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No. of Recommendations: 21
I bought my first stock, KFC, in the early 1960s from farm labor earnings at age 12. It doubled when Heublein, a liquor company, bought it. I promptly sold it and bought American Motors during the only time it had comparative success in the auto scene and promptly lost most of my gains. It was thirty years later after college, marriage, kids and dealing with getting a struggling business off the ground I returned to stock picking. My dad passed away and left us with the money he had surprisingly accumulated from investing his social security checks. It took me almost two years to figure out what stocks to invest my inheritance. Why? I did not look at it as my bride's and my money, rather it was still Dad's money and I could not stand the thought of losing any of his money. I made some mistakes as all of us do when traveling down the stock picking path. My biggest mistakes made many years ago were selling Labcorp and Apple after nice gains.

My predominate stock picking path in the 1990s up to around 2002 was Graham & Dodd cigarette butt stocks. My record was positive in that category, but you had to have a spread of holdings because you never forgot or avoided the reality those companies were compromised in some manner. I am still instinctively looking for cigarette butt opportunities. The difference today is the bulk of our holdings are in large quality firms and the cigarette butt buying moves are in liquid firms that have been temporarily compromised or unnecessarily knocked down by governmental impositions or legal attacks that can be quantified through researching as to what the realistic maximum amount of actual effect is likely to be versus what the market is saying the effect is. This is how I looked at BAC and why I bought it a short while before Buffett got his awesome deal with BAC.

My comments today center on the realities facing us stock pickers going forward. The number of publicly traded stocks has been halved since 1997. The number of IPOs coming into the American marketplace is a mere trickle compared to earlier eras. Private equity firms are everywhere and have cash pouring out of their proverbial pockets owing to low interest rates, institutions of all sorts desperately seeking return on their investments, small to medium size companies selling out because of generational transfer issues and the on-going onslaught of the big companies getting bigger by buying out their competitors rather than building new product plants, etc. is drying up future potential investment opportunities.

Information is everywhere, too. You can't beat insiders. They know it all. We little guy stock pickers cannot beat the next echelon behind insiders, the money manager stock pickers who know nearly all there is to know about particular companies. It is what they do day in and day out.

I am wary of momentum stocks. Yes, holding my Apple position from 2000 would have made us a lot of money and if I had invested alongside my son in Amazon when it was $40, that would have been sweet. Just as I learned much during my cigarette butt investment period that I still utilize, I've also learned much during the post-Internet bubble (2000-2001) era. Investing for me since the late 1990s is buying quality companies at attractive prices and holding forever if possible. Period.

So where are the quality companies at attractive prices today? Increasingly I'm seeing they are seldom found in the USA in 2017. They are overseas in developing countries where the demographic and societal upward movement trends are fostering growth. My issue is this is too much comprehend even with stock screeners. The comments made above ring true in those markets, too. I am kidding myself if I think a guy like me with four to six hours of quality time a week for investing studies is going to be able to accurately survey & assess the world markets, the companies involved in various industries, the governmental regulations in those countries, determining the validity of the financial reporting, etc. for opportunities with a margin of safety. I will be taking positions in the developing world with some of our cash, but it will increasingly be through a managed fund specializing in that province. You may say do this with specialized index funds. Yes, that is the logical path espoused today by most knowledgeable pundits. I beg to differ with the present populist motif of avoiding actively managed funds. I want to be alongside folks that have skin in the game. Now that we are well on the other side of middle age, we don't need a huge upside, we are willing to forego some upside in return for decent protection to the downside, two characteristics of better managed active funds. Additionally, we have been in a long era of upward stock valuations that makes index investing look impressive. This will change when the tide goes out and the going gets rough. No, I don't know when that will be. Yes, I know these comments make me look foolish today.

I wish we could return to the times of yesteryear when small, local companies could go public and local folks could enjoy risking some money in companies managed by local folks. Local in my definition can be a company in the same region. A town 40 miles away has a surprising number of millionaires because of a local company selling stock in the late 1960s to raise funds. Yes, it is always buyer beware, but there is also buyer aware leading to wealth accumulation historical phenomenon, too.

