Black Monday

[Panda-NZ-]

This isn't the USSR.

The SOE model ("E" meaning "Enterprise") are run on private sector principles - which is why they were so easy to privatise.

[Panda-NZ-]

Yes... And how do you get higher wages and kiwisaver?

You have to produce more goods and services in relation to inputs.


Not more, better goods and services (which can get a higher price).

Kiwisaver is a matter of simple govt edict.

[SailorRob]

Not more, better goods and services (which can get a higher price).

Kiwisaver is a matter of simple govt edict.

Ok bro why not make kiwisaver 50% then?

Government just need to click fingers and kiwisaver can be way higher and all will be well. OK bro.

Correct, better goods and services will also work.

[SailorRob]

The SOE model ("E" meaning "Enterprise") are run on private sector principles - which is why they were so easy to privatise.

Oh man... Very funny.

The state should take over all industry and just run it under the enterprise model.

[Panda-NZ-]

Oh man... Very funny.

The state should take over all industry and just run it under the enterprise model.

That's the chinese approach I think.

Nah, let's simply keep it as it is. The best things in life often involve compromise. :)

[alokdhir]

W69 ....if NZ10Y goes from high of 5.62% to 4.5% in next few days ...that shud help valuations a lot ...I think !! NZX50G is coiling up at the moment for Santa to arrive maybe just about at right time . Our gloomy views here and in the real world may help uncoil it bigger ...lol

TRA / MFT / KFL are my picks to participate for Xmas gifts ....imho

Everyone's views most welcome

[Panda-NZ-]

W69 ....if NZ10Y goes from high of 5.62% to 4.5% in next few days ...that shud help valuations a lot ...I think !! NZX50G is coiling up at the moment for Santa to arrive maybe just about at right time . Our gloomy views here and in the real world may help uncoil it bigger ...lol

TRA / MFT / KFL are my picks to participate for Xmas gifts ....imho

Everyone's views most welcome

Historically NZX doesn't do well in the opening days of a right-wing govt.

Look overseas (particularly currency hedged if you expect the NZD to spike). Or leveraged funds.

[SailorRob]

That's the chinese approach I think.

Nah, let's simply keep it as it is. The best things in life often involve compromise. :)

Yes, and with the kiwisaver boost the government can simply raise minimum wage to $50 as well.

No that's far far from the chinese approach!

[Panda-NZ-]

Yes, and with the kiwisaver boost the government can simply raise minimum wage to $50 as well.

No that's far far from the chinese approach!

I prefer things that are evidence based and practical.

More effective is a roadmap to $50 in 2040, with stages along the way.

[Daytr]

Yes I agree. But two different arguments.

This is talking about them being sold too cheap.

My concern is the state owning them at all.

This isn't the USSR.

They never would have been built if it wasn't for the Government. Most power generation historically was built by Governments and sold off under ne-liberalism so your concern is invalid.

Since the sale there has been mass mismanagement, price manipulation & soaring prices on assets that were already paid for by the tax payer.

[SailorRob]

They never would have been built if it wasn't for the Government. Most power generation historically was built by Governments and sold off under ne-liberalism so your concern is invalid.

Since the sale there has been mass mismanagement, price manipulation & soaring prices on assets that were already paid for by the tax payer.

If it wasn't for your beloved state, we'd all be using candles.

[Panda-NZ-]

If it wasn't for your beloved state, we'd all be using candles.

These debates are more relevant for America.

In NZ we do things our own way.

[SailorRob]

These debates are more relevant for America.

In NZ we do things our own way.

And what great success we're having.

[SailorRob]

They never would have been built if it wasn't for the Government. Most power generation historically was built by Governments and sold off under ne-liberalism so your concern is invalid.

Since the sale there has been mass mismanagement, price manipulation & soaring prices on assets that were already paid for by the tax payer.

I have an idea for a new system.

The state, on behalf of citizens, builds and runs everything and then distributes everything equally.

Nobody would go without.

[FTG]

These debates are more relevant for America.



...and they are also not relevant in this thread.

Ms Red Panda - best you go and do your Bamboo farting in a more appropriate thread (plenty of power SOE related threads to pick from), rather than continually polluting this one.

[Panda-NZ-]

Power related stocks which make up a large portion of the NZX aren't relevant?

That's wierd.

[FTG]

Power related stocks which make up a large portion of the NZX aren't relevant?

That's wierd.

But just before you exit the the "Black Monday" thread - perhaps heading to https://www.sharetrader.co.nz/showthread.php?11636-Power-shares&highlight=power

...I will address your super glib comment,


If it was privately run we'd have blackouts.



Please, let's keep to the facts. It is acknowledged that, globally, State owned/controlled Power entities are 5+ times more likely to cause brownouts, and 9+ times more likely to cause blackouts than privately run Power entities.

It is of no surprise that history has shown, the more State "controlled", & hence less privately owned a Power entity, the higher the incidences of brownout & blackouts.

[Snoopy]

Removed as off topic and transferred to the 'Power Shares ' thread as rightly suggested by FTG.

https://www.sharetrader.co.nz/showthread.php?11636-Power-shares&p=1029914&viewfull=1#post1029914

SNOOPY

[SailorRob]

And as you exit the door of the "Black Monday" thread, perhaps heading to https://www.sharetrader.co.nz/showthread.php?11636-Power-shares&highlight=power

...addressing your super glib comment,



Let's keep to the facts huh. Globally, it has been shown that State owned/controlled Power entities are 5+ times more likely to cause brownouts, and 9+ times more likely to cause blackouts, than privately run Power entities.

And imagine trying to get a new connection from a state owned facility, or hook up a new town...

Guess it's communist manifesto by candle light.

[Panda-NZ-]

That is one way of looking at things. The other side of the card is that there have been no pre-advertised and planned rolling power cuts since the privatization process, and there has been:


They are still 51% state owned...

[Ggcc]

I prefer things that are evidence based and practical.

More effective is a roadmap to $50 in 2040, with stages along the way.

It would be better to freeze the minimum wage, so that small businesses don't need to increase prices so quickly. The only thing benefitting from these rise in minimum wages is the government. The minimum wage worker generally suffers if their wages are forced up.

[Panda-NZ-]

It would be better to freeze the minimum wage, so that small businesses don't need to increase prices so quickly.

It would be better for small business to make more efficient use of their labour (ie increase their productivity and sell more premium goods).

Minimum wage doesn't matter in that case.

[SailorRob]

It would be better to freeze the minimum wage, so that small businesses don't need to increase prices so quickly. The only thing benefitting from these rise in minimum wages is the government. The minimum wage worker generally suffers if their wages are forced up.

Correct, their minimum wage rises along with the cost of everything they need to buy. And then the company figures out a way to do without them...

[Valuegrowth]

https://www.youtube.com/watch?v=qhMN8JDCPgs

[Valuegrowth]

https://www.youtube.com/watch?v=e2HO3p0uIYk

[Valuegrowth]

https://www.youtube.com/watch?v=HZ1iUgDXoR0

[winner69]

Headline Bloomberg ‘legendary short seller Chanos to close his main hedge funds’

If the greatest short seller the world has ever seen has to shut down his fund, what chance do you have shorting stocks?

[SailorRob]

Headline Bloomberg ‘legendary short seller Chanos to close his main hedge funds’

If the greatest short seller the world has ever seen has to shut down his fund, what chance do you have shorting stocks?

Exactly right.

Unless you're Daytr you have no chance.

[Daytr]

Headline Bloomberg ‘legendary short seller Chanos to close his main hedge funds’

If the greatest short seller the world has ever seen has to shut down his fund, what chance do you have shorting stocks?

Do you think he HAS to shut down his fund?
Only $200M under management down from over $8Bln at one stage.
Sounds like he has been winding it down for a while and is now basically retiring.
So really not much to see here.

If you are a trader, not an investor, it's silly to only play one side of the market.
However I short the market far less than I buy and in smaller size.

[Bjauck]

Ok bro why not make kiwisaver 50% then?

Government just need to click fingers and kiwisaver can be way higher and all will be well. OK bro.

Correct, better goods and services will also work.
Countries like the USA and UK have pension and savings plans that allow contributions to be untaxed and from gross income. So the incentive is for people have much larger savings and pension pots there. Their pension funds have lower taxes. Because of NZ’s lack of a gross contribution pension scheme and the lack of a general CGT and stamp duties, long term leveraged investor housing still takes the Crown as the de facto tax efficient way to amass a pension pot. We are still stuck in the Nineteenth Century Victorian age in that respect.

‘The NZ state in effect has subsidised landlord’s investment in housing. (Also it has subsidised owner occupiers too)

[SailorRob]

Do you think he HAS to shut down his fund?
Only $200M under management down from over $6Bln at one stage.
Sounds like he has been winding it down for a while and is now basically retiring.
So really not much to see here.

If you are a trader, not an investor, it's silly to only play one side of the market.
However I short the market far less than I buy and in smaller size.

How successful has your short selling been overall?

And what is the primary reason you've been more successful than David Einhorn?

[SailorRob]

Countries like the USA and UK have pension and savings plans that allow contributions to be untaxed and from gross income. So the incentive is for people have much larger savings and pension pots there. Their pension funds have lower taxes. Because of NZ’s lack of a gross contribution pension scheme and the lack of a general CGT and stamp duties, long term leveraged investor housing still takes the Crown as the de facto tax efficient way to amass a pension pot. We are still stuck in the Nineteenth Century Victorian age in that respect.

Good points yes.

[Daytr]

How successful has your short selling been overall?

And what is the primary reason you've been more successful than David Einhorn?

I'm a Commie remember?
With no place in capital markets.
Apparently I'm a liar, a fraud, a scammer & a chisler among many other repeated insults you have fired.

Last time we want on this merry go round you asked plenty of questions, which I answered, asked for examples, which I provided.
Not one single acknowledgement from you.

So if you think I am going to keep feeding a troll, you are going to go hungry.
Go on spit the dummy like the child you are.

Meanwhile I will enjoy my Sunday & engage with reasonable posters.

[Daytr]

Countries like the USA and UK have pension and savings plans that allow contributions to be untaxed and from gross income. So the incentive is for people have much larger savings and pension pots there. Their pension funds have lower taxes. Because of NZ’s lack of a gross contribution pension scheme and the lack of a general CGT and stamp duties, long term leveraged investor housing still takes the Crown as the de facto tax efficient way to amass a pension pot. We are still stuck in the Nineteenth Century Victorian age in that respect.

‘The NZ state in effect has subsidised landlord’s investment in housing. (Also it has subsidised owner occupiers too)

What you say makes sense however there is one obvious exception & that's Australia.
They have a large stamp duty, CGT of sorts, tax Super contributions at only 15% & employers make the contribution I.e it's over & above your salary at around 9%.

And yet housing is played there like it is here.
Why? Supply & demand driven by mass immigration, just like here.

At least the Australia taxes those gains, shame we can't learn from what has worked relatively well across the ditch.

[SailorRob]

I'm a Commie remember?
With no place in capital markets.
Apparently I'm a liar, a fraud, a scammer & a chisler among many other repeated insults you have fired.

Last time we want on this merry go round you asked plenty of questions, which I answered, asked for examples, which I provided.
Not one single acknowledgement from you.

So if you think I am going to keep feeding a troll, you are going to go hungry.
Go on spit the dummy like the child you are.

Meanwhile I will enjoy my Sunday & engage with reasonable posters.

I never called you a chisler, but now you mention it...

Snivelling commie I said not stock standard.

I doubt you are a better short seller than David Einhorn.

And he doubts that net he's ever made money short selling.

[Bjauck]

What you say makes sense however there is one obvious exception & that's Australia.
They have a large stamp duty, CGT of sorts, tax Super contributions at only 15% & employers make the contribution I.e it's over & above your salary at around 9%.

And yet housing is played there like it is here.
Why? Supply & demand driven by mass immigration, just like here.

At least the Australia taxes those gains, shame we can't learn from what has worked relatively well across the ditch. Australia at least has greater diversity of household wealth, with pension funds contributing a much greater proportion then in NZ. KiwiSaver in its current form will never contribute as much as pension funds in Australia.

In the past, Australia also allowed negative gearing with losses from rental properties being deducted from other income for tax purposes. I think Their CGT scheme also allows material concessionary rates depending on length of time the asset has been owned.

[Daytr]

Australia at least has greater diversity of household wealth, with pension funds contributing a much greater proportion then in NZ. KiwiSaver in its current form will never contribute as much as pension funds in Australia.

In the past, Australia also allowed negative gearing with losses from rental properties being deducted from other income for tax purposes. I think Their CGT scheme also allows material concessionary rates depending on length of time the asset has been owned.

Agreed, we could learn a thing or two from Aussie in regards their Super Scheme & alleviate the massive pension issue that is not being addressed.

[ValueNZ]

What you say makes sense however there is one obvious exception & that's Australia.
They have a large stamp duty, CGT of sorts, tax Super contributions at only 15% & employers make the contribution I.e it's over & above your salary at around 9%.

And yet housing is played there like it is here.
Why? Supply & demand driven by mass immigration, just like here.

At least the Australia taxes those gains, shame we can't learn from what has worked relatively well across the ditch.
I somewhat agree with you about New Zealand needing a capital gains tax, but with one caveat. A CGT would be okay only if in conjunction with the CGT other taxes were decreased proportionately. No point in sending additional $$$ to a government that sucks at spending.

[Valuegrowth]

Still there can be chances for sophisticated traders to short stocks as they have experience in the game. However, they also can make mistakes. I am a long player for strong balance sheet firms provided I buy them at great discount to the market (at very attractive prices). I can sleep nicely without worry.

https://www.marketbeat.com/short-interest/

Need impeccable management skills to trade and short stocks. Otherwise, you are going to lose money. Traders could lose heavily if market plummet suddenly. Even investors become traders by selling stocks early when they realized that they have made a mistake or if they see fundamentals are going to get hit. I have done this over the last 2 years. I also manged to do my best trading ever as soon as world started to recover from covid-19 even though I am not a trader. Nice video on trading except picture of the falling knife.


https://www.youtube.com/watch?v=Vxc1WgY8exk
Headline Bloomberg ‘legendary short seller Chanos to close his main hedge funds’

If the greatest short seller the world has ever seen has to shut down his fund, what chance do you have shorting stocks?

[ValueNZ]

Headline Bloomberg ‘legendary short seller Chanos to close his main hedge funds’

If the greatest short seller the world has ever seen has to shut down his fund, what chance do you have shorting stocks?
Michael Burry closed his SP500 puts apparently booking a ~40% loss.

[SailorRob]

https://www.nzherald.co.nz/lifestyle/shoppers-at-westfield-newmarket-mall-stuck-in-their-cars-for-hours-in-traffic-jam/H7IZZYUPNFDOZAQIGTMAG3TBMM/?utm_medium=Social&utm_campaign=nzh_fb&utm_source=Facebook&fbclid=IwAR3zM0dveXVZ8JuLUrPtnIH2kvQHyhhALCWrez2HA A-NI27tXHf3_IV2HKQ#Echobox=1700286859

This economy is DEAD.

[mike2020]

I couldn't read past scary trapped in a mall. No active shooter, no Hamas or rocket fire. Paaarthetic.

[causecelebre]

I’ve been reading “The Fund” an unofficial biography of Ray Dalio. What an outright prick and narcissist. Bridgewater was essentially a cult of The Principles. Regardless of the size and success of his funds even his staff say he picked 15 of the last 0 recessions. Even if you hero worship Dalio (like some here seem to do given recent posts) it’s worth a read and may open your eyes. It was written by a long time WSJ journalist who has written much about Bridgewater. Dalio refused to be interviewed and has not wanted this book to be published. Thank goodness for freedom of the press in the US as even Dalios money and lawyers couldn’t prevent censorship

[SailorRob]

I’ve been reading “The Fund” an unofficial biography of Ray Dalio. What an outright prick and narcissist. Bridgewater was essentially a cult of The Principles. Regardless of the size and success of his funds even his staff say he picked 15 of the last 0 recessions. Even if you hero worship Dalio (like some here seem to do given recent posts) it’s worth a read and may open your eyes. It was written by a long time WSJ journalist who has written much about Bridgewater. Dalio refused to be interviewed and has not wanted this book to be published. Thank goodness for freedom of the press in the US as even Dalios money and lawyers couldn’t prevent censorship

Agreed. I used to rate him but he's just another shyster.

