Three weeks ago I didn't have the book " DHANDO INVESTOR" by Mohinish Pabrai, now I do. Its a good book, deals with simple concpets and common sense arbitrage and buying businesses with durable moats. Heads I win, tails I don't lose much, is the center theme around all chapters in the book. Fine, that is great ,sounds more like a gamblers motto than an investing insight and wisdom. Great concepts no doubt, it should work in the long run if you have nothing better to do or invest or know about around you. Than I went to www.nasdaq.com and drilled down Mohnish Pabrai's holdings ( you find out about any public funds what they own at the site and portfolios etc in minutes). He is invested with 300 million dollars in 15 stocks and a bunch of Berkshire Hathway class A and B shares where he is parking idle cash. BRK hasn't done a thing since 2007 and the chart is sideways. Mohnish could have bought T-Bills at5% and done better if he wasn't in such an awe, about Warren Buffet through out this year. Take a look at the charts of RAIL, PNCL and some of his holdings some other obscure stocks that he owns. They have low P/Es and high ROE, I agree. But the stocks are in the dumpsters! Technical charts suck. There is no promise if that business will make it big. Why would you invest 2-3 years of your dollars in some doubtful business just because you bought it 50- 75 cents on the dollar when you can reap twice as much on some great running bullish stocks that pay cash divvys ? No wonder these guys call themselves geniuses when the eek out a measely 20% returns. Heck , you can buy SPY and IWM and some bullish stocks like DO, HAL, SLB, GOOG, AAPL, AMZN, NVDA and some mutual funds and perhaps come out way way ahead. What is this buying up some junked up companies when there is so much meat on the others that you can trade your way in and out, write covered calls, and enhance your returns. The way I look at it, I make 5-10% returns through income generation strategies consistently on a small 150 K account, my returns are astronomical compared to Pabrai Funds or BRKA this year so far ? Would you call me a genius perhaps?
There is such a thing as deep value investing, and it does works. As far as buying, you have to be willing to buy the things NOBODY else wants, and time it so its just before they change their minds, that's all.
Don´t know whether we should call you a genius, but maybe this guy is one => Paul Rotter, derivatives trader, Zug, Switzerland => http://www.rotterinvest.com/ Quote from his website : "For us, asset management means more than just tracking indices. We expect more - more of our dealers, our analysts and our back office staff. And more of our clients. Our core competence is in trading financial derivatives, especially options and futures. On peak days, we trade contracts on the bond markets with a total value of up to â¬50 billion, more than many major banks. We have achieved returns of 20-300% on our client portfolios over the last few years, depending on the risk strategy selected. Such returns can only be attained if you perfectly understand yourself and your capabilities, your limits and the markets in which you operate."
I would argue that Buffett made the trade of his lifetime when he pledged his shares to charity. I interpret his announcement, not the event (actual gift) as a distraction to Slim trouncing he and Gates on the wealth velocity scale. In addition, this is a diversion from the looming succession issue which will also be the excuse for why this stock stagnates leading to its divestment stage. Microsoft had the moat of all "moats" ...OS rights to EVERY ibm machine...where was Buffett? We are still trying to produce a viable alternative to MSFT! Gates was one hell of a businessman, but hiring Russell to index his money...HAHAHAHAHA! PS...every trade has assumed "value," isn't that why we make trades in the first place? Step up and buy some CMO strips wise guy, those are deep value right now!
Just to clarify the above is 5-10% return every month consistent over a 13 month period. For example year 2007 I invested $1 and my brokerage account has increased by 0.52 cents so far.
A $100,000 investment in Pabrai Funds at inception (on July 1, 1999) was worth $659,700 on Dec. 31, 2006. That's seven and a half years. The annualized return is 28.6% - that's net of his 25% performance fees. So the gross return is way up in the 35% area annualized, which is even more impressive considering these numbers were achieved with a long only strategy in one of the worst bear markets in history. Do what you're doing for 5 years and go through a complete market cycle, then you will have a much better picture of the viability of your strategy. One year of a bull market is not nearly enough.
That may be true. This value investing would be a great strategy in bear market when you are trying to swim upstream going long and buying companies run down and depressed for some reasons. But why do that? In bear markets you should be shorting stocks and putting up bear credit spreads and moving with the flow of things. Why try to buy something and call yourself a genius ? I am sure either which way the market goes money can be made. If it doesn't goes anywhere I would implement neutral strategies, selling calendar spreads and butterflies and still rake in 5-10% a month. The returns are consistent because I am staying very conservative and right now the market is I am not initiating any new positions for the month of September. The returns may fall, but come October I will perhaps make up all those. Today I got assigned 500 shares of HD stock for a short put I wrote last month. HD could be "value investing stock" P/E 13.00 ROE 21.5 % and low book to value, stock depressed due to real estate crisis for the time being. I plan to keep it 2 years and see what happens. (That wasn't funny at all. I bought back balance of the short positions and rolled down to lower strike with next month just to breakeven on the trade)