Speculation mistaken for Reasoned Analysis

AlterEgo said:

Amazing!

So if the share price were going down the toilet, that wouldn't matter, as long as the book value were going up? Silly me thought that we were in the market to make money, not to admire how great the balance sheet looks. If the increase in book value doesn't move the share price up, then what's the point of it? You can't spend the book value in your retirement. Ultimately the share price is what matters, as that's the price you'll get for it when you sell it.

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Spot on AlterEgo. Rising book values and great looking balance sheets are fine but if they don't put money in your pocket as an investor it's time to put your money elsewhere.

FxTrader said:

I did not use the term "undervalued companies" I said quality businesses. This is what he is best known for and what other contemporaries like Roger Montgomery focus on, business analysis and selecting quality businesses to invest in. I know full well he invests in other instruments but that's not how he has distinguished himself or how Berkshire built its businsess empire. Your point here is a therefore a useless one.

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Use whatever term you want, it doesn't change the fact Buffett has made a lot of money with other strategies than buying "quality businesses". That this is not widely known, or more likely you didn't know, doesn't change the fact Buffett has used multiple startegies to build his "business empire".

Buffett's derivative exposures and hedging have not done much for the share price of his company over the last 13 years have they. He's not an economist nor does he profess to be one and has always been primarily U.S. focussed in his investment activity with a few exceptions. These are simply facts, no debate about this is necessary or useful.

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Of course there is cherry picking, you looked at the data first than pick a period like 13 years. Why not 10, 11, 12 or 14 or 15 years. 13 years has clearly been cherry picked. I doubt you even know what "cherry picked" means. 30% tax rate 5% interest $80000 compunded over 13 years earns ~$45K not $73K, so clearly tax has a huge impact. That you had to arbitrarily choose a 13 year period and ignore the effects of taxation either shows your intellectual dishonesty or ignorance about investing.

Still more nonsense and waffle from a blinkered Buffett fanatic. BRKA has significantly underperformed a large basket of ASX listed stocks over the last 8-10 years but the CEOs of these companies are not an object of your worship, do the research yourself. The only bias evident here is your slavish devotion to everything Buffett.

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I suggest you learn what the "post hoc fallacy" is. Given your screen name I'm not suprised a noise trader such as yourself doesn't know what this means.

FxTrader said:

Bob, my apologies for indulging the biases, twisted logic and fanaticism of the Buffett worshipers here, it's time to stop. They have hijacked this thread as they tend to do when their idol is mentioned in any thread. I get what you've been trying to say here even though its been suffocated by Buffett's religious legion now.

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+1. Thanks for raising such a valid topic, Bob.

freddy2 said:

I doubt you even know what "cherry picked" means.

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Yikes. It's getting hot in here.

FxTrader said:

Bob, my apologies for indulging the biases, twisted logic and fanaticism of the Buffett worshipers here, it's time to stop. They have hijacked this thread as they tend to do when their idol is mentioned in any thread. I get what you've been trying to say here even though its been suffocated by Buffett's religious legion now.

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That’s OK, I can appreciate that right minded, and yes that is a go at those who have been arguing for the beatification of Buffett, people might want to try and get some facts across yet hey its why I haven’t indulged, it only raises the blood pressure and my wine collection is for that!

Julia said:

+1. Thanks for raising such a valid topic, Bob.

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A pleasure!

So where does that leave us? How do we as investors and purveyors of the world at large combat the ever increasing BS and self-interest claims of Buffett (that’s my little dig) et al?

Would people pay me (and a group of others) a $300 yearly subscription to get a weekly or even a 3 times weekly newsletter that pointed out the FACTS and REAL situation of others claims? Or is this a losing battle? Will people only be interested in the 'facts' that are presented on the glossy pages of magazines and Fox TV or CNBC or Bloomberg, or as that reprehensible Alan K and his band of 'merry men' and the atrocious 'claims' they make on anything from Super to 'stocks to look out for'.

As I have always stated, people have to be responsible for their own actions, however when dealing with stocks or investments there is a world that even those who are 'experts' have trouble understanding how it all works, so how can the ordinary person begin to grapple with the complexity of it all, apart from relying on those who are seen as 'trusted' or 'respected' sources of information, no matter how self-serving their 'advice' or 'comments' are.

The sad part of any analysis is that if you have an interest then you are swayed by where that interest takes you, so long as you agree with it!

This is not to say that all who provide 'advice' or 'comment' are self-serving, yet generally there is an element of this no matter how in-offensive or indirect the comment.