[Valuegrowth]

https://www.youtube.com/watch?v=_BE5T8c3LOc

[Valuegrowth]

This writer says every bull market has corrections and pull backs and the odds are favouring for a big Q4 rally.

https://nz.finance.yahoo.com/news/why-stocks-poised-finish-strong-194100510.html

[Baa_Baa]

This writer says every bull market has corrections and pull backs and the odds are favouring for a big Q4 rally.

https://nz.finance.yahoo.com/news/why-stocks-poised-finish-strong-194100510.html

Stocks take the stairs up and the elevator down, I think you must be very confused, analysis paralysis, about what to do with your worry beads and my advice would be, just stop listening to all these 'opinions', and find a few facts that you can track and form your own opinions and act on those. All these commentators have vested interests and are, in my experience, very distracting and not aligned to your own vested interests. My own experience a long time ago, was that my investment performance improved when I just ignored all of these numpties, none of them have a part in my investment considerations or analysis routines anymore.

[Valuegrowth]

Thank you Baa.Baa for your great advice.


Stocks take the stairs up and the elevator down, I think you must be very confused, analysis paralysis, about what to do with your worry beads and my advice would be, just stop listening to all these 'opinions', and find a few facts that you can track and form your own opinions and act on those. All these commentators have vested interests and are, in my experience, very distracting and not aligned to your own vested interests. My own experience a long time ago, was that my investment performance improved when I just ignored all of these numpties, none of them have a part in my investment considerations or analysis routines anymore.

[Hoop]

Stocks take the stairs up and the elevator down, I think you must be very confused, analysis paralysis, about what to do with your worry beads and my advice would be, just stop listening to all these 'opinions', and find a few facts that you can track and form your own opinions and act on those. All these commentators have vested interests and are, in my experience, very distracting and not aligned to your own vested interests. My own experience a long time ago, was that my investment performance improved when I just ignored all of these numpties, none of them have a part in my investment considerations or analysis routines anymore.

Baa_Baa your post deserves a medal..unfortunately the best I can do is click the black star to add to your reputation..:mellow:

PS...hmmmm it wont let me...It says I have to spread it around first.

[iceman]

Baa_Baa your post deserves a medal..unfortunately the best I can do is click the black star to add to your reputation..:mellow:

PS...hmmmm it wont let me...It says I have to spread it around first.

Ditto from here

[alokdhir]

https://www.nzherald.co.nz/business/wholesale-market-points-to-lower-nz-mortgage-rates/IZ2KCLNCCFEIHMVTHA6UAUEU54/

US is more dynamic market , there already long term mortgage rates are down ...we shud follow ...so shud stocks react eventually

As experts have said ...simple equation holds true ...rates up stocks down ...rates down stocks will be up also !!

[Daytr]

Stocks take the stairs up and the elevator down, I think you must be very confused, analysis paralysis, about what to do with your worry beads and my advice would be, just stop listening to all these 'opinions', and find a few facts that you can track and form your own opinions and act on those. All these commentators have vested interests and are, in my experience, very distracting and not aligned to your own vested interests. My own experience a long time ago, was that my investment performance improved when I just ignored all of these numpties, none of them have a part in my investment considerations or analysis routines anymore.

Whaaaat !
But YouTube is the source of truth...

[bull....]

Stocks take the stairs up and the elevator down, I think you must be very confused, analysis paralysis, about what to do with your worry beads and my advice would be, just stop listening to all these 'opinions', and find a few facts that you can track and form your own opinions and act on those. All these commentators have vested interests and are, in my experience, very distracting and not aligned to your own vested interests. My own experience a long time ago, was that my investment performance improved when I just ignored all of these numpties, none of them have a part in my investment considerations or analysis routines anymore.

yes great advice , i ignore everything buffett etc say .... numpties lol

[winner69]

https://www.nzherald.co.nz/business/wholesale-market-points-to-lower-nz-mortgage-rates/IZ2KCLNCCFEIHMVTHA6UAUEU54/

US is more dynamic market , there already long term mortgage rates are down ...we shud follow ...so shud stocks react eventually

As experts have said ...simple equation holds true ...rates up stocks down ...rates down stocks will be up also !!

Yes mate, life is so simple eh

So no worries

[causecelebre]

Big tech is ripping again today. QQQ's almost at all time highs. Nvidia at ATH before earnings tomorrows earnings. MSFT at ATH. Squeaky bum time for any fund manager out of position.

[ValueNZ]

yes great advice , i ignore everything buffett etc say .... numpties lol
Buffett doesn't make macroeconomic forecasts.

[SailorRob]

Buffett doesn't make macroeconomic forecasts.


Yeah when did he become a commentator... No secret bulls*>[ ignores what he says.

[bull....]

Speaking to MBA students at the University of Florida in 1998, Buffett said that he does not concern himself with the "macro stuff" because it is so difficult to understand.

there you go thats why he doesnt worry about it

[SailorRob]

Speaking to MBA students at the University of Florida in 1998, Buffett said that he does not concern himself with the "macro stuff" because it is so difficult to understand.

there you go thats why he doesnt worry about it

Do you think it's easier for you to understand than it is for him?

[bull....]

Do you think it's easier for you to understand than it is for him?

if you understood buffett you would know he is basically saying thats not my strenght and its not needed in my plan. if i used macro and achieved a return of 2% / annum in my plan ... yes i would be better than buffett as far as macro investing goes

[ValueNZ]

“In January of 2016, I was having dinner with Warren Buffett. And he says to me, for a piece of information to be desirable, it has to satisfy two criteria. It has to be important. It has to be knowable. The macro is very important. Seems to be the thing that moves the market most, but it's not knowable … You've got Buffett, you have Munger, you have Peter Lynch, you have Bill Miller, and you can go on down the list of successful investors. Now, give me a list of the macro investors who have been successful.” - Howard Marks

[bull....]

george soro's 20% odd / annum annualised over 40yrs obviously they never invited him

[Daytr]

“In January of 2016, I was having dinner with Warren Buffett. And he says to me, for a piece of information to be desirable, it has to satisfy two criteria. It has to be important. It has to be knowable. The macro is very important. Seems to be the thing that moves the market most, but it's not knowable … You've got Buffett, you have Munger, you have Peter Lynch, you have Bill Miller, and you can go on down the list of successful investors. Now, give me a list of the macro investors who have been successful.” - Howard Marks

Macro players are generally traders not investors. Stop confusing the two.

[SailorRob]

Macro players are generally traders not investors. Stop confusing the two.


Exactly. Traders can and do return over 100% per year.

Investors can't do this.

[Valuegrowth]

Exactly. Traders can and do return over 100% per year.

Investors can't do this. Yes traders can do return over 100% provided they buy after doing their home work and identifying trend. Most of the time traders lose money but just like intelligent investors there are intelligent traders. Sometimes I become a trader to rebalance my portfolio and to protect my capital.Investors also lose money by picking a wrong investment.

[bull....]

Exactly. Traders can and do return over 100% per year.

Investors can't do this.

exactly. thats why buffett only does 20% per year

[bull....]

markets tune changing in NZ. next 6 mths economic data must be going to be pretty bad

Markets are now pricing in about three interest rate cuts from the middle of next year

https://www.stuff.co.nz/business/money/301012668/relief-may-be-in-sight-for-interest-rates

Big Nvida earnings after the bell

[SailorRob]

At what 12 month rate of return would you sell your entire stock portfolio to invest at if you had the opportunity?

So only 12 months.

I'm not sure what the rate would be for me, but I would NOT currently do it at 15%.

It's an interesting thought exercise.

[SailorRob]

exactly. thats why buffett only does 20% per year

Doesn't do anything close to that. He did in the past, you're getting confused with long running CAGR.

[ValueNZ]

At what 12 month rate of return would you sell your entire stock portfolio to invest at if you had the opportunity?

So only 12 months.

I'm not sure what the rate would be for me, but I would NOT currently do it at 15%.

It's an interesting thought exercise.
If that were a 10 year offer of 15% CAGR I'd probably take it. But for one year it'd probably need to be 25-30% solely because my portfolio has significantly underperformed over the last year due to my concentration in Oceania Healthcare. I still expect those shares to eventually rerate to fair value, but I have no clue when that could be, but it could be over the next year.

I don't know if 25%-30% sounds too high but realistically theres no way in my mind I'd take any less.

[bull....]

At what 12 month rate of return would you sell your entire stock portfolio to invest at if you had the opportunity?

So only 12 months.

I'm not sure what the rate would be for me, but I would NOT currently do it at 15%.

It's an interesting thought exercise.

if anyone banked there outcome on a 12 mth return only , i would call them nut's

[mike2020]

At what 12 month rate of return would you sell your entire stock portfolio to invest at if you had the opportunity?

So only 12 months.

I'm not sure what the rate would be for me, but I would NOT currently do it at 15%.

It's an interesting thought exercise.

That is interesting, 2 years ago my nz portfolio was all div payers at a high and TD rates were dismal. Ironically they are all still paying the same more or less return at a much lower share price. The average drop in share price is probably 35%. I would have to think a few points south from the reserve bank and 15% would be an easy target in under 12 months plus divs.

[SailorRob]

If that were a 10 year offer of 15% CAGR I'd probably take it. But for one year it'd probably need to be 25-30% solely because my portfolio has significantly underperformed over the last year due to my concentration in Oceania Healthcare. I still expect those shares to eventually rerate to fair value, but I have no clue when that could be, but it could be over the next year.

I don't know if 25%-30% sounds too high but realistically theres no way in my mind I'd take any less.

You are bang on.

[SailorRob]

That is interesting, 2 years ago my nz portfolio was all div payers at a high and TD rates were dismal. Ironically they are all still paying the same more or less return at a much lower share price. The average drop in share price is probably 35%. I would have to think a few points south from the reserve bank and 15% would be an easy target in under 12 months plus divs.

Agreed yep.

[Daytr]

At what 12 month rate of return would you sell your entire stock portfolio to invest at if you had the opportunity?

So only 12 months.

I'm not sure what the rate would be for me, but I would NOT currently do it at 15%.

It's an interesting thought exercise.

Why would you measure your exit with rate of return? Be it investing or trading?
To provide an extreme example, Bitcoin.
If you invested at $100 & decided I will get out at 100% return i.e $4. You would be kicking yourself.

I set my exit looking at a combination of fundamentals and charts & continuously reassessing as new information comes to hand. That could lower or raise my exit price.

Personally I would look at it completely the opposite of what you wrote.
I.e At entry point that's when I look at my likely rate of return. I.e is it worth investing in.
Then that gets continuously re-assessed along the way.

[causecelebre]

If that were a 10 year offer of 15% CAGR I'd probably take it. But for one year it'd probably need to be 25-30% solely because my portfolio has significantly underperformed over the last year due to my concentration in Oceania Healthcare. I still expect those shares to eventually rerate to fair value, but I have no clue when that could be, but it could be over the next year.

I don't know if 25%-30% sounds too high but realistically theres no way in my mind I'd take any less.


Jim Simon's RenTech 62% annualised over 40 years. Tidy in anyone's book

[SailorRob]

Why would you measure your exit with rate of return? Be it investing or trading?
To provide an extreme example, Bitcoin.
If you invested at $100 & decided I will get out at 100% return i.e $4. You would be kicking yourself.

I set my exit looking at a combination of fundamentals and charts & continuously reassessing as new information comes to hand. That could lower or raise my exit price.

Personally I would look at it completely the opposite of what you wrote.
I.e At entry point that's when I look at my likely rate of return. I.e is it worth investing in.
Then that gets continuously re-assessed along the way.

I have no idea what you're talking about.

I posted an interesting thought exercise which a few people responded to coherently.

Suggest you do the same.

[SailorRob]

Jim Simon's RenTech 62% annualised over 40 years. Tidy in anyone's book

Hahaha hahaha

[causecelebre]

...Big Nvida earnings after the bell

Bull, Do you have the inside line or are you expecting? I'm keenly awaiting...

[SailorRob]

Jim Simon's RenTech 62% annualised over 40 years. Tidy in anyone's book

Hope they took a bit of capital out otherwise they'd consume the GDP of the entire universe.

That's lame compared to Day Traders mates.

[causecelebre]

Hope they took a bit of capital out otherwise they'd consume the GDP of the entire universe.

That's lame compared to Day Traders mates.

It was 'only' 39% after fees. I just finished "The man who solved the market" by Gregory Zuckerman. I'm inclined towards quant strategies and found it a very interesting read

[Daytr]

I have no idea what you're talking about.

I posted an interesting thought exercise which a few people responded to coherently.

Suggest you do the same.

Wow that says a lot.

[causecelebre]

NVDA smashed it! $4.02 EPS vs $3.37 expected. Rev $18.12b vs $16.18b expected

[bull....]

NVDA smashed it! $4.02 EPS vs $3.37 expected. Rev $18.12b vs $16.18b expected

smashed it alright. another stock id consider a core holding. also like amd.

[Daytr]

smashed it alright. another stock id consider a core holding. also like amd.

Certainly did but it seems that a bit if buy the rumour / sell the fact as the SP is down 1% after the announcement.

Seems like there maybe a few headwinds due to export restrictions going forward as well according to the headlines.

Tbh I don't know enough about the company except for monitoring its stellar growth.

[causecelebre]

Certainly did but it seems that a bit if buy the rumour / sell the fact as the SP is down 1% after the announcement.

Seems like there maybe a few headwinds due to export restrictions going forward as well according to the headlines.

Tbh I don't know enough about the company except for monitoring its stellar growth.

For sure. It was already priced in, particularly yesterday. The call noted direct selling to restricted destinations has contributed directly to data centre revenues. Kress (CFO) also noted on the call that sales to other regions will more than offset those to restricted areas. That said, she also noted they don't have a clear view of the magnitude of impact over the long term

[ValueNZ]

Jim Simon's RenTech 62% annualised over 40 years. Tidy in anyone's book
His fund isn't compounding capital at that rate.

[Daytr]

His fund isn't compounding capital at that rate.

So the results are even more impressive right?
Go to the bank if you want to compound.

[SailorRob]

So the results are even more impressive right?
Go to the bank if you want to compound.

Math isn't your strong point is it!!

[ValueNZ]

So the results are even more impressive right?
Go to the bank if you want to compound.
No definitely a lot less impressive. Given enough time even a 10% compound growth rate would beat 60% non-compounded growth rate.

[Daytr]

No definitely a lot less impressive. Given enough time even a 10% compound growth rate would beat 60% non-compounded growth rate.

You really need to think about what you are writing.
Where do you think the money they are not compounding is going?
They could choose to compounding it and then what would their returns be?
It's like valuing a stock with the same returns after dividends as one not paying a dividend.
I think my math is fine.

[ValueNZ]

You really need to think about what you are writing.
Where do you think the money they are not compounding is going?
They could choose to compounding it and then what would their returns be?
It's like valuing a stock with the same returns after dividends as one not paying a dividend.
I think my math is fine.
I know exactly what I wrote. I said it's uncompounded and you called it even more impressive? More impressive because it's not being compounded? How?

[causecelebre]

His fund isn't compounding capital at that rate.

Sorry buddy. I know Buffett is your hero...

https://www.cnbc.com/2020/09/08/billionaire-warren-buffett-most-overlooked-fact-about-how-he-got-so-rich.html search the page for Jim Simons....Here's a quote from the CNBC article

Jim Simons (https://www.cnbc.com/james-simons/), founder of the hedge fund Renaissance Technologies, has compounded money at 66% annually since 1988. No one comes close to this record. As we just saw, Buffett has compounded at roughly 22% annually, a third as much.

Simons’ net worth, as I write, is around $23 billion (https://www.forbes.com/profile/jim-simons/#7ee555413b6a). He is 72% less rich than Buffett.

Why the difference, if Simons is such a better investor? Because Simons did not find his investment stride until he was 50 years old. He’s had less than half as many years to compound as Buffett. Had Simons earned his 66% annual returns for the 70-year span Buffett has built his wealth, he’d be worth — please hold your breath — $63,900,781,780,748,160,000.

