Mungerism's blog

Legendary investor Wilbur Ross, of WL Ross & Co., told CNBC, the Greek seems to have problem to collect taxes. In a resort where his friend lives, they collect tax by the number of swimming pool and there a bout 600 swimming pool on the official record, but some flied a airplane and counted about 16,000.

The most dangerous downfall of a value investors is falling in love with a real bargain. The so called deep value investing can be the biggest value trap of all.

Many people don't know how to see and analyze their own mistakes. The method is simple. Take a look at your biggest stock market losses, and post here the causes of those big mistakes.

I will start:

Many contributors to our over-the-top boom, which led to the gross bust, are known. They include insufficient controls over morality and prudence in banks and investment banks; undesirable conduct among investment banks; greatly expanded financial leverage, aided by direct or implied use of government credit; and extreme excess, sometimes amounting to fraud, in the promotion of consumer credit.

1. Study the company's ability to generate free cash flow.
2. Think about ways in which we could “kill” the company – i.e., what kinds of mistakes or misfortunes could impair our investment. In the case of ACF, we believe that in some of those scenarios – such as in run-off mode – we could get significantly higher value.