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Are you retired? Living off your portfolio? Then please take the poll and help us all understand your normal percentage allocation to stocks.
My Equity ratio less than 50%.
I'm about 50% Equities and 50% Bonds, cash and other
I'm 50% to 75% equities and depend on timing
I'm greater than 80% equities and depend on timing
I'm greater than 60% equities and don't time the market

Click here to see results so far.

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Are you going to publish results?

Another question could be how many depend on timing only, How many on MI only and how many on MI + timing
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An interesting companion poll might be along these lines:

I know bonds all have a negative expected real return at prevailing prices.
i.e., by holding them I'd be paying someone to take my money from me.
My allocation is....

(a) zero
(b) some
(c) lots
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Zero - But do have a little in an ETF that shorts treasuries
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Well, if you do not time, you should not be in equities at all. Everything has a time to sell and to buy.
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I consider "safe" bonds like treasuries and AAA corporates as very unsafe (except very short term bonds). They are pretty much "guaranteed" not to maintain purchasing power.
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Well, if you do not time, you should not be in equities at all. Everything has a time to sell and to buy.

I do not look at it that way. I think everything has a price at which to buy and a price at which to sell. And those prices may need to be adjusted from time to time, but very seldom more often that when 10K and 10Q reports are released.
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Well, if you do not time, you should not be in equities at all. Everything has a time to sell and to buy.

I also don't look at it that way.
Rather than timing things (which implies a forecast about price
movements after the date) one could alternatively price buys and sells.

e.g., one might reasonably conclude that Berkshire Hathaway stock is
worth somewhere in the rough vicinity of $185000 a share these days.
By extension the stock is a great deal at $135000 a share and not a
very good deal at $235000 a share. Selling at $235k or buying at $135
does not involve what would would call stock or market "timing",
merely reacting to prevailing price and price/value considerations.

One can certainly use timing signals to further stack the deck in your favour,
but that isn't really necessary. When the price of something you own starts
to get above any reasonable estimate of fair value it makes no sense to hold it longer
unless perhaps you have a clear idea of tax advantages of extremely long holds.
You don't have to have any clue about where the price is going next for that to be sensible.

If you never buy anything that is priced at a price above its long run
expected average valuation multiple and never sell anything at a price
below such a multiple, and you merely mostly pick things that don't
ever drop in value, you can do pretty well over time.
You only need to know how to value a tiny number of companies, but you
really need to know that you don't know how to value most of them.
The more companies and industries I study, the more I learn, but also
the more I realize how little I know. I've ditched a lot of companies
from my portfolio in the last few years because I once thought I knew
what made them tick but on further reflection decided I didn't really.
Stick to the few businesses whose economics you can really understand, or stick to quant techniques.
Nobody who doesn't really know how to value a business should ever buy its
stock except as part of a diversified "shotgun" approach as a defense against that ignorance.

Jim
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You only need to know how to value a tiny number of companies, but you really need to know that you don't know how to value most of them.

Stick to the few businesses whose economics you can really understand, or stick to quant techniques.
Nobody who doesn't really know how to value a business should ever buy its stock


That's certainly one way to do it. But we're not buying the company, we're buying stock in the company.

"To the dismay of many, stock prices are under no obligation to respond in kind to improvements in fundamentals in any predictable time frame. Beside fundamentals, there are a host of other factors (rational and irrational) that influence the actions of buyers and sellers in the marketplace. A narrow focus on fundamentals can leave one frustrated.”

"Prices don’t change when fundamentals change. Prices change when expectations and perceptions change and they could change for various reasons. the main indicator that signals changes in expectations is price."

"Graham's “margin of safety” assumes that you can actually buy securities for less than they are worth. In other words, you need to know that in advance and others don’t. ... Graham’s “margin of safety” assumes you are right to begin with. So your risk management is achieved from paying a price so much lower than true value that you have room (a margin for error). That may have been more possible prior to 1934."

You make firmly believe that BRK's "correct" value is $185K, but Res tantum valet quantum vendi potest (A thing is worth only what someone else will pay for it.)
My investment club was once utterly convinced that Riblett was worth $6. But we eventually sold it for 5/16 because that's all that we could get.
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You may firmly believe that BRK's "correct" value is $185K, but Res tantum valet
quantum vendi potest (A thing is worth only what someone else will pay for it.)


It's in Latin, and I like Latin—I studied it for years—but it's still simply wrong.
The value of something is not the best offer available, but rather the present value
of what it will bring if sold the next time you get a fair offering price for it.
That's coincidentally about equal to the present value of all future possible cash distributions.
As you note, "stock prices are under no obligation to respond in kind
to improvements in fundamentals in any predictable time frame".
The simplest solution to that problem is not to ignore valuation, but simply to
exhibit the amount of patience that is required. Who needs predictability of time frame?
The last few millenia have demonstrated that it is safe to assume that
every business is fairly priced from time to time and the wait is
essentially never too long to make it worthwhile.
Indeed, if it's a decent growing business, the longer the better.