How do you change this? How can a program of real evidence based analysis come to light and in fact at the fore of the many self-interest's out there? How do you get people to stop subscribing to the likes of AK etc and take a broader approach? I know it’s a losing battle, and one that can’t be won - unfortunately - yet if one person doesn’t renew, or turns CNBC off when Buffett talks (another small dig) then it might, in a thousand years or so have begun to snowball to where we can demand, and most of all expect and get real analysis without and overt and in your face lies and self-serving nonsense.

Ohhh, I would add before the legion of 3 jump on about their God like love for Buffett, I, or the group I would like to assemble be preaching a certain way or suggesting an alternative, I propose that the subscription would bring to you factually based analysis based on the publications of those self-serving and self-interested groups. So a review of others, a review of the BS! A Media Watch for the investment world.

Ohhh, I would add before the legion of 3 jump on about their God like love for Buffett, I, or the group I would like to assemble be preaching a certain way or suggesting an alternative, I propose that the subscription would bring to you factually based analysis based on the publications of those self-serving and self-interested groups. So a review of others, a review of the BS! A Media Watch for the investment world.

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Bob, while I'd regard it as a great idea, and would like to see it floated, I'm not sure that the great majority of 'investors' (translation: people who are forced to have money in Super but who remain determinedly ignorant about what is happening with said Super), would provide a sufficient base for it to be worth your while.

Given the breathtaking passivity of the average Australian with funds in Super, i.e. at the time of the GFC most didn't even know what risk option they had selected for their Super, I'd imagine that most would look at any promotion for such a service and their eyes would glaze over, as probably already happens with the supa dupa advice proffered by the likes of AK et al.

I'd guess there would be clear interest from those who are already aware of the self-serving nature of so called mainstream advice, but would that be a sufficient market?

The other downside would be the undoubted retaliation by those presently sitting so comfortably in their current role who would obviously be threatened by criticism of their sage advice, no matter how subtly worded.

I'm not meaning to be negative. I like the idea. But objectively you might have difficulty.

People are entitled to thier opinions, whether such opinions are self-motivated or not.

While it is important to know the "facts", "facts" can be rubbery and must be "interpretated" before use. Take Buffet for example... is the statement "Buffet has underperformed the market" a statement of fact? Over what timeframe? On what measure? And how's that to be interpreted for the future? Does it mean he's due for a catch up, or is that a sign that he's getting old and stupid?

Some people are natural optimists (Buffet?) while others are bearish like hell (Faber?). Their opinion, either self-serving or not, are their own interpretation / spin of "facts". Like your thread title... is the person at fault the one who made those speculations, or those who mistaken them for reasoned analysis? If one has not the knowledge to decide whether such opinion is valid or not, then he/she should not be in the game imo.

Alan Kohler is a publicist first and foremost and he sells his reports. If people are happy to be misled by him by subscribing to his reports - they hardly have any grounds to complain??

bob99 said:

As I have always stated, people have to be responsible for their own actions, however when dealing with stocks or investments there is a world that even those who are 'experts' have trouble understanding how it all works, so how can the ordinary person begin to grapple with the complexity of it all, apart from relying on those who are seen as 'trusted' or 'respected' sources of information, no matter how self-serving their 'advice' or 'comments' are.
.

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Buying good stocks and get reasonable return actually isn't science rocket
Anyone with average intelligent can do it .... you don't need any fancy foot work..
all I got is a little calculator and a notepad for most of my investment decision

most of these business are in their face all they have to do is a little homework and buy at the right price

hell start from today and chart this for the next 10 years and see if it beat the market
SUL, DMP, RFG ,CCP, CCV, .... These business seem reasonable and even if you don't know what you doing buying these will probably make you happy return for years to come...

Most people just aren't willing to do the hard work and leave it to someone else ..

it is rare for someone to get good mark in the exam without studying

Why it is when it comes to their money they don't put in the effort and expect
excellent outcome?

I got people at work spend more time looking to buy a phone than
they do researching the business they buy

"hard work pays off" be it in investing, studying or your job.

the more time you spent on something the greater the success, simple as that..

Julia said:

Bob, while I'd regard it as a great idea, and would like to see it floated, I'm not sure that the great majority of 'investors' (translation: people who are forced to have money in Super but who remain determinedly ignorant about what is happening with said Super), would provide a sufficient base for it to be worth your while.

Given the breathtaking passivity of the average Australian with funds in Super, i.e. at the time of the GFC most didn't even know what risk option they had selected for their Super, I'd imagine that most would look at any promotion for such a service and their eyes would glaze over, as probably already happens with the supa dupa advice proffered by the likes of AK et al.

