1) As new money comes in, I build new coffee cans based on current circumstances and prices offered by the market.
2) Provides Time Diversification. Not all times are created equal. At certain times, opportunities are better. But since marketing timing is difficult, especially since this is somewhat of a passive strategy, I'd rather simply invest periodically.
This reminds me of a study which showed that even if you bought the same stocks a month after Buffett and his holding company Berkshire Hathaway disclosed their own purchases, you'd still be way ahead of the game.
"The market ... appears to under-react to the news of a Berkshire stock investment since a hypothetical portfolio that mimics Berkshire's investments created the month after they are publicly disclosed earns positive abnormal returns of 14.26% per year."
But Buffett is a long term investor.
I am not sure how long the Pelosis hold their stocks...
There's a community on Reddit that studies Berkshire's purchases (investments made by Buffett/Weschler/Combs) and tries to follow, purchasing only below what Berkshire paid:
For example, in 2020 and early 2021 Berkshire paid $59 for Verizon, buying $9 billion worth (a huge Buffett/Weschler telecom investment). Verizon now trades at about $54, so this community is buying.
Berkshire's investments are based on a deep understanding of the business and are intended to produce good long-term results. Factors like economic moat, trends in consumption, conservative valuation, etc.
For example, Berkshire purchased Apple (AAPL) between 2016 and 2018, at an average price of $35 per share (P/E ratio of 12 or 13), and it was years before that paid off. The Redditors buy during those years, before the payoff.
Berkshire doesn't have to be right about every stock pick as long as the average is good. But if you buy 100% of the Berkshire picks that go down and less than 100% of the picks that go up (because some never drop below the level they bought them for), there is a real risk that you could do substantially worse
Buffett makes huge new investments very, very rarely. Three in the last 5 years.
Apple: buying began in 2016.
The 5 major Japanese trading houses (the sogo sosha -- Itochu, etc.): buying began in early 2019.
Verizon: buying began in late 2020.
They all trade at or near Berkshire's price, if not far below, and you get one new idea every few years.
There are other new purchases (Chevron, Kroger, AbbVie, Aon, RH, etc.), but these are small, lower-confidence positions that are often sold as soon as the price rises far enough. Probably Weschler and Combs, not Buffett.
We do that, too. For example, one of those Redditors owns 22,612 BRK.B shares and has been buying since late 2002.
Berkshire spent $25 billion in 2020 (all of its operating earnings) on buybacks at an average price of $205 per BRK.B share. That buying continued at almost the same pace in 2021 and the average price paid is $220 per BRK.B share.
We can't buy at that buyback price today, but many of us would gladly pay, say, $250 per share for BRK.B.
It's a little hard to take you seriously when you seem to dedicate the first 4 paragraphs to dunking on Microsoft. Windows is no more of a Mac clone than MacOS is a Xerox PARC clone. Word is just a rich text editor, same as Excel is database software and Bing is a search engine. Call it whatever you like, but people all-too-soon forget that the root of all software development is "I wonder if I could do this better?"
I think that's absolutely doable. Not easy but doable.
And for anyone thinking along those lines, I'd argue that the goal isn't to get to $1M/yr but rather to a place of financial freedom. I think more people would hit that mark, if in addition to plowing money into growing their businesses, they also diversified and invested their cashflows effectively.
Below is a story of an Optometrist who became a billionaire over time. His fortune came from two things:
1) He started a successful business that did about $10 million/yr in profit.
2) Over his lifetime, he continuously redirected his business profits into stocks.
update: for some reason the link above goes to the beginning of the thread instead of the tweet about said Optometrist. You can scroll to Tweet #27 in the thread.
enjoy the thread...and don't forget to compound :)
This article references something called The Coffee Can Portfolio. The idea of a coffee can is simple: You try to find the best stocks you can and let them sit for years. You incur no costs with such a portfolio, and it is simple to manage.
Robert Kirby, the Portfolio Manager who first introduced the idea recognized that most professional investors in the stock market focused on preserving capital as opposed to growing it. As a result, when their portfolios became “unbalanced”, that is, their winning stocks started to become large portions of their portfolios, they trimmed those positions and transferred capital into their “less successful” investments, the ones that had gotten “cheaper”.
Although that might sound prudent, what is really happening is that money is being transferred from the most dynamic companies, to the least dynamic companies.
This idea helped me become a longer term investor, and as a result, a better investor.