Provided you have a sufficient time horizon, the only risk (one, 1, singular) in owning
any non-overpriced stock is a deterioration in the prospects of the underlying business.
Everything else is transitory, so you just wait it out.
Pretty much every security's market price passes through fair value at least
once in a while. The wait is longer than 5-7 years so rarely that it can be ignored.
Anybody owning equities with money they might need in under 5 years is a fool, so this is no extra burden.

It's true I might be worse at valuing something than I should be, but
that's an entirely different risk. Hence my emphasis on sticking to the few
individual securities for which I think I have the valuation expertise,
or shotgun investing which includes all quant and MI approaches as well as indexing.

Sure, if you can pick things that will be fairly valued sooner rather
than later you'll do better, and picking things that pass through
fair value frequently is better than picking those that don't.
Attempting those things is certainly time well spent.
If you're good enough with predictions you can in theory even get away with
buying things that are not underpriced, but that's a skill that is very
unreliable—the process is unrepeatable to an unknown degree.
Like real estate investment, the most reliable approach requires only the
ability to do a "pretty good" valuation of some subset of securities and some patience.
It's easier in stocks than in real estate because a much smaller subset
of the market participants is even interested in valuation levels.
(your quote makes me suspect you are one such person not interested in value,
which means if I merely exhibit some patience you make the ideal counterparty).
If somebody offers me $1000 for my house tomorrow, that doesn't mean
it's worth $1000. I just say "no thanks". Same thing with the prices of my stocks.

Alas, not many of the stocks I own are breathtakingly undervalued.
At best I have stocks that are depressingly close to fair value but at least likely
to rise in observable value at a better-than-average pace in the next few years.

None of this suggests that quant investing or MI are a bad idea.
I think they are entirely sensible, since they rely on averages.
But I don't think anybody should select and purchase any individual
stock unless they know how to value that specific stock with passable
reliability and have the patience to wait for a fair offer for it.
This rule of thumb rules out all stocks representing businesses which
themselves are not reasonably predictable, and it rules out all individual
stock purchases as sensible choices for the vast majority of individual
investors since most investors have no idea how to value any stock.

Jim
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Thanks to all that participated. For me, there a couple of interesting notes. First of all, Mungo brings up such an interesting point. If bond type instruments are your alternatives with a guaranteed loss ..then where will you invest? Cash is nice in a bear market but it doesn't yield so you are left with little choice.

Also. for ep0001's reply of "zero" equities. That must be a practice of sell in may and go away? Why else would you have no equities?

The unexpected result for me was the high number of people in the last category that don't rely on market timing. They must always believe in the eventual market recovery. It's just that when you are retired, I think that takes nerves of steel. After all, it might be the difference of going back to work or not. Or perhaps they have so much money, that losing a lot of it ..well it just doesn't matter.
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What surprised me most was the number of forum members who have taken part in the poll, 50+ respondents---currently retired. For someone who just opened a retirement account less than a year ago (age 35 :<), I find myself in the minority. It is heartening to see that many seasoned members have stuck with quant investing and timing techniques through thick and thin. I only hope I have as much perseverance and endurance.
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Provided you have a sufficient time horizon, the only risk (one, 1, singular) in owning
any non-overpriced stock is a deterioration in the prospects of the underlying business.
Everything else is transitory, so you just wait it out.


That, or find a way to benefit from the meaningless fluctuations.
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it might be the difference of going back to work or not.

Yes and at my age, the option of going back to work is not really an option. Ever hear of age discrimination? Technically illegal in many places, but common none the less. My former employer had an early retirement plan to get senior members of staff to retire early. They then hired young recent college graduates to take their place, since they could be paid less. And many they did not hire at all. They employed contractors who they could pay still less. At some point you cannot afford to work at such a place.

Maybe I could go to work as a greeter at Home Despot or Wal-Mart, but I do not know if I could afford that. And perhaps they would think I was just there for the benefits.
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I thought I was saying "zero" bonds. I do have equities. Sorry for the confusion
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It's just that when you are retired, I think that takes nerves of steel. After all, it might be the difference of going back to work or not. Or perhaps they have so much money, that losing a lot of it ..well it just doesn't matter.

This brings to mind a thread on another board about Indexed Universal Life policies. One proponent was aghast that anyone would voluntarily invest in S&P500 B&H instead of an IUL, when the S&P subjects you to a occasional 50% loss and the IUL stays steady with no loss ever. She used the same "nerves of steel" phrase.

When it was pointed out to her that the S&P portfolio dropped from $700K to $350K whereas the IUL stayed steady at $128K, she still didn't get it.

IMHO it's readily possible to have a $2M portfolio when you retire after a working lifetime. With that size a portfolio, yeah, it's pretty easy to glide over the bumps.

They must always believe in the eventual market recovery.
Pull up a max-time chart of the DJIA or the S&P500. Can you spot *any* dip that didn't recover? Me neither.
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If bond type instruments are your alternatives with a guaranteed loss
..then where will you invest? Cash is nice in a bear market but it
doesn't yield so you are left with little choice.


