BOFI - Thanks to everybody

Thanks to everybody for the great discussion on BOFI. Yesterday morning I got mostly out because I was getting so uncomfortable, and because I anticipated that the market would find it hard to shrug off the second NY Times article (and it did drop $17.50 in a day), but it’s obviously not a high conviction sell, and I certainly might rebuild my position if things turn around. I have lost a bunch of confidence in management though. And, as others have noted, there are lots of other good stocks around without these legal issues. I really appreciate all the different points of view expressed and the great discussion.

Saul

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Yesterday morning I read your post telling us that you got mostly out of BOFI. You held it as one of your three high-conviction stocks but then sold it without telling us that your conviction changed. I realize that one difference between this board and the MF services I am in is that they tell us what they are going to buy\sell (usually) before they do it. Since I’ve followed you (for about the last year) you share with us what you are going to buy but only tell us after the fact about the sells. I realize that with such a large number of followers, the reason for this may be the market drop that such an announcement would cause before the sale. Many, many of us hold you in a place of near reverence as we follow your advice. Your rockstar reputation is the price you pay for being so brilliantly helpful, concerned and giving. Thank you. I’m hoping you can work in more info before the fact on sells as well as buys.

Fred (one of your many admirers). Long BOFI

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I share your apprehensions.

Even if the most optimistic scenario plays out and BOFI is found clean on all accusations, it be months and months (and months…) before the legal and regulatory storm clouds break up.

BOFI is wounded, rightly or wrongly, and I no longer see its investment charm in light of other, less confounding, market opportunities.

The question I ponder now is whether BOFI’s competitors will benefit though this, or be threatened with similar concerns/accusations.

O the froth of it all…

Bob

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“You held it as one of your three high-conviction stocks but then sold it without telling us that your conviction changed.”

Fred, I have to disagree with you. My understanding of this board is that it is to help us all become better self sufficient investors. It is not so that we can follow Saul blindly. Following Sauls actions to the letter without thought does not serve in helping us becoming better investors capable of directing our own investments. I do not believe that Saul need to be at our beck and call to direct our investments. He told us that he had sold. That for me is adequate feedback. Do I know whether he is holding the proceeds in cash - No. DO I know wether he expanded his percentage in all of his remaining stocks, moved his tryout into actual full positions, poured all of it into a single high conviction stock - No. Would I like to know - Yes but at the same time even if I do choose to follow his BOFI lead I am now able to decide for myself where I see my funds being placed. A certain satisfaction in learning how to invest.

I happened to have followed Sauls lead but not just because Saul did it. I was one of those that have just seen to many perfect stories unravelling and I was worried that this was yet another example. When Saul sold that was an important “sign” that all of the other signs pointed towards me exiting my position. Had Saul bought I would not have bought more but it might have persuaded me to sell off only a portion or hold a little longer.

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I got mostly out because I was getting so uncomfortable, and because I anticipated that the market would find it hard to shrug off the second NY Times article

Saul, I think you made a wise decision here. It is a wise choice even if the allegations are proved wrong and BOFI races back to $140 overnight.

It pays to abide by the laws of statistics. I don’t know anything about BOFI but I do know that far too many accounting fraud allegations end up being true. Don’t have exact number but let’s say 20% to 40% are proven correct. That is a huge risk. This is a level of uncertainty that people should be uncomfortable with.

Buying BOFI at $100 is to toss a statistical coin. With 70% probability you win and BOFI goes to $130. With 30% probability you lose and BOFI goes to $40.

Until we get clarity, BOFI should be limited to those who specialize in catching falling knifes or have inside information. The statistical risk/reward is simply not there.

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My understanding of this board is that it is to help us all become better self sufficient investors. It is not so that we can follow Saul blindly. Following Sauls (sic) actions to the letter without thought does not serve in helping us becoming better investors capable of directing our own investments. I do not believe that Saul need to be at our beck and call to direct our investments. He told us that he had sold.

Well, your message prompted me to review Saul’s six postings following the BOFI blow-up: I believe BOFI, I believe BOFI, I believe BOFI, I believe BOFI, I believe BOFI, I sold BOFI. And this is not a criticism of Saul but simply an observation of how quickly investors can move from a belief in the strength of a company and stock to a loss of confidence and conviction.

