sh + investing   43

What to look for while reading the annual report? | Seeking Wisdom
Charlie Munger: Yeah. I think the set of numbers — the one set of numbers in America that are the best quick guide to measuring one business against another are the Value Line numbers.

And, if you sort of have in your head how all of that looks in different industries and different businesses, then you’ve got a backdrop against which to measure. I mean, if you’d never watched a baseball game and never seen a statistic on it, you wouldn’t know whether a .300 hitter was a good hitter or not.

Yeah. I would say that, on average, in a business, we’re really interested in, even though we know what to skip, to some extent, and what to read, I mean, it’s going to be 45 minutes or an hour on a report.

And if there are six or eight companies in the industry, that’s going to be six or eight hours, perhaps, and then their quarterlies and a lot of other — I mean, it — the way you learn about businesses is by absorbing information about them, thinking, deciding what counts and what doesn’t count, relating one thing to another. And, you know, that’s the job.
7 weeks ago by sh
xkcd: Investing
2% of $1,000 in 10 years is...$1,219
march 2018 by sh
Apple vs. Exxon Mobil | Base Hit Investing
As Charlie Munger warned in his discussion on cattle at the Berkshire AGM, it’s probably best to avoid commodity businesses that don’t produce decent returns on capital.
june 2016 by sh
Importance of ROIC: "Reinvestment" vs "Legacy" Moats | Base Hit Investing
I bifurcate the group further into what I classify as “Legacy Moats” and “Reinvestment Moats”.

I find that most businesses with a durable competitive advantage belong in the Legacy Moat bucket, meaning the companies earn strong returns on capital but do not have compelling opportunities to deploy incremental capital at similar rates.

There is an even more elite category of quality businesses that I classify as having a Reinvestment Moat. These businesses have all of the advantages of a Legacy Moat, but also have opportunities to deploy incremental capital at high rates.

Instead I’m looking for a business that actually becomes stronger as it gets bigger. In my opinion there are two models that lend itself to this kind of positive reinforcement cycle over time: companies with low cost production or scale advantages and companies with a two-sided network effect.

Charlie Munger outlined in “The Art of Stockpicking”:

“If the business earns 6% on capital over 40 years and you hold it for that 40 years, you’re not going to make much different than a 6% return—even if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you’ll end up with a fine result.”
may 2016 by sh
The Misunderstanding of Peter Lynch's Investment Style | Base Hit Investing
“I’ve never said, ‘If you go to a mall, see a Starbucks and say it’s good coffee, you should call Fidelity brokerage and buy the stock.'” – Peter Lynch
april 2016 by sh
Long-term Thinking and Back to Basics | Base Hit Investing
The average large cap stock’s 52 week high is around 50% higher than its 52 week low.
january 2016 by sh
Walter Schloss | Base Hit Investing
His typical office hours were 9am-4:30pm. He came in, looked through Value Line for cheap stocks and read annual reports. He has said that this passive style of investing has enabled him to live a low-stress life, and has allowed him to continue to invest as he got older. He said that while others had higher rates of returns at times, he was able to outlast them, and thus achieve a longer track record because his style of investing was enjoyable and easy to maintain. He contrasted his approach to that of Peter Lynch, who had to retire after 13 years of managing Magellan because he was spending so much time working and traveling, visiting companies, etc… Schloss’ style of investing could be replicated by most people, if they have the temperament and patience that Schloss had.
january 2016 by sh
Focusing on the Investment Process | Base Hit Investing
“It is the basics. It is focusing on selection, low prices, and reliable, convenient, fast delivery. It’s the cumulative effect of having this approach for 14 years. I always tell people, if we have a good quarter it’s because of the work we did three, four, and five years ago. It’s not because we did a good job this quarter.” – Jeff Bezos, 2009
business  investing 
january 2016 by sh
5 Tips to Avoid the Next Dick Smith - Forager Funds
It’s almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors).

You are reading a completely biased document.
business  investing 
january 2016 by sh
Scoring vs Learning | Seeking Wisdom
The reason is very simple. In high school my focus was to score high marks and at Stanford I signed up for the course to learn. The difference between scoring and learning is same as the difference between price and intrinsic value.
april 2015 by sh
Books I Wish I Had Read Before 20 | Seeking Wisdom
Munger: “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time – none, zero.”
january 2015 by sh
Mr Market | Seeking Wisdom
Indeed, if you aren’t certain that you understand and can value your business far better than Mr.Market, you don’t belong in the game. As they say in poker, “If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.“
january 2015 by sh
Incentive Caused Bias | Seeking Wisdom
I often see this practice in real estate property management business. Every time the owner of the property incurs an expense, he gets billed for the cost-plus-a-percentage-of cost.

