Hi

1)

Hi Buffett Fan,

If your name is actually a representative of your interest in Mr. Buffett, I would want to make your acquanitence. I admire the way Buffett and Munger run their companies and enable their managers to make wealth for everyone.

Welcome to the forum and hope to learn from your last four years experience in the secondary markets.

Thanks and Regards,
http://pseudosocial.blogspot.com

Sure... we can catch up on this forum or even one on one.. I can PM you my coordinates if you like
reg

Ofcourse I totally disagree with the above statement.Studies have shown that in the long run money is made by proper assett allocation than stock picking skills. Its simply impossible for any investor to beat the market all the time ( even a few times ) and the only safeguard is in properly managing risk.

Welcome to the forum.

CV

thats what they teach you in investment management...theorists writing reams of books on why it is impossible to beat the market...but people do..and the market is irrational pretty frequently and does offer opportunities..

if you keep making insignificant investments....you will pretty soon have something like 200+ different assets ..and then what do you do...how do you follow them??
If the inv is not significant..you are never serious about it....it is the seriousness and the resultant ruminations that matters when you want to outrun the market

Hi Buffetfan and Hi CV,

I like CV and his investing philosophy but this time I would agree to disagree with CV.

What CV is saying - money is made by proper allocation of assets is correct in my opinion. Further CV has said it is difficult to beat the market even a few times BUT (notice the BUT) ... if you beat it even once with high stakes ... imagine the kind of returns.

VCs (Venture Capitalists) work on the same principle. They invest money into potential winners and even if one of them clicks, all the other investments are accounted for. Example is people who would had invested in google when it was started. Take Infy for an indian example. Trent is something that comes to my mind.

Talking about Buffett, jhunjhunwala, lynch, any of the people who have made money - they have done it because they had substantial chunk.

And in the end the bufettfan says is also important. You would have invested 1000 odd into 200 stocks with your total portfolio being 2,00,000. I assume you are an exceptional investor and would make 25% ROI on all the stocks, your portfolio would rise to 2,50,000. But if you had 1 lakh in infy when it was started and 1 lakh in lets say some bankrupt company, the lakh in infy would have made you millions and would have offset your loss.

It all depends on the odds.

And i think if you guys read the autobiography of Prof. Bakshi, you would further understand the power of backing your best bet in big manner and the power of compounding. (Link: http://pseudosocial.blogspot.com)

To end it all ... dont put all your eggs into one basket BUT (notice the but) dont put your eggs in too many baskets

Regards,
http://pseudosocial.blogspot.com

You misunderstand me totally

I am not talking about theory, I am talking about scientific studies done on the subject.Its available at SSRN, study on many Mutual Funds where it was found that assett allocation actually contributed to returns while their stock picking were zilch. For individuals its even more important when you consider asymmetric leverage ( [1/1-Loss%]). Position sizing is crucial to any strategy, actually there can be no strategy w/o proper position sizing.

Markets are irrational .yes..I know ..I make my living with it..but beating the markets is a different ball game. Even Warren Buffett failed miserably recently with his dollar bet and he is regularly quoted saying that he is not interested in market averages and timing.

I was talking about allocations and not diversification. Chalk and Cheese.

Those are relative terms.What is significant/insignificant depends on portfolio size. And I dont think one's seriousness has anything to do with investments.Its all about risk/reward scenario, trying to outrun ( ?? ) the market should never be a consideration.


CV

I didnt say money is made by proper allocation, what I said was that its more important than stock picking for investors.Havent you heard of investors who have had 'multibaggers' on small a/cs and one large swoop wipes out all the small 'multibagger' gains.

Yes, and that imaginations drives a whole industry, but how many have been successful over the years? Here is what happened to Buffet recently.If its difficult for him after all these years, not sure what the 'hacks' will come up with

http://moneycentral.msn.com/content/P116165.asp


Exactly, and one must bet according to the odds.

As I said, I wasnt talking about diversification.Put your eggs where they hatch, baskets arent really necessary.


Rgds
CV

"In my view, the exposure that one takes in any investment should be significant enough to make a difference either way. ie..if the investment goes down, it should the big enough to make some difference in your economic condition..and if it goes up..it should be big enough to give your personal balance sheet a significant upside."

Sorry, i do not agree with that at all....may be if investing is your pasttime, where it doesn't matter to ur profit/loss, and u have continuous source of money coming in, you may look for significant downside (god only knows why anyone will do that), but otherwise its risk/reward ratio. only if u have a positive expectancy than u may have the chance to win over the long term. even buffet buys only at a level where the mkt has thrashed the stock...and since he follows graham and fisher, his value buys and margin of safety are very important.
btw we talk bout buffet, jhunjhunwala so casually...this year one of this gentlemen made most of his money on index future and not just by buy and hold investment. he is a big player in the futures market too.

and buffet also trades...i hope u know that...he also does arbitrage aggressively...incl risk arb and merger arb...

there are many other things that we can discuss...but more later..and since cv is here...he'll do the honours for sure

oh yeah...about vcs...do u know where their money comes from?

the day u mathematically find 2, 4 or even 10 stocks to divide ur 200000, of which one has a 100% chance of becoming an infy, that day u wud have found the holy grail