Lastly, my bride and I will continue to keep our hand in the stock picking arena. Like many of you, it is my hobby and truthfully, a bit of my avocation. I look upon our investments as an allocation decision pie chart of sorts. I manage what I do best and increasingly let others manage what they do best for us.

I'd love to hear if there are any folks on this esteemed Berkshire board who are using a hybrid approach where they actively manage part of their holdings and outsource the remainder. Inquiring minds want to know.
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No. of Recommendations: 5
I'd love to hear if there are any folks on this esteemed Berkshire board who are using a hybrid approach where they actively manage part of their holdings and outsource the remainder. Inquiring minds want to know.

I actively manage a little less than half of my holdings, and outsource the remainder.

I have investments in MMM, GWR, VZ, BNS, INTC, SJM, and ROIC. I also have a little in precious metals.

I have outsourced over half to management by Warren E. Buffett (a noted investor), a little to Dodge and Cox, and an annuity in Swiss Francs.
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No. of Recommendations: 5
I'd love to hear if there are any folks on this esteemed Berkshire board who are using a hybrid approach where they actively manage part of their holdings and outsource the remainder. Inquiring minds want to know.

I manage all my personal funds since I retired 14+ years ago. No pension-no annuity minimal SS and no other means of income other than the income from my investment portfolio.
Portfolio has evolved over the years to now where it consists of 6 securities and 2 CEF's. Since I needed income from day One when I retired on July 1 2003 I have geared the portfolio towards income and let the growing income (excess above my needs)pull the portfolio higher

Current portfolio consists of
1)ARCC (Received in merger with ACAS)
2)ETE
3)EVA
4)HASI
5)MIC
6)MPLX(Received in merger from MWP into MWE into MPLX)
and the 2 CEF's
7)UTF
8)GAB

Many probably never heard of some or all of these securities. I rarely trade and have built up the income received to where all my expenses including FED and STATE taxes is about 40% of received income allowing the other 60% to be either dripped or reinvested for additional income to cover growing senior living expenses. My current cost of living expenses are about 3 times my 2003 expenses, the year I retired.

I hope you find this helpful

b&w
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No. of Recommendations: 20
I am not sure I agree that stock picking, or rather let's call it security selection (include bonds,
funds, what have you, we should probably also include real estate and the like), has got much
harder. It's just always been tough. More of an evolving game.

I do think that it is very tough to find anything reasonable if you are relying on a screener. Not
impossible, but tough because there is a lot of adverse selection.

The easiest thing for me to do at this point would be to give a list of 20 very different securities
(primarily U.S. equities) at least half of which would fit your (or a general reader's) criteria of
reasonably valued and understandable investments. But if that's what people want, well I think then
you should just post and ask for investment ideas. My guess is that your question has a bit more of a
general/philosophical bent to it.

So let me try and offer some platitudes (some of which might actually be helpful). Do the whole Sir
Terry thing of setting a man on fire so that he'll be warm for the rest of his life. If you like, a
sort of treasure hunt of where market inefficiencies may lie (all my opinion and biases of course).

- There are plenty of arenas where a lot of institutional money simply doesn't play or can't play.
For instance, short swing rules and the like "force" funds to keep their ownership in a company
below 10%. So the larger a fund, the more it is "forced" to hunt for big companies. You don't have
to go small illiquid micro-cap size here. Plenty in the $1-$5B market cap range.

- Sometimes it'll be a large company but will be ignored by large funds because there'll be an
insider or some other large shareholder who leaves very little public float available. Large fund
can't play, but the little guy can.

- Dual class share structures

- I tend be very quick to point out that people should be very careful about investing in
banks/shadow banks and insurance companies. Quirky accounting and all sorts of funny firm specific
issues. But here also lies opportunity - if something is not well understood, there is opportunity
for the gal who sits down and expends time and effort to understand these things.

- Companies that don't do earnings calls or provide guidance. In the same vein, companies that have
no analysts following them (bonus points if no one on popular stock commentary sites like Seeking
Alpha, Motley Fool and the like is interested in them).

- Companies that screen in a particular problematic sector and are dismissed, but have businesses
inside them completely outside the problem sector.

