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May 2011



Baron Opportunity Fund

May 31, 2011 – Comments (0)

So I am in no way falling into the confirmation bias trap or anything; especially considering that I haven't bought either of these yet. But I did find it pretty cool that MASI and RP are top ten holdings in this Baron Opportunity Fund:

I promise I found them without Baron's help...I just saw this today :) They hold the ninth and tenth spots. I continue to keep great interest in where these two may be headed.


Jason   [more]



RS Weekly Update - Munger, Optimism & Watchlist

May 25, 2011 – Comments (1)

Dear Fools,

Picking up where we left off last week, here is tendency #13 in Charlie Munger’s take on the psychology of human misjudgment from Poor Charlie’s Almanack.

Tendency #13 – Overoptimism Tendency

Would you consider yourself an optimist or pessimist? I guess if I were forced to choose I would probably put myself in the pessimist category, but I would also have to qualify that with a dash of optimism here and there. My wife and kids for example help me see life as an optimist.

I was pretty much raised to prepare for the worst and then hope (and work) for the best. And in the grand scheme of things I wouldn’t change that either. I like being able to go into situations having done my best and then understanding that stuff happens. Life isn’t fair and things don’t always go your way. I try to make sure my kids understand this too. It is in fact possible to give something your all and then still come up short. But you pick yourself up and keep on going. So I guess there’s the optimist in me. I guess being a golfer for the better part of 34 years has something to do with it too.

But there is a point where we can be overly-optimistic. What Munger calls foolishly optimistic (note the little “f”). Like the person who goes in to buy a lottery ticket just knowing that this time (as with the last time) is their lucky day; they just know it. A simple assessment of the odds reveals this optimism as foolish. Of course you can look at it like I do and buy the lottery ticket knowing good and well there’s not a snowball’s chance in hell of winning. But remember, you can’t win if you don’t play; so sometimes I do. Only for giggles though.

Foolish best,

Jason (TMFJMo)

Mutual Funds

It pays to know how your money is managed:

Elbit Systems

One of the things I like about this company is that they just keep on coming out with press releases of new contracts being signed:

Watchlist Stocks

Back in January I started looking at St. Jude Medical (NYSE: STJ) after it popped up on a screen: I wish I had bought it then, but the price is creeping down a little again and the company still looks like it has a number of excellent prospects.

Another relatively new IPO, RealPage (Nasdaq: RP) is a really interesting business. The company provides on demand software solutions for the rental housing industry and has a tremendous market opportunity in front of it; that is if it can bring the goods. The stock looks awfully expensive, but I’ll continue to research while I wait.

Straight from the Onion

Mmmmmmmmmmmm….syrup:  [more]



RS Weekly Update - Munger, Endowment & Review

May 18, 2011 – Comments (0)

Dear Fools,

Picking up where we left off last week, here is tendency #12 in Charlie Munger’s take on the psychology of human misjudgment from Poor Charlie’s Almanack.

Tendency #12 – Excessive Self-Regard Tendency

Have you ever had the feeling that when something becomes yours it’s just automatically better? I’d be willing to bet we all have at one point or another. It’s what psychologists refer to as the “endowment effect” and it’s a powerful force.

A pretty funny example can be seen in lottery tickets. So when you buy a lottery ticket, typically you can either have the numbers drawn for you or you can pick them yourself. The thing is that regardless which way the player goes, the odds are essentially still the same and significantly against the player. However because the player can choose his or her own numbers, they attribute more value to their ticket and given the option will even be more likely to buy more tickets. Ever been there?

I’ve been asked the question before, “Would you prefer to meet management of a company you are invested in or not?” Many times people will immediately simply answer “Yes!” Not so fast though Munger would argue. While it is easier to assign judgment once we have met face-to-face, that doesn’t necessarily make it accurate. We can overappraise the worth of our own conclusions based on that very judgment: our own. Rather why not judge solely on the merits of the individual? That is, why not just go with their record of what they have done? The facts should speak for themselves, after all. At the very least as Munger notes, the antidote is to overweight the past record and underweight the face-to-face as the endowment effect is unavoidable otherwise.

Ultimately in investing, we need to force ourselves to be as objective as possible. The endowment effect can surely manifest itself if we’re not. The stock you own is better because you own it? I hardly think so. Try using Munger’s approach of inverting to see how an investment can fail. What has to go wrong for this to end badly? Find the answer or answers to that question, and you may just avoid that bad ending altogether.


Jason (TMFJMo)

The Review

It’s been six months already; here’s my review of the portfolio to date:

Elbit Systems

From the watchlist to the portfolio, check out my latest purchase:

White Mountains Insurance

White Mountains is selling Esurance to Allstate and it looks like a pretty good deal for both:

And here’s another Foolish take on White Mountains’ 15% pop today:

Straight from the Onion

Pretty ballsy indeed:   [more]



New Rising Star Buy

May 13, 2011 – Comments (0)

Hey Fools,  [more]



Excellent Use of the Word Boondoggle

May 13, 2011 – Comments (5)

Tweeted in from SmartMoney:  [more]



RS Weekly Update - Munger, Denial & Earnings

May 11, 2011 – Comments (0)

Dear Fools,

Picking up where we left off last week, here is tendency #11 in Charlie Munger’s take on the psychology of human misjudgment from Poor Charlie’s Almanack.

Tendency #11 – Simple, Pain-Avoiding Psychological Denial

Being that we lived in Cairo, Egypt for a time, whenever I tell my daughters that “de-nial” is not just a river in Egypt, they kind of get what I’m referring to. From the simplest of things to the most tragic of events, denial has a way of working its way in our lives either through ourselves or those we care about.

Munger mentions the three outcomes denial tends to be most involved with as love, death and chemical dependency; that sounds about right too. We’ve all felt love at some point in our lives, we’ve probably all had to deal with death as well, and chances are decent you know someone whose life has been affected by chemical dependency in some way, shape or form.

In love and in death, it seems like denial is often more acceptable. “Just give them some time to cope and deal and they’ll come around” is probably a pretty popular thought or statement. Chances are that most of the time they will come around too. Only in the most extreme of cases will someone need to seek professional help to deal with the situation. Chemical dependency is a bit different though as many times time itself will only make things worse. The addicted person will think that they have a grip on the situation and can control it. Only when things spin out of control and they themselves recognize that they need help can the denial be overcome. Even then a positive outcome is nowhere close to guaranteed.

So how does denial come into play in investing? Maybe one of the simplest forms is to deny that your stock “has a problem” and needs to be ousted from your portfolio. Maybe management continues to fail consistently and you continue to give them “just one more chance.” Maybe management themselves are in denial about the condition of the business. It behooves us as investors to remain detached enough from our investments to be able to look at them objectively. Peter Lynch once said something to the effect of (and I’m paraphrasing here) never fall in love with a stock as it doesn’t know that you own it. I agree wholeheartedly.


Jason (TMFJMo)

The Watchlist

I wouldn’t be at all surprised to see one or more of these added to the portfolio sooner or later:


Higher One:

White Mountains:

Activision Blizzard:

Houston Wire and Cable Company:

Straight from the Onion

The stresses that come with the job:

Jason owns shares of Activision Blizzard   [more]

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