Medienpädagogik KS Seetal - Benutzerbeiträge [de]

Thoughts from VALUEx Vail 2012 Convention

2013-12-27T23:48:33Z

JoyceLeachman:

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a [http://Wetlandcare.com.au/nikefree.html conference] in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Bassili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd [http://Wetlandcare.com.au/nikefree.html benefit] from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Steve Employment Unveils New iTunes iPod Nano iPod Touch AAPL

2013-12-27T23:38:37Z

JoyceLeachman: Die Seite wurde neu angelegt: „As predicted, Apple manager Steve Employment declared new iPods today, as effectively as a new variation of Apple's iTunes computer software.nnThe iPod nano is…“

As predicted, Apple manager Steve Employment declared new iPods today, as effectively as a new variation of Apple's iTunes computer software.nnThe iPod nano is as soon as once again tall and skinny -- and even a lot more colorful. A created-in motion sensor will inform it when to exhibit a vertical impression and when to exhibit a horizontal picture. Larger ability, but very same entry price: An 8-gig design will value $149, although a sixteen-gig product will value $199.nnnnThe iPod contact will get a new steel situation, a created-in speaker, and developed-in quantity handle. It'll also assist Nike+iPod developed-in. As predicted, it's more affordable -- but nevertheless not as cheap as Apple's most affordable Apple iphone. An eight-gig iPod contact will price $229 -- $70 significantly less a sixteen-gig contact will run $299, a $one hundred price cut and a 32-gig iPod touch will expense $399, also a $a hundred low cost.nnnnThe iPod vintage continues its road to retirement. Only 1 model -- one hundred twenty gigabytes -- continues to be.nJobs also announced that Apple would release an update to the Apple iphone application -- version two.one -- on Friday, which must support with battery daily life, balance, and a couple of other quirks.nDwell Coverage:n1 p.m.: Employment on phase Steve Work: The reports of my loss of life are significantly exaggerated.n1:02: iTunes -- 8.5 mn music. 3,00 programs for Apple iphone and iPod Touch. 65M accounts. Enabled us to little by little become the amount 1 audio distributor in any structure -- ahead of Walmart Very best Purchase Amazon and Target.n1:03: Adding HDTV displays nowadays. Purchase them for $two.99 -- $1 far more than regular definition and you can look at them on your computern1:: NBC is coming back again to iTunes. Workplace, Monk, Battlestar Galactica, thirty Rock, Heroes, and so on. coming in High definition and Regular Definition.n1:05: Introducing iTunes 8. The greatest new issues are Hd Television displays, accessibility, constructed in Voice More than and all othe accessibility features, browsing and Genius.nnBrowsing: Existing searching is not area productive. Incorporating the capability to seem by album cover, [http://wetlandcare.com.au/nikefree.html included] a bar at the best and you can appear at every little thing graphically by Album, Artist, Genre, ComposernGenius: Groups collectively like tune. Make diverse playlists. How does it perform. Included Genius algorithms to itunes retailer in the cloud. Genius is choose-in voluntary, and it sends data to iTunes, items like monitor names, play counts rankings playlists.n1:09: Demo of the new iTunes. Kind by album and open every single album to see a track (playng Respect by Aretha Franklin). The sorting and browisng functions the identical for the motion pictures and Tv set shows. Exhibiting an episode of the Business office in High definition. The exhibits are rather crystal distinct even on the giant display.n1:11: Likely into songs, actively playing Gravity by John Mayer. Drive the Genius button, Genius has made a playlist. You can refresh or set the size of the playlist.n1:13: Heartbreak Hotel by Elvis introduced up Roy Orbison's POh, Fairly Woman, and Wild Issues, amongst other individuals.n1:14: iTunes 8 accessible today at Apple.comn1:fourteen: the iPod: NPD Information shows iPod with a 73.4% market place share in the U.S. Variety 2 is other, variety three is SanDisk, quantity four is Microsoft. In excess of five,000 add-ons for iPod. Annonce goods even ahead of we want them to. 90% of automobiles in the US supply iPod integration.n1:sixteen: Discontinuing the thick iPod. 120GB will be $249n1:sixteen: Delivered the 1st Nano in 2005. 2nd generation vertical kind issue and hues was actually a beloved item. 3rd was the horizontal 1. New iPod Nano with vertical kind factor larger screen, black scroll wheel. Portrait aspect attribute but identical large res display. But it really is the thinnest iPod they've at any time made. Oval shape.n1:19: Accelerometer on the iPod Nano, generate Genius playlists on Nano. Hello-res exhibit turns horizontal like the Iphone when you transfer the telephone. Full measurement album artwork. Video is wonderful. If yu press and keep down the centre button you get a pop up menu. you can commence a genius playlist, add songs to existing playlists, and so forth. Calendar, cease look at, document voice when it detects a microphonen1:twenty: Demo of the Nano: Taking part in a Beck track -- Guess I'm Undertaking Good. Although the tunes is taking part in, you can rotate the nano sideways and scroll via Protect Movement. Scrolled by means of and picked Bob Dylan, Don't Feel Twice, It is All Proper. Thrust the heart button and begin a genius playlist based mostly on the two music. (The us by Simon and Garfunkel). Not connected to iTunes or anything esle right now. New characteristic: Shake to shuffle -- Shake the Nano and it shuffles (Dean Martin -- Ain't That a Kick In the Head, John Mayer -- Break up Display screen Disappointment).n1:23: thumbing by means of photographs of Zacak Lake, CA. Change the Nano for landscape images.n1:24: 24 hours of batterr existence for Audio and four hrs for Movie.n1:24: We want to be environmentally mindful with making these. The Nano has Arsenic cost-free glass, BFR Cost-free, Mercury Cost-free, PVC Totally free, Very Recyclablen1:27: 8GB and 16GB ($199). From new headphones you can management quantity and enjoy/pause ($29). New in-ear earphones, woofer and Tweeter on each facet ($seventy nine).n1:28: Nano arrives in eight colors.n1:28: New Nano advert showcasing all eight colours. The two types transport this week.n1:29: iPod Contact: Amazing solution, unlike something in the marketplace. For this vacation season, we're making it much better. New iPod Contact has exact same three.five inch display, but it's even thinner, with the stainless steel design. What's diverse? Integrated volume controls into the facet. Accelerometer even now there. New Constructed-in a speaker. Truly tough with one thing this thin -- for informal listening not for Audiophiles. Genius playlist creation and the app store built in.n1:31: Created in Nike +iPod. Receiver is created in to the touch, so all you require is the transmitter for your shoe.n1:33: Consumers have downloaded above a hundred,000,000 apps from the app shop. These days is the sixtieth working day the application store has been open.n1:34: About seven-hundred games on the application shop, and a great deal of them are free of charge. Undoubtedly somehting below for everbody. Application retailer is obtainable in sixty two countries.n1:34: Demo of new iPod Contact -- taking part in Green Working day American Fool . And Genius playlist introduced up Purple Haze (Jimi Hendrix), Sunday Bloody Sunday (U2). Refreshing the playlist brings an additional checklist of twenty five tunes.n1:36: Has the modern Iron Man film on his iPod Touch (the DVD arrives out on Sept. thirty).n1:37: Phil Shiller Demo of some video games that are not on the market yet (or just just lately on the iPod Contact). Spore Origins -- the beginning of the Spore recreation -- in the primordial ooze phase. Creature creator, you can pinch and zoom and change th character just like in the Laptop version of the match.n1:39: purpose of the recreation is consume or be eaten. Leaping into degree 15, and he's controlling the character using the accelerometer. Seeking for things smaller than him that he can take in. Goal is to defend your character and eat and get much better. Previously in Application keep.n1:forty: Actual Soccer 2009 shipping right now (from GameLoft). Choosing the U.S., playing Italy. Stadium rendered in 3D. Using real group knowledge for the appropriate rosters. Recreation is initially developed for D-pad controls. But the D-Pad is on the touch display. Arrived out nowadays.n1:42: Require For Speed Undercover coming out on all platforms at the identical time (EA Racing game). Coming out November. Manage the automobile with the accelerometer, graphics are fairly very clear.n1:45: Work back -- Battery life -- 36 hrs for music, six hrs for movie. Environmental checklist seems to be like Nano.n1:forty five: New iPod contact -- the funnest iPod at any time. We feel individuals are heading to genuinely enjoy it. Three models, 8GB product for $229, $16 GB design for $299, 32 GB for $399. All 3 models are available right now.n1:48: new iPod Touch has the software version two.1. If you have the outdated iPod Contact and you upgraded to 2., it really is a cost-free upgrade to two.1. If not -- $nine.ninety nine.n1:49: 2.1 software update: backing up to iTunes is substantially more quickly for Iphone. That update is offered Friday.n1:forty nine: We consider we've received the best lineup we've ever had for this getaway year. At the conclude of June we experienced offered a lot more than 160M iPods.n1:fifty: Whenever we have a audio event we believe it's crucial to remind ourselves and our clients why we do this in the initial area. The cause is like you we really like audio: These days acquired a genuine specific guest who's agreed to appear and execute. Offered over 16 million albums, tour is 1 of the best tickets this summer time. #1 marketing Male artist in ipod historical past -- Jack Johnson.n1:51: Singing songs from album "Rest Through The Static."n1:58: Jack Johnson accomplished: Seems kinda bizarre that I'd be the number one above U2. Maybe they don't rely simply because they're a band. I'm employed to 20-some thing women correct listed here (pointing to entrance row). I truly want to thank iTunes, my tunes point arrived alongside appropriate as that started. They've often been actually supportive.n2:00: Hold out -- another Jack Johnson tune.n2:03: Jack Johnson off, Steve Jobs again on.n2:04: Thank You all for coming this early morning and go get your arms on some of these new items. Thank You.n2:04: Keynote in excess of.nRelated:n- What Apple Investors Will Be Searching For For the duration of Today's Keynote: A Healthy Steve Jobsn- Your Picks For Apple's "Let's Rock" Celebration: New iPod Nano, Cheaper Contact, iTunes 8n- Zune Will get New Characteristics That Won't Aid Promote Zunes If you cherished this information as well as you desire to be given more information regarding [http://www.tchange.com.au/nikefree.html Nike Free] i implore you to pay a visit to the webpage.

Emerging Marketplaces Inflation and ETFs: Q A With Richard Kang

2013-12-27T23:28:24Z

JoyceLeachman:

Richard Kang is the Main Investment decision Officer and Director of Research at Rising International Advisors, LLC, the only ETF issuer to target completely on products offering exposure to rising marketplaces. He recently took time out of his active timetable to discuss about emerging market ETFs and inflation with ETF Databases.nETF Database (ETFdb): Inflation has become a scorching situation in emerging markets and has been cited as a result in for some of the large dips we have observed this calendar year. Is inflation a key concern, a small bump in the road, or somewhere in in between?nRichard Kang (RK): It is a major concern. Traders have been chatting about it for a whilst, and saying there's a risk of hyperinflation. Individually, I'm a lot more worried with the common inflation trend. From the seventies, the place you had extremely high extended term rates, it went to a stage exactly where basically over the last six or 7 a long time, men and women have had "free" cash, ultimately foremost to a housing bubble and other financial issues. And now we concur that it is heading the other way. It is just a matter of when.nThe reality that there was such significant inflation and that plan in our era has revolved all around the require to control it with interest rates led us to exactly where we are today. Additional, we have experienced a disinflationary entire world due to the fact cheap labor in China permitted that place, among others, to ship lower-value goods into key merchants like Wal-Mart. That pattern is also reversing, due to the fact individuals international locations are now becoming wealthier, spending by themselves a bit more relative to the western planet, and allowing their folks to keep an growing standard of residing - all of which is inflationary.nIf you seem at the increase of the U.S., England, Japan and Continental Europe soon after WWII, as with the increase of any financial system, you will see inflation. It's just on a considerably larger scale now, and the better considerations are tangible since of the sheer scale as a consequence of demographics.nIf you have equally prices likely up and inflation slowly and gradually heading up, and you have buyers who believe in a standard stock/bond/money portfolio, the bond part is in real trouble. In addition to the inverse partnership of value and fascination costs, enhanced inflation degrades the prospective of "fixed income" returns. This all tends to make intuitive feeling but for our ageing populace with possibly increased weights biased to bonds, one should wonder if there is difficulty ahead here. If so, traders need to have remedies. When we listen to someone like Monthly bill Gross expressing that he's pondering more about stock publicity more than bonds, I consider buyers need to take into account it as effectively. nETFdb: Surely inflation is a problem, but does it also create options in the emerging entire world?nRK: It's absolutely a dilemma that you have to acknowledge, and with the issue arrives the possibility to discover the answer. It may be quantitative easing and the exporting of capital that is gas for inflation in the rising marketplaces. In this carry trade, the borrowing of US bucks or Japanese Yen to commit in larger yielding places of the rising marketplaces entire world can clearly result in inflation within their economies. Even without it, the simple fact is that they have had sturdy progress and the resulting natural and organic inflation. X factors like weather patterns only exacerbate the situation: the media highlights information like an onion charges 8 moments much more than it did many months in the past in some emerging marketplaces. nFrom an investment decision point of view, that type of dilemma leads to a sensible solution. Traders can use really fundamental techniques, these kinds of as sector rotation, to tackle this difficulty. Consider the S&P 500 for example. We are now at the little one boomer age, and the broad implication is that Individuals are going to be shelling out considerably less. That does not (or should not) suggest you start off to exit, or even limited the S&P 500. Probably a more reasonable technique would just bias in direction of sectors such as overall health care and monetary services - the goods and companies greater customized to an growing older economic climate. Likewise, in the rising entire world, you do not just just exit out of the emerging marketplaces you want the development and produce that occur from these allocations. Instead, you bias toward inflation-delicate regions like power and supplies. And let's not overlook buyer staples as a sector. This massive populace nevertheless requirements to take in merchandise like foods and gas to satisfy simple demands.nETFdb: Sticking with the rising markets, we listen to men and women talking about the prolonged time period outlook utilizing the time period "favorable demographic trends" a good deal. What specifically does that indicate, and how does that translate, over the long expression, into the economic likely?nRK: We know from recent heritage that international locations that have been devastated by manmade or organic disasters are able to get well. As prolonged as they had a inhabitants of a excellent size, and they experienced training, they are ready to go past getting what I get in touch with a frontier market place, which is primarily described as an economic system that only relies on stuff from the floor: agriculture, metals, oil.nSo Dubai, for case in point, imports people to support construct its skyscrapers and ski slopes within of buildings. If you have an educated population, like Japan and Germany, as an alternative of constructing essentials, they progress to build automobiles, technological innovation, and other crucial goods.nSo in which is the potential now with demographics? I would say China and India are the big types, though Brazil and Indonesia are both close driving. All have an educated inhabitants albeit some far better than other individuals.nBut the figures are basically staggering. We know that in our populace of some 300 million men and women, there are roughly seventy five million infant boomers nearing retirement. Of the 1.3 billion in China roughly 750 million - 10 moments our boomer populace - live in rural elements of the region. They are relatively very poor, not like the coastal China that we know with the gleaming glass properties. And they are also the country's potential buyers, having nevertheless to spend like other people nearer to the coast.nBut they need to have infrastructure to do so. If there is an earthquake in parts or rural China, emergency solutions can't very easily get to them there are no in depth highway networks and restrictions in conditions of massive scale airports. Fortunately for them, there are plans to have a greater infrastructure program, which will provide better commerce to their region and as a outcome will enable them to much better take in. In limited, for rural China to get what the modern day element of China has is in the very best interest of the entire place and its 1 celebration system.nWhen you evaluate what's taking place in China to what we're observing in India and the latter's significantly higher want for contemporary infrastructure, we know that this is a extremely long phrase improvement. In fact, we believe that this modernization procedure is on a a lot more substantial scale than something we've observed in the U.S.nETFdb: What about attaining publicity to emerging marketplaces through huge cap U.S. equities that create a large part of their revenues from building economies. Is a fund like SPY a engage in on the rising marketplaces?nRK: Although there is some logic to that, it is certainly not a black and white concern. If the Russell 2000 or U.S. modest caps all round did far better last 12 months, it was because traders believed that growth in the U.S., the real recovery from our personal consumption, was heading to happen.nWith regard to the rising marketplaces the question is, are they heading to increase or tumble with the U.S. or is there real decoupling happening? It is unclear. What we do know is that there are pure enjoy emerging market place companies, which are local companies favored by the emerging marketplace consumer. They are much better positioned for accomplishment there because of model recognition and far more productive expense structures.nAn Apple iPad is a luxury item in an emerging market financial system. Even though we believe of Taiwan and China as lower expense labor, to them it is substantial expense labor. The wages acquired by the genuine maker of an iPad part are not low-cost to them. Expense issues. Take a European title like Swatch or an American title like Nike these are of course common brand names in designed markets that people in the emerging marketplaces are also heading to want. But a lot more usually than not, they won't get the Swatch or Nike-brand name item. They are in fact likely to get the neighborhood equivalent simply because of expense.nFurthermore, if we concur that the present inflation situation is negative in the emerging planet, and especially the non-main fuel and foods measures, then it stands to reason that it is wiser, from an expense stage of check out, to target on a neighborhood foodstuff firm or an energy company or a content organization in the rising marketplace that supplies merchandise that are absolutely crucial. Folks can keep off on purchasing a Swiss view or American sneakers, but paying on staples is going to continue.nETFdb: There is not a solitary definition of an emerging market place. There have been some feelings that South Korea is on the route to designed marketplace status, whilst other folks would say that it is previously there. What is your firm's methodology for identifying what is an rising market place and what isn't?nRK: Emerging Global Advisors utilizes the exact same approach used by the IMF, which focuses on GDP for every capita. I think for most traders, they do not really make a determination of rising marketplaces or designed markets primarily based on GDP for each capita. The genuine driver for investment selection is based on aim, and if your goal is development, most folks are now calling rising marketplaces "progress markets." Rightly so.nKorea is much less of a development marketplace than it has been in the past, and the same goes for Taiwan and Israel. And that is partially due to the fact domestic use is not the identical as during the 80s and 90s, when they genuinely have been rising marketplaces. It really is not like they're stagnant. But it is the decelerating pattern of development that issues. We've noticed this before in Japan. They acquired what they needed, while the reasonably inadequate, people who have been usually savers in the accurate rising markets, are now shelling out more. Perhaps not a great deal per individual, but in dimension, it is.nThus, this demographic tailwind is very important. We can appear to the more aged, a bit a lot more created countries for patterns of what to assume in rising marketplaces. Central and Eastern Europe as properly as Russia suit this description households there are not possessing "enough" young children. A more youthful population signifies a broader client base more mature populations eat, but they do not insert to efficiency. Many international locations that have "emerged" present families possessing much less young children so they can take pleasure in a higher regular of residing.nAnd it is specifically what has transpired in Japan. You could not [http://Wetlandcare.com.au/nikefree.html photocopy] an financial plan any much better ... Korea and Taiwan certainly are the Japan of the potential. It is difficult to make such powerful black and white remarks, but they will have the very same problems as Japan, due to the fact they are not having enough children, the expansion story is more than and they are pushing employment exterior to cheaper labor in the Philippines, Thailand, and mainland China.nETFdb: As individuals just take a closer search beneath the hood of their rising market place publicity, they see that there are weighty tilts toward normally banks and power companies. What value is there to acquiring more well balanced publicity? What may well some of these larger, mega-cap weighted money, be missing out on?nRK: If you seem at a normal index fund, it is likely to be market cap weighted, which is the most typical and minimum pricey way to index. In the rising markets there are so several big vitality and content names that these companies will automatically account for massive parts of market cap-weighted indexes and the ETFs joined to them.nWe know that there is a lot more innovation coming out of the rising markets, so searching at [http://wetlandcare.com.au/nikefree.html technological] innovation publicity is important. The buyer sector can also be ignored by cap-weighted merchandise, but is backed by a very persuasive expenditure thesis. We are in a time now the place buyers have to consider extremely carefully of how they have been behaving with their sights on rising markets. The information confirmed in 2010 there was a massive move to dangerous assets, particularly rising markets. It was genuinely a break-by way of yr for emerging marketplaces. The first two months of 2011 has been just the emerging market place get back again. Traders have been getting their funds out, and the internet outflows have been huge.nWith the broad rising resources that everybody knows like EEM and VWO, there is only so considerably you can do. You can both acquire-and-keep or you can industry time. There is not much past that. So if you want to make a much more qualified perform based mostly on views on inflation or usage or infrastructure, you have to add bias. And the only way to do that is to favor one particular nation above another or one sector more than yet another or maybe some other issue. Rising World-wide Advisors and other ETF suppliers that concentrate on rising marketplaces are offering instruments so buyers can obtain that more exact exposure.n[See a checklist of all EGShares items or indicator up to get marketplace perspectives]nDisclosure: No positions at time of producing.nClick right here to go through the authentic report on ETFdb.com.nnnMuch more from ETF Databases:nETFdb�s 2013 Holiday getaway Portfolio Recap: XRT, KOL, IYT, Minimize, COW nnThe Best and Worst All-ETF Portfolios of 2013nnGreatest and Worst Region ETFs of 2013nnETF Insider: Large-Generate Prospective customers December 22nd VersionnnETF Insider: New Highs & Lows December twenty first Version If you loved this article and you also would like to get more info about [http://www.tchange.com.au/nikefree.html http://www.tchange.com.au/nikefree.html] i implore you to visit our web page.