I often wonder how could there be a relationship between a retail investor and his stock broker/financial advisor. The goal of the investor is to buy low cost financial products like index funds, trade less often and there by paying less in transaction costs and taxes. The goal of the stock broker is to maximize his returns by selling high cost financial products and make you trade more as his commissions depends on the volume. The goals are orthogonal.
january 2015 by sh
Rivals Outdo Gross in Bond Race - The Wall Street Journal
Purdue has a $2 billion endowment. Pimco manages 1.9 trillion.
november 2014 by sh
Inside the Biggest-Ever Hedge-Fund Scandal
cohen fostered getting insider information. went from $700 million position to $250 million short in 8 days prior to insider information being released.
october 2014 by sh
Nassim Taleb on the Notion of Alternative Histories
Not so quick. If we were wise we would not judge performance in any field by results (outcome bias).

Taleb argues that we should judge people by the costs of the alternative, that is if history played out in another way. These “substitute courses of events are called alternative histories.”

The reader can see my unusual notion of alternative accounting: $ 10 million earned through Russian roulette does not have the same value as $ 10 million earned through the diligent and artful practice of dentistry. They are the same, can buy the same goods, except that one’s dependence on randomness is greater than the other.

Commentary: Bullets are infrequent, “like a revolver that would have hundreds, even thousands, of chambers instead of six.” After a while you forget about the bullet. You can’t see the chamber and we generally think of risk in terms of what is visible.
march 2014 by sh
Warren Buffett keeps mum on stocks and successor - The Term Sheet: Fortune's deals blogTerm Sheet
Back in 2001, Buffett said investors who buy when the relationship of stock values to the economy falls in the 70% to 80% range should do well. That means stocks would have to plummet 48% before we are back in Buffett buy territory.
march 2014 by sh
Interactive Brokers
Supposedly a good/cheap broker (with an API?) recommended on HN.
december 2013 by sh
Financial Planners: Online vs. Brick-and-Mortar - Businessweek
"Online services like NestWise may not provide as much of the hand-holding as traditional advisers, but many of us may not need it. It’s not like other industries haven’t already gone through this evolution. Think I’m wrong? Ask a travel agent."

Get amounts you should put where.
december 2012 by sh
In Defense of Liquidity Rebates and other Structures in the Equity Markets | veyronb
explains that rebates are necessary because market makers have orders already on the books when markets move, so almost always "lose". however, if they didn't have orders on the books, spreads would be wider. i think.
november 2011 by sh
xkcd: Investing
froz: he decided to be good. saw some korean play fast, decided he could too, so played until he could.

always confident in himself, but when he lost, it was his fault, he needed to get better.

getting really angry with adrenaline is just chemicals. a pill can make you do the same thing. just wait and it will go away.

8 years of playing. 14 hours a day for 2 months. worked really, really hard for something. and it paid off.

starcraft makes you a decision maker. not waffling over a vs. b. choose the best right now and deal with it later.
september 2011 by sh
Who Rules America: An Investment Manager's View on the Top 1%
bottom half of top 1% (1m+) vs. top half of top 1% (30m+)
august 2011 by sh
M&T Bank Corporation - Annual Reports
Top 5 large banks have disproportionate (35%) amount of deposits, yet still make a majority of their income from trading, which is just wealth transfer and not wealth generation (loans) activities. These activities are fundamentally different from normal banks and shouldn't enjoy government/FDIC protection.
june 2011 by sh
Munger Says `Thank God' U.S. Opted for Bailouts Over Handouts - Bloomberg
now it's a really bad, but it would have been really bad without the bailout. "suck it in and cope".
may 2011 by sh
In Investing, It's When You Start and When You Finish ...
for the S&P 500, your return varies widely based on when you got in/got out.
january 2011 by sh
The best investment advice you'll never get | San Francisco online
For 35 years, Bay Area finance revolutionaries have been pushing a personal investing strategy that brokers despise and hope you ignore. -- Index funds.
november 2010 by sh
Investing for the Long Run | Yale Lecture
He emphasizes the importance of asset allocation and diversification and the limited effects of market timing and security selection.
october 2010 by sh
Rethinking Investing - Part 3 - Spotting Mistakes in Jon Stewart vs. Jim Cramer
Investing in stocks is provably not speculation. If one were to own all of the stock of a company with positive earnings, cash flow, and net worth, this ownership would have value. Thus, there is also value in a partial ownership stake in this same business. Purchasing any asset at a price less than its value is not speculation. Perceptive investors realize that they are not investing in “the market”; they are actually investing in the companies in which they hold ownership shares.
march 2009 by sh
Prepping for Warren Buffett: The Art of the Elevator Pitch (Videos) | The Blog of Author Tim Ferriss
buffett: unless you're a professional (e.g. enjoy reading annual reports 12 hours/day), go with a low-cost fund like vanguard
may 2008 by sh
opentick :: home
free real-time and historical market data for trading systems and trading platforms. over ten terabytes of historical tick data for free.
investing  programming 
april 2008 by sh
The King of Cash -
He adds up the cash paid out as dividends, cash used to buy back shares and cash used to pay down debt. The sum, expressed as a percentage of a company's market capitalization, is what he calls the "shareholder yield." A stock with a shareholder yield ove
forbes  investing 
april 2007 by sh

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