I just went to check what my cost basis was on UMC since I transferred brokerages and it hadn’t updated yet, so I checked this thread and realized I missed posting that trade in here. Bought UMC 2/22/24 for $7.75.
I had previously bought it 11/15/22 for $7.648 and sold it on 5/10/23 for $8.06, based on concerns over growing tensions with China (It’s a Taiwanese semiconductor manufacturer). I re-entered because I believe the Chinese economy struggling pushes back the timeline for any potential invasion, or at least makes it way less likely in the short-term.
Should probably split out my trades blog into a separate thread soon.
Up nearly 20% today on a great earnings report. I trimmed it to a standard size position by selling just under half of my shares at $283.62, +100.15% (incl div). S&P (incl div) over that time frame +15.69%.
It’s not really a value play at this point, with that kind of remarkable gain. However, it’s still a great business with an exceptional ROIC. This is now a modern day Buffett stock rather than an old school Graham/Buffett type stock: a wonderful business at a reasonable price, rather than a reasonable business at a wonderful price. They kept their earnings flat in FY2023 despite really challenging conditions, and could benefit quite a bit from lower interest rates. However, it’s hard to justify holding ~2x a standard allocation when managing a small amount of money that allows me to find reasonable businesses at wonderful prices.
Some of the newly available cash will go into an additional Japanese stock, which I couldn’t quite purchase a 100-share block of. I’ll have to figure out what to do with the rest.
Bought 3765.T, GungHo Online Entertainment, for ¥2,123.20. 0.85x tan book, 0.95x NCAV, 6.5 P/E. Basically no debt, shareholder yield just under 5.5%. They own about 60% of Gravity (GRVY). Earnings have been pretty stable, but not growing. Some risk here, as they are reliant on two games for their revenue. But getting it below tan book when tan book is almost all cash and receivables feels like a pretty good bet at a low multiple.
Yeah these are my retirement fund, they’re in a Roth IRA and SEP IRA (and later probably an HSA). So the only taxes I’m paying are foreign taxes.
My average yearly income is a number that moves, so I guess that’s tough to answer. It’s right around a solid but not spectacular year’s gross earnings, which happens to be in the ballpark of half my net worth - the other half being bankroll/emergency fund.
I have feelings about whether or not your choice of investments is wise in this case, but I think you’re set on your path so I hope it goes well. What I would advise is making sure you’re maxing out your Roth contribution every year if possible. You’re at a decent point, but definitely want to keep fully funding it to make sure you reach your eventual retirement goals.
The Japanese investments have been a lot of fun to track, and it’s been a cool learning process. It’s also pretty interesting to have like 80% of my portfolio’s trading day run 9:30am to 4pm M-F and the other 20% is 8p to 2a Su-Thur.
So far, since I opened those positions:
Nikkei 225 +2.77%
S&P +1.01%
Commonwealth Japan Fund +7.11%
However, the yen is getting smoked against the dollar, so adjusting the Nikkei and my Japanese positions for that it’s:
Nikkei -0.28%
S&P +1.01%
Commonwealth Japan Fund +3.92%
Nine of the 10 positions are up, of course the one that’s in the red is my favorite of the bunch, -1.31%. GungHo is +15.6%, and Okayama Paper is up 23.4%.
The good problem to have is that I’m going to have to start thinking about my exit strategies on some of these sooner rather than later, as they’re going to have a lot more risk after they cross past book value. Given the corporate governance reforms, they’re going to be under way less pressure to do anything once they cross that threshold, and I don’t think I have much ability to make a read on how committed they are to actual reforms if they’re not under any pressure.
Part of my consideration will be other available ideas, especially in Japan.
Thanks… Yeah for the first time I’m pretty close to where I’d be had I maxed out the Roth every year up until now and stuck it in the S&P. Given my career path (broadcasting making under $15K a year → poker building a bankroll), I had close to no retirement savings five years ago.
I’ll definitely be maxing the Roth and HSA this year if we can afford it - and in the coming years making at least that sized contribution whether it’s to a Roth, SEP IRA, HSA, etc. Then probably opportunistic SEP IRA → Roth IRA rollovers. At some point if I keep beating the market handily, I’ll have to decide if it makes more sense to keep more money out of the retirement accounts.