- Acquisitive companies whose earnings are obscured by purchase price accounting. In the same vein,
companies whose earnings are obscured by amortization charges that are significantly higher than
economic reality.

- Build your own LBOs (company where debt dominates the capital structure - there is the usual
risk/reward of high leverage here).

- the local company approach still works, albeit you need to squint a bit. Who owns that booming
parking lot/warehouse? Why do you see so many trucks with the same recurring logo? Who owns all
those billboards that seem to always have a new flashy advert on them. Who owns these car
dealerships? Who is providing all that support software to these car dealerships? Who is the can't
live without business support/supplier for your favorite restaurant whose owner you have got to know
a bit over the years? So on and so forth.

- Spin-offs

- Companies that pay no dividends and have no always on share repurchase, but seem to every few
years do a large tender offer typically right about when their stock price is being pummeled.

- For skin in the game, instead of active funds look for companies where insiders have a large
percentage of their net worth (or reputation) tied up in the company and don't compensate themselves
disgustingly.
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No. of Recommendations: 9
I posted my current portfolio on another board yesterday, but it might be just as applicable here.

My current problem revolves around the shrinking universe of stocks which offer any particular sense of 
value (on a fundamental basis) and I find myself building hypothetical stories of what “might” take 
place, rather than choosing between a pile of companies  who would likely succeed based on their balance 
sheets.  Hell, as companies borrow money to buy back stock, many major concerns (Boeing comes to mind) 
might be profitable, but have negative book values.  Makes me have to tear up my high school economics book :-)



Once in a while, I've posted my current equity portfolio on METAR for comments and heckling.  Obviously I 
am not one to come to for investment advice, but rather seek the feedback of others.

Less than half of the portfolio are companies based in the US.  Many of the foreign companies were picked
up when I was inspired during my travels to their native countries by observing them in their native environment.

Since Yahoo melted down, I've had to hand-work more of my analytics, but such is life and while the 
designations are far from perfect, I've at least attempted to separate the positions by sector as well as geography.

While it's not obvious from the breakdown, one of the major threads tying many of the choices is that
they are involved in various functions of artificial intelligence and robotics.  There is also a 
perception that emerging markets (and even Europe) will grow at a faster rate than the US.

Just for fun, while I've sorted the portfolio by position size (both A and B shares of Berkshire 
Hathaway have been combined for simplicity). 

Yes, I know there are a lot of different shares represented, but it is rare for me to hold mutual funds 
or ETF's and this lets me play around and have fun, rather than just hold a slug of SPY and a bunch of 
foreign ETF's.

There are an awful lot of very good companies which are not represented (some of which have been 
recently sold), in general, because I feel they have become overvalued.  As an explanation, there is a 
fair amount of trading done from time to time, so most of these shares have not been represented in the 
portfolio for more than a couple of years.  I am frankly becoming more than
a little nervous about the valuation of the US market and this probably explains why my tools keep 
telling me to sell US stocks and replace them with foreign ones.  Oh, one more note, if you're having
problems finding some of the symbols, the ones ending with ".AX" have been procured on the Austrailian
market in Aussie bucks and the ones ending in ".VX" have been bought on the Swiss bourse in Swiss Francs.
This adds currency risk on top of market risks, but that's another game I regularly play.
If you think the positions should be parsed in some other fashion, please let me know.