Equities and cash are the only choices both obvious and sensible.
Even mildly overpriced equities are arguably better than bonds.
I suspect a good allocation to zero return cash will have a great return
if it's deployed somewhere vaguely near the bottom of the next bear,
even counting how many years that might take.

I say "obvious" above because there are always the non-obvious things.
Buy rental properties in Frankfurt?
(house prices now rising after a 30+ year bear market)
Buy a fast food franchise?
Become a shadow banker in China? A great read: http://www.bloomberg.com/news/2013-07-08/why-i-became-a-chin...
The PIA factor comes to dominate these choices quite rapidly.

Personally I just delegate management of half my assets to the nice folks over at Berkshire Hathaway.
http://stonewellfunds.com/FiveYearRollingComparison.jpg
That's dead easy, except for the 2+ years full time I've spent analyzing them.

Jim
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I use a rule of thumb of 110 - my age = % in equities. Of course this varies as my portfolio changes but I try to rebalance to this target periodically.
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Old rule was 100 - age. Several years ago, a local conservative financial advisor stated that with increasing ages, 120 - age is a good rule
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I suspect a good allocation to zero return cash will have a great return
if it's deployed somewhere vaguely near the bottom of the next bear,
even counting how many years that might take


Would love ti*o know when the next bear bottom is

Personally I just delegate management of half my assets to the nice folks over at Berkshire Hathaway.<b/>

Do you do any timing with this? Periodically reallocate? I know Buffet has had a great record, but ...
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Would love to know when the next bear bottom is

Wouldn't we all? Both the date and the index level would be nice.
Nobody knows those things yet, but we can at least guess when the signs are prominent.
Last time I was only off by 3 days, not too bad. http://boards.fool.com/a-bottom-27491607.aspx
I'd say that was about 20% skill and 80% luck.

Do you do any timing with this? Periodically reallocate? I know Buffet has had a great record, but ...

Not much in the way of timing it, but I do price it, buying more on dips
and sometimes lightening up on strength.

The price-versus-value equation got so extreme a year or two ago that I sold essentially
all my stock and put the money (half my liquid net worth) into BRK call options.
Deep in the money, so very low leverage, but still a big bet.
This is why I am now buying myself a nice new car.
Easily my best year since the tech bubble and the only reason I did
well that time was because I wasn't able to sell my stock as soon as I wanted.

I estimate Berkshire's fair value is in the 1.46x book to 1.81x book range these days.
http://boards.fool.com/significantly-understated-proxy-30769...
The high number is sensible and defensible, the low number is definitely conservative.
The current price is 1.44x end-March book/share, I'd guess around
1.4x end-June book which is not yet known.
In the last five years fair value has risen around 4.9%/year faster
than SPY total return, estimating fair value based on investments
per share and K * pretax income on all the operations other than investments.
I expect the BRK advantage to be higher than 4.9%/year in the next ~five
years because BRK's value will probably drop less than SPY will in the next bear.
Right now Berkshire is slightly to moderately undervalued at $172.6k
and SPY is substantially to extremely overvalued at $165.19 so mean
reversion would suggest more than the usual level of outperformance for a while.

Jim
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Jim -

When you talk about the Berkshire stock and how you expect it to behave in the future, you cite data regarding the "A" shares. In your opinion, will the "B" shares perform in a similar manner?

While theoretically, I could afford to buy one or two "A" shares, no way am I going to put that much money in one company - even Berkshire. But I would give consideration to some reasonable number of "B" shares.
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In your opinion, will the "B" shares perform in a similar manner?

Definitely.
Just divide everything by 1500.

One A is economically equal to 1500 B shares, but has slightly more voting rights than 1500 B shares.
Since none of us is likely to have enough shares to sway any big votes,
they are for all intents and purposes the same.

Surprisingly, the big advantage to the A shares is that they are a little harder to trade.
Thus you don't trade, and build up the advantages of not doing stupid things
trying to outguess the market. Lots of deferred tax benefits for most people, too.
I (and many of my friends) have more than one brokerage account, and it
seems to be an invariable rule that the one with the lower turnover does better.

Berkshire is not going to be the best performing stock in the next decade.
But it's going to be the most bullet proof of all the ones I'm nearly
100% sure will outperform the broad market by a material amount.
Flipped around, it's likely to be close to the best performer among the
firms that I'd consider pretty predictable and essentially bullet proof.
Some people might name other firms, but it's an interesting way to think about the "best" stock to own.
Predictability is very much more important than most people realize;
look for the business whose nearly-worst-case ten year scenario is most profitable.

Jim
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Market cap of the 'B' shares is only 118 million? Is there ever a liquidity issue?
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Oops 189 M.
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Market cap of the 'B' shares is only 118 million? Is there ever a liquidity issue?

That is Yahoo data. MSN Money gives mkt cap at 268 billion
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Market cap of the 'B' shares is only 118 million? Is there ever a liquidity issue?

Most data sources miscalculate the market cap and liquidity because
they don't handle the two share classes correctly.
Liquidity of the B shares is definitely not a problem. They traded 2.6m B shares today = $300m.
But only around 311 A shares traded (still $52m worth).

