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Mark Cuban: How Stocks are like Baseball Cards (2004)

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Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#11

Post by kdw »

tocomment wrote: post #8
lftl wrote: post #7

Earlier quoted context omitted.

If you're worried about inflation, then you might want to take a look at TIPS http://www.treasurydirect.gov/indiv/products/prod_tips_glanc...

that's kind of cool. Ok, don't shoot me, but that is probably based on the CPI and folks on reddit say government published inflation data understates inflation. Maybe I should just stop reading reddit ...

Frankly, reddit is a truly horrible source of information about business and the economy. The loudest commenters on those topics tend to be educated primarily via blogs.

Personally, I'd advocate a subscription to the Financial Times, which is brief and factual in nature, with opinions kept to the opinion page.

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#12

Post by kdw »

ad wrote: post #9

Cuban makes a lot of good points in this series, but fundamentals do exist. Compare his philosophy to Warren Buffet. Sure, Buffett does often get better deals not available to retail investors, such as the recent Goldman deal, but Buffett also buys plenty of common stock as well. (There is plenty of overlap in the philosophies as well...looking over his 2008 letter, seems like he favors dividend paying stocks, but do…

Personally, I take the approach advocated by Benjamin Graham. I have separate accounts for investing, and speculation/trading.

I just view them as fundamentally different activities, with different risk profiles, and different sorts of analysis required prior to taking or selling any given position.

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#13

Post by davidw »

kdw wrote: post #12
ad wrote: post #9

Cuban makes a lot of good points in this series, but fundamentals do exist. Compare his philosophy to Warren Buffet. Sure, Buffett does often get better deals not available to retail investors, such as the recent Goldman deal, but Buffett also buys plenty of common stock as well. (There is plenty of overlap in the philosophies as well...looking over his 2008 letter, seems like he favors dividend paying stocks, but do…

Personally, I take the approach advocated by Benjamin Graham. I have separate accounts for investing, and speculation/trading. I just view them as fundamentally different activities, with different risk profiles, and different sorts of analysis required prior to taking or selling any given position.

I read the 'snowball' book about Buffet, and it seemed to me like the advantage Graham had was that they went over information in a way that would only take a few minutes with a computer, but that wasn't done so systematically at the time, by most people. So, 'fundamentals', yes, but fundamentals driven by data. In this day and age, when everyone can comb out the same stocks in a matter of minutes, does that approach work?

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#14

Post by Tuna-Fish »

tocomment wrote: post #8
lftl wrote: post #7

Earlier quoted context omitted.

If you're worried about inflation, then you might want to take a look at TIPS http://www.treasurydirect.gov/indiv/products/prod_tips_glanc...

that's kind of cool. Ok, don't shoot me, but that is probably based on the CPI and folks on reddit say government published inflation data understates inflation. Maybe I should just stop reading reddit ...

CPI doesn't categorically understate inflation, sometimes it shoots high, sometimes low. This is understandable, as turning something as complicated as inflation over all the goods and services bough in a country into a single number cannot exactly be simple.

Lately, the index has arguably been understating inflation a little because the cost of living is going down, which pulls the index on the whole down even if the price of most of the essentials on it are going up.

Then again, this can simply be considered wad -- cost of living is a very major household expense, even if most people who already own a house don't see the cost reductions on their balance sheet.

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#15

Post by bokonist »

tocomment wrote: post #8
lftl wrote: post #7

Earlier quoted context omitted.

If you're worried about inflation, then you might want to take a look at TIPS http://www.treasurydirect.gov/indiv/products/prod_tips_glanc...

that's kind of cool. Ok, don't shoot me, but that is probably based on the CPI and folks on reddit say government published inflation data understates inflation. Maybe I should just stop reading reddit ...

No, the Redditers are right. Well, more or less right. The CPI is entirely subjective. There is no objective way to measure quantitatively how much quality of a product has improved.

More importantly, from an investment perspective what you care about is monetary dilution, not consumer prices. If the currency dilutes at 10% a year, and productivity grows at 7% a year, then CPI inflation would be a nice and easy 3%. But that dilution rate is really high. If you own a asset that dilutes at 2% (gold, stocks, oil, real estate), you'll earn a return of 8% a year.

