TomB16 investing blog

Discussion in 'Investing' started by TomB16, Aug 7, 2019.

  1. TomB16

    TomB16 Well-Known Member

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    Meanwhile, the WBI is at an irrelevant 198.6.

    Many continue to indicate the market can go up by 2% each month, adjusted for the GDP, and do that either forever or for a substantially longer period than it already has. Consider me skeptical.

    While the markets have been excellent to me, I am working on moving a significant amount of cash into a business startup. This isn't a great time but I am ignoring the macro factors. I think I have found something that will do well during my retirement years, even if I ignore it for relatively long periods of time.

    The point being, I trust this market with most of our money but not all. I want to have something outside the market.
     
  2. TomB16

    TomB16 Well-Known Member

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    I want to go back to: market/decision/luck. How do you figure out where the credit belongs?

    One of our core companies was purchased by a larger company. It left a bunch of cash in our accounts in early march. We were already cash heavy, at that point.

    The last two weeks of March saw us sink a small amount into one company and also our, by far, largest ever position expansion of another company. It took over two weeks to snipe the shares of the big one at a price I was happy with. This, after several months of only picking up a few shares, here and there, at our target price.

    Fast forward to today. A week later, safety stocks seem to be taking a big boost. Particularly, the company we just hit so hard. It is up 4.1%, this morning. We are already up 7% on this position and it's only been a few weeks. Suffice to say, I'm having a good day. The gain could be erased in a millisecond but we are happy, right now.


    What factors were in play?

    Trending market - For sure. All of my "safety" stocks, of which this is one, are up this morning. I cannot predict macro factors. Further, I don't believe anyone else can. So, I look at this as stepping into a stream that just happens to be flowing the direction I want to go.

    Decision quality - I believe this move was a good decision made for the right reasons but I won't know for considerable time. The proof will be following a well run company of hard working people for quarter after quarter. In 18 months, I will have a good idea if my positive view of this management team was correct.

    Luck - No kidding. Since I had absolutely no idea this company would leap forward, luck is 100% in play.


    Conclusion: I am 100% confident market trends and luck account for the morning gain. I am 65% confident this purchase was a good decision. Even though I made a move and it turned out great, I am in absolutely no position to declare myself some sort of investing genius.


    If you want to succeed with an objective approach, you need to be objective. That's where it all starts. Self aggrandizement is poison to value investing.

    To be candid, I feel I am a competent investor with strong, historic, gains over nearly four decades. I am well aware that does not mean I will do well going forward or that finding well run companies will get any easier with time. Past performance is no guarantee of future results.

    So, I will keep working hard, trying to find corporate value in the cushions of the market couch.
     
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  3. Rustic1

    Rustic1 Well-Known Member

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    Been extremely busy lately with not much time to hang out on the board.

    I dont put you on a pedestal by any means. However, for those that are new to the markets or want to lean towards a BETTER investing style. I would steer them your way to learn DUE DILIGENCE and more solid ways to approach the companies they are interested in.

    We have another thread on this site that is nothing more than copy/paste of endless articles and convincing people that FULLY INVESTED is the only way to go. Those are the ones that blindly follow and by not having cash on the sidelines, often get trapped when the sectors rotate and are forced to endure the HOPIUM method while others are able to average down.

    I use that thread as a example of what not to do.
    Some of us don't fall in love with a stock and use buy/sell signals to stay ahead of the game.

    On the green days, they dance like cheerleaders, on the red ones they cry like little girls. Whatever hikes your skirt, some of us have better plans.
     
  4. TomB16

    TomB16 Well-Known Member

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    The WBI is now 201.

    Not that anyone cares. lol!
     
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  5. Rustic1

    Rustic1 Well-Known Member

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    They will when its time. :D
    Most of them don't know what it means.:cool2:
     
  6. TomB16

    TomB16 Well-Known Member

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    Market / decision quality / luck... again

    In 1991, an EAA friend and I flew to Oshkosh, WI for an air show. He wanted to check out the hot experimental kit plane of the time, the RV-6. It was a great time.

    Wandering around, I stumbled across a chatty guy who worked for a corporation. He was part of a project to create a GM V8 based retro-fit power plant for rotary aircraft engines. He talked and talked. They knew where every operational radial engine was in the world. He talked about more than halving the operational cost of the aircraft. He talked about lack of jugs (sleeve and tube that, along with a piston, make up a cylinder). Soon, these aircraft would need to be fitted with new engines or be mothballed. This corporation serviced aircraft, so they had a direct connection to this market of old, radial powered, aircraft.

    By 91, there were too many failed auto-conversion projects to list. While some conversions from that era are still operating, they are experimental and there are more stories of harrowing engine failures than there are conversions.

