Ask Eric!

[augustabound]

One "small world" anecdote from that Microsoft job is that I met a great guy from Canada (Hamilton, Ontario)

 

I'm originally from Hamilton and knew someone who worked for Microsoft. Was his name Charles (Chuck) by chance?

 

Of course, if the answer is yes, then I'm feeding in the Canadian stereotype that we all know each other.  ;D

[ERICOPOLY]

One "small world" anecdote from that Microsoft job is that I met a great guy from Canada (Hamilton, Ontario)

 

I'm originally from Hamilton and knew someone who worked for Microsoft. Was his name Charles (Chuck) by chance?

 

Of course, if the answer is yes, then I'm feeding in the Canadian stereotype that we all know each other.  ;D

 

First name Robert, last name is a Croatian name.

 

Further information, he always says "I don't know what you're talking aboot" when he really means to say "I don't know what you are talking about".  I'm sure that will narrow it down!

 

[augustabound]

We don't say aboot in Hamilton, or Ontario for that matter. I think it's a regional thing from the east coast. Much the way y'all is typically the deep south in the U.S.

 

Unless y'all say y'all all over the U.S.?  ;D

[ERICOPOLY]

We don't say aboot in Hamilton, or Ontario for that matter. I think it's a regional thing from the east coast. Much the way y'all is typically the deep south in the U.S.

 

Unless y'all say y'all all over the U.S.?  ;D

 

It was a long running joke with him -- a few of his close buddies would say "ahboooot" and all would laugh.  Could be a mix of the Croatian influence.

[ERICOPOLY]

So I am starting to get the point here and I'm quite a bit more interested now in the value of reading 10-Ks.  It can have the same kind of fun attached to it that I had as a stress tester.  My question though -- how would I go about getting started with an education in this field if I wanted to pursue it as a formal career?  I have been a bit bored.

 

How about doing the CFA (Chartered Financial Analyst) exam?  Its self paced with 3 exams and it an excellent qualification for securities analysis work.

 

There are various websites selling study notes etc... 

 

Can someone help with pointing to a good website and set of study materials?  Online course?  Thanks.

[sswan11]

Here is the CFA Institute homepage for official registration. 

 

https://www.cfainstitute.org/programs/cfaprogram/Pages/index.aspx?WPID=Programs&PageName=Homepage

 

They have "official" study materials and a list of recommended books.  I do recall the Charles Ellis book for Exam I (but that's only one of many):

 

http://www.amazon.com/Winning-Losers-Game-6th-Strategies/dp/0071813659/ref=sr_1_1?ie=UTF8&qid=1447078131&sr=8-1&keywords=charles+ellis+winning

[ERICOPOLY]

Here is the CFA Institute homepage for official registration. 

 

https://www.cfainstitute.org/programs/cfaprogram/Pages/index.aspx?WPID=Programs&PageName=Homepage

 

They have "official" study materials and a list of recommended books.  I do recall the Charles Ellis book for Exam I (but that's only one of many):

 

http://www.amazon.com/Winning-Losers-Game-6th-Strategies/dp/0071813659/ref=sr_1_1?ie=UTF8&qid=1447078131&sr=8-1&keywords=charles+ellis+winning

 

Do these other courses make it easier to study?

 

http://crushthefinancialanalystexam.com/best-cfa-study-materials/

 

[lessthaniv]

So I am starting to get the point here and I'm quite a bit more interested now in the value of reading 10-Ks.  It can have the same kind of fun attached to it that I had as a stress tester.  My question though -- how would I go about getting started with an education in this field if I wanted to pursue it as a formal career?  I have been a bit bored.

 

How about doing the CFA (Chartered Financial Analyst) exam?  Its self paced with 3 exams and it an excellent qualification for securities analysis work.

 

This is what I used.

 

https://www.schweser.com/cfa

 

 

There are various websites selling study notes etc... 

 

Can someone help with pointing to a good website and set of study materials?  Online course?  Thanks.

