Beruflich Dokumente
Kultur Dokumente
https://www.youtube.com/watch?v=3WkpQ4PpId4
How to pick a company?
- Great management: Then wed prefer a management with great integrity and talent
- Safe Price: Finally, doesnt matter how good it is, price wont be infinite, so we have to have a
price that makes sense and gives a margin of safety.
- It is a very simple set of ideas. It hasnt spread faster because its too simple. Professional
classes cant justify their existence if thats all they have to say. If its all so obvious and simple,
what would they have to do with the rest of the semester?
- Business value mindset: We have the mindset of someone who were going to buy the whole
business. We want the price for the business (so calculated) to look very attractive. So we buy
shares that are lower than what a rational person would buy the whole business.
On Coca-Cola success
- When we bought it, it was succeeding mildly and it was cheap in relation to what was plainly
going to happen. That was a valuable insight.
- There are times when even a company as big as coca-cola is too cheaply priced by the market,
considering what it going to do for the shareholder. And there are times when we can figure that
out, others we cant. When we do figure out, we tend to go heavily. We were very aggressive
with coca-cola.
What Buffett learned from Munger
https://www.youtube.com/watch?v=7I7utGAEhDI
Munger: I observed things, Id seen so many idiots get rich in easy business. Naturally I
wanted to be in an easier business
Buffett: Charlie analysed his clients business more than they analysed it themselves. What would
work and what wouldnt and why. Its so simple.
Munger: If you wanna ruin your life, try changing people. So we only deal with companies that have
good managers, we dont expect to change them. We make silk purses with silk.
somebody else makes a lot of money or reports a lot of money, let them! It is pernicious and it has
caused huge problems.
continue https://www.youtube.com/watch?v=BPIWCdrH4kM (40m)
Jim Simons
A Rare Interview with the Mathematician Who Cracked Wall Street | Jim Simons | TED Talks
25 sept. 2015
https://www.youtube.com/watch?v=U5kIdtMJGc8
- Trend following (graph/math) wouldve been great in the 60s, it was ok in the 70s, by the 80s
wasnt good anymore, because others started doing it.
- We stayed ahead by finding other approaches, shorter term approaches to some extent. The
real thing was to gather a tremendous amount of data. In the early days it was by hand, wed
go to the Fed Reserve and copied interest rate histories and stuff like that. We had a lot of
data and very smart people, what was the key.
- I didnt really know how to hire people to do fundamental trending. I couldnt make a business
out of that. But I did hire scientists, because I had a taste for that. Gradually these models got
better and better.
- In a certain sense what we did was machine learning. It worked and still does. We looked at
everything: anual reports, quarterly reports, historic data, volumes, you name it. Youre
looking for anomalies. Any one anomaly might be just a random thing, but if you have
enough data you can tell if its not. You can see an anomaly that persists for a long time, so
the probably or randomness is not high.
- But these things fade after a while. Anomalies get washed out.
- We didnt just hire mathematicians, but astronomers and physicists and stuff like that.
- Like Buffett, Im not focused on the variations of stock every day. I dont have a bloomberg on
your desk, I dont care.
- Were not traders
- Then I went to school, focused on finance, graduated at 19 and immediately got a job in the
stock market, from that point until I was fired at 54 yo, thats all I did. It really consumed my life.
All I cared about was my own ability to pick stocks, to make judgements on what was gonna go
up and what was gonna go down, using all available methodology to do that - which related to
economics, individual finance, many things. It was a very silly endeavor. And behind all I studied
and dedicated, it was the feeling that I had to follow my father as a gambler. And what I did was
a form of sophisticated gambling. I was never 100% sure that gambling and stock market was
really in the end all that different.
In my business, I think because I started so early and was so focused on it, I was extremely
successful. When people ask me what to do professionally, what industry to focus, I always
answer that cliche : You should really do what you love. If youre lucky enough to love what you
do, that solves a lot of problems. Find something you can devote your entire being to, something
that can catch you both intellectually and spiritually, and can be your lifes work in a wholistic
way. To me that was the stock market.
After a while I felt I had to so something else, in my late 30s I was gonna quite. My friends told
be to get a sabbatical year instead.
In my teens I became an atheists, and for most of my life I was a guilty atheist. I challenged
rabis in the issues of faith, and was never satisfied. Later in life I lost the guilt.
Jewish values are the best values human kind has created.
