Sorry for your HD problem. But there is nothing wrong with selling naked puts when you want to acquire a stock. I don't see anything wrong with what you did, except perhaps have too much faith in the good Mr. Buffet. And i am sure neither you nor Mr. Buffet would be buying a building supply stock just as we were headed into the biggest building/real estate bust of our lifetimes, so i have to assume you got in before the mortgage crisis was obvious to everyone. Mr. Buffet often waits a long time to be rewarded. So if you are prepared to wait a few years for your reward, your "value investment" may still be OK. Right now it looks like you will have to wait five to ten years until the Real-Estate Building sector recovers. I hope you are the patient sort. But buying the stock of a company already in financial distress as Pabrai did is most definitely not value investing. Value investing means buying an above average company at a below average price. It does not mean buying a failing company at a "help me jesus price." Unless you have Mr Buffets pockets and can inject cash, take charge of the company, and turn it around, that's hail Mary gambling.
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Horrific Lessons in value investing- DFC files for bankruptcy
- Thread starter HedgefundTrader2
- Start date
Sorry for your HD problem. But there is nothing wrong with selling naked puts when you want to acquire a stock. I don't see anything wrong with what you did, except perhaps have too much faith in the good Mr. Buffet. And i am sure neither you nor Mr. Buffet would be buying a building supply stock just as we were headed into the biggest building/real estate bust of our lifetimes, so i have to assume you got in before the mortgage crisis was obvious to everyone. Mr. Buffet often waits a long time to be rewarded. So if you are prepared to wait a few years for your reward, your "value investment" may still be OK. Right now it looks like you will have to wait five to ten years until the Real-Estate Building sector recovers. I hope you are the patient sort. But buying the stock of a company already in financial distress as Pabrai did is most definitely not value investing. Value investing means buying an above average company at a below average price. It does not mean buying a failing company at a "help me jesus price." Unless you have Mr Buffets pockets and can inject cash, take charge of the company, and turn it around, that's hail Mary gambling.
Quote from piezoe:
This is NOT Value investing guys. It's distress sale investing. They are entirely different.
I agree here. When I think of value investing I think of a portfolio of 100 or more stocks that are cheap by some measure of value, not taking a gamble on individual stocks (unless you are Buffet and can get them to take your phone calls). The ones that go under are more than offset by the ones that pay off.
There are a bunch of academic studies that show diversified value portfolios outperform growth portfolios over reasonably long horizons, but it is not a style I would expect big dramatic returns from.
day7793, you're one of the biggest losers here on the board. Nobody cares if you understand or like value/distressed investing. See, e.g. I don't like daytrading but I don't call daytraders "idiots". If they make money with their style -> MORE POWER TO THEM! At the end of the day all that counts is making money, regardless of the style.
And Pabrai makes his investors money, since almost one decade. He is being inundated with new funds by investors. Clearly to you, all those investors are fools and morons and should go long AAPL. Just consider for a second that those investors have access to any investment vehicle in the world and they still choose to go with Monish Pabrai. Maybe they know they could invest in AAPL but still chose to put their money in a manager that can make them money REGARDLESS of market direction?
Pabrai was up 10.03% net of fees as of Oct. 31 this year. I am not sure how DFC will affect his November performance, we will see. It should be published within 2 weeks. Monish loves low risk/high uncertainty investments and he probably went into this position fully aware they might go out of business.
July 1999 till Dec 2006 Pabrai had an annualized return of 28.6%. This includes one of the worst bear markets in history. This includes a few positions with bad returns. But it also includes many many big winners. How did you do with your own little tiny account? WHO LOOKS LIKE THE FOOL NOW?
And Pabrai makes his investors money, since almost one decade. He is being inundated with new funds by investors. Clearly to you, all those investors are fools and morons and should go long AAPL. Just consider for a second that those investors have access to any investment vehicle in the world and they still choose to go with Monish Pabrai. Maybe they know they could invest in AAPL but still chose to put their money in a manager that can make them money REGARDLESS of market direction?
Pabrai was up 10.03% net of fees as of Oct. 31 this year. I am not sure how DFC will affect his November performance, we will see. It should be published within 2 weeks. Monish loves low risk/high uncertainty investments and he probably went into this position fully aware they might go out of business.
July 1999 till Dec 2006 Pabrai had an annualized return of 28.6%. This includes one of the worst bear markets in history. This includes a few positions with bad returns. But it also includes many many big winners. How did you do with your own little tiny account? WHO LOOKS LIKE THE FOOL NOW?
Day, you are obviously an idiot and its quite clear that you are an unprofitable trader.
Lampert, Pabrai, and Buffett have consistently delivered superior returns, yes sometimes they make poor decisions, like every single other person in life. 23M to Pabrai is not a big deal, I'm sure he could raise 100M in a day with no effort.
