Chet Holmes was said to be "America's greatest sales and marketing executive" by Charlie Munger. Have a read on the interview with Chet Holmes.
To read the article.
To watch the interview.
Happy learning,
David
Knowledge grows through sharing! To be the best, learn from the best! May all your dreams come true! Collections of Value Investing articles, interviews and videos, especially on Warren Buffett and Charlie Munger and articles from various disciplines to build "Latticework of Mental Models"
Saturday, September 02, 2006
Thursday, August 31, 2006
Warren Buffett married his long-time companion, Astrid Menks
Mr. Buffett's daughter, Susan, hosted the wedding at her Omaha home. She said her father and Ms. Menks, 70, were married by Douglas County District Judge Patricia Lamberty in a 15-minute ceremony on Mr. Buffett's 76th birthday.
To read the complete article.
Congratulation, Mr. Buffett!
David
To read the complete article.
Congratulation, Mr. Buffett!
David
Happy Birthday, Mr. Buffett!
On behalf of my family members, I would like to wish Mr. Buffett Happy 76th Birthday. Thank you very much for your wonderful teaching, your generous gift to the world, and your excellent capital allocation at Berkshire Hathaway.
May you have a long and prosperous life.
Warmest regards,
Dah Hui Lau (David)
May you have a long and prosperous life.
Warmest regards,
Dah Hui Lau (David)
Wednesday, August 23, 2006
Buffett's Car on Auction!
Warren Buffett has decided upon a starting bid of $25,000 for the four-door, 2001 Signature Series Lincoln Town Car, which has fewer than 14,000 miles on the odometer and boasts a light-parchment gold exterior, a light beige interior, an etched brass plaque bearing the investor's signature and a personalized "Thrifty" number plate.
"We auctioned off a wallet some years back and got $215,000 for it, so we're hoping since this weighs about 4,000 times what the wallet did, you can figure out what we're hoping to get," Buffett.
The auction begins at 6 p.m. on Tuesday, Sept. 12 and ends at the same time on Friday, Sept. 22.
Source: Forbes.
Happy bidding! :)
Sunday, August 13, 2006
No broadband!
Dear fellow readers,
Sorry about not hearing from me for quite a while. I have just moved house and everything is in a mess at the moment. Plus, I have no broadband in my new house yet; it will take another 1 week or so to be installed. So, you may be hearing from me infrequently. Having said that, I will try to update my blog as often as I could.
If you have anything interesting to share, please email me at: dahhuilaudavid@gmail.com
Happy investing,
Dah Hui Lau (David)
Sorry about not hearing from me for quite a while. I have just moved house and everything is in a mess at the moment. Plus, I have no broadband in my new house yet; it will take another 1 week or so to be installed. So, you may be hearing from me infrequently. Having said that, I will try to update my blog as often as I could.
If you have anything interesting to share, please email me at: dahhuilaudavid@gmail.com
Happy investing,
Dah Hui Lau (David)
Wednesday, July 26, 2006
Amazon, A Scary Drop!
Shares of Amazon plunged over 20% today as it announced a 58% profit decline. This is equivalent to a loss of about $2.8B in market value in less than 24 hours. Amazon share is currently trading at 3 years low.
So, does this come as a surprise?
No. Not for me at least.
Why?
From a quick glance from Yahoo, Amazon is overvalued. Most value investors would avoid Amazon, except for Bill Miller.
Market Cap (intraday): 11.08B
Enterprise Value (26-Jul-06)3: 13.96B
Trailing P/E (ttm, intraday): 34.07
Forward P/E (fye 31-Dec-07) 1: 31.56
PEG Ratio (5 yr expected): 3.02
Price/Book (mrq): 43.23
Enterprise Value/EBITDA (ttm)3: 23.777
Is it a good buy now after this "myocardial infarction-inducing" drop?
No, not in my opinion. It is still richly valued. The share has to slide further to entice me.
Is Amazon a Good Company?
Yes, without doubt, Amazon is a great company. I buy all my books from Amazon. Not only does Amazon sell cheaper books, but it offers free delivery too! Amazon has never disappointed me since I started using its service more than 5 years ago. Even Warren Buffett buys books from Amazon!
ROA (ttm): 10.39%
ROE (ttm): 409.88%
Conclusion:
Warren Buffett said, “It is more important to say "no" to an opportunity, than to say "yes"."
Happy investing,
Dah Hui Lau (David)
So, does this come as a surprise?
No. Not for me at least.
Why?
From a quick glance from Yahoo, Amazon is overvalued. Most value investors would avoid Amazon, except for Bill Miller.
Market Cap (intraday): 11.08B
Enterprise Value (26-Jul-06)3: 13.96B
Trailing P/E (ttm, intraday): 34.07
Forward P/E (fye 31-Dec-07) 1: 31.56
PEG Ratio (5 yr expected): 3.02
Price/Book (mrq): 43.23
Enterprise Value/EBITDA (ttm)3: 23.777
Is it a good buy now after this "myocardial infarction-inducing" drop?