My wife is also likely to have a 401k match available to her once she starts working, so I expect to max that out and assume that our options with that will be pretty limited - thus building up a side of our retirement portfolio that’s in the S&P. That said, depending on how good the match is, how high the 401k fees are, what the options with that are, and my results, we’ll see. I suspect the 401k will be lower EV than me running the money based on my results so far, but I’m inclined to take the up front win on the match and the “safety” of the S&P for what should become sizable chunk of our retirement portfolio.
Yeah, I’ve posted a lot about how frustrating our financial situation is, but that’s really about housing costs and not owning a house. When I manage to block that out momentarily, my investing results thus far and the fact that we should be able to put a reasonable amount into retirement accounts going forward is good. If we manage to buy a house in the next few years, then my hope is to “retire” early. I always see myself playing some poker, but I also don’t want to be in a position to be relying on my cognitive abilities being as good at 55, 60, 65, etc as they are now.
Unless the match is terrible, it’s super unlikely you’d ever be able to overcome the combined value of the match plus the tax benefits of the 401k. Just put it all in the lowest expense target date fund or market index fund.
The goal of all of the smartest poker players I’ve known is to use poker as a pathway into another career and maintain poker as the side income. Your posting makes it clear that you’re an intelligent enough person that you would probably be able to make a solid living doing something else. Not saying that transition needs to or should happen immediately. But might be worth considering what that would look like for you.
If the market returns 10% and I return 20%, assuming the alternative is in an IRA so the tax benefits are identical and ignoring any 401k fees.
$2,000 in a 401k at 10% after 10 years is $5,187
$1,000 in an IRA at 20% after 10 years is $6,191
I think I can beat the market by more than that unless we’re talking about managing millions of dollars and we’re definitely not. All that said, the risk of not beating the market is real and a lot of our retirement savings are under my management, so I’m inclined to take the match and put it in the lowest cost index fund/target date fund available.
Thanks, and I’ve thought a lot about this. For now, I kind of view investing as the other source of income even though it’s in the retirement account and can’t be touched for a while (there are some tricks to get at it early). As the account grows, if my results hold, I’ll be generating enough extra money to make it worthwhile as a significant use of my time.
That said, if I have that track record, I could actually consider trying to put together some sort of an investment fund to run - but I don’t really know the first thing about how to start that and would have to learn. I’ve been writing about investing as well, hoping to build a following to allow me to start an investing group on Seeking Alpha where you can make decent money selling your analysis - but obviously way way less than you’d make running money.
Beyond that, running a business could be an interesting proposition but I’m not sure what business that would be. I’m definitely open to ideas on other things to do. I love playing tournament poker to try to win bracelets, and I enjoy cash games, but I am definitely not married to the full time cash grind long-term. I always want to go chase bracelets at the WSOP, and put in the kind of studying it takes to stay competitive in that regard. Beyond that I’m open to considering alternatives that allow for that flexibility.
What percentage of your purchases would actually be unavailable or hindered in any way if you were managing millions of dollars? Let’s suppose $50 million.
What kind of drag do you estimate it would create on your expected returns?
Most of my positions are 5% of my portfolio, so my position sizes would be $2.5 million. Not sure how much of a company’s market cap I could buy without substantially moving it (obviously volume traded is key here), but it would probably eliminate 10% to 20% of my plays and hinder some others.
I don’t have the experience to know where this would start to be a factor, so I’m mostly going off what Buffett and other value investors have said in the past, which is probably somewhere around $10M iirc it starts to matter. Now that’s an old quote so maybe it’s $20-30M now.
I would also be holding some stuff longer to get to long-term cap gains, which would add variance - although so far being forced to hold some stuff longer probably would have worked out in my favor in a big way.
I’d also be open to some positions I’m less open to now, and open to letting them go long-term. Like WSM would be a buy and hold until they are obviously overvalued or management changes in a world where my available ideas were more limited.
Now to be clear, what I’m saying is on the amounts of money I’m investing now, I think I can average more than 20% or more than double the S&P 500 over a significant sample size (On the other hand I am confident I can beat the market). Running more money (say double deca-millions), averaging 20% might be possible. At some point, it would obviously not be, and I don’t know where that cut off would be.
