Reflections 2.5

How the Stock Market Works (1952)

noreply@blogger.com (Shai Dardashti) — Tue, 03 Jan 2012 15:03:00 +0000

Exactly 50 years ago...

Is this what the same video looks like, today?

The Marketplace of Ideas

noreply@blogger.com (Shai Dardashti) — Fri, 30 Dec 2011 12:48:00 +0000

I have been intrigued by the idea of creating an open source version of the "Pabrai checklist". Something all investors can use before making investment decisions - Paras (December 29, 2011)

IDEA UPDATE: RELEASED 12/30/2011

noreply@blogger.com (Shai Dardashti) — Thu, 29 Dec 2011 15:22:00 +0000

ValueInvestingResource.com has two goals:

Make learning cheaper, better, faster.
Democratize information, globally.

noreply@blogger.com (Shai Dardashti) — Thu, 29 Dec 2011 15:19:00 +0000

Rose Blumkin's business model:

"Sell Cheap, Tell the Truth."

ValueInvestingResource.com strives for nothing more and nothing less.

Learn Cheaper, Better, Faster in 2012...

noreply@blogger.com (Shai Dardashti) — Tue, 27 Dec 2011 23:36:00 +0000

What Online Resources Do You Enjoy?

noreply@blogger.com (Shai Dardashti) — Tue, 20 Dec 2011 19:04:00 +0000

What are the "Top 5" blogs (or online resources) you particularly enjoy reading?

http://tinyurl.com/Top5resources

Comments:

This is all anonymous.
Welcome to forward around the URL.

Thank you!

Related.

VALUEx India: Success!

noreply@blogger.com (Shai Dardashti) — Mon, 19 Dec 2011 06:40:00 +0000

VALUEx is inspired by three principal sources, which determine the following three bedrock principles.

Berkshire Hathaway, Wesco, Warren Buffett, Charlie Munger, Ben Graham et al.: A place(s) where like minded individuals can develop their worldly wisdom, learn to be better investors, and become better people in the process.
Wikipedia / Linux / Firefox and the Open Source revolution: No one individual either owns, or controls it. The endeavor is not for profit. Leadership comes from the group of individuals who are in the best position to contribute and who can best understand and develop the mission and the goals.
Chris Anderson / TED / Ideas worth Sharing: Content and speakers are selected using the same principle applied at TED, where the most successful talks are delivered by inspiring speakers in an inspiring way. A strict time format ensures that the speakers deliver their most valuable ideas promptly. The focus is on “Ideas worth sharing”, rather than pitching products / companies / one’s own services.

VALUEx Zurich
VALUEx Vail
VALUEx India

Wanted: VALUEx hosts
Email: shaidardashti@gmail.com

Notes from the Final Conversation with Charlie Munger

noreply@blogger.com (Dah Hui Lau) — Tue, 05 Jul 2011 10:32:00 +0000

Ben Claremon of Inoculated Investor has kindly shared his notes.

Link

2011 Berkshire Hathaway Meeting Notes

noreply@blogger.com (Shai Dardashti) — Mon, 02 May 2011 21:30:00 +0000

With gratitude to Ben Claremon and Dustin Hunter.

The Economics of the Jewelry Business

noreply@blogger.com (Farnam Street) — Wed, 27 Apr 2011 02:26:00 +0000

... Of course, price means nothing unless you are sure of the quality of what you are getting. When products are branded, such as watches and chinaware are, comparisons are simple. But jewelry is usually a "blind" item - and that puts virtually all purchasers at the mercy of the seller.

I can remember well how helpless I used to feel in a Fifth Avenue or Rodeo Drive jewelry store, where the only thing I knew for sure was that the operator had extraordinarily high overhead - and that they had to cover it in their sales price. I was also wary of the "upstairs" solo operator who operated on consignment merchandise, since that would have cost them more than merchandise bought outright, and would necessarily have inflated their retail price. And, finally, I always worried about the quality of what I was getting I couldn't tell the difference between an emerald or a diamond worth $10,000 and one whose value was $100,000. (I still can't.)