    One of the more successful conversions from that era used a Mazda rotary engine and he even used the manual transmission as a re-drive (car engines rev a lot higher than aircraft engines and need to be geared down). He just wired a manual transmission in 3rd gear and replaced the tailshaft bearing frequently.

    This project I was being told about at Oshkosh was being done with corporate money by engineers and was going to result in certified replacement power for commercial use. It was being done "right". That had never been done before.

    I immediately started following the morning line and any news I could find that company.

    It didn't take long to talk myself into buying that stock. 24 months later, I sold it at a nice little profit. I felt like a genius and was smug with insider knowledge.

    At Oshkosh 99, I ended up seeing this man again. He wasn't all that talkative but I saw him later in the beer garden and brought him a beer. It seemed like the least I could do. After some idle chit-chat, he started talking.

    It turned out, they did finish the project and got the engine certified. They had to redevelop every part on that engine, right down to the castings and the alloys. It took a few years longer than expected. They only recovered part of the development cost before pulling the plug on the project. The project was not a success.

    That conversation burst my bubble of smugness. It sent me down a path of trying to quantify my objectivity. What I discovered was that I was a genius when the markets were rocking and an idiot when the markets contracted. In other words, I wasn't nearly as objective as I wanted to be.

    I feel I found success via the relentless pursuit of objectivity and self awareness. It's taken a lifetime of effort and it's been worth it.
     
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  7. TomB16

    TomB16 Well-Known Member

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    Please consider this question. It is not rhetorical. I hope someone has the guts to respond.


    Consider someone who is at the bottom of society. This person has $10,000. They inherited it or perhaps they saved it over the course of 15 years of ardent saving. The point being, they aren't going to get another $10,000 any time soon.

    One day, this person is told by a doctor their heart is no good and they will die unless they receive a pacemaker. The cost of a pacemaker is $10,000.

    Driving to the hospital for pacemaker surgery, with $10,000 in their pocket, they come across a flashing neon sign in a pleasing color that reads, "Get rich quick! Guaranteed results! Never work again in your life!"


    How many people will cut the wheels to inject their money into the GRQ scheme?

    I estimate about 30% of the population will gamble, even if it puts their life at risk. What do you think?
     
  8. Rustic1

    Rustic1 Well-Known Member

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    I would spend the 10k on coke n hookers. :D Sign up for welfare and get everything free, housing,food,insurance, stimulus money. Then I would start a campaign about life being unfair and receive donations for a free pacemaker. :cool2:

    And you?:lauging:
     
  9. roadtonowhere08

    roadtonowhere08 Active Member

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    I think your estimate is pretty accurate.

    For some the temptation to "go for broke" exceeds the "one in the hand is better than two in the bush" pragmatic thinking. It's why gambling is so popular. It preys on some people's predisposition for addiction or irrationality. No rational person thinks they are going to go home a winner overall.

    For your example, people who are at the bottom of society (for whatever reason) must have some sort of burning desire to move up because, well, poverty sucks. The reactions to that desire vary wildly, but if someone were to scrimp and save that money only to have to hand it over for a life saving surgery must be incredibly deflating. I would assume about 30% of the populace would have their rationality overridden by that "go for broke" temptation in order to have it all due to not wanting to go back to square one that much later in life.

    Though that person certainly screwed themselves out of a longer life due to that temptation, I do understand the thought process.

    Having a spouse and/or children only compounds this problem and the collateral damage becomes exponentially worse.
     
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  10. gtrudeau88

    gtrudeau88 Active Member

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    I agree with the 30%. Maybe more even
     
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  11. TomB16

    TomB16 Well-Known Member

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    "Get off my lawn." - Charlie Munger

     
  12. TomB16

    TomB16 Well-Known Member

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    India is reporting 314,835 new cases of COVID in the last 24 hours. They expect to gain over 400K new cases per day in the near future.

    It's an interesting case study to consider the highly aggressive response that was implemented in China vs virtually ignoring it in India. Imagine how many million people will die in India, as a result of ignoring the problem. Meanwhile, they don't even have to mask in China, anymore. There are only a few active cases that are easily dealt with.
     
  13. TomB16

    TomB16 Well-Known Member

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    I thought Achates Power dropped the ball. It's been three years since they announced dual opposed power imminent in consumer and commercial vehicles. At that time, they had an F-150 demonstrator with opposed piston power. Achates Power was founded in 2004 specifically to develop the opposed piston engine, so it's about time they come out with a product.

    Apparently, a recent grant from DOE has them providing test engines for commercial demonstration use in 2021. Also, they have a contract to provide designs to Caterpillar for use in military vehicles with production starting in 2024.

    I'd love to own an opposed piston truck but I think that window is coming to a close. There is still time but a decade from now, I expect pickup trucks to be exclusively electric.
     
  14. TomB16

    TomB16 Well-Known Member

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    This is three minutes of "All the education you need."

