OT: When comes the time to play "vulture&qu

Stocks A to Z
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A year ago I got rid of nearly everything, except BRK and oil companies. I had absolutely no love for any of Saul’s recommendations in that market environment. I could explain my reasoning, but it would roll off the Saul disciples and it would be preaching the choir here. It worked out well in spite of my ignorance.

wouldn’t roll off my back. When I got into Saul in 10/2020 I expected a year of flatness while the cracy 300% growth in Saul port up to 10/2020 was reeled back in. Instead what I got was even more crazy growth, another doubling actually, by 11/2021, which has been followed by giving back that doubling until now 3/2022. So my year of flatness is, at this point, 15 months of net flatness, and I’m ready for returning to at least multiple flatness for a while as that will give me 50% returns on the Saul stocks. But I am patient given the 20+ years that precede this. No I am not sure, but I decided in 10/2020 it is the way to bet, after following Saul and not investing for a few years before 10/2020.

R:

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Just keep in mind that when SAAS stocks are behaving all the posters are posting their investment records. There’s a noteworthy void in that respect, except for the board leader whose returns seem to go up exponentially as the stocks go down.

Saul continues to post monthly and his port is down which he accurately reports.

Its not that you are a broken record, its that you have erased what is actually written and made up lies.

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For the record, I am now down on my overall Saul investing experience. I got in about October of 2020, rode the rocket up to more than doubling by 11/2021, and have now ridden the rocket down. Am I wiped out? No, I am about even with where I got in in 10/2020. Does this mean I am wrong about Saul? No more so than Brk spending a year at a time going nowhere proves you are wrong about BRK.

More likely, it proves that this is a much better time to get into Saul type investing than my 10/2020 entry, following as it did a year in which Saul’s port had tripled, and so was exploring new heights in its multiple expansions.

This is the key criticism of Saul’s method. Entry price matters. He got into DDOG under $40/sh. That leaves a lot of room for mean revision if the price reaches escape velocity. Saul insists entry price doesn’t matter. Occasionally someone will make a throwaway comment about entry price being “too rich” but it’s never tied to any attempt at valuation.

Mungo basically gets it. And I’d be shadowing Mungo’s port instead of Saul’s if he had published his port as clearly as Saul has and it audited out to something like 29%/year like Saul’s does.

And that’s the second criticism. There are clearly a lot of people on the board simply shadowing, and despite his disavowals, he has some responsibility to the hundreds of hangers on. When he deletes any and all posts that might serve to educate about questions of valuation and entry price, he is blinding the cows and potentially leading them to slaughter. I have a problem with that. Mungo might suggest that something is interesting at current prices, but he never offers a portfolio for people to blindly follow. No one on these boards should function as an investment advisor, but the Saul board looks a lot like one.

PP

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Mungo basically gets it. And I’d be shadowing Mungo’s port instead of Saul’s if he…

As you apparently have a high respect for him let me point out that you might miss an important point Jim made not long ago with respect to Saul: That it is “cycle dependent”, that this type of investing can work amazingly well during “the right time” in the cycle - - - and that this time might come to an end now.

P.S.: Jim, my apologies should I distort too much what you said.

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Again, examples are many and there’s just one Amazon. This one is very likely where that board is and will be.

My brother-in-law is not poor, but he is well-read and owns (now given down a generation) a few local businesses with a total of probably 150 emloyees. He made some critical decisons about 30 years ago, he began selling some of his businesses (in other towns) and simply investing the proceeds in the stock market.

To say the least, given the stagnation in the businesses he sole, it has been wildly successful. He claims luck, not skill.

But along the way he stumbled into the business/stock called EMC back in the early 1990’s. Storage! He was so fond of the business he put $100,000 into the stock. By the early 2000’s he had close to ten million of EMC…and he decided to sell. He sold on one of the downturns so he got about $8,000,000 total.

EMC had sold for about 18 times earnings when he bought. As earnings grew 35-50% (actually faster at times) a year the stock gained a lot of attention and the PE went up through the roof. My brother-in-law is a part of my investment club and the club too bought EMC a tad later than my bro-in-law’s purchase.

The club’s basis was less than $1.50 when the stock hit $107. Nobody had the courage to step up and say, “Well the PE is nearly 200 so we ought to bail out of this puppy now.” So old dealraker who did not buy the stock says, “Why don’t we just do a programmed sell where we unload x percentage each meeting until we’ve reduced the position?” The motion was voted in and we sold a tad of the stock at $80 per share.

We held on to EMC and eventually sold the remaining position at $7, yes seven dollars, per share. EMC the business? Never stopped growing, just grew slower.

But that’s not the main point here. The main point is that in my investment club there are 25 of us, and everybody in the club also personally bought EMC stock. Yep all of them…except me. I just watched.

And here comes the message of this story: All 25 of them, except my brother-in-law who sold higher and me who didn’t buy the stock, sold for a loss on the stock. 23 of 24 investors in a fabulously successful stock and business lost money.

You can be almost certain that the SAAS game will present the same outcome to that bunch, except in my view the losses will likely be far higher. Of course none will admit it, the rotation in and out of that board will be extreme.

It is this way, always has been. Our investment club has about a 100% lose-your-ass outcome buying stocks because “someone else has made X (an incredible amount) money.”

I just watch…and of course preach a little. When or if the SAAS bunch jolts higher Saul will be posting his outcomes (that aren’t really outcomes) and his herd will run along with him buying at far higher prices. And at some point, and in these stocks it will likely come far faster, those beauties will sell for 10-15 times earnings.

Life is great…if you can stand it.