The cheapest education in the stock market is to put your own money on it, enough to get you
mad if you loose it. That process of wining or losing will force you to really educate yourself on it.
What is necessary for success with stocks? Luck, experience, talent?? I always answer that in
my case, I was much more intense about it than others, I really cared about it. When I lost, I was
really miserable.
- These day, making 20% to 30% is unthinkable. I dont think managers even think about it. They
are much more interested in achieving, if possible, a very low double digit number, like 10-12%,
5 points higher than treasury return.
"They taught you that 40% of a stock's price movement was due to the market, 30% to the sector
and only 30% to the stock itself, which is something that I believe is true. I dont know if the
percentages are exactly correct, but conceptually the idea makes sense.
"It's hard to find ideas that aren't picked over and harder to get real returns and differentiate
yourself. We are entering a new environment. The days of big returns are gone." Cohen has
mentioned a few times that it was relatively easy to earn money in the 1990s, and here, he is
referencing this point again.
- I read 3 books about poker and got 10 times better than all those guys, who never had read
anything in their lives. Its all mathematics. You gotta read, research. Every wee I would win 400
bucks, at the end of the summer I would have $2 thousand a month. After 4 years I had 10
thousand saved. My father and mother never asked me where I got the money.
I never fit in with anyone. I went to medical school for a while.
Tim Cook is a good manager because he breathes it, hes obsessed with it.
The most important thing in a company is the CEO, by far. There is nothing close.
The market is not a gambling casino, and this type of marketing too many people think it is.
Specially now with low interest rates its really a dangerous place.
You have to be obsessive, its more about that than talent.
I made a lot with arbitrage. And I was the only guy who could put it together with options.
- Activism: you would take a company with great assets and potential, but who were not making
any money. And you find the reason is management, and you cant get rid of it because there is
no accountability in the company. So we get on the board and clean the company up and make
money for all shareholders.
- Corporate america is a dysfunctional system, even worse than the political system. Because
there is no accountability. You cant get rid of bad CEOs.
Bill Ackman - Charlie Rose - 2013
https://www.youtube.com/watch?v=CLjKP1v2Rwk
- Problem with shorting stocks is that there is a large number of people who own the stock who
wont be happy, the CEO will not be happy with you
- We short very few stocks, this is the second large short Ive done in 10 years.
- The good things about shorters is that they are the early morning signal about a problem in the
business.
- Pyramid schemes dont care about the quality of the product they sell to people.
- Jim Chanos: one of the very well known shorters
- Like Buffett says: In the short term the market is a voting machine, long term its a weighing
machine, much more precise.
- Wall Street is the biggest engine for job creation. Enabling businesses to access capital, to grow.
- Were not gonna save the country with philanthropy, but with good economic policies that create
the right incentives, policies that will make us compelling globally.
- Why is hedge performance down?: There are a lot more participants, and also due to some
regulatory changes that made harder for hedge funds to make money. But its like the mutual
fund industry, or real estate also, as a collective its not attractive, but there are a few very good
managers who did much better than the market over time.
- The financial economist Bill Sharpe confirmed that we need shorters as economic agents.
- When you short a stock, it can go up infinitely, down only to zero. But Ive seen far more stocks
go to zero than infinity. What you have to do managing a portfolio, is simply set capital limits on
each position.
- You have to say: how much of my capital for my clients am I willing to risk at anyone position?
Maybe its 2%, maybe 3%. In your case its never more than 5%.
- If we still love the idea, we just trim it back. But we never let one idea carry us out.
We assume the market will go up over time. So we structure our portfolios and our fee
structure so that we are judged against the market. Im always long the market and short my
stocks.
Analysing a company, its hard to identify a fraud on advance. What you are looking for is
- flawed accounting (and there is a lot of that)
- structurally unsound businesses
- businesses on the wrong side of a deep cycle
- so we look at those sorts of classic signs as opposed to just simply something that
seems expensive.
Market is unpredictable. So when constructing any portfolio, you need long stocks, bonds, real
estate and so on. There are times you can take more risk and times you can take less risk. Now
I think were in a point where one should take less risk.
(Larry, other guy): Trading against machines: you have to embrace what these computers are
doing: they are following orders. So, the market place has changed.
- China establishes their growth (GDP), ex: Ok, our growth is gonna be 7%, how do we get
there?. And there are many corporations that do that to (laughs)
- Isnt it worrisome that Fannie Mae can not find term sheets that describe the perfect hedges
against its massive mortgage portfolio?