I really recommend this article for understanding the problems with CPI: http://unqualified-reservations.blogspot.com/2008/08/de-gust...

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#16

Post by bokonist »

kdw wrote: post #11
tocomment wrote: post #8

Earlier quoted context omitted.

that's kind of cool. Ok, don't shoot me, but that is probably based on the CPI and folks on reddit say government published inflation data understates inflation. Maybe I should just stop reading reddit ...

Frankly, reddit is a truly horrible source of information about business and the economy. The loudest commenters on those topics tend to be educated primarily via blogs. Personally, I'd advocate a subscription to the Financial Times, which is brief and factual in nature, with opinions kept to the opinion page.

Keep in mind that the mainstream, professional economists did in fact lead the economy of the cliff. So mainstream views of economics are not exactly error-free. Blogs, reddit, etc. are full of populist myths. But the blind squirrel occaisionally finds some nuts. Or an elephant. The CPI is the elephant.

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#17

Post by kingkongrevenge »

ad wrote: post #9

Cuban makes a lot of good points in this series, but fundamentals do exist. Compare his philosophy to Warren Buffet. Sure, Buffett does often get better deals not available to retail investors, such as the recent Goldman deal, but Buffett also buys plenty of common stock as well. (There is plenty of overlap in the philosophies as well...looking over his 2008 letter, seems like he favors dividend paying stocks, but do…

It's kinda ridiculous to try and extract personal investing lessons from Buffett. He cultivates this image of some grandpa who is just good at picking stocks, but it's baloney. He has always operated with an edge. Information advantages or super cheap capital from insurance companies.

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#18

Post by kingkongrevenge »

tocomment wrote: post #6

So where are we supposed to put our money then? Especially with inflation becoming a big concern in a few years.

I think Harry Browne's "permanent portfolio" deserves a lot more popular attention than it gets.

In Fail-Safe Investing Harry said to allocate your wealth equally between: stocks (broad market index), bonds, gold, and cash (CDs, money market). Rebalance back to equal allocations roughly once a year. Try not only to diversify a fraction of this internationally, but make sure to have some wealth entirely outside your home country out of reach of your government.

This portfolio has the critical property of stability, which is very important yet underrated for most personal investors, who are told to go heavy on equities. It captures inverse correlations so that it tends to grow steadily, rather than shoot up and down along a growth trend as equity markets do. It underperformed equities during the late 90s, but never nosedived in the early 2000s and actually continued to grow.

It has done very well historically. It grows steadily in each of an inflationary, deflationary, or high growth macro environment.

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#19

Post by maukdaddy »

bokonist wrote: post #16
kdw wrote: post #11

Earlier quoted context omitted.

Frankly, reddit is a truly horrible source of information about business and the economy. The loudest commenters on those topics tend to be educated primarily via blogs. Personally, I'd advocate a subscription to the Financial Times, which is brief and factual in nature, with opinions kept to the opinion page.

Keep in mind that the mainstream, professional economists did in fact lead the economy of the cliff. So mainstream views of economics are not exactly error-free. Blogs, reddit, etc. are full of populist myths. But the blind squirrel occaisionally finds some nuts. Or an elephant. The CPI is the elephant.

Economists did not lead the economy off a cliff, the financial firms did. Big difference.

Re: Mark Cuban: How Stocks are like Baseball Cards (2004)

#20

Post by bokonist »

maukdaddy wrote: post #19
bokonist wrote: post #16

Earlier quoted context omitted.

Keep in mind that the mainstream, professional economists did in fact lead the economy of the cliff. So mainstream views of economics are not exactly error-free. Blogs, reddit, etc. are full of populist myths. But the blind squirrel occaisionally finds some nuts. Or an elephant. The CPI is the elephant.

Economists did not lead the economy off a cliff, the financial firms did. Big difference.

The economists at the Fed set the rules of the game (too big to fail, lender of last resort, Greenspan put) that rewarded increasing levels of irresponsibility over the last two decades. Firms have one directive: make money. The Fed has the directive of setting the rules so that financial firms make money from being productive, rather than living off the taxpayer. The Fed failed at this.
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