My sense of helplessness led me to an obvious conclusion: "If you don't know jewelry, know your jeweler." For that reason, I made all of my jewelry purchases at Borsheim's for many years before Berkshire Hathaway bought the company. I didn't know stones, but I did know Ike Friedman, the retailing genius who had built the business from nothing into one of the nation’s largest independent jewelry stores. When I purchased Ike's business, I did it without an audit but with full confidence that I was getting value received. And that's just what I got - precisely as I had when I purchased a single piece of jewelry from him.

...

Warren Buffett

Source

Early Buffett Partnership: Genesse Valley Gas

noreply@blogger.com (Shai Dardashti) — Sun, 17 Apr 2011 15:01:00 +0000

Circa 1954:

"[Warren Buffett] I found a little company called Genesse Valley Gas near Rochester. It had 22,000 shares out. It was a public utility that was earning about $5 per share, and the nice thing about it was you could buy it at $5 per share."

Early Buffett Partnership: Western Insurance

noreply@blogger.com (Shai Dardashti) — Fri, 15 Apr 2011 14:46:00 +0000

[Warren Buffett] I found some strange things when I was 20 years old. I went through Moody’s Bank and Finance Manual, about 1,000 pages. I went through it twice. The first time I went through, I saw a company called Western Insurance Security Company in Fort Scott, Kansas…Perfectly sound company. I knew people that represented them in Omaha. Earnings per share $20, stock price $16…I ran ads in the Fort Scott, Kansas paper to try and buy that stock – it had only 300 or 400 shareholders. It was selling at one times earnings, it had a first class (management team)…I’d never heard of Western Insurance Services until I turned that page that said Western Insurance Services. It showed earnings per share of $20 and the high was $16. Now that may not turn out to be something you can make a lot of money on, but the odds are good. It’s like a basketball coach seeing a guy 7’3” walk through the door. He may not be able to stay in school, and may be very uncoordinated, but he’s very large. So I went down to the Nebraska Insurance Department, and I got the convention reports on their insurance companies, and I read Best’s. I didn’t have any background in insurance. But I knew I could understand it if I worked at it for a while. And all I was really trying to do was disprove this thing. I was really trying to figure out something that was wrong with this. Only there wasn’t anything wrong. It was a perfectly good insurance company, a better than average underwriter, and you could buy it at one times earnings. I ran ads in the Fort Scott, Kansas paper to buy this stock when it was $20. But it came through turning the pages. No one tells you about it. You get ‘em by looking.

Compilation of Berkshire Hathaway Letters

noreply@blogger.com (Shai Dardashti) — Fri, 15 Apr 2011 14:23:00 +0000

Chapter 8 of The Intelligent Investor

noreply@blogger.com (Shai Dardashti) — Thu, 14 Apr 2011 21:43:00 +0000

Ch 8

Reflecting on Warren Buffett's investment in The Washington Post

noreply@blogger.com (Shai Dardashti) — Thu, 14 Apr 2011 02:56:00 +0000

Original Washington Post Annual Reports

The Superinvestors of Graham-and-Doddsville, by Warren Buffett (1984)

I would like to say one important thing about risk and reward. Sometimes risk and reward are correlated in a positive fashion. If someone were to say to me, "I have here a six-shooter and I have slipped one cartridge into it. Why don't you just spin it and pull it once? If you survive, I will give you $1 million." I would decline -- perhaps stating that $1 million is not enough. Then he might offer me $5 million to pull the trigger twice -- now that would be a positive correlation between risk and reward!

The exact opposite is true with value investing. If you buy a dollar bill for 60 cents, it's riskier than if you buy a dollar bill for 40 cents, but the expectation of reward is greater in the latter case. The greater the potential for reward in the value portfolio, the less risk there is.

One quick example: The Washington Post Company in 1973 was selling for $80 million in the market. At the time, that day, you could have sold the assets to any one of ten buyers for not less than $400 million, probably appreciably more. The company owned the Post, Newsweek, plus several television stations in major markets. Those same properties are worth $2 billion now, so the person who would have paid $400 million would not have been crazy.

Now, if the stock had declined even further to a price that made the valuation $40 million instead of $80 million, its beta would have been greater. And to people that think beta measures risk, the cheaper price would have made it look riskier. This is truly Alice in Wonderland. I have never been able to figure out why it's riskier to buy $400 million worth of properties for $40 million than $80 million. And, as a matter of fact, if you buy a group of such securities and you know anything at all about business valuation, there is essentially no risk in buying $400 million for $80 million, particularly if you do it by buying ten $40 million piles of $8 million each. Since you don't have your hands on the $400 million, you want to be sure you are in with honest and reasonably competent people, but that's not a difficult job.