Jeff


                                                            Position
                                                            Position
     Ticker                Company            % of Port   % Gain/Loss        Country
BRK-A,B         Berkshire Hathaway Inc. A and  13.12%        7.47%                       Financial
GOOG            Alphabet Inc.                  10.62%        10.60%                      Technology
RDS-A           Royal Dutch Shell Plc Royal D   6.50%        13.64%     England          Material
NESN.VX         Nestle N                        6.04%        25.73%     Switzerland      Consumer
RIO.AX          Rio Tinto Fpo                   5.92%        12.53%     Australia        Material
BHP.AX          Bhp Blt Fpo                     5.31%        1.24%      Australia        Material
IBM             International Business Machin   4.67%        5.71%                       Technology
NOVN.VX         Novartis N                      3.93%        8.78%      Switzerland      Pharma
BABA            Alibaba Group Holding Limited   3.89%        8.17%      China            Technology
VWO             Vanguard Ftse Emerging Market   3.75%        7.02%      Emerging Mkt     Emerging Mkt ETF
AAPL            Apple Inc.                      3.59%        13.78%                      Technology
MSFT            Microsoft Corporation           3.41%       128.70%                      Technology
SAN             Banco Santander, S.A. Sponsor   2.67%        19.29%     Spain            Financial
OMRNY           Omron Corp                      2.61%       139.20%     Japan            Technology
ROG.VX          Roche Gs                        2.53%        -1.93%     Switzerland      Pharma
TCEHY           Tencent Hldgs Ltd               2.25%        31.25%     China            Technology
CSCO            Cisco Systems, Inc.             2.24%        15.81%                      Technology
SNY             Sanofi American Depositary Sh   1.86%        8.93%      France           Pharma
FB              Facebook, Inc.                  1.85%        64.67%                      Technology
JMHLY           Jardine Matheson                1.33%        19.37%     Hong Kong        Financial
IEMG            Ishares Core Msci Emerging Ma   1.18%        6.51%      Emerging Mkt     Emerging Mkt ETF
FANUY           Fanuc Corp                      1.12%        46.09%     Japan            Technology
BAC             Bank Of America Corporation     1.09%        3.35%                       Financial
DHR             Danaher Corporation             1.09%        36.07%                      Technology
ABBN.VX         Abb Ltd N                       1.07%        13.85%     Switzerland      Industrial
SAFRY           Safran                          1.05%        1.51%      France           Industrial
DANOY           Danone                          1.01%        2.36%      France           Consumer
ECH             Ishares Msci Chile Capped Inv   0.97%        -5.29%     Emerging Mkt     Emerging Mkt ETF
SFTBY           Softbank Group Co               0.89%        45.06%     Japan            Technology
SVNDY           Seven & I Holdings              0.70%        11.33%     Japan            Consumer
FTV             Fortive Corporation             0.41%        67.98%                      Technology
SBGSY           Schneider Electric              0.38%        33.51%     France           Industrial
RCL             Royal Caribbean Cruises Ltd.    0.28%       311.39%                      Consumer
NCM.AX          Newcrest Fpo                    0.24%       136.64%     Australia        Material
FYRTY           Familymart Uny Hld              0.17%        59.61%     Japan            Consumer
CCL             Carnival Corporation            0.14%        22.21%                      Consumer
SJM             J.M. Smucker Company (The) Ne   0.06%       426.14%                      Consumer
NAB.AX          Nat. Bank Fpo                   0.04%       -10.99%     Australia        Financial
ADEN.VX         Adecco N                        0.03%        29.64%     Switzerland      Industrial

SECTOR                                                  NATIONALITY
Technology                             38.63%           United States              42.56%
Financial                              18.24%           Switzerland                13.60%
Material                               17.97%           Australia                  11.50%
Consumer                                8.41%           England                     6.50%
Pharma                                  8.32%           China                       6.14%
Emerging Mkt ETF                        5.90%           Emerging Mkt ETF            5.90%
Industrial                              2.53%           Japan                       5.49%
                                                        France                      4.30%
                                                        Spain                       2.67%
                                                        Hong Kong                   1.33%

Based on subsequent comments:


I figure (as much as anything else to make sure I think about each comment) it's worth addressing each 
of your comments:

1) Great idea to pick up ROBO (after I get the chance to peek under the hood), or alternatively to 
cherry pick from its positions

2) Again, a good idea to buy direct on HK exchange after tracking relative costs/values of raw vs ADR

3) IBM is mainly a play on Watson (AI thing again). One day, before the cows come home, maybe, but the 
point is well taken that they can't get out of their own way.  Omron, Fanuc and Danaher (and now its 
offspring Fortive) are my attempt to own the companies which make the gadgets of which robots are made.  
Softbank is my play in the “built” robot arena and Google (as well as bits of Microsoft, Facebook etc.) 
are my attempts to play in the software space.  IBM seemed to fit in, but you’re right, their approach 
of scaling a pile of PC’s is probably not the best approach.  Actually, my bet is that Google’s major 
play into “natural” speech recognition (now that it’s headed by Ray Kurzweil – who developed Dragon 
Dictate, probably the best PC based speech recognition software) will give them the depth of research 
into pattern recognition to allow their cloud based approach to grab the Turing test brass ring first.  
While I’ve recently sold Baidu, I still have positions in Alibaba and Tencent.  I believe many Americans 
are underestimating the growing technical prowess of the Chinese.  (While most millennial Chinese aspire 
to own an Apple iPhone, this American engineer carries a Chinese phone made by Huawei).  

