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To: Hanney Yin who wrote (1979)	1/3/2000 7:41:00 PM
From: Lucky888	Respond to of 10934

NTAP -- Buffett's decision on portfolio management is an exercise in his subjective probability.Berkshire Haathaway bot $1 billion of Coca Cola stock, an amount that came to over 30% of the total value of portfolio. by yr end 1998, that investment was worth over $13 billion If He brought $1B QCOM back then, I think that investment should be worth much more than $13B now. :) L. ps: Can't even send you a PM, is YIN reall your last name?

To: Hanney Yin who wrote (1979)	1/3/2000 8:14:00 PM
From: dwayanu	Respond to of 10934

By the same token, if we see the odds of NTAP is above 75%, or Q is 100%, investing 50% of the portfolio is logical. Strong idea Hanney. I see NTAP as the most 'sure-bet' single company 5-to-10 bagger play that I know of. On NTAP's business side, say around 85% chance of NTAP dominating the NAS market for the next 2-6 years. On the NTAP stock price side, discount that by maybe 25% for Acts of God in the market (war with China, Buffett has Greenspan asassinated, etc). Net around 65% for long term buy and hold. Portfolio percent = (2 x 65) - 100, or 30% Quite reasonable IMO, but the judgements/assumptions above like 85% and 25% make a big difference. - Dway

To: Hanney Yin who wrote (1979)	1/3/2000 8:28:00 PM
From: Mehitabel	Respond to of 10934

Hanney (and all) Hanney-- thanks for Buffet's subjective probability formula for weight of a stock position. I've been using some kind of implicit and unlabeled "feeling of confidence". I'm delighted to learn that I was really making use of such an elegant concept after all. The next time someone tut tuts me about not being "diworsified" enough for their taste, I will be able to dazzle them <G> For all-- I certainly benefit from seeing investment books discussed and commented on, and don't consider that off-topic at all. Though the internet is such an outstanding investment resource, I still learn a lot from books. <smile>

To: Hanney Yin who wrote (1979)	1/3/2000 9:07:00 PM
From: kas1	Respond to of 10934

> If you know the probability of success How would you ever know the probability of success? What is success anyway? Breaking even? Doubling your money? Beating t-bills? What? I'm sorry for what may seem like an attack -- I assure you it has nothing to do with you personally -- but I have a strong dislike for authors who give people formulas like that on which to base very important life decisions. I can just imagine someone sitting there going "well, I'm 90% sure Bre-X will be successful, so I'll put 80% of my life savings on it!" The objective probability of success does not exist. Success -- if we can first define it -- either happens or not at some point in the future. But there is no "probability" of it right now. (exception: you can derive probabilities of certain time-price combinations using historical market returns and the beta of a security, but this is not what books like this mean when they say "calculate the probability") > conclusions that fly in the face of > conventional wisdom Tip: beware of anything that flies in the face of anything. > my personal experience: CBOE's software Option Tool > is better than McMillan's book Very different tools, that I think are best used in tandem. E.g. no one learns to fly just by reading a book, but also no one learns to fly just from playing on a simulator. When I was younger and braver (about 3-4 yrs ago) I read McMillan and some other similar books, then papertraded for a while, then started making myself a pretty decent income daytrading options. What I found is that it can be very profitable, but you have to be prepared to eat some big losses, and in terms of dollars per hour, it is not such a lucrative activity -- if you trade options you have to be pulling up quotes and ready to trade pretty much all day. Got out of that hobby when it was eating into my life too heavily. Reading Malakiel's book didn't help much either. My main suggestion to someone going into trading options is to sit down and stare at Black-Scholes, and fully understand what it means about time premiums -- because of the time premium, as an options trader you are basically bleeding money any time you are holding a long position in a put or call.