Honestly the biggest factor here is that the investors in a fund run this way have to be okay with boring investments with a long-term horizon on returns. I don’t consider these strategies difficult, or think that I’m some kind of genius. I have a pretty good bullshit detector, I think, and I’m diligently applying methods successful investors have used in the past with the discipline to watch NVDA or TSLA run up and shrug and say “That’s not for me.”
My big wins are going to be 1 baggers or 2 baggers, maybe rarely a 3 or 4 bagger. But I’m avoiding big losses, too. Rule number 1: never lose money, rule number 2: don’t forget rule number 1.
I think with $50 million your expected returns (from your perspective) should be higher. You’d be able to invest in 95% of what you are already doing plus you’d get better access and pricing on other things.
For example, when you wanted to make a bet against the Fed raising rates, you could have simply called up someone at an investment bank and have them price you a derivative structured the way you want. As it stood, you weren’t able to participate as a retail investor.
That’s an interesting point, although it also gets into what I’d be comfortable betting other people’s money on and what they’d trust me to bet it on. I think I’m batting 1.000 on Fed rate takes, but the sample size is two or three so it’s obviously not significant to draw conclusions. Although they were also all longshots, so the returns could have been huge with minimal risk.
It’s also possible that working full-time on investing, with a budget to use for research, I might come up with more investible ideas.
My knowledge on derivatives like you described is also limited so I’d be at risk of getting taken advantage of by an investment bank in the scenario you described, which would also make me hesitant.
Sold OXY at $68.12, +18.13% including dividends. S&P in that stretch +3.67% total return.
Towards the high range of where it’s traded over the last year or so and out of the range where Buffett seems to be buying it, so keeping it simple here. Wouldn’t hate being in it long-term, but I’d really love getting to slide back in down in the $56 to $58 range again.
I think you mentioned MBUU here a while back. They are being sued because the “forced” one of their outlets to carry 100 mill in product to boost their numbers. Or something along those lines…
Yeah I’m mainly concerned about them losing that distributor and having a lot of inventory in limbo potentially as a result. I find it pretty hard to believe that a dealer would accept being “forced” to buy an absurd amount of inventory fully expecting to fail to sell it. Sounds like the dealership was a clusterfuck and now they’re frivolously suing. Obviously you never know and we’ll see how it plays out.
Yup, it was moving up again so I bought 3 more shares, I wasn’t able to buy anything else in my portfolio while it was down last month so thought I’d try with these guys. My 5 shares should be worthless by the end of the week…
I’m still holding it, not adding right now, though. Looking to add one or two new names to the portfolio soon, doing some research. Have almost exactly enough in BIL to add two normal-sized positions.
MBUU is a great example of one of the standard value investing experiences… which is you catch a falling knife, in this case fundamentally because of high interest rates making buying expensive luxury products less appealing.
Fortunately one of the big advantages of value investing is that you usually skipped out on an awful lot of losing (you bought after it dropped XX% that’s what made it attractive enough to meet your metrics) and companies very often recover fully from a period where they have a few bad quarters because of the market shifting… and when that happens you often end up crushing the market over the lifetime of the investment despite being down a meaningful amount for a lot of that time period.
But yeah it’s very normal to buy something and then lose 25-50% waiting for it to bottom out and begin recovering. It’s so common that I typically leave room to buy the stock 2-3 additional times should the stock fall from the level where I buy it the first time. Obviously it’s really important to keep tabs on what is happening in the real world and making sure that isn’t eroding, but markets simply are not efficient and that means sometimes something that is already cheap is going to get sold even cheaper before it starts to recover. You can’t build your entire strategy on exploiting the rather substantial gaps between the prices things are selling for vs what they are worth in real life and then bitch that it isn’t valuing your stuff fairly… that doesn’t make any sense. Of course it isn’t valuing your stuff fairly lol.
FWIW I don’t think MBUU got less fair as it went down from the 50’s to where it is now. Things have gotten materially worse for their business. Thing is it was very cheap in the 50’s and its very cheap now. I bought two allocations of it with my first entry being at ~58 and my second entry being at 43. I think this retailer going bust is a sign of the times. Fortunately MBUU seems to be pretty well positioned to ride this out until rich people start splurging again. I don’t think betting against rich people buying nice shit in the long run makes much sense.