RichardGibbons

Yep, there are two holes in my argument. The first is that my numbers are way too extreme. The edge I propose is way too high, betting 40c to win $1 in a coin flip. That's the average actual advantage I'm suggesting the bettor might have, across all the bets they make, all of which have uncertainties. That is a super-high edge. The other big flaw is that the liquidity of these markets isn't even close to infinite, and it wouldn't be long before you start moving the market. Polymarket had $55M in bets on who would win the Superbowl--the biggest sporting event of the year in America. I imagine it's pretty easy to find places where you can deploy $55M as a value investor without eliminating the investment opportunity as a result of your buying. I suspect all the deep markets on Polymarket are based on arbitrage.

Agreed, that's why I said "lots of such examples every day". Polymarket is clearly worse if there is only one bet you can identify as mispriced every month. I'm too lazy to want to calculate the math by hand, but Gemini says that the optimal bet size with my numbers is 44% of your bankroll, and you'd need 52 bets to be 99% confident that your bankroll would gain over 25%. So, to completely obliterate a value investor's with those odds, you'd need about one such bet a week for a year. If you're not trying to obliterate the value investor, and don't bet as much as Kelly suggests (instead bet 10-15% of bankroll), then apparently it's 22 bets.

Yeah, that's fair. Accountability and post-mortems are worthwhile. I think the only narrative from that era that's still in the air is the reserve currency issue because that's something that's likely to play out over a decade, not a year. Outside of a World War, the world isn't going to shift from one reserve currency to another in a year.

Yeah, I think either makes sense. Value investing is buying something for less than it's worth and hoping it re-evaluates to its value. Polymarket is betting on coin flips where you can occasionally risk 40c for a 50% chance of winning $1. It's unclear to me which would be better (though, if those were the actual numbers for the bet and there are lots of such examples every day, it's clear that you'd make way more with Polymarket because that's an expected return of 25% in a matter of days, way above any value investor.)

Oh, I see--you want credit for scoring a goal. If that's the case, I'll give you 100% credit. I think you were the person who, about a year ago, kind of predicted what might happen with inflation, and what you predicted mostly happened. You were the closest to correct that I can remember of anyone on the thread. Good job, and thanks for sharing your viewpoints. (And since it isn't always clear, I'm not being sarcastic at all. I genuinely believe what I said in the previous paragraph, though it's possible someone else was more correct, and I just forgot.)

In economics, inflation is an increase in the average price of goods and services in terms of money. Inflation refers to the general increase in prices or the money supply, both of which can cause the purchasing power of a currency to decline. I mean, I guess you could decide to use a definition of inflation different than everyone else by deliberately excluding your politically-favoured causes of inflation. But it seems like a bad idea to me, because it makes you lose credibility and you end up with stupid conversations like this one. And it's particularly weird when you posted Truflation numbers to claim that inflation was going down--an index based on prices. Like, why would you even care about Truflation when it's just based on price data when the core of your argument is that price increases aren't inflation?

Yes, it is. You genuinely believe that if Biden had decided to put a 10000% tax on the input costs of every item anyone could buy, prices would not have increased? Those Nike sneakers that cost $18 to make now cost $1800 to make, but you think Nike will still be selling them for $120?

This argument makes no sense to me. I think because it doesn't make sense.

Yeah, that's fair. Now I have to think about whether cult member is different than what Bonhoeffer is describing. It certainly not far different. Maybe one difference is that cult implies an organization with direct social control, while Bonhoeffer doesn't.

Thanks, that's a certainly worthwhile. I think we need a new word for it, because people generally view intelligent and stupid as opposites, which isn't what Bonhoeffer is getting at. Basically, we need a word for "consumed by a social movement such that one becomes incapable of independent decisions, reasoning, and facts." If we had such a word, it might actually help prevent that outcome. Thought I suppose that, like other words, it would become diluted as it was used as an insult, as "fascist", "communist", and "racist" have been.