Surprisingly it's the 3rd biggest public company in the world by market
cap after Apple and Exxon (as of end March).
But that can change. Apple and Exxon are quite a bit larger, but
there are several companies only a whisker smaller.
Petrochina, Walmart, GE, Microsoft, IBM, Nestle, Chevron are all within 10%.

Jim
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This is why I am now buying myself a nice new car.

Ferrari F12 Berlinetta ?
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Ferrari F12 Berlinetta?

Nah, too flashy.
I'm thinking of maybe a nice Jag.
Ferraris are for people who still have hair.

Jim
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I've read the new Jaguar F-type is really nice!
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My former employer had an early retirement plan to get senior members of staff to retire early. They then hired young recent college graduates to take their place, since they could be paid less. And many they did not hire at all. They employed contractors who they could pay still less. At some point you cannot afford to work at such a place.

It is almost never cheaper to hire contractors than employees. Even allowing for employee pension costs.

However it is much easier to get rid of contractors than employees.
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I'm thinking of maybe a nice Jag.

Tata has ruined the marque.

Eric Hines
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"I'm thinking of maybe a nice Jag."

Tesla-http://www.teslamotors.com/

(probably not available in Europe though :-(

Ward
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Tata has ruined the marque.

I just blame it on the modern world.
Too wide, too heavy, too soft, and [ugh] they're all automatics.
Hmmm, how about a restored Series I E-Type with a 6-speed manual and modern mechanicals...
http://i.telegraph.co.uk/multimedia/archive/01669/Jaguar-E-t...

Jim
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Series I E-Type and modern mechanicals!

I'd put a lot of emphasis on the modern mechanicals. I had a friend who had one back in the late
60's. The engine and power train were ok but otherwise it was one minor repair after another with unavailable replacement parts. A beautiful car but the reputation of the most unreliable was well deserved.

A 1969 owners survey by Road & Track revealed that there is justification for the E-Type's reputation. Nine specific problem areas were reported by more than 10% of owners, more than for any other car.
http://www.web-cars.com/e-type/ownership.php

RAM
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Hmmm, how about a restored Series I E-Type with a 6-speed manual and modern mechanicals...

In addition to being the most beautiful car ever, it's a great conversation starter. "Hey Jim, how did you scrape together enough to buy that?"

Neil
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In addition to being the most beautiful car ever, it's a great conversation starter. "Hey Jim, how did you scrape together enough to buy that?"
But that's only from people who know about cars.

Another good conversation starter was people at work coming up and asking, "How can you afford to retire when you're only 58?"
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Another good conversation starter was people at work coming up and asking,
"How can you afford to retire when you're only 58?"


I do get that question, but not at work : )

Jim
(not 58 yet)
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I use a rule of thumb of 110 - my age = % in equities. Of course this
varies as my portfolio changes but I try to rebalance to this target periodically.
...
Old rule was 100 - age. Several years ago, a local conservative financial
advisor stated that with increasing ages, 120 - age is a good rule


To me a better rule would be based on the trend earnings yield, not your age.
(trend earnings yield being cyclically adjusted broad market earnings
divided by current price, e.g. 1/CAPE).
http://www.smithers.co.uk/page.php?id=34

If the cyclically adjusted earnings yield [on your portfolio] is under 3-4% it's probably
wise to have essentially no equities, and if it's in the 13-18% range it
probably makes sense to have 80-90% equities.
But that approach still doesn't take into account the yields on competing assets.
A 5% CAPE yield on equities deserves a small allocation if you can get 5%
on TIPS, but a big allocation if you can get only negative returns on bonds and cash.
(unless you can think of something better)

So, beyond the cash one needs in the next while, to me the sensible asset
allocation is a function of the real expected returns for each possible asset.
http://www.zerohedge.com/news/2012-10-15/timberrrrr-will-be-...
Any formula that puts you more than 0% in mainstream bonds right now would be a bad formula.

Jim
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Nah, too flashy.
I'm thinking of maybe a nice Jag.
Ferraris are for people who still have hair.


So buy yourself some nice new hair to go with the nice new car.

- Jamie
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So buy yourself some nice new hair to go with the nice new car.

I see a flaw: Drive fast in a convertible and your toupee will blow off.
I'm more of the "retreat and declare victory" school.
As I keep my head shaved, who really knows how much hair I can grow?
Besides, better aerodynamics that way.

Actually I did look at two Ferraris, one old (too impractical) and one new (way too wide).
So long as they don't ever again make a reasonable width car I'll continue to save a bundle.

Jim
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So long as they don't ever again make a reasonable width car I'll continue to save a bundle.

http://www.lotuscars.com/us/our-cars/current-range/evora-ran...

Or if you're married to a drop-top

http://www.lotuscars.com/us/our-cars/current-range/elise-ran...

Eric Hines
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Nah, too flashy.

Back in the 1960s, when I could still afford to, and when I did not live in New Jersey, I used to drive sports cars. My parents never owned a car and neither knew how to drive. So they could give no advise on the subject.