I'd guess there would be clear interest from those who are already aware of the self-serving nature of so called mainstream advice, but would that be a sufficient market?

The other downside would be the undoubted retaliation by those presently sitting so comfortably in their current role who would obviously be threatened by criticism of their sage advice, no matter how subtly worded.

I'm not meaning to be negative. I like the idea. But objectively you might have difficulty.

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I couldn’t agree more Julia. I am not advocating that I want to start such a concept, yet the idea appeals. However, it’s just the idea that such things are taken with such blind faith.

I think the first step is not to try and correct what the gurus have said, yet it’s too asked the questions that are so obviously needing to be asked, then work from there.

I subscribe to a bunch of investment newsletters and sites, and one such piece of utter BS was in Marcus Padley's newsletter yesterday. He highlighted what one broker has said:

"Long Term Outlook:

My tentative long-term count suggests that a bull market is due to commence sometime this decade."

Wow, only just over 9 years to get this right!

And people pay for this advice? I mean Christ! If I have started a Thread on ASF with this sort of thing I could only imagine the sorts of comments that would flood in, yet as this guy obviously works for a 'BIG' firm so it’s given 'air-play'.

skc said:

People are entitled to thier opinions, whether such opinions are self-motivated or not.

While it is important to know the "facts", "facts" can be rubbery and must be "interpretated" before use. Take Buffet for example... is the statement "Buffet has underperformed the market" a statement of fact? Over what timeframe? On what measure? And how's that to be interpreted for the future? Does it mean he's due for a catch up, or is that a sign that he's getting old and stupid?

Some people are natural optimists (Buffet?) while others are bearish like hell (Faber?). Their opinion, either self-serving or not, are their own interpretation / spin of "facts". Like your thread title... is the person at fault the one who made those speculations, or those who mistaken them for reasoned analysis? If one has not the knowledge to decide whether such opinion is valid or not, then he/she should not be in the game imo.

Alan Kohler is a publicist first and foremost and he sells his reports. If people are happy to be misled by him by subscribing to his reports - they hardly have any grounds to complain??

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Ahhh, yet this is where you have missed the point. The sources of 'knowledge' for the average punter are in nearly all cases are predicated on the same initial source.

It’s like the food critic who recommends a restaurant, there is an inherent belief by most that he/she has an objective view, they may, yet the experience will always nearly be tainted if they are known - which they are.

Take for example a 'respected' food critic for Gourmet Traveller. All the chef's know him, the wait staff are trained to recognise them (him), and there are pictures of critics (him) in the kitchen, and many are 'good friends' with the chef. So reason says to me that staff will be more attentive, the kitchen (and esp. the head chef) will pay particular attention to his meal, and so the experience is muddied. He may be aware of this and takes this into account, yet how do we know?

So they write a review which - is typically - at odds with broader consensus.

It’s the same in the investment world, we don’t have the time, resources, nor funds to investigate all aspects so we rely on the critic or commentator or 'respected' person for insight.

Just as you don’t have the money to eat in all the restaurants in say, Sydney, you rely on advice on which ones are good. So the same is for investments.

The average person invests little and, I am sure would invest more if they could, so when a sizeable chunk of their funds would go to a broader level of analysis they may not have enough to buy those investments. Or, and possibly very importantly, it could be the same self-serving interest, of course depending on the topic.

It’s the availability of independent verifiable knowledge that is important. Just because AK might have many contributors its not to say they are all of a like mind - which sadly they are, a poor one (well not monetarily there not).

This is given more purchase when they are seen as the 'finance' reporter on TV. This once again is perception. I.e. AK reports finance for the ABC, he provides 'advice' and 'news reports' for papers etc. and has a newsletter which many 'names' I recognise so therefore he is a respected source. Not true, yet is seen as true.

Personal responsibility is important, yet in an industry where there is very few like it: the self-serving aspect and the representation of mis-information as FACT is a hard one for the average person to recognise and filter.

I would add there is a difference between 'optimism' and 'using your position to gain further for yourself' despite any evidence to the contrary.

bob99 said:

, so when a sizeable chunk of their funds would go to a broader level of analysis they may not have enough to buy those investments.

It’s the availability of independent verifiable knowledge that is important.

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All the company Annual and half yearly reports are available free for download on the internet along with every other asx announcement.

The average guy on the street who does not have the time or inclination to conduct theireown research should not be trying to pick stocks or time the market any way.