Lampert, Pabrai, and Buffett have consistently delivered superior returns, yes sometimes they make poor decisions, like every single other person in life. 23M to Pabrai is not a big deal, I'm sure he could raise 100M in a day with no effort.
Quote from makloda:
This "fool" has averaged 30% returns annually since 1990 and has a personal net worth of $3bln.
How much are YOU worth? What are your returns?
Who's the fool now?
Shut up makoda. We have met before, and I donot like your tone of voice and mannerism. Stop hounding threads opened by me. I will not respond to your attack above since I donot consider you a worthwhile opponent. Get lost now, before I fleece you with nice things...
Quote from Stu_utterguy:
Day, you are obviously an idiot and its quite clear that you are an unprofitable trader.
Lampert, Pabrai, and Buffett have consistently delivered superior returns, yes sometimes they make poor decisions, like every single other person in life. 23M to Pabrai is not a big deal, I'm sure he could raise 100M in a day with no effort.
Lampert is upside down on SHLD face it any ways. It ain't working for him just look at the stock.
You are prepared to overlook Pabrai's (possible loss )which I estimated to be around $23 million, it could have been lot more depending on where he bought the stock on DFC and this is probably not his first loss. You won't hear these things in the media or well written articles, you just extrapolate and present an opinion on it.
We don't know what really happened, but one thing is clear donot buy stocks that look cheap and have low multiples and are asking a bankrupcy' Judge's gavel.
I have never lost $23,000,000 or $230,000 or $23,000, or $2300, well at least that sets me apart doesn't it?
Quote from makloda:
day7793, you're one of the biggest losers here on the board. Nobody cares if you understand or like value/distressed investing.
Take a hike ...
July 1999 till Dec 2006 Pabrai had an annualized return of 28.6%. This includes one of the worst bear markets in history. This includes a few positions with bad returns. But it also includes many many big winners. How did you do with your own little tiny account? WHO LOOKS LIKE THE FOOL NOW?
You donot know what he made except what he told the media? Is there any verifying absolute slate where we can see his audited brokerage records?
People spew lots of things and you cannot take them for granted. Here is one incident where he may have taken a loss and yet he will never say one thing about it.
One of the problems with SHLD is that they suck as retailers. There is a Super Kmart in my neighborhood. I usually go to WMT's Supercenter.
One day I thought the lot at Kmart looked empty so I stopped in to pick up a fewthings--I am an impluse buyer also, so I don't really know everything I need till I see it on the shelves.
Well, the point is that I was the only person in the fruits/veggies section. The prices were twice WMT's, produce was awful,.
Dry goods I picked up a few things, but half what I wanted and could get at the grocery store or WMT wasn't there.
So, I go to check out with maybe $80 in stuff and there are 2 lines open out of about 25, and they are filled. The manager is standing by the door of the place just smiling. I walked up to him with the cart and said, "Here, maybe you can put this stuff back (lots of frozen foods) because this place is just terrible and I'm not waiting for service at a terrible place" He looked stunned. I walked out.
One day I thought the lot at Kmart looked empty so I stopped in to pick up a fewthings--I am an impluse buyer also, so I don't really know everything I need till I see it on the shelves.
Well, the point is that I was the only person in the fruits/veggies section. The prices were twice WMT's, produce was awful,.
Dry goods I picked up a few things, but half what I wanted and could get at the grocery store or WMT wasn't there.
So, I go to check out with maybe $80 in stuff and there are 2 lines open out of about 25, and they are filled. The manager is standing by the door of the place just smiling. I walked up to him with the cart and said, "Here, maybe you can put this stuff back (lots of frozen foods) because this place is just terrible and I'm not waiting for service at a terrible place" He looked stunned. I walked out.
Quote from bestfriend:
One of the problems with SHLD is that they suck as retailers. There is a Super Kmart in my neighborhood. I usually go to WMT's Supercenter.
One day I thought the lot at Kmart looked empty so I stopped in to pick up a fewthings--I am an impluse buyer also, so I don't really know everything I need till I see it on the shelves.
Well, the point is that I was the only person in the fruits/veggies section. The prices were twice WMT's, produce was awful,.
Dry goods I picked up a few things, but half what I wanted and could get at the grocery store or WMT wasn't there.
So, I go to check out with maybe $80 in stuff and there are 2 lines open out of about 25, and they are filled. The manager is standing by the door of the place just smiling. I walked up to him with the cart and said, "Here, maybe you can put this stuff back (lots of frozen foods) because this place is just terrible and I'm not waiting for service at a terrible place" He looked stunned. I walked out.
Eddie Lampert can't compete with WALMART. He knows that and didn't realize it when he took in all that real estate when real estate was in high gear.
This is what happens to value investors don't you get my point?