I sometimes fall into the trap of bookmarking interesting content but failing to go back to read it, especially long form content, although I find such content to be the best for learning about interesting things.
There were a few articles I kept coming back to but couldn't get through because of distractions, so yesterday I decided to print out the articles I wanted to read. 30 mins later, I had gone through 3 three great reads (plus made notes).
It was great. I learned a lot, and they spurred some ideas as well. I think I might start doing more of this.
Printing is something I started to do some months ago. Instead of keeping the tab open for weeks, I decided I'd print anything I want to read and place it a physical "inbox".
Some tips: I print 2 pages to a side, so 4 pages per printer paper. Even long articles don't use too much paper, and for my eyes it's still readable (there are a few articles where I need to enlarge first). I print using either Firefox's "Simplify Page" feature or its "Readability" feature. This removes almost all the noise: No ads, no menus, etc. It's just the article and relevant images. Similar to reading a physical newspaper.
It's been a game changer. I can now read wherever I want. Going to the mechanic? I just take some of these printed articles with me. I find myself taking notes on the paper - something I would not do well on the computer screen. My eyes get a lot less strain. Once you get used to this, there's no going back. Now when I see an article through a web browser, it's just ugly. Too many distractions. Even the menus are annoying. I didn't realize I'd been putting up with filth for so long.
I initially worried that my inbox would get full and I'd have the same mental angst, and my plan was that if it happens, I'll take a random bunch and throw it in the recycle bin. But it never came to that - I still manage to read everything I print. Somehow, the physical inbox weighs less on my mind than the virtual one. I don't feel I need to deal with this inbox. It's OK if it just sits there collecting dust.
When I had more time (before having kids) i would print out a couple of articles every other day to read while commuting with public transport or during the evening. I became a bit obsessed with the optimal usage of paper space per article. So I wrote a HTML-to-LaTex converter as a golang learning project and applied the scientific paper style to the articles. I was quite happy with the results. Some HN classics can be found here:
That's pretty good. How robust is it to various types of articles (e.g. stripping out headers/footers/comments/menus etc)? Since I do it often, it's critical for me to have the process as smooth as possible (minimum number of clicks to get a preview before printing).
Also, the amusing thing is kids were part of the reason I started doing this. I detest reading on the phone, and I cannot be glued to my desktop because I have to watch the kids/babies and they love turning off my PC. Printing them out lets me read them while monitoring them and being away from the PC.
Do you have a simple system to keep track of the notes you take?
I ask because I also started taking notes, primarily because I want to write about some of the things I come across. I write an investment newsletter (https://playingfordoubles.substack.com)
I probably need to get myself some type of filing cabinet to keep track of articles I'd like to revisit in the future.
> Do you have a simple system to keep track of the notes you take?
Not a good one. I used to just use org modes' capture templates, but it wouldn't be organized, and it became a write only system. I recently switched to org-roam. Still, it takes work to organize so I don't really take many notes.
To be clear, when I said I take notes while reading, over 90% are "transient" notes - just something relevant for that reading and not intended for long term storage. So they're lost once I discard the article.
I was going to recommend the Zettelkasten method then realised you asked for something simple. But for others who are curious or don't mind a more involved system then I would recommend it. Works digitally as well.
I wonder how the environmental impact compares against potential alternatives. Like if instead of reading those pages on your commute, you'd bought yourself a new hand held console every few years to play, or decided that since you're not using the time anyway then you might as well drive yourself to make the trip a little shorter.
For those that want to do something like this regularly you might consider the ReMarkable tablet, which has a Chrome extension for sending website print outs to the device. It is essentially just high tech paper, so very little potential for distraction. I've not used the web extension much but the tablet more generally has helped me a lot with productivity in reading academic papers and note taking.
> so yesterday I decided to print out the articles I wanted to read. 30 mins later, I had gone through 3 three great reads (plus made notes).
I do this too and find it very enjoyable and easier to handle. I learned this from my grandfather. He was a civil engineer and one of the first people in the neighborhood to get a computer and internet at home. He had a good balance of traditional and modern.
It's a similar paradox that today's DTC brands face, especially those selling digital products or consulting services. They usually have to give away a lot of IP upfront...for free.
A couple of years ago, I started this spreadsheet to share my investments with close friends and family.
One unexpected benefit has been that i have gotten my sister interested in investing. Since investing is a big passion of mine, it has been personally very rewarding to be able to discuss investing topics with her.
https://docs.google.com/spreadsheets/d/1tBrZEMFK9XNWxiqOxE8o...