Value Ideas Blog
Some Links
Dear followers, the time has come again for our weekly link collection. This time featuring an enlightening article on management compensation, how Charlie Munger picks stocks, seven patterns of inefficiency when pricing a business, some thoughts from the Brooklyn Investor and an ‘Economist’ comment on John Nash’s nobel price 1994, in remembrance of his great life that ended three days ago. nash We will be back shortly with our latest investment story. Stay tuned and enjoy your week!
Dear followers, first of all, we want to wish happy easter to all of those who celebrate! As you know, we share some useful reading from time to time. These are some easter eggs that we think you might like:     I want to close this entry with some thoughts about chosing business partners. Here is a short quote from “The Ides of March”, a movie from 2011.  
There is only one thing that I value in this world, Steven, and that’s loyalty. And without it, you are nothing. You have no one. And in politics? It’s the only currency you can count on. That’s why I let you go. Not because you’re not good enough, not because I don’t like you. But I value trust over skill.
  I think that in business life, there are lots of situations in which you have to be certain you can rely on your peers and I have always spent time getting to know the great people I deal with. Charlie Munger found his own words for this:  
 Choose clients as you would friends.
  Some time ago, I heard a talk about by Kent Hahne, the founder of several international food chains (Vapiano, L’Osteria et al). He was very clear about the importance of shared values and friendship in business. For him, it was the ‘key ingredient’. I have to add that I absolutely agree on his thoughts. I hope that I continue to be as lucky as I have been so far when encountering partners, as loyalty is crucial for any long term business relation. Finally, we want to thank all the subscribers that have stayed with us so far. Let’s keep the discussion alive. Happy Easter!
Dear followers! Here are once again a couple of recent links out of different areas that we found interesting. And regarding the recent actions taken by the ECB, this could help maintain your confidence in stocks and bonds:  
How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case. – Robert G. Allen
  Have a great week!
After I spend a week in Omaha to attend a German value investor conference and the show of Buffett and Munger, we have a couple of more ideas to work on and even more valuable readings. Overall I can say that this week was a unique experience and I have to be deeply grateful to the organisations of the event and particularly to two persons from which I learned the most and have such a great personality. The two guys I owe so much are  M&MMI, thank you guys for all the lessons which you have taught me.   Created with Nokia Smart Cam   I bought Berkshire Hathaway`s letters to shareholders from 1965-2013  for 12 Dollar in a book form, which is a pure bargain for a guy who does not like to read so much on a screen. I will try to summarize them all (after I have finished my studies) and upload them.   Furthermore I`d like to highlight the book “Dream big” which was highlighted by Warren Buffett at the end of the Meeting. You can read a summary here.   You can read the notes of the Meeting here, I would like to highlight WBs answer to the Cost of Capital.   Additionally I would recommend the lessons of failure from the really good moatology blog. As a person who admits to have failed a couple times I can recommend to use such an approach.   Due to the fact that I like entrepreneurship and like to spend my leisure time on edx courses I only can recommend to read about entrepreneurship, strategy  and learn something new in an edx online course! And last but not least I have learned how important a franchise is, so go out and lean-to account for it! (We will try it as well)   And always keep in mind that the intelligent investor estimates likely returns, and invests if the returns are worth the risk.  Most profitable investing takes an uncomfortable view versus the consensus, and buys when the market offers good deals.  If there are no good deals, profitable investing sits on cash, and waits for a better day. Have a great week!    
Once again, we share our most useful lecture with you, this week you might want to take some more time than usual:   An outstanding student investment newsletter from the Columbia Business School: http://www8.gsb.columbia.edu/valueinvesting/sites/valueinvesting/files/Graham%20%26%20Doddsville%20-%20Issue%2020%20-%20Winter%202014.pdf   An exponentially growing company in a very competitive field: http://moatology.com/2014/02/20/optimizerx-a-little-company-in-the-sweet-spot-of-a-massive-industry/   And, as we like to do, we give you two great quotes:  
Really good investment opportunities aren’t going to come along too often and won’t last too long, so you’ve got to be ready to act. Have a prepared mind. ― Charlie Munger You will become way less concerned with what other people think of you when you realize how seldom they do ― David Foster Wallace, Infinite Jest
  Finally, we do not want to miss out on making an announcement for those of you who are around: We are going to have a presentation on value investing, margins and moats at the European Business School in Oestrich coming up on Monday. Feel free to join if you have the chance! https://www.facebook.com/events/530086467089189/?ref_dashboard_filter=upcoming
More warning signs are rising, companies margins are at their peeks: “A slowdown in profit growth would hardly be surprising, given that profits are at their highest as a proportion of American GDP since the second world war. But that points to another oddity. On the best long-term measure, the cyclically-adjusted price-earnings ratio (which averages profits over 10 years), American equities trade on a multiple of 25.4, according to Professor Robert Shiller of Yale University, well above the historic average.” Read the full article of the Economist here.   Probably the biggest money scandal in Germany in the year of 2014: The nearby bankruptcy of Prokon, where over 75.000 Germans have invested a part of their money. Another example of the famous economic quote: There is no free Lunch! English  short version.   Very good blog and a very good article over the moat of financial service companies on Punch Card Investing, which perfectly fits in our current research process.   And for the first time, a video Link to an interview with the World’s Best Investment Advices from valueinvestors like Warren Buffett, Peter Lynch, John Templeton, Seth Klarman, Charlie Munger, Walter Schloss, Bill Ackman, Bruce Greenwald, …   And one quote  to think about for the week:  “When he was dry, he believed it was alcohol he needed, but when he had a few drinks in him, he knew it was something else, possibly a woman; and when he had it all — cash, booze, and a wife — he couldn’t be distracted from the great emptiness that was always falling through him and never hit the ground.” Denis Johnson