10/14/2015 12:21 PM There is absolutely no new news. This was entirely something that could have been anticipated. Stock may be making new highs again in another month or so. http://discussion.fool.com/what-could-be-going-on-with-bofi-3194…

10/14/2015 1:08 PM Yes, I just bought some more shares, but PLEASE don’t take that as a guarantee that the price is going right up! http://discussion.fool.com/yes-i-just-bought-some-more-shares-bu…

10/14/2015 1:11 PM An example of a frivolous legal action (to illustrate what has happened to BOFI). http://discussion.fool.com/heres-another-example-new-york-oct-14…

10/14/2015 2:54 PM I think that Neil’s post was so pertinent that it should be reposted on this thread too. Saul re-posted Neil’s observations on why the allegations against BOFI are groundless. http://discussion.fool.com/i-think-that-neils-post-was-so-pertin…

10/15/2015 8:21 PM I concluded that by far the weight of evidence is with the company. http://discussion.fool.com/i-cant-say-i-feel-a-ton-better-to-be-…

10/16/2015 3:07 PM I decided today that I wasn’t comfortable with such a large part of my portfolio at risk (it was about 14%) and acted accordingly. http://discussion.fool.com/i-have-been-long-this-stock-for-a-cou…

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“You held it as one of your three high-conviction stocks but then sold it without telling us that your conviction changed.”

Fred, are you one of those guys that just follow what Saul does and now, because you didn’t get a chance to sell when Saul did yesterday, you are nervous about your holdings, is that it?

So, if BOFI goes up to $120 tomorrow you are happy and all is forgiven.
This is not what this board is about, though I have the feeling we have more and more “newer” investors here that try to follow the money and who does not like to make 30% per year.
The problem with that is, we are not like Saul and everybody has to find their OWN style of investing.

I was fortunate enough to have found this board right at the beginning and we all owe Saul immensely for his willingness to share and try to help us all become better investors, but I have the feeling with comments like this we will scare Saul away and he will just leave us alone and he will still make his 30% annual return.
Fred, Saul does not need to tell us ANYTHING!
He is kind enough to do it and I appreciate it very much
Thank you Saul, Erik

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Hi NewEchota,

I made it clear in the beginning that I wouldn’t post my buys and sells routinely, but only at the end of the month in my End of Month Summary. I’m not obligated in any way to publish them at all, or to publish my positions. I could have waited until the end of the month and mentioned then that I had greatly reduced my BOFI. I have made it clear that I will never publish my trades before I make them, as my primary responsibility is to my family and myself. Period. I tell people all the time that this board isn’t about following my trades, but learning how to think for yourself and invest for yourself, as I’m an old guy and won’t be around forever.

I published this major move though, when I did, as a courtesy to members of this board. Selling was what I felt was best for me in light of my unease about the CEO’s somewhat bizarre behavior (for a CEO) in the conference call (which I tried to make excuses for), and then with the addition of the second NY Times article. Just too much for me. There are plenty of other stocks out there without that level of worry attached. I recognize that many other people may see it as a bargain price in response to an unproved accusation. That’s fine, and it may bounce right back a third time. But it might not. I don’t know.

I hope this explains it adequately for you.

Saul

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There are lots of other stocks

For instance I used to own SCTY. I still believe that distributed solar will increase it’s share of power generation. But SCTY was just too hard to understand, and utility companies own" most of their regulators. So I not only had all the internal risks of poor planning or execution, I had all those external ones too. So I sold and moved on.

You can always sell now, then move back into BOFI, it won’t go to 200 anytime soon.
Or sell half your holdings, a way to avoid commitment and be at least half right no matter what happens.
Sometimes the only way to overcome ownership bias is to sell and step back for a while. Once sold it goes from “my company” to “a company”

Any bounce or fall over the next few days are most likely to be a technical one. The news is out, almost everybody knows. Early Monday we often see a short spell of craziness as the least informed investors have had all weekend to think (or more likely emote) the news over.

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"Well, your message prompted me to review Saul’s six postings following the BOFI blow-up: I believe BOFI, I believe BOFI, I believe BOFI, I believe BOFI, I believe BOFI, I sold BOFI. "

Wow so what you are saying is that Saul is actually a thinking human who had the opportunity to spend from 8:22pm ( a minute after his post :slight_smile: ) on 10/15/15 to sometime on 10/16/15 to rethink everything that had come to light. He had a chance to review and internalize the data and then decide that on the basis of all of that, together with his personal requirements and the fact that he had a significant portion of his funds in one stock that this was no longer a situation that he wanted to be a part of. And then after he acted upon it he took an opportunity (before market close I might add) to let us all know what he had decided.