My first car was an Alfa Romeo Giulietta Spider, and my next three were also.
The first was a robin's egg blue, the second was charcoal black, the third was a Red Giulia. I got a bunch of tickets with it.
Then I got a red Lotus 26 Elan. Maximum tickets. I then got a green Lotus 26 Elan hard top: no tickets. I did not drive any better or worse. But no tickets. I have never gotten a red car since. I do not believe I have gotten a moving violation in the last 30 years or so. But living in New Jersey, driving is no fun, so I immediately got my miles per year down under 25,000 and since I retired, I have it under 10,000 miles per year. This reduces my ticket exposure.

But with the Elans, that was a pretty closely controlled experiment (that I did not actually do as an experiment) that showed at least that the way I drive (whether good or bad) green cars get less tickets than red cars do.

Now one data point hardly qualifies as statistically significant. But unless someone wants to send me LOTS of money, I hope to get no new cars until 2028, and if I am still alive, I am not sure I should be driving after that, so I may never get another car.
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It is almost never cheaper to hire contractors than employees. Even allowing for employee pension costs.

When I was there, they had a very good defined benefit pension plan, a good 401K (1:1 match), and a good medical benefits plan (much better than Medicaid).

Later on they went to underfunding the pension plan (they did not get in trouble for that because they could assume the rate of return for the investments in it and all they had to do is find an ignorant actuary, or a corrupt one, to say that they expected to get an unrealistically high rate of return so that legally, it was not underfunded.

But then management went downhill. They ended up with so much debt that they had to sell off part after part of the company just to keep up with the interest payments, until there was very little productive capacity left. They were then bought up by another (Eurepean, in this case) company who is having financial difficulty too. And I do not know if anyone would want to buy them out.

I never saw the company's books, so I have no idea if they actually saved any money by getting rid of the employees and replacing them with contractors. They said that would be the case, and since the management was replaced by bean counters, I would expect that they would have known. It was surely easier to get rid of the contractors, and they would get lower priced contractors (no pensions, no 401(k)s, no medical benefits, and lower salaries), I imagine they could have got lower labor costs. Upper management got bonuses and high salaries for improving productivity even though the company lost billions at times. Its name survives because another company that bought some of its assets got the trademark as part of the deal. But the actual company no longer survives.

Think about it: if you lay off all the employees except the CEO, the productivity gets very high. But you produce nothing, so what does it matter?
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Both of my Lotus Elan (26) cars suffered from what got to be called The English Car Disease. They cost about US$4000 new in those days, and required about $200/month in maintenance in those days. A biggie was the need to replace starter motors (worn teeth on the pinion) and flywheels (missing teeth). Another problem was the linkage between the gas pedal and the carburettors. That design was pretty amusing unless it disconnected as you were pulling onto a limited access highway and the engine instantly dropped to idle. And then when the brake cylinders would freeze up full on because the boots that kept the salty water from the roads off the pistons perished because they could not tolerate a little road salt or acid rain or whatever. And in New Jersey it ate park Plugs. I always kept a set of new ones in the trunk along with a tool kit that had a torque wrench and a spark-plug socket. Because if I drove around town, it needed the hottest spark plugs you could get to keep from fouling, but if I took it on the Parkway or Turnpike, it fried those. I finally put electronic ignition in there so it could take colder plugs for local driving.


Anyway, they just would not last more that 3 years unless you had someone like Jeff Donahue (I do not remember the spelling) as a live in mechanic to keep them running. As one Lotus mechanic said, Colon Chapman did not make cars that had to go over 560 miles between rebuilds, and said if a car could complete a victory lap, it was overdesigned. OK for racing, but not much good for driving on the street.

I lived in Buffalo N.Y. when I got my first one and the nearest mechanics that could work on them were in Millerton NY, and in Manhattan. So I bought the shop manual for it, and that was very helpful. I had to get a tool for balancing dual Weber carburettors, a timing light, torque wrenches, etc.

About that shop manual.

It had some problems listed and what to do about it. I just about fell off my chair when I read

Bent connecting rods. They should be straightened or renewed (i.e., replaced). Imagine that!!! R&R engine $250. Open up the bottom, get the crankshaft out. Get the pistons out, STRAIGHTEN the connecting rods, and reverse, then put the engine back in. How much do new connecting rods cost? Straightening a bent on would save how much. Are they made of a miracle alloy steel that does not fatigue? Whey did they bend in the first place? They also say to rebuild the engine every 25,000 miles. In USA with a car like that, that would be every year!!!

I have this image of the typical English car driver:

1.) Every Saturday, push the car out of the garage. Wash the car, dry the car, was the car, push it back into the garage.

2.) Every Sunday, push the car out of the garage. Wash the car, dry the car, was the car, push it back into the garage.

3.) Monday through Friday, take the bus to work.

What are they thinking of?

So have Lotus fixed these issues?
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And you owned 4 of them??? Must have been a lot of fun when running correctly, sounds like a corvette I owned about 35 years ago!
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Colon Chapman...

Freudian misspelling of Colin?

What are they thinking of?
So have Lotus fixed these issues?


