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  • softdude2000 2017-06-16 05:51
    batbeer2: Hi Softdude,

    Yes and no. This is a pretty simple business with a lot of revenue. They are not generating enough cash now but that IMHO is a choice. T
    SHOS management is investing(in IT infra and rebranding) as if there is no doubt as a going concern for this business. Market is treating as if they are going to close doors.
  • softdude2000 2017-06-15 18:34
    Other than balance sheet, do you see any safety in cash flow statement/income of SHOS.
  • softdude2000 2017-06-03 17:18
    batbeer2: Hi Softdude,

    Bricks and mortar are expensive but so is IT infrastructure.

    I don't think the IT expenses are on the downstream side (webshop). I thi
    Thanks for the reply.

    Is this IT system worth anything if they close down their business?
    I am trying to understand if there is any resale value from IT system in addition to NCAV discount we see.
  • softdude2000 2017-06-03 05:13
    I was reading latest 10-Q for SHOS. what caught my attention is that they spent 10M, 15M in 2015 and 2016 for IT related stuff. They are planning another $20M in 2017 and ~0 in 2018. 1. I dont get this. A company with 70M marketcap spending $45M on IT expenses. Did I understand this right? Did they forget we are in cloud computing era? Is there any referral fee for AWS :) I can charge them. 2. Does this mean huge upside waiting in 2018 that frees up $15M average annual expense? 3 ...
  • batbeer2 2016-06-23 10:24
    Hi brinsley, thanks for the heads-up on Kone. Hadn't really looked at that one for a while and the P/E is not as high as it used to be last time I checked. I don't mnd the currency they report in. If Schindler moves its head office to Luxemburg then they start reporting in euros but the company remains otherwise unchanged. What matters is their costs. I would have to check out the Swiss headcount as compared to the total to determine if I'm worried about currency fluctuations. best, ...

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All batbeer2's Activities

  • batbeer2 commented on Robert Abbott's article 23 hr ago
    Modern Value Investing: CAPE and Long-Term Investing
    There is the price-earnings ratio and there is the cyclically adjusted price-earnings, or CAPE, ratio. In wrapping up chapter five of “Modern Value...
    View all 10 comments
    batbeer2 01-22 10:59
    • >> Hopefully an average investor would at least be able to discern if a business is profitable and unlikely to land in bankruptcy court.

      Ah! I think we are talking about different things. Any analyst (amateur or otherwise) would be able to discern that. But there is more to investing than analysis. Take Tesla (or for that matter Amazon). For the sake of this argument I'm going to say the average market participant owns at least one stock like that.... but not based on simple earnings analysis. There is a huge behavioural component to that and that is what gets that average market participant done in.

      But to bring this discussion a bit closer to the original topic, I would bet 25% of my portfolio that the model presented in this article (if followed to the letter) will underperform the S&P500 index between now and 2020. If you don't see how, then that is not a problem per se but  my advice would be to stay away from it.
  • batbeer2 commented on Robert Abbott's article 01-22 08:58
    Modern Value Investing: CAPE and Long-Term Investing
    There is the price-earnings ratio and there is the cyclically adjusted price-earnings, or CAPE, ratio. In wrapping up chapter five of “Modern Value...
    View all 6 comments
    batbeer2 01-22 08:58
    • Hi Stephen,

      Yes, you could do worse but that's like saying there are quicker ways to lose money. Take a good look at that second chart. If you had been an investor since say.... 1970 studying this you would conclude that selling at levels over 25 might be a good idea (and perhaps buying below 20). Within the framework of this article that would be a rational conclusion to draw back then because it would help you avoid the major crashes and participate in the great bull runs.

      You would be buying for 20 years until the early 90s (good) and by then you'd be out of the game.

      You'd be back again in 2008 (good) and gone by 2011.

      In all, you'd be out of the market half the time since 1970. I'm not going to do the math on your real rates of return since 1970 but they wouldn't be good. 

      Now you could rotate in and out of sectors using this model but believe me, that would worsen your outcome. Point is, there are simpler and more effective frameworks and so this one is wrong. Just buy a cheap S&P index fund. That's easier to do and with much better returns. 

       
  • batbeer2 commented on Robert Abbott's article 01-21 16:13
    Modern Value Investing: CAPE and Long-Term Investing
    There is the price-earnings ratio and there is the cyclically adjusted price-earnings, or CAPE, ratio. In wrapping up chapter five of “Modern Value...
    View all 3 comments
    batbeer2 01-21 16:13
    • Hi Stephen,

      Not to be snarky but I believe the average investor is not going to accumulate wealth at all by participating in the stock market.This is a zero-sum game. Importantly, the guy at the wrong side of the table never believes its them. FWIW I have some clear ideas how to take some money from someone using CAPE as a guideline. Do you have an idea how you'd lose money using this model?

      If you don't then I guess we've can agree what our respective roles are at this particular poker table.

       

      Another way to put it is that to me it is like reading a statistical analysis of how the color affects used car value.  https://www.kbb.com/car-advice/articles/best-color-to-buy/

      Statistically you could do a lot of interesting work on that and develop a convincing framework for how to get rich buying and selling cars. But if you are going to let that "knowledge" affect your buy and/or sell decisions when you're setting up a used car business, you are very likely going to get poorer and not richer. The guy who specialises in that particular niche is going to take your money and you aren't going to know it until you find yourself broke.