Feelings from VALUEx Vail 2012 Meeting

2013-12-27T23:18:29Z

JoyceLeachman: Die Seite wurde neu angelegt: „Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John M…“

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal [http://Wetlandcare.com.au/nikefree.html language] they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Feelings from VALUEx Vail 2012 Conference

2013-12-27T23:08:07Z

JoyceLeachman:

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an [http://wetlandcare.com.au/nikefree.html addiction] if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
More from Contrarian Edge 
A Few Simple Rules For Money Managers 

Mahler - Symphony No. 
Qualcomm�s Competitive Advantages Are Too Numerous to Ignor 
Nelson Mandel 
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10 Methods To Get rid of Bodyweight Utilizing An Apple iphone

2013-12-27T22:57:35Z

JoyceLeachman: Die Seite wurde neu angelegt: „Sounds like a bogus assure � la infomercial or normal spammy web headline-how can a four.eight ounce gadget help in fat decline? But, in real truth, "who" gr…“

Sounds like a bogus assure � la infomercial or normal spammy web headline-how can a four.eight ounce gadget help in fat decline? But, in real truth, "who" greater to act as a devoted personalized coach and nutritionalist than the Apple iphone? The smartphone is entirely and completely tethered to the day-to-day life of the average middle to higher class American. It's reputable and precise. All it requirements is a charged battery, the appropriate app, and of course, as with every single diet plan and fitness routine, a consumer with unwavering self self-discipline. Below, ten Apple iphone applications designed for using on the common human plight of maintaining an ideal physique fat and sufficient fitness schedule.n1. Food SnapnThe most current dieting app to split news headlines, Meal Snap easily tracks what you take in. Basically:nnSnap a image of what you're about to eat.nnTo make certain precision, enter a description.nnAnd go! The app will "vehicle-magically detect the dietary breakdown" of the meal, mapping your calorie intake over time.nCost: $2.99 obtain below.n2. Everyday BurnnBy the identical creators of Meal Snap, Every day Burn up employs their FoodScanner feature to scan UPC barcodes of in excess of 350,000 foodstuff-no typing required. The application also includes a tool for designing and examining your very own tailored exercise strategy.nCost: free of charge down load listed here.n3. Nike Coaching ClubnNike Training Club boasts a software built on a basis of a long time of education with world-class athletes. Just pull from their pool of "90+ multi-dimensional, multi-directional drills" to design your very own full entire body work out plan.nCost: free of charge obtain here.n4. CrunchFunWhat's intriguing about CrunchFu is its capacity to detect motion-simply hold the Apple iphone towards your chest as you perform sit-ups, and the application will return suggestions on your pace and kind.nCost: $.99 down load below.n5. DigifitnDigifit is a totally free cardio application that screens your heart fee employing a genuine-time coronary heart charge chart. It also tracks your outside operating and/or biking mileage, and calculates the calories burned dependent on your coronary heart charge, top, weight, age, gender and fitness degree.nCost: free download here.n6. Fast Foods Calorie CounternWhile taking in [http://Wetlandcare.com.au/nikefree.html rapidly] foods is certainly counterintuitive to dieting, absolutely everyone slips up now and yet again. If you cannot manage to completely abolish those guilty trips to the travel-thru, you ought to at minimum keep track of your intake. Quickly Foodstuff Calorie Counter delivers a searchable databases of dietary information for 9,141 menu things from seventy three leading fast foods restaurants.nCost: $.99 obtain here.n7. iMapMyRUNnEquipped with an armband and iMapMyRUN, the Iphone helps make a wonderful working companion. Put on your favourite playlist, and log your distance, time, rate, and pace making use of your iPhone's GPS and the totally free app.nCost: cost-free down load right here.n8. Pr�t-�-YoganGym shy or too cheap for daily yoga lessons? Pr�t-�-Yoga acts a "private instructor" with no the awkward corrective touching or expense of studio membership. For 99&cent, you can take pleasure in your possess private yoga-teacher-on-the-go, who will guidebook you through the poses of the 4 levels of Pranayama, Sunshine Salutation A, Sunlight Salutation B, and Beginner's Sequence.nCost: $.99 down load below.n9. 40�30�30nMany dieting applications provide calorie trackers, but how do you know if you're consuming the correct [http://wetlandcare.com.au/nikefree.html harmony]? If you're subsequent the commonly advisable ratio of 40%-30%-thirty% of carbohydrates, protein and body fat respectively, you can use the 40&middot30&middot30 application to split down your intake into the appropriate proportions.nCost: free of charge obtain listed here.n10. Get rid of It!nLose It! is a free app that allows users to produce a entire fat administration program by budgeting calorie ingestion and everyday workout. Merely enter your stats, generate your prepare, and have your analyzed progress sent straight to your email.nCost: cost-free down load listed here.nPhoto by vivapedian nThrough 10 Methods to Drop Fat Employing an Apple iphone on WonderHowTo.nMuch more from WonderHowTo:nGot a Christmas Gift Card? Here Are Our Leading 5 Sport Picks on the iTunes App Retailer nnReceived a Christmas Reward Card? Here Are Our Leading 5 Recreation Picks on the Google Perform Application StorennDon't Throw Out Your Broken Bulbs-Change Them into Better Christmas Tree Ornam !

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Emerging Markets Inflation and ETFs: Q A With Richard Kang

2013-12-27T22:47:07Z

JoyceLeachman: Die Seite wurde neu angelegt: „Richard Kang is the Main Expense Officer and Director of Research at Emerging Worldwide Advisors, LLC, the only ETF issuer to target solely on items providing …“

Richard Kang is the Main Expense Officer and Director of Research at Emerging Worldwide Advisors, LLC, the only ETF issuer to target solely on items providing publicity to emerging marketplaces. He recently took time out of his occupied plan to discuss about rising market place ETFs and inflation with ETF Database.nETF Databases (ETFdb): Inflation has turn out to be a hot problem in rising markets and has been cited as a lead to for some of the huge dips we have witnessed this 12 months. Is inflation a significant problem, a modest bump in the road, or someplace in in between?nRichard Kang (RK): It is a main problem. Buyers have been chatting about it for a although, and declaring there's a risk of hyperinflation. Personally, I'm far more worried with the basic inflation craze. From the 1970s, where you had really large extended term prices, it went to a level exactly where basically in excess of the previous 6 or seven a long time, individuals have experienced "free" funds, eventually leading to a housing bubble and other financial problems. And now we concur that it is going the other way. It's just a [http://Wetlandcare.Com.au/nikefree.html subject] of when.nThe fact that there was this sort of extreme inflation and that policy in our generation has revolved close to the need to have to handle it with fascination rates led us to the place we are these days. Even more, we have experienced a disinflationary world due to the fact low cost labor in China permitted that country, amid other individuals, to ship minimal-expense merchandise into key stores like Wal-Mart. That pattern is also reversing, since people international locations are now getting to be wealthier, spending on their own a little bit far more relative to the western world, and allowing their people to preserve an rising standard of residing - all of which is inflationary.nIf you look at the increase of the U.S., England, Japan and Continental Europe following WWII, as with the increase of any economic climate, you will see inflation. It is just on a a lot more substantial scale now, and the greater worries are tangible due to the fact of the sheer scale as a result of demographics.nIf you have both prices likely up and inflation slowly and gradually heading up, and you have buyers who believe in a standard stock/bond/cash portfolio, the bond portion is in actual trouble. In addition to the inverse connection of cost and fascination costs, improved inflation degrades the likely of "fastened income" returns. This all helps make intuitive feeling but for our ageing inhabitants with possibly higher weights biased to bonds, 1 should ponder if there's trouble forward listed here. If so, traders need solutions. When we hear an individual like Bill Gross stating that he's considering much more about stock publicity in excess of bonds, I think investors ought to contemplate it as well. nETFdb: Undoubtedly inflation is a issue, but does it also generate opportunities in the emerging world?nRK: It really is definitely a dilemma that you have to accept, and with the difficulty will come the chance to discover the solution. It might be quantitative easing and the exporting of cash that is gasoline for inflation in the emerging marketplaces. In this carry trade, the borrowing of US [http://Wetlandcare.Com.au/nikefree.html dollars] or Japanese Yen to spend in increased yielding places of the emerging marketplaces entire world can obviously consequence in inflation within their economies. Even without having it, the reality is that they have had robust growth and the resulting organic and natural inflation. X elements like temperature styles only exacerbate the predicament: the media highlights specifics like an onion costs eight instances a lot more than it did several months back in some emerging markets. nFrom an investment viewpoint, that kind of problem leads to a useful resolution. Traders can apply very simple methods, these kinds of as sector rotation, to deal with this issue. Just take the S&P 500 for illustration. We are now at the little one boomer age, and the broad implication is that Americans are likely to be paying much less. That does not (or must not) mean you begin to exit, or even short the S&P 500. Possibly a much more affordable method would just bias toward sectors these kinds of as wellness treatment and monetary solutions - the merchandise and companies far better customized to an ageing economy. Equally, in the emerging globe, you do not just basically exit out of the emerging marketplaces you need the progress and generate that occur from these allocations. Alternatively, you bias toward inflation-delicate places like vitality and resources. And let us not overlook buyer staples as a sector. This huge populace nevertheless demands to consume items like foods and gasoline to fulfill basic needs.nETFdb: Sticking with the rising marketplaces, we hear men and women speaking about the prolonged expression outlook using the expression "favorable demographic trends" a good deal. What specifically does that indicate, and how does that translate, more than the extended expression, into the financial likely?nRK: We know from latest historical past that nations that have been devastated by artifical or organic disasters are able to get better. As extended as they had a populace of a excellent size, and they had education, they are able to go past getting what I get in touch with a frontier market, which is basically outlined as an economic system that only relies on things from the ground: agriculture, metals, oil.nSo Dubai, for case in point, imports folks to help develop its skyscrapers and ski slopes inside of structures. If you have an educated inhabitants, like Japan and Germany, alternatively of developing fundamentals, they development to build cars, technology, and other important products.nSo where is the potential now with demographics? I would say China and India are the huge types, although Brazil and Indonesia are each close powering. All have an educated population albeit some much better than other individuals.nBut the figures are just staggering. We know that in our inhabitants of some three hundred million individuals, there are roughly 75 million baby boomers nearing retirement. Of the one.3 billion in China roughly 750 million - ten occasions our boomer inhabitants - stay in rural elements of the place. They are reasonably inadequate, not like the coastal China that we know with the gleaming glass structures. And they are also the country's future shoppers, having however to spend like other individuals nearer to the coastline.nBut they require infrastructure to do so. If there is an earthquake in parts or rural China, unexpected emergency providers can not very easily get to them there are no substantial road networks and limits in phrases of big scale airports. Fortunately for them, there are plans to have a greater infrastructure technique, which will bring increased commerce to their location and as a consequence will permit them to better eat. In brief, for rural China to get what the contemporary component of China has is in the very best interest of the entire nation and its 1 celebration technique.nWhen you examine what's going on in China to what we're seeing in India and the latter's significantly higher need to have for modern infrastructure, we know that this is a really prolonged expression growth. In fact, we believe that this modernization process is on a a lot greater scale than something we've observed in the U.S.nETFdb: What about reaching publicity to rising marketplaces through big cap U.S. equities that create a large part of their revenues from developing economies. Is a fund like SPY a play on the rising marketplaces?nRK: While there is some logic to that, it is definitely not a black and white problem. If the Russell 2000 or U.S. little caps general did better previous 12 months, it was due to the fact traders considered that progress inside the U.S., the actual recovery from our very own consumption, was going to happen.nWith regard to the rising marketplaces the issue is, are they going to rise or tumble with the U.S. or is there actual decoupling happening? It is unclear. What we do know is that there are pure perform rising marketplace organizations, which are neighborhood organizations favored by the rising market place client. They are better positioned for achievement there since of model recognition and more efficient cost buildings.nAn Apple iPad is a luxury merchandise in an rising market economy. Even even though we consider of Taiwan and China as low price labor, to them it is higher price labor. The wages gained by the actual maker of an iPad element are not inexpensive to them. Value issues. Just take a European title like Swatch or an American title like Nike these are of system common brands in created markets that folks in the rising marketplaces are also heading to want. But far more typically than not, they won't acquire the Swatch or Nike-brand solution. They are actually going to acquire the local equal due to the fact of value.nFurthermore, if we concur that the present inflation circumstance is undesirable in the emerging planet, and specifically the non-main gasoline and foods measures, then it stands to reason that it is wiser, from an investment stage of see, to emphasis on a regional meals firm or an strength company or a content firm in the emerging industry that supplies goods that are totally crucial. Men and women can maintain off on buying a Swiss observe or American sneakers, but shelling out on staples is likely to proceed.nETFdb: There is not a solitary definition of an rising industry. There have been some views that South Korea is on the route to developed marketplace position, although others would say that it is previously there. What is your firm's methodology for identifying what is an emerging marketplace and what isn't?nRK: Rising Global Advisors makes use of the exact same method utilised by the IMF, which focuses on GDP for each capita. I believe for most buyers, they do not truly make a determination of rising markets or designed markets based mostly on GDP for every capita. The real driver for expenditure decision is primarily based on goal, and if your goal is development, most folks are now calling rising marketplaces "development markets." Rightly so.nKorea is significantly less of a growth marketplace than it has been in the earlier, and the same goes for Taiwan and Israel. And that is partly simply because domestic use is not the exact same as throughout the 80s and 90s, when they truly were emerging markets. It really is not like they're stagnant. But it really is the decelerating trend of growth that issues. We've witnessed this just before in Japan. They acquired what they necessary, while the fairly bad, people who have been typically savers in the true rising marketplaces, are now paying more. Maybe not a good deal for every person, but in dimension, it is.nThus, this demographic tailwind is really critical. We can appear to the much more aged, somewhat much more designed nations around the world for patterns of what to expect in emerging marketplaces. Central and Jap Europe as effectively as Russia fit this description families there are not having "enough" young children. A young inhabitants indicates a broader customer foundation more mature populations eat, but they do not add to productivity. Numerous international locations that have "emerged" demonstrate households having fewer children so they can enjoy a greater common of dwelling.nAnd it is specifically what has took place in Japan. You could not photocopy an financial program any better ... Korea and Taiwan absolutely are the Japan of the potential. It is difficult to make this kind of strong black and white feedback, but they will have the very same troubles as Japan, because they are not having sufficient youngsters, the expansion story is more than and they are pushing employment outdoors to cheaper labor in the Philippines, Thailand, and mainland China.nETFdb: As people take a nearer appear underneath the hood of their rising market exposure, they see that there are large tilts in the direction of normally banks and strength firms. What price is there to receiving far more well balanced exposure? What may well some of these greater, mega-cap weighted cash, be missing out on?nRK: If you search at a typical index fund, it is going to be market place cap weighted, which is the most common and least pricey way to index. In the emerging markets there are so many big strength and substance names that these organizations will necessarily account for huge parts of market cap-weighted indexes and the ETFs connected to them.nWe know that there is far more innovation coming out of the emerging marketplaces, so looking at technologies publicity is critical. The customer sector can also be ignored by cap-weighted merchandise, but is backed by a quite persuasive investment thesis. We are in a time now where buyers have to think extremely meticulously of how they have been behaving with their views on rising marketplaces. The information showed in 2010 there was a huge go to dangerous belongings, especially emerging markets. It was truly a crack-through yr for rising markets. The initial two months of 2011 has been simply the rising industry take again. Investors have been getting their funds out, and the web outflows have been enormous.nWith the wide emerging cash that everyone is aware like EEM and VWO, there is only so considerably you can do. You can either get-and-keep or you can industry time. There is not much over and above that. So if you want to make a far more qualified perform primarily based on sights on inflation or intake or infrastructure, you have to add bias. And the only way to do that is to favor 1 nation over another or one sector more than an additional or perhaps some other factor. Emerging Worldwide Advisors and other ETF suppliers that emphasis on emerging markets are offering resources so investors can get that a lot more specific exposure.n[See a checklist of all EGShares merchandise or indicator up to receive market perspectives]nDisclosure: No positions at time of composing.nClick below to go through the first write-up on ETFdb.com.nnnA lot more from ETF Databases:nETFdb�s 2013 Getaway Portfolio Recap: XRT, KOL, IYT, Reduce, COW nnThe Greatest and Worst All-ETF Portfolios of 2013nnGreatest and Worst Country ETFs of 2013nnETF Insider: Substantial-Yield Prospective customers December 22nd VersionnnETF Insider: New Highs & Lows December twenty first Version If you are you looking for more regarding [http://www.tchange.com.au/nikefree.html Nike Free] review our page.

