zondag 17 augustus 2014

hoger licht

Over het verkopen van posities zegt Buffett minder in zijn jaarlijkse brieven dan over de aankopen.  Zo heeft hij volgens mij nooit in zijn brieven uitgelegd waarom hij precies afscheid nam van  Anheuser Bush bij de fusie met Inbev.   
Ex post bekeken, vandaag dus,  was dat een sub-optimale inschatting.    

Ergens geeft hij wel in daden toe dat hij dat ook zo ziet, kijk maar naar de partners in z´n Heinz deal: al de maatjes van Brito.  :-)


Maar toch, in 1987 schreef hij dit: 
"We need to emphasize, however, that we do not sell holdings just because they have appreciated or because we have held them for a long time. (Of Wall Street maxims the most foolish may be "You can't go broke taking a profit.") We are quite content to hold any security indefinitely, so long as the prospective return on equity capital of the underlying business is satisfactory, management is competent and honest, and the market does not overvalue the business."

Lijkt me een strak plan.

Controversieel, en uniek: 

"Berkshire's newer shareholders may be puzzled over our decision to hold on to my mistakes. After all, their earnings can never be consequential to Berkshire's valuation, and problem companies require more managerial time than winners. Any management consultant or Wall Street advisor would look at our laggards and say "dump them." That won't happen. For 29 years, we have regularly laid out Berkshire's economic principles in these reports (pages 93-98) and Number 11 describes our general reluctance to sell poor performers (which, in most cases, lag because of industry factors rather than managerial shortcomings). Our approach is far from Darwinian, and many of you may disapprove of it. I can understand your position. However, we have made — and continue to make — a commitment to the sellers of businesses we buy that we will retain those businesses through thick and thin. So far, the dollar cost of that commitment has not been substantial and may well be offset by the goodwill it builds among prospective sellers looking for the right permanent home for their treasured business and loyal associates. These owners know that what they get with us can't be delivered by others and that our commitments will be good for many decades to come. Please understand, however, that Charlie and I are neither masochists nor Pollyannas. If either of the failings we set forth in Rule 11 is present — if the business will likely be a cash drain over the longer term, or if labor strife is endemic — we will take prompt and decisive action. Such a situation has happened only a couple of times in our 47-year history, and none of the businesses we now own is in straits requiring us to consider disposing of it."

Over het idiote gedrag van de coinflippers om met stop-losses te werken om je verkopen te timen, en meer specifiek over "portfolio insurance": 
"This strategy—which is simply an exotically-labeled version of the small speculator's stop-loss order dictates that ever increasing portions of a stock portfolio, or their index-future equivalents, be sold as prices decline. The strategy says nothing else matters: A downtick of a given magnitude automatically produces a huge sell order. According to the Brady Report, $60 billion to $90 billion of equities were poised on this hair trigger in mid-October of 1987."

In De Tijd van dit weekend staat het briljante advies van de columniste: "eerst verkopen, dan vragen stellen!".   In dezelfde krant ga ik derhalve wel akkoord met Kaaiman en z'n doordacht gebed voor wat betreft vrouwelijke columnistes... :-)

Terug naar goeroe.
Even verder, trekt hij de logische conclusie uit dit absurde gedrag: 

"what portfolio insurance tells a pension fund or university to make when it owns a portion of enterprises such as Ford or General Electric. The less these companies are being valued at, says this approach, the more vigorously they should be sold. As a "logical" corollary, the approach commands the institutions to repurchase these companies—I'm not making this up—once their prices have rebounded significantly. Considering that huge sums are controlled by managers following such Alice-in-Wonderland practices, is it any surprise that markets sometimes behave in aberrational fashion? 

Many commentators, however, have drawn an incorrect conclusion upon observing recent events: They are fond of saying that the small investor has no chance in a market now dominated by the erratic behavior of the big boys. This conclusion is dead wrong: Such markets are ideal for any investor—small or large—so long as he sticks to his investment knitting. Volatility caused by money managers who speculate irrationally with huge sums will offer the true investor more chances to make intelligent investment moves. He can be hurt by such volatility only if he is forced, by either financial or psychological pressures, to sell at untoward times."



Over hoe te kopen, schrijft hij vaker,  al negeert quasi iedereen zijn advies: 

"Our goal is to find an outstanding business at a sensible price, not a mediocre business at a bargain price. Charlie and I have found that making silk purses out of silk is the best that we can do; with sow's ears, we fail. (It must be noted that your Chairman, always a quick study, required only 20 years to recognize how important it was to buy good businesses. In the interim, I searched for "bargains"—and had the misfortune to find some. My punishment was an education in the economics of short-line farm implement manufacturers, third-place department stores, and New England textile manufacturers.)"

Het is ook best moeilijk, velen zijn niet lernfähig , ze leren maximaal 1 truukje, dat werkt meteen, en de one-trick ponies zijn overtuigd dat ze alles inzien en niks meer bij te leren hebben.   