[Daytr]

I know exactly what I wrote. I said it's uncompounded and you called it even more impressive? More impressive because it's not being compounded? How?

Because the annual return is higher despite not being compounded. It's being paid out.
What would their returns be if they chose not to pay out returns & compounded.
So to return 60% without compounding is hugely impressive.
Get it?

[SailorRob]

Because the annual return is higher despite not being compounded. It's being paid out.
What would their returns be if they chose not to pay out returns & compounded.
So to return 60% without compounding is hugely impressive.
Get it?

Wow! One of you has just done his calculus exam. The other clearly has never done math beyond 4th form.

[Daytr]

Wow! One of you has just done his calculus exam. The other clearly has never done math beyond 4th form.

OK here is it explained.
I invest $1m I get a dividend of $600k per annum.
I invest that $600k each year in something else that is paying 10% return each year and I compounded it.
I'm still getting my $600k a year to invest elsewhere.
Or perhaps pay off my home loan that's at 7% pa.
Am I better off?
If I had a choice I would reinvest in the same fund I.e compounded at 60% but I don't know the details of the fund and perhaps it's a closed fund as I suspect.

[ValueNZ]

Because the annual return is higher despite not being compounded. It's being paid out.
What would their returns be if they chose not to pay out returns & compounded.
So to return 60% without compounding is hugely impressive.
Get it?
An annualised return as a percentage doesn't grow larger just because you choose compound your capital. It's not just an average of the total return divided by the number of years dude.

By that logic Berkshire has an annualised return of 65,301%... LOL

[ValueNZ]

OK here is it explained.
I invest $1m I get a dividend of $600k per annum.
I invest that $600k each year in something else that is paying 10% return each year and I compounded it.
I'm still getting my $600k a year to invest elsewhere.
Or perhaps pay off my home loan that's at 7% pa.
Am I better off?
If I had a choice I would reinvest in the same fund I.e compounded at 60% but I don't know the details of the fund and perhaps it's a closed fund as I suspect.
Agreed but you're changing the topic of discussion. You seem to think a 60% return without compounding is more impressive than compounding at 60%. At least that's what you've told us.

[Daytr]

Agreed but you're changing the topic of discussion. You seem to think a 60% return without compounding is more impressive than compounding at 60%. At least that's what you've told us.

Nope I never said that. I said 60% uncompounded is impressive. I.e imagine what it would be if it was compounding.
But 60% uncompounded pa. Is a lot more impressive than 10% pa (to quote you) compounded as you get to utilize that 60% payout each year anywhere you want.

[ValueNZ]

Sorry buddy. I know Buffett is your hero...

https://www.cnbc.com/2020/09/08/billionaire-warren-buffett-most-overlooked-fact-about-how-he-got-so-rich.html search the page for Jim Simons....Here's a quote from the CNBC article

Jim Simons (https://www.cnbc.com/james-simons/), founder of the hedge fund Renaissance Technologies, has compounded money at 66% annually since 1988. No one comes close to this record. As we just saw, Buffett has compounded at roughly 22% annually, a third as much.

Simons’ net worth, as I write, is around $23 billion (https://www.forbes.com/profile/jim-simons/#7ee555413b6a). He is 72% less rich than Buffett.

Why the difference, if Simons is such a better investor? Because Simons did not find his investment stride until he was 50 years old. He’s had less than half as many years to compound as Buffett. Had Simons earned his 66% annual returns for the 70-year span Buffett has built his wealth, he’d be worth — please hold your breath — $63,900,781,780,748,160,000.
Funny, that article was released in 2020 when he was worth 23 billion.

Which, using the logic of the article, would make his net worth be roughly 105 billion today (23*1.66^3). A quick google search shows he's worth 30 billion today. Huh.

It's because he's not compounding his wealth anymore, he cant earn 66% returns on a 20 billion net worth. But he can do it with a few billion (or whatever sum of money it may be). Point being Buffetts return is far more impressive as it is scalable in the hundreds of billions that Berkshire is dealing with.

[Daytr]

Funny, that article was released in 2020 when he was worth 23 billion.

Which, using the logic of the article, would make his net worth be roughly 105 billion today (23*1.66^3). A quick google search shows he's worth 30 billion today. Huh.

It's because he's not compounding his wealth anymore, he cant earn 66% returns on a 20 billion net worth. But he can do it with a few billion (or whatever sum of money it may be). Point being Buffetts return is far more impressive as it is scalable in the hundreds of billions that Berkshire is dealing with.

And what are his investors worth with a 60% return each year that they probably invested elsewhere including into Berkshire?
You really aren't getting this.

[Baa_Baa]

And what are his investors worth with a 60% return each year that they probably invested elsewhere including into Berkshire?
You really aren't getting this.

I'm confused, if you're saying the return is paid out to investors, then it cannot be compounding? Maybe you're not explaining your argument as well as the mathematicians? Try to do it in more words than a tweet soundbite, show us some maths, on retained returns reinvested, or if that's not what you're arguing, lets us know what is your argument.

Are you guys talking past each other? Something's not joining up these opposing logics.

[Daytr]

I'm confused, if you're saying the return is paid out to investors, then it cannot be compounding? Maybe you're not explaining your argument as well as the mathematicians? Try to do it in more words than a tweet soundbite, show us some maths, on retained returns reinvested, or if that's not what you're arguing, lets us know what is your argument.

Are you guys talking past each other? Something's not joining up these opposing logics.

Exactly it's not compounding within that investment however you have earned the 60% return per annum to invest elsewhere which could be compounded. Obviously it would be preferable to reinvest and compound in an investment returning 60% but from what was stated that's not possible.

If you invested $1M in an investment returning 10% per annum compounded over 10 years that investment would be worth $2.36M

However even without reinvesting a 60% annual return you have made $6M on top of your initial $1m investment.

I am responding to ValueNZ post that a 10% compounding return is better than a 60% uncompounded return.
And I quote ValueNZ
"
No definitely a lot less impressive. Given enough time even a 10% compound growth rate would beat 60% non-compounded growth rate.

Which would you rather have?
Imagine if that $600k per annum was invested at a conservative 5% return.
What are your returns then?

[SailorRob]

Exactly it's not compounding within that investment however you have earned the 60% return per annum to invest elsewhere which could be compounded. Obviously it would be preferable to reinvest and compound in an investment returning 60% but from what was stated that's not possible.

If you invested $1M in an investment returning 10% per annum compounded over 10 years that investment would be worth $2.36M

However even without reinvesting a 60% annual return you have made $6M on top of your initial $1m investment.

I am responding to Valuegrowth's post that a 10% compounding return is better than a 60% uncompounded return.
And I quote Valuegrowth.
"

Which would you rather have?
Imagine if that $600k per annum was invested at a conservative 5% return.
What are your returns then?

Umm that's ValueNZ bro.

Valuegrowth is a bot.

[Daytr]

Umm that's ValueNZ bro.

Valuegrowth is a bot.

Quite correct. But the logic was horribly wrong

[SailorRob]

Quite correct. But the logic was horribly wrong

Yes but with effort you can correct your thinking, takes time if you're not mathematically competent but it's certainly possible.

ValueNZ is well worth listening to.

[Daytr]

Yes but with effort you can correct your thinking, takes time if you're not mathematically competent but it's certainly possible.

ValueNZ is well worth listening to.

That's funny. I just proved my math was more than fine even though you said it didn't stack up.
Moving on.

Edit. If you were referring to ValueNZ rather than me (which wasn't clear as you insulted my math skills earlier) then yes I agree, however that would be a starting point before I start investing. A basic requirement I would have thought.

FYI I don't claim to be a mathematician but this is pretty basic stuff. I once employed a trader who had a PHD in math & computer science from Yale & at times I felt like a complete idiot next to him, however I could ball park a $100M complex deal in my head whereas as he had no idea until he worked it out.
Ended up being a good combo of practicality and science.

[ValueNZ]

That's funny. I just proved my math was more than fine even though you said it didn't stack up.
Moving on.

Edit. If you were referring to ValueNZ rather than me (which wasn't clear as you questioned my math earlier) then yes I agree, however that would be a starting point before I start investing. A basic requirement I would have thought.
Hey Daytr I said given enough time the compounded 10% would beat the non compounded 60%. So this time try 50 years and report back your findings :t_up:

[ValueNZ]

Hey Daytr I said given enough time the compounded 10% would beat the non compounded 60%. So this time try 50 years and report back your findings :t_up:
And no cheating by reinvesting the earnings from the 60%, because that's not what I said. I said no compounding.

[Daytr]

Hey Daytr I said given enough time the compounded 10% would beat the non compounded 60%. So this time try 50 years and report back your findings :t_up:

Talk about shifting arguments....
50 years time you are probably the only one on here that can say, see I told you so from your retirement home as the rest of us will be dead.

I never suggested not utilizing the 60% returns elsewhere.
I am trying to make you think rather than jumping to poor conclusions and parroting others.

[causecelebre]

I should note that RenTech 66% returns is the annualised (geometric average - therefore compounded and certainly not average as some have alluded to) since '88. CAGR is also the geometric average so effectively the same thing. To put this into perspective if i put $1 into the Medallion Fund in 1988 it would have grown to almost $42000 by 2021. If I put that same $1 into BRK it would be worth $152

If we are measuring pure CAGR returns Grenblatt, Soros, Lynch, Bill Miller all have better returns than Buffett, albeit over different periods of time. People love Buffett because he is a man of the people and understand his investing philosophy.

At the end of the day as an investor if RenTech's Medallion funds were open I would invest there rather than BRK. Note that Medallion is also capped at $10b

[Daytr]

I should note that RenTech 66% returns is the annualised (geometric average - therefore compounded) since '88. CAGR is also the geometric average so effectively the same thing. To put this into perspective if i put $1 into the Medallion Fund in 1988 it would have grown to almost $42000 by 2021. If I put that same $1 into BRK it would be worth $152

If we are measuring pure CAGR returns Grenblatt, Soros, Lynch, Bill Miller all have better returns than Buffett, albeit over different periods of time. People love Buffett because he is a man of the people and understand his investing philosophy.

At the end of the day as an investor if RenTech's Medallion funds were open I would invest there rather than BRK. Note that Medallion is also capped at $10b

Wow you could have added that a lot earlier to save a lot of back and forth. 🤣

[causecelebre]

Wow you could have added that a lot earlier to save a lot of back and forth. 藍

haha I love the chit chat

[ValueNZ]

I should note that RenTech 66% returns is the annualised (geometric average - therefore compounded and certainly not average as some have alluded to) since '88. CAGR is also the geometric average so effectively the same thing. To put this into perspective if i put $1 into the Medallion Fund in 1988 it would have grown to almost $42000 by 2021. If I put that same $1 into BRK it would be worth $152

If we are measuring pure CAGR returns Grenblatt, Soros, Lynch, Bill Miller all have better returns than Buffett, albeit over different periods of time. People love Buffett because he is a man of the people and understand his investing philosophy.

At the end of the day as an investor if RenTech's Medallion funds were open I would invest there rather than BRK. Note that Medallion is also capped at $10b
The $10 billion cap is what makes it less impressive, like I said they aren't compounding at that rate.

Still a massive feat but I wouldn't call Simons a better capital allocator than Buffett by any stretch.

[ValueNZ]

Talk about shifting arguments....
50 years time you are probably the only one on here that can say, see I told you so from your retirement home as the rest of us will be dead.

I never suggested not utilizing the 60% returns elsewhere.
I am trying to make you think rather than jumping to poor conclusions and parroting others.
I never parroted anyone, just stated a mathematical truth which you seemed to for whatever reason disagree with.

[SailorRob]

The $10 billion cap is what makes it less impressive, like I said they aren't compounding at that rate.

Still a massive feat but I wouldn't call Simons a better capital allocator than Buffett by any stretch.


Yeah he's just a boy compared.

Ultimately they are just very efficient market makers.

I doubt the record is as good as suggested but nonetheless it's stunning and probably the best in the world of its type, not including a certain someones mates that is.

[Daytr]

I never parroted anyone, just stated a mathematical truth which you seemed to for whatever reason disagree with.

OK buddy. A 50 year horizon is perfectly normal & reasonable...

[SailorRob]

OK buddy. A 50 year horizon is perfectly normal & reasonable...


Absolutely, it's really a minimum and covers most peoples working lives.

[ValueNZ]

OK buddy. A 50 year horizon is perfectly normal & reasonable...
Thanks finally something we can agree on

[SailorRob]

OK buddy. A 50 year horizon is perfectly normal & reasonable...


And of course most people will have family members that they will want to continue their legacy, even if it's day trading your KiwiSaver!

[Daytr]

Thanks finally something we can agree on

A pity we can't on your math though.
60% return taken out each year & that 600k is put in the bank at a measly 5% p.a. you are still $6M better off than your 10% compounding over 50 years.

Obviously you could get a 10% return on every $600k taken out over 50 years and be multiples better off.
Hey but that's just how the real world works.

People don't just receive dividends and put it under the mattress.

Anyway this has been yet another exercise in futility.

Adios.

[SailorRob]

Anyway this has been yet another exercise in futility.

Adios.


Kinda like trading your KiwiSaver portfolio!

[causecelebre]

The $10 billion cap is what makes it less impressive, like I said they aren't compounding at that rate.

Still a massive feat but I wouldn't call Simons a better capital allocator than Buffett by any stretch.

Like I said. I know where I would put my money. You know where you would put yours. We are both happy :)

[Daytr]

Kinda like trading your KiwiSaver portfolio!

Switching it every now & then is hardly trading & its worked out brilliantly.
Up over 20% year to-date.

[Daytr]

Absolutely, it's really a minimum and covers most peoples working lives.

Pitty that not only would your investment return be lower than taking out the 60% return and reinvesting it elsewhere, it would be lower returns for 50 years!

Both very good returns no doubt, but one works out a hell of a lot better than the other and over time the difference just amplifies.

Either way both investors would be very wealthy.

[SailorRob]

Switching it every now & then is hardly trading & its worked out brilliantly.
Up over 20% year to-date.

Yeah I don't think 11 months is a good time frame to gloat about your skills. Let's see if you come out ahead of just leaving it alone over 10 years. I have 100k that says you won't.

And 20% is nothing to be too proud about, S&P is around that.

[Daytr]

Yeah I don't think 11 months is a good time frame to gloat about your skills. Let's see if you come out ahead of just leaving it alone over 10 years. I have 100k that says you won't.

And 20% is nothing to be too proud about, S&P is around that.

Braa haha.
Gawd you are a full of it.
One minute 10% compounding is fantastic.
Nec minute 20% is not good enough.
Honestly mate you are so inconsistent.
And you are full of your BS bets like a child in the playground.

Waste of space.
Always ends up the same.
And yes it's my fault for indulging your petty behavior.

[ValueNZ]

Braa haha.
Gawd you are a full of it.
One minute 10% compounding is fantastic.
Nec minute 20% is not good enough.
Honestly mate you are so inconsistent.
And you are full of your BS bets like a child in the playground.

Waste of space.
Always ends up the same.
And yes it's my fault for indulging your petty behavior.

Daytr, the king of strawman arguments.

[SailorRob]

Braa haha.
Gawd you are a full of it.
One minute 10% compounding is fantastic.
Nec minute 20% is not good enough.
Honestly mate you are so inconsistent.
And you are full of your BS bets like a child in the playground.

Waste of space.
Always ends up the same.
And yes it's my fault for indulging your petty behavior.

20% year to date is under performance.

10% isn't fantastic it's good enough for me over 50 years.

DM me and let's get the bet going, we will put it up on same website buffett used.

[Daytr]

20% year to date is under performance.

10% isn't fantastic it's good enough for me over 50 years.

DM me and let's get the bet going, we will put it up on same website buffett used.

How many NZ Super Funds have returned 20% this year?

[SailorRob]

How many NZ Super Funds have returned 20% this year?

If you're a athlete you don't compare yourself to the special Olympics.

Totally irrelevant, why would anyone have more than 5% of capital invested in a commie hole?

NZ is irrelevant. You are not trying to outperforme the IHC.

You are trying to compound your retirement fund.

Big world out there Son.

[Daytr]

If you're a athlete you don't compare yourself to the special Olympics.

