Buffett Buffet

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Koogie
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Re: Buffett Buffet

Post by Koogie » 06 May 2015 17:22

kcowan wrote:
ghariton wrote:Then I wouldn't have had to work so bloody hard between 55 and 65.

George
In my case it was grappling with my marital dissatisfaction. But it only cost me 55 to 60 because the compounding was working well (and I was in my maximum earning years). But it was bloody hard work as well!
I was "taught" the lesson of compounding in my twenties. I am now in my early forties and only just waking up to it. Market timing ╪ time in the market. Planning seems to be simple. Execution is hard.
Buy very little, sell even less.

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Re: Buffett Buffet

Post by Flaccidsteele » 06 May 2015 23:14

I was indoctrinated with the concept of compounding in my late teens from the usual (value) suspects.

A few concepts stuck with me... the geometric series taught in high school math...the idea that the unrealized capital gains in a particular year were tax deferred, but as long as you didn't sell, you were using the government's money to compound the following year, and so on and so forth... and then the FV = P(1+i)**n formula... all these ideas (and probably a few others that I'm forgetting), convinced me that time was the most important factor. More important than initial capital. More important than rate of return (in my teens I used Warren Buffett's rate of return as the 6-sigma/upper upper bound).

Having been thoroughly convinced that I needed to start ASAP, I opened up a brokerage margin account in university, and started investing in my early 20s.

My only conflict was investing in individual businesses and/or index investing. I was 'taught' that Index investing was 'guaranteed', but the value investing investors made picking businesses appear very simple. So I split my tiny capital. One pool to the index. One pool for buying individual stocks. I decided that I would compare the two after 10 years and then shift over to whichever one was 'better'.

In the beginning, I had assumed that I needed a 40-50 year runway (i.e. the time until "retirement") in order to become financially free from having to work. Compounding worked far faster than even I imagined. This thread was very reminiscent for me on how fast things can snowball.
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by Flaccidsteele » 10 May 2015 23:29

Warren Buffett is putting his money where his mouth is. Or, not putting his money where his mouth isn't.

The Berkshire Hathaway chairman recently admitted stock market valuations are pricey and bonds even more expensive. So he has to consider other investments to grow the firm's $US530 billion portfolio.

An analysis of Berkshire's cash flows for the past 20 years conducted by shareholder and chartered financial analyst, James Harris, reveals the Oracle of Omaha has lately been investing in a quasi new asset class; capital expenditures for existing investments.


Is Warren Buffett sending a message that everything is overvalued?

Speaking for myself, cash has exceeded 20% of total assets.
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by Flaccidsteele » 18 May 2015 00:14

There is roughly a 0% probability that the company will be broken up. One of the reasons, as Buffett pointed out, is that there are “a lot of benefits to having the companies on the same tax return.”...While many other companies are forced to take on large amounts of debt to fund growth, Berkshire can funnel money from one of its 60 subsidiaries to another. Best of all, because of Berkshire’s structure, it can do so without paying tax.

...

When selecting these companies, Buffett made it clear that he will “never make an acquisition based on macro factors.”

...

When Buffett thinks about the structure of Berkshire, or what businesses to acquire, he’s thinking about what’s in the best interest of shareholders...Buffett holds 34% of the voting power at Berkshire, which makes him far and away the largest shareholder.


Warren Buffett Says He Would Never, Ever Do These 3 Things
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by Taggart » 30 May 2015 15:08

A couple of years old, but a truly wonderful paper from India I just stumbled into today.

WHAT HAPPENS WHEN YOU DON’T BUY QUALITY?; AND WHAT HAPPENS WHEN YOU DO?

Edited transcript of talk delivered earlier today at OctoberQuest 2013, Mumbai.

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Re: Buffett Buffet

Post by Flaccidsteele » 21 Jul 2015 00:45

This was from Charlie Munger's recent talk at USC Business School entitled, "A Lesson on Elementary Worldly Wisdom":
Charlie Munger wrote: When Warren lectures at business schools, he says, “I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so that you had 20 punches — representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all.”

He says, “Under those rules, you’d really think carefully about what you did and you’d be forced to load up on what you’d really thought about. So you’d do so much better.”

Again, this is a concept that seems perfectly obvious to me. And to Warren it seems perfectly obvious. But this is one of the very few business classes in the U.S. where anybody will be saying so. It just isn’t the conventional wisdom.