Het briljante aan Buffett, Munger, Klarman &co is net dat ze van vele markten thuis zijn, elke dag bijleren zodat ze multiple-trick zoo blijven.  

++++++++++++++++++++++++++++

Over management... 
"Charlie and I put Chuck Huggins in charge of See's about five minutes after we bought the company. Upon reviewing his record, you may wonder what took us so long."

"The supreme irony of business management is that it is far easier for an inadequate CEO to keep his job than it is for an inadequate subordinate."


Over dat andere academische idee, de efficiente markt..

"In my opinion, the continuous 63-year arbitrage experience of Graham-Newman Corp. Buffett Partnership, and Berkshire illustrates just how foolish EMT is. (There's plenty of other evidence, also.) While at Graham-Newman, I made a study of its earnings from arbitrage during the entire 1926-1956 lifespan of the company. Unleveraged returns averaged 20% per year."

Maar we moeten blij zijn dat het bestaat, want :
"From a selfish point of view, Grahamites should probably endow chairs to ensure the perpetual teaching of EMT"

:-)

niet alleen beleggers zijn one-trick ponies,  economists also qualify: 

"John Kenneth Galbraith once slyly observed that economists were most economical with ideas: They made the ones learned in graduate school last a lifetime. University finance departments often behave similarly. Witness the tenacity with which almost all clung to the theory of efficient markets throughout the 1970s and 1980s, dismissively calling powerful facts that refuted it "anomalies." (I always love explanations of that kind: The Flat Earth Society probably views a ship's circling of the globe as an annoying, but inconsequential, anomaly.) Academics' current practice of teaching Black-Scholes as revealed truth needs re-examination. For that matter, so does the academic's inclination to dwell on the valuation of options. You can be highly successful as an investor without having the slightest ability to value an option. What students should be learning is how to value a business. That's what investing is all about"

 
Maar de mooiste passage over EMH en economen gaat over z'n vriendschap met Walter Schloss: 

"Let me end this section by telling you about one of the good guys of Wall Street, my long-time friend Walter Schloss, who last year turned 90. From 1956 to 2002, Walter managed a remarkably successful investment partnership, from which he took not a dime unless his investors made money.
 My admiration for Walter, it should be noted, is not based on hindsight. 
A full fifty years ago, Walter was my sole recommendation to a St. Louis family who wanted an honest and able investment manager. 
Walter did not go to business school, or for that matter, college. His office contained one file cabinet in 1956; the number mushroomed to four by 2002. Walter worked without a secretary, clerk or bookkeeper, his only associate being his son, Edwin, a graduate of the North Carolina School of the Arts. Walter and Edwin never came within a mile of inside information. Indeed, they used "outside" information only sparingly, generally selecting securities by certain simple statistical methods Walter learned while working for Ben Graham. 
When Walter and Edwin were asked in 1989 by Outstanding Investors Digest, "How would you summarize your approach?" 
Edwin replied, "We try to buy stocks cheap." So much for Modern Portfolio Theory, technical analysis, macroeconomic thoughts and complex algorithms. Following a strategy that involved no real risk — defined as permanent loss of capital — Walter produced results over his 47 partnership years that dramatically surpassed those of the S&P 500. It's particularly noteworthy that he built this record by investing in about 1,000 securities, mostly of a lackluster type. A few big winners did not account for his success. It's safe to say that had millions of investment managers made trades by a) drawing stock names from a hat; b) purchasing these stocks in comparable amounts when Walter made a purchase; and then c) selling when Walter sold his pick, the luckiest of them would not have come close to equaling his record. There is simply no possibility that what Walter achieved over 47 years was due to chance. 

I first publicly discussed Walter's remarkable record in 1984. At that time "efficient market theory" (EMT) was the centerpiece of investment instruction at most major business schools. This theory, as then most commonly taught, held that the price of any stock at any moment is not demonstrably mispriced, which means that no investor can be expected to overperform the stock market averages using only publicly-available information (though some will do so by luck). 
When I talked about Walter 23 years ago, his record forcefully contradicted this dogma. 
And what did members of the academic community do when they were exposed to this new and important evidence? Unfortunately, they reacted in all-too-human fashion: Rather than opening their minds, they closed their eyes. To my knowledge no business school teaching EMT made any attempt to study Walter's performance and what it meant for the school's cherished theory. Instead, the faculties of the schools went merrily on their way presenting EMT as having the certainty of scripture. Typically, a finance instructor who had the nerve to question EMT had about as much chance of major promotion as Galileo had of being named Pope. 
Tens of thousands of students were therefore sent out into life believing that on every day the price of every stock was "right" (or, more accurately, not demonstrably wrong) and that attempts to evaluate businesses — that is, stocks — were useless.
 Walter meanwhile went on overperforming, his job made easier by the misguided instructions that had been given to those young minds. After all, if you are in the shipping business, it's helpful to have all of your potential competitors be taught that the earth is flat. 
Maybe it was a good thing for his investors that Walter didn't go to college."


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