January 3, 2006 Quick New Years thoughts, game plan and resolutions
The start of another year. Happy New Year to anyone reading this.
Goals for 2006:
1. Try to minimize use
of short positions. Although this has been extremely profitable for
us and gives a hedge to our longs, I am uncomfortable with the tax consequences,
as short sales are always treated as short term gains.
2. Try to keep stock sales at a minimum and reduce
turnover. Our turnover is already fairly low. Our goal
for turnover of stocks is to be consistently less than 10 - 20 % . Our research
will dictate the turnover, and we will not hold a stock, only because of a
desire to have low turnover.
3. Keep reading and learning and most importantly, keep
doing what I am doing. I am feeling real good about our
research and our portfolio management. I have never been more comfortable with our research and
execution. I think I am an investor who knows "thyself."
4 . Increase assets under management - I
guess that is what we all try to do. With this goal in mind, please
understand that we prefer that the prices of shares which we are accumulating
are dropping in price. This "hope" is contrary to our goal of increasing
assets. Most importantly, we really aren't performance oriented, and our
long-term approach welcomes buying opportunities. We will always be
focused on portfolio composition as our highest priority.
5. Meet our Charlie Munger - Can't rush these
things, but we certainly wouldn't mind a partner in thought and such. This has
been a goal of mine for sometime now (probably over a decade.) With this
said, the following discusses a Warren Buffett (Charlie Munger's partner)
interaction, which can be found in the book, "Trade Like Warren Buffett."
I enjoyed the letter that Buffett sent back to Monish Pabrai, in regards to a
request for employment and learning under Buffett. Allegedly, Buffett responded
(hmm, sounds like a quote from the book "Is your mama a llama?"). "Look, I
work alone, and the kind of position you seek does not exist at Berkshire".."Good
luck reorganizing your life; I'm not the answer." I liked that. I don't know
why. Maybe one day i will meet my Munger.
6. Follow the leaders - What I mean by this
is to keep honing in on my style, not shifting, just refining and growing. I
have learned so much from studying Buffett, Munger, etc, etc. I learned about 15
years ago from listening to "Psychology of Success", by Brian Tracy the
following. If you want to be successful, read an hour a day. Read about
something you love in your career and focus on it. I am so thankful I did that.
I lost sight of the hour a day, and made it probably an average of 40 - 60 hours
a week. yet, no regrets, I'm having a blast. I feel like I am playing backgammon
or Risk all day, and getting paid to do what I would do for fun anyway.
Following the leaders to me means, study the investors I
admire and are within my competence and philosophy, and just keep
learning.
7. Try to have as few positions in our portfolio
as possible. I would ideally like to have 8 to 10 common stock
positions. We currently have around 18 - 24 positions (some are small positions
(1%). Our largest holding is around 8% position, second largest around 7%, we
have a handful at 5% and the rest are just hanging at 2 to 4%.
Realistically, I could see our positions becoming less than 15 - 20 this year.
Peace everyone, happy , healthy and prosperous new year to all. Here's to
a happy and healthy 2006.
ron