same things at the same time but never with your conviction

[oddballstocks]

I just got back from the bank, I took out a new mortgage on the house and rolled it into BAC LEAPs, am I ok or late to the party?  I leveraged my leverage, I can't wait to be rich!

 

 

[infinitee00]

This thread should be renamed - " Prince Eric and the Fight to Conceal Richest People Data from Forbes " ;-)

 

I am very happy for Eric and I hope that he reaches that billion dollar mark pretty soon :-) Eric definitely looks much more grounded than most would be if they had such a record. In fact, I doubt if I could be as grounded and modest had I been in his shoes. It's refreshing to see a person who does not suffer from self-attribution bias and admits his approach as " prudent gambling". I think "gambling" is fine if that what one want's to do, but most of us on this board are trying to be prudent investors. Reading all the comments, I agree with Plan's observation about envy and greed. This thread is turning out to be one of the most dangerous (and somewhat amusing) threads I have come across. When extremely smart, disciplined and rational investors, who have earned 20%+ returns for a decade, wonder if their returns are good enough, that to me sounds totally nuts !! I sometimes wonder whether all the discussions we had on behavioral biases and differentiating skill vs luck had any effect on our long-term thinking.

 

This thread reminds me of a story I came across as a kid. In fact, one of my aunts knew the reporter who covered this for our local newspaper. A small grocery store owner in our part of town had won a huge jackpot in a lottery. He sold off his grocery store, moved to a huge mansion, bought a few fancy cars and started spending money like crazy ( some of them charitable, I must admit). Once news of his winnings and escapades spread across town, other store owners who knew this guy ( some of them decent hard-working folks) started buying lottery tickets (even ones who have never gambled in their life). Everyone thought they would just win one jackpot and retire rich. When none of them won after a few months of constant lottery-ticket-buying, some gave up but some increased their purchases. They probably thought that if they just buy enough, one day they are surely going to hit the jackpot. It took them another few months or so to finally come to their senses, quit buying lottery tickets and get back to reality. In the meantime, I think one guy went broke and another guy got divorced and became an alcoholic. Most of the others who were interviewed found themselves regretting the fact that they spent so much money on lottery tickets. This story was of course an aside to the real story of the lottery winner and I am not sure what the reporter/editor was aiming for here - maybe some human angle to the get rich quick dreams. I remember telling my mom jokingly at that time that I hoped our neighbors never win a lottery because that would make our lives so miserable !  This taught me a valuable lesson in not chasing dreams where skill had a very small role to play in the final outcome.

 

For those thinking of increasing leverage to juice their returns further, I hope you would seriously re-consider what that entails. I know there's not much I can teach the smart guys on this board, but sometimes it helps to reiterate. Not only do we have to be right on the direction of our bet but also on the timing. Add to this a 3rd component - keeping our behavioral biases under control this whole time - this becomes extremely difficult. Now consider the fact that we have to get all of these right and under control repeatedly and every time we buy a leveraged product, we soon realize why there's only one Eric amongst the hundreds(?) of COBF members.

 

Given where this thread has meandered into, thought I'd share this link on survivorship bias (http://blog.asmartbear.com/business-advice-plagued-by-survivor-bias.html)

 

During World War II the English sent daily bombing raids into Germany. Many planes never returned; those that did were often riddled with bullet holes from anti-air machine guns and German fighters.

 

Wanting to improve the odds of getting a crew home alive, English engineers studied the locations of the bullet holes. Where the planes were hit most, they reasoned, is where they should attach heavy armor plating. Sure enough, a pattern emerged: Bullets clustered on the wings, tail, and rear gunner’s station. Few bullets were found in the main cockpit or fuel tanks.

 

The logical conclusion is that they should add armor plating to the spots that get hit most often by bullets. But that’s wrong.

 

Planes with bullets in the cockpit or fuel tanks didn’t make it home; the bullet holes in returning planes were “found” in places that were by definition relatively benign. The real data is in the planes that were shot down, not the ones that survived.

 

 

Specific examples of survivor bias in business advice

So far I’ve been asking rhetorically whether survivor bias might be severely skewing business advice. Steven Levitt (of Freakonomics fame) investigated this question directly.

 

He was reading Good to Great by Jim Collins, a book that analyzed eleven companies that were mediocre — just pooping along — but then transformed themselves into stock market sensations. A conclusion was that the common trait was a “culture of discipline.” This book has sold many millions of copies, so it’s a good example of popular writing on business advice.

 

One of the eleven “great” companies was Fannie Mae, and Steven Levitt was reading this book just as Fannie was collapsing in financial disaster. Hmm, he thought, I wonder how those other “great” companies are doing.

 

Turns out, had you invested in those eleven companies in 2001 (when the book came out), your portfolio would have underperformed the S&P 500! (Fannie Mae wasn’t even the only case of total disaster — also extolled was the now-bankrupt Circuit City.)

 

Why didn’t these companies continue to succeed? It turns out Jim started by combing through 1435 companies looking for good candidates for the book, and picked eleven. It’s the ESP experiment all over again!

 

On top of that, Jim doesn’t bother asking whether any of the 1424 other companies also displayed a “culture of discipline.” Maybe that’s something that many public companies have regardless of performance.

 

Is this book an aberration? Nope, Steven investigated another business book from the 1980s — In Search of Excellence — and found the same effect.

 

Steven then comes to the same conclusion that I’m coming to:

 

    These business books are mostly backward-looking: what have companies done that has made them successful? The future is always hard to predict, and understanding the past is valuable; on the other hand, the implicit message of these business books is that the principles that these companies use not only have made them good in the past, but position them for continued success.

 

    To the extent that this doesn’t actually turn out to be true, it calls into question the basic premise of these books, doesn’t it?

 

 

[hyten1]

well for me leverage is like alcohol

 

- some people are social drinkers

- some people are heavy drinkers and it affects how they are as a person

- some people drink so much it ruins their live

- etc.

 

its really up to you, its not for everyone

 

alcohol can either ruin your life or enhance it, its up to the individual (you need to know who you are)

 

just my humble opinion

hy

[Rabbitisrich]

The warnings against leverage are good and useful, but it's also good to avoid basing investment decisions on overly broad categories. Leverage isn't leverage isn't leverage. Particularly when it comes to leaps and some warrants, the ability to own underlying equity at a negative carry with NO RECOURSE can be very attractive. The no recourse feature of options is not to be underestimated. Investors might reasonably fear losing permanent money to irrational pricing, but those risks can be mitigated by position sizing, term management, and sticking with situations featuring deep discounts plus capable management.