Thanks for your insightful post, Flesh. I think the truth thing can be a bit tricky as well when it comes to social "sciences" because reality is racist and sexist. Like, races aren't statistically all the same even in very measurable stuff like physical ability, and neither are the genders. But I see factual generalizations about races and genders as the start of the brain becoming racist or sexist. (One of the things that I extrapolated from "Thinking Fast and Slow" is that the various -isms are effectively a natural outcome of how human brains works--we naturally group people and form generalizations about them for heuristics. The frequent claim "kids aren't racist therefore racism is taught" is both simplistic and wrong.) So, for me, I feel like the fight to become the 1% non-genocider is a process of working out what's reasonable and ethical, and trying to view the world through that lens, rather than a completely accurate one. To achieve that, I try to focused on rules of thumb for how I want my brain to see the world. e.g. Always try to view people as individuals first, and as their group identities last. Respect isn't earned. Every human get it by default, and can only lose it. Never support any type of discrimination based on group identity. Attempts to implement discriminatory policies to improve the world in some way are toxic to society. Life isn't fair in almost any dimension. The best society can do is to allow merit to determine who gets access to opportunities while implementing economic policies that try to balance the need for both social mobility and innovation. In terms of the risk of ostracization from trying to be the 1%, there is certainly a risk there, but I think there are ways to navigate it, particularly since most of the time, it doesn't matter. Like, it certainly matters during a genocide, but that's a rare event. And I think that it's possible to stand up for your beliefs without be obnoxious about it. (I'm not good at it, but my wife is.) And really, it isn't even about standing up for your beliefs, but rather to do your bit to achieve the goals, but most of the time, anything an individual does is irrelevant to the bigger picture, so there's no reason to push. Plus, often proselytizing your beliefs might be antithetical to your underlying goals. (e.g. if people hadn't been arguing so strenuously against Trump, maybe cubs wouldn't have decided that a fascist dictatorship is a positive outcome for the USA.) I agree with your insight on the science/religion complexities.

Yeah, I'm not that interested in the atrocities themselves, but more interested in how they reveal the parts of human nature that I can't understand. Like, a mother or father jumping between an angry grizzly bear and their kid isn't that interesting, because I can understand it. But understanding the psychology of the people involved in something that I can't identify at all with, is fascinating. Like, I read that book, and think that I probably wouldn't be in the 10% relishing mass murder, and I'd like to think I'd in the 1% refusing to commit genocide. But the sheer weight of numbers indicates strongly that I'd be one of the people just viewing it as a distasteful task. And that provides insight to me. Like, I'd much rather be in the 1%, so how do I have to think about both the world and people to become that person I aspire to be?

Yeah, I think this Ordinary Men book provides a lot of insight into this conundrum. The book doesn't really provide good answers (IMO) as to the cause and prevention, but it does provide a lot of observations about the decisions and actions of the people involved. Based on the observations, it's pretty clear how most men would act in this situation where they were instructed to commit genocide--most men would do so. Demographics don't matter much. Some (10%?) would relish it, and a tiny number (1%?) would refuse (even though the consequences of refusal were negligible, mostly social, and presumably no chance at promotion). The median and the mode man in the group would view it as a distasteful task, and just want to get it over with.

Not sure why you believe this. Even in fascist countries, the people still have power, in aggregate. Germany The Kreuzkampf (Crucifix Struggle) (November 1936) The Rosenstrasse Protest (February–March 1943) The Witten Women's Protest (October 1943) Italy The Aventine Secession (June 1924) The "Bread and Peace" Strikes (March 1943)

The solution we have now works pretty well, I think. Political effluent largely only seems to overflow into other threads when politics can't easily be disentangled from the investment case. (e.g. the Europe thread).

If you do just want to closet index, according to Gemini, you can basically reproduce the TSX composite index with about 25 stocks. Sector TSX Weight Stocks Needed (Total ~25) Strategy Financials 30% 6–7 Buy the "Big 5" Banks + 1 Insurer (e.g., Manulife or Sun Life). Energy 17% 4–5 Buy the giants (e.g., CNQ, Suncor, Enbridge, TC Energy). Industrials 14% 3–4 Focus on rail (CN/CP) and waste/infrastructure (e.g., WSP, GFL). Materials 11% 3 Gold & Copper leaders (e.g., Barrick, Agnico Eagle, Teck). Tech 9% 2 Critical: You must own Shopify (it moves the index alone) + 1 other (e.g., CGI). Telecom/Util 9% 2 BCE, Telus, or Rogers + 1 Utility (e.g., Fortis or Hydro One). Cons. Discret. 4% 1 A leader like Dollarama or Restaurant Brands Intl. Cons. Staples 4% 1 A leader like Loblaw or Metro.

I think the civil unrest is the goal. I think Trump's trying to figure out ways around the 22nd amendment. He's been floating ideas and it seemed like the politicians in general aren't keen on violating his term limits. So, I suspect his best idea to remain in power beyond his term is through mass civil unrest where he's "forced" to declare martial law that won't end until after his death. It's also possible that he's realized that he actually might only have a year left to start that mass civil unrest because of the possibility of losing the midterms and being instantly impeached.

Yep. Pretty clear that this is just outright murder. With this sort of thing going on in public (and the government being totally cool with it), it makes me wonder what's going on in private. Is there another Abu Ghraib, just on US soil this time?