No, not in my opinion. It is still richly valued. The share has to slide further to entice me.
Is Amazon a Good Company?
Yes, without doubt, Amazon is a great company. I buy all my books from Amazon. Not only does Amazon sell cheaper books, but it offers free delivery too! Amazon has never disappointed me since I started using its service more than 5 years ago. Even Warren Buffett buys books from Amazon!
ROA (ttm): 10.39%
ROE (ttm): 409.88%
Conclusion:
Warren Buffett said, “It is more important to say "no" to an opportunity, than to say "yes"."
Happy investing,
Dah Hui Lau (David)
An Afternoon with Charlie Munger
Opportunity Cost
"There is this company in an emerging market that was presented to Warren. His response was, 'I don't feel more comfortable buying that than I do of adding to Wells Fargo.' He was using that as his opportunity cost. No one can tell me why I shouldn't buy more Wells Fargo. Warren is scanning the world trying to get his opportunity cost as high as he can so that his individual decisions are better."
When you are evaluating any investment, you must compare it to every other available investment, including ones you may already own. Instead, many investors collect stocks like baseball cards and the resulting portfolio bloat will likely not increase returns or reduce risk. So when you hear about the new hot stock in the next can't-miss sector, ask yourself two questions: (1) Do I understand the investment as well or better than one I already own? (2) Is the risk and reward profile of the investment superior to all other alternatives? If the answer is "no" to either questions, it is probably best to stay away.
Rationality
"Rationality is not just something you do so that you can make more money, it is a binding principle. Rationality is a really good idea. You must avoid the nonsense that is conventional in one's own time. It requires developing systems of thought that improve your batting average over time."
Munger is an evangelist for the virtues of rationality and his outstanding investment record is testimony to a lifetime of disciplined thought. To succeed as an investor, one has to make good decisions that are anchored in reality and free from emotional and cognitive distractions. At GrowthInvestor, we are searching for companies with significant market potential, rising demand, an economic moat, and growth-oriented management for purchase in the portfolio. This is not merely a checklist, but a research process focused on helping us make the most-rational decisions. If we make enough rational decisions, we will eventually have the returns to show for it.
Envy
"Harvard and Yale concentrated with venture capitalists that got the best calls and brainpower. Very few firms made most of the money, and they made it in just a few periods. Everyone else returned between mediocre and lousy. When returns happened, envy rippled through institutional money management. The amount invested in venture capital went up 10 times post-1999. That later money was lost very quickly. It will happen again. I don't know anyone who successfully resists this stuff. It becomes a new orthodoxy."
Munger and Buffett often say that envy is worst of the seven deadly sins because it is the only one that isn't fun to commit. When a group of people make money, others are compelled by an irresistible force to get a piece of the action, even though prices have risen so far above fair value as to guarantee disappointing returns and there are much better alternatives available. I am completely puzzled by this behavior, but I am also glad it exists.
Learning
"We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side. If you can't state arguments against what you believe better than your detractors, you don't know enough."
Carl Jacobi, a noted 19th-century mathematician, counseled his students to "invert, always invert" when they encountered a particularly vexing problem. I think this is a great way to approach investing. After you compile all the reasons you should buy a stock, invert the question and state the reasons why you should not buy the stock. By doing this, you ensure that your research process is more complete.
Mistakes
"Chris Davis ]of the Davis funds[ has a temple of shame. He celebrates the things they did that lost them a lot of money. What is also needed is a temple of shame squared for things you didn't do that would have made you rich. Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Reality doesn't remind you. Why not celebrate stupidities in both categories?"
I have kept track of my investing mistakes for some time now, and it is a painful, but illuminating, experience. Without doubt, I am a better investor for it. I will be keeping track of our mistakes at GrowthInvestor, and I suggest you do the same with your portfolio. With a post-mortem catalog of your mistakes, you will be able to identify patterns in your decision-making process that produce unforced errors.
Risk
"I know a man named John Arriaga. After he graduated from Stanford, he started to develop properties around Stanford. There was no better time to do it then when he did. Rents have gone up and up. Normal developers would borrow and borrow. What John did was gradually pay off his debt, so when the crash came and 3 million of his 15 million square feet of buildings went vacant, he didn't bat an eyebrow. The man deliberately took risk out of his life, and he was glad not to have leverage. There is a lot to be said that when the world is going crazy, to put yourself in a position where you take risk off the table. We might all consider imitating John."
This article is from Yahoo.
Happy learning,
Dah Hui Lau (David)
"There is this company in an emerging market that was presented to Warren. His response was, 'I don't feel more comfortable buying that than I do of adding to Wells Fargo.' He was using that as his opportunity cost. No one can tell me why I shouldn't buy more Wells Fargo. Warren is scanning the world trying to get his opportunity cost as high as he can so that his individual decisions are better."