I for one am very very appreciative of Saul who is incredibly gracious in allowing us all to gain from his knowledge, expertise and mistakes. I cannot imagine being that ungrateful so as to criticize him for a) changing his mind and b) not getting our permission to do so prior to selling.

Saul - Thanks so much. A recent follower but one who has already learnt the most important lesson on this board - Think for yourself and make your own decisions (albeit with a bit of guidance from those many on this board that have forgotten more than I currently know).

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Saul

You totally rock, and I am grateful to read anything you care to publish about your thoughts and your trades, whenever you make them!

in light of my unease about the CEO’s somewhat bizarre behavior (for a CEO) in the conference call

This made me smile though: having encountered quite a few CEOs of mid-size, upstart companies, I don’t see anything here that I would be surprised to see in many other similar ‘under-pressure’ situations from charismatic, driving leaders in high-performing, process-light, small/med-size companies.

I loved the cc: for what was said explicitly, what I was able to read between the lines, and how it was delivered. The only things that pissed me off were that (1) the Press Release said there would be a link on the IR page before the start and there wasn’t, and (2) waiting on hold to get registered to listen in once it had started.

Cheers

Cham

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I cannot imagine being that ungrateful so as to criticize him for a) changing his mind and b) not getting our permission to do so prior to selling.

Under normal circumstances, I would agree with you but not when his trading action is the complete opposite of his board guidance over the previous two days including an announcement that he had added to his position.

As late as Thursday night at 8:21 PM he provided a summary review of the previous two days actions and had “concluded that by far the weight of evidence is with the company.” He clearly seemed to be comfortable with his investment in spite of the uncertainty, including his concern over the tone of the CEO on the BOFI conference call.

And then after he acted upon it he took an opportunity (before market close I might add) to let us all know what he had decided.

Yes, less than an hour before the close and unless you’re on the boards full time, you probably missed it. I know I didn’t read it until after the market close and my jaw dropped. After reading Saul defend the company and stock through two turbulent trading days only to suddenly liquidate one of his three high-conviction stocks left me scratching my head in disbelief. I know Saul needs to do what’s best for himself and his family (and that we’re all responsible for our own investment decisions) but this could have been handled better.

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" Yes, less than an hour before the close and unless you’re on the boards full time, you probably missed it. I know I didn’t read it until after the market close and my jaw dropped. After reading Saul defend the company and stock through two turbulent trading days only to suddenly liquidate one of his three high-conviction stocks left me scratching my head in disbelief. I know Saul needs to do what’s best for himself and his family (and that we’re all responsible for our own investment decisions) but this could have been handled better. "

Wow, I am really amazed at the entitlement bieng shown here. When did anyone start paying Saul to run an investment letter or run their portfolios. If you were paying him to do either you would have a gripe but as it stands he bears absolutely no responisbility to any of you.

Truly if anyone is that materially affected by Sauls decisions then thay have learnt nothing from this board and are merely trying to mirror his portfolio.

Saul did what a good investor should: He reeveluated his position as it pertained to him specifically and then made decisions based on his position, his relucance to deal with certain odds and then acted accordingly. Just because he sold does not mean I should - unless I am following him absolutely blindly.

For those that are blindly following Saul take comfort in the fact that the odds are there will be a pop tomorrow at least for a short time and you will be ale to sell at a price higher than you would have had you been on the boards on Friday afternoon when Saul made his announcement.

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Saul owes you nothing NewEchota! The board members benefit from sharing opinions and facts about Stocks and Investing. Not about people.

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… piling on here a little bit …

I think that people seem to forget: Everybody needs to remember all the time that although it’s hosted by the Fool, this is a public board and not part of any paid subscription service. Personally, I’m relatively new here, having lurked for several months before making my first post here a couple of months ago. I have no idea whether the discontent that I’ve read over the past few days is mostly from newbies like me, or more veteran readers, but regardless, there seems to be some significant understanding about how this works.

For Fool paid services, they have strict trading rules about preannouncing trades made by the portfolio services and for blackout periods before and after any relevant trade of any sort by a Fool employee. But this board is not like that. It is a public discussion board. But instead of discussing politics or humor or some other topic, Saul has set up a board to discuss his own personal investing philosophy, purely on his own terms, and the Fool has agreed to host it. Because this is a free discussion board and not part of a paid subscription service, in theory it could just as easily been hosted on Yahoo or some other site, but Saul choose TMF. But that doesn’t mean that he should be subject to any of the rules intended for paid services.