Shai Agassi: A Better Model? (The Commonwealth Club)

noreply@blogger.com (Shai Dardashti) — Wed, 13 Apr 2011 10:00:00 +0000

Ericsson 2020 Shaping Ideas

noreply@blogger.com (Shai Dardashti) — Wed, 13 Apr 2011 10:00:00 +0000

The world is changing in a profound way, and it's not just due to the financial recession. Find out why.

Direct Link

Dan Pink: Drive, The Surprising Truth About What Motivates Us

noreply@blogger.com (Shai Dardashti) — Mon, 11 Apr 2011 10:00:00 +0000

Buffett's Investments in Asia

noreply@blogger.com (Shai Dardashti) — Sun, 10 Apr 2011 10:00:00 +0000

Buffett's Disclosures

"I started investing in Korea four years ago, when I found Korean companies’ stocks to be undervalued. I personally invested in Kia Motors, Hyundai Steel and Shinyoung Securities, in addition to Posco. At one time most of my personal investment portfolio was made up of Korean companies, but now I have sold them at reasonable prices, which had increased a lot," he said... "My Company has not sold a single share in Posco. We get dividends. And the strengthening won gives us additional earnings," he said.

Direct Link

There were two more revelations at a press conference yesterday in Daegu, South Korea, where Buffett toured a factory owned by a Berkshire unit. He said the company didn't have any Chinese holdings besides PetroChina and had kept its entire stake in Posco, Asia's third-largest steelmaker by output.

At the Daegu press conference, Buffett discussed his own investments in South Korea as well as Berkshire's. He mentioned three companies in which he bought stakes in past years, Hyundai Steel Co., Kia Motors Corp., and Shinyoung Securities Co., and said he still had ``one Korean stock left.''

Direct Link

PetroChina: A Look Back

The following is a short case study of Berkshire Hathaway’s investment—from when the first purchase was made five years ago to when the entire stake was sold over the past month.

Using the $100 billion estimated value at the time of purchase, Buffett valued PetroChina’s enterprise value at about 12x operating income. Assuming Buffett can’t predict oil prices or precise currency fluctuations, this seems like a fairly reasonable multiple for the largest oil company in one of the world’s fastest growing economies... The table below shows a comparison between the price of oil, intrinsic value and market price since the investment was made.

In a more worst-case scenario (some unforeseen event), PetroChina’s value could have decreased up to 72% over the years, and assuming there was no price/value gap Buffett would have no permanent loss of capital. This would be an extremely rare Black-Swan-type event—and even then, there would be little to no loss.

Direct Link

Stick And Carrot: Why Beijing Will Become The World’s Electric Vehicle Capital

noreply@blogger.com (Shai Dardashti) — Sun, 10 Apr 2011 01:22:00 +0000

Excerpt:

Yesterday, we were first to run with the story that Beijing most likely will become EV capital of the world. Not because Beijing scientists have developed the miracle battery. Not because Chinese EVs suddenly go 400 miles on a single charge. Physics did not change. Beijing changes. Months ago, new car buyers in Beijing stopped dreaming about buying a new car.That dream was shattered. Now suddenly, an EV has become the only car a new car buyer can buy and drive tomorrow. Or on Monday. If one would be on sale. Here is what happened...

Full Story

Sir Ken Robinson: Changing Education Paradigms

noreply@blogger.com (Shai Dardashti) — Sat, 09 Apr 2011 10:00:00 +0000

A Conversation with Charlie Munger (Michigan)

noreply@blogger.com (Shai Dardashti) — Fri, 08 Apr 2011 21:41:00 +0000

Nicholas Christakis: How Social Networks Predict Epidemics (TED@Cannes 2010)

noreply@blogger.com (Shai Dardashti) — Fri, 08 Apr 2011 10:00:00 +0000

Berkshire Hathaway Shareholder Weekend Notes

noreply@blogger.com (Shai Dardashti) — Thu, 07 Apr 2011 14:07:00 +0000

Chris Anderson: How Web Video Powers Global Innovation (TEDGlobal 2010)

noreply@blogger.com (Shai Dardashti) — Thu, 07 Apr 2011 10:00:00 +0000