Steve Positions Unveils New iTunes iPod Nano iPod Touch AAPL

2013-12-27T21:27:47Z

JoyceLeachman: Die Seite wurde neu angelegt: „As envisioned, Apple manager Steve Work declared new iPods nowadays, as nicely as a new version of Apple's iTunes application.nnThe iPod nano is once yet again…“

As envisioned, Apple manager Steve Work declared new iPods nowadays, as nicely as a new version of Apple's iTunes application.nnThe iPod nano is once yet again tall and skinny -- and even a lot more colorful. A created-in movement sensor will tell it when to show a vertical picture and when to screen a horizontal image. Bigger potential, but same entry price: An 8-gig design will expense $149, while a sixteen-gig product will expense $199.nnnnThe iPod touch receives a new steel circumstance, a developed-in speaker, and built-in volume management. It'll also assist Nike+iPod constructed-in. As expected, it really is less costly -- but nonetheless not as inexpensive as Apple's cheapest Apple iphone. An eight-gig iPod contact will cost $229 -- $70 considerably less a sixteen-gig touch will operate $299, a $100 price reduction and a 32-gig iPod contact will value $399, also a $a hundred price reduction.nnnnThe iPod traditional proceeds its street to retirement. Only one model -- a hundred and twenty gigabytes -- continues to be.nJobs also announced that Apple would release an update to the Apple iphone computer software -- variation 2.one -- on Friday, which should aid with battery lifestyle, steadiness, and a few other quirks.nDwell Coverage:n1 p.m.: Positions on stage Steve Positions: The studies of my loss of life are drastically exaggerated.n1:02: iTunes -- eight.five mn songs. three,00 apps for Apple iphone and iPod Touch. 65M accounts. Enabled us to slowly turn out to be the number 1 music distributor in any structure -- ahead of Walmart Ideal Purchase Amazon and Target.n1:03: Introducing HDTV displays these days. Buy them for $two.99 -- $1 far more than regular definition and you can look at them on your computern1:: NBC is coming back to iTunes. Business office, Monk, Battlestar Galactica, 30 Rock, Heroes, etc. coming in Hd and Normal Definition.n1:05: Introducing iTunes eight. The biggest new factors are High definition Television set displays, accessibility, created in Voice Over and all othe accessibility attributes, searching and Genius.nnBrowsing: Existing browsing is not area successful. Incorporating the capacity to seem by album cover, included a bar at the best and you can search at almost everything graphically by Album, Artist, Style, ComposernGenius: Teams together like music. Make distinct playlists. How does it function. Included Genius algorithms to itunes keep in the cloud. Genius is choose-in voluntary, and it sends data to iTunes, issues like monitor names, perform counts ratings playlists.n1:09: Demo of the new iTunes. Type by album and open every album to see a music (playng Respect by Aretha Franklin). The sorting and browisng works the exact same for the videos and Tv shows. Displaying an episode of the Place of work in Hd. The exhibits are rather crystal very clear even on the large screen.n1:11: Heading into tunes, playing Gravity by John Mayer. Push the Genius button, Genius has made a playlist. You can refresh or set the dimension of the playlist.n1:13: Heartbreak Lodge by Elvis introduced up Roy Orbison's POh, Rather Girl, and Wild Items, amongst others.n1:fourteen: iTunes eight available today at Apple.comn1:14: the iPod: NPD Data shows iPod with a 73.4% market place share in the U.S. Number two is other, quantity 3 is SanDisk, variety 4 is Microsoft. More than 5,000 equipment for iPod. Annonce goods even prior to we want them to. ninety% of autos in the US offer iPod integration.n1:sixteen: Discontinuing the thick iPod. 120GB will be $249n1:16: Shipped the very first Nano in 2005. Second generation vertical sort aspect and shades was actually a beloved item. 3rd was the horizontal one. New iPod Nano with vertical form factor larger screen, black scroll wheel. Portrait aspect function but identical substantial res display. But it really is the [http://wetlandcare.com.au/nikefree.html thinnest] iPod they've at any time produced. Oval form.n1:19: Accelerometer on the iPod Nano, develop Genius playlists on Nano. Hi-res show turns horizontal like the Iphone when you go the phone. Entire measurement album art. Movie is wonderful. If yu drive and maintain down the centre button you get a pop up menu. you can begin a genius playlist, insert tunes to existing playlists, etc. Calendar, quit observe, record voice when it detects a microphonen1:twenty: Demo of the Nano: Enjoying a Beck song -- Guess I'm Undertaking Good. Even though the songs is actively playing, you can rotate the nano sideways and scroll by way of Cover Circulation. Scrolled by means of and picked Bob Dylan, Don't Believe Two times, It's All Proper. Press the center button and begin a genius playlist dependent on the two music. (The us by Simon and Garfunkel). Not related to iTunes or anything at all esle correct now. New function: Shake to shuffle -- Shake the Nano and it shuffles (Dean Martin -- Ain't That a Kick In the Head, John Mayer -- Break up Monitor Unhappiness).n1:23: thumbing by means of photos of Zacak Lake, CA. Change the Nano for landscape pictures.n1:24: 24 several hours of batterr life for Songs and four hrs for Movie.n1:24: We want to be environmentally mindful with making these. The Nano has Arsenic cost-free glass, BFR Totally free, Mercury Free of charge, PVC Free, Hugely Recyclablen1:27: 8GB and 16GB ($199). From new headphones you can control volume and enjoy/pause ($29). New in-ear earphones, woofer and Tweeter on every single side ($seventy nine).n1:28: Nano arrives in eight colors.n1:28: New Nano advert showcasing all 8 shades. Each versions shipping and delivery this 7 days.n1:29: iPod Contact: Amazing solution, unlike anything at all in the market. For this holiday period, we're creating it far better. New iPod Touch has same 3.five inch display, but it really is even thinner, with the stainless steel design. What's diverse? Built-in volume controls into the side. Accelerometer nevertheless there. New Developed-in a speaker. Actually tough with anything this thin -- for casual listening not for Audiophiles. Genius playlist development and the application shop built in.n1:31: Built in Nike +iPod. Receiver is built in to the contact, so all you need to have is the transmitter for your shoe.n1:33: End users have downloaded more than 100,000,000 apps from the application store. Today is the 60th working day the application store has been open.n1:34: About seven-hundred online games on the app store, and a great deal of them are free. Absolutely somehting right here for everbody. Application keep is obtainable in 62 nations around the world.n1:34: Demo of new iPod Contact -- playing Inexperienced Day American Fool . And Genius playlist brought up Purple Haze (Jimi Hendrix), Sunday Bloody Sunday (U2). Refreshing the playlist brings another list of 25 music.n1:36: Has the current Iron Guy movie on his iPod Touch (the DVD will come out on Sept. thirty).n1:37: Phil Shiller Demo of some game titles that are not on the marketplace nevertheless (or just recently on the iPod Touch). Spore Origins -- the starting of the Spore match -- in the primordial ooze period. Creature creator, you can pinch and zoom and change th character just like in the Computer variation of the sport.n1:39: purpose of the game is try to eat or be eaten. Leaping into stage fifteen, and he's controlling the character using the accelerometer. Looking for items scaled-down than him that he can take in. Aim is to protect your character and consume and get more robust. Currently in Application shop.n1:40: True Soccer 2009 delivery right now (from GameLoft). Picking the U.S., enjoying Italy. Stadium rendered in 3D. Making use of genuine crew data for the right rosters. Recreation is originally made for D-pad controls. But the D-Pad is on the touch display. Came out today.n1:forty two: Need For Velocity Undercover coming out on all platforms at the very same time (EA Racing match). Coming out November. Control the car with the accelerometer, graphics are pretty very clear.n1:45: Positions back again -- Battery life -- 36 hrs for music, 6 hrs for online video. Environmental checklist seems like Nano.n1:forty five: New iPod contact -- the funnest iPod ever. We feel individuals are likely to actually adore it. Three models, 8GB model for $229, $sixteen GB model for $299, 32 GB for $399. All 3 types are accessible right now.n1:forty eight: new iPod Touch has the software program model 2.one. If you have the previous iPod Contact and you upgraded to two., it is a free up grade to two.one. If not -- $9.99.n1:49: two.one application update: backing up to iTunes is drastically more rapidly for Apple iphone. That update is accessible Friday.n1:49: We believe we've received the ideal lineup we've at any time had for this holiday year. At the conclude of June we experienced sold far more than 160M iPods.n1:50: Every time we have a tunes celebration we feel it's crucial to remind ourselves and our consumers why we do this in the first place. The purpose is like you we adore audio: Today got a actual special visitor who's agreed to appear and perform. Sold above sixteen million albums, tour is one particular of the best tickets this summertime. #one promoting Male artist in ipod history -- Jack Johnson.n1:fifty one: Singing songs from album "Rest By means of The Static."n1:fifty eight: Jack Johnson done: Looks kinda strange that I'd be the number one particular more than U2. Probably they do not count because they're a band. I'm employed to 20-anything girls proper below (pointing to front row). I really want to thank iTunes, my songs issue arrived alongside right as that began. They've always been actually supportive.n2:00: Wait around -- yet another Jack Johnson track.n2:03: Jack Johnson off, Steve Employment back again on.n2:04: Thank You all for coming this morning and go get your arms on some of these new goods. Thank You.n2:04: Keynote more than.nRelated:n- What Apple Traders Will Be Seeking For In the course of Today's Keynote: A Healthy Steve Jobsn- Your Picks For Apple's "Let's Rock" Celebration: New iPod Nano, Less expensive Touch, iTunes 8n- Zune Will get New Functions That Won't Assist Sell Zunes In the event you loved this information in addition to you wish to get more information with regards to [http://www.tchange.com.au/nikefree.html http://www.tchange.com.au/nikefree.html] i implore you to visit our site.

Views from VALUEx Vail 2012 Convention

2013-12-27T21:17:40Z

JoyceLeachman:

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we [http://Wetlandcare.Com.au/nikefree.html blindly] follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock [http://wetlandcare.com.au/nikefree.html manipulators]. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Social Community Advertising Nearing An Inflection Position

2013-12-27T21:07:27Z

JoyceLeachman: Die Seite wurde neu angelegt: „Two of the most critical developments in on the internet marketing are the pervasiveness of social networks and the expanding use of "owned platforms"--interne…“

Two of the most critical developments in on the internet marketing are the pervasiveness of social networks and the expanding use of "owned platforms"--internet sites or apps that advertisers own that allow them to interact right with customers and potential clients.nThese traits threaten to disrupt conventional material publishers who promote advert place, due to the fact they permit advertisers to go direct.nThus significantly, shelling out on social network advertisements has been modest, because the advertisements have a tendency to perform poorly. Social networks have now turn out to be so pervasive, nonetheless, that they are not possible to disregard.nAt the identical time, many advertisers are developing many "owned platforms" right on to social networks, with some extraordinary outcomes. The growth of these "owned platforms" is very likely to speed up, specially as advertisers look for more effective methods to market on social networks. (See some examples of owned platforms below >).nThe pursuing slide from a presentation by Adknowledge President Brett Brewer at the Social Media 2009 convention held this week in Sidney, Australia captures what we see as an inflection stage for social media and "owned platform" advertising and marketing:n1) brand names are struggling how to ideal use social networks, which are getting to be much more pervasive andn2) as traditional varieties of advertising and marketing prove to be ineffective, advertisers will switch to "owned platforms," a expanding section in online marketing.nThe essential takeaways from the slide are:n1) Social networking, although nevertheless primarily considered with skepticism by entrepreneurs will be so intertwined with the typical person's lifestyle (ninety%-furthermore penetration into internet end users by following calendar year) that brands will recognize they have to figure out a way to advertise on the platforms successfully or miss out on achieving customers in which they are most engaged.n2) Conventional promoting inventory (banners, video, textual content ads) are low-cost, but that is since they are primarily ineffective on social [http://wetlandcare.com.au/nikefree.html networks]. So, as "owned platforms," which we recently highlighted, proceed to make results (including soon after the official campaign ends) more and much more advertisers will change to them.nA year ago most entrepreneurs/agencies ended up starting to chat about social networks as a increasing prospective advertising and marketing medium, and this is now starting to enjoy out into genuine ad commit. The subsequent Nielsen chart demonstrates how most of the leading advertisers doubled their advert invest on social networks the past calendar year:nnWe believe most of this improve was put in on traditional ad inventory (banners, video, text). But as advertisers keep on to see the outcomes of platforms like Nike Additionally or Facebook's "engagement sampling ads" (go through far more listed here), they will request businesses and media firms for much more strategies like these. In change, social networks like Facebook will go after far more of these given that the CPMs are larger.nDigital Organization Insider is a quality subscription provider from TBI Study. Electronic Organization Insider digs into the economic, strategic, and economic effect of the news and tendencies impacting the media industry, supplying everyday evaluation online and via e mail. Digital Enterprise Insider customers receive all publications, as properly as on-line entry to our archives. Users are also invited to post queries and requests for added investigation.nTo signal up for a free beta demo, post your name and email deal with here. The support is at present in beta and will start formally later this year. If you cherished this report and you would like to acquire a lot more facts with regards to [http://www.tchange.com.au/nikefree.html http://www.tchange.com.au/nikefree.html] kindly go to the web-page.