Totally irrelevant, why would anyone have more than 5% of capital invested in a commie hole?

NZ is irrelevant. You are not trying to outperforme the IHC.

You are trying to compound your retirement fund.

Big world out there Son.

Well not only is your post disgusting its not even relevant & just displays your ugly personality.

The big world of proprietary trading that you deny exists...
As I have said on multiple occasions.
A waste of space.

[SailorRob]

Well not only is your post disgusting its not even relevant & just displays your ugly personality.

The big world of proprietary trading that you deny exists...
As I have said on multiple occasions.
A waste of space.

Interesting you're finally admitting prop trading is a waste of space. I never thought I'd get through.

[Daytr]

Interesting you're finally admitting prop trading is a waste of space. I never thought I'd get through.

Having worked on trading floors in London, New York, Tokyo, Hong Kong & Sydney over a 20 year career, I would suggest that I know just a little bit about international trading & finance, certainly not everything, far from it.

The level of ignorance you display towards a world you clearly dont understand & the fact you don't even acknowledge how it operates or some of the returns that are generated etc. is comical.

Continuously confusing investors like Buffett with what some proprietary hedge funds do or return.

Asking for comparisons to S&P returns to cross asset long / short funds & not understanding that proprietary traders don't care what the S&P is doing unless they are trading equities just underlines your complete misunderstanding of the topic being discussed.

ValueNZ is a 17yo kid & I can forgive the hubris.
What's your excuse for such displays of ignorance?

Why not admit this just an area you have no experience of?
Ego getting in the way?

[ValueNZ]

Having worked on trading floors in London, New York, Tokyo, Hong Kong & Sydney over a 20 year career, I would suggest that I know just a little bit about international trading & finance, certainly not everything, far from it.

The level of ignorance you display towards a world you clearly dont understand & the fact you don't even acknowledge how it operates or some of the returns that are generated etc. is comical.

Continuously confusing investors like Buffett with what some proprietary hedge funds do or return.

Asking for comparisons to S&P returns to cross asset long / short funds & not understanding that proprietary traders don't care what the S&P is doing unless they are trading equities just underlines your complete misunderstanding of the topic being discussed.

ValueNZ is a 17yo kid & I can forgive the hubris.
What's your excuse for such displays of ignorance?

Why not admit this just an area you have no experience of?
Ego getting in the way?
Why wouldn't you compare returns of a trader against the SP500? If you are underperforming that after fees then there's literally zero point in wasting your time spending countless hours trading. Aka opportunity cost of trading is having your cash in an SP500 index fund.

Also, how can prop traders average gains like 100% whilst participating in a zero sum game? That makes no sense to me.

When you can properly answer these questions I'll happily admit you're right.

[SailorRob]

Having worked on trading floors in London, New York, Tokyo, Hong Kong & Sydney over a 20 year career, I would suggest that I know just a little bit about international trading & finance, certainly not everything, far from it.

The level of ignorance you display towards a world you clearly dont understand & the fact you don't even acknowledge how it operates or some of the returns that are generated etc. is comical.

Continuously confusing investors like Buffett with what some proprietary hedge funds do or return.

Asking for comparisons to S&P returns to cross asset long / short funds & not understanding that proprietary traders don't care what the S&P is doing unless they are trading equities just underlines your complete misunderstanding of the topic being discussed.

ValueNZ is a 17yo kid & I can forgive the hubris.
What's your excuse for such displays of ignorance?

Why not admit this just an area you have no experience of?
Ego getting in the way?


Interesting that Berkshire doesn't hire these mates of yours to manage their portfolio.

All these super funds and hedge funds that all produce sub 10% returns, sovereign wealth funds... All they need to do is hire Day Traders mates and they'd be punching 100 plus CAGR's.

[SailorRob]

ValueNZ is a 17yo kid

18 mate...

[SailorRob]

Betting Contract Between SailorRob and Day Trader

Parties Involved



SailorRob (hereinafter referred to as "Party A")
Day Trader (hereinafter referred to as "Party B")


Background:Party A (SailorRob) and Party B (Day Trader) hereby enter into this contract to formalize a bet regarding the comparative performance of an S&P 500 index fund and Party B's KiwiSaver account through active trading over a period of 10 years.

Terms and Conditions:



Objective of Bet: Party B must actively trade their KiwiSaver account with the aim to outperform the total return of an S&P 500 index fund over a period of 10 years from the date of contract signing.
Amount of Bet: The sum of the bet is $100,000 NZD.
Measurement of Performance:a. The performance of the S&P 500 index fund will be measured based on the total return, including dividends reinvested, from the date of contract signing to the end date of the 10-year period.b. The performance of Party B's KiwiSaver account will be measured based on the total value of the account at the end of the 10-year period, including any gains or losses from trading activities.
Verification:a. Party B agrees to provide annual statements of their KiwiSaver account to Party A for verification of active trading and performance.b. An independent financial auditor may be employed by either party at their own expense for verification purposes.
Settlement:a. If Party B's KiwiSaver account outperforms the total return of the S&P 500 index fund at the end of the 10-year period, Party A will pay Party B the sum of $100,000 NZD.b. If the S&P 500 index fund outperforms Party B's KiwiSaver account at the end of the 10-year period, Party B will pay Party A the sum of $100,000 NZD.
Termination of Bet:a. The bet may be terminated early by mutual agreement of both parties. In such a case, no payment will be required from either party.b. If Party B ceases to actively trade their KiwiSaver account before the end of the 10-year period, they will be deemed to have forfeited the bet and will owe Party A the sum of $100,000 NZD.
Legal Considerations: This bet is intended as a private agreement between the parties and is not intended to contravene any laws or regulations related to betting or financial trading.
Dispute Resolution: Any disputes arising from this contract shall be resolved through mediation or arbitration, as agreed upon by both parties.

[Daytr]

Why wouldn't you compare returns of a trader against the SP500? If you are underperforming that after fees then there's literally zero point in wasting your time spending countless hours trading. Aka opportunity cost of trading is having your cash in an SP500 index fund.

Also, how can prop traders average gains like 100% whilst participating in a zero sum game? That makes no sense to me.

When you can properly answer these questions I'll happily admit you're right.

I am quite aware it makes no sense to you.
You are the comon denominator in this

I have explained this extensively & adnauseum.

All you do is keep jumping to very poor conclusions.

All due credit you have changed the old saying about teaching an old dog new tricks.
It now also applies to young dogs

Good luck to you. Following Buffett's strategy from a very young age isn't a bad thing at all.
I just question if the pair of nonagarians can continue to repeat their performance.

[Daytr]

Interesting that Berkshire doesn't hire these mates of yours to manage their portfolio.

All these super funds and hedge funds that all produce sub 10% returns, sovereign wealth funds... All they need to do is hire Day Traders mates and they'd be punching 100 plus CAGR's.

Again confusing investors with traders.
The Sailor don't learn.
Hopefully you can navigate a bit better than you debate a point, as your arguments go around in ever decreasing circles.

My KiwiSaver has only been running for 8 years and I have looked back my returns.
I have averaged 15.4% per annum after tax.
I wish I had started shifting around my Super earlier, as I would have done better.
Either way I'm happy with that as it's my conservative fund.
As I've said before I don't normally bother monitoring percentage gains.
I look at $$$ P&L like all traders.

Happy investing.

[Leemsip]

I have just shifted my kiwisaver into a predominantly bond fund - to capitalise on any drop in rates.
Was good earning 5% in the cash fund for a bit.

[ValueNZ]

I am quite aware it makes no sense to you.
You are the comon denominator in this

I have explained this extensively & adnauseum.

All you do is keep jumping to very poor conclusions.

All due credit you have changed the old saying about teaching an old dog new tricks.
It now also applies to young dogs

Good luck to you. Following Buffett's strategy from a very young age isn't a bad thing at all.
I just question if the pair of nonagarians can continue to repeat their performance.
I didn't start as a value investor... I think most, including myself, start obsessed with the quick profits that trading promises, but doesn't deliver. Some of us eventually realise that it's simply not possible to expect trading to outperform investing. Too many transaction fees whilst participating in a zero sum game is always going to get beaten by low transaction fees in a positive sum game over the long term.

This isn't a case of not being able to teach a young dog new tricks, all evidence points towards trading having worse returns than investing for the long term in productive assets.

[ValueNZ]

Again confusing investors with traders.
The Sailor don't learn.
Hopefully you can navigate a bit better than you debate a point, as your arguments go around in ever decreasing circles.

My KiwiSaver has only been running for 8 years and I have looked back my returns.
I have averaged 15.4% per annum after tax.
I wish I had started shifting around my Super earlier, as I would have done better.
Either way I'm happy with that as it's my conservative fund.
As I've said before I don't normally bother monitoring percentage gains.
I look at $$$ P&L like all traders.

Happy investing.
It'll be the easiest 100k of your life then I'm sure.

[SailorRob]

Again confusing investors with traders.
The Sailor don't learn.
Hopefully you can navigate a bit better than you debate a point, as your arguments go around in ever decreasing circles.

My KiwiSaver has only been running for 8 years and I have looked back my returns.
I have averaged 15.4% per annum after tax.
I wish I had started shifting around my Super earlier, as I would have done better.
Either way I'm happy with that as it's my conservative fund.
As I've said before I don't normally bother monitoring percentage gains.
I look at $$$ P&L like all traders.

Happy investing.

No, I get it.

What I don't understand is why Berkshire don't use these traders.

Why settle for crappy investment returns.

[Daytr]

I didn't start as a value investor... I think most, including myself, start obsessed with the quick profits that trading promises, but doesn't deliver. Some of us eventually realise that it's simply not possible to expect trading to outperform investing. Too many transaction fees whilst participating in a zero sum game is always going to get beaten by low transaction fees in a positive sum game over the long term.

This isn't a case of not being able to teach a young dog new tricks, all evidence points towards trading having worse returns than investing for the long term in productive assets.

What transacting fees are you referring to?

[Daytr]

No, I get it.

What I don't understand is why Berkshire don't use these traders.

Why settle for crappy investment returns.

Just by asking that question, means you don't get it at all.

But who knows perhaps some of their investment managers are ex traders.
I have no idea & I doubt you know either, but anyway it's a very different beast.

[SailorRob]

Just by asking that question, means you don't get it at all.

But who knows perhaps some of their investment managers are ex traders.
I have no idea & I doubt you know either, but anyway it's a very different beast.

I have studied their investment managers in great detail actually. I know their history from high school.

This is what lead to me being able to buy a good chunk of Davita in the low 70's a few weeks back. Highlighted the opportunity here.

Weschler has almost his entire personal portfolio in the company, some 200 odd million dollars.

I know it's different but why doesn't Buffett hire the best?

[daveypnz]

Interesting that Berkshire doesn't hire these mates of yours to manage their portfolio.

All these super funds and hedge funds that all produce sub 10% returns, sovereign wealth funds... All they need to do is hire Day Traders mates and they'd be punching 100 plus CAGR's.

Scale. Trading only works with a small account; Buffett himself said this:

"If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.

[ValueNZ]

Scale. Trading only works with a small account; Buffett himself said this:

"If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.
Nowhere did Buffett ever say trading works with a small account.

[causecelebre]

No, I get it.

What I don't understand is why Berkshire don't use these traders.

Why settle for crappy investment returns.

Maybe I misunderstood the quote but from Investopedia:

BlackRock is a Berkshire competitor in this sector. It's the world's largest public investment firm with around $8.5 trillion in assets as of 2022. Unlike Berkshire Hathaway, BlackRock does not participate in proprietary trading.

https://www.investopedia.com/ask/answers/051915/who-are-berkshire-hathaways-brka-main-competitors.asp

[SailorRob]

Nowhere did Buffett ever say trading works with a small account.

Correct. Nowhere has he ever said that...

[Daytr]

Scale. Trading only works with a small account; Buffett himself said this:

"If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.

Whether Buffett said that or not I don't know or care as I don't salivate on every word he says like some of his hero worshipers on here.
But largely that's true and as they typically don't compound but pay out returns each year then the pool of capital typically stays the same.
It also depends on the liquidity of the market you are in and how deep the pockets are of the trader or the investor they are trading for.
There have been many examples of positions in the billions of dollars and Soros taking on Stirling back in the day is a prime example.

I supported a trader when I first started out who's position on any given day could be up to 8 yards.
He was trading the entire delta position for a large European Bank and a one tick move at times could be $1M swing in P&L.

[daveypnz]

Nowhere did Buffett ever say trading works with a small account.

On June 23, 1999, in Business Week, Buffett said:

“If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”


In 1999, at Berkshire’s annual shareholders meeting, when asked if there were opportunities in the stock market for the small investor, Buffett remarked:

“I think, working with a very small sum, that there is an opportunity to earn very high returns. But that advantage disappears very rapidly as the money compounds. Because I, you know, from a million to 10 million, I would say it would fall off dramatically, in terms of the expectable rate.

Because there are little — you find very small things that, you know, you can make — you are almost certain to make high returns on. But you don’t find very big things in that category today.”

[ValueNZ]

I have studied their investment managers in great detail actually. I know their history from high school.

This is what lead to me being able to buy a good chunk of Davita in the low 70's a few weeks back. Highlighted the opportunity here.

Weschler has almost his entire personal portfolio in the company, some 200 odd million dollars.

I know it's different but why doesn't Buffett hire the best?
I bought some at $79.50, but only a tiny amount as I didn't feel I knew the company well enough to buy a meaningful amount. Was hoping for it to crash some more and buy some time to do an actual deep dive into the company. Oh well.

[Daytr]

I didn't start as a value investor... I think most, including myself, start obsessed with the quick profits that trading promises, but doesn't deliver. Some of us eventually realise that it's simply not possible to expect trading to outperform investing. Too many transaction fees whilst participating in a zero sum game is always going to get beaten by low transaction fees in a positive sum game over the long term.

This isn't a case of not being able to teach a young dog new tricks, all evidence points towards trading having worse returns than investing for the long term in productive assets.

I'm not trying to convince you to do something else, I never have in fact repeatedly I have said its not for everyone.
All I have tried to point out that there is a much bigger world out there and people make money in different ways and can be as profitable of more profitable than others.
You constantly refuse to believe the returns that are made by proprietary traders.
But I don't really care what you believe, its just displays a small mind.

[SailorRob]

On June 23, 1999, in Business Week, Buffett said:

“If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”


In 1999, at Berkshire’s annual shareholders meeting, when asked if there were opportunities in the stock market for the small investor, Buffett remarked:

“I think, working with a very small sum, that there is an opportunity to earn very high returns. But that advantage disappears very rapidly as the money compounds. Because I, you know, from a million to 10 million, I would say it would fall off dramatically, in terms of the expectable rate.

Because there are little — you find very small things that, you know, you can make — you are almost certain to make high returns on. But you don’t find very big things in that category today.”


Yes we're familiar with the quotes. But where does he say trading?

[ValueNZ]

On June 23, 1999, in Business Week, Buffett said:
“If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”


In 1999, at Berkshire’s annual shareholders meeting, when asked if there were opportunities in the stock market for the small investor, Buffett remarked:
“I think, working with a very small sum, that there is an opportunity to earn very high returns. But that advantage disappears very rapidly as the money compounds. Because I, you know, from a million to 10 million, I would say it would fall off dramatically, in terms of the expectable rate.


Because there are little — you find very small things that, you know, you can make — you are almost certain to make high returns on. But you don’t find very big things in that category today.”



Working with small sums doesn't mean you're a trader... Lol

[SailorRob]

There is zero question that working with small sums is a massive massive advantage. Nobody is saying otherwise.

[Daytr]

I have studied their investment managers in great detail actually. I know their history from high school.

This is what lead to me being able to buy a good chunk of Davita in the low 70's a few weeks back. Highlighted the opportunity here.

Weschler has almost his entire personal portfolio in the company, some 200 odd million dollars.

I know it's different but why doesn't Buffett hire the best?

Why are you referring to investment managers when I am talking about proprietary trading?
The key perhaps is in the first word... investment... :rolleyes:
Again, it just proves you don't understand, despite your flailing claims.

So, you are asking a forum why Buffett isn't doing something? :laugh:
Surely that's a question for Buffett himself.