They were actually pretty good engineers even back then, though...quirky.
It's just that the company was always broke.
They did eventually fix the issues, when they were bought by GM.
When the Elise was introduced it went through the same reliability
torture test cycles as any other GM car, and they were robust.
I don't know about the most recent ones, but it certainly isn't the bad old days.

But it did take a while to get to that point.
I had a Series I Lotus Esprit once. Spectacularly beautiful, absolutely
flawless condition. It had never been wet. Both I and the original
owner would crawl into the engine compartment and clean the suspension
members with Windex. But the reliability? Ah, well.
The Series I cars should really have been called test mules, as they
couldn't afford to build any prototypes before shipping them to hapless customers.
If both I and the passenger hit the electric window at the same time
the engine would die, every time. Stressed drive shafts and inboard
brakes could perhaps be considered exotically efficient rather than daft,
but the car (remember, this was essentially the best specimen in the world)
left me on the side of the road fully half the times I drove it.
I had to rebuild the engine after a coolant leak that didn't register
on the heat gauge until it was too late. *shudder*.
This process took so long and required garages so dodgy that the
mechanics stole parts from my car while it was there, never telling me,
or replacing them, or even admitting it. (they're still in business www.caliberauto.ca )
Pretty funny the first time I drove in the dark and tried to turn on the no-longer-existing headlight switch.

I'd be willing to trust the new cars, but I don't really desire one.
The new Evora is again just too physically bloated for me. It's wider than a Corvette!
With narrow roads and 200-220cm wide parking spots it's a big deal.
A friend of mine with a BMW 3-series convertible has an assigned parking spot
so narrow he has to leave the roof open and climb out over the hood every day.
That must be quite the sight in his banker's suit and briefcase.

Jim
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And you owned 4 of them???

No: just two; one at a time.


Must have been a lot of fun when running correctly, sounds like a corvette I owned about 35 years ago!

It was fun driving the first one in western New York state. I used to go on a sports car rally every weekend. They handled beautifully. The second one I had in New Jersey. Driving is never fun in New Jersey. I moved here in about 1965. I have been on one sports car rally in that whole time. It was awful, the rally master did not even know how to run a rally. You had to follow the route, and he scored it by the fact they wrote down your odometer reading at the beginning and at the end, and whoever got the closest mileage to the official distance won the rally. They did not specify any particular speeds, and had no intermediate checkpoints. Absolutely stupid. I picked up a guy who had never been on a rally before. We won it because whenever we came to a doubtful turn, I just got out and walked until I got a needed clue, walked back, got the car, etc. If we were being timed, that strategy would not have worked. I have been unable to find any other rallies here, but I gave up trying years ago. The traffic is just too horrible to drive in most of the time, no fun to drive rallies, etc.

Anyone remember The Abominable Snow Rally? It was held three years in the early 1960s. In January or February. Started in the Syracuse or Manlius NY area in the evening and ran all night for two nights. Going largely north to places like Boonville, Watertown, etc. I did not have a Lotus for those. Probably a good thing. It was the absolute toughest rally I was ever on. I went on it three years. One year I slid off the road into a ditch. I was going up a hill, and there was a lot of loose snow (blizzard going on) on top of glare ice. I could not get up the hill because my wheels would spin. So I stopped with the idea of backing down the hill. But even though I was stopped, the car slowly slid off the road into a ditch (road superelevated). There was nothing I could do about it. My navigator and I spent the night in the Philadelphia Cream Cheese factory there in South Edmeston. We got a tow truck to get me out the next morning. Four-wheel truck with chains on all four wheels, double wheels on the back. He pulled me out in the downhill direction, and it was still so slippery he had to try twice.
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Colon Chapman...

Freudian misspelling of Colin?


I do not think it was Freudian. I have been a little dysliterate (or whatever the writing disorder like dyslexic is for reading disorder) ever since I had a little stroke. And I am not consciously angry with Mr. Chapman. I think he was a wonderful engineer. But the English mechanics or whatever, were terrible. When I got my first Lotus, in NYC and drove it back home to Buffalo, NY, most of the stuff on the dashboard fell off because they were not tight enough. And the other stuff in the car. I used to joke that it was assembled with aluminum bolts and lead nuts. If you tightened them normally, they fell off. If you tightened them a little more they stripped or broke. A friend had a Super 7 that he tried to race. He had to safety wire all the critical nuts. He replaced the brake lines with the steel braid type. The nuts and bolts were replaced by high strength SAE grade 8 types (the ones with 6 little lines on them). He replaced a lot of other stuff. Could not race it as stock, got stuck in modified class.

Another friend tried to race twin-cam MGA cars. The engines would not survive racing. I do not know if they had double valve springs, but I doubt it. The pistons would hit the valves and that was the end of the race. He could not finish races with them. He gave up on MGA twin-cams and got either an Elva or a Lola (I forget which) and started winning races. Cost him more, though. And they were English, too, but they must have had a quality control department, or a manufacturing engineering department. Or something.