When you are evaluating any investment, you must compare it to every other available investment, including ones you may already own. Instead, many investors collect stocks like baseball cards and the resulting portfolio bloat will likely not increase returns or reduce risk. So when you hear about the new hot stock in the next can't-miss sector, ask yourself two questions: (1) Do I understand the investment as well or better than one I already own? (2) Is the risk and reward profile of the investment superior to all other alternatives? If the answer is "no" to either questions, it is probably best to stay away.
Rationality
"Rationality is not just something you do so that you can make more money, it is a binding principle. Rationality is a really good idea. You must avoid the nonsense that is conventional in one's own time. It requires developing systems of thought that improve your batting average over time."
Munger is an evangelist for the virtues of rationality and his outstanding investment record is testimony to a lifetime of disciplined thought. To succeed as an investor, one has to make good decisions that are anchored in reality and free from emotional and cognitive distractions. At GrowthInvestor, we are searching for companies with significant market potential, rising demand, an economic moat, and growth-oriented management for purchase in the portfolio. This is not merely a checklist, but a research process focused on helping us make the most-rational decisions. If we make enough rational decisions, we will eventually have the returns to show for it.
Envy
"Harvard and Yale concentrated with venture capitalists that got the best calls and brainpower. Very few firms made most of the money, and they made it in just a few periods. Everyone else returned between mediocre and lousy. When returns happened, envy rippled through institutional money management. The amount invested in venture capital went up 10 times post-1999. That later money was lost very quickly. It will happen again. I don't know anyone who successfully resists this stuff. It becomes a new orthodoxy."
Munger and Buffett often say that envy is worst of the seven deadly sins because it is the only one that isn't fun to commit. When a group of people make money, others are compelled by an irresistible force to get a piece of the action, even though prices have risen so far above fair value as to guarantee disappointing returns and there are much better alternatives available. I am completely puzzled by this behavior, but I am also glad it exists.
Learning
"We all are learning, modifying, or destroying ideas all the time. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side. If you can't state arguments against what you believe better than your detractors, you don't know enough."
Carl Jacobi, a noted 19th-century mathematician, counseled his students to "invert, always invert" when they encountered a particularly vexing problem. I think this is a great way to approach investing. After you compile all the reasons you should buy a stock, invert the question and state the reasons why you should not buy the stock. By doing this, you ensure that your research process is more complete.
Mistakes
"Chris Davis ]of the Davis funds[ has a temple of shame. He celebrates the things they did that lost them a lot of money. What is also needed is a temple of shame squared for things you didn't do that would have made you rich. Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Reality doesn't remind you. Why not celebrate stupidities in both categories?"
I have kept track of my investing mistakes for some time now, and it is a painful, but illuminating, experience. Without doubt, I am a better investor for it. I will be keeping track of our mistakes at GrowthInvestor, and I suggest you do the same with your portfolio. With a post-mortem catalog of your mistakes, you will be able to identify patterns in your decision-making process that produce unforced errors.
Risk
"I know a man named John Arriaga. After he graduated from Stanford, he started to develop properties around Stanford. There was no better time to do it then when he did. Rents have gone up and up. Normal developers would borrow and borrow. What John did was gradually pay off his debt, so when the crash came and 3 million of his 15 million square feet of buildings went vacant, he didn't bat an eyebrow. The man deliberately took risk out of his life, and he was glad not to have leverage. There is a lot to be said that when the world is going crazy, to put yourself in a position where you take risk off the table. We might all consider imitating John."
This article is from Yahoo.
Happy learning,
Dah Hui Lau (David)
Friday, July 21, 2006
Sears shareholder exiting; Third Avenue fund sells 250,000 shares
Since engineering the combination of Sears and Kmart last year, billionaire Edward Lampert has tried to convince investors that he intends to run the new company as a retailer.
Wall Street, for the most part, has turned a deaf ear, betting that Lampert will turn Sears Holdings Corp.'s massive real estate holdings into cash.
Perhaps he will, eventually. But one prominent real estate investor isn't waiting around to find out.
Michael H. Winer, portfolio manager of Third Avenue Real Estate Value Fund, cut his fund's Sears stake roughly by half in the quarter ended April 30 and expects to liquidate the rest of the holdings in January, according to Third Avenue's second-quarter letter to shareholders mailed in June. He sold 250,000 shares worth roughly $35 million.
The reason: a combination of an "attractive price"--about $140 a share; a fourteenfold increase from what the fund paid for them--and "our view that the company should be valued as a going concern, as opposed to the theoretical liquidation value," Winer wrote.
To read the complete article.
Thank you GuruFocus for this link.
Happy thinking,
Dah Hui Lau (David)
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