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What I Learned from Losing $200M (2015)

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Re: What I Learned from Losing $200M (2015)

#71

Post by Plough_Jogger »

gowld wrote: post #52
ryandrake wrote: post #34

Earlier quoted context omitted.

Those would be the few on the right-most side of the distribution who flipped heads 10 times in a row. As soon as they inevitably flip tails, we'll post facto find others who have gotten consistent returns and declare them to be the ones with the secret sauce.

That's not how math works. Buffet has been "flipping heads" consecutively for several decades, with no regression to the mean.

Buffet is now a poor example; Berkshire Hathaway has many structural advantages that no individual investor, and almost no institutional investors can exploit.

There are many articles on this: https://www.forbes.com/sites/adamhartung/2014/11/19/why-you-...

Re: What I Learned from Losing $200M (2015)

#72

Post by dba7dba »

CalChris wrote: post #6

I crewed on a sailboat in YRA races leading up to and during the 2008-9 crash. It was mostly people from Lehman and Barclays. I was the only SV guy on the boat. No one partied harder than those guys but then they really only partied with themselves. It was kinda like Boiler Room. The Dot Com boom is the stuff of legends but these guys left nothing on the table. Barclays had a riff and ordered a string of cabs to take…

Someone from Korea (S. Korea of course) told me this story that he read in a South Korean newspaper.

When Lehman was trying desperately to sell themselves in order to get more funding in 2008, one place they tried it was in S Korea. Lehman's ex head of Korean office was in a high place in Korean banking industry at the time.

Supposedly some local press was painting it like it was going to be a great chance for a Korean bank to own the famous Lehman. Probably due to well placed phone calls.

So Lehman's ceo and his management team came to S. Korea to work the deal. Like 10 guys.

Guess what, the CEO and his entourage had NOT 1 piece of paper to show during the negotiation. For a deal that was to involve billions of dollars, the seller had not prepare even 1 piece of paper to show to the potential buyer/funder about anything.

To me this suggests

1. Lehman management was really full of it and thought they could swindle S. Korean to throw money into a black hole, despite not having done any prep work on their part.

2. Lehman management was just going through the motions, while fully knowing they were doomed.

3. All of the above.

Re: What I Learned from Losing $200M (2015)

#73

Post by the_cat_kittles »

yters wrote: post #63
seanmcdirmid wrote: post #58

Earlier quoted context omitted.

Flipping heads 200 Times is definitely possible, I can do the math to prove that. It is just greatly improbable to happen in the space or lifetime of the universe.

Probabilities can be so small they are only possible in a mathematical sense, but impossible practically speaking. When faced with such small probabilities we can use Bayes theorem to infer a better explanation than chance, such as a two headed coin.

lol @ u spouting nonsense. i think your trying to say you can use bayes to adjust for small sample sizes, like with beta-binomial models, or comparing posterior distributions for different models and params.

Re: What I Learned from Losing $200M (2015)

#74

Post by throwaway613834 »

blackholesRhot wrote: post #66

I was working in the crude oil / nat gas options pit at the NYMEX during the summer of 2008 when these trades went down (where much of Mexico's hedge was traded but not necessarily the author's portion.) A highly ironic part of this story is that the traders in the pit selling to Mexico thought they were getting an incredible deal. Both because the price of crude was so high at the time but also because they were abl…

Thank you for sharing this! One outsider/laymen question:

> When one of these brokers came into the pit and yelled out "what's the market on DEC '9 crude" traders guessed he was hedging for mexico and quoted a price a full dollar above where the market was at

> The brokers had no choice but to accept this higher price.

I don't understand this. They didn't say they want to buy or sell anything. Why were they obligated to do either?

Re: What I Learned from Losing $200M (2015)

#76

Post by kcorbitt »

Danihan wrote: post #14
ryandrake wrote: post #13

Earlier quoted context omitted.

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

Your comment seems so ignorant to me. Maybe that's true if you are day trading, or picking dozens of short-term holds each year instead of long-term buys. My stock picks have been: * Google in 2003, because I worked in a call center and saw EVERYONE using it all the sudden to find answers on tech support calls. * Chipotle at their IPO because I saw the huge lines at every location in my city. * Amazon in 2008 after t…

...Google's IPO was late 2004.

