racemize

He also indicated areas to look for (things that are out of favor) Don't remember all, but at least: Shipping commercial real estate (not A cities/A buildings)

http://www.berkshirehathaway.com/qtrly/1stqtr13.pdf Book Value up to 120,525.

I don't think he meant this as a call on how soon it would end, just a measurement of the degree of emotion and pricing in the current market.

Honestly, it is very hard to sum up Marks because he always says the same thing, but with very subtle differences (though I think the subtle differences are very important). His talk was on "the Human Side of Investing" and he focused (as always) on risk and the pendulum of greed and fear. I was fortunate to get him to sign my book and give him my own essay on risk (hopefully he will read it)!

At the Value Investor Conference, Howard Marks gave the post lunch talk. Besides being an excellent talk, here are two highlights: Says Equities are perhaps in the 7th inning (just before the too high point) and that he would recommend "proceeding with caution".

I'd really like to go, but this Value Investor Conference appears to go too long to make it over in time. Does anyone know how late it typically goes (e.g., much more than 7)? Where's Tilson's event that people are talking about?

From Lauren Templeton fund: Brink (Money transport) based on emerging market and developed market increase in velocity of money (showed that money is currently not released by banks with thesis that it will eventually normalize) CP Foods - based on increase protein consumption in emerging markets (after stripping out holding), currently depressed due to recent outbreak of EMS disease/bird flu in China

Hi all, I'm attending the Value Investing Conference before the Berkshire meeting this year, and thought I would post some ideas that presenters have discussed (so far, we have heard from Tom Russo, Mario Gabelli, Jeff Matthews, and Ivan Martin-Aranguez). I really enjoyed Tom Russo's and Mario Gebelli's talks. Here are a few ideas I jotted down that were mentioned: From Iberian Peninsula: Sempapa (100% upside) Gas Natural Baron de Ley Mentioned by Gabelli (he talks really fast, also pretty funny): NFG Liberty Media kinv'b - sev fiat trx many others that he went too fast for (a lot of shale gas affiliate companies) I'll try to jot down ideas from other presentations tomorrow as well.

I'm heading to the value investing conference tonight and will be at the meeting over the weekend (as well as the MKL brunch). Who else is coming? (Particularly to the two smaller events)

Here is a spreadsheet for AIG's reserve triangles, just change the numbers/years in the initial sheet and everything else automatically updates: http://dl.dropbox.com/u/14968/reserve%20triangle%20analysis.xls

It is on the S&P website and is updated daily, here is how I get the TR for my google spreadsheet: =(Index(ImportHtml("http://www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa-500-usduf--p-us-l--", "table", 7),4,7)) Here is how I get the TR updated throughout the day: =(Index(ImportHtml("http://www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa-500-usduf--p-us-l--", "table", 7),4,7)) - (Index(ImportHtml("http://www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa-500-usduf--p-us-l--", "table", 7),6,7))+E3 where E3 is the change in S&P index from beginning of year to now.

Page 157 shows the reserve development for the accident years--as you can see for 2004, they had reserve redundancies of 24%, which is really good. Now, as to how to convert that to an actual combined ratio, I'm not too sure, but it would seem clear that a redundancy of 24% should yield a fairly good CR. Perhaps someone on the board can enlighten us on how to do the conversion or how possible that is (seems like we would need to know the expenses and total policies written to do it). Incidentally, I have a spreadsheet which allows one to convert cumulative triangles into accident year triangles, if you would be interested in it.

We'd also need to know their gains for the offset, so that seems hard to predict very well.

I actually stole the question from another user from another thread (can't remember which), so I can't take much credit. Regardless, thank you very much for getting the question through, and I'm very excited that I'm actually going to be there this year, and hopefully will get to hear the question answered in person. I've been trying to figure out where I got this question from--I think someone posted the Hussman article quoting Buffett, and I generated it from there, so perhaps it wasn't as much of a stolen question as I was thinking (other than from Hussman).

I actually stole the question from another user from another thread (can't remember which), so I can't take much credit. Regardless, thank you very much for getting the question through, and I'm very excited that I'm actually going to be there this year, and hopefully will get to hear the question answered in person.

Found this one on reddit--some interesting graphs in there. http://www.iii.org/assets/docs/pdf/NYSSA-031813.pdf

I've been off for a few years and haven't looked back. Also, Google fiber is coming to Austin, so I'm pretty excited about that.