Deal BRAGS up to date 11 09

2013-12-27T20:57:31Z

JoyceLeachman: Die Seite wurde neu angelegt: „Please share!Sometimes the sale and coupon planets align just right and give us an amazing deal. You can't help yourself. You have to gloat! Don't hold it …“

Please share!Sometimes the sale and coupon planets align just right and give us an amazing deal. You can't help yourself. You have to gloat! Don't hold it in. Share! Add to the comments on this page and show off your awesome deals. You know you want to! 

PianoIf you've read my other hubs, you know that my son is autistic. Hubby and I are not even close to being rich but we do the best we can to support him in the things he's interested in. His biggest interest would have to be music. So I started watching Craigslist for an affordable piano for him to play on and tinker on. Despite watching the ads like a hawk, it was my mother who sent me a posting. A man already had the piano loaded on his trailer and would bring it to you (yard or garage delivery only) for $25. I contacted him and he said he could deliver that night if I could provide one other person to help unload. Hubby worked 2nd but I was able ask a family friend to come help. As they were unloading it, my son was so excited he couldn't stand it. He kept trying to play it as the men were trying to move the giant thing. He even brought a step stool from the garage over in front of it when they took a minute rest. Great deal, right? It gets better. Once the seller saw just how excited my son was, he wouldn't even take the $25 for the deliver. He told me to keep the money and buy a bench. Not really a deal you can duplicate but still... Goes to show there are angels out there, even when buying used on Craigslist:) Dollar Days School Supplies Order #: XXXXXXX OrderDate: 04/13/2011 Items below have not yet shipped or have been canceled SKU # Description Pieces Per Case Piece Price # of Cases Case Cost Line item Cost Discount Coupon Discount Code 1 ($0.01) 2000 ($0.01) ($20.00) 437472 Clear Application Permanent Glue Stic .26 oz 1 $0.58 5 $0.58 $2.90 441622 Washable Markers Broad Point Classic Colors 1 $4.83 2 $4.83 $9.66 674112 Bic Great Erase Low Odor Dry Erase Markers Chisel 1 $5.52 1 $5.52 $5.52 674123 Bic Mark-It Permanent Markers Ultra Fine Point 1 $2.47 1 $2.47 $2.47 Order SubTotal: $0.55 Order Freight: $0.00 Order Adjustment: $0.00 Order Total: $0.55 Shopping trip on 4/8 to HyVee See all 2 photos Here's what I bought.., 4 boxes of Life Cereal, 2 boxes Smart Taste pasta, 4 boxes Pasta Roni, 10 Power Bars, 4 lbs deli ham, 1 4lb bag sugar, 1 Cantaloupe, 1 box Quaker Oatmeal Squares, 1/2 gallon ice cream Here's what I spent See all 2 photos HyVee on 3/24After being cooped up w/ a sick kiddo, I was finally able to get out for a bit. Here's my trip to HyVee 12 pack Diet 7up - $0.99 on HyVee�s NOWWOW 2lbs fresh strawberries - One sale for $1.18/lb Six bananas - $0.59/lb Value pack of Chicken quarters - $0.79/lb Two-six packs of slim fast - $4.99 each sale Four bags of chex mix - 3/$5 Two bags HyVee chips - $0.88 each Two bags HyVee iceburg salad $1.00 How much actually came out of my pocket? $16.50!!!! WOOHOO! Used these coupons $3.00 off two Slimfast from HyVee Catalina $1.50 off two Slimafast Manufacturer $2.25 off four Chex Mix Peelie $3.51 NowWow code from Cell Text $7.00 in [http://Wetlandcare.Com.au/nikefree.html coupons] from last weeks Betty Crocker Gummy promo. Shoes I'm so excited... I got an e-mail that they shipped!!!!!! My new shoes SHOES:):):):)Dr Oz (What kind of a name is that anyway? Does he think he's a wizard?) teamed up w/ Nike to give away 5,000 pairs of shoes as part of his get moving program. I attempted to sign up but never got a confirmation that my entry went through as a lot of other folks wanted the shoes too. I had an e-mail waiting for me this morning that I won. I got shoes that I would never in a million years spend that much money on for free:) Here are my shoes... Style: 415257-004 Nike Free XT Quick Fit+ Women's Training Shoe Metallic Silver/Black-White-Concord Size: 9 1 @ $85.00 Free Nike Free shoes - (-85.00) $0.00 Promotion Codes Used: Free Nike Free shoes - Promotion Savings: ($85.00)Subtotal: $0.00 Shipping & Handling: $0.00 Tax: $0.00 TOTAL: $0.00 Lots of soup (9/15)Stocked up on soup this week. HyVee had Campbell's select on sale for $1.00 each. I had three $1.00 off one coupons and scored three large cans of soup for free. Progresso is on sale for 4/$5. Bought 10 cans and used several $0.50 off two coupons. Then HyVee was giving a promo, buy 10 General Mills products, get a $5.00 off future purchase coupon. Woot! 9/6 Hot dogs, Cheese, and HamburgerHyVee rocked again this weekend. Here's what I got... I had 2 $5.00 off the purchase of Kraft Cheese products coupons from the Huddle for Hunger. I used them to buy 5 packages of Kraft Singles, 1 Philadelphia Cream Cheese and 4 packages of shredded cheese. The singles were $1.79 so with the coupon they were $0.79. The singles also had a peelie that was $1.00 off 1lb of hamburger when you buy 2 packages of Kraft cheese products. HyVee also had 85% hamburger on sale for $1.89 per pound. So I got 5 packages of Kraft singles cheese, 2lbs of hamburger, a package of Philadelphia cream cheese and 4 packages of shredded cheese for $10.11! HyVee also had Oscar Meyer hot dogs for 4/$5. I had 4 coupons for $1.00 off 1 package. So I got 4 packages of Premium OM hot dogs for $1.00. 8/29 Cereal and Coca ColaI am so excited by my run to HyVee two days ago. Here are my two favorite deals of the night... Bought six 12 packs of Coke products: HyVee had a coupon for Buy 4 Coke products for $11.00 - 4/$13 without coupon. I also had a HyVee coupon for a free 12 pk of any pop (6 weeks of savings flier), and a coupon that I'd stashed from a peelie promo - buy 4 12 pks, get one free. So I got 6 12 packs of coke for $11.00 or 1.83 each. Bought six boxes of General Mills Cereal: I bought two boxes of Multigrain Cheerios at 3.49 each, two boxes Golden Grahams at 3.89, and two boxes of Chex at 3.09. Total would be 20.49. HyVee had a coupon for 10.00 off if you bought six boxes of General Mills Cereal. Then it gave you a Catalina (coupon that prints at the register for newbies) for another $6 off a future order. I then used two $.75 coupons on the Cheerios, and two $1.00 off two for the other four boxes I was purchasing. So I spent $6.99 out of pocket and get $6.00 off my next order. Like getting them for $0.17 per box. SCORE:) Should you have just about any issues with [http://wetlandcare.com.au/nikefree.html regards] to where as well as how you can utilize [http://www.tchange.com.au/nikefree.html http://www.tchange.com.au/nikefree.html], you possibly can call us on our web-site.

Feelings from VALUEx Vail 2012 Conference

2013-12-27T20:47:54Z

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a [http://Wetlandcare.Com.au/nikefree.html terrific] investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, [http://wetlandcare.Com.au/nikefree.html prophesying] that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Thoughts from VALUEx Vail 2012 Conference

2013-12-27T20:38:04Z

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher [http://wetlandcare.com.au/nikefree.html margins] and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about [http://wetlandcare.Com.au/nikefree.html Watergate]. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Steve Jobs Unveils New iTunes iPod Nano iPod Touch AAPL

2013-12-27T15:19:58Z

JoyceLeachman: Die Seite wurde neu angelegt: „As anticipated, Apple boss Steve Work announced new iPods these days, as [http://Wetlandcare.com.au/nikefree.html effectively] as a new variation of Apple's iT…“

As anticipated, Apple boss Steve Work announced new iPods these days, as [http://Wetlandcare.com.au/nikefree.html effectively] as a new variation of Apple's iTunes computer software.nnThe iPod nano is after yet again tall and skinny -- and even far more colourful. A built-in movement sensor will tell it when to display a vertical image and when to screen a horizontal graphic. Bigger capacity, but same entry price tag: An eight-gig design will price $149, while a 16-gig product will cost $199.nnnnThe iPod touch will get a new steel case, a built-in speaker, and created-in volume management. It'll also assist Nike+iPod constructed-in. As anticipated, it really is less costly -- but even now not as low-cost as Apple's most inexpensive Iphone. An 8-gig iPod touch will expense $229 -- $70 much less a sixteen-gig touch will operate $299, a $a hundred discount and a 32-gig iPod contact will price $399, also a $100 price cut.nnnnThe iPod basic [http://wetlandcare.com.au/nikefree.html proceeds] its street to retirement. Only one particular model -- one hundred twenty gigabytes -- stays.nJobs also announced that Apple would launch an update to the Iphone software program -- edition 2.1 -- on Friday, which ought to support with battery lifestyle, balance, and a handful of other quirks.nReside Coverage:n1 p.m.: Employment on phase Steve Employment: The stories of my death are significantly exaggerated.n1:02: iTunes -- 8.5 mn music. three,00 apps for Iphone and iPod Contact. 65M accounts. Enabled us to little by little turn out to be the amount one songs distributor in any structure -- forward of Walmart Greatest Acquire Amazon and Concentrate on.n1:03: Including HDTV demonstrates nowadays. Get them for $two.ninety nine -- $1 much more than regular definition and you can observe them on your computern1:: NBC is coming back to iTunes. Business office, Monk, Battlestar Galactica, 30 Rock, Heroes, and so on. coming in High definition and Regular Definition.n1:05: Introducing iTunes 8. The largest new items are Hd Tv demonstrates, accessibility, created in Voice In excess of and all othe accessibility functions, browsing and Genius.nnBrowsing: Current searching is not space successful. Introducing the capacity to appear by album protect, additional a bar at the best and you can search at every thing graphically by Album, Artist, Genre, ComposernGenius: Groups with each other like song. Make diverse playlists. How does it perform. Additional Genius algorithms to itunes store in the cloud. Genius is choose-in voluntary, and it sends information to iTunes, items like monitor names, perform counts scores playlists.n1:09: Demo of the new iTunes. Kind by album and open up each album to see a music (playng Regard by Aretha Franklin). The sorting and browisng works the identical for the films and Tv set exhibits. Exhibiting an episode of the Business office in Hd. The displays are rather crystal clear even on the big screen.n1:eleven: Heading into audio, playing Gravity by John Mayer. Press the Genius button, Genius has produced a playlist. You can refresh or set the dimensions of the playlist.n1:13: Heartbreak Hotel by Elvis introduced up Roy Orbison's POh, Pretty Girl, and Wild Things, amongst other folks.n1:14: iTunes 8 obtainable these days at Apple.comn1:fourteen: the iPod: NPD Data demonstrates iPod with a 73.4% industry share in the U.S. Variety two is other, variety 3 is SanDisk, number 4 is Microsoft. Above 5,000 equipment for iPod. Annonce products even ahead of we want them to. 90% of cars in the US provide iPod integration.n1:16: Discontinuing the thick iPod. 120GB will be $249n1:sixteen: Transported the first Nano in 2005. Next generation vertical form element and shades was actually a beloved merchandise. Third was the horizontal one. New iPod Nano with vertical kind issue more substantial screen, black scroll wheel. Portrait facet characteristic but identical high res display. But it's the thinnest iPod they've ever manufactured. Oval condition.n1:19: Accelerometer on the iPod Nano, develop Genius playlists on Nano. Hi-res show turns horizontal like the Iphone when you transfer the cellphone. Complete dimensions album artwork. Video clip is fantastic. If yu thrust and keep down the middle button you get a pop up menu. you can commence a genius playlist, incorporate tunes to current playlists, and many others. Calendar, end watch, report voice when it detects a microphonen1:twenty: Demo of the Nano: Actively playing a Beck tune -- Guess I'm Doing Wonderful. Although the tunes is enjoying, you can rotate the nano sideways and scroll through Include Stream. Scrolled by way of and picked Bob Dylan, Do not Think Two times, It's All Proper. Drive the middle button and begin a genius playlist primarily based on the two tracks. (The us by Simon and Garfunkel). Not connected to iTunes or something esle correct now. New attribute: Shake to shuffle -- Shake the Nano and it shuffles (Dean Martin -- Ain't That a Kick In the Head, John Mayer -- Break up Display screen Unhappiness).n1:23: thumbing via pictures of Zacak Lake, CA. Switch the Nano for landscape pictures.n1:24: 24 hrs of batterr lifestyle for Tunes and four hrs for Movie.n1:24: We want to be environmentally mindful with producing these. The Nano has Arsenic totally free glass, BFR Cost-free, Mercury Totally free, PVC Free, Extremely Recyclablen1:27: 8GB and 16GB ($199). From new headphones you can handle volume and perform/pause ($29). New in-ear earphones, woofer and Tweeter on each aspect ($79).n1:28: Nano arrives in 8 hues.n1:28: New Nano advert showcasing all eight colors. The two types shipping this 7 days.n1:29: iPod Contact: Outstanding item, not like something in the market. For this getaway period, we're creating it much better. New iPod Contact has very same three.five inch show, but it really is even thinner, with the stainless metal style. What's diverse? Integrated quantity controls into the side. Accelerometer still there. New Built-in a speaker. Genuinely difficult with anything this slim -- for casual listening not for Audiophiles. Genius playlist development and the application keep constructed in.n1:31: Constructed in Nike +iPod. Receiver is developed in to the touch, so all you require is the transmitter for your shoe.n1:33: Consumers have downloaded above one hundred,000,000 applications from the application shop. Nowadays is the 60th day the application store has been open.n1:34: About 700 video games on the application shop, and a great deal of them are free of charge. Certainly somehting right here for everbody. App keep is offered in sixty two countries.n1:34: Demo of new iPod Touch -- taking part in Eco-friendly Day American Idiot . And Genius playlist introduced up Purple Haze (Jimi Hendrix), Sunday Bloody Sunday (U2). Refreshing the playlist delivers one more checklist of 25 tracks.n1:36: Has the current Iron Male movie on his iPod Contact (the DVD arrives out on Sept. thirty).n1:37: Phil Shiller Demo of some video games that are not on the market place however (or just recently on the iPod Contact). Spore Origins -- the commencing of the Spore match -- in the primordial ooze section. Creature creator, you can pinch and zoom and change th character just like in the Computer variation of the match.n1:39: aim of the recreation is consume or be eaten. Leaping into degree fifteen, and he's controlling the character making use of the accelerometer. Looking for factors scaled-down than him that he can consume. Goal is to shield your character and try to eat and get stronger. Currently in Application store.n1:forty: Real Soccer 2009 shipping and delivery right now (from GameLoft). Picking the U.S., playing Italy. Stadium rendered in 3D. Using genuine team info for the right rosters. Game is originally created for D-pad controls. But the D-Pad is on the touch display. Came out right now.n1:42: Need For Speed Undercover coming out on all platforms at the exact same time (EA Racing recreation). Coming out November. Management the auto with the accelerometer, graphics are rather clear.n1:45: Positions again -- Battery daily life -- 36 hrs for tunes, 6 hrs for movie. Environmental checklist looks like Nano.n1:forty five: New iPod contact -- the funnest iPod ever. We believe men and women are heading to really love it. Three versions, 8GB model for $229, $16 GB model for $299, 32 GB for $399. All a few models are obtainable right now.n1:forty eight: new iPod Contact has the computer software model 2.one. If you have the outdated iPod Contact and you upgraded to two., it really is a cost-free update to two.1. If not -- $nine.ninety nine.n1:49: 2.one software program update: backing up to iTunes is dramatically quicker for Apple iphone. That update is obtainable Friday.n1:forty nine: We think we've obtained the ideal lineup we've ever had for this getaway period. At the stop of June we had marketed a lot more than 160M iPods.n1:50: Anytime we have a audio function we feel it's essential to remind ourselves and our customers why we do this in the first spot. The reason is like you we love songs: These days received a real particular guest who's agreed to arrive and execute. Offered in excess of 16 million albums, tour is one particular of the most popular tickets this summer. #1 promoting Male artist in ipod heritage -- Jack Johnson.n1:51: Singing music from album "Sleep Via The Static."n1:58: Jack Johnson accomplished: Seems kinda bizarre that I'd be the variety one particular in excess of U2. Probably they don't count since they're a band. I'm used to 20-something girls proper listed here (pointing to entrance row). I truly want to thank iTunes, my audio point came together right as that started out. They've constantly been really supportive.n2:00: Wait around -- yet another Jack Johnson tune.n2:03: Jack Johnson off, Steve Positions again on.n2:04: Thank You all for coming this morning and go get your palms on some of these new merchandise. Thank You.n2:04: Keynote above.nRelated:n- What Apple Investors Will Be Looking For For the duration of Today's Keynote: A Healthful Steve Jobsn- Your Picks For Apple's "Let's Rock" Celebration: New iPod Nano, More affordable Contact, iTunes 8n- Zune Will get New Characteristics That Will not Assist Market Zunes If you are you looking for more info in regards to [http://www.tchange.com.au/nikefree.html Nike Free] check out our own page.