- Are the rating agencies so conflicted that they could be this blind?
- In my letters to investors, I described a downturn that would be unprecedented.
- I was short 8.4billion dollars worth of subprime mortgages and certain financial companies.
The most we can loose was less than 100 million dollars, thanks to credit derivatives.
- At first we did lose. But latter it turned the table on wall street. I bet against america and
won.
- As it turned out
- information is not perfect
- volatility does not define risk
- markets are not efficient
- the individual is adaptable
- The next decade of your life, without marriage, kids, etc. is the most flexible and genius decade
of your life.
- You can leave here today and chose to never stop learning, never stop asking questions.
- Summary:
- 1) going after your goals
- 2) encountering problems
- 3) appreciating and loving your problems
- the biggest barrier in getting to the root cause of your problems is ego, psychological pain
- when you face psychological pain, pause and reflect on it
- any type of pain means something is at odds
- I dont understand the concept of failure, because the term failure implies an end.
- Every great person I ever know had great weaknesses. Because the strength come with a
weakness. There are very different kinds of thinking.
- People in our society are reluctant to disagree, and thats a bad thing. The power comes frim
finding out from other people what you might be missing. Its not within you.
- Walter Isaacson, biographer of Jobs, Einstein and Benj. Franklin, said that they never listened to
anybody, they had to make sense of things themselves.
- The projected returns of asset classes should be at a level that makes sense. If theyre out of
line with each other, ex cash having lower expected returns than bonds, having a lower
expected return than equities
continue at 30min
- Knowing what you dont want to do is the best place to be when you dont know what to do,
because it leads you to figure out what you wanna do.
Ive always done what felt right, followed my instinct.
Luck is preparation meeting the moment of opportunity.
Im usually the only female and the only black person in meetings and such things.. and I love it.
I looks like Im a host, Im in the movies and have a network, but the real reason why Im here is
to help connect people to themselves through ideas and stories. Raise consciousness.
- My mantra, my religion, is the 3rd law of physics: for every action there is a reaction. The
intension determines the reaction, the result. My show was intention based, purpose fuelled,
thats why it was n 1.
- I pay attention to my life. Life teaches you every day. Everything is trying to take you within.
- Align your personality with your purpose, and nobody can touch you. Then you wake up every
day and you are fired up.
Seth A Klarman, The Baupost Group - Ben Graham Centre Value Investing 2009
https://www.youtube.com/watch?v=NCEd9oOgHu8
- I worked for some time in Mutual Fund, and I learned more there than my 2 years in business
school. The important thing I learned was value investing
- Value investing: risk averse approach. Think first about risk than about returns
- Ben Graham is the intellectual father of value investing. He worked in the market in the 20s and
30s very much like Buffett after him. He looked for mispricing situations.
- Im not in favour of a pure mathematical approach to value investing.
- Some situations that look cheap arent that cheap: obsolete inventories, uncollectible
receivables, bad assets on the books, balance sheet liabilities like environmental problems or
litigation.
- So we have to 1) follow value principles and then 2) approve them through in depth
fundamental analysis
- Our approach is built upon 3 pillars:
- 1) Focus on risk before focusing on return (Graham)
- this is very different than Wall Street
- volatility isnt necessarily risk
- risk is the probability of losing and how much you can loose
- Wall street tends to simplify with single point estimates rather than a range of possible
outcomes. They just focus on how much you can make, and with weak precision.
- 2) The world is oriented in relative performance
- All the big mutual funds just care about competing against each other or against the
market, so they look at relative numbers: if the market is up 20 they wanna be up 21. Youre
happy with losses if you lose less than the others.
- They end up just tracking indexes.
- Reason is: everyone is an asset gatherer.
- Wealthy individuals are interested in absolute returns.
- 3) Be bottom-up and not top-down
- Most of the investment world is top-down:
- how is the economy gonna do?, how currencies/interest rates gonna do?
- You analyse investments bottom-up, one at a time
- George Soros was top-down
- he would have a view that for ex
- the pound was under or over valued or
- Relationships
- We work hard to have the best brokers and give important clients to them
- Look at who youre buying from: is that person smarter than you? Does he know more
than you? Try to buy from people that are selling cheap because they dont know what
theyre doing.
- Opportunities of mispricing:
- bonds that are downgraded
- kicked out of an index
- corporate spin-offs
- fairly large company that has an unwanted division of some sort, has a vision, a major
liability, weak management
- CONTINUE AT 27m00