What I have been doing, my portfolio, Coaching, Selling, Facebook valuation, Michael Mauboussin, and Winners and Losers

Update on what I have been up to

Recently I have been catching up on some reading; investing books, websites, blogs, etc, which is why I have been posting a lot of sites that I think we could all learn something from.  I hope to finish up the book I have been reading in the next few days, and then it is back to searching for some more companies.

I have been struggling in trying to find the proper balance between learning new things and researching companies.  It seems like I always wish I had more time for both.  If any of you have any tips on how you strike a balance between the two it would be very much appreciated if you could share them.

My Portfolio

Another reason I have not been researching new companies lately is because I have been thinking about my portfolio and what I need to do to free up some cash.  I missed out on Dole because I was fully invested and could not get any cash into my account in time which led me to thus far miss out on the almost 40% uptick in the stock price since I originally wrote about them.  I am glad that there was cash in a couple of accounts that I manage and that I was able to buy it for them, but it made me realize that I need to become more concentrated in my own portfolio, get rid of some of the older companies I bought when I was doing very minimal research, and free up some cash.

In the next few days I will be talking about some of the decisions I have come to.

Some more links for you

Coaching a Surgeron is an article from The New Yorker that asks questions like “If professional athletes have coaches why don’t we all?” It is an incredibly valuable article that any person who wants to become better at any walk of life should read.  It is quite a lengthy read but well worth the lessons that it contains.

How to Think When Selling Stocks is a write-up from Jae Jun over at oldschoolvalue.com.  I wrote a post about a week or so ago about how I was struggling with some of my sell decisions and this is one of the things that actually helped me come to some decisions about my own portfolio.

Ten Reasons Winners Keep Winning, Aside From Skill is an article from the Harvard Business Review blog.  Most of the reasoning is talked about in several other books and websites, but it never hurts to review them and think about them again.

Share Repurchases From All Angles is a write-up from Michael Mauboussin and Legg Mason Capital Management that discusses share repurchases from different perspectives, how management thinks about them, the pros and cons of share buybacks vs dividends, and how they affect the company and shareholders.

This is the Short Call on Facebook, Targeting a $4 Share Price is a mini valuation and analysis of Facebook from SumZero.  The author explains why he thinks Facebook is still overvalued and why he is shorting the stock at this time.

L.B. Foster, Incredible chart on investment fees, and Optimizing the Investment Process.

L.B. Foster News

Original article from Seeking Alpha here.

PITTSBURGH, July 25, 2012 /PRNewswire/ — Pittsburgh, Pennsylvania-based L.B. Foster Company (FSTR) has been awarded the company’s largest rail products contract, valued at approximately $60 million, by contractor Kiewit/Kobayashi, a Joint Venture for the county-wide construction of the Honolulu Authority for Rapid Transportation (HART) passenger transit system. L.B. Foster rail, concrete ties, direct fixation fasteners, third rail with accessories and special trackwork will be installed throughout the Honolulu Rail Transit Project’s new elevated railway system and maintenance yard.

(Logo: http://photos.prnewswire.com/prnh/20101222/MM21387LOGO)

L.B. Foster offered a comprehensive materials and logistics package that maximizes purchasing efficiencies and meets critical scheduling requirements for the HART project. “Our company provided the highest quality and value offering, most comprehensive logistics package and the professional project management team necessary to successfully satisfy the requirements of such a large municipal project,” noted Greg Lippard, Vice President of Rail Products Sales at L.B. Foster Company.

“Our L.B. Foster team has a long and successful relationship with Kiewit. We have worked closely with this leading contractor to provide quality products for signature projects throughout North America,” said Hakan Eksi, General Manager of L.B. Foster Transit Products.

Incredible chart from the Motley Fool

This chart is showing the difference in returns.  The Vanguard fund has a 0.05% fee, and the generic mutual fund in the chart has a 1% fee. It ends up being a difference of almost $600,000 over the time period.

I ran into the same problem this writer for the Fool did.  I saw that my parents were being charged 6% fees every time their investment advisor bought or sold any shares they owned.  That is not including the sometimes above 2% fees that were being charged by the mutual funds he had them in.  I was shocked to see those huge fees, especially since there are comparable funds or ETF’s that he could have put them in that had fees as low as 0.05%

Stated another way, and not even counting inflation, the way he had their funds set up, they had to produce returns of at least 8% a year just to break even.  Suffice it to say that I am now running their retirement funds.

Michael Mauboussin on Investment Process

This is a fantastic and very important article where Michael Mauboussin talks about how it is extremely important to come up with a great investment process and how that can lead to great returns over time.  This article also talks about how investment returns, especially short term, can sometimes be misleading.

“Mauboussin believes the main difference between good and great investors comes down to temperament and focus. Good processes and good outcomes deliver deserved success, just as bad processes and bad outcomes are a form of poetic justice. Conversely, bad processes that yield good outcomes are just dumb luck. Investors often confuse the two. Successful poker players and renowned economists agree that better decision making comes from evaluating decisions on how well they were made rather than on outcomes.”

 

I encourage you to read the whole article at the above link.