[vinod1]

Here is the CFA Institute homepage for official registration. 

 

https://www.cfainstitute.org/programs/cfaprogram/Pages/index.aspx?WPID=Programs&PageName=Homepage

 

They have "official" study materials and a list of recommended books.  I do recall the Charles Ellis book for Exam I (but that's only one of many):

 

http://www.amazon.com/Winning-Losers-Game-6th-Strategies/dp/0071813659/ref=sr_1_1?ie=UTF8&qid=1447078131&sr=8-1&keywords=charles+ellis+winning

 

Do these other courses make it easier to study?

 

http://crushthefinancialanalystexam.com/best-cfa-study-materials/

 

I can comment on Kaplan/Schweser as I have used them. They are pretty good to get to the gist of the issue and they have examples/questions that would get you most of then finer points that you need to understand.

 

You can pass the exam entirely using these notes but just if you are interested you can read the CFA official material as well.

 

I even refer to some of the Kaplan material occasionally as a quick refresher and would recommend it if you want to give CFA a shot.

 

Vinod

[vinod1]

Also if you are just interested in reading 10-K's you can just buy Level 1 and Level 2, Kaplan's Book #3 "Financial Statement Analysis". You can get second hand copies from Amazon or Ebay.

 

Although I think these are pretty basic for you for the most part and would be a quick read.

 

Vinod

[hyten1]

did a search online found this http://nuclear868.net/store/cfa/

 

 

[leeway]

I passed cfa tests 3 years in a row by mostly just taking a week off before the tests and doing the past exams. It was quite some years ago, so not sure if the tests get harder

[philippoc93]

Hi Everyone,

 

Pretty new to the forum, but am loving it so far. There is so much wisdom and knowledge to be studied, which brings me to my question:

 

Eric...if you could recommend 5 threads to read inside out 10x over, what would they be?

 

I have already read this thread numerous times, but would like to learn/study more options material. I come from an engineering background, and love thinking in terms of risk, probability and how to practically execute on a successful asymmetric investment strategy. 

 

Thanks in advance and I hope the surfing is going well. If you're ever in Ireland, hit up Lahinch on the West coast of Clare. You won't be disappointed.

 

 

[ERICOPOLY]

Well, I put my socks on one at a time too.

 

Two years ago I sold all my BAC above $17 in our Roth IRA accounts.  I held on in my taxable account because I couldn't bring myself to share 1/3 of the gains with people who didn't put up any of the capital at risk.

 

During that time, I borrowed $1m against it to buy 1/3 of my home in Montecito, and spent a good deal on top of that.  You know, it's easy to spend $500k when you aren't working and you have a $2m mortgage.  Especially when your friends have a lot of money too.  After paying for our new house (I'll get to that in a minute), most of what is left in that account will settle the tax bill.

 

So the stock doing what it is, we're renting out the Montecito house and moving to a lower-burn-rate jurisdiction.  So a few weeks ago we paid cash for a house in Granite Bay (near Sacramento) -- no mortgage this time.  It is 5 acres, 4,200 sqft, good public schools, and yet costs 1/3 as much as the other one.  Well, it's easy to save money when you are leaving Montecito. 

 

At one point in early 2014, our Roth IRAs were jointly worth $10m.  Then a month later $9m.  At that point I decided to move it over to Sanjeev/Alnesh and Mohnish to manage.  Then a year later, back to $10m.  Now, probably worth about $7.5m or so... maybe $8m.  I dunno.  Market does what it does.

 

So the plan is to now try to earn a living and minimize what we withdraw from those IRAs.

 

It's difficult to feel like a loser with roughly $9m or $10m in assets, but somehow I do a bit.  Maybe it's because I feel like that that makes me a loser.  It's going to take a bit of time to mentally reboot.

 

Once the kids finish school we can "retire" back to the Montecito house if the Roth IRAs do alright going forward.

