Will W
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on the atlas — 3
- Graham & Dodd Annual Breakfast 20221 savers
- They've Ruled Out Tail Risk - Hussman Funds1 savers
- Why non-transitory recession is coming and how to face it as an investor - Vitaliy Katsenelson Contrarian Edge1 savers
highlights — 13
Finding owners who are fiduciaries, (Charlie asked Combs what percent of management are fiduciaries)
Graham & Dodd Annual Breakfast 2022Sometimes companies do deals because other companies do deals. As Charlie says, the best quality is to remain rational.
Graham & Dodd Annual Breakfast 2022Combs then goes on to explain the flaws embedded within EBITDA. Something frequently not understood, not discussed, and consequently not evaluated is maintenance capex. Feynman had this saying “it’s so easy to fool yourself and you’re the easiest person to fool.” CEO’s have a very low grasp of their maintenance capex. Combs further says how most management teams aren't even able to have that discussion because of their confidence in investing for growth. In reality management often is mistaking growth for something that is really maintenance capex. “It might be growth spending, but you’re not …
Graham & Dodd Annual Breakfast 2022Every time Combs meets with a company, there are two questions he always asks management: (1) How long do you spend talking to investors, and (2) what would you be doing if you were not publicly traded?
Graham & Dodd Annual Breakfast 2022Warren asks “How many names in the S&P are going to be 15x earnings in the next 12 months? How many are going to earn more in five years (using a 90% confidence interval), and how many will compound at 7% (using a 50% confidence interval)?” In this exercise, you are solving for cyclicality, compounding, and initial price. Combs said that this rubric was used to find Apple, since at the time the same 3-5 names kept coming up.
Graham & Dodd Annual Breakfast 202298% of what Buffett and Combs discuss is qualitative. If something is 30x earnings you can calculate what it will have to do to get to run rate earnings. The worst business grows and needs infinite capital with declining returns. The best business grows exponentially with no capital.
Graham & Dodd Annual Breakfast 2022Combs explained how one question is constantly asked, usually daily, and that is if the moat is wider or narrower on any of their businesses.
Graham & Dodd Annual Breakfast 2022Combs recalled the first question Charlie Munger ever asked him was what percentage of S&P 500 businesses would be a “better business” in five years. Combs believed that it was less than 5% of S&P businesses, whereas Munger stated that it was less than 2%. You can have a great business, but it doesn’t mean it will be better in five years. The rate of change in the world is significant, which makes this exercise difficult, but this is something that Charlie, Warren and Todd think about. When Combs started at Berkshire, they had a 7/10 confidence on the businesses outlook for the next five years…
Graham & Dodd Annual Breakfast 2022the first question Charlie Munger ever asked him was what percentage of S&P 500 businesses would be a “better business” in five years. Combs believed that it was less than 5% of S&P businesses, whereas Munger stated that it was less than 2%. You can have a great business, but it doesn’t mean it will be better in five years. The rate of change in the world is significant, which makes this exercise difficult, but this is something that Charlie, Warren and Todd think about. When Combs started at Berkshire, they had a 7/10 confidence on the businesses outlook for the next five years. The nature of…
Graham & Dodd Annual Breakfast 2022if you take a business, what is your level of confidence in predicting what it looks like in five years?
Graham & Dodd Annual Breakfast 2022Here’s the fun part. The amount of “skew” priced into options turns out to be a contrary indicator. The more investors are concerned about extreme losses, the more constructive the market outlook. Conversely, the more investors tend to rule out extreme losses, the more concerned you should be about a trap door.
They've Ruled Out Tail Risk - Hussman FundsThe latest Barron’s poll of Wall Street strategists, not one 2023 target implies a loss in the S&P 500 over the coming year. The average year-end-target for 2023 is over 4200, with both the median and average target implying a 2023 total return of over 10% for the index.
They've Ruled Out Tail Risk - Hussman FundsThis caused bubbles across all assets except one: common sense did not experience much growth.
Why non-transitory recession is coming and how to face it as an investor - Vitaliy Katsenelson Contrarian Edge