Down goes the Dow

Ghost of Igloi wrote:

Yo,

Here is another piece this time from Jim Grant you might find interesting:

http://tablet.fuw.ch/article/the-next-thing-might-be-helicopter-money/

Igy

grant is worth reading.

incl his saying we shouldn't care so much about biotechs and some commodities. Igy.

So what’s next for the global financial markets?

The mispricing of biotech stocks or corn and soybeans is of no great consequence to financial markets at large. Interest rates are another matter. They are universal prices: They discount future cash flows, calibrate risks and define investment hurdle rates. So interest rates are the traffic signals of a market based economy. Ordinarily, some are amber, some are red and some are green. But since 2008 they have mainly been green.

agip,

I agree that the mispricing of Biotechs is not an issue as an isolated matter, however it is symptomatic of larger issues. If not why would he mention it. He also makes a point about the inevitability of investors making the same error of buying at the top and riding the asset down.

Also that is really not my photo in the Troll post.

Igy

Picture of the Troll:

https://en.m.wikipedia.org/wiki/Troll#/media/File:John_Bauer_1915.jpg

Igy

Yo,

No, this explains everything:

https://en.m.wikipedia.org/wiki/Troll#/media/File:John_Bauer_1915.jpg

Igy

Yo,

What is wrong, can you respond to legimate arguments? Do you have a lack of knowledge? Did I challenge a shallow belief system?

Igy

Ghost of Igloi wrote:

One can blindly throw money into an investment and hope that it all turns out well in the end. If one has a sufficient time horizon, then one has time to correct their mistakes. There are many people that were seduced into believing that technology stocks and housing investments would grow to the sky. The loss of wealth has never be recouped.

Igy

My response to this is the Buffett philosophy of" buy companies, not stocks." Quality never goes out of style. The companies I owned through the 1990's. I sold in Oct 1998-April 2000. But, if I had not retired, never sold my core holdings, rode out the 2000-2002 and 2008-2009 bear markets, these would have been the returns:

MSFT: 4000%

INTC 2200%

CSCO 9000%

ORCL 20000%

By comparison, the SP500 is up ~500% and Berkshire class A is up 2700%.

As for those homebuilders, I owned some of those in 2002-2005 and also since early 2012. If you take one of those--NVR--since the time I bought at the end of 2002, it is up 374%, while the SP500 is up 112%..

I think you would rather have the returns of the tech stocks listed above over the return of bonds in that period. If you bought quality tech stocks in the early 1990's and held them, the CAGR is 20%....INCLUDING the bear markets.

As far as garbage like efficient markets, random walk, etc., see the paper "The Superinvestors of Graham and Doddsville" which Warren Buffett gave as a speech in 1984 and which Ben Graham put in the Appendix of "The Intelligent Investor". Such a devastating indictment of the efficient market theory that academics teaching financial analysis won't even talk about it:

coach d,

The essence of my valuation argument is buying cash flow not stock tickers. So I think there is no argument from me on your post. The technology stocks that you highlighted are still good businesses as well as your homebuilder NVR. Unfortunately there are a large number of investors buying a story rather than a business.

Igy

Ghost of Igloi wrote:

Picture of the Troll:

https://en.m.wikipedia.org/wiki/Troll#/media/File:John_Bauer_1915.jpg

Igy

She's pretty cute.

coach d,

Benjamin Graham once said: "Operations for profit should not be based on optimism but on arthmetic." Today, too many stocks today are priced for optimism and not for profit.

Igy

Who?

Igy, are you drunk posting again? "Arthmetic"? "Today, too many stocks today...."? Stocks priced for optimism and not profit? WTF?! Usually your drunk posting occurs much later in the day.

Oh wait...it's your birthday, right? Okay, that explains it. Enjoy.

POTO,

I am going to have to pay my proof reader more. "A Red Indian Thought He Might Eat Tomatoes In Church." My elementary school teacher actually used that politically incorrect jingle. I use to pride myself on spelling skills, must be age. Speaking of age you are close on the birthday, off by a day. New age group and eligible for Medicare. Thanks though, but no booze yet.

Igy

Owl,

Benjamin Graham is considered the father of fundamental security analysis.

Igy

Ghost of Igloi wrote:

Yo,

What is wrong, can you respond to legimate arguments? Do you have a lack of knowledge? Did I challenge a shallow belief system?

Igy

You are joking, right?

Please familiarize yourself with the concepts I mentioned earlier. Then get back to me.

You know, keith richards did really well for himself as a musician. I think I'll do the same. What could go wrong?

seriously man - I know you are bragging here about your stock picking...and that's fine...but do you really want to advise people to buy individual stocks and risk losing everything...you think that is better than making 8-10% over a lifetime of investing?

there's a reason the average investor makes around 3% per year - most people are terrible at it.

Yo,

And just think of all my wasted years. To end like this. Dissed on the internet.

Igy

I think coach is just echoing WB's mantra of owning what you know. I recently read an article about the advantages of owning a handful of stocks that you believe in vs a mutual fund that invests in many stocks. I'll see if I can find it.

On another note, did you see the new Netflix documentary on Keith Richards? Very interesting and recommended for fans.

coach d wrote:

Ghost of Igloi wrote:

One can blindly throw money into an investment and hope that it all turns out well in the end. If one has a sufficient time horizon, then one has time to correct their mistakes. There are many people that were seduced into believing that technology stocks and housing investments would grow to the sky. The loss of wealth has never be recouped.

Igy

My response to this is the Buffett philosophy of" buy companies, not stocks." Quality never goes out of style. The companies I owned through the 1990's. I sold in Oct 1998-April 2000. But, if I had not retired, never sold my core holdings, rode out the 2000-2002 and 2008-2009 bear markets, these would have been the returns:

MSFT: 4000%

INTC 2200%

CSCO 9000%

ORCL 20000%

By comparison, the SP500 is up ~500% and Berkshire class A is up 2700%.

Since the end of 1999, that portfolio has lost money. 1991-2015 CAGR is 21.44%; 2000-2015 CAGR is -.04%.

Who needs fossil fuels when the hot air emanating from this thread could heat the entire world?