“Welcome to our Country Club!”
The Aleph Blog » Value Investing
by David Merkel
2y ago
Image Credit: born1945 || When I was a boy, I spent many days caddying at the local country club. (This is one of my occasional experiments. Bear with me if you will…) ========================== Wagner: I don’t get the thrill. Hawker: What’s not to like? W: This is nothing like the investment memorandum said it would be. H: It’s a work in progress. Don’t look at what it is now, think of what it will be like when everyone clamors to join us. W: This is just a field. H: So? W: When I bought a small share in the ownership of this club, the memorandum had pictures of the golf course, lodge, tennis ..read more
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Decentralized Ponzi
The Aleph Blog » Value Investing
by David Merkel
3y ago
Photo Credits: Jared Enos, Stephan Mosel & Pine Tools || Ponzi would have appreciated the cleverness of wallstreetbets The operation of the “bull pool” at wallstreetbets resembles a Ponzi scheme. There are five things that make it different: It is decentralized. Because it is decentralized, there is no single party that controls it and rakes off some of the money for himself, at least not directly. The assets can be freely sold in a somewhat liquid, but chaotic market. Most Ponzi schemes have time barriers for redemption. They caught a situation where shorting was so r ..read more
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GameStop: The Voting Machine Versus The Weighing Machine
The Aleph Blog » Value Investing
by David Merkel
3y ago
Photo Credits: Seattle Municipal Archives, Luis Anzo, piepjemiffy & Pine Tools || Truth is stranger than fiction, particularly with the behavior of crowds in markets Before I start writing this evening, I want to say that what I write here is correct in its major findings, but it is quite possible that I got some details wrong. This is complex, and there are a lot of issues involved. I’ve had four friends ask me about GameStop [GME] over the last few days. Thus I am writing an explanation as to why things are so nuts here. As a prelude, I want to tell everyone that I have no positions at p ..read more
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Decentralized Ponzi
The Aleph Blog » Value Investing
by David Merkel
3y ago
Photo Credits: Jared Enos, Stephan Mosel & Pine Tools || Ponzi would have appreciated the cleverness of wallstreetbets The operation of the “bull pool” at wallstreetbets resembles a Ponzi scheme. There are five things that make it different: It is decentralized. Because it is decentralized, there is no single party that controls it and rakes off some of the money for himself, at least not directly. The assets can be freely sold in a somewhat liquid, but chaotic market. Most Ponzi schemes have time barriers for redemption. They caught a situation where shorting was so r ..read more
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The Challenge for Warren Buffett
The Aleph Blog » Value Investing
by David Merkel
3y ago
Photo Credit: Javier || THis is a much younger version of Buffett. Has the present Buffett learned to adapt? Barron’s ran an article called Why Berkshire Hathaway Stock Has Rarely Been This Cheap. It was written by Andrew Bary, a man that I respect. I wrote a comment at the article, and it reads as follows: So long as the government & its commercial paper financing arm (The Fed) is willing to create grants and credit out of thin air to rescue businesses, Buffett will not get opportunities to buy stock at the discounts that he has liked to see in the past. The cash pile will grow, & BR ..read more
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GameStop: The Voting Machine Versus The Weighing Machine
The Aleph Blog » Value Investing
by David Merkel
3y ago
Photo Credits: Seattle Municipal Archives, Luis Anzo, piepjemiffy & Pine Tools || Truth is stranger than fiction, particularly with the behavior of crowds in markets Before I start writing this evening, I want to say that what I write here is correct in its major findings, but it is quite possible that I got some details wrong. This is complex, and there are a lot of issues involved. I’ve had four friends ask me about GameStop [GME] over the last few days. Thus I am writing an explanation as to why things are so nuts here. As a prelude, I want to tell everyone that I have no positions at p ..read more
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The Rules, Part LXVI
The Aleph Blog » Value Investing
by David Merkel
3y ago
Photo Credit: Heather R || Round and round it goes, where it stops, nobody knows Don’t bet the firm. Attributed to the best boss I ever had, Mike Cioffi. I learned so much from him. I was surprised to see how many times I mentioned at this blog how I considered and dropped the idea of writing floating rate Guaranteed Investment Contracts [GICs]. A lot of effort went into that decision, and unlike most decisions like that, the failures of competitors with a different view happened quite rapidly. Also, this blog highlighted those that wrote terminable floating rate GICs later, and insurers that ..read more
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The Challenge for Warren Buffett
The Aleph Blog » Value Investing
by David Merkel
3y ago
Photo Credit: Javier || THis is a much younger version of Buffett. Has the present Buffett learned to adapt? Barron’s ran an article called Why Berkshire Hathaway Stock Has Rarely Been This Cheap. It was written by Andrew Bary, a man that I respect. I wrote a comment at the article, and it reads as follows: So long as the government & its commercial paper financing arm (The Fed) is willing to create grants and credit out of thin air to rescue businesses, Buffett will not get opportunities to buy stock at the discounts that he has liked to see in the past. The cash pile will grow, & BR ..read more
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Estimating Future Stock Returns, December 2019 Update
The Aleph Blog » Value Investing
by David Merkel
3y ago
Graphic Credit: Aleph Blog, natch… same for the rest of the graphs here. Data is from the Federal Reserve and Jeremy Siegel Here’s my once a quarter update. If you owned the S&P 500 at the end of 2019, it was priced to give you a return of 2.26%/year over the next 10 years. That said, the market has changed a lot in the last 2.6 months –as of the close of business on March 18th the market was priced to give you a return of 7.28%/year over the next 10 years. Finally, you have a chance to double your money over the next ten years, while a 10-year Treasury would give you 1.5%/year over the sa ..read more
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The Rules, Part LXVI
The Aleph Blog » Value Investing
by David Merkel
3y ago
Photo Credit: Heather R || Round and round it goes, where it stops, nobody knows Don’t bet the firm. Attributed to the best boss I ever had, Mike Cioffi. I learned so much from him. I was surprised to see how many times I mentioned at this blog how I considered and dropped the idea of writing floating rate Guaranteed Investment Contracts [GICs]. A lot of effort went into that decision, and unlike most decisions like that, the failures of competitors with a different view happened quite rapidly. Also, this blog highlighted those that wrote terminable floating rate GICs later, and insurers that ..read more
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