 

What a mess moving is.  And to top things off, I injured myself again -- had the MRI done on my left elbow this time... got the results back today -- only 20% of my "ulnar collateral ligament" is still attached.  I'm told not to carry anything heavier than a cup of coffee for 3 months.  Great...  and moving in 2 months? 

 

When it rains, it pours.

[muscleman]

Eric, sorry to hear that you got the Elbow injured! Hope you feel better soon.

 

What was the reason to move money management to Pabrai and Sanjeev? You have done a great job on that and doing much better than they did.

[Picasso]

Eric, I'm curious.  If you have close to $10 million of tax-free Roth money, why not just put it in a bunch of corporate bonds you feel comfortable with?  It's like getting a 6% tax-free muni bond.  You've already "won" so to say, it doesn't seem like you need to take on a ton of risk to live a nice life.  Definitely not necessary to be holding a bunch of GM, Fiat or Horsehead type risk.

 

And secondly, how do you feel about the composition of Pabrai's portfolio?  Almost everything in there seems to be on the wrong side of history.  It's hard not to be a back seat driver as an investor in his fund, but I would have serious second thoughts as a Pabrai LP.  Are you simply okay with his process and think he'll figure this out or make yet another adjustment with his process while his LP's pay the price for seemingly learning on the fly?

[ERICOPOLY]

Eric, I'm curious.  If you have close to $10 million of tax-free Roth money, why not just put it in a bunch of corporate bonds you feel comfortable with?  It's like getting a 6% tax-free muni bond.  You've already "won" so to say, it doesn't seem like you need to take on a ton of risk to live a nice life.  Definitely not necessary to be holding a bunch of GM, Fiat or Horsehead type risk.

 

And secondly, how do you feel about the composition of Pabrai's portfolio?  Almost everything in there seems to be on the wrong side of history.  It's hard not to be a back seat driver as an investor in his fund, but I would have serious second thoughts as a Pabrai LP.  Are you simply okay with his process and think he'll figure this out or make yet another adjustment with his process while his LP's pay the price for seemingly learning on the fly?

 

Really, what worries me is his public speaking -- I worry that if you do too much of that, teaching your "wisdom" to others, then you can adopt a sort of new identity, and one that may not be conducive to the type of meditative undisturbed thought that is required of investing.  You become sort of celebrated.  Anyways, I think the best way for him to avoid that is to decline invitations to situations where you have the adoring fans hanging on every word.  The stock tip in the wallet is something that I would nix if I could do so.  Just try to be more disappearing.  I favor Sanjeev in that regard, because he doesn't do that kind of thing and his results are great.  I think it probably helps him make decisions without the brains other hazards getting in the way.

 

Not that we're talking about him, but I simply was floored when I once heard Guy Spier being interviewed and he started talking about his amazingly high intelligence.  It's just against my religion to ever utter something like that.  Anyways, that's only somewhat related because they're buddies.

 

 

[stahleyp]

Hey Eric,

 

sorry to hear about the injury (and that you might be going back to work).

 

Are you doing a 72T on the roth money? If not, are you paying taxes on the gains?

 

 

[ERICOPOLY]

Hey Eric,

 

sorry to hear about the injury (and that you might be going back to work).

 

Are you doing a 72T on the roth money? If not, are you paying taxes on the gains?

 

It's been more than 5 years since the Roth conversions, so we have some penalty-free and tax-free money to withdraw first.  We could go the 72T route later.

[muscleman]

Eric, I'm curious.  If you have close to $10 million of tax-free Roth money, why not just put it in a bunch of corporate bonds you feel comfortable with?  It's like getting a 6% tax-free muni bond.  You've already "won" so to say, it doesn't seem like you need to take on a ton of risk to live a nice life.  Definitely not necessary to be holding a bunch of GM, Fiat or Horsehead type risk.

