Liberty Posted March 8, 2013 Share Posted March 8, 2013 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? Link to comment Share on other sites More sharing options...
Parsad Posted March 8, 2013 Share Posted March 8, 2013 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! Link to comment Share on other sites More sharing options...
valuecfa Posted March 8, 2013 Share Posted March 8, 2013 Eric, I would be surprised if you don't get a phone call from the SEC soon if you keep those returns up. Congrats on a very impressive paper trail. Link to comment Share on other sites More sharing options...
Packer16 Posted March 8, 2013 Share Posted March 8, 2013 Eric, Congrats on a such a record over that period of time. I feel like an underachiever with only a 27% annual return over that same 10-yr period. I finally purchased some BAC but a little later than everyone else (Sep 2012) but better late then never. Packer Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 8, 2013 Share Posted March 8, 2013 Eric, Congrats on a such a record over that period of time. I feel like an underachiever with only a 27% annual return over that same 10-yr period. I finally purchased some BAC but a little later than everyone else (Sep 2012) but better late then never. Packer I will be a trillionaire if I can replicate your returns for the rest of my life (given the life history of two of my grandparents). Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 8, 2013 Share Posted March 8, 2013 Eric, I would be surprised if you don't get a phone call from the SEC soon if you keep those returns up. Congrats on a very impressive paper trail. I've been curious about that too. I guess they don't really investigate anyone unless they get tipped off. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted March 8, 2013 Share Posted March 8, 2013 "Perhaps the most significant is that it's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong ... Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig ... As far as Soros is concerned, when you're right on something, you can't own enough." - George Soros via Stanley Druckenmiller via The New Market Wizards via Market Folly. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 8, 2013 Share Posted March 8, 2013 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? Probably mid-high teens maybe? Low 20s? I'm okay with the reality that this was gambling. Better not to fool myself into thinking this was prudent investing. Maybe prudent gambling, but that's not the same as prudent investing. I think the research (not mine) into the ORH buyout, the CDS research (again, not mine), etc... that was like rigging the outcome of the game, and then betting on it. Only legal! So I like the profile picture of Rothstein -- I have gambled, only I think I've been as smart about it as I can get without being illegal. I think he would be very much a fan of some of these bets. Link to comment Share on other sites More sharing options...
indirect Posted March 8, 2013 Share Posted March 8, 2013 Eric has the right strategy, which has been consistently advocated by CM and WB with his 20 tickets/lifetime line of thinking. However concentration and leverage can be deadly. Consider the example of Mark Sellers and his long only hedge fund that took a concentrated bet on MCF, with the thesis the NG cannot go below $6 with long term history of 6:1 oil:NG ratio. Proceed cautiously folks. As much as we want to be Eric, our risk and stress DNA might be different. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 8, 2013 Share Posted March 8, 2013 My grandfather did pilot a B-24 Liberator across the Pacific from Australia to assault the Japanese (who put many holes in his plane). What I've done here is nothing like that. He risked my very existence! If I've put my family's financial lives at risk, that's a bit less reckless. Link to comment Share on other sites More sharing options...
Parsad Posted March 8, 2013 Share Posted March 8, 2013 My grandfather did pilot a B-24 Liberator across the Pacific from Australia to assault the Japanese (who put many holes in his plane). What I've done here is nothing like that. He risked my very existence! If I've put my family's financial lives at risk, that's a bit less reckless. If you want to make money like Eric, there is a business model available with less at risk capital, lower annual returns, just as much leverage, and you can sleep at night...manage other people's money! ;D Mohnish started Pabrai Funds with $100,000 of his own money. After ten years at about 22% annual compounding, he built a net worth of about $45M. He not only sleeps well at night, he takes a damn nap in the middle of the day at the office! Cheers! Link to comment Share on other sites More sharing options...
Mikenhe Posted March 8, 2013 Share Posted March 8, 2013 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? Probably mid-high teens maybe? Low 20s? I'm okay with the reality that this was gambling. Better not to fool myself into thinking this was prudent investing. Maybe prudent gambling, but that's not the same as prudent investing. I think the research (not mine) into the ORH buyout, the CDS research (again, not mine), etc... that was like rigging the outcome of the game, and then betting on it. Only legal! So I like the profile picture of Rothstein -- I have gambled, only I think I've been as smart about it as I can get without being illegal. I think he would be very much a fan of some of these bets. Its gambling - but not in the conventional sense - more like card counting at blackjack... waiting until the deck is in your favour then push your chips in the middle to maximise the advantage. Nothing wrong with that - and obviously its helped with leverage. I spent years dripping funds into my 401k - funds that I had many internal debates about the use of. when I finally got control of part of my 401k I was able to invest in funds that I wouldn't have touched via a fund and my returns finally outstripped the market. Its nothing spectacular - and nor do I have the backup that Eric mentioned - but I'm way ahead of the game compared to the average. If I can manage to keep up even half the gains that I have got in the last couple of years then I can finally do what I want for a living - reading up on markets and financials to my own investments - in my own time!! nice work Eric! Funnily enough my grandfather did something similar - except he was in the back end of a lancaster over europe.... I love the sucess stories - shows it can be done! Link to comment Share on other sites More sharing options...