4) Good point about the small positions. These are the left-overs from a previously more diversified 
grouping, but Bio is worth adding (probably as an ETF because it's such a crap shoot to pick the winners)

5) That's there as an object lesson that I have to stare at each day. It is the residual of a dividend 
payment (DRIP) which came in after a position was sold (which accounts for its relatively small size). 
I've kept it to teach me that I wasn't as smart as I thought when I sold the position.

6) See #5 (above) and #9 (below) as rational for some small positions. Also, some of the foreign small 
positions, were tentative purchases but, in aggregate, create a single "position" (call it a mini-ETF). 
Also, since there is no scale to the portfolio, I might as well state that, all but the smallest 
positions, are still worth a buck or two.

7) I've held BHP/RIO for quite a while. Sooner or later, people have to start making "stuff" again out 
of "things" that come out of the ground. I avoided VALE because of perceived political issues, but may 
pick up the Brazilian ETF as I think things may have calmed down. I'm heading down there in February and 
will decide. The Shell is a very recent acquisition (couple of months IIRC). I noticed that its books 
were not as bad as people thought, it was paying a hell of a yield (in dividends), and I guess I got 
lucky for a change.

8) Good idea to look into regionals (any ideas are appreciated :-). I did well on Australian banks for a 
while. The Santander position is a residual of a larger one. I figured that it was being treated like a 
Spanish bank (it is), even though only around 15% of its business is there. One of those asymmetric 
punishment things. I got in too early and the position was under water for a while, but is doing OK 
nowadays (and the yield based on original acquisition price is generous).

9) Both RCL and CCL (and NCL) award significant on-board-credit (to cover expenses of all sorts) to 
stockholders who take any of their ships. We are currently traveling 6-10 months a year (where many of 
the stock ideas come from) and while only a fraction is on ships (mainly to get from point A to point B 
around the world), these positions have been very profitable beyond what's shown here.

10) Schneider Electric (yup, it's a French company) is best known in the US as the owner of the APC line 
of computer battery backup systems. It and ABB are vestiges of a group of electrical equipment 
manufacturers (which at one point also included Emerson, Eaton, GE, Seimen and Phillip) which I had 
assembled when I thought the US had no choice but to beef up its electrical grid. I still think that it 
will be a requirement if electric cars become "all the rage", but I got bored of waiting. Similarly, 
Nestle and Danone are vestiges of a theme that bottled water will be a growth industry world-wide and 
the grouping used to include Coke and Pepsi. I still think the idea is valid, but I got a bit bored 
waiting, picked up my chips and bet on other numbers.

As a student of relative currency valuations and of how they tend to reflect on equity prices, things 
are fairly stable right now. Interestingly, the Swiss market has gone up, despite a rise in the Swiss 
Franc and the Aussie market has stagnated despite the currency being a bit low. The US equity market 
still drives world share prices, but I'm wondering if, the next time we plunge, the Chinese will not 
attempt to fill the vacuum - in the fashion that they are now filling our shoes in international trade 
agreements and foreign aid to emerging nations. Their Silk Road project, their driving of the production 
of electrical cars, their penetration into the high-speed train field and many other signs indicate that 
it is likely that the RMB will, within the next few years, become an accepted trading currency - forcing 
it to appreciate. China, I assume, is currently turning the ship so that this will not trash a 
dependence on an export economy. As all currency valuations are relative (gold being non-issue), this 
would favor RMB oriented investments. Incidentally, my holding of Jardine Matheson, while listed in Hong 
Kong, has massive investments in China as well and was my first dip of a toe into those waters (I 
figured, at the time, that they knew more about investing in China than I did. They've underperformed a 
bit, but still have done OK for a security blanket).