Before WW-II, the British were famous for their high quality machine work. But after the war, it was hopeless. Perhaps it was still good at Rolls Royce. I think the reason the Lotus 26s that I owned used up starter motors and flywheel ring gears is because there is a line you could draw down the center of the crankshaft, and a line you could draw down the center of the rotor of the starter motor. These have to be parallel, and I suspect the two were not parallel in the ones I had. Either that, or the ring gear was aluminum and the pinion on the starter was lead. (I am not serious about that), but it was a drag replacing starter motors every 10,000 miles or so and flywheels too (but not as often). I know how one should replace the ring gear, but I never met a mechanic who I would trust doing that. Grind ring gear most of the way through, but not enough to even touch the flywheel, then chisel it off, chill the flywheel as cold as you could get it, heat the ring gear in hot oil to about 200C, not just heat it with a torch, quickly assemble the two, using dial gauges to be sure aligned correctly, and allow to cool. Do you know a mechanic who could do that? Not around here.

And that Super 7. I could not believe some of it. The tachometer pickup (mechanical tach) hooked up on back of the generator (no alternators for Lotus). The generator was hooked to the engine with a fan belt. So if there was slip in the fan belt, the tach read low. Smart. You could blow an engine in a race because of that.

Another friend who had driven English sports cars, mostly Triumph and MC TC and TD, would say: Give an Englishman a piece of metal and he is bound to do something stupid with it. And the only electrics you could get on English cars were Joseph Lucas, and that was as bad as Chinese stuff these days. At least, Alfa Romeo solved the problem of the bad Marelli electrics they used later by using Bosch electrics instead. Then they would start in the wintertime.
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Anyone remember The Abominable Snow Rally?

Nope, being born in 1961. But I grew up in western NY (snow belts south of Buffalo, Chautauqua County) so I remember the Blizzard of '77 quite well. I did some rallies while I was a student at Cornell, driving Corvairs, the unsafe-at-any-speed car.

While in Ithaca, in 1984, I found a 1964 turbocharged Corvair Spyder convertible, all rotted out, bought it for $200, and had it flat-bedded 200 miles to my parent's house.

We discovered the car had been purchased new and only driven by the astronomer Carl Sagan. It has about 33K miles on it. Sagan drove it from '64 to '72 and then switched to a Porsche. Corvairs in general aren't worth much, but I hope Sagan's name adds a little mystique to it. The car is mentioned in a Sagan biography. These days, not too many people seem to know who he was. They are re-issuing the series Cosmos next year, Neil deGrasse Tyson is the narrator this time.

Anyway, a good chunk of my MI returns over the last four years have gone to restoring the car (my Dad is doing the work), and it is almost done.

Last weekend, I picked up the engine from a local engine builder, here it is with turbo, carburetor, and other parts. Sheet metal is powder coated, and exhaust and turbo components are ceramic coated.

http://i118.photobucket.com/albums/o116/mddorogi/IMG_0342_zp...

Not quite sure what I'm going to do with this car when it's done! I need to find a safe place to keep it, and only drive it in the most pristine of weather conditions, not things I'm used to doing!



Mark
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Not quite sure what I'm going to do with this car when it's done!

We had a 1977 MGB 2-seater convertible that we bought from a car dealer on a lark. We were going to meet my son at a restaurant for dinner and we drove past the dealer who had this car in front. My wife said, "WoW". After dinner she said she wanted to go back and see how much they wanted. I said No. After a bit of discussion, wherein sleeping on the sofa was mentioned, I said that if she could get it for $900 I'd buy it. We walked into the dealer 15 minutes before they closed. The saleman came up to gladhand us, and she said in a loud voice, "My husband said I could buy that MG If I could get it for $900, otherwise he won't let he have it. How 'bout it?"

We took it in a short test drive (by this time they were turning off the lights), and made the deal. On the way home we discovered why they wanted a *short* test drive. There was rust in the gas tank and the fuel filter clogged in 10 miles. It took 15 minutes of sitting until it unclogged enough to run.

Loved that car, but I spent as much time fixing it as driving it. We had a great MG club in Chicago and they held 2-3 superb rallys a year. Rainy weather was ...interesting... Lucas electrics. Open up the bonnet and it looked like a lightning storm, with all the sparking from the ignition wires.

But.....when we retired and moved down here, I wanted something reliable as well as fun. So we sold the MGB and bought a BMW Z4 that had just come off lease.
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We discovered the car had been purchased new and only driven by the astronomer Carl Sagan.

That is deeply cool. I am most impressed and envious!
I imagine it had beeelions and beeelions of rust spots.

Jim
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I may be one of the few people who had decent reliability from British sports cars. My second car was a 1952 MG TD. I loved that car, finally sold it when my pregnant wife could no longer fit in the drivers seat. Later I had a Triumph TR3 and even later reverting to my adolescence had a TR 6. Alas I found that hard riding uncomfortable cars were not as much fun when you were middle aged. All of them were reasonably reliable, though I admit they were babied and never driven in snow or on long trips. They were bought used, since I noted that many of the original owners of these cars treated them like a first born child.
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In my first year of college bought a black 1972 Triumph Spitfire Mark IV for about $1200.
Painted to white, then had to learn and do engine overhaul after a valve spring broke and a valve gamed in a cylinder on a piston.