To me, it’s obvious that the winner has to bet very selectively. It’s been obvious to me since very early in life. I don’t know why it’s not obvious to very many other people.


http://www.businessinsider.my/this-tip- ... M0m9t9l.97
It's not obvious to Munger, because if this idea was 'obvious to other people' then the 'other people' would all be millionaires as this would be the 'conventional wisdom'. But 'other people' aren't millionaires/billionaires so it's obvious that it's not obvious to other people. :roll:

Munger makes some very intelligent observations, but sometimes he speaks like he's blind in one eye. 8)
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by Flaccidsteele » 27 Jul 2015 20:24

USA Today wrote: There are two very clear lessons to be learned from the richest Americans. First, the net worth of America's wealthy is directly related to the assets they own and not the salary they collect. The elite might use their earnings to buy fancy cars, nice houses, and art collections, but the bulk of their wealth is derived from owning business assets that have compounded its value for years.

The second lesson is that these individuals held these assets for years. While some do buy and sell businesses quite regularly, the top of the top-tier elite have owned their compounding machines for years and have no plans to let it go.


http://www.usatoday.com/story/money/201 ... /30733011/
This jives with my confirmation bias that the time spent compounding is by far and away, the most important criteria for building wealth. More important than capital, rate of return, conventional diversification/asset allocation/rebalancing (rebalancing would be the antithesis of compounding IMHO), etc.

Becoming financially secure is relatively simple. Buy assets. Hold them. Ignore the rest and go about your business.
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by adrian2 » 28 Jul 2015 10:31

Flaccidsteele wrote:This jives with my confirmation bias that the time spent compounding is by far and away, the most important criteria for building wealth. More important than capital, rate of return, conventional diversification/asset allocation/rebalancing
You cannot have significant compounding without a significant rate of return.
Flaccidsteele wrote: (rebalancing would be the antithesis of compounding IMHO), etc.
Rebalancing is not the antithesis of compounding. Rebalancing strives to increase the chances of a floor rate of return which allows good compounding over time.

An undiversified portfolio means you're swinging for the fences. For some people it works, for others it doesn't.
You were lucky so far, even though you may think it's your choice of "indoctrination". The luck may, or may not, continue.
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

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Re: Buffett Buffet

Post by Flaccidsteele » 28 Jul 2015 13:45

I hope that your investment philosophy works out for you one day. :thumbsup:
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by Flaccidsteele » 08 Aug 2015 23:42

Mr. Combs, formerly a hedge-fund manager, began working at Berkshire in 2011. Mr. Weschler, who also ran his own firm, joined a year later. The two—and potentially others—are expected eventually to take over the investment functions of Berkshire.
The Likely Berkshire Minds Behind Interest in Precision Castparts

I've always been torn between eventually simplifying all my equity investments into either the S&P500 index or Berkshire Hathaway stock.

One of the things I find attractive about Berkshire Hathaway is it's portfolio of private businesses and how capital can flow between each business within the conglomerate. I think my best opportunity to buy Berkshire Hathaway (short of a market-wide crash) is when Buffett is no longer heading the business.
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by Flaccidsteele » 12 Aug 2015 00:56

Interesting development. One of the problems of taking on huge debt/pension obligations from acquisitions, intermingled with existing capital requirements in insurance/re-insurance businesses.

In its release, S&P said this move, "reflects uncertainty around the funding of the acquisition and how it may affect current cash resources and leverage metrics at the holding-company level. In addition, we believe that to fund the acquisition, BRK is likely to use some of the capital resources available at its insurance companies."

S&P to Warren Buffett: We're watching you
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by Flaccidsteele » 14 Aug 2015 00:01

99% of Buffett’s wealth was earned after his 50th birthday

I hope this is the case with everybody. It would imply that 1) we have lived a long time and that 2) compounding works as advertised.

Image
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by OnlyMyOpinion » 14 Aug 2015 13:02

This is likely to get posted anyway, so you'd might as well shoot me (I'm just the messenger and have no opinion on the veracity of the article):
Why Berkshire Hathaway is a stock to avoid: Olive
http://www.thestar.com/business/2015/08 ... olive.html

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Re: Buffett Buffet

Post by Bylo Selhi » 14 Aug 2015 13:33

OnlyMyOpinion wrote:so you'd might as well shoot me (I'm just the messenger and have no opinion on the veracity of the article)
[If this is a shot, then it's for a different reason.] Olive has been bashing BRK for years. He wrote a similar article a dozen years ago (and maybe others in between.) I can't find a link to it that still works so we'll have to settle on someone on The Motley Fools who had an exchange with Olive about it here and here.

I suppose if Olive bashes BRK long enough then eventually there's a modicum of chance that he might be proven right.
Sedulously eschew obfuscatory hyperverbosity and prolixity.

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Re: Buffett Buffet

Post by jaybee » 14 Aug 2015 16:46

Flaccidsteele wrote:99% of Buffett’s wealth was earned after his 50th birthday

I hope this is the case with everybody. It would imply that 1) we have lived a long time and that 2) compounding works as advertised.