Thanks again for making me think this mess through :-)

Jeff
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No. of Recommendations: 3
if you're having problems finding some of the symbols, the ones ending with ".AX" have been procured on the Austrailian market in Aussie bucks and the ones ending in ".VX" have been bought on the Swiss bourse in Swiss Francs. This adds currency risk on top of market risks, but that's another game I regularly play.

I do not think having stocks denominated in foreign currencies is necessarily a currency risk. I think of it as a spreading of risk. What makes you so sure (if you are sure of this; you may not be) that the US dollar is the most stable of all currencies? There was certainly a time, around 1970, when the Swiss Franc was much more stable than the US dollar*, and having your assets in US dollars was the currency risk. Perhaps the US dollar is the most stable this month or this year, but will it always be so? IMAO, one of the reasons to invest in non-US stocks is just to reduce the danger of a falling US dollar.

_____
* Back then, the US economy was in trouble because of the productivity loss due to being at war with Viet Nam, and borrowing our way to pay for it, causing severe inflation. We had to go off the gold standard (Breton Woods agreement) to allow the inflation to increase. And now we are fighting five to seven wars (depending on how you count them) instead of just one. Of course, these days, most (if not all) countries are trying to borrow themselves out of debt, so pick your foreign investments as carefully as your US ones.
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No. of Recommendations: 2
Actually, JeanDavid is absolutely correct. I probably misused the term "risk". I have, for many years kept funds in foreign currencies abroad as a hedge against unforeseen disaster in the US. Unfortunately, while the US remains the biggest tax haven in the world, the aggressive actions of the US Internal Revenue Service against foreign banks has turned US citizens into pariahs in many jurisdictions. My accounts and activity has always been above board, reported and taxes paid (but I guess I am in the minority?).

There is also the obvious(?) fact that currency valuations are basically ratios, rather than measured against any absolute benchmark (like gold, in previous years). It is hard to separate the "value" of an asset from what it's worth in your native currency and similar to how most foreigners still do arithmetic in their native tongue, unless you travel a lot, it's hard to think ion terms of a foreign currency without doing the conversion to your native one to establish the value of an asset. I think Jim uses something he calls the North Atlantic buck which is a composite of the USD, CAD and Euro. I admit to rationalizing my holdings in USD, but am willing to use other currencies (and other domiciles for them) as a way to hedge against both geographical and currency issues. Since this strategy doesn't always necessarily work to one's financial advantage as measured in terms of "home" currency (though, so far, so good), there is risk involved as well as potential benefits. That was the risk I was referring to, rather than the alternative risk of having all of one's eggs in a single basket.

The origin of the Swiss position is that it is a vestige of a much larger CHF holding which, while reported to the IRS etc., I was no longer allowed to hold in Switzerland (Swiss banks got paranoid about Americans after the UBS thing and after moving from bank to bank, it just didn't work anymore) . I moved it to New Zealand, where it was eventually assessed at a negative interest rate and they were giving me a hard time as an American, so I transferred to Interactive Brokers and, again because of what amounts to a negative interest rate, converted most to USD (paying a substantial capital gain) and bought stocks with the rest.

The origin of the Australian position was when I noticed that, during the financial crisis, the Aussie dollar was at about $.60US and one of their banks (Westpac) was paying 8% on five year term accounts. I moved a load of USD (about 10% of my net worth) into the currency. Much has been repatriated (again paying capital gains) into USD, but I put some of the interest payments into Aussie shares (again at IB).

Incidentally, I also keep a multi-currency account in Hong Kong (in HKD and RMB) "just in case". It also offers the opportunity to invest directly - either in Hong Kong or Shanghai, should I decide the time is ripe.

Hope that explains more than confuses.

Jeff
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No. of Recommendations: 2
Jeff,
this post is going to be in the 'heckling' category, hope you don't mind.

-- The $250 credit on RCL cruises is not worth being exposed to the stock for that reason. Get a good travel agent, she can save you hundreds. I believe you can't combine the shareholder credits with anything else. Once you are platinum on CCL and the equivalent on RCL, the rewards are better. (In passing, RCL used to have a kick-@$$ rewards program such as unlimited aperitifs before dinner... or so I hazily recall :-) Must be too good because they cut back on it significantly once the cruise industry got over its slump.)