If you’re not happy with the way that Saul shares information, you’re certainly free to leave, just as you were free to join and read. And by that I literally mean “free”. I’m sure that if any poster was part of some market manipulation or other similarly egregious behavior, TMF would intervene and shut it down. Otherwise, I don’t see any serious restrictions are relevant or should be expected.

As I mentioned, I’m relatively new here, and still getting a feel for the place. But as I slowly get a feel for how things work around here, I am under no allusions as to what to expect. I think that TMF will ensure that we get no less than we paid for (i.e., zero), but whether or not you get more than you paid for is entirely up to each of us. I for one always follow a new source for quite awhile before I have enough confidence in it before taking any sort of action based on what I’m reading. And in any case, any subsequent actions are my own, not somebody else’s responsibility. If you think that you’re getting nothing of value, well …

… FYI, I am not a Fool employee nor in any way formally affiliated with Fooldom, other than that I pay them a lot of money for subscription services totally unrelated to access to this particular board. In fact, I’m too lazy to look up the actual rules regarding the expected behavior of hosts of free public services, or even if such rules exist … if anybody reading this is sufficiently concerned, feel free to look it up on your own if you want to. And if you find some rules that have been violated (such as you can’t speak your mind in real time and then change your mind), please feel free to share those details, so we can all learn from it. But as far as I understand, Saul doesn’t owe us anything here – nor should we expect anything from him. He and the other active posters here have simply decided to share their thoughts here in public rather than in some private chatroom somewhere else. For that I am grateful, and hoping to learn something.

as always, i am full of carp

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I would agree with you but not when his trading action is the complete opposite of his board guidance over the previous two days including an announcement that he had added to his position.

Tell us… how much did your subscription to “Saul’s Investing Decisions” cost you?

While its fine to seek understanding in how Saul manages his portfolio, to complain is simply ludicrous.

Here’s my suggestion… request a refund of your remaining “Saul’s Investing Decisions” subscription. I’m sure Saul will oblige. Then simply uncheck that red heart at the top of the thread.

Bob

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Under normal circumstances, I would agree with you but not when his trading action is the complete opposite of his board guidance over the previous two days including an announcement that he had added to his position.

Board guidance?! He’s just a (very talented at investing) guy that very graciously takes time to share his methodology and ideas with the Internet and makes it very clear to not blindly follow him.

Personally, I very much appreciate everything he brings to the table and have learned a ton, but with statements like that I wonder how long it will last. I would certainly start having thoughts of shutting things down if I were Saul. Or at least holding my cards closer to my vest after reading posts like these.

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I know Saul needs to do what’s best for himself and his family (and that we’re all responsible for our own investment decisions) but this could have been handled better.

I’m curious what you think Saul should have done to handle it better. Not post his opinions at all when the story initially broke? Pretend early on that there was much more doubt in his opinions than he actually felt at the time? Delay selling even though he decided wanted to sell?

It seems to me that all the options involve Saul hiding his true opinion, misrepresenting his true opinion, or not doing trades he’d like to do. So I wonder if I’m missing some other option.

Like, if you were Saul, what would have done to handle it better?

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I like the reminder noted in the last sentence of this blog, and appreciate all the opinions on both sides.

http://www.economicnewsdaily.com/read-this-before-you-sell-t…

Enjoyed Neil, your link to the Cramer clip, and postings on options and shorts.

Personally, I could not sleep with the uncertainty hanging, in holding 15-20% of my portfolio into BOFI, and thus understand how/why Saul would need do, for his circumstances, whatever he did do.

And, full of Carp, you are spot on;

http://discussion.fool.com/-piling-on-here-a-little-bit-i-think-…

And Bob as well.

http://discussion.fool.com/i-would-agree-with-you-but-not-when-h…

Greg

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Carp,

Great post. I’m with you and am also grateful to be able to read this board. Saul provides a great place to learn about being a good to great investor for free. Thanks to Saul and many of the other contributors there is an amazing flow of ideas, techniques, tools and tips available to all comers. All for free. What a great concept. What a great country and what a great board. Thanks Saul and all the other board contributors.

As he correctly pointed out it’s his money and his responsibility to make the best investments decisions for himself and his family.

BigOil1

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