Image
Jim (aka flaccidsteele, aka Rickson9)

You should bring back your website. This sort of thing is interesting!

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Re: Buffett Buffet

Post by Flaccidsteele » 14 Aug 2015 23:44

I think Olive has some legit concerns, but they're mixed with some less-than-legit concerns. Of course that's just my opinion.

The biggest concern is that the price is way too high. On all metrics.

And Berkshire shouldn't be viewed as a business in growth mode any more. It's a slow, giant compounding machine that is virtually impossible to put out of business. There are some who find that attractive and others who don't.
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by Flaccidsteele » 30 Aug 2015 01:14

I guess this is Buffett's biggest oil play.
Warren Buffett's Berkshire Hathaway Inc (BRKa.N) disclosed a $4.48 billion stake in oil refiner Phillips 66 (PSX.N), rebuilding a bet it had made in the energy industry before oil prices fell.

The 57.98 million-share, or roughly 10.8 percent, stake was revealed in a Friday night filing with the U.S. Securities and Exchange Commission. Phillips 66 shares closed Friday at $77.23.


Buffett's Berkshire takes $4.48 billion stake in Phillips 66
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by nisser » 01 Sep 2015 01:22

I'm not sure if it's true but Berman on BNN recently stated that Buffet has essentially underperformed the S&P for the past 15 years.

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Re: Buffett Buffet

Post by Flaccidsteele » 01 Sep 2015 02:02

nisser wrote:I'm not sure if it's true but Berman on BNN recently stated that Buffet has essentially underperformed the S&P for the past 15 years.
I don't know who Berman is, but that would appear to be false.

Image

Disclosure: I used Sept. 1, 2000 until Sept. 1, 2015. Perhaps Berman is using another 15 year period?

Buffett is living longer than I originally anticipated.
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by kcowan » 01 Sep 2015 09:53

nisser wrote:I'm not sure if it's true but Berman on BNN recently stated that Buffet has essentially underperformed the S&P for the past 15 years.
I heard Larry Berman say this too. I assumed he meant that Buffet's new investments (picks in last 15 years) have underperformed.
For the fun of it...Keith

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Re: Buffett Buffet

Post by Flaccidsteele » 01 Sep 2015 15:38

Not sure what data source Berman is citing. Likely none.

It isn't true anyway.
Retired @ 40 after reading Munger/Buffett. I avoided a fragile retirement by avoiding conventional volatility management (diversification, re-balancing and asset-allocation). "Put 90% in a very low-cost S&P 500 index fund...the long-term results will be superior" - Warren Buffett

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Re: Buffett Buffet

Post by SkaSka » 01 Sep 2015 17:31

If you check on Morningstar for total returns, you can see that over a 15 year period, BRK.A came out ahead of the S&P 500 on a total return basis.
BRK.JPG

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Re: Buffett Buffet

Post by Flaccidsteele » 01 Sep 2015 23:26

kcowan wrote:I heard Larry Berman say this too. I assumed he meant that Buffet's new investments (picks in last 15 years) have underperformed.
I haven't kept up with Berkshire's portfolio as I once did. All the purchases are public domain so anybody with an interest can have a go at calculating the comparison. Last I recall, Berkshire's portfolio was far outpacing the S&P500 by 2012 for virtually all but the shortest of starting periods.

Highly improbable that severe underperformance against the S&P500 occurred after 2012 for a 15 year prior start date.

But if somebody wants to go through the data, they're welcome to it.

Logically the only way the portfolio will underperform is when it becomes so large that it literally becomes the average. There is still a slight advantage to the value investor behind Berkshire's stock portfolio (despite it's $100b size).
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Re: Buffett Buffet

Post by OnlyMyOpinion » 02 Sep 2015 09:17

There is also this site showing recent purchases and gains/losses (you can click past the logon screen. I don't know how accurate the data is). I think it's a waste of time trying to second-guess Berkshire's purchases though: http://www.gurufocus.com/StockBuy.php?G ... down&n=100 .

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Re: Buffett Buffet

Post by jaybee » 07 Sep 2015 17:07

Flaccidsteele wrote:
kcowan wrote:I heard Larry Berman say this too. I assumed he meant that Buffet's new investments (picks in last 15 years) have underperformed.
I haven't kept up with Berkshire's portfolio as I once did. All the purchases are public domain so anybody with an interest can have a go at calculating the comparison. Last I recall, Berkshire's portfolio was far outpacing the S&P500 by 2012 for virtually all but the shortest of starting periods.
Flaccid, back in 2012 you disclosed owning Berkshire.

http://nextinsight.net/index.php/story- ... tting-rich

Have you sold it since 2012? And, Jim you should write a post about your experience attending the Berkshire AGM. Would be an interesting read!

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