    Jack Bogle has done more for retirement investing that anyone on the planet.


     
  15. TomB16

    TomB16 Well-Known Member

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    "If you go to 10 doctors and they tell you the same medicine, that is the thing to take. If you go to 10 engineers to build a bridge and they tell you the same thing, that is the thing to build. If you go to 10 investment advisors and they pick out the same asset, you had better stay away from it." - John Templeton
     
    #635 TomB16, Apr 26, 2021
    Last edited: Apr 26, 2021
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  16. TomB16

    TomB16 Well-Known Member

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    If the above quote would fit in a signature, it would be there right now. That John Templeton pearl is one of the best things I've come across in years.


    I wish to, once again, point to a perspective difference between traders and investors. Investors are keenly aware of the distinction between the two. Traders are not.

    Yesterday, I was approached by an acquaintance I met at a retirement investment seminar, several years ago. I hate meeting people I know at those things and don't have a lot of respect for that stuff so I rarely go. My wife would go to every one. She considers it to be education. I consider it listening to mindless self aggrandizement for two hours, followed by a sales pitch. Every so often, in a moment of weakness, I go to one. This time, someone I knew was there.

    At the seminar, he came by to explain to me his investment chops are unrivalled. He then went on to explain his magic 8 ball system of randomized high frequency trades. At least, that's what I heard. :biggrin:

    I told him, "I'm an investor. I hold companies for years and decades." That didn't slow his self promotion.

    Yesterday, I was leaving a meeting with someone and he spotted me at street level. He came marching over and threw his strongest pitch about a gold exploration stock that has been struggling but is sure to go up like a rocket in no time. It cannot lose.

    He had some sort of pooled money idea that, if I was paying attention, would have involved me providing the cash and him taking the profit.

    I shut him down quite abruptly.

    - "I don't buy penny stocks."
    - "I don't trade."
    - "I don't buy commodities."
    - "I don't buy based on anyone's tip."
    - "I don't invest with other people."

    I tried to be as nice as I could while clearly conveying there is zero chance of that ever happening. As I was throwing shade, it occurred to me this is a glaring example of how few traders understand the distinction between trading and investing while all investors I know are acutely aware of it.


    If a trader reads this, they are welcome to ponder this: If this man buys the gold exploration company and gains plenty of wealth in a short time from it, I will not regret passing on the opportunity. How well or badly this stock does has nothing to do with my interest in owning it.
     
    #636 TomB16, Apr 27, 2021
    Last edited: Apr 27, 2021
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  17. TomB16

    TomB16 Well-Known Member

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    The WBI is now 205. :biggrin:


    A company I've been buying went up 15% this morning under volumes that are 30x normal. A big player is buying in.

    We have all of this equity we need but I'm always open to buying more, at a good price. When this sort of thing happens, I never chase it. The price is almost certain to settle, once this player has had a long drink at the trough. Even if the price doesn't return to previous normals, I will not adjust my strike price unless I can see increase in value.

    FOMO is toxic, IMO.
     
  18. TomB16

    TomB16 Well-Known Member

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    The WBI is at 196.6, as of two minutes ago.

    With the Berkshire succession plan now public, I will mention something about Warren Buffett that few seem to understand.

    I believe Warren Buffett's objective is to own the most, high quality, businesses possible. Specifically, this is not the same as having the most money possible. Some businesses, like rail and insurance, require a lot of capital so he does have a need for cash reserves. Still, he would rather own a business than have cash beyond what he needs in reserve.

    The difference I see is that most people seem to consider their stocks a temporary mechanism for compounding money with the goal being to get the money back. To an investor, the goal is to own business(es) with cash being primarily a mechanism for buying more businesses and secondarily for survival.
     
  19. TomB16

    TomB16 Well-Known Member

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    When I research a company, I find out all I can about it, right down to a complete list of executives and people. I keep a database of these people.

    My buy/sell decisions are primarily based on people. If I feel executives are absorbing too much money, instead of returning it to the business or shareholders, I sell the business. I also keep careful notes.

    This brings up an interesting opportunity.

    Blackstone is currently absorbing REITs like a black hole feeding on a solar system. They are buying the most well run REITs. Blackstone seems to be primarily interested in absorbing operations and releasing the executives of the new purchase.

    I try to read the prospectus of every IPO. Lately, I find myself familiar with the people behind these new companies. This has made it easy to significantly buy into two IPOs, where I wouldn't dream of buying an IPO without knowledge of the people running the company.
     
    #639 TomB16, May 4, 2021
    Last edited: May 4, 2021
  20. roadtonowhere08

    roadtonowhere08 Active Member

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    Is this the company you have mentioned buying a lot of recently? Seems like a good stable company with a nice dividend. Good run up lately.
     

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