I had to change the U-joints few times. I loved the experience. Bought another one, a 1974 model 3 years later. Few times in winter with snow and ice made trips to Madison Wis. on two way highway with a few close calls.

http://en.wikipedia.org/wiki/File:1974_Triumph_Spitfire4.jpg...
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I imagine it had beeelions and beeelions of rust spots.

LOL, mostly the rust spots had melded into one all-encompassing rust spot. Here's the car (and yours truly) in April 2009 when we rolled it into the shop.

http://i118.photobucket.com/albums/o116/mddorogi/Corvair1_zp...

That's the original paint (what's left of it) - Palomar Red, of course!
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Forget "unsafe at any speed"... that's "unsafe at any expense"!!! THAT's a Sisyphean project!

FC
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Forget "unsafe at any speed"... that's "unsafe at any expense"!!! THAT's a Sisyphean project!

It certainly is, but hey, it's Sagan's car! It had to be done. Artistic necessity.
And Palomar Red...you can't make this stuff up.

Jim
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Stick to the few businesses whose economics you can really understand, or stick to quant techniques.
Nobody who doesn't really know how to value a business should ever buy its
stock except as part of a diversified "shotgun" approach as a defense against that ignorance.


While I'm convinced this is essentially true, and have little confidence in my security analysis skills, I'm yet compelled to profitably invest, or else it may well be Alpo time at some point in a realistically envisioned future. So for me it's value and/or quant. I regard myself as a value investor, and while I do consider a fairly wide array of performance characteristics — Debt/Income, Return-on-Equity, Earnings Growth, Price/Earnings and so forth — I count myself as abiding in the quant camp, as I don't have the penetrating depth of understanding suggested by Jim. Then I read...
I've ditched a lot of companies from my portfolio in the last few years because I once thought I knew what made them tick but on further reflection decided I didn't really.

This overwhelms me with a realization of the patent inadequacy of my own assessments. Don't get me wrong, Jim...I dearly appreciate your generous sharing and humble candor.

Perhaps my biggest concern is whether I have the cahones to see the strategy through the next big dip in the spontaneously unfolding market rollercoaster. The market is indeed a heaving and seething social milieu.

If you're resigned to just going up and down with the market, a recent thread suggests RSP may be suitable for doing that with a flair. Combined with a bit of hedging, and/or market timing, this could be a relatively pleasant ride toward market-beating returns. In a US taxable value portfolio, timed RSP may serve as a profitable way to top off the 15% bracket where capital gains aren't taxed.

Of course, the same could be done with Berkshire Hathaway, or whatever other watchlist company may be currently undervalued. For value investors, the perpetual challenge is accurately assessing value for a select group of companies.

What I'm led to conclude is that I'm a value investor with a dependency upon both quantitative techniques and the considered assessments of a highly select group of respected value investors. I maintain a watch list garnered largely from nominations by others. I monitor the performance of companies on that list against a variety of metrics. For these companies I also gather Value Line's assessments of present and future Fair Value, along with its projections of both short and long term price performance.

In time many are rejected, or demoted to a vestibule of watchlist wannabes. These are companies I'm less confident of, for whatever reason, some idiosyncratic. For example, I leave out airlines for their notoriously poor management — they aren't even among the wannabes; and drug companies for their product liability and ultimate susceptibility to government price control. Aside from industry exclusions, individual companies may be excluded because of erratic long-term historical growth in Earnings, Book Value, Cash Flow, or possibly Dividends.

The companies on the watchlist are divided into two groups: those now most eligible for ownership, and those that are not now less eligible. Any stock presently owned is included on the eligible list by default. Otherwise, eligibility is determined by present price versus fair value now and 3-5 years hence, usually as determined by Value Line.

Obviously fair value may be derived independently of VL. Again, this may be significantly influenced by exchanges on, for example, the Berkshire board. I actually see no problem with this, as I have confidence in my ability to discern sound information over the long haul on a forum populated with vigilant luminaries like mungo. Pursuit of these threads is accompanied by relevant collateral reading, often suggested by the same folk. If this isn't a valid source of investing information, then I question the rationale for participation in these forums.

In any event, in my schema the relationship of current price to present and anticipated fair value largely determines eligibility for present ownership. So individual companies may move back and forth between present and erstwhile eligible lists, and present holdings are interspersed among those now eligible.

Stick to the few businesses whose economics you can really understand, or stick to quant techniques.
Nobody who doesn't really know how to value a business should ever buy its
stock except as part of a diversified "shotgun" approach as a defense against that ignorance.


In light of the foregoing, this sounds a bit harsh.

Comments welcome.

Tom
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Stick to the few businesses whose economics you can really understand, or stick to quant techniques.
Nobody who doesn't really know how to value a business should ever buy its
stock except as part of a diversified "shotgun" approach as a defense against that ignorance.
...
In light of the foregoing, this sounds a bit harsh.
Comments welcome.


Doesn't sound harsh to me...
It sounds to me as if you are pursuing both of the suggested approaches
and the things on the spectrum between. Rather prudently, it seems.

Jim
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