Re: What I Learned from Losing $200M (2015)

#77

Post by chki »

dba7dba wrote: post #72
CalChris wrote: post #6

I crewed on a sailboat in YRA races leading up to and during the 2008-9 crash. It was mostly people from Lehman and Barclays. I was the only SV guy on the boat. No one partied harder than those guys but then they really only partied with themselves. It was kinda like Boiler Room. The Dot Com boom is the stuff of legends but these guys left nothing on the table. Barclays had a riff and ordered a string of cabs to take…

Someone from Korea (S. Korea of course) told me this story that he read in a South Korean newspaper. When Lehman was trying desperately to sell themselves in order to get more funding in 2008, one place they tried it was in S Korea. Lehman's ex head of Korean office was in a high place in Korean banking industry at the time. Supposedly some local press was painting it like it was going to be a great chance for a Kore…

I mean if you know that your company is worthless, that is probably not a good thing to print out in the first place. But it is quite absurd nonetheless.

Re: What I Learned from Losing $200M (2015)

#78

Post by skinnymuch »

pdm55 wrote: post #62
gowld wrote: post #52

Earlier quoted context omitted.

That's not how math works. Buffet has been "flipping heads" consecutively for several decades, with no regression to the mean.

Some info I gained from when I last read some of Buffett's annual letters: (1) He said he likes the insurance business (Gen RE, Geico) as it gives him money to use; (2) He doesn't like to use that money to buy shares, he likes to buy the whole of solid, multi-million family businesses e.g. furniture businesses; (3) He encourages the previous owners & management to stay on and run the business; (4) He doesn't pay divi…

Just to fawn over Buffett and Berkshire assets a bit more. Coca Cola and Amex are part of his original big four, along with Wells Fargo and IBM. Amex is the highest percentage ownership while Wells Fargo is the biggest investment in dollars. More recently he has had 3 new huge investments come in, they all exceed some of his four in value. Bank of America (about as much percent as IBM), Apple (only 2-3% but that adds up to a ton), and Kraft Heinz (over 25%) or whatever they call themselves now. That's his biggest major stake now, but a bit different as he worked with 3G of Brazil to first buy Heinz, then merge with the bigger Kraft.

And even more recently he did the cool thing of being a top or the top shareholder of the big 3-4 airline companies in America: United, Delta, American, Southwest.

There have also been some pretty big complete buy outs this century. Two come to mine. One being some manufacturing company. Another being a rail company. Both buyouts were in the low tens of billions. And then Gen Re insurance as mentioned above was no small thing either.

Re: What I Learned from Losing $200M (2015)

#79

Post by IAmGraydon »

xstartup wrote: post #69
tryingagainbro wrote: post #11

Earlier quoted context omitted.

2 mil was all you had, more or less? Must've been devastating. You could live like a king in a lot of places with $2mil...almost for life. Not in NYC but the world has a lot of countries

I went into serious depression for a month after that. That was not all money. I've more in saving which I don't touch. Honestly, I don't know what 2M buys because I've never spent any significant amount of money on anything. I don't know how much 2M is, all I know is that I had worked 2 years for that money. Whenever I remember that 2 years worth of my efforts has been flushed down the drain, it makes me sad.

I'm loving the humblebrag in this post.

Re: What I Learned from Losing $200M (2015)

#80

Post by modfodder »

Danihan wrote: post #14
ryandrake wrote: post #13

Earlier quoted context omitted.

> Systematic profits are feasible year over year... But only to the select few who are in the right product or looking at the market in the right way. You seem to be falling for the same myth: That "certain wizards" can get +EV. Every casino on Earth makes money from this myth. I believe that there are no wizards in the stock market (or in business in general), and everyone's gains and losses vs the total market are…

Your comment seems so ignorant to me. Maybe that's true if you are day trading, or picking dozens of short-term holds each year instead of long-term buys. My stock picks have been: * Google in 2003, because I worked in a call center and saw EVERYONE using it all the sudden to find answers on tech support calls. * Chipotle at their IPO because I saw the huge lines at every location in my city. * Amazon in 2008 after t…

Are those the only stocks you have picked? Have you picked any that didn't do as well? Or any that were losers? What led you to miss on Apple or Priceline?
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