Josh4580 Posted March 8, 2013 Share Posted March 8, 2013 So no worries Eric. Your secret will be safe with us, as you fly around on your Marquis Jet Card, surfing the internet at 20,000 feet. And, posting on cornerofberkshireandfairfax... I kinda like that thought What I'd like to see is Eric become a centimillionare over the next few years, and have him continue to post on here. Then every time someone like Harry Long comes on here and tells us how we are anchored to our old ideas, all we have to do is show a picture of Eric sitting in his Netjets plane! ;D Cheers! I dont know. I hear Harry's systematic systemic systems are running at 89% annualized right now! Link to comment Share on other sites More sharing options...
onyx1 Posted March 8, 2013 Share Posted March 8, 2013 My grandfather did pilot a B-24 Liberator across the Pacific from Australia to assault the Japanese (who put many holes in his plane). What I've done here is nothing like that. Related story. A friend of mine runs a non-profit that prepares veterans for careers on wall street, like training for Series 7 exams and teaching valuation and trading techniques. He recently trained a young helicopter pilot who had finished three tours, two in Afghanistan and one in Iraq. On one of his tours he was shot out down and was lucky enough to not only survive but to avoid falling into enemy hands. The vet completed the training and went on an interview with a well know investment bank. After waiting for 15 minutes in a conference room in comes this pompous, suspender-wearing banker who proceeded to grill the vet in a dismissive tone: "Do you have any idea what it is like to go home at night with a trading position that is going against you?"..."What makes you think you can handle the ups and downs of a trader?"...."Do you have any idea of the stress level involved here?" The young vet paused, and simply responded: "Does anybody shoot at you here? Link to comment Share on other sites More sharing options...
value-is-what-you-get Posted March 8, 2013 Share Posted March 8, 2013 2012 -- Up 300% from BAC (it doesn't show in the numbers given because it excludes January 2012 which was epic month) Oh those figures exclude the epic month . . . that explains the sub-par performance! ;D Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 8, 2013 Share Posted March 8, 2013 2012 -- Up 300% from BAC (it doesn't show in the numbers given because it excludes January 2012 which was epic month) Oh those figures exclude the epic month . . . that explains the sub-par performance! ;D Sorry, I meant to say the 1 year figure does -- the rest of the figures include January 2012. I misphrased it. They all include January 2013, which was a down month. So the 1 yr number isn't the 300% that I previously stated. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 8, 2013 Share Posted March 8, 2013 My grandfather did pilot a B-24 Liberator across the Pacific from Australia to assault the Japanese (who put many holes in his plane). What I've done here is nothing like that. Related story. A friend of mine runs a non-profit that prepares veterans for careers on wall street, like training for Series 7 exams and teaching valuation and trading techniques. He recently trained a young helicopter pilot who had finished three tours, two in Afghanistan and one in Iraq. On one of his tours he was shot out down and was lucky enough to not only survive but to avoid falling into enemy hands. The vet completed the training and went on an interview with a well know investment bank. After waiting for 15 minutes in a conference room in comes this pompous, suspender-wearing banker who proceed to grill the vet in a dismissive tone: "Do you have any idea what it is like to go home at night with a trading position that is going against you?"..."What makes you think you can handle the ups and downs of a trader?"...."Do you have any idea of the stress level involved here?" The young vet paused, and simply responded: "Does anybody shoot at you here? Thank you! I've been trying to make that point for a hell of a long time. My strategy might have (okay, it has) caused me to lose sleep, it has been stressful, but it's only money after all. Link to comment Share on other sites More sharing options...
Mikenhe Posted March 8, 2013 Share Posted March 8, 2013 down in 2013 - thats not good [current talking head mode] clearly lost his way and its indicative of a lack of confidence in the long term strategy.sell sell sell. [\current talking head mode] Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 8, 2013 Share Posted March 8, 2013 down in 2013 - thats not good [current talking head mode] clearly lost his way and its indicative of a lack of confidence in the long term strategy.sell sell sell. [\current talking head mode] It's +12.35% since the end of January. Unfortunately Fidelity only calculates these return statistics on a monthly basis, and then doesn't publish them to my account for another 15 days after that. And then hopefully Sanjeev will be right and it will be up a lot more a week from now. Link to comment Share on other sites More sharing options...
Liberty Posted March 8, 2013 Share Posted March 8, 2013 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? Probably mid-high teens maybe? Low 20s? Thanks, that's interesting. The leverage is actually making a bigger difference than I expected; I thought that the heavy concentration into your very best ideas was in itself a bigger part of the return. Though I suppose that it still is, just in a different way: You need to be extremely confident to lever things up, and you probably can't get to that point with a diversified portfolio. Did you start out investing like that, passing on anything that wasn't sure enough and then going very concentrated and levered? Or did you start with a more conventional approach to investing and over time you evolved that style because it suits your strenghts? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted March 8, 2013 Share Posted March 8, 2013 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? Probably mid-high teens maybe? Low 20s? Thanks, that's interesting. The leverage is actually making a bigger difference than I expected; I thought that the heavy concentration into your very best ideas was in itself a big part of the return. Though I suppose that it still is, just in a different way: You need to be extremely confident to lever things up, and you probably can't get to that point with a diversified portfolio. Did you start out investing like that, passing on anything that wasn't sure enough and then going very concentrated and levered? Or did you start with a more conventional approach to investing and over time you evolved that style because it suits your strenghts? I usually haven't held cash in the account. So during the short selling ban, for example, I was fully invested all the way down to the stock going to near $220 when I levered it and then there was the big pop and I sold off the leverage again. So I've made money by being fully invested in the account almost all of the time, but then conjuring excess reserves out of options land when the odds got really good. Link to comment Share on other sites More sharing options...
racemize Posted March 8, 2013 Share Posted March 8, 2013 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? Link to comment Share on other sites More sharing options...
hyten1 Posted March 8, 2013 Share Posted March 8, 2013 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 Link to comment Share on other sites More sharing options...
hyten1 Posted March 8, 2013 Share Posted March 8, 2013 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 Link to comment Share on other sites More sharing options...
Liberty Posted March 8, 2013 Share Posted March 8, 2013 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? Link to comment Share on other sites More sharing options...
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