 

And secondly, how do you feel about the composition of Pabrai's portfolio?  Almost everything in there seems to be on the wrong side of history.  It's hard not to be a back seat driver as an investor in his fund, but I would have serious second thoughts as a Pabrai LP.  Are you simply okay with his process and think he'll figure this out or make yet another adjustment with his process while his LP's pay the price for seemingly learning on the fly?

 

Really, what worries me is his public speaking -- I worry that if you do too much of that, teaching your "wisdom" to others, then you can adopt a sort of new identity, and one that may not be conducive to the type of meditative undisturbed thought that is required of investing.  You become sort of celebrated.  Anyways, I think the best way for him to avoid that is to decline invitations to situations where you have the adoring fans hanging on every word.  The stock tip in the wallet is something that I would nix if I could do so.  Just try to be more disappearing.  I favor Sanjeev in that regard, because he doesn't do that kind of thing and his results are great.  I think it probably helps him make decisions without the brains other hazards getting in the way.

 

Not that we're talking about him, but I simply was floored when I once heard Guy Spier being interviewed and he started talking about his amazingly high intelligence.  It's just against my religion to ever utter something like that.  Anyways, that's only somewhat related because they're buddies.

 

Well, Sanjeev's record is far less outstanding than your own. Why not keep doing it yourself? :)

[ERICOPOLY]

Eric, I'm curious.  If you have close to $10 million of tax-free Roth money, why not just put it in a bunch of corporate bonds you feel comfortable with?  It's like getting a 6% tax-free muni bond.  You've already "won" so to say, it doesn't seem like you need to take on a ton of risk to live a nice life.  Definitely not necessary to be holding a bunch of GM, Fiat or Horsehead type risk.

 

And secondly, how do you feel about the composition of Pabrai's portfolio?  Almost everything in there seems to be on the wrong side of history.  It's hard not to be a back seat driver as an investor in his fund, but I would have serious second thoughts as a Pabrai LP.  Are you simply okay with his process and think he'll figure this out or make yet another adjustment with his process while his LP's pay the price for seemingly learning on the fly?

 

Really, what worries me is his public speaking -- I worry that if you do too much of that, teaching your "wisdom" to others, then you can adopt a sort of new identity, and one that may not be conducive to the type of meditative undisturbed thought that is required of investing.  You become sort of celebrated.  Anyways, I think the best way for him to avoid that is to decline invitations to situations where you have the adoring fans hanging on every word.  The stock tip in the wallet is something that I would nix if I could do so.  Just try to be more disappearing.  I favor Sanjeev in that regard, because he doesn't do that kind of thing and his results are great.  I think it probably helps him make decisions without the brains other hazards getting in the way.

 

Not that we're talking about him, but I simply was floored when I once heard Guy Spier being interviewed and he started talking about his amazingly high intelligence.  It's just against my religion to ever utter something like that.  Anyways, that's only somewhat related because they're buddies.

 

Well, Sanjeev's record is far less outstanding than your own. Why not keep doing it yourself? :)

 

Well, if you use leverage and concentration and the stock moves favorably, you can do much better than Warren Buffett. 

[ERICOPOLY]

It takes a lot of energy to send a rocket up into space... so my leverage and concentration was necessary.

 

It takes very little energy to keep it in orbit. 

[ERICOPOLY]

They put limits on what expenses you can deduct when you are a homeowner.  So you can deduct interest up to the first million of mortgage principle, but the rest of the interest must be paid after-tax.  They put limits (AMT) on your property taxes.  They make you pay for repairs out of pocket, and they give you nothing for depreciation.  You can't deduct for the pool guy, or the gardener, or the irrigation bill.

 

However that completely changes when you move out of the house and sign it over to a tenant.

 

So the house immediately becomes much more affordable, as far fewer taxes are paid.  Soon we will qualify as "real estate professionals" and therefore the expenses that we can carry against our other income will not be restricted.

[Cardboard]

This is what comes to mind sometimes when I think of buddy Ericopoly:

 

[Patmo]

I too picture Ericopoly as a 20 year old tattoo-faced black dude from the ghettos of Miami