Thoughts from VALUEx Vail 2012 Convention

2013-12-27T15:09:21Z

JoyceLeachman:

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I [http://wetlandcare.Com.au/nikefree.html probably] would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Ideas from VALUEx Vail 2012 Convention

2013-12-27T11:17:44Z

JoyceLeachman:

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and [http://wetlandcare.Com.au/nikefree.html Charlie] Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Ideas from VALUEx Vail 2012 Convention

2013-12-27T11:07:37Z

JoyceLeachman:

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this [http://wetlandcare.Com.au/nikefree.html assumption] is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Views from VALUEx Vail 2012 Convention

2013-12-27T10:57:42Z

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and [http://Wetlandcare.Com.au/nikefree.html Charlie] Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Nike A Tale of Dropped Chances

2013-12-27T10:47:11Z

JoyceLeachman: Die Seite wurde neu angelegt: „See all 4 photographs For these of you who have been adhering to my hubs not too long ago you will recall that I am making an attempt to get suit and that I es…“

See all 4 photographs For these of you who have been adhering to my hubs not too long ago you will recall that I am making an attempt to get suit and that I established a aim that after I hit 78 kgs that I am likely to get some new working [http://Wetlandcare.Com.au/nikefree.html footwear]. I wrote about this in my In shape for Enterprise hub. Properly,the day arrived this 7 days and I took a couple of hundred pounds with me to acquire some runners from the freshly opened Nike Store in Rundle Mall, Adelaide.nFor those of you who have just lately arrived on the earth Nike is the #1 sporting activities manufacturer in the planet, worn by athletes across the globe. In 2010 Nike generated $19 billion in revenue and $1.9b in operating revenue and employs 34,000 individuals worldwide.nNike have also courted with controversy in current several years like accusations of utilizing contractors in Asia who utilized people in sweatshops, influencing athletes to withdraw from races if they felt that they could not get (Liu Xiang, Beijing Olympics 110m Hurdle Last) and the use of youngster labour in generating soccer balls. To counteract these promises Nike have produced a thorough company social obligation platform and are functioning in the direction of making certain that all suppliers have adopted protected work practises and human rights.nNike also owns other planet brand names these kinds of as Cole Hann, Hurley Internationa, Umbro and Converse and the sub brand names of Air Jordan, Reside Sturdy and Nike+.nWith this kind of a massive manufacturer promoting shoes direct to the public in Adelaide, I was keen to give them a attempt to understand their selling philosophy and what I could discover from this multinational manufacturer and retailer.nSee all four pictures Nike Adelaide Nike AdelaideNike has just lately opened their doors in Adelaide in our premier retail purchasing precinct in Rundle Mall. The keep is on 3 ranges with �running� on the 1st flooring and then men�s and women�s fashion on the other 2 floors.nLocated right subsequent to the Nike Store is an Athlete�s Foot franchise that is also promoting running on their floor ground. It would seem to me that working is a current target for equally merchants as they attempt to wedge out some competitive advantage in this room.nNike is renowned for instore icons and a �reason to visit�. However, in Adelaide there is no icon or capacity to operate or a device to be assessed on, so that the advisor can suggest the right display for your gait. This is obtainable in other merchants across the globe, but not in Adelaide as much as I could notice.nFor the client wanting to acquire managing shoes there is a Nike Operating Club logo in the window and as you cross the threshold running sneakers are instantly on exhibit. So it seems to be effectively merchandised and sound exterior promoting.nNo Thanks, I'm Just Searching: Sales Techniques for Turning Customers into BuyersAmazon Cost: $thirteen.57nList Cost: $24.95The Revenue ProcessAs I crossed the threshold I was anticipating excellent a revenue and client provider experience and typically I wasn�t allow down.nWithin 90 seconds I was approached by a revenue expert �Bryan� (name has been altered) who asked if he could assist me. Friedman revenue teaches us in retail to not immediately approach a buyer, but to acknowledge that they are there and to give them some place. After a limited period of time of time the consultant need to technique and to start off with a non-enterprise connected issue. Although Bryan unsuccessful to complete a 180 degree go by he was friendly sufficient & I was eager to chat to him.nI mentioned that I needed to get some running footwear and what could he advocate.nThis is when Bryan the sales particular person appeared! He probed me to locate out about the place I run, how long, how typically and how I run. I discussed that I run on pavement, about 5 kms for every day, a great deal on the flat but with at the very least one particular massive hill per run and that I have a tendency to run on my toes until finally the end of the operate the place I get sloppy and run again on the heels.nI also described that I get soreness powering the right shin right after I run�he said that that is precisely exactly where he receives comparable soreness.nSo far, so good. He suggested that all issues regarded as that I need to purchase the Nike Lunarglide+ 3. This shoe has further help in the heel and about the toes that would suit my gait and pavement managing. On his tips I attempted on a pair and could come to feel the big difference quickly, so the sale was absolutely on.nTo price add the method Bryan then confirmed me a pair of workout routines that I could do to minimize my pain close to the shin. This is a great illustration of removing buyer�s remorse and delivering some retail suggestions that I couldn�t have got from purchasing on the internet.nThe subsequent point I did was verify the value - $two hundred, which was inside my price range, so these ended up �put on the counter� and I had psychologically bought them.nI had 1 last concern, on the Nike internet site it experienced suggested that I should purchase the barefoot running sneakers soon after I had completed the online survey. He explained totally not for pavement working, so I was happy to be in a store to get the right suggestions.nBy now Bryan and I were hanging out, we experienced turn into close friends and I had acquired the sneakers. This was his possibility to incorporate on.nSee all 4 photos The new sneakers - added support! See all four photos The new footwear - 'Livestrong' The Dropped OpportunityThe Friedman sales technique teaches us that after a customer purchases that you put the item on the counter and then you insert on. Properly, Bryan must have by no means experienced include on education or he was absent from this session.nWith the exception of the technique Bryan had carried out every little thing by the book, he had found out about my demands, matched a product to my needs, had found a item within my price variety and had benefit included the sale. Now was the time to incorporate on as I was obviously in a purchasing mood.nAdding on is a very straightforward process and because Bryan experienced turn into my pal and an skilled on managing he could have quite easily cross marketed me on to a variety of other items this sort of as:nnRunning shirt - I run at night a bit. With a little bit of probing Bryan could have marketed me a shirt with a bit of reflective cloth so that motorists at night could see mennShorts - I operate in a 2002 classic Newcastle United football shorts, could require an improve if he could market me the benefitsnnSocks - don�t all sneakers want socks, this is the best incorporate on he could have produced all working daynnHat - in Australia we have a extremely sizzling solar and whilst I usually dress in a hat when managing it�s an old Port Adelaide FC cap and it�s really heavy (specially soon after I fill it up with sweat) - a lighter cap could have appealnnOther operating equipment - money holders, ipod equipment, consume bottles and many othersnNow, I could have said no to any of these, but it won�t compromise the sale - it experienced already been made.nAll retailers know that it costs a great deal of income to get buyers into your retailer and when you get one sale from that customer it can be marginal. Totally free cash is offered to you with each incorporate on. An illustration is that the Nike store most likely tends to make the subsequent:nSale = $200nBuy Value = significantly less $100nStaff Price = much less $20nRent = considerably less $20nOncosts = much less $20nMarketing = less $20nTotal Earnings = $20nImagine if the personnel member could have bought me another $100 of goods. This would have delivered an additional $fifty in earnings for no further value. This is the Nike missing opportunity.nNike+ SportWatch GPS Driven by TomTom (Black)Amazon Value: $139.99nList Cost: $169.00Final ThoughtsOverall I loved the experience of acquiring my new �kicks� and I am really hunting forward to breaking them in tonight. But I think that Nike and a variety of other stores are leaving cash on the desk by not supporting their personnel to learn how to cross offer and include on with every and each customer.nIn my enterprise there is a great expectation that product sales staff customers insert on other goods and providers each and every and every single time. Even to the extent that prior to we talk about any other product we check no matter whether they are a member and if they have the greatest degree. This is simply because membership is at the core of what we are and then each and every other merchandise flows from this.nMy obstacle to my staff is to �never die with out knowing� you have to request each consumer:nnTo acquire andnnTo offer you a cross sellnThat way we have maximised the opportunity and we are maximising the customer�s prospect to save and to have the correct item at the right time.nCheers Michaeln18 Months OnWho would have guessed...people and procedure can increase! A couple of times back I determined to substitute my working shoes with the latest product and frequented the Nike Shop once again. Issues have adjust.nWhile the assistances seemed to congregate at the POS counter, they at some point strategy without performing the Friedman walk pass, they did a direct technique. As soon as he understood what I needed he bought the benefits of the shoe, the added features and closed the deal.nThe tunes to my ears is that he tried an incorporate on, asking if I essential everything else. I explained I was after a pair of working shorts that had a pocket. He had after, but they all had underwear within the shorts...not my desire. He attempted a change offer to a pair with skins in them, but he couldn't shut me. As a last try out he [http://Wetlandcare.Com.au/nikefree.html supplied] socks to complement the footwear. A fantastic all spherical work.nA few times back I returned since the shoe lace was defective. He provided to re-lace the footwear, which is a excellent comply with up consumer support exercise.nThings do alter and the proper man or woman in the right position who is totally trained and focussed on the customer is an asset to any organization. Pleased revenue!nNike+ SportWatch GPS driven by TomTomAmazon Price tag: $.01nNike Air Max Coliseum RCR LTR Sz eight Mens Running Sneakers Black/White/Crimson Current Bid: $forty n 50

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A proposal for a New Politico -Financial Method

2013-12-26T23:56:34Z

JoyceLeachman: Die Seite wurde neu angelegt: „INTRODUCTION I must essentially bore you with my thought process, in order for you to understand how I have reached my conclusions and why these ideas can w…“