-- Owning Chinese companies is dicey. I don't know how much they care about giving their profits to their foreign shareholders. (Or foreign 'sort-of-pseudo-claim-checks-not-quite-shares' holders.) JMHLY excepted.

-- Softbank is run by idiots with too much money. They are never going to make back the money they are flinging at Silicon Valley "Bro"s.

-- Since you get bored watching paint dry while your investment thesis plays out, you should follow the companies AFTER you sell them, and compute your opportunity cost.
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No. of Recommendations: 1
The origin of the Swiss position is that it is a vestige of a much larger CHF holding which, while reported to the IRS etc., I was no longer allowed to hold in Switzerland (Swiss banks got paranoid about Americans after the UBS thing and after moving from bank to bank, it just didn't work anymore) .

My Swiss Franc position originated over two decades ago when I wanted geographical diversity in my cash assets. The Swiss were not welcoming US dollars, although they did not refuse them. On the other hand, they charged 2% negative interest on bank accounts owned by US citizens. So I bought a single payment deferred annuity, denominated in Swiss Francs, that paid 2% guaranteed interest and an additional interest payment of about 2% most years. I reported all that interest as accrued, the 1% excise tax for buying a foreign annuity to the IRS, and all that. I also report the payments the annuity now pays me annually.

My approach has worked well for me, but would not be suitable for someone who wanted access to the funds at any time.
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No. of Recommendations: 5
Information is everywhere, too. You can't beat insiders. They know it all. We little guy stock pickers cannot beat the next echelon behind insiders, the money manager stock pickers who know nearly all there is to know about particular companies. It is what they do day in and day out.

Maybe so. But I suspect that the attractiveness of index investing today has a strong element of hindsight bias.

Stock picking has always been difficult, but has been particularly difficult since the 2008 crash. The massive flow of funds into indexing since 2008 has left managed funds in the dust.


The managed vs unmanaged metrics have in the past been a cyclical. The size and duration of the current swing suggest that when the current cycle peaks, the swing back toward managed will make stock picking a lot easier in the next ten years.

I think this is particularly true when future performance will be measured compared to the popular large cap American centric indexes (S&P 500). The current popularity of index funds has directed a huge flow of funds into large cap American Companies without any attempt to evaluate the potential for future growth of the companies involved.

I expect that managed funds and individual stock pickers will have an easier time going forward.
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No. of Recommendations: 5
Information is everywhere, too. You can't beat insiders. They know it all. We little guy stock pickers cannot beat the next echelon behind insiders, the money manager stock pickers who know nearly all there is to know about particular companies. It is what they do day in and day out.

It seems to me that the little guy investors sometimes have an advantage over the insiders because the insiders usually want to make their profits in the next 90 days or the next year. If the little guy has a different objective (not all do), they can play in a somewhat different sandbox from the insiders, buy stocks with no glitz but good long-term prospects, etc. So the insiders make their profits and losses in one sandbox, one where the little guy will get killed, and the little guy plays in stocks too slow growing, insufficiently volatile, or just too small for most insiders to bother with.
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-- The $250 credit on RCL cruises is not worth being exposed to the stock for that reason.

Or you can buy the stock at one broker and simultanously short it at another. (Doesn't everybody have more than one broker?)

Or buy it the day that the monthly statement is generated and sell it the next day.

All you have to show the cruise line is a statement that shows you own 100 shares of their stock. All sorts of ways to play that game.


RCL's shareholder benefit sucks, BTW. They rejected giving it to us because "You already got a good bargain from your travel agent, so we are not going to honor your shareholder benefit."
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I used to play the buy/sell/buy/sell thing, but more recently, left the chips on RCL (I bought it a while ago and the position is up over 300%, pays regular dividends and has probably "earned" us about another 50% in credits. The size of the CCL position has risen and fallen and I think on a LIFO basis the position is up about 100% (rather than the 22% my spreadsheet generated - which is a blended average) and which has generated on-board-credits of at least 50%. Overall profits on the symbol have more than paid for the position. You're right, it's probably a bit of bother for $250, but in our case, over the years the strategy has generated thousands in savings - along with being profitable as well - though for better or worse being a tiny portion of the overall portfolio.