But here goes, as I would have thought for someone who has studied the great Sage as much as you have, I would have thought some of the answers were pretty obvious.

Buffett doesn't get involved in things he doesn't understand, which is smart. Its why he took so long to get involved in China and by the time he did it was too late and he I'm sure regrets that move, but you probably know more about that than I would.

Buffett has said he's not into the macro. It's a pretty fundamental part of trading.

Buffett is an investor looking to at least five year horizon & beyond & is not into short term gains, that's exactly the opposite of most traders outlook.

In summary its not a good fit.

But again, that's a question for him.

Hey, but as you said it's a big wide world out there and amazingly a lot of it doesn't involve Buffett.
Why isn't he involved in credit markets?
Why isn't he involved the bond market? etc etc
He could be an investor in any of those things but as far as I'm aware doesn't as he sticks to his knitting.

[ValueNZ]

Why are you referring to investment managers when I am talking about proprietary trading?
The key perhaps is in the first word... investment... :rolleyes:
Again, it just proves you don't understand, despite your flailing claims.

So, you are asking a forum why Buffett isn't doing something? :laugh:
Surely that's a question for Buffett himself.

But here goes, as I would have thought for someone who has studied the great Sage as much as you have, I would have thought some of the answers were pretty obvious.

Buffett doesn't get involved in things he doesn't understand, which is smart. Its why he took so long to get involved in China and by the time he did it was too late and he I'm sure regrets that move, but you probably know more about that than I would.

Buffett has said he's not into the macro. It's a pretty fundamental part of trading.

Buffett is an investor looking to at least five year horizon & beyond & is not into short term gains, that's exactly the opposite of most traders outlook.

In summary its not a good fit.

But again, that's a question for him.

Hey, but as you said it's a big wide world out there and amazingly a lot of it doesn't involve Buffett.
Why isn't he involved in credit markets?
Why isn't he involved the bond market? etc etc
He could be an investor in any of those things but as far as I'm aware doesn't as he sticks to his knitting.
I learn new things everyday. Buffett isn't involved in the credit market...

[SailorRob]

Why are you referring to investment managers when I am talking about proprietary trading?
The key perhaps is in the first word... investment... :rolleyes:
Again, it just proves you don't understand, despite your flailing claims.

So, you are asking a forum why Buffett isn't doing something? :laugh:
Surely that's a question for Buffett himself.

But here goes, as I would have thought for someone who has studied the great Sage as much as you have, I would have thought some of the answers were pretty obvious.

Buffett doesn't get involved in things he doesn't understand, which is smart. Its why he took so long to get involved in China and by the time he did it was too late and he I'm sure regrets that move, but you probably know more about that than I would.

Buffett has said he's not into the macro. It's a pretty fundamental part of trading.

Buffett is an investor looking to at least five year horizon & beyond & is not into short term gains, that's exactly the opposite of most traders outlook.

In summary its not a good fit.

But again, that's a question for him.

Hey, but as you said it's a big wide world out there and amazingly a lot of it doesn't involve Buffett.
Why isn't he involved in credit markets?
Why isn't he involved the bond market? etc etc
He could be an investor in any of those things but as far as I'm aware doesn't as he sticks to his knitting.

Yeah only a couple hundred odd billion in the bond market, just a NZ GDP that's all.

Credit market? He's not in it????

Why doesn't he hire the guns I wonder, why don't the super funds hire them or hedge funds?

Is it because none of them can outperform a simple index fund??

[SailorRob]

I learn new things everyday. Buffett isn't involved in the credit market...

Or the bond market!

He's only the biggest corporate player in treasury market...

Nothing much.

And how can anything be undervalued by more than 100%?

[SailorRob]

Why are you referring to investment managers when I am talking about proprietary trading?
The key perhaps is in the first word... investment... :rolleyes:
Again, it just proves you don't understand, despite your flailing claims.

So, you are asking a forum why Buffett isn't doing something? :laugh:
Surely that's a question for Buffett himself.

But here goes, as I would have thought for someone who has studied the great Sage as much as you have, I would have thought some of the answers were pretty obvious.

Buffett doesn't get involved in things he doesn't understand, which is smart. Its why he took so long to get involved in China and by the time he did it was too late and he I'm sure regrets that move, but you probably know more about that than I would.

Buffett has said he's not into the macro. It's a pretty fundamental part of trading.

Buffett is an investor looking to at least five year horizon & beyond & is not into short term gains, that's exactly the opposite of most traders outlook.

In summary its not a good fit.

But again, that's a question for him.

Hey, but as you said it's a big wide world out there and amazingly a lot of it doesn't involve Buffett.
Why isn't he involved in credit markets?
Why isn't he involved the bond market? etc etc
He could be an investor in any of those things but as far as I'm aware doesn't as he sticks to his knitting.


Buffett done better in China than any other westerner on record... Predominantly via Petrochina and BYD.

[Daytr]

I learn new things everyday. Buffett isn't involved in the credit market...


Yeah only a couple hundred odd billion in the bond market, just a NZ GDP that's all.

Credit market? He's not in it????

Why doesn't he hire the guns I wonder, why don't the super funds hire them or hedge funds?

Is it because none of them can outperform a simple index fund??


Or the bond market!

He's only the biggest corporate player in treasury market...

Nothing much.

And how can anything be undervalued by more than 100%?


Buffett done better in China than any other westerner on record... Predominantly via Petrochina and BYD.

I don't study Buffett so I don't know what he's involved in. And I really don't care.

But seriously that's what you took out of the post? 🤣 Perhaps Warren has more time for your inane questions.

[SailorRob]

I don't study Buffett so I don't know what he's involved in. And I really don't care.

But seriously that's what you took out of the post? 🤣 Perhaps Warren has more time for your inane questions.

I believe you about your kiwisaver return YTD, having just underperformed. But as you have at least 3 'stratagies' perhaps one will do OK each year.

What have your returns been across your entire net worth? That's all that matters...

[Daytr]

I believe you about your kiwisaver return YTD, having just underperformed. But as you have at least 3 'stratagies' perhaps one will do OK each year.

What have your returns been across your entire net worth? That's all that matters...

Ohhh you believe me do you.
What a relief, for a minute there I was really questioning myself.
What if SailorRob doesn't believe me?
How can I convince him. 🤣

My returns have averaged 15.4% p.a over 8 years. But perhaps if you actually read my post you would know that and also stop asking silly inane questions about the other two. Again read my post.

You continously ask these very basic questions and constantly want to compare dick length, (Sailors will be sailors I suppose) but you seldom acknowledge any of the answers.

It's like feeding a blackhole of ignorance with the light not ever able to escape.

Notice I don't keep asking you what your returns are. Why? Because I don't give a $#%@ about what you make.
But it was interesting to hear that your 2nd largest holding has been a complete underperformer for they last five years.

[Daytr]

It'll be the easiest 100k of your life then I'm sure.

Nope that was my first $1M, as most of it was gifted as a bonus.
But I suppose I worked the year for it.

[SailorRob]

Ohhh you believe me do you.
What a relief, for a minute there I was really questioning myself.
What if SailorRob doesn't believe me?
How can I convince him. 🤣

My returns have averaged 15.4% p.a over 8 years. But perhaps if you actually read my post you would know that and also stop asking silly inane questions about the other two. Again read my post.

You continously ask these very basic questions and constantly want to compare dick length, (Sailors will be sailors I suppose) but you seldom acknowledge any of the answers.

It's like feeding a blackhole of ignorance with the light not ever able to escape.

Notice I don't keep asking you what your returns are. Why? Because I don't give a $#%@ about what you make.
But it was interesting to hear that your 2nd largest holding has been a complete underperformer for they last five years.

Ain't talking about average son. What has your time weighted CAGR been across entire net worth, including all money squandered in the business. Same way hedge funds and Berkshire measure, or the S&P.

[SailorRob]

Ohhh you believe me do you.
What a relief, for a minute there I was really questioning myself.
What if SailorRob doesn't believe me?
How can I convince him. 🤣

My returns have averaged 15.4% p.a over 8 years. But perhaps if you actually read my post you would know that and also stop asking silly inane questions about the other two. Again read my post.

You continously ask these very basic questions and constantly want to compare dick length, (Sailors will be sailors I suppose) but you seldom acknowledge any of the answers.

It's like feeding a blackhole of ignorance with the light not ever able to escape.

Notice I don't keep asking you what your returns are. Why? Because I don't give a $#%@ about what you make.
But it was interesting to hear that your 2nd largest holding has been a complete underperformer for they last five years.

Markel has destroyed the market over all time periods, including 5 years.

You must be talking about the share price. Best you learn to analyse business performance.

The more it underperforms the more money I make...

Buying the majority of my position in the high 700's and low 800's was great.

[Daytr]

Markel has destroyed the market over all time periods, including 5 years.

You must be talking about the share price. Best you learn to analyse business performance.

The more it underperforms the more money I make...

Buying the majority of my position in the high 700's and low 800's was great.

Well the more money you potentially might make if the market recognizes the value you do.

So why do you think the market is not recognizing the value you see?

To use your parlance it's also underperformed the S&P in the time you have invested.
So how is that destroying the market?

[Valuegrowth]

Do you think rates to go down soon? To my knowledge it’s highly unlikely. My kiwi saver (KS) too has given one year return after tax around 5%. Just now I looked at one-to-three-years performance of KS funds in one leading provider. Their one-year performance for KS funds is negative except cash fund. Even their cash fund has not generated over 3%. To my surprise their cash fund has outperformed other KS funds including growth fund during 3- years period as well. Given the geopolitical issues and overvalued growth stocks I don’t think I will go for any growth fund right now. Besides all my holdings in the KW fund have invested in NZ. Still, I haven’t thought about bond funds.


I have just shifted my kiwisaver into a predominantly bond fund - to capitalise on any drop in rates.
Was good earning 5% in the cash fund for a bit.

[SailorRob]

Well the more money you potentially might make if the market recognizes the value you do.

So why do you think the market is not recognizing the value you see?

To use your parlance it's also underperformed the S&P in the time you have invested.
So how is that destroying the market?


The business... Not the stock price. They are two very different things, you want the stock price falling while the business goes from strength to strength.

It's not value I see... It's fat stacks of cash pouring through the front door unstoppable. God only knows why people can't see it.

Why could the market not see the value in all the stuff I have bought over time... Who knows.

[SailorRob]

Finally getting a chance to look through the coalition deals.

Literally one of the greatest days in New Zealand's history. Will take a long time to rebuild after the 6 years of utter madness.

This from the Tax payers Union.

Remove co-governance from delivery of public services and ensure government contracts awarded are based on value, not race – This so so basic, but so vital. We have lost count of the number of small business people who have contacted the Taxpayers' Union in recent years because they've lost government contracts because of their skin colour. Racial preference in procurement was one of the most disgraceful policies from the Ardern-era, and thank goodness it's gone.

Never could I have imagined I would live in a country that was run like this, absolute disgrace.

[Daytr]

The business... Not the stock price. They are two very different things, you want the stock price falling while the business goes from strength to strength.

It's not value I see... It's fat stacks of cash pouring through the front door unstoppable. God only knows why people can't see it.

Why could the market not see the value in all the stuff I have bought over time... Who knows.

Well let's hope for your sake your imaginary wealth turns into something tangible.

Company's aren't paid a premium to sit on cash.
From what I see they have high operating costs and a huge liability of unpaid insurance claims etc. that is growing.

You might be able to explain away that massive number, I don't know the detail.

[ValueNZ]

Well let's hope for your sake your imaginary wealth turns into something tangible.

Company's aren't paid a premium to sit on cash.
From what I see they have high operating costs and a huge liability of unpaid insurance claims etc. that is growing.

You might be able to explain away that massive number, I don't know the detail.
Would be better if that number were double.

[Daytr]

Would be better if that number were double.

Is that because most of the set aside liability will never be paid out?

[ValueNZ]

Is that because most of the set aside liability will never be paid out?
Yes on a net basis the liability will never meaningfully be paid down, providing Markel with capital that they can invest and earn a return on at basically no cost. That's the basis of insurance float, it provides very cheap and noncallable leverage to be invested.

It's a fascinating concept that most investors don't have a clue about.

[ValueNZ]

Depending on Markels situation the cost of float may actually be negative (operationally profitable on writing of contracts), I've only looked at one set of financial statements so couldn't tell you. SailorRob will be able to explain this float concept much better than me.

I know GEICO is so well run that their cost of float is negative.

[Daytr]

Yes on a net basis the liability will never meaningfully be paid down, providing Markel with capital that they can invest and earn a return on at basically no cost. That's the basis of insurance float, it provides very cheap and noncallable leverage to be invested.

It's a fascinating concept that most investors don't have a clue about.

Well it's not that difficult to understand although as it's a liability it needs to be reasonably readily available. So they will be benefiting from higher interest rates in the last year.
That's likely to change in the near future.

How is that huge some ever materialized?
I assume it's a drip feed from both ends, beware claims coming in, old claims settled or rejected.
Do you know the percentage of this number that gets retained by the company? I.e what claims are rejected?

Again not something you would pay a premium for.

[ValueNZ]

Well it's not that difficult to understand although as it's a liability it needs to be reasonably readily available. So they will be benefiting from higher interest rates in the last year.
That's likely to change in the near future.

How is that huge some ever materialized?
I assume it's a drip feed from both ends, beware claims coming in, old claims settled or rejected.
Do you know the percentage of this number that gets retained by the company? I.e what claims are rejected?

Again not something you would pay a premium for.
You could definitely justify paying a premium for the float, float is better than equity. I've been calling it a liability, which is only true by accounting standards, but as an investor it should be viewed as an asset. You want as much of this "liability" as possible, it'll never be paid down and it's free or close to free unlike equity.

As for your question I have no clue as I don't own any shares in Markel.

[SailorRob]

From what I see they have high operating costs and a huge liability of unpaid insurance claims etc. that is growing.


Hmmm you obviously didn't do much professional work in insurance. This is very basic stuff that you would have been taught in first year.

This is the only reason I own the company, they are desperately (as are Berkshire) trying to grow this 'liability'. It's far better than equity and the insurance companies of the world fight hard to grow their liabilities to the point they are happy to lose money underwriting.

Faster it grows the more Markel is worth. It's a key number.

Happy to write up another bet, you VS Markel over the next 10 years.

[SailorRob]

Yes on a net basis the liability will never meaningfully be paid down, providing Markel with capital that they can invest and earn a return on at basically no cost. That's the basis of insurance float, it provides very cheap and noncallable leverage to be invested.

It's a fascinating concept that most investors don't have a clue about.


They pay NEGATIVE 8% to 10% on it.

They are paid 8% to 10% to borrow the money. PLUS what they then make on it.

[Daytr]

Hmmm you obviously didn't do much professional work in insurance. This is very basic stuff that you would have been taught in first year.

This is the only reason I own the company, they are desperately (as are Berkshire) trying to grow this 'liability'. It's far better than equity and the insurance companies of the world fight hard to grow their liabilities to the point they are happy to lose money underwriting.

Faster it grows the more Markel is worth. It's a key number.

Happy to write up another bet, you VS Markel over the next 10 years.

Why don't you just answer the questions I asked? (Instead of being a dick)

Correct I have no experience in the Insurance game.

[SailorRob]

Well it's not that difficult to understand although as it's a liability it needs to be reasonably readily available. So they will be benefiting from higher interest rates in the last year.
That's likely to change in the near future.

How is that huge some ever materialized?
I assume it's a drip feed from both ends, beware claims coming in, old claims settled or rejected.
Do you know the percentage of this number that gets retained by the company? I.e what claims are rejected?

Again not something you would pay a premium for.


You pay a MASSIVE premium for it. The world fights over it...

Some of what you said is correct, Berkshire can do as they please with the 160 billion cheaper than free money as their capital so massive.

Markel as you say need to have it 'reasonably readily available' They retain 8 to 10% plus what they make on it (as you say benefitting now, maybe less forward)

[SailorRob]

Why don't you just answer the questions I asked? (Instead of being a dick)

Correct I have no experience in the Insurance game.


Yep the insurance side is just one part of Markel, the liabilities are invested by Gayner, one of the worlds greatest allocators, he did 100 points over the S&P over 30 years and from 2000 to 2012 he did 100% vs 0% for the market.

