tkenyon

Wall Street: Dumb as It Ever Was

Easy skanking, 5446 was my number, Kaya, Legalize It, Pimper's Paradise...


On Nov 06 03:40 PM cayman wrote:

> what songs were in on that reggae session ?

Investing's Holy Grail: More Return, Less Risk

The best measure of risk is the probability of permanent loss of capital. The other measures are a function of stock price fluctuation, so that a stock that appreciates 100% but has a volatile stock price could be "riskier" by these measures than a stock that declines slowly and permanently. Or, a very cheap stock that has a volatile price could be "riskier" than a very expensive stock with a less volatile price - which of course is the opposite of reality. Assuming we are truly investors and not short term speculators, we need to try and evaluate the probability that we might permanently lose capital if we purchase the stock at a given price.

Buffett: The Impossible Expectations of Stock Performance

mla99, you re right - just because the number looks big relative to today's level means nothing. It's all a matter of whether the Dow can return 9% on average. I am not sure why Buffett emphasized the enormity of the number, as it is an example of "anchoring" , one of the behavioral mistakes he and Charlie try to avoid. Here he seems to be using our natural tendency to anchor to help make his point.

Regarding the puts, he wrote them because he get $4.5B NOW to play with for 15-20 years. I am sure he believes there is almost NO CHANCE of the indexes being lower in 15-20 years, hence he gets $4.5B almost like he found it on the sidewalk. When you consider the return he should be able to generate on those funds over 15-20 years, the chance of any NET loss is nil. If he can earn 6% on that 4.5B, he'll have 12.5B in 17.5 years. Vintage Buffett. He could care less about the non-cash effect on accounting earnings. I wonder who is on the other side of the trade - can you say sucker...

The Fear Is Palpable. Time To Buy.

I'll try to respond to some of these comments over on my Vestopia blog, vestopia.com/Blogs/Mar...

There’s Only One Right Way to Build a Portfolio

Volatility does not equal risk. Simple as that. dsilisk has it right, whether or not his 8B year number is right. It's shocking how much money and resources are wasted on so called risk management and portfolio design, which create no real value.