Jeff
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Information is everywhere, too. You can't beat insiders. They know it all. We little guy stock pickers cannot beat the next echelon behind insiders, the money manager stock pickers who know nearly all there is to know about particular companies. It is what they do day in and day out.


For the small fry, the best way to win is to play a different game they're not playing.

The thing both of the above (generally) have in common is a short time horizon. Particularly money managers: all but the highest-reputation (think Seth Klarman or Buffett) have to constantly fear that if they have several quarters of underperformance, they will face fund redemptions (less AUM fees)...or worse, will lose their job.

Yet an individual investor is at liberty to have fairly long periods of relative underperformance, as long as the long-term results are attractive and as long as the finances are arranged to weather the occasional storm. So looking for businesses with great long-term prospects yet short-term difficulties or uncertainties may be one of the more fruitful pastures.

Also, those "money managers" aren't immune from group-think (as a group), so if one can stand apart from that, even the most well-known stocks out there can offer great prospects. In early 2013 and again in early 2016 Apple--the largest business in the world at both points--was absurdly cheap (less than 10X free cash flow in 2016...with about 30% of share price represented by net cash)...despite "information being everywhere". Or take Berkshire in early 2016...the poor individual investor could grab that at 1.25X BV...and take a full position in one click of the mouse. No need to pity the small individual investor...even one--like myself--who prefers to invest in very large cap and very well known businesses (contra TransverseSlice, I don't have the confidence to commit large percentages of my money to businesses that don't have conference calls and no one follows...I feel more comfortable reading tons of opinions on businesses, then making my judgment based on that info. I've find sound reasoning is easier to recognize than produce...though I suspect the latter in qualified hands is more profitable).
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I don't have the confidence to commit large percentages of my money to businesses that don't have conference calls and no one follows...I feel more comfortable reading tons of opinions on businesses, then making my judgment based on that info. I've find sound reasoning is easier to recognize than produce...though I suspect the latter in qualified hands is more profitable).

I just want to clarify something.

When I say, "pay attention to businesses that don't host
conference calls", it is more along the lines of, "find management teams who don't go through the
usual Wall St motions just because everyone does it". There are probably more companies out there
who don't host conference calls because they don't care a whit for minority shareholders, than
companies who believe in capital stewardship but don't host calls because they think they are a
waste of time and incentivize bad behavior.

If you ask a CEO why they host calls, you don't want to hear, "because that is the Wall St game".
The best response I have ever got to that question was:

"I view it as a chance for employee shareholders to hear the same messages from me that they are
hopefully also hearing from the operating group managers and business unit managers. Easier to keep
the wheel true when you are just adjusting the spokes a bit. Hard when it has gotten far out of
alignment. Same applies to long-term but unsophisticated shareholders."

There are only 3 businesses I currently hold (one is Berkshire) that don't host conference calls. However, some of
the businesses I like most hold very atypical calls.
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I just want to clarify something.

When I say, "pay attention to businesses that don't host
conference calls"



I didn't intend so much to focus on conference calls per se, but rather small and obscure businesses/stocks. I know you find much success there, and Charlie and Warren have both said that's where they would fish if they were small again. And I've wanted to be able to do that...and possibly reap the superior rewards there.

But recognizing my limitations (lack of time, lack of sophistication in accounting, etc) I've simply found that sticking to the universe of well-known, exhaustively-analyzed businesses is my "circle of competence" (though obviously only a subset of that large universe). Having only small fund and going with a very concentrated portfolio, I've still found this to be quite profitable. Maybe/hopefully some day--with more time available (e.g., retirement) and more knowledge and investing experience, I'll be able to apply that in the small/obscure stuff...though I think I will always stick with extreme concentration, as that's felt right to me since I first invested twenty years ago, and seems even more so as time goes on. (I've also wondered if rather than trying to shift to small/obscure businesses, I might be better served to simply complement my current approach with periodic investments in long-dated DITM call options on very-high-quality businesses when they periodically are severely cheap...I try to keep learning from Jim on this).
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