Next cycle will be his again, hard to keep up over last few years but he has.

The ventures side is growing super fast.

Just go onto their website and read one of his shareholders letters. You will be very impressed.

[Daytr]

You pay a MASSIVE premium for it. The world fights over it...

Some of what you said is correct, Berkshire can do as they please with the 160 billion cheaper than free money as their capital so massive.

Markel as you say need to have it 'reasonably readily available' They retain 8 to 10% plus what they make on it (as you say benefitting now, maybe less forward)

And what percentage of that 'liability' is declined? I.e the claim isn't paid out?

[SailorRob]

Why don't you just answer the questions I asked? (Instead of being a dick)

Correct I have no experience in the Insurance game.





Insurers receive premiums upfront and pay claims later. ... This collect-now, pay-later model leaves us holding large sums -- money we call "float" -- that will eventually go to others. Meanwhile, we get to invest this float for Berkshire's benefit. ...


If premiums exceed the total of expenses and eventual losses, we register an underwriting profit that adds to the investment income produced from the float. This combination allows us to enjoy the use of free money -- and, better yet, get paid for holding it. Alas, the hope of this happy result attracts intense competition, so vigorous in most years as to cause the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. Usually this cost is fairly low, but in some catastrophe-ridden years the cost from underwriting losses more than eats up the income derived from use of float. ...


Our float has grown from $16 million in 1967, when we entered the business, to $62 billion at the end of 2009. Moreover, we have now operated at an underwriting profit for seven consecutive years. I believe it likely that we will continue to underwrite profitably in most -- though certainly not all -- future years. If we do so, our float will be cost-free, much as if someone deposited $62 billion with us that we could invest for our own benefit without the payment of interest.


Let me emphasize again that cost-free float is not a result to be expected for the P/C industry as a whole: In most years, premiums have been inadequate to cover claims plus expenses. Consequently, the industry's overall return on tangible equity has for many decades fallen far short of that achieved by the S&P 500. Outstanding economics exist at Berkshire only because we have some outstanding managers running some unusual businesses.

[ValueNZ]

They pay NEGATIVE 8% to 10% on it.

They are paid 8% to 10% to borrow the money. PLUS what they then make on it.
Wow that is crazy. I definitely am going to spend the next week or so studying Markel because that is insane. Is that a long term average or just one yearly result?

Also out of curiosity I just took a look at Berkshire's 13f, turns out they reduced their holdings in Markel by 66%. What do you think the reason for this could be?

[SailorRob]

And what percentage of that 'liability' is declined? I.e the claim isn't paid out?


There are two components, one the amount of claims not paid out, and two the cost of running the business.

In isolation they don't mean too much, it's the 'combined ratio' that matters.

Markel is the best in the world that I know of - better than Berkshire.

So of $100 of the premiums taken in from policy holders they retain $8 to $10 after paying out all the claims AND the costs of running it.

The actual % of claims paid out is much lower, off the top of my head somewhere in the 70 odd percent range.

[SailorRob]

Wow that is crazy. I definitely am going to spend the next week or so studying Markel because that is insane. Is that a long term average or just one yearly result?

Also out of curiosity I just took a look at Berkshire's 13f, turns out they reduced their holdings in Markel by 66%. What do you think the reason for this could be?


Yeah that had me stumped, the Berkshire move. Maybe the were looking at a merger or who knows.

Let's be clear, Markel is not Berkshire. Berkshire is a far superior company. (Markel has a better combined ratio but on much smaller numbers)

No that's the long term average, all the information is in the shareholders letter.

Markel will likely do 12% CAGR over the next decade vs the S&P500 that will be lucky to do mid single digits, perhaps 7.5% at a push.

[SailorRob]

Wow that is crazy. I definitely am going to spend the next week or so studying Markel because that is insane. Is that a long term average or just one yearly result?

Also out of curiosity I just took a look at Berkshire's 13f, turns out they reduced their holdings in Markel by 66%. What do you think the reason for this could be?


Good summary article here


Summary




Markel's fixed-income portfolio is profiting from higher interest rates, with recurring interest and dividend income growing 70% during Q3.
Despite already holding over 70 times his base salary in Markel shares, CEO Tom Gayner has continued to acquire shares in the open market.
The stock is trading in its low valuation range from both a book value and net income perspective.
I expect Markel to outperform the market with a 24% stock price increase in 2024 and an 18% CAGR over five years.


There are not so many stocks that investors can confidently hold with the expectation of strong performance over decades, but I am of the opinion that Markel Group (NYSE:MKL (https://seekingalpha.com/symbol/MKL?hasComeFromMpArticle=false&source=content_type%253Areact%257Csection%253Amain _content%257Cbutton%253Abody_link)) is one of those.

In this article, I will look at what allows a company to compound at a 15% annual growth rate for over 36 years, and more importantly, what should investors expect in the future.
Markel's Background

Markel was founded (https://www.mklgroup.com/who-we-are/our-story) in 1930 to insure jitney buses by Sam Markel, who was joined by his four sons and helped draft the Motor Carrier Act of 1935 that regulated the growing bus and truck industries.
After gaining a national reputation as an industry leader, it expanded to Canada in 1951 by founding Markel Service Canada, Ltd., which later reorganized into the current Fairfax Financial (
Markel became a publicly listed company in 1986 at an initial price of $8.33 per share with a market cap of ∼$30M, and expanded through acquisitions in the insurance industry and by opening an office in London, gaining access to the international specialty insurance market.

In 2005, Tom Gayner, the current CEO of Markel, became aware of a company for sale (https://www.youtube.com/watch?v=UKPlwWZ6dGg) named AMF Bakery Systems, which was also located in Richmond, Virginia. Gayner knew the CEO and after analyzing the opportunity, Markel decided to diversify from the insurance business, copying Warren Buffett's playbook and allocating part of the insurance funds to other businesses. Since then, it has been building its three-engine system.

Three-Engine System

The three-engine system provides diverse income streams, a wider range of opportunities to deploy its cash flows, and greater diversification the long-term growth.
Insurance

Markel is not a classical insurance company, where competition and regulations are higher. In contrast, it is highly specialized and most of its earned premiums come from specialty insurance products that provide coverage for hard-to-place risks in niche markets such as earthquake-exposed commercial properties, equine and horse club insurance, classic cars, and marine, among others.
To successfully operate in niche markets, many of the larger accounts are highly customized and Markel leverages its expertise by assigning teams of experienced underwriters and claims specialists.
Through a higher degree of specialization and extensive experience in its particular markets, Markel generates significantly higher returns than the average insurance industry.
While the average combined ratio for the overall property and casualty insurance industry between 2013 and 2022 (https://content.naic.org/sites/default/files/inline-files/2022%20Annual%20Property%20%26%20Casualty%20%26%20 Title%20Insurance%20Industries%20Analysis%20Report .pdf) was at 99.4%, during the same period Markel had an average combined ratio of 95%, which is an outstanding overperformance.

(https://static.seekingalpha.com/uploads/2023/11/21/58560248-17005889844556577_origin.png)Markel has been consistently growing its earned premiums since 2010 and only had two years with underwriting losses (combined ratio above 100%). It is important to note the 2017 abnormal level of natural catastrophes such as hurricanes Harvey, Irma, and Maria, and the Mexico City earthquakes had significant impacts and the company has reduced its exposure (https://markel.widen.net/s/dzqdsdgzpw/shareholder-2022) to natural catastrophe risks.


During the recent years, Markel has reduced its premium volume in the property segment, which is mainly related to catastrophe-exposed risks.
Investments

To boost its profits, Markel uses the cash provided by the insurance business to invest in equities and fixed-income securities, maintaining a mix that ensures future claims coverage.

Over the long term, the fixed income operations provide lower returns compared to the equity portfolio, but they have the highest level of short-term liquidity and are matched with the expected pay to insurance policyholders. The portfolio (https://s202.q4cdn.com/749045284/files/doc_financials/2022/ar/2022_Annual_Report_FINAL.pdf) has an average rating of "AAA," with 99% of the securities rated "A" or better.
In equity operations, Markel's portfolio has outperformed the S&P 500 (SPY (https://seekingalpha.com/symbol/SPY?hasComeFromMpArticle=false&source=content_type%253Areact%257Csection%253Amain _content%257Cbutton%253Abody_link)), averaging a 14.4% annual return over the last 10 years and a 12.5% over the last 20 years.


The portfolio (https://www.dataroma.com/m/holdings.php?m=MKL) currently holds 133 positions, but 50% is concentrated in 14 companies.

To achieve these superior returns over such a long time frame, investment decisions are guided by four key aspects:


Good returns on capital and low debt.
Run by talented, reliable, and trustworthy management.
Reinvestment opportunities and good capital allocation.
Reasonable valuation.




Seems fair to me. Although one might not agree with all of their holdings or might be missing some company that could fit in the portfolio, it is important to remember they are stewards of capital, so their investment perspective is not the same as mine or yours, and they need to look for a balance between beating the market and not being too defensive.
Markel Ventures

The third engine is Markel Ventures, a portfolio of businesses that operate independently in a variety of industries such as building materials, food, cranes, trailers, or fire suppression and security systems, among others.
Markel has built the portfolio by acquiring entire businesses or a controlling interest, and from its own start-ups, investing ∼$3.4B since 2005. These businesses returned (https://markel.widen.net/s/sfd9j6kfrg/shareholder-2021) $1.5B to Markel over the years, and revenues have been consistently growing.


Capital Allocation

To allocate its multiple sourced cash flows, Markel conducts a four-step process:


The first choice is organic growth, prioritizing the people inside the organization with a proven track record that brings up opportunities to expand an existing business.
Secondly, they look for acquisitions in the insurance or Markel Ventures segments.
If there is still capital unallocated, Markel looks for publicly traded equities that meet their criteria.
Finally, if they believe Markel shares are undervalued, they buy back their own shares.




I believe this is the best capital allocation possible, and it's worth noting that Markel doesn't distribute dividends, but in case there is capital unallocated they buy back shares, a more tax-efficient way to return capital to shareholders.
Management

Markel is currently (http://proxy.markelcorp.com/materials/Markel%20Corporation%20-%20Notice%20and%20Proxy%20Statement%20for%202023%2 0Annual%20Meeting.pdf) led by Tom Gayner (age 61), who joined the company in 1990 in an asset management role, became Chief Investment Officer in 2010, and co-CEO in 2016. He started to learn accounting at a young age since his father himself was an accountant, and before joining Markel gained experience in sales and accounting, working at PricewaterhouseCoopers LLP.
I can't recommend enough reading his annual letters and listening to his multiple interviews, since I believe they are highly enlightening for anyone interested in business and investing.
Markel's executive team has extensive experience and has been in the company for many years. The President of the Insurance (https://www.linkedin.com/in/jeremyanoble/) division joined the company in 2002 and the President of Markel Ventures (https://theorg.com/org/markel/org-chart/andrew-g-crowley) in 2004.


The board of directors includes Markel family members who have been in the company since 1975 (Steven Markel (https://es.marketscreener.com/lideres-empresariales/Steven-Andrew-Markel-12482/biografia/)) and well-known names such as Lawrence Cunningham (https://www.linkedin.com/in/lawrence-cunningham-68b7574b/), who is a director and Vice Chairman at Constellation Software, Inc.

Compensation Structure

The compensation structure is as good as it can be, incentivizing long-term decision-making and shareholder value creation.
Executive management receives a base salary ranging from $0.5M to $1M, and a variable compensation based on the compound annual growth rate (CAGR) in book value per share, and the CAGR in the stock price over five years. Variable compensation compromised ∼75% of total compensation during 2022 and is mainly received in equities vesting over three years.
For every extra point of accomplished CAGR over 5 years, management compensation increases.

This compensation structure avoids short-term thinking and taking unnecessary risks to earn incentive compensation.
We don't forecast future economic conditions or geopolitical circumstances. We focus on what we can control and do. We do our best to prepare ourselves to survive and persist no matter what comes our way.
Over decades, we've lived and grown despite bouts of inflation, deflation, dollar strength, dollar weakness, wars, energy shocks, political shocks, labor shortages, natural catastrophes and more.
(Source: Thomas S. Gayner, Chief Executive Officer. 2022 Letter to shareholders)



Ownership

The stock ownership guidelines require that the CEO maintain a stock ownership of at least five times the base salary and other members of senior management at least one to three times the base salary, depending on the position.
Overall, the board and executive members as a group own 1.75% of Markel's shares, being the largest individual shareholders the Chairman of the Board Steven Markel (∼$150M), his cousin (https://www.markel.com/-/media/news/reactions---a-family-affair.pdf) Anthony Markel who started in 1964 and retired recently (∼$116M), and Tom Gayner (∼$70M ).
Although I would like the combined management team to own a higher percentage of the shares, it is important to note it is an almost $20B company, and highly I value the fact that the CEO owns 70x of its base salary.
Financials and Valuation

Markel's accounting shouldn't be looked at from a GAAP perspective, since unrealized profits and losses on the equity investment portfolio are accounted as revenues.
To evaluate the company, we can use the market cap to book value ratio, which has been useful over many years, but as Tom Gayner and Warren Buffet have recently stated, it is becoming a less reliable method given the increasingly asset-light nature of many businesses. From a book value perspective, the stock is currently trading at its low long-time range.

In Markel's case, I prefer to use market cap divided by underwriting profit, net profit from Markel Venture's businesses (adjusted for intangible amortization) plus interests and dividends received, increased by the average long-term profits from equity investments.



(https://static.seekingalpha.com/uploads/2023/11/23/58560248-170074221530405_origin.png)As shown in the table presented above, since 2013 the average last twelve months ratio to total profit has been at 9.5x.
If we take into account the data for 2023, during the first nine months Markel has generated an underwriting profit of $283M, dividends and interest income totaling $521M, and a $392M adjusted profit from Markel Ventures. The equity portfolio is currently valued at $8.57B.


By annualizing the income from the insurance segment, dividends and interests, and the profit from Markel Ventures, plus a 12.5% return from the equity portfolio, which has been the average over the last 20-year period, we arrive at a total income figure of $2.54B.

Given the current market cap is at $19B, we get a market cap to total profit ratio of 7.5x, suggesting significant undervaluation when compared to the historical average.
Other factors that support my thesis are that the CEO has been purchasing shares (https://seekingalpha.com/article/4646627-markel-group-inc-mkl-q3-2023-earnings-call-transcript?hasComeFromMpArticle=false&source=content_type%253Areact%257Csection%253Amain _content%257Cbutton%253Abody_link) in the open market during 6 of the last 7 quarters, investing approximately all of its after-tax salary, and Markel has increased the pace of its share buybacks, reducing the share count by 1.83% during the last twelve months, higher than the average annual decrease of 0.5% observed over the last seven years.
Considering that our investment decisions should not rely solely on historical performance, let's take a look at future expectations for Markel.


Expected Growth

In the upcoming years, I anticipate that underwriting profits in the insurance segment will experience a growth rate of 10%, which is slightly lower than the long-term average of 12%, given the higher interest-rate environment and increasing price competition in the insurance business.
On the other hand, the fixed-income portfolio will produce higher income due to the higher interest rates. My assumption is a 7% growth rate in this segment, above the 4.6% CAGR since 2004, since the historically low-interest rates we had during the last decade which are reverting to the mean, but below the 9% CAGR in the gross premium volume during the same period.
Markel Ventures has been growing its revenues at 25% CAGR over the last ten years, and I will be cautious by projecting a 15% CAGR going forward.
Finally, for the equity portfolio, I expect the same 12.5% CAGR that Markel has achieved over the last two decades, since I believe it is a fair assumption given that we had the 2008 great financial crisis in between.

(https://static.seekingalpha.com/uploads/2023/11/23/58560248-17007430865810623_origin.png)With these assumptions, I expect Markel to generate almost $3B of total profit in 2024 and $4.6B in five years. Without including any share buybacks and valuation reverting to the 9.5x market cap to the total income average during the following years, I expect Markel's market cap to be at $28.4B in 2024 and $43.7B in five years, with a share price of $1,775 for 2024 (24% return) and $3,290 for 2028 (18% CAGR).
If we do not assume valuation reverting to the mean, the market cap should be at $34.5B in five years, providing a 12.7% CAGR.