      Just some thoughts.

       
  • batbeer2 commented on Robert Abbott's article 01-21 14:47
    Modern Value Investing: CAPE and Long-Term Investing
    There is the price-earnings ratio and there is the cyclically adjusted price-earnings, or CAPE, ratio. In wrapping up chapter five of “Modern Value...
    View all 1 comment
    batbeer2 01-21 14:47
    • Thanks for the article; quite an effort.

      It makes me wonder, would Bezos/Buffett/Carlos Slim/the Waltons/the richest guy in your zip code have accumulated more wealth or less wealth if they had spent any time using the CAPE ratio as a guideline to allocate capital? 

       

       

       
  • batbeer2 commented on Stepan Lavrouk's article 01-21 13:56
    How to Value an Oil and Gas Company: Part 1
    The oil and gas sector is notoriously tricky to invest in given the technical nature of the field, the sometimes ambiguous terminology, the...
    View all 4 comments
    batbeer2 01-21 13:56
    • Agree with Tom, keep up the good work Stepan!
  • batbeer2 commented on Bram de Haas's article 01-18 08:38
    Murray Stahl's 4 Stock Picks
    Recently Murray Stahl (Trades, Portfolio) talked to a group of Horizon Kinetics clients, and the recording was posted on soundcloud. I’m a big fan...
    View all 2 comments
    batbeer2 01-18 08:38
    • On the off chance anyone is still listening....

      One can now buy the holdings discussed in this article at a discount to their current market price. All yu have to do is acquire shares of RENN fund (trading at roughly 30% discount to NAV).

      You get the services of Murray Stahl (Trades, Portfolio) and a few Bitcoins thrown in for free. The fact the you get Stahl's services for free is non-trivial. He has a decent long-term track record for compounding value and treating shareholders fairly. 

      https://kineticsfunds.com/funds/small-cap-opportunities-fund/
  • batbeer2 commented on John Engle's article 01-17 10:06
    Should Value Investors Fear the 'Algo' Boogeyman?
    Fears have been mounting in recent years over the precipitous rise of computerized, or algorithmic, trading systems. The “algos” have become...
    View all 1 comment
    batbeer2 01-17 10:06
    • >> .... it deserves more than mindless antipathy from value investors.

      ROFL... if algos are going to create more volatility I'm all for it. No antipathy at all.

      Perhaps I'm all confused but in my framework markets don't go up or down. Prices go up and down (BIG difference) and you simply have different buyers (and sellers) at different price points. At the bottom you have Charlie Munger (Trades, Portfolio) buying and at the top it is Bill Miller. I know how I set my price point and I know better than most how algos work.... no competition.
  • batbeer2 commented on Thomas Macpherson's article 01-17 08:39
    Fundamental Business Analysis
    “Getting inside the guts of a business and understanding how it works really isn’t that interesting or sexy. I remember sitting on an assembly...
    View all 3 comments
    batbeer2 01-17 08:39
    • Thanks for sharing your thoughts.

      So how much fundamental research is enough? That is a question I have wrestled with. So far the best answer I have come up with is "if you can't explain to an 8 year old which company is the best competitor in a given industry and why" then you haven't done enough.

      Simple enough huh... now how many people will happily own Exxon but could not explain if or why it is better at what it does than BP, Shell or Aramco. Is Michelin better than Goodyear? Coca-Cola better than Pepsi Kraft better than Unilever etc. etc.

      I don't claim to have coherent answers to all of these questions, that is not the point. The point is that if I don't know enough to figure out if Unilever is a better company than Kraft then that space is simply not (yet) within my circle of competence. This is important because I believe there are lots of market participants who do know which of these companies is better than the other and I don't want to competing in a game where others have the advantage.

      just some thoughts....
  • batbeer2 commented on Robert Abbott's article 01-12 16:42
    Modern Value Investing: Focus on Risk, Not Returns
    Value investors should not follow academics and Wall Street when they define risk, according to author Sven Carlin in chapter three of “Modern...
    View all 2 comments
    batbeer2 01-12 16:42
    • Thanks for the article.

      In my view it is not a matter of using the correct definition of risk. Use them all but distinguish between them and take appropriate measures.

      Take volatility/market risk. Don't deny it is a risk. Volatility gets a lot of smart investors in trouble and turns them into forced sellers causing permanent loss of capital. Not only because they are using leverage but also because they are managing other (not so patient) people's money. So the appropriate measure is to sit on excess cash at all times and invest only your own money.... now market risk becomes a source of excess returns.

      Another way to put it is that you are not vulnerable to market risk but you have become market risk. After all it is a zero sum game and you are taking other people's money. But to become market risk you have to understand what it is... which is my point.

      Same with currency risk, interest rate risk etc. etc. Understand what they are, how the market tends to respond and how they affect long-term owner earnings; then act rationally.

      just some thoughts.
  • batbeer2 uploaded a new picture 04-22 11:42
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