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TA works in hindsight. It has no useful benefit in predicting what will happen next. I didn't care that Fairfax was at $400...I looked at price to book...it was at 0.55-0.6. That's all I cared about. Just like I don't use TA to predict when to sell. If FFH gets to 1.5 times book, I'm completely out. In between, I average in and average out. Simple and it works! Nothing to do with TA. Cheers!

Really?

I think it's reasonable to model a normalized EPS of $100 USD going forward, which is clearly not priced into the shares. Where I get stuck is on growth rate and where normalized EPS will land in year 4 and beyond ( @Viking focuses on 2 to 3 years out, but I happen to enjoy wasting brain cells on rough 5 and 10 year forecasts). Let's oversimplify and say after tax EPS breaks down neatly into 3 factors: $40 per share of insurance underwriting earnings at a combined ratio of 95 $40 per share of interest income at an average yield of 3.5% $20 per share of non-insurance/interest earnings growing 10% annually Total Baseline EPS: $100 ^ Notice $80 of earnings is tied to two CRITICAL variables entirely out of FFH's control; the insurance cycle and interest rates. Now let's setup a conservative scenario for EPS in year 4. First, for simplicity's sake, let's assume that in years 1 through 3 a total of $300 per share was reinvested and results in additional earnings of $30 per share in year 4 (we'll call this 'earnings on reinvested cash'. Then, let's assume we're in a soft, mid-cycle, insurance rate environment, and that short term interest rates have declined to a level more in line with long term GDP growth potential. Year 4 EPS Scenario: $30 per share of insurance underwriting earnings assuming modest premium volume growth and a CR of 98 $20 per share of interest income at an average yield of 1.5% $60 per share of non-insurance/interest earnings (including $30 EPS from cash reinvested in yrs 1-3) Total Year 4 EPS: $110 ^ Under that highly conservative, highly oversimplified, set of assumptions I can see a scenario where earnings remain relatively flat for at least the next 4 years. From years 4 to 10 let's assume EPS grows 10% annually. That gives us the following EPS projections for years 5 and 10: Year 5 EPS: $121 Year 10 EPS: $195 If we slap a 15x multiple on those conservative estimates we're looking at: Year 5 Share Price: $1,815 Year 10 Share Price: $2,925 If you buy at $700 per share you're looking at a decent shot at a 15% return over the next 10 years. Not too shabby.