Risks

As always, there are no risk-free investments, so let's take a look at what investors should monitor at Markel.
Natural Disasters

Although Markel has a diversified business portfolio, at its core it is an insurance company with exposure to windstorms, hurricanes, earthquakes, and so on.

(https://static.seekingalpha.com/uploads/2023/11/22/58560248-17006667483527684_origin.png)As we can see from the chart above, the impact of natural disasters has been increasing over the last decades. Even though it is hard to predict the frequency of natural catastrophes going forward, the trend is clear and studies (https://accesspartnership.com/the-citizen-natural-disasters-set-to-increase-by-37-globally-by-2025-report/#:~:text=A%20new%20report%20has%20revealed,541%20o ccurrences%29%20by%202025%20globally.) suggest that climate change will increase weather-related disasters.
As commented before, Markel has been reducing its exposure, but this is not the only factor to take into account. Also, the analytical models used to fix prices and capital reserves must be accurate.

Product Development and Competition

The insurance business is highly competitive. There are some regulatory entry barriers and the industry is consolidating, which makes it more difficult for smaller companies to compete, but the sector is undergoing rapid and significant technological changes due to the increasing use of data, so Markel's future on the insurance business will be highly dependent on its ability to adapt, develop new products, and increase efficiency.
Inflation

Inflationary pressures have primarily two effects on Markel's financials. Within the insurance segment, elevated inflation increases the cost associated with claims payments, particularly in longer-tail product lines.
Additionally, this new economic environment influences reserves, which are based on the estimated ultimate cost of settling claims. This, in turn, diminishes Markel's capacity to allocate capital toward higher-yielding sources, such as the equity portfolio or Markel Ventures.
Liquidity Risk

Finally, the aspect that I believe is easier to monitor, but at the same time highly relevant, is Markel's liquidity and its capital allocation.
It is mandatory for Markel's shareholders to supervise the percentage of its investments allocated into highly liquid assets since a major event could force the company to sell assets to cover the claims, which could result in realized investment losses.
For now, I feel safe with Markel's balance sheet and management's incentives, nevertheless, it remains essential for them to sustain a balance between maximizing returns and ensuring long-term resilience.


Conclusions

As Tom Gayner said, just as a poker player can't judge the success of a specific play based on its immediate outcome, but should consider it over the long term due to statistical variation, Markel's success shouldn't be judged by the most recent stock performance.
Markel has a long track record of value creation, and management is taking the right steps towards the future. Moreover, the current stock price appears undervalued, supported by historical data, expectations, and recent share purchases by its CEO.
I view Markel as a long-term investment that can be kept without spending much time looking at the share price or the latest quarterly figures, but just letting it grow over time knowing the capital will be in good hands, and assigning it a strong buy rating expecting a 24% stock price increase for 2024 and an 18% CAGR over five years.

[Daytr]

Insurers receive premiums upfront and pay claims later. ... This collect-now, pay-later model leaves us holding large sums -- money we call "float" -- that will eventually go to others. Meanwhile, we get to invest this float for Berkshire's benefit. ...


If premiums exceed the total of expenses and eventual losses, we register an underwriting profit that adds to the investment income produced from the float. This combination allows us to enjoy the use of free money -- and, better yet, get paid for holding it. Alas, the hope of this happy result attracts intense competition, so vigorous in most years as to cause the P/C industry as a whole to operate at a significant underwriting loss. This loss, in effect, is what the industry pays to hold its float. Usually this cost is fairly low, but in some catastrophe-ridden years the cost from underwriting losses more than eats up the income derived from use of float. ...


Our float has grown from $16 million in 1967, when we entered the business, to $62 billion at the end of 2009. Moreover, we have now operated at an underwriting profit for seven consecutive years. I believe it likely that we will continue to underwrite profitably in most -- though certainly not all -- future years. If we do so, our float will be cost-free, much as if someone deposited $62 billion with us that we could invest for our own benefit without the payment of interest.


Let me emphasize again that cost-free float is not a result to be expected for the P/C industry as a whole: In most years, premiums have been inadequate to cover claims plus expenses. Consequently, the industry's overall return on tangible equity has for many decades fallen far short of that achieved by the S&P 500. Outstanding economics exist at Berkshire only because we have some outstanding managers running some unusual businesses.



Thanks. Pretty straight forward.
Let's hope the investment managers for the floats don't lose the money set aside for the insurance companies to pay their clients insurance claims.

Or there is a regulatory change on how the insurance companies are allowed to invest what effectively isn't their money or insurance companies are forced to pay cost of funds to claimants for delayed payouts.

One could describe this as a legalized Ponzi scheme.

[ValueNZ]

Thanks. Pretty straight forward.
Let's hope the investment managers for the floats don't lose the money set aside for the insurance companies to pay their clients insurance claims.

Or there is a regulatory change on how the insurance companies are allowed to invest what effectively isn't their money or insurance companies are forced to pay cost of funds to claimants for delayed payouts.

One could describe this as a legalized Ponzi scheme.
Nothing like a ponzi scheme. In a ponzi scheme old investors are paid with funds from new investors, in an insurance business they can only distribute the profit from the invested liability and not the liability itself.

There's also plenty of regulation already existing in insurance regarding how they are allowed to invest the float.

[SailorRob]

Thanks. Pretty straight forward.
Let's hope the investment managers for the floats don't lose the money set aside for the insurance companies to pay their clients insurance claims.

Or there is a regulatory change on how the insurance companies are allowed to invest what effectively isn't their money or insurance companies are forced to pay cost of funds to claimants for delayed payouts.

One could describe this as a legalized Ponzi scheme.


The regulations are already extremely rigid.

They have to have the float matched to claim time frames in super secure bonds- lots of sovereigns, unless they have extra capital to commit like Berkshire and to an extent like Markel.

The entire industry on average already loses money, you cannot have a regulatory change or the industry won't exist, it's bad enough already. Or premiums would go up massively.

The insurance industry is TERRIBLE but for the few that are good at it, free money.

Yes the Ponzi analogy is relevant.

But if you think this source of free money sounds good, it pales in comparison to the NZ retirement sector.

[SailorRob]

Nothing like a ponzi scheme. In a ponzi scheme old investors are paid with funds from new investors, in an insurance business they can only distribute the profit from the invested liability and not the liability itself.

There's also plenty of regulation already existing in insurance regarding how they are allowed to invest the float.


Yeah you are right, the Ponzi was not in fact relevant.

[Daytr]

The regulations are already extremely rigid.

They have to have the float matched to claim time frames in super secure bonds- lots of sovereigns, unless they have extra capital to commit like Berkshire and to an extent like Markel.

The entire industry on average already loses money, you cannot have a regulatory change or the industry won't exist, it's bad enough already. Or premiums would go up massively.

The insurance industry is TERRIBLE but for the few that are good at it, free money.

Yes the Ponzi analogy is relevant.

But if you think this source of free money sounds good, it pales in comparison to the NZ retirement sector.

Good to know & obviously you would hope so.
This however must limit the returns made on the float. I get that it's free money & that's growing over time.

Anyway, it's interesting & I have learnt something new about how the insurance industry operates.

Amazing how things can go when you play nice eh.

[SailorRob]

Good to know & obviously you would hope so.
This however must limit the returns made on the float. I get that it's free money & that's growing over time.

Anyway, it's interesting & I have learnt something new about how the insurance industry operates.

Amazing how things can go when you play nice eh.

Correct, massive handbrake on returns.

But with markel and Berkshire not just being pure insurance companies they can use other capital to back insurance liabilities, so Berkshire can invest all the insurance money into equities.

[Relaxed]

There are two components, one the amount of claims not paid out, and two the cost of running the business.

In isolation they don't mean too much, it's the 'combined ratio' that matters.

Markel is the best in the world that I know of - better than Berkshire.

So of $100 of the premiums taken in from policy holders they retain $8 to $10 after paying out all the claims AND the costs of running it.

The actual % of claims paid out is much lower, off the top of my head somewhere in the 70 odd percent range.


Or, if you're into more risk due to a higher current valuation and size, you could look at Kinsale (KNSL)

Their highest combined ratio so far has been about 87% in 2020, which would be an extraordinary lowest-ever number for pretty much any other insurance company… and their average for the past ten years is 78%

Ideally you'd wait for a pull back in the share price, but it has tended to make higher lows over time and is currently rising off one of those.

[SailorRob]

Or, if you're into more risk due to a higher current valuation and size, you could look at Kinsale (KNSL)

Their highest combined ratio so far has been about 87% in 2020, which would be an extraordinary lowest-ever number for pretty much any other insurance company… and their average for the past ten years is 78%

Ideally you'd wait for a pull back in the share price, but it has tended to make higher lows over time and is currently rising off one of those.

Wow, will check it out.

How are they keeping out competition?

[Relaxed]

Wow, will check it out.

How are they keeping out competition?

They are writing insurance that no one else wants. really specialised stuff.

also, the CEO keeps talking it down by noting that "this level of growth will not continue forever, it will reduce"
he is right, of course, but so far they have been growing like a government bureaucracy with extra funds to deliver an outcome :)

in KNSL case so far, they have actually managed to deliver the outcome. unlike said bureaucracy

[SailorRob]

During 2013 and 2014, John Key’s National-led Government sold just under half of Mighty River Power (now known as Mercury NZ), Meridian Energy and Genesis Energy and listed them on the NZX.
A few years after that, I recall asking the chief executive from one of those companies about the biggest change he’d noticed since the sharemarket float.Without hesitation, he said “scrutiny” because of the added pressure to manage the business sensibly, spend every dollar wisely and have a clear strategy.


There’s nowhere to hide when you have an army of experienced analysts and savvy investors watching and judging your every move. Those three companies are much better businesses today than they were 10 years ago and that’s reflected in the earnings and share price growth we’ve seen since. Contrary to popular belief, this success hasn’t come at the expense of consumers.

According to MBIE, electricity costs per unit have increased at less than half the rate they did when these companies were in government ownership. The Crown still owns 51 per cent of each of them, as is the case with Air New Zealand, so the taxpayer has continued to benefit from any further success while also retaining control.

The rest of the profit has largely stayed in the country too, with KiwiSaver funds and private New Zealand investors well-represented on the share registers.
This approach allows central or local government to reinvest the proceeds in other priorities, which means it can either generate returns elsewhere or won’t need to borrow as much.

[Snoopy]

During 2013 and 2014, John Key’s National-led Government sold just under half of Mighty River Power (now known as Mercury NZ), Meridian Energy and Genesis Energy and listed them on the NZX.
A few years after that, I recall asking the chief executive from one of those companies about the biggest change he’d noticed since the sharemarket float.Without hesitation, he said “scrutiny” because of the added pressure to manage the business sensibly, spend every dollar wisely and have a clear strategy.

There’s nowhere to hide when you have an army of experienced analysts and savvy investors watching and judging your every move. Those three companies are much better businesses today than they were 10 years ago and that’s reflected in the earnings and share price growth we’ve seen since. Contrary to popular belief, this success hasn’t come at the expense of consumers.

According to MBIE, electricity costs per unit have increased at less than half the rate they did when these companies were in government ownership. The Crown still owns 51 per cent of each of them, as is the case with Air New Zealand, so the taxpayer has continued to benefit from any further success while also retaining control.


Interesting to note you mentioned Air New Zealand. But you did not mention the disastrous Ansett Australia acquisition by Air New Zealand that brought the privately run and scrutinized Air New Zealand to its knees in 2001. Fortunately the Helen Clark government rescued the day by majority nationalisation taking an 80% stake. Then when the government sold down that stake to a controlling 51%, they had to step in again during Covid-19 by guaranteeing company finances. So the mantra that 'private ownership always do it better' is really just an exercise in picking the data to suit your own biases.




The rest of the profit has largely stayed in the country too, with KiwiSaver funds and private New Zealand investors well-represented on the share registers.
This approach allows central or local government to reinvest the proceeds in other priorities, which means it can either generate returns elsewhere or won’t need to borrow as much.


Didn't National and Stephen Joyce reinvest the proceeds from the Meridian, Genesis and Mercury power company sell downs into 'roads of national significance'? Projects with a far lower payback than the power company shares that were sold to fund them?

SNOOPY

[SailorRob]

Interesting to note you mentioned Air New Zealand. But you did not mention the disastrous Ansett Australia acquisition by Air New Zealand that brought the privately run and scrutinized Air New Zealand to its knees in 2001. Fortunately the Helen Clark government rescued the day by majority nationalisation taking an 80% stake. Then when the government sold down that stake to a controlling 51%, they had to step in again during Covid-19 by guaranteeing company finances. So the mantra that 'private ownership always do it better' is really just an exercise in picking the data to suit your own biases.



Didn't National and Stephen Joyce reinvest the proceeds from the Meridian, Genesis and Mercury power company sell downs into 'roads of national significance'? Projects with a far lower payback than the power company shares that were sold to fund them?

SNOOPY


Not me cuz, was Mark Lister article in the Herald.

Why was it fortunate the commies 'rescued' the airline? The government should never have got involved.

How are you feeling after reading through the coalition documents and realising your commie utopian dreams are over!

Any reason you're not moving to a country where the state owns everything?

[Daytr]

Not me cuz, was Mark Lister article in the Herald.

Why was it fortunate the commies 'rescued' the airline? The government should never have got involved.

How are you feeling after reading through the coalition documents and realising your commie utopian dreams are over!

Any reason you're not moving to a country where the state owns everything?

So what havoc would have been created for domestic travel in NZ if the Government hadn't stepped in?

[Valuegrowth]

Thanks. Pretty straight forward.
Let's hope the investment managers for the floats don't lose the money set aside for the insurance companies to pay their clients insurance claims.

Or there is a regulatory change on how the insurance companies are allowed to invest what effectively isn't their money or insurance companies are forced to pay cost of funds to claimants for delayed payouts.

One could describe this as a legalized Ponzi scheme.Financial sector firms should not make mistakes that they made in the past. I have some experience in the banking and insurance sector. Before I buy banking or the insurance sector firms I will think twice. Hope they have better risk management systems now.

https://www.fma.govt.nz/about-us/enforcement/cases/finance-company-collapses/
NZ finance company collapses (2006–2012)

https://www.theguardian.com/business/2008/dec/28/markets-credit-crunch-banking-2008
Three weeks that changed the world

https://www.thebalancemoney.com/aig-bailout-cost-timeline-bonuses-causes-effects-3305693
AIG bailout

[SailorRob]

So what havoc would have been created for domestic travel in NZ if the Government hadn't stepped in?


Study Chapter 11.

[Charlie]

https://www.who.int/emergencies/disease-outbreak-news/item/2023-DON494

might be an issue again .
watching the markets carefully.
FYI

[SailorRob]

https://www.who.int/emergencies/disease-outbreak-news/item/2023-DON494

might be an issue again .
watching the markets carefully.
FYI

What do you mean 'watching the markets carefully' what precisely does this entail, and given what you see what reaction do you then have?

[Daytr]

Study Chapter 11.

AIRNZ had a cash burn rate of over $100M per month and that was when 70% of the domestic market was operating.
Even with the domestic market 100% open, their cash burn rate was $65Bln per month.

What supplier is going to continue to support AIRNZ under that scenario?
The banks debt covenants would have been breached.

I don't think Chapter 11 was an option, it was either liquidation or a bail out.

Others may no more than I & happy to be corrected.

[SailorRob]

AIRNZ had a cash burn rate of over $100M per month and that was when 70% of the domestic market was operating.
Even with the domestic market 100% open, their cash burn rate was $65Bln per month.

What supplier is going to continue to support AIRNZ under that scenario?
The banks debt covenants would have been breached.

I don't think Chapter 11 was an option, it was either liquidation or a bail out.

Others may no more than I & happy to be corrected.


No it's a fair point.

Under such a scenario equity holders must lose everything and top management must lose their entire net worth and partners as well as Buffett says of banks that need bail outs -

“If a bank gets to where it needs government assistance, the responsible CEO should lose his net worth and his spouse’s net worth,” Buffett said at Berkshire’s shareholders meeting.

So effectively the state could have a role in transitioning the assets after wiping out the equity holders, looking closely at regulations that may have led to uncompetitive business conditions, and selling to someone who knows how to run an airline (i.e. not a government that cannot run a bath).