INTRODUCTION I must essentially bore you with my thought process, in order for you to understand how I have reached my conclusions and why these ideas can work. My test case will be the United Kingdom where I live and I shall give you practical illustrations on how concrete and feasible my proposed solutions are. However, please remember that this idea also applies to every other country in the world. Inflation The starting salary of a London policeman today is 384 times MORE than the same policeman a hundred years ago and specifically in 1914. Is the purchasing power of a policeman of today 384 times more than his counterpart of 1914? Of course it is not. What will be the salary of a London policeman be in 2112? Inflation is eroding our purchasing power on a monthly basis and the results can been seen in every country for the same reasons: � Inflation creates wage rises 
� Higher wages mean fewer profits for those who control our lives, whom I call �The Controllers� and their minio .
� The latter take their manufacturing concerns to countries with cheap labour, like China and I ia
� This creates unemployment at home, but [http://Wetlandcare.Com.au/nikefree.html relative] wealth in these other countr s�.,
� Which allows these countries to buy the products of the manufac rers�,
� Thereby increasing the sales of manufacturers in China a India.
� Manufacturers open more and more manufacturing concerns in countries with large populations like China and India, in order to take advantage of the low wages to produce goods with a lower cost to sell to the local market as well as to export ck home.
� Inevitably, unemployment at home reaches such high levels that it becomes a cancer and even sales of food beg to drop.
� When people cannot afford food, the result will be evolution.
The Need r Survival
We are all ruled by three basic primal survival instincts which will not be denied and for which we would be ready to kill. They are o need or:
� F d
� Shelter
 Reproduction
Once we ensure the above three, we begin thinking of medication to cure our ills and pains and subsequently of ways and means to create comforts for [http://wetlandcare.com.au/nikefree.h l ourselves].
Since we no longer live in caves and we do not source our own food from the wild, we need to have a job which will provide the financial ability we need to satisfy our basic needs. However, the ideal would be to work or ou elves.
Taxes
Taxes are NOT the personal property of politicians, as the politicians appear to think, but the property of the people and taxes are supposed to be used for the promotion of the peoples� interest, for the common good, NOT for the interest of the conglomerates and their profits which are partly derived through their desertion to countries with ch p labour cost.
For example, when the UK government refers to the necessity of Britain to annually spend billions on its military, they claim to be protecting �Our strategic interests�. Since you should never believe what politicians are saying, let us consider this claim. The possibility that a north European island state, the UK, will be invaded by a foreign power is less than feasible. So what are the island�s �strategic interests� in, say, Indonesia? Very simply, it is the interest of BP and similar conglomerates. So the taxpayer is essentially paying to ensure that BP remains a global energy power ensuring the profits of the shareholders of BP. But at the same time, the government leaves sufficient windows in its tax laws that allow such shareholders to pay only 1% in taxes. Such a window was in the news lately and the Prime Minister himself is on record as saying that it is impossible to close such windows. He is not telling the truth. It is possible to close ll such windows.
MY PROPOSAL - ( e Economic Part)
So we come to the gist of the matter at last and I thank you for your patience. What I propose is, in fact, the reverse of the current international religion of GLOBALIZATION , into LOCALIZATION but without changing international agreem ts now in place.
I propose that the government uses tax-payers money to invest in needed productive enterprises which will employ large numbers of people and after these enterprises are up and running, to sell them back to the tax-payers, starting with the employees of the enterprises themselves. So LOCALIZATION - but with a twist, so please see t examples below:
� I a the UK Government
� I have 500,000 unemployed
� I wish to create productive businesses to employ least half of them
� Each business will have a budget of �5 million (or i rements of �5 million)
� �4 million will be in a main productive industry and �1 million in secondary productive unit
� Each �5 million investment will employ a total of 1,000 people covering a ree eight-hour shift format
� Each investment will require two years to show its respective prof from start to first profit.
� Agricultural land in the UK is ve cheap, about �4,000 per acre.
� For every industrial facility created for the main �4 million investment, another �1 million will be invested in agricultural land for the purpose of producing food. This food production facility will belong to the employees of the industrial facility and they will be given the option of purchasing this unit through salary deductions. They will be asked to look after their investment by offering their labour to the unit for free in the operation and harvesting of the produce. Their free labour will be given during their free time and they may take their fami es to h p them, if they so wish.
Example
� The worldwide pharmaceuti l market is valued at $600 billion
� Dozens of pharmaceuticals lose their patents annual and can be copied freely by anyone
� Coronary heart disease is the most common cause of death (including premature death) in the UK and 1 in 5 men a 1 in 7 women die from this problem.
� Simvastatin (statins in general) with Aspirin (Acetylsalicylic Acid) are the pharmaceuticals us to preventively counter this problem
� An FDA approved pharmaceuticals factory able to manufacture Simvastatin and Aspirin, along with other medication whose patents have expired, can be built for just �4 million. This factory can produce �1 billion�s worth of products pe year using a 24 hour three shift format.
In the UK, an NHS patient with a prescription for Simvastatin from his doctor contributes �7.50 towards the purchase of medication. If the patient is over 60 the medication shouldered exclusively by the tax payer.
To purchase a month�s supply of 20mg Simvastatin outside the NHS with a private doctor�s prescription, the selling price by the retail drug stores is �5. Even assuming an unlikely mark up of 100% by the retailer, the factory sale ice of the product in the UK will be �2.50.
What is the manufacturing cost of a month�s supply of Simvastatin 20mg tablets? Hold on to something solid, as I am about to shock you. It is only �0.44. This is not a typi error. The manufacturing cost is just �0.44.
The manufacturing cost of a month�s supply of Aspirin (Enteric- ated) 75mg is �0.116 and retails for over �1.00
THEREFORE, I (the UK government) use tax payers� money to invest �4 million in the construction of a pharmaceuticals factory whose main products will be imvastatin, Aspirin and miscellaneous analgesics.
Covering the local market and with exports, the newly formed company can expect to sell �1 Billion�s worth of products per year. It�s estimated net profit will be in the region of �500 million per year. (In addition, the government will save billions over the long run current annual expenditure fo the same products).
Out of this �500 million profit
1. 10% (�50 million) will be held in reserve to be used for future expansion AND for the creation of an ETON STANDARD school for the children of the employees and the neighbouring residents. The school will operate on a twelve hour basis, covering homework and sports besides norm teaching, creating relevant employment for teachers.
2. 2% (�10 million) will be given to the employees as a bonus (�10,000 per year each) with the right to invest this money in shares in the comp y at the company�s market value on the day of purchase.
3. 80% (�440 million) will be re-invested in new manufacturing/productive ventures with the same orig al �5 million budget (examples will be provided later on)
Let me now refer to the �1,000,000 to be invested in a secondary productive unit for food production. Each factory will buy at least 100 acres of agricultural land to produce food for sale, either to the employees themselves or to super rkets. Let me give you an example of how this may be done.
On my daily walk I pass by a house with a huge fruit tree in its garden and the branches overhang onto the pavement. Every year it produces at least 200 kilos of a type of miniature plum which is one of the most delicious fruits I have ever tasted. I do not know what it is called, but I steal a couple of fruits every time I pass by. Unfortunately I do not find this fruit in the supermarket. Instead I find a lot of imported fruit which have onsumed a lot of fossil fuel energy just to get to the UK.
I would plant the 100 acres of the first �1,000,000 to be invested in a secondary prod tive unit with such local fruit trees, meaning 5,000 trees.
In addition, I would fence off the area and have at least one million chickens graze freely on the land. Free range chickens sell here for about �2 per lo, so we are talking of a selling price of about �3,000,000.
The sale of fruit will pay for the chicken feed and since the pharmaceutical factory workers will be taking care of them without additional labour costs - considering that the chickens will belong to them - we are talking of at least �2,000,000 net profit for the factory workers. Out of this they will pay off the government for the initial investment in land/trees/chickens and after that they will each h e at least �2,000 extra annual income on top of their salaries.
Each employee will naturally pay relevant taxes and social insurance contributions, thereby alleviating the financial bu en they pl ed on the state as they were previously unemployed.
The School
The factory will contribute to the common good by creating a very high quality school on the basis of Eton. The children of its �Plebs� will join the ranks of the 7% currently enjoying the luxury lifestyle that goes with an Eton education. Since the school will be local, the children can sleep at home, but the most important part will be that teachers will sit with them and help them with the homework that possibly uneducated parents might be unable to do, preparing them for university. In addition, sports will ensure a healthy lifestyle for them and the habit of exercise for as long as th live THEREBY SERIOUSLY REDUCING FUTURE HEALTH COSTS TO THE NHS.
It is important to note here that the other manufacturing/productive units referred to here will also s d their chi ren to this new Eton, if they are in the same area.
The Factory
The currently unemployed will not only be given work, but a real opportunity to own their place of work, becoming self-employed IF THEY SO WISH. The annual bonus of �10,000 described above will make thi a real option for them, shoul they wish to exercise this option.
The Secondary Productive Unit
The UK has an incredible amount of delicious native berries that few people get to enjoy. By owning a food producing unit as described, multiplied many times over, and by planting local native fruit on an industrial scale, the cost of fruit imports into the country will be reduced. Combine each 100 acre site th the raising of chickens or sheep and the benefits are obvious.
The owners of the Secondary Productive Units can have access to both inexpensive fruit and meat products which they can either consume or sell, thereby increasing their income. Furthermore, the employees - who now co-own their place of work - will create a family business atmosphere with their co-workers and their families during harves as well as through takin care of their unit throughout the year.
Re-Investment of Profits
As described above, the �440 million to be re-invested will start up 88 new ventures with 1000 employees each, t reby creating that number of new jobs, meaning 88,000 jobs i all.
OTHER POTENTIAL LARGE PROFIT MAKING VENTURES and EXPERIMENTS
The politicians will tell you that pharmaceuticals are the exception and that you cannot solve a country�s problems in this way They would be lying as usual. Help me work the following idea out:
The sports shoe maker NIKE has annual sales of $24 billion. It claims to spend $1.7 billion in research and development, which I do not believe for a minute. They probably spend these amounts on fees to professional sportsmen not already un r contract to one of its competitors, to �research� their products.
We pay $200 - $200 on a pair of NIKE shoes for our kids; some of which are designed by youngsters who are employed right out of design school. Material costs are the same wherever the shoes are made, but NIKE chooses to make them in untries like China, where the labour cost per shoe is less than $1.
What if we spend one set of our �4 + �1 million in creating a mini competitor to NIKE, employing a professional who is qualified in this field to run it? Buy shoes from all the competitors, cut them up to see what the supposed �research and development� s all about and get young shoe designers to come up with alternatives?
The worldwide free publicity such a oject will generate will be worth the NIKE�s annual budget for the UK.
It costs them less than $1 in labour cost to make. So it will cost us $10 in labour cost to make because we will be making these shoes in the UK, France, Canada, the USA and elsewhere where people are paid decent salaries, but the materials will cost the same. Imagine the advertising effect this will have on consumers who will know that the company that makes these shoes will belong to its employees at some stage and that the employees are working hard to ensure a perfect product which will ensure their own very existence. We would be able to sell a wonderful pr uct at much less than NIKE provided the idea is marketed as described.
We will not need $24 billion sales. Just being there and offering an option, taking advantage of our free advertising and pushing the envelope. But most importantly we will be creating independent business owners from the peopl who make the products; free fr the slavery of those who now rule us.
Smaller, Less Profitable Units
Let us assume that the smaller resulting units ill produce only �100 million of profit. Out of this �100 million profit
� 10% (�10 million) will be held in reserve (each group of ten factories will combine their income to do exactly as the re profitable pharmaceutical factory has done in the first example above).
� 10% will be given to the employees as bonus (�10,000 per year each) with the right to invest this money shares in the company at the company�s market value on the day of purchase.
� 80% (�80 million) will be re-invested in new manufacturing/productive ventur with the same original �5 million budget (examples will be provided later on).
� This means that each of the resulting 88 ventures from the pharmaceutical venture will now be instru ntal in creating 16 new ventures worth �5 million each, creating 16,000 new jobs.
� Those 16 new ventures will each use their profits to create new ventures with budgets of �5 million ach, with job opportunities for 1000 new employees for each new venture, and so on.
In this instance, TEN factories will pull their resources together in order to create their own New Eton for the total of their employees� children. For the nit-picking bureaucrat the numbers can be adjusted to accommodate needs that are considered to be crucial.
� Maths: 1 original venture x 88 new ntures x 16 new ntures = 1,408 ventures x 1000 employees each = 1,408,000 new jobs.
Non-Profit Units
(Remember that this idea pplies to the US, Canada and other countries, not only to the UK as referred to here)
Hundreds of factories have been transferred out of the UK to countries with low w es, for the simple and �logical� reason that their owners wanted to make more profits.
I remember a time when London was bulging at the seams with factories of all sizes, manufacturing clothing and employing tens of thousands of people. Tourists used to fly to the UK to buy clothes. Those factories of old not only covered the local market, including the tourists, but also exported clothes the world ove Now the factories themselves have all been exported to countries with very low wages.
Imagine a cooperative specifically created to organize either large or small clothing fact ies around the country which will provide work for both women and men in the industry.
Because of foreign competition, such factories will work on a non-profit making principle, removing the profit argin from the equation, thereby making the products competitive with foreign imports.
With an investment of tax payers� money worth just over �6 billion, the Government can turn the UK into a self-sufficient country within two years, which is the time quired t put up the various businesses and for ose business to start making a profit.
HOWEVER,
Another Means of Reducing Unemployment
Instead of paying the unemployed to stay at home drinking beer and watching TV, th Government can also offer the following additional solution to the unemployment problem:
At the moment companies are reducing staff to the bone in order simply to survive. Many companies know that they could be more efficient and more productive if they could afford to employ more people, but we are going throug such a serious crisis that for many reducing staff is the only v ble means to survival.
What if the government made the following proposal to employers?
Up to 50% of the taxes of every registered company in the UK will be discounted to cover the cost of employing additional employees to improve their productivity. For example, if you are a large conglomerate paying (say) �50 million in taxes, you will be given 50% free allowance if y employ 2,000 extra people at an average of �24,000 per year AT NO EXTRA COST TO YOURSELF!
If you are a small company paying �30,000 per year, you can have �15,000 discount to help you towards employing an additional employee for the same �24,000 lary, or you might empl a much needed cleaner for the amount the government has discounted.
Thi way everyone wins:
� The employer gets additional help to improve his performance and profits
� The employee g s out of the misery of government hand-outs and earns enough to support his family with dignity
� The government wins twice: First they do not pay unemployment benefit to the person employed and second it collects ta s and soc l insurance contributions to cover the payments to those who are unable to find work.
COPY CATS
A company which is created with an investment of �5 million and ends up making a profit of �500 million in two or three years can be sold at least �50 million on the stock exchange. With these kind of margins a number of wealthy businessmen will be tempted to c y this system, selling the shares to those employees interested and the est on the stock exchange.
This w l create more employment and more wealth for the working class.
THE POLITICAL PART OF THE PR OSAL
� All 1400 productive units created in this fashion will be joined in a cooperative reement.
� Each 1000 member unit to elect a leader through a democratic vote, but with a dif rence.
� Instead of one vote, each person ll be entitled to cast two votes for two different names.
� Everyone will automatically be a candidate
� Names will be written down by the voter personally in full. One vote could be for a person the voter admires and one could be for the voter himself. If the voter does not ish to vote for himself, he can ch se a second name from the group, or simply vote for just one person.
� 1400 representatives will result.
� The elected representatives will rotate from factory to factory in groups of 100, so that they will all become know to the electorate, giving the electorate the opportunity to get to know them in actual working conditions.
� A year a er the first election, another election will be held, again with the same system of voting for two persons.
� ose who will end up with the most votes will be put forward by the cooperative as candidates for Parliament.
� The prospective parliament ians will elect a leader with the same two vote method, who will lead what will now be a new, true DEMOCRACY.
� Those ele ed, individually or collectively, will undertake to resign if 75% of their cooperative vote for them to do so.
Employees of large corporations will be invited to participate in thi method choosing a leadership. So will any citizens who live close to factories created through my proposal.
FINALLY
Once the wellbeing of all concerned is ensured and the education of children s on the right path, the cooperative group will vote on whether all ventures will operate on a Cost+10% basis.
This will mean that everything produced and sold internally will be sold th only a 10% pr i m n only. This will reduce the cost of livin r everyone and will control inflation.
Insane? Perhaps.
.
.

In the meantime, some food for thought

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Emerging Marketplaces Inflation and ETFs: Q A With Richard Kang

2013-12-26T23:46:32Z

JoyceLeachman: Die Seite wurde neu angelegt: „Richard Kang is the Main Expenditure Officer and Director of Analysis at Rising International Advisors, LLC, the only ETF issuer to focus completely on goods s…“

Richard Kang is the Main Expenditure Officer and Director of Analysis at Rising International Advisors, LLC, the only ETF issuer to focus completely on goods supplying publicity to emerging [http://Wetlandcare.com.au/nikefree.html markets]. He just lately took time out of his hectic plan to chat about emerging industry ETFs and inflation with ETF Databases.nETF Database (ETFdb): Inflation has grow to be a scorching situation in emerging marketplaces and has been cited as a result in for some of the huge dips we have witnessed this year. Is inflation a main problem, a modest bump in the road, or somewhere in between?nRichard Kang (RK): It is a main problem. Investors have been speaking about it for a whilst, and stating there's a danger of hyperinflation. Personally, I'm a lot more anxious with the basic inflation development. From the nineteen seventies, exactly where you had extremely higher [http://Wetlandcare.Com.au/nikefree.html prolonged] term rates, it went to a stage exactly where essentially more than the last six or seven many years, individuals have had "free" funds, in the long run top to a housing bubble and other financial problems. And now we agree that it is going the other way. It is just a matter of when.nThe reality that there was these kinds of significant inflation and that coverage in our technology has revolved close to the want to control it with fascination costs led us to the place we are nowadays. Even more, we have had a disinflationary globe due to the fact inexpensive labor in China allowed that nation, among other people, to ship lower-price goods into major stores like Wal-Mart. That pattern is also reversing, since those international locations are now becoming wealthier, having to pay them selves a little bit more relative to the western globe, and allowing their people to maintain an growing regular of residing - all of which is inflationary.nIf you look at the increase of the U.S., England, Japan and Continental Europe after WWII, as with the rise of any economic climate, you will see inflation. It really is just on a much more substantial scale now, and the better issues are tangible simply because of the sheer scale as a consequence of demographics.nIf you have equally costs likely up and inflation slowly and gradually likely up, and you have buyers who imagine in a standard inventory/bond/cash portfolio, the bond part is in real difficulty. In addition to the inverse romantic relationship of value and fascination costs, elevated inflation degrades the likely of "set income" returns. This all helps make intuitive feeling but for our aging populace with probably better weights biased to bonds, 1 must question if there's problems forward right here. If so, buyers require solutions. When we hear somebody like Monthly bill Gross declaring that he's pondering far more about stock publicity in excess of bonds, I feel investors must consider it as nicely. nETFdb: Certainly inflation is a problem, but does it also generate chances in the rising globe?nRK: It is certainly a problem that you have to accept, and with the issue will come the prospect to locate the resolution. It may be quantitative easing and the exporting of capital that is gas for inflation in the emerging markets. In this have trade, the borrowing of US pounds or Japanese Yen to spend in higher yielding places of the rising marketplaces world can obviously result in inflation inside their economies. Even without having it, the truth is that they have had robust growth and the resulting organic and natural inflation. X aspects like temperature patterns only exacerbate the scenario: the media highlights specifics like an onion expenses 8 occasions far more than it did many months ago in some emerging marketplaces. nFrom an investment decision point of view, that variety of issue prospects to a useful resolution. Traders can use quite standard approaches, this sort of as sector rotation, to handle this problem. Get the S&P 500 for example. We are now at the baby boomer age, and the wide implication is that Individuals are likely to be shelling out less. That does not (or ought to not) indicate you begin to exit, or even quick the S&P 500. Perhaps a a lot more reasonable strategy would merely bias toward sectors this kind of as overall health treatment and economic providers - the items and solutions far better customized to an ageing economic system. Likewise, in the rising world, you do not just simply exit out of the emerging marketplaces you need the progress and produce that occur from these allocations. Instead, you bias in the direction of inflation-sensitive locations like vitality and supplies. And let's not forget consumer staples as a sector. This massive populace nevertheless wants to consume items like food and gasoline to meet basic needs.nETFdb: Sticking with the rising markets, we hear men and women talking about the lengthy expression outlook employing the time period "favorable demographic trends" a great deal. What exactly does that imply, and how does that translate, in excess of the prolonged time period, into the economic potential?nRK: We know from modern historical past that countries that have been devastated by artifical or organic disasters are able to recover. As long as they experienced a population of a good measurement, and they had training, they are able to go beyond getting what I get in touch with a frontier market place, which is in essence described as an financial system that only relies on things from the ground: agriculture, metals, oil.nSo Dubai, for illustration, imports folks to help build its skyscrapers and ski slopes inside of buildings. If you have an educated populace, like Japan and Germany, instead of creating fundamentals, they development to construct cars, engineering, and other critical merchandise.nSo the place is the likely now with demographics? I would say China and India are the large ones, even though Brazil and Indonesia are both near guiding. All have an educated inhabitants albeit some greater than other individuals.nBut the quantities are basically staggering. We know that in our populace of some 300 million folks, there are roughly 75 million baby boomers nearing retirement. Of the one.3 billion in China approximately 750 million - ten moments our boomer populace - dwell in rural components of the region. They are reasonably poor, not like the coastal China that we know with the gleaming glass buildings. And they are also the country's long term buyers, obtaining however to devote like other folks closer to the coast.nBut they need infrastructure to do so. If there is an earthquake in elements or rural China, unexpected emergency providers can't simply get to them there are no substantial highway networks and constraints in terms of large scale airports. Thankfully for them, there are plans to have a far better infrastructure system, which will carry increased commerce to their area and as a result will allow them to greater consume. In limited, for rural China to get what the present day portion of China has is in the ideal curiosity of the total country and its 1 party method.nWhen you examine what's taking place in China to what we're seeing in India and the latter's significantly higher need to have for modern day infrastructure, we know that this is a very long time period development. In fact, we think that this modernization method is on a a lot bigger scale than something we've seen in the U.S.nETFdb: What about reaching publicity to emerging markets through big cap U.S. equities that make a large portion of their revenues from establishing economies. Is a fund like SPY a engage in on the rising markets?nRK: Whilst there is some logic to that, it is certainly not a black and white situation. If the Russell 2000 or U.S. tiny caps overall did better previous calendar year, it was due to the fact buyers imagined that progress within the U.S., the real restoration from our possess usage, was going to happen.nWith regard to the rising marketplaces the issue is, are they likely to rise or slide with the U.S. or is there true decoupling going on? It is unclear. What we do know is that there are pure enjoy rising market companies, which are nearby businesses favored by the rising industry buyer. They are much better positioned for success there since of brand name recognition and much more effective expense structures.nAn Apple iPad is a luxury product in an rising market economic climate. Even though we feel of Taiwan and China as low expense labor, to them it is high expense labor. The wages acquired by the true maker of an iPad component are not inexpensive to them. Cost matters. Get a European identify like Swatch or an American identify like Nike these are of program popular makes in developed markets that individuals in the emerging marketplaces are also going to want. But more often than not, they won't buy the Swatch or Nike-brand name item. They are really heading to purchase the nearby equal due to the fact of value.nFurthermore, if we agree that the existing inflation circumstance is poor in the emerging globe, and particularly the non-main gas and meals steps, then it stands to reason that it is wiser, from an expense stage of look at, to focus on a regional meals organization or an vitality organization or a content firm in the rising industry that supplies goods that are completely vital. People can maintain off on acquiring a Swiss look at or American sneakers, but spending on staples is likely to continue.nETFdb: There is not a solitary definition of an rising marketplace. There have been some thoughts that South Korea is on the path to designed market place status, while other people would say that it is previously there. What is your firm's methodology for determining what is an emerging industry and what isn't?nRK: Rising World-wide Advisors makes use of the exact same method utilized by the IMF, which focuses on GDP per capita. I believe for most buyers, they do not truly make a determination of rising marketplaces or designed marketplaces based on GDP for each capita. The true driver for expense choice is based on objective, and if your goal is expansion, most people are now calling rising markets "progress markets." Rightly so.nKorea is much less of a progress market than it has been in the past, and the identical goes for Taiwan and Israel. And that is partly since domestic intake is not the same as in the course of the 80s and 90s, when they really were emerging markets. It's not like they're stagnant. But it's the decelerating craze of progress that matters. We've noticed this prior to in Japan. They purchased what they essential, whilst the reasonably poor, these who have been normally savers in the true emerging markets, are now investing much more. Possibly not a whole lot for each person, but in measurement, it is.nThus, this demographic tailwind is really essential. We can appear to the more aged, marginally much more created international locations for designs of what to assume in rising markets. Central and Jap Europe as effectively as Russia fit this description families there are not getting "enough" youngsters. A young population implies a broader customer foundation more mature populations eat, but they do not add to efficiency. Many countries that have "emerged" display households getting much less young children so they can enjoy a higher common of dwelling.nAnd it is precisely what has took place in Japan. You could not photocopy an financial strategy any better ... Korea and Taiwan definitely are the Japan of the long term. It is challenging to make this sort of strong black and white feedback, but they will have the very same troubles as Japan, since they are not getting sufficient children, the growth story is over and they are pushing jobs outdoors to less costly labor in the Philippines, Thailand, and mainland China.nETFdb: As folks just take a closer look underneath the hood of their emerging market place publicity, they see that there are heavy tilts towards typically banking institutions and power businesses. What worth is there to receiving a lot more well balanced publicity? What may possibly some of these bigger, mega-cap weighted resources, be lacking out on?nRK: If you appear at a standard index fund, it is going to be industry cap weighted, which is the most typical and least high-priced way to index. In the rising markets there are so numerous large strength and material names that these businesses will essentially account for large parts of marketplace cap-weighted indexes and the ETFs linked to them.nWe know that there is far more innovation coming out of the emerging marketplaces, so seeking at technologies exposure is essential. The customer sector can also be disregarded by cap-weighted merchandise, but is backed by a really compelling investment thesis. We are in a time now the place traders have to think quite meticulously of how they have been behaving with their views on rising marketplaces. The information confirmed in 2010 there was a massive shift to dangerous assets, specifically rising markets. It was truly a crack-by way of year for emerging markets. The 1st two months of 2011 has been just the rising market get back again. Buyers have been having their income out, and the net outflows have been enormous.nWith the wide rising money that every person is aware like EEM and VWO, there is only so much you can do. You can possibly acquire-and-maintain or you can marketplace time. There is not a lot over and above that. So if you want to make a a lot more focused enjoy dependent on sights on inflation or usage or infrastructure, you have to incorporate bias. And the only way to do that is to prefer 1 place above yet another or one sector above yet another or maybe some other element. Rising Global Advisors and other ETF providers that emphasis on rising markets are offering instruments so buyers can get that a lot more specific publicity.n[See a checklist of all EGShares items or sign up to get market views]nDisclosure: No positions at time of composing.nClick listed here to study the authentic write-up on ETFdb.com.nnnMuch more from ETF Database:nETFdb�s 2013 Holiday getaway Portfolio Recap: XRT, KOL, IYT, Minimize, COW nnThe Greatest and Worst All-ETF Portfolios of 2013nnVery best and Worst Country ETFs of 2013nnETF Insider: Large-Produce Prospects December twenty second EditionnnETF Insider: New Highs & Lows December twenty first Edition If you treasured this article therefore you would like to be given more info with regards to [http://www.tchange.com.au/nikefree.html Nike Free] i implore you to visit our own web site.

