Four Ways To Use My Ideas

[David Sklansky]

I won't be responding to your post. I'm telling you that so that you won't think my non response was because I didn't read it. But I also can't tell you what my reason is. Except to say it has nothing to do with being irritated or anything like that.

[DesertCat]

David, I have what I believe to be a solid disproof of your theory, I will attempt to post it tomorrow. In the mean time I'm not sure why you think Buffett's skill either applies to large companies or is best applied to large companies. His greatest outperformance occurred when he was able to invest in small companies and he has regularly contended he could guarantee 50% annual returns if he could invest in small companies.

[pig4bill]

[ QUOTE ]
Warren Buffett took $100,000 and turned it into $50 billion buying stocks.

[/ QUOTE ]

No he didn't. He built a company, and only part of that involved buying stocks.

[David Sklansky]

[ QUOTE ]
David, I have what I believe to be a solid disproof of your theory, I will attempt to post it tomorrow. In the mean time I'm not sure why you think Buffett's skill either applies to large companies or is best applied to large companies. His greatest outperformance occurred when he was able to invest in small companies and he has regularly contended he could guarantee 50% annual returns if he could invest in small companies.

[/ QUOTE ]

That doesn't change anything. You can get to 50% a year with stocks that you thought were half price and that turned out to be 80% or higher of true value. And there are many smaller companies that are in solid stable businesses where a great analyst doesn't have to worry too much about why he can't explain the discrepancy between his opinion and the market. And lastly I still say that Buffett DOES usually make sure he can explain it before he invests. And if he can't explain it and he invests anyway, he doesn't win anywhere near what his estimates indicated he would.

Meanwhile we have to get through this simple stuff so we can get to the more sexy exciting stuff. Where you find stocks where there is a SMALL discrepancy between your value (that you have a FIRM opinion about) and the market's value, you have NO IDEA why there is this discrepancy (In other words you would have thought the market would value the stock the same as you) and you thus invest in exactly OPPOSITE OF YOUR OWN OPINION. Ironically, in order to pull off this coup that would make fuddy duddy FAs stomach churn you have to be an expert FA. Otherwise you can't be sure that the stock price is slightly weird.

Eventually you and Stephen will come around kicking and screaming. And make 100 million between you. And when you do a mere apology will not be sufficient. We are talking about a suite in Dubai liberally stocked with hostesses.

[David Sklansky]

[ QUOTE ]
I don't think its as easy as David thinks to handicap the stock market.
A good FA can determine the value of a company with enough accuracy to make money when its shares are mispriced.
We know the market price, and thats how we can tell whether or not to buy the company.
What I don't understand is how you come up with this other number about the expectation of price. Shouldn't the expectation be the value you determined?

[/ QUOTE ]

No. Suppose you know that the Giants have a tight end that has a particular pass move that is tough for the Packer cornerback to defend against. But you also know that the public doesn't know about that or take it into account properly. So your line will be different from your anticipated line. And therefore when it is you can explain it.

[Mark1808]

[ QUOTE ]
I won't be responding to your post. I'm telling you that so that you won't think my non response was because I didn't read it. But I also can't tell you what my reason is. Except to say it has nothing to do with being irritated or anything like that.

[/ QUOTE ]

I know you still believe you are right and you may be. I enjoy sharing ideas.

[Mark1808]

[ QUOTE ]
[ QUOTE ]
Warren Buffett took $100,000 and turned it into $50 billion buying stocks.

[/ QUOTE ]

No he didn't. He built a company, and only part of that involved buying stocks.

[/ QUOTE ]

He bought stocks, companies and made various arbitrage and foreign currency investments through his holding company Berkshire Hathaway. The source of his $50 billion net worth is investing.

[maxtower]

[ QUOTE ]
[ QUOTE ]
I don't think its as easy as David thinks to handicap the stock market.
A good FA can determine the value of a company with enough accuracy to make money when its shares are mispriced.
We know the market price, and thats how we can tell whether or not to buy the company.
What I don't understand is how you come up with this other number about the expectation of price. Shouldn't the expectation be the value you determined?

[/ QUOTE ]

No. Suppose you know that the Giants have a tight end that has a particular pass move that is tough for the Packer cornerback to defend against. But you also know that the public doesn't know about that or take it into account properly. So your line will be different from your anticipated line. And therefore when it is you can explain it.

[/ QUOTE ]

I don't agree. I think this is an apples to oranges comparison. There are thousands of computers and smart people with lots of money who move the markets. The average player in the stock market is not a layman. The average sports bettor is. I still contend that this "third" parameter doesn't exist. Either that or I still don't fully understand what you are talking about. I don't see any difference between valuing a stock with FA, and this "third" parameter you're talking about.

FA guys value the stock. That is their handicap of what price they think it should be. The market price is the other variable. They bet accordingly. Give me a stock example of this "third" parameter.

[Moseley]

"pay more attention to David Sklansky's Fundamental Theorem of Investing."

Howz that theorem been working out for you over the last 10 years?

[stephenNUTS]

[ QUOTE ]
Eventually you and Stephen will come around kicking and screaming. And make 100 million between you. And when you do a mere apology will not be sufficient. We are talking about a suite in Dubai liberally stocked with hostesses.

[/ QUOTE ]

You got it David... [img]/images/graemlins/smile.gif[/img]

Have a Happy Thanksgiving,
Stephen

BTW ...Seriously whats "David Sklansky's Fundamental Theorem of Investing" as referred to above?