[Panda-NZ-]

and selling to someone who knows how to run an airline (i.e. not a government that cannot run a bath).

NZ has no capital to do any such thing..

Only the NZ govt or american banks can step in - i'd rather the former.

[ValueNZ]

No it's a fair point.

Under such a scenario equity holders must lose everything and top management must lose their entire net worth and partners as well as Buffett says of banks that need bail outs -

“If a bank gets to where it needs government assistance, the responsible CEO should lose his net worth and his spouse’s net worth,” Buffett said at Berkshire’s shareholders meeting.

So effectively the state could have a role in transitioning the assets after wiping out the equity holders, looking closely at regulations that may have led to uncompetitive business conditions, and selling to someone who knows how to run an airline (i.e. not a government that cannot run a bath).
I agree, bad businesses should be allowed to fail and not bailed out. I think it sends out a dangerous message to big business that if they take on excessive risk and go bust they won't face the consequences of their actions.

Also I know very little about bankruptcy law but once bankrupt shouldn't the assets of the business be transferred amongst their creditors, and they should decide who to sell those assets to? Why should the government be involved with the sale of the assets?

[ValueNZ]

NZ has no capital to do any such thing..

Only the NZ govt or american banks can step in - i'd rather the former.
Why? Does the NZ government know something that free enterprise doesn't?

[SailorRob]

I agree, bad businesses should be allowed to fail and not bailed out. I think it sends out a dangerous message to big business that if they take on excessive risk and go bust they won't face the consequences of their actions.

Also I know very little about bankruptcy law but once bankrupt shouldn't the assets of the business be transferred amongst their creditors, and they should decide who to sell those assets to? Why should the government be involved with the sale of the assets?


The argument is, say it was Ports of Auckland, a bankruptcy/asset liquidation will have flow on effects that can damage the entire country. Unable to import export goods for Months etc, could lead to thousands of bankruptcies and major damage to NZ economy.

This is the too big to fail argument, but it should not mean that these businesses are Nationalised to stop this risk, obviously.

[Daytr]

No it's a fair point.

Under such a scenario equity holders must lose everything and top management must lose their entire net worth and partners as well as Buffett says of banks that need bail outs -

“If a bank gets to where it needs government assistance, the responsible CEO should lose his net worth and his spouse’s net worth,” Buffett said at Berkshire’s shareholders meeting.

So effectively the state could have a role in transitioning the assets after wiping out the equity holders, looking closely at regulations that may have led to uncompetitive business conditions, and selling to someone who knows how to run an airline (i.e. not a government that cannot run a bath).

It's not like AIRNZ was being run poorly or unprofitably. It was a pandemic with global air travel shut down by Governments.

So none of the consequences you outlined are appropriate & the ramifications for creditors let alone the potential contagion effect could have had a much larger & wider impact on the economy.

The Government will no doubt sell down their increased equity stake for a substantial profit and meantime collect a dividend.
A much better result for all New Zealanders than the unnecessary catastrophe you propose.

Buffett says... Buffett this...
Do you bow when utter hus bane?

[Panda-NZ-]

It's not like AIRNZ was being run poorly or unprofitably. It was a pandemic with global air travel shut down by Governments.

So none of the consequences you outlined are appropriate & the ramifications for creditors let alone the potential contagion effect could have had a much larger & wider impact on the economy.

The Government will no doubt sell down their increased equity stake for a substantial profit and meantime collect a dividend.
A much better result for all New Zealanders than the unnecessary catastrophe you propose.

Buffett says... Buffett this...
Do you bow when utter hus bane?

China's Guangdong Holdings (state enterprise) would have liked a stake in Air NZ for 10c a share.

[SailorRob]

It's not like AIRNZ was being run poorly or unprofitably. It was a pandemic with global air travel shut down by Governments.

So none of the consequences you outlined are appropriate & the ramifications for creditors let alone the potential contagion effect could have had a much larger & wider impact on the economy.

The Government will no doubt sell down their increased equity stake for a substantial profit and meantime collect a dividend.
A much better result for all New Zealanders than the unnecessary catastrophe you propose.

Buffett says... Buffett this...
Do you bow when utter hus bane?

Could it have been undervalued by more than 100% perhaps?

Your communist utopia is DEAD.

Read the coalition agreement.

[Valuegrowth]

Deleted. Posted on the wrong place. sorry.

[Valuegrowth]

https://www.who.int/emergencies/disease-outbreak-news/item/2023-DON494 (https://www.who.int/emergencies/disease-outbreak-news/item/2023-DON494)

might be an issue again .
watching the markets carefully.
FYI

Charlie You are very intelligent. You are doing homework on major events. I agree always we must watch market carefully. Market is filled with all types of market players. If we study the past incidents, we can get better decisions in this investment world. To face those types of events in the future I buy future strong balance sheet firms at attractive prices who can generate cash. Some managers don’t have risk management systems in place to face for major events. Some blame government cannot run businesses while themselves cannot manage their business efficiently and productively. How many corporations failed over last 3 decades and how many people lost their money and even retirements. Tax money went for bailing out failed companies. It’s not too big to fall. Similarly, it’s not too small to be big. However, in every situation, there are opportunities for intelligent investors. These days people have get caught in growth traps. Recently, I sold one value trap and one growth trap. One of my rules is never stay in growth and value trap once I realized it. Number one rule is: invest in strong balance sheet firms to face major events in the future.

[Panda-NZ-]

Could it have been undervalued by more than 100% perhaps?

Your communist utopia is DEAD.

Read the coalition agreement.

In china 60% of the GDP is a state owned enterprise.

Virtually everyone else has been stagnant except arguably India.

[bull....]

Now the turkey festive is over back to business. seasonality in full play great nov , dec prior to presidential yr usually good too. lets see how it goes

[SailorRob]

Charlie You are very intelligent. You are doing homework on major events. I agree always we must watch market carefully. Market is filled with all types of market players. If we study the past incidents, we can get better decisions in this investment world. To face those types of events in the future I buy future strong balance sheet firms at attractive prices who can generate cash. Some managers don’t have risk management systems in place to face for major events. Some blame government cannot run businesses while themselves cannot manage their business efficiently and productively. How many corporations failed over last 3 decades and how many people lost their money and even retirements. Tax money went for bailing out failed companies. It’s not too big to fall. Similarly, it’s not too small to be big. However, in every situation, there are opportunities for intelligent investors. These days people have get caught in growth traps. Recently, I sold one value trap and one growth trap. One of my rules is never stay in growth and value trap once I realized it. Number one rule is: invest in strong balance sheet firms to face major events in the future.

IQ of 180 at least.

[Daytr]

Could it have been undervalued by more than 100% perhaps?

Your communist utopia is DEAD.

Read the coalition agreement.

What are you on about?
Nice diversion though.

[winner69]

No doubt Adrian will try to impose himself on Wednesday and make a mark by foolishly cutting the OCR

You never know he might even have been ‘told’ to

That’ll shake up the markets

[bull....]

Zhongzhi collapse could be bigger than Evergrande’s
https://asiatimes.com/2023/11/zhongzhi-collapse-could-be-bigger-than-evergrandes/

[bull....]

with the smoking u=turn to raise revenue they should consider making weed taxable

[bull....]

Black Friday shoppers spent a record $9.8 billion in U.S. online sales, up 7.5% from last year
https://www.cnbc.com/2023/11/25/black-friday-shoppers-spent-a-record-9point8-billion-in-us-online-sales-up-7point5percent-from-last-year.html



Black Friday sales slump by 10 percent - Retail NZ
https://www.rnz.co.nz/news/business/503306/black-friday-sales-slump-by-10-percent-retail-nz

[winner69]

Black Friday shoppers spent a record $9.8 billion in U.S. online sales, up 7.5% from last year
https://www.cnbc.com/2023/11/25/black-friday-shoppers-spent-a-record-9point8-billion-in-us-online-sales-up-7point5percent-from-last-year.html



Black Friday sales slump by 10 percent - Retail NZ
https://www.rnz.co.nz/news/business/503306/black-friday-sales-slump-by-10-percent-retail-nz

A tale of two countries as they say

[Rawz]

Good, hopefully we see inflation killed so rates can drop

[alokdhir]

Rates have no where else to go but drop ...they have double whammy ...either inflation will drop or recession will bite ..both ways rates will be down ...so rates outlook is clearly downwards ...eventually it will work out well for stocks ...best case for stocks is inflation drops before serious recession hits companies ...at present most likely case ...as they say base case ...but always have plan B ...ie holding power if we have to go thru a serious recession....mild one wont hurt good companies ....which we have noticed ...TRA has actually grown business in bad times ...thanks to many people's love for TINA ...many can be found here too :p

[SailorRob]

Rates have no where else to go but drop ...they have double whammy ...either inflation will drop or recession will bite ..both ways rates will be down ...so rates outlook is clearly downwards ...eventually it will work out well for stocks ...best case for stocks is inflation drops before serious recession hits companies ...at present most likely case ...as they say base case ...but always have plan B ...ie holding power if we have to go thru a serious recession....mild one wont hurt good companies ....which we have noticed ...TRA has actually grown business in bad times ...thanks to many people's love for TINA ...many can be found here too :p


Given this prediction, what percentage of your net worth do you have in TLT?

[bull....]

Rates have no where else to go but drop ...they have double whammy ...either inflation will drop or recession will bite ..both ways rates will be down ...so rates outlook is clearly downwards ...eventually it will work out well for stocks ...best case for stocks is inflation drops before serious recession hits companies ...at present most likely case ...as they say base case ...but always have plan B ...ie holding power if we have to go thru a serious recession....mild one wont hurt good companies ....which we have noticed ...TRA has actually grown business in bad times ...thanks to many people's love for TINA ...many can be found here too :p

yep ive got big bet on rates falling.

[ValueNZ]

Rates have no where else to go but drop ...they have double whammy ...either inflation will drop or recession will bite ..both ways rates will be down ...so rates outlook is clearly downwards ...eventually it will work out well for stocks ...best case for stocks is inflation drops before serious recession hits companies ...at present most likely case ...as they say base case ...but always have plan B ...ie holding power if we have to go thru a serious recession....mild one wont hurt good companies ....which we have noticed ...TRA has actually grown business in bad times ...thanks to many people's love for TINA ...many can be found here too :p
Here's a fun graph, most investors have only experienced a period of declining/very low interest rates. Not sure that the party can go indefinitely though.
14875
Howard Marks has some great info on how he thinks the investment environment has possibly fundamentally changed regarding interest rates. This memo is worth a read https://www.oaktreecapital.com/insights/memo/further-thoughts-on-sea-change

[SailorRob]

Here's a fun graph, most investors have only experienced a period of declining/very low interest rates. Not sure that the party can go indefinitely though.
14875
Howard Marks has some great info on how he thinks the investment environment has possibly fundamentally changed regarding interest rates. This memo is worth a read https://www.oaktreecapital.com/insights/memo/further-thoughts-on-sea-change


Make sure you read this one as well, a mate of mine described it quite well 'Most f*&^%* disturbing thing, that s*&% memo he wrote about his son and bitcoin was his most popular ever, apparently'.

One of the most supposedly respected and conservative value investors in history, massively capitulating at almost the day of the top of the bubble, now sitting on a 70% drawdown for all that crap he shilled through his Son, wonder how beloved Andrew is doing these days.

Threw his entire 40 year career away the day he hit print on that shocker.

https://www.oaktreecapital.com/insights/memo/something-of-value (https://www.oaktreecapital.com/insights/memo/something-of-value)

[ValueNZ]

Make sure you read this one as well, a mate of mine described it quite well 'Most f*&^%* disturbing thing, that s*&% memo he wrote about his son and bitcoin was his most popular ever, apparently'.

One of the most supposedly respected and conservative value investors in history, massively capitulating at almost the day of the top of the bubble, now sitting on a 70% drawdown for all that crap he shilled through his Son, wonder how beloved Andrew is doing these days.

Threw his entire 40 year career away the day he hit print on that shocker.

https://www.oaktreecapital.com/insights/memo/something-of-value (https://www.oaktreecapital.com/insights/memo/something-of-value)
Just read the full memo, it gets worse and worse as you read it.

His son is an idiot and Howard Marks endorsing that mindset in that article is equally idiotic.

Thanks for posting that link.

[SailorRob]

Just read the full memo, it gets worse and worse as you read it.

His son is an idiot and Howard Marks endorsing that mindset in that article is equally idiotic.

Thanks for posting that link.

And almost on the very day ARKK and all that other rubbish peaked. Capitulation after 40 years on the exact Month of the top.

[RTM]

LCharlie Munger, investing genius and Warren Buffett’s right-hand man, dies at age 99”

Sailor Boy might be off to the USA for a while.

[Muse]

My favourite Munger quote...

"....tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical things, will often dramatically improve the financial results of that lifetime. A few major opportunities clearly recognisable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables. An then all that is required is a willingness to bet heavily when the odds are extremely favourable, using resources available as a result of prudence and patience in the past."

RIP Charlie

[Rawz]

My favourite Munger quote...

"....tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical things, will often dramatically improve the financial results of that lifetime. A few major opportunities clearly recognisable as such, will usually come to one who continuously searches and waits, with a curious mind, loving diagnosis involving multiple variables. An then all that is required is a willingness to bet heavily when the odds are extremely favourable, using resources available as a result of prudence and patience in the past."

RIP Charlie

Great quote. RIP Charlie

[Muse]

Great quote. RIP Charlie

he could have been describing our percy with that one

[Sideshow Bob]

Yes Muse, that is a great quote.

Very sad - RIP Charlie.

[SailorRob]

https://twitter.com/Larryjamieson_/status/1729616307514192212?t=FhpkLMNYEimjqOJBa7Kf3w&s=19

[SailorRob]

https://www.youtube.com/watch?app=desktop&v=80ipCc6ABVk

[bull....]

hawkish pause RBNZ with slightly higher track :scared:

[bull....]

Charlie Munger gave Buffett the blueprint. Here’s his great lesson

“Warren was obviously the frontman but the real brains behind it all was definitely Munger


https://www.afr.com/chanticleer/charlie-munger-shaped-buffett-s-thinking-here-s-his-great-lesson-20231129-p5enn1

[Daytr]

Charlie Munger gave Buffett the blueprint. Here’s his great lesson

“Warren was obviously the frontman but the real brains behind it all was definitely Munger


https://www.afr.com/chanticleer/charlie-munger-shaped-buffett-s-thinking-here-s-his-great-lesson-20231129-p5enn1

Yet it was Buffett that made all the money from what I understand.

[Baa_Baa]

Yet it was Buffett that made all the money from what I understand.

And both of them are/were great philanthropists giving away vast swathes of their wealth, advocating for other billionaires to follow their example. Truely inspiring investors, with something every investor can take heed of. Legends both of them.

[Daytr]

And both of them are/were great philanthropists giving away vast swathes of their wealth, advocating for other billionaires to follow their example. Truely inspiring investors, with something every investor can take heed of. Legends both of them.

Tru dat
Shame Gates doesn't get the same credit for philanthropy.

[Baa_Baa]

Tru dat
Shame Gates doesn't get the same credit for philanthropy.

Precisely, but I don't know why you think he doesn't get credit for it (what they do)? https://www.gatesfoundation.org/about/foundation-fact-sheet Regardless of whether we agree where the money goes, there's a heck of a lot of money that does go to their selected causes. Billions of it.

Another insight for successful investors, that success in investing beyond what we ourselves need for our own lives and purposes, has precedent in the very successful investors who choose to share and distribute their wealth through philanthropy, to causes that they are passionate about.

An admirable ambition imo.

[SailorRob]

Precisely, but I don't know why you think he doesn't get credit for it (what they do)? https://www.gatesfoundation.org/about/foundation-fact-sheet Regardless of whether we agree where the money goes, there's a heck of a lot of money that does go to their selected causes. Billions of it.

Another insight for successful investors, that success in investing beyond what we ourselves need for our own lives and purposes, has precedent in the very successful investors who choose to share and distribute their wealth through philanthropy, to causes that they are passionate about.

An admirable ambition imo.

Most of the Gates foundation money comes from Buffett, or at least a big percentage.