FWIW, I didn't spend a lot of time ensuring that I used the most precise comparative. However, to answer your question, I'd say that in general, "OK" would be roughly as good as the average S&P company is, if you exclude companies that are obviously suppar. On top of that, I'd weight the assessment based on the confidence that I could have in my evaluation of the assessment. 15% would be good for the this sort of company. However, if you look at the probability weighting of the expected returns, I think the errors are much more likely to be on the downside than the upside. Like, I would be more surprised if Fairfax's returns on investment were 35% than -5% in 2027. I think this because I think surprises in insurance are much more likely to be negative than positive. On top of that, Fairfax has a high variance investment strategy for an insurance business. I know that people on the board are generally writing off Fairfax's seven years of famine as an aberration resulting from shorting that will never come back. But I don't have the same confidence in that as everyone else. It was a costly error, and I think generally the historical behaviour of people is a better way to assess likely future behaviour than what people will claim in that particular moment. And, if they are changing their behaviour to avoid a catastrophe, then how do I know that they're not also losing some of the potential big upside bets they could make, such as the credit default swaps 2009. Essentiallly, with Fairfax, it feels to me like the snowglobe has likely been shaken up, but we don't know where the snow will settle. If they end up with 15%+ returns in 5 years, then I think those returns will be good. Based on my best probabilistic guess right now of the chance of it happening, then it's OK.

Come on cwericb, that's not fair--draft dodging in his youth is one of the key reasons Trump might think he deserved the Nobel Peace Prize. (Though, since at this point, it's kind of a discredited prize anyway, can they just give the Nobel Peace Prize to Mark Carney this year? The resulting meltdown would be epic!)

Yes, this is is something I think about, but I feel like I don't have a very good grasp on it for most businesses. I'm not very good at thinking about it deeply, and am mostly vibing--doing some sort of hand-waving composite involving historical ROI, moat, and gut feel for how hard I think it would be to reinvest the capital. (Note: I'm not saying this is a good process. It's atrocious, really.) I think Fairfax should have OK returns on incremental capital these days because they are still small enough and do tend to be smartly opportunistic. I think Berkshire's returns on incremental capital won't be great. They're smartly opportunistic, but too big for that strategy to have really high returns because viable opportunities are too infrequent.

I'm pretty lazy, so I largely don't think about the hidden value. My typical method of keeping up to date on Fairfax is to let you and others on this thread do all the work. (Thanks!) I like diversification, so I'm only likely to trade Fairfax if it becomes wildly over- or undervalued. Today, at ~$150/share, it's still an amount that's within my error range when calculating the value of Fairfax. As such, at this point, it's not a number that would likely impact my buy/sell decision because right now I only care about extremes. If I thought we were at a valuation where I might want to trade Fairfax, I'd spend some time thinking about the hidden value estimate to see if it changes my opinion (though I think it's unlikely it would change a decision in the next 5 years because it's just not big enough.)

Yep, I agree with much of what you say. (And it's not just "people like him". Carney is literally one of the people who pushed the broken ideological stuff.) To me, it's almost like Maslow's Hierarchy of Need applied to nations. It's like, after the Cold War ended, Western nations had successfully achieved the "Esteem" level--they were respected, free, and strong, with no real threats against them. And the citizens themselves were generally prosperous. So then they decided to tackle the "Self-Actualization" level, deciding what made a nation "good". The ended up allowing academics to define "good", academics who had built careers viewing the world through a Marxist lens--the idea that human interactions are primarily about one party oppressing another. This is a pretty insane idea to any human who's actually interacted with another humans, but governments seemed to run to it because they had nothing better to do, it fulfilled "self-actualization", and it helped them villainize groups in a way that would get politicians elected. What the politicians didn't really understand was that that particular road to self-actualization wasn't just virtue signalling. And, as a side-effect they basically tore down the things that made the other levels possible. So, societies are starting to see their hierarchy of needs collapse, and the electorate just wants to shore things up again. Hence, as you say, a move toward common sensism.

Carney's speech at Davos is worth watching or at least worth reading the highlights. It's pretty neat watching someone who's actually capable of playing 4-D chess sit down at the chessboard.

No need to worry--it's just 4-D chess. You see, Trump says tariffs are beneficial. So, Canada is being sneaky, tricking China into reducing its tariffs. Now China won't get any benefits from tariffs, hurting it greatly. What's more, Canada's actually sacrificing for the common good of North America by getting rid of some of its own tariffs as well. It's hard to imagine a bigger bilateral trade win for the USA than China and Canada foolishly removing their highly beneficial tariffs while the USA gets to reap all the tariff benefits for itself!