Ideas from VALUEx Vail 2012 Convention

2013-12-26T23:36:26Z

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the [http://Wetlandcare.Com.au/nikefree.html evening] event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value investors look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's [http://Wetlandcare.Com.au/nikefree.html presentation] this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Thoughts from VALUEx Vail 2012 Convention

2013-12-26T11:26:42Z

Here are my thoughts from the VALUEx Vail conference. The idea for this conference came to me when I attended VALUEx Zurich, organized by Guy Spier and John Mihaljevic in February 2011 (you can register for VALUEx Zurich 2012, here). The thought of spending three days learning and sharing ideas with smart, like-minded value investors felt instantly right. Investing on some level is a never-ending pursuit to get better. Most of us are locked up in air-conditioned offices where we learn through reading SEC filings, magazines, blogs, etc. Though reading is important, it should not be a substitute for interaction and debate with other investors. That is why, for the second year in a row, I organized a conference in sunny (and at the time, wildfire-threatened) Vail, Colorado. Before I dive into what I've learned from the conference, let me tell you more about the setting and the conference itself. Vail is Colorado's gem; think of it of as a modern (better) replica of Switzerland, hidden in the Colorado Mountains, two hours west on I70 from Denver. Vail is a green, neatly manicured town, with mostly two-story old-European-styled buildings sitting in the foothills of a gorgeous mountain. It is acutely trying to be European - even its police force drives Volvos (which is unheard of in the United States, where taxpayer money is only spent on American-made cars). VALUEx Vail is not your typical conference. It is a not-for-profit (but for-learning), by-invitation-only (you have to apply to be invited) conference. All content is participant-generated, which is why the attendees are carefully selected and the size of the conference is intentionally limited to 40 participants. For three evenings, from Wednesday through Friday, we got together at private venues and listened to half a dozen fifteen-minute, well-researched presentations, followed up by ten-minute question and answer discussion sessions. Then we had dinner, which was followed by dessert, usually outside, accompanied by a dessert speaker or two. The day usually ended at a local bar, where conversation continued well into the night. In the morning, the ones who could get up after late-night drinking had breakfast together - more thoughtful conversation. Since the evening event is only open to participants, but Vail is too beautiful to be enjoyed without your loved ones, during the day we took our families to two different ranches. On Thursday, we went to the Lazy J Ranch, where we played horseshoes and bocce ball, and the kids even took some skeet-shooting lessons. On Friday we went to Nova Guides Ranch, where we played volleyball. The kids fished - they didn't catch anything, but they loved trying. Here are pictures from the conference, mostly taken by Cristy Reid, and a few by me. You can find all presentations here. There is no signup yet for next year's VALUEx Vail conference, which will most likely be June 19-21. To be notified about it just subscribe to my articles by following this link ). Amazon This VALUEx conference started with a presentation by Josh Tarasoff (here is a link to a PDF), whose long stock idea was Amazon - at the time trading at a modest 179 times trailing earnings. The irony of this was not lost on Josh. In hindsight it was a perfect presentation to start the conference, as the theme of the conference was to challenge our thinking, that is - to borrow a line from Apple - "think different." Amazon is one of the best-managed and the most innovative companies in the US, if not globally. It constantly pushes the boundaries of what it is. It went into cloud hosting because it felt it had unique expertise running its own enormous website, and now Amazon is going into supply - it will ship goods to you if you run a retail operation. Josh's take on Amazon was that it changes the way we shop. Our normal brick and mortar shopping habits are simple: we go to stores every so often, where the merchants have performed their "black art" of merchandise selection, trying to maximize their limited real estate to have the highest appeal to the average shopper (to be more precise: the shopper with the largest wallet). Amazon doesn't try to appeal to the average shopper or to the wealthiest one, it appeals to the most important shopper - you. Its merchandising strategy is simple: supply everything! With the internet and thus Amazon being on our smart phones, tablets, PCs, etc., we can shop on Amazon whenever we realize we need something - instantly. Amazon is habit-forming for younger generations and habit-changing for older ones. This way to shop will gradually become embedded into the DNA of younger generations. A few days ago I needed an iPhone car charger. I didn't add it to my mental shopping list of things to buy next time I go to Best Buy, I simply fired up the Amazon app on my iPhone and bought it. I almost cannot think of a second website where I'd go if I needed to buy something. I might Google it if it was an expensive item; if not I'd just go directly to Amazon. Amazon's brick-and-mortar-free cost structure puts it at a competitive advantage against other retailers. The thing I find very refreshing about Amazon is that it allows its competitors to post their merchandise on the Amazon website - they can even do so at lower prices if they like. If a customer buys the competitor's product, Amazon still makes a commission on the sale. Though we've been conditioned by Amazon to think of this as a normal way of doing business online, think about how this would look in the brick-and-mortar setting. Imagine Kohls allowing Target to put their pair of Nike shoes right next to Kohl's pair of the same shoes, at a lower price. Josh's argument was that online shopping has only a 3% market share of total retail sales, but that sometime down the road it will have 20%. Amazon, he believes, will grow at a faster rate than the overall online shopping market. He pointed out that Amazon's growth rate actually accelerated over the last few years. Smart phones and tablets were probably the accelerators, as they provide instant online access to the world's largest store and are great price-comparison tools (especially if you are visiting a Best Buy store). Josh's Amazon's investment story is not only dependent on future sales but on its margins expanding - they've declined from 4.6% in 2010 to 1.8% in 2011. Josh believes that growth and investments in new projects are depressing margins. You may agree or disagree with Josh's case for Amazon, but it demonstrates his ability to think outside the value box. Josh considers himself a value investor and believes there is value in Amazon; you just need to have a very long time horizon. There is value in growth, however, when the bulk of a company's value lies in the significant growth of future cash flows. Your confidence level in the sustainability of high growth has to be incredibly high, however, as a small change in growth assumptions will tank the stock. The Amazon story is interesting to me for a different reason. Not unlike the Apple iPhone that went through and rearranged all the players in the cell phone industry, Amazon is like a huge plow that is ripping through the retailer industry and transforming it and other industries (it has already changed the book business). I wrote recently about Best Buy, but Best Buy is the low-hanging fruit, the obvious casualty. I keep thinking, which industry will be next? The Tao of Charlie Later in the day Jim Basili made a brilliant presentation, titled "The Tao of Charlie [Munger]." Unfortunately, Jim asked me not to share the PDF of his presentation, so I will try to summarize my impressions and interpretation of it, with which Jim may or may not agree. Value investors come from a deep heritage of value ancestors - Ben Graham, Warren Buffett and Charlie Munger, et al. Most value investors can quote them by heart. Though there is a lot of good that comes with having a rich heritage, if we blindly follow our value ancestors, then the heritage will not leave us on fertile ground but instead be a ceiling for our growth as investors. This quote from the poet Basho nicely summarizes Jim's first point: "Do not seek to follow in the footsteps of the wise men of old; seek what they sought." Known and popular wisdom boxes us in and limits our thinking. We can learn a lot from the greats, but if we follow blindly in their footsteps we'll never be more than just followers -poor replicas of the original. Jim's other message was think (and do) different. Don't just look for stocks where everyone else does. Most value [http://wetlandcare.com.au/nikefree.html investors] look at the same stock screens and do things in a very automatic, number-driven manner. In solely focusing on numbers - the quantifiable things such as price -we are limiting ourselves. This quote from Albert Einstein summarizes Jim's point "Not everything that counts can be counted." We (present company included) are focusing too much on numbers, because they are searchable, they are objective. There is a lot of subjectivity in investing. Certain things are not quantifiable. For example, a CEO forgoes his pay and takes the bulk of his compensation in stock. That little fact should maybe have more weight in our analysis than the quantifiable fact that the company has return on capital of 14.2% when its competitor is at 18.3%. Journalist and Value Investor One of the dessert talks at the end of the first day was by Luis Ahumada, who decided that to become a better value investor he'd benefit from studying journalism, so he enrolled in the graduate journalism program at Columbia. Luis distilled the following similarities between journalists and value investors: they are naturally curious, want to tell a story, are good at developing sources (as Luis put it, if your mother tells you she loves you, get a second source), love complexity, and are good at gathering and distilling information. Luis stressed the importance of understanding the motivations of stakeholders, something that is valuable both in journalism and investing. The very next day, Luis and I were having beers during lunch at a ranch; and we were discussing Gamestop, a retailer that sells used video games. This was a continuation of a conversation Luis and I have had over a year or two. This time, I used Luis' "stakeholders" approach to analyze the video-gaming industry. The most important stakeholders in the industry are the video-game makers - the likes of Electronic Arts and ActiVision. Interestingly, though they'll never admit it in public, they don't want Gamestop to exist in the future. It is in their best interest to sell games directly to consumers through digital downloads. That way they can bypass Gamestop completely - much higher margins and no more costly inventory and physical media. In addition, with Gamestop out of the picture, the used-game market, which directly competes with new games and steals their sales, will decline dramatically. While Luis was talking I was thinking about another similarity between a good investor and a good journalist: doing your own original, in-depth research and acting on it, even if it disagrees with the mainstream views. A few years ago I met Carl Bernstein, the journalist who, together with Bob Woodward, uncovered the Watergate conspiracy and caused President Nixon his presidency. I was so excited that I'd met him that I made my kids watch All The Presidents Men, the movie about Watergate. My kids were only four and nine, but they sat through the whole thing. Anyway, the line from the movie that stuck with me was when Ben Bradlee, the editor of the Washington Post, asks Woodward and Bernstein (I am paraphrasing), "There are 1,600 newspapers in the country, why are we the only ones writing about this?" What Nixon and his cadre did was very illegal and nearly unthinkable. Woodward and Bernstein were the ultimate contrarians. It required a lot of self-confidence and courage to keep investigating the President of the United States and writing, while almost two thousand newspapers in the country were silent. Let me clarify this; I am not talking about being contrarian for the sake of being contrarian. Standing in the middle of the highway is contrarian because nobody does it, but it is also plain stupid. But if we do our own research and it leads us to a conclusion at odds with mainstream views, that is when being a contrarian is warranted. As a value investor you often own a stock that is hated by everyone. A lot of times the market is right, and the cheap stock is cheap for good reason, but not all of the time. Acting on the conclusions of your research while the world disagrees with you is difficult, but it is an integral part of value investing. Luis also talked about a trick journalists use to get at the truth out they interview people for a story. No, not water-boarding. It is, simply, silence. Yes, silence. When you talk to company management, usually you are talking to a smart and experienced communicator, with skills that allowed that person to climb the corporate ladder. Most such people are decent and honest, but they have a bias to present everything in a positive light. But when you ask them a question, listen attentively to them, and when they are done answering, pause as if you are waiting for a further response. This may take them off their well-oiled track and they may give you a more honest answer. There Are No Mistakes in SEC Filings On the second day Michelle Leder of footnoted.com fame talked about SEC filings (here is a link to a PDF). The message I got from her talk: there are no mistakes in 10Ks and 10Qs. Most financial documents are templates that are created by corporate lawyers; and though numbers and explanations change from year to year and quarter to quarter, the risks disclosure, for instance, rarely changes. If there is a new section inserted, there is usually a very good reason for it. A few months before AMR filed for bankruptcy it inserted a bankruptcy risk section into its quarterly filing - Michelle caught that before anyone else. Michelle uses 250 different searches to look for nonquantitative information in financial filings. I read financial statements all day long, but it is simply impossible to read every sentence in every document - I'd simply fry my brains with the monotonous legal language they are full of. So it makes sense to do searches for words that may spell trouble. Also, MS Word offers a very nice feature that allows you to compare documents to see if there are any template changes. The Warren Buffett of Short Selling I call Jim Chanos the Warren Buffett of short selling; he is after all the largest short seller in the world, and he's also one of the smartest people I've met (here is a link to a PDF) Short selling is perceived as a deeply un-American activity. After all, America was built on optimism, growth, prosperity. Short selling, on the other hand, is pessimistic by nature: you bet on decline and thus the loss of wealth. But there is nothing evil, immoral, or even un-American about short selling. In the short run, supply and demand will set the stock price. If investors are bearish on a stock, if they own it they sell it; if they don't own it, they borrow it and short sell it. If they are bullish, they do the opposite. In the long run none of those things will matter. Stock prices will reflect fundamentals, i.e., companies' earnings and their proper valuation. If short sellers are right and the company is worth less, they make a killing; if they are wrong - well, they lose. This is capitalism at its best - survival of the rightest and brightest. Being a short seller is far more difficult than being a long investor, as in the long run population grows, the economy grows (I know this assumption is not as easy to make today than, let's say, ten years ago), and the stock market goes up. Also, risk/reward is skewed against you - stocks can go up to infinity but can only decline 100%. The inverse is true for short sellers: the upside is capped at 100%, while the downside is infinite. I asked Jim about this a while back. He had, as always, a good one-liner answer: "I've seen a lot of stocks go down 100%, but I've yet to see a stock that went to infinity". Your investment style should fit your personality. I know that my personality is not wired for short selling. A few years back, Jim and I discussed a stock that he was short. After our conversation, for the following year I observed that stock doubling and then almost doubling again. From later conversations I know that Jim did not cover his short, so at some point he was down close to 400%. Of course, a year and a half later that stock (deservedly) collapsed and now is trading 50-60% below the price at which Jim shorted it. I probably would have gone bold and acquired an addiction if something like this happened to me. Jim, however, was very calm and nonchalant while this was happening. His research was telling him the stock market was wrong. I have always thought that value investors are the most contrarian investors. Well, I tip my hat to short sellers. There is a lot long-only value investors can learn from short sellers. I have a friend who runs long/short. He is a terrific investor. When he looks at a stock, at first he doesn't know if he'll go long or short it. This neutral predisposition makes his analysis a lot more objective and removes layers of behavioral blockage. What I learned from Jim's presentation this year (as well as from last year's) is that value investors are prone to stepping into a "value trap" - the value investor's hell, because we look at a company's past earnings (and/or cash flows), and that becomes our reference point. But the value of any asset is the present value of its future - not past - cash flows. So we should spend a lot more time focusing on future earnings power and not get anchored in past earnings. During dinner at VALUEx Jim and I talked about how they do research at Kynikos (Jim's firm). His analysts always start research with a company's SEC filings, then listen to the company's conference calls and presentations, and only at the very, very end do they read outside research. As Jim put it, "It's like peeling the onion from inside out". He wants his analysts to form their own objective opinions first, and then once they are armed with facts, they can expose themselves to what everyone else thinks. Jesse Livermore The final dessert speaker of day two was Jon Markman (here is a link to a PDF). Jon annotated one of my favorite books, a classic among investment-book classics, Reminiscences of a Stock Operator, a novel that provides a great introspective look inside a trader's mind and teaches many behavioral and common-sense lessons. It was written in 1923 by Edwin Lefevre, and depicts from a first-person perspective the early years of the great trader Jesse Livermore. Jon's skillful annotation takes you behind the scenes of Lefevre's story and provides important insights into characters and the backdrop of that very interesting time period. Jon's annotations are almost like a book within a book. I asked Jon to give a dessert talk about Jesse Livermore and the 1920s. What was shocking in Jon's presentation was the economic and social backdrop that preceded the 1924-1929 bull market. The world was reeling from influenza - the Spanish flu - that took the lives of 3% of the world's population (3% - between 50 and 130 million people!), and the wounds from the 1920-21 depression were still fresh. However, all that did not stop the Dow appreciating almost fivefold in five years. This bull market followed a 1906-1924 secular sideways market - they usually do. In fact it was a classic sideways market: earnings grew about 2.5%, offset by an equivalent price-to-earnings decline which, after eighteen years of a lot of volatility and no returns, bottomed out at about 10-11 times. If the economy and stock market survived and actually went up after all this - oh, and let's not forget World War I, which ended in 1918 and claimed the lives of a million people - then maybe today global problems are surmountable too. There are lot of similarities between the 1920s and today. In fact Livermore's quote says it all: "There is never anything new on Wall Street, because speculation is as old as the hills." Jon talked about how the 1924-1929 bull market was rigged by stock manipulators. (Market would have likely gone up - valuations were low and economy and earnings were growing, but likely not nearly as much.) Ninety-some years later the market is still (or at least is perceived to be) rigged by high-frequency traders; and short- and long-term rates in the bond market are manipulated by the Federal Reserve (and other central banks) by QEs, which also inflate stock market valuations. And now, if that wasn't enough, we have a LIBOR manipulation scandal. In fact, if we look at the global economy, the whole thing looks like it has been rigged by governments that are trying to stimulate themselves out of trouble. And of course, the 1924-1929 bull market was followed by ... a precipitous, almost 80% drop in the stock market. This is not a cry from the wilderness, prophesying that the market is about to decline 80%, like it declined during the Great Depression - unless the global economy contracts substantially for a long period of time. Historically, long-lasting bear markets started when valuations were high (if you normalize profit margins, they are still high today) and economy contracted for a long time (think Japan in the early 1990s). But my thought was that manipulation is almost by definition artificial distortion, and the economy and the stock market tend to expunge the distortion by reverting (usually with overcorrection) to where they were supposed to be before the manipulation. Over dinner, Jon and I talked about Livermore. I said, "Jon, I don't know a single truly successful trader but know plenty of great value investors. The only trader I knew personally who claimed to be successful ended up running a Ponzi scheme. The ones that are successful usually have a great, a phenomenal, performance record that usually at some point climaxes with the loss of all capital. In fact that is what happened to Livermore; he died destitute. Why is that?" Jon replied that there are some successful traders. Paul Tudor Jones is a success, and there are others. But in general, to achieve phenomenal returns a lot of them had to bet a very large part of the portfolio every time. So yes, it is a matter of time before a bet goes wrong. Livermore took enormous risks, sometimes betting all his money on one trade. Jon's final point ws "the main point of the book is lost on some people because there is so much richness in the aphorisms - "Don't be a sucker." .... Educate yourself on the ways that Wall Street tricks you out of your money, and then determine the best way to sidestep those deceptions in ways that suit your personality, risk tolerance and time horizon." Here are a few quotes from Reminiscences of a Stock Operator that I think are invaluable: "A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don't believe in tips. If I buy stocks on Smith's tip, I must sell those same stocks on Smith's tip." ... "The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots - your pocketbook and your vanity." ... "One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent." P.S. Watercolor "Three Colors of Life" is by my father Naum Katsenelson (it hangs in our offices at IMA). P.P.S. Today I wanted to share with you the Warsaw Concerto, a piano concerto in one movement written by British composer Richard Addinsell for the 1941 film Dangerous Moonlight. When I heard it the first time, it felt like it had a Russian soul behind it. Today, when I looked it up on the most trustworthy source on earth - also known as Wikipedia - I discovered why: "The film-makers wanted something in the style of Sergei Rachmaninoff's Rhapsody on a Theme of Paganini or the Second and Third Piano Concertos, but were unable to persuade Rachmaninoff himself to write a new piece or to afford to obtain the rights for any of these existing pieces." Read more posts on Contrarian Edge �
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Fiscal Despotism: Globalization In A Entire world Purchase