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And that’s the second criticism. There are clearly a lot of people on the board simply shadowing, and despite his disavowals, he has some responsibility to the hundreds of hangers on. When he deletes any and all posts that might serve to educate about questions of valuation and entry price, he is blinding the cows and potentially leading them to slaughter. I have a problem with that. Mungo might suggest that something is interesting at current prices, but he never offers a portfolio for people to blindly follow. No one on these boards should function as an investment advisor, but the Saul board looks a lot like one.

PP

And you think that these “cows” read only his message board? That they aren’t smart enough to look at other message boards for discussions on value?

gcr
One who has benefitted greatly from Saul’s style of investing, but doesn’t always agree with him.

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The problem with [Upstart’s AI selection of debtors] is the problem with all data mining. They will find the people who fit that goal in the current market, but those people may regress spectacularly to their credit score predicted performance as conditions change. Upstart has been around briefly and so my fear is their AI has trained itself to be really good at 2020 and 2021, but not so good at conditions like the 2010s, 2008, 1999, etc., that credit scores have been around longer and so will be more robust in their predictions of creditworthiness.

This is a good point, though I’m certain Upstarts data goes back before 2020. I wonder how much data they have going how far back? Do they go as far back as 2007? I know they have partnered with various entities to gain access to data. Maybe I’ll try to look into this a bit more. It would be a fairly obvious goal for the builders of the AI to train it on recession-era data as well as boom-time data, so expect there is some of that already built in.

Upstart doesn’t have much exposure to the default risk themselves. Their business would be hurt if they performed worse then FICO in a severe recession, but if their customers believed in the process and the AI’s ability to learn and improve, they might forgive a one time blip, reasoning that the AI will do better next time.

I find it an exciting business and will continue to research. There will have to be a clear path to stock price growth through traditional valuation for me to want to buy in. It may be getting to that ball park recently, but I’m not sure enough to buy in.

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it is “cycle dependent”, that this type of investing can work amazingly well during “the right time” in the cycle - - - and that this time might come to an end now.

This is a key point. A post bit earlier cites a 29% return over 20 years at least four times in the same post. I don’t have the exact numbers, but I recall someone here figured that going forward the S&P could lose something like 2% a year for the next decade and still be above historical multiples. That 29% return was not achieved in the current environment. Past returns are not assured for the future. I don’t know if his methods will still work, perhaps it will, all I know is that today is a very poor analogy to twenty years ago.

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It is baffling what happened over “there” during the last I think 1-2 hours. Divi posted about a company he found interesting and Saul had a very rude reply, to which Divi and me replied, then another guy, then Assistant board manager Bear asked Divi and me to show a bit “humility”, to which I replied - - - and now all of this is gone and the board and the leader’s shirt pure and clean again, as if never anything did happen and as if Saul never rudely told Divi “What do you not understand about ‘No Cryptocurrencies!’ ?” - - - while Divi introduced Coinbase, which is not a cryptocurrency but a SaaS company, a “…secure online platform for buying, selling, transferring, and storing cryptocurrency”.

Mhm, maybe PP had a point with his “Putinesque” censorship.

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Oh Saul is very very rude, especially when you point a mistake. Hey when you have a huge following you can be whatever you want to be. You have earned the right to be rude.

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Mhm, I used to read that board fascinated and with amusement and was and still am amazed by the work and the thorough analysis done over there.

I even had SaaS stocks and still hold Sentinel One, and did profit lately several times from a certain pattern (If one of their stocks fell on one day extremely, say 20%-25%, I bought Calls and sold them next or latest 3 days later).

But I don’t like the atmosphere over there any more. It’s a fascinating experiment in applied group dynamics, social psychology pure, but it’s too “dark”.

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King, I understand you mean it rather as a sarcastic comment. But it offers a good opportunity to say this:

There is no right to be rude.

Rudeness requires blindness, not seeing that the one you talk to, the one to who’s post you reply with yours, that this one will die! As more one gets aware of this one should see in that other one a fellow traveler with the same fate, the same end.

End of sermon.

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Hey when you have a huge following you can be whatever you want to be. You have earned the right to be rude.

I hope you are saying that with some sarcasm. On this board, from Jim to WEB himself, the ones who have most earned the right to be rude are great examples of why it works not to be.

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On this board, from Jim

Jim can be and has been… It is just more polished.

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As far as the concept of rudeness goes, my view has evolved to literally treasuring the freedom of this board for all to express their views. Sometimes it does get dicy and pretty abrupt. But it isn’t run by a dictator who literally stands up and repeatedly stomps the panic button in sheer rage if you aren’t on your knees in worship position.

div20 and kingran…post on brothers.

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Can I make a suggestion? Please start a new Board called “Lets Complain about Saul’s Board”, and take this discussion over there.

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Please start a new Board called “Lets Complain about Saul’s Board”, and take this discussion over there.

Rejected. This on the surface so neat and appropriate suggestion completely misses that within this one single thread apart from complaints we now already had

  • a discussion about SaaS stocks beeing “cycle dependent” (or not)
  • Upstart’s AI and datamining risks
  • neat anecdotes about the '90s and EMC
  • a discussion about how much entry price matters
  • high growth metrics and their use in momentum strategies
  • Saul’s indeed highly impressive investment performance
  • the question whether Upstart is a SaaS company indeed (or not)
  • several times a comparison of Upstart and Cisco
  • a list of the generally most widely held SaaS stocks
  • anecdotes about the 70’s “Biomedical Reference Labs”

A very rich and diverse thread. Seeing it only as “Complaints about Saul’s Board” must come from either a Sauls’s board junkie or a hardcore Berkshire junkie. Both are missing out.

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In psychology that’s called “projection”.

Jim is the epitome of politeness and integrity, especially when being poked with a stick.

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Believe what you want… nothing hurts like truth.