Stocks and Trading Thread - Channeling your inner Mono

[Baron von Schtinkenbutt]

American is going to give me ulcers.   The bankruptcy was very good for me, but the volatility of the stock right now is nerve-wracking.

BTW, in case you fellow Blackrock Kelso fans aren't aware, their next earnings report, and probably dividend announcement, is Thursday.

[Alcibiades]

What are you thinking we are going to see?   

[Baron von Schtinkenbutt]

To those who claim you cannot consistently beat the market, explain this.

[Grey Fox]

Berkshire has a 201k share price?!?!?!? That is not a lot of issued shares.

[MadImmortalMan]

I don't think they ever split. Buffett likes to have his investors really believe in it, and the high price weeds out the fast movers and the less-committed.

[The Minsky Moment]

To those who claim you cannot consistently beat the market, explain this.

Who is the "you" directed to?
I don't think Warren Buffet is a languish member.

[Ancient Demon]

I don't think they ever split. Buffett likes to have his investors be rich, and the high price weeds out the poor.

FYP 

[DGuller]

Why can't somebody just create an ETF consisting solely of Berkshire shares, to get around the absurdly high price?

[Baron von Schtinkenbutt]

To those who claim you cannot consistently beat the market, explain this.

Who is the "you" directed to?
I don't think Warren Buffet is a languish member.

The "you" isn't directed at anyone.  It's a stand-in for people who think there exist investments that consistently outperform the market.  Several people on this board, Mono in particular, think this is impossible.  By that chart, though, it appears someone who invests all their money in Berkshire will consistently outperform every market index in existence.  Thus, I was asking those who claim beating the market consistently in the long term is impossible to explain how Buffet and his investors are doing just that.

[Baron von Schtinkenbutt]

Why can't somebody just create an ETF consisting solely of Berkshire shares, to get around the absurdly high price?

I'm not aware of any reason.  As far as I know, a fund manager can choose whatever equity investments they want, subject to restrictions imposed by those who created the fund.

[DGuller]

To those who claim you cannot consistently beat the market, explain this.

Who is the "you" directed to?
I don't think Warren Buffet is a languish member.

The "you" isn't directed at anyone.  It's a stand-in for people who think there exist investments that consistently outperform the market.  Several people on this board, Mono in particular, think this is impossible.  By that chart, though, it appears someone who invests all their money in Berkshire will consistently outperform every market index in existence.  Thus, I was asking those who claim beating the market consistently in the long term is impossible to explain how Buffet and his investors are doing just that.

The standard answer is that it's impossible to expect to beat it.  In hindsight you can always find stocks that outperformed (and underperformed) the market.

[Baron von Schtinkenbutt]

The standard answer is that it's impossible to expect to beat it.  In hindsight you can always find stocks that outperformed (and underperformed) the market.

I don't buy that.  The nature of what a market indices represent and the existence of investments that consistently beat their performance indicates that there will exist in the future other investments that will do the same.  If someone were able to figure out a way to identify some of these investments while they are doing so, and dispose of them before they cease to, this person can expect to beat the market.

[DGuller]

If someone were able to figure out a way to identify some of these investments while they are doing so, and dispose of them before they cease to, this person can expect to beat the market.

That's like saying that if someone were to figure out a way to build a machine that puts out more energy than it takes in, they would be able to create a perpetual motion machine.  Which is a true statement.  The devil is in the details.

[alfred russel]

Why can't somebody just create an ETF consisting solely of Berkshire shares, to get around the absurdly high price?

Investment vehicles (not sure about ETFs) have been made to do that. It prompted Buffett to offer b shares at a much lower price (they are some fraction of the a shares).

[Baron von Schtinkenbutt]

If someone were able to figure out a way to identify some of these investments while they are doing so, and dispose of them before they cease to, this person can expect to beat the market.

That's like saying that if someone were to figure out a way to build a machine that puts out more energy than it takes in, they would be able to create a perpetual motion machine.  Which is a true statement.  The devil is in the details.

No, it isn't.  Based on the current understanding pf physics, a machine that puts out more energy than it takes in cannot exist.  If such a machine could and did exist, then it would be possible but not necessarily practical to create a perpetual motion machine.

Which was my point.  The existence of an investment in the past capable of consistently beating market averages, combined with the nature of how market averages are constructed, means that such investments will exist in the future.  The existence of such an investment that is itself composed primarily of investments also proves it is not impossible to find these in the future, as someone has done so in the past.  Thus, it is not impossible to beat the market or expect to beat the market.