This was posted on reddit and was very good--is it from someone on the board? http://covestreetcapital.com/Blog/wp-content/uploads/2013/04/2013-Fairfax-Annual-Meeting-Notes.pdf

my friend just finished running it! He's ok, but this is insane.

What is the source of this? Are you talking about this from the 99 letter: We see the growth in corporate profits as being largely tied to the business done in the country (GDP), and we see GDP growing at a real rate of about 3%. In addition, we have hypothesized 2% inflation. Charlie and I have no particular conviction about the accuracy of 2%. However, it’s the market’s view: Treasury Inflation-Protected Securities (TIPS) yield about two percentage points less than the standard treasury bond, and if you believe inflation rates are going to be higher than that, you can profit by simply buying TIPS and shorting Governments. If profits do indeed grow along with GDP, at about a 5% rate, the valuation placed on American business is unlikely to climb by much more than that. Add in something for dividends, and you emerge with returns from equities that are dramatically less than most investors have either experienced in the past or expect in the future. If investor expectations become more realistic — and they almost certainly will — the market adjustment is apt to be severe, particularly in sectors in which speculation has been concentrated. from this: http://rlaexp.com/studio/biz/conceptual_resources/authors/warren_buffett/warrenbuffett.pdf

following on the above, those latter categories also stop me from buying stocks if I don't think they are a 3x, 4x, or 5x. e.g., as Pabrai said in the video, he doesn't want an idea where the stock sells at 10 and is worth 14, he wants one where it sells at 10 and is worth his valuation multiple (2x for his first 75%, 3x for the next 10%, etc.).

I absolutely agree--this seems very difficult to solve and I don't know how well I can do in categorizing investments as I make them. I guess just use best guess expectations. Let's say for BAC, we think it is worth BV. From my own expectations, I presume they will run off most of the legacy asset portions this year and into next year, so a lot of the earning's power should emerge in the 2-3 year time frame. In that case, I would expect it to trade in the 20-23 range, with the wildcard being all the litigation. Roughly, we could put BAC in the third category, in that case, whereas when it was under 10 (particularly $5 area), we might have been able to put it in the 3x/4x categories. Even so, it is less about categorizing the investment, but more valuing the remaining cash. For example, if I'm at 100% cash, I probably need to buy some stocks, and my bar will be lower (e.g., in a high market, you should still own some amount of stocks). Where this model seems particularly useful is when it saves me from accepting an expected 15% return (such as buying FFH/MKL/BRK) when I only have 10% cash left. Thus, I agree that the numbers are too specific given the complexity, but it helps with framing.

I honestly have no clue about things like this and would have no idea how to even begin to categorize investments in this manner. Perhaps I am missing something obvious. What are some examples of things that would be in some of these categories, particularly the latter ones? I hadn't really thought about things this way until I saw Pabrai's video either. What I had noticed is that when I was investing, I treated the first 50% fairly similar to the last 10%, which I realized was probably not correct. Said another way, the money should become more and more dear until you are only willing to invest the last 5 or 10% if we are truly at a crazy market low (e.g., 2008 or near-abouts) in order to have money at the opportune time. This seems to make sense to me, as otherwise you are unlikely to have cash at the right time, without having some macro forecasting going on. For him, he would not consider investing unless it was a double in 2-3 years, and the latter categories are copies of his. I modified it to fit more in line with my thinking. Here's my thinking for each category section (and again, I'm trying to modify how I'd been approaching it, so this is still somewhat squishy and changing in my mind): Category 1: I think reasonable expectations of 15% annual returns in investments is the lowest I'm willing to sign up for--or said another way, 10% with a large margin of safety. Examples here might be FFH/MKL/BRK/LUK ~book value. Other investments over shorter periods also make some sense in this category, perhaps moderately undervalued moat companies that you expect mean reversion over time (maybe WFC at P/E of 8 with expectations of acceptable growth). Categories 2 and 3: We've moved up in the chain, so this will probably be shorter term and not buy and hold as much (e.g., strong mean reversion). Or perhaps, when they mean revert, we end up with category 1 companies if we held them. Examples may be something like AIG/BAC at the current prices. Category 4: BAC at 7 perhaps? Category 5: BAC at 5 perhaps? Categories 6 and 7: Various good companies at the bottom of 2008?

Based on this thread (thanks