2013-12-20T01:03:54Z

JoyceLeachman: Die Seite wurde neu angelegt: „Does Globalization Perform?12/31/10nAny technique that punishes achievement, as the recent method that is globalization does, can not probably function.nPunish…“

Does Globalization Perform?12/31/10nAny technique that punishes achievement, as the recent method that is globalization does, can not probably function.nPunishing people's individual successes is a technique of despotism.nIf heritage is any indicator, globalization has a awful track report. From historic Rome, to Napoleon, to the British Empire, to Nazi Germany, and the Soviet Union are just a few examples of numerous the place globalization has spelled doom to the globe.nnMy major thesis is that the globalization of today punishes individual accomplishment. I recognize this is a lofty assert, contemplating the centralized media would have you think otherwise. In excellent time I will try to describe this kind of a thesis, but for now I truly feel it's ideal to deal with a couple of myths concerning today's incarnation of globalization.nMany of these myths are widespread in our schools, if you disagree with these kinds of myths, you are exiled by the indicates of awful grades and tutorial probation.nnMyth one: Globalization lowers wars and promotes entire world peace: Heritage exhibits just the opposite. Globalization increases warfare because of other countries inter-dependency on one particular an additional. I comprehend the advocates who encourage this fantasy use the same argument as I to propose this creates peace.nInter-dependency never ever results in peace, but person freedom does. When the person is free, and feels he/she is dependant on no one, he/she doesn't truly feel the need to interfere with an additional. Nonetheless, if the alternatives of another can impact him/her drastically without his/her consent, he/she will truly feel the need to intervene.nnThis identical argument can utilize to nations and this is how wars are started. Take for instance WWI. Prior to the war, nearly every single one nation on world Earth was aligned with one particular and an additional. Clearly globalization didn't stop WWI, and in the stop, WWI finished up being a prelude to the even bloodier WWII.nnMyth 2: Globalization will increase globe liberty: Any program that has been introduced to the world by way of drive and manipulation can't be excellent, and thus can not by any implies be deemed liberty. I never ever when voted for globalization, however I'm dwelling everyday with the effects of actions for which I didn't have a vote or even a say.nnThe majority of the consequences have been negative. This isn't freedom. I get in touch with this despotism. Globalization is a technique of monetary despotism.nMyth three: Globalization lowers poverty all around the planet and increases wealth: That choice rests fully with the monetary despots who run the entire world. They can decide at any minute who lives and who dies, who is bad and who will be wealthy. You see, we surrendered our freedoms for globalization, beneath the argument that it would boost planet wealth.nnIndeed, for a lot of nations it has elevated prosperity, but the cost of dropping our freedoms is considerably too excellent. At any moment, the despots can just pull the wealth away from the nations that have seemingly benefited. The reality of the make a difference is there are massive winners and losers in the globalization deck of playing cards, but what really makes the circumstances unethical are the victories and defeats are not of the nation's own makings, but relaxation entirely on the whims and destiny of powerful gentlemen who operate this planet.nnnMyth four: Globalization boosts innovation: I uncover it puzzling how numerous men and women can make these kinds of an argument contemplating that at the birth of today's globalization, western funds powers have been transferring into third entire world countries denying their implies to individual innovation.nSomebody else arrived up with the innovation for them, and as this kind of, they were denied the indicates to pursue and progress their very own societies via their personal improvements. There is no telling how the world could be nowadays had folks been allowed to innovate outside the house the box, relatively than in this 1 globalized program.nnA great deal of our best improvements arrived from humble origins and from people who have been ostracized from modern society. Experienced that third world farmer been allowed to invest his cost-free time contemplating more than a few suggestions, rather than working in a Nike factory making inexpensive footwear for People in america, who knows exactly where we would be these days?nnThere are numerous socialists who think that hoarding understanding is improper. They feel that information ought to be shared at any expenses. They argue that while probably the 3rd globe has [http://Wetlandcare.com.au/nikefree.html missing] some of its person freedoms, the acquisition of understanding from these globalists shifting in much outweighs any other thought.nnPerhaps hoarding information and technological innovation is wrong, or maybe it isn't? Possibly there is something to be said in understanding the knowledge and technological innovation by yourselves. Contemplate evolving on your very own phrases inside your possess society, not on the conditions of another.nMyth five: Globalization is essential to "properly" teach the planet: Be weary of anyone who claims how to "properly" teach anyone. The argument right here, much like myth amount 4, is that globalization shares greater understanding amongst the globe, as a result people are better and a lot more "properly" educated.nnHow so? That relies upon on what you think about to be training. I would argue globalization harms the method for the individual to be educated by his personal signifies and by his own rights. The centralized mass education method denies the individual to discover greatest on his/her personal terms and in his/her personal talents.nGlobalization systematically standardizes education across the world, denying individuals selections in how to pursue one's education and learning. Another massive problem with the standardized globalized education program, is what is regarded "proper" schooling is remaining squarely in the values and perceptions of the given schooling directors.nnThe threat is that quite a few clever and capable people will be left driving, because here is yet another illustration of globalization's most heinous crime: Not respecting the fact that we are certainly various.nMyth six: Globalization lowers racism and sexism. Raises tolerance for other cultures: I wonder if a Palestinian, Iraqi, Iranian, or Afghani would share a similar impression since they as a culture refused to embrace the globalist teach wreck. Globalization does just the reverse.nnGlobalization is a hegemony technique, as this sort of, person variations are shunned in the name of unification. The world is turning into much more and much more homogenized. Languages are dying. Our schools are generating more and much more of the identical (rational still left-brain kind regurgitators who spit out details).nI doubt several of our wonderful innovators of the past would endure in today's planet. Albert Einstein would by no means be listened to today, since he's just a patent clerk with no a Master's degree. Companies are having above the world at an alarming price. One of the primary organization models of the corporation is to deliver familiarity to the buyer.nnPeople are relaxed realizing that whether or not they shop at a McDonald's in Canada, the US, Germany, China, etc. it will be mainly the same. The issue with that model is range is killed, and with it innovation and individual lifestyle. Our Hollywood motion pictures could spew propaganda how unification is a wonderful thing, I on the other hand, don't see any inherit worth in making an attempt to make everyone artificially equal.nI don�t want to be the exact same as everyone else. I don�t wish it, I like who I am, though I am saddened that culture refuses to take it and as consequence subjects me to unjustified hardship.nnMyth 7: Globalization is essential to guard against tyrants who are oppressing their very own individuals: China has certainly been beefed up since the inception of present day day globalization. The apartheid in South Africa only finished the day the globalists determined to shift out and end supporting the oppressive regime.nHow can globalization be utilized to safeguard tyranny when it's operate by tyrants? The tyrants you see marketed in the media are middlemen. The king males who run the program make a decision which middlemen will increase and fall based on their possess self-interests. Globalization is amoral.nnWhen it's beneficial for the system to help a tyrant killing harmless men and women, that's the agenda. When it isn't helpful to assist a tyrant killing innocent folks, the tyrant will be disposed.nMyth 8: In the finish, we have to accept globalization anyway. Nation states are evil. We're all human and ought to live beneath a one country: Why? Critically, I'm inquiring why numerous people truly feel that 100, 200, 500, one thousand a long time from now humanity must be unified under a one banner?nnBecause some exciting science fiction motion pictures portray that in a good gentle? My hope is that in the future human beings can function together, while at the identical time have valid selections the place/how to dwell, operate, and play. If it really is all the very same, and this sameness unwell-suits a particular person, what is that person to do?nOnly through choices can humanity have freedom, and only by way of freedom can we hope to progress as a species. Globalization, forcing everyone down the route of sameness, is therefore evil.nnSo How Does Globalization Punish Personal Success?Now that we've dispelled some of the myths promoted by foremost academics regarding globalization, I will go back again to the principal thesis: That globalization does punish personal success.nWe see cases of this occurring on a day-to-day basis. The globalists phone this capitalism. I have to concern how any method that punishes profitable men and women by creating them "too high-priced to be employed," and then delivery off their positions to an individual who does not even know how to use a laptop, can be referred to as capitalism.nnWhat transpires beneath globalization is productive, industrial, and educated nations around the world sooner or later have a forex that is "way too expensive." The final results are that they drop their jobs for basically being effective and propping up their nation's economic system. Their work and subsequent economies are then moved to a nation where its currency is cheaper.nThe currency is less expensive because the people are considerably less productive, considerably less educated, and much less industrious. Ultimately, since these people now have positions, they have incentives to become far more productive, far better educated, and industrious. The end result is much like the country ahead of them, they will value on their own out of the industry and their employment might be moved to one more nation.nnIronically enough, it may be the exact same nation they beforehand took the positions from because that nation has now turn into inadequate thanks to possessing no positions and it is forex now subsequently devalued. Do you see the place I'm likely with this? Financial globalization is creating us to spin our wheels.nnIt's a constant quest to often find out the most affordable wages. In other phrases, failure is becoming sought out, not good results. If this program of punishing financial nation achievement and rewarding failure continues, the stop result is we'll have full-blown communism. Exactly where everyone is similarly very poor but a handful of prime 1% that are terribly wealthy.nnWithout a doubt, it really is evident to any enlightened personal that is exactly exactly where we're heading . . .nSee all three images Your Perspective of Globalization Punishing Individual Success Seems To Appear From A Worker Standpoint, But What About Entrepreneurs? Any individual who has the perception that globalization is of great gain to business people has naturally never experimented with to commence a company.nSuch a particular person is quite frequently a smug person, an overeducated and a glorified personnel in an analyst place of a major establishment. There are but a couple of winners with globalization, and I can guarantee you, it really is not the person entrepreneur. The biggest winners are company CEO's.nnThe greater part of whom is absolutely nothing much more than glorified personnel, considerably like the pundit analyst I described. The majority of CEO's haven't established the businesses they operate. They have contributed nothing entrepreneurial to modern society. All they have done is deal with an current organization, which they have inherited below a profitable wage, and have employed a few individuals that have upgraded the existing technology more than a period of time of time.nVery small of substantial innovation has appear from CEO's over the past 10 years. Like all basic tendencies, there are noteworthy exceptions, but they're exceptions relatively than rule.nnOn the other hand, anybody trying to start a enterprise from ground zero is getting into an exceptionally hostile atmosphere to commence a organization. This is a correct entrepreneur, and the simple fact of the matter is there is a various set of policies that he/she need to abide by than the companies.nThe rules favour one celebration more than another, want to take a guess who benefits?nConclusionGlobalization is undemocratic, opposes person liberty, and have to be fought. Say NO to globalization, a method of financial despotism.nn-Donovan D. WesthavernSee all 3 photos If you loved this article and you would like to receive more info pertaining to [http://www.tchange.com.au/nikefree.html Nike Free] kindly visit our internet site.

Benutzer:JoyceLeachman

2013-12-20T01:03:42Z

JoyceLeachman: Die Seite wurde neu angelegt: „My name is Joyce and I am [http://wetlandcare.com.au/nikefree.html studying] Educational Policy [http://wetlandcare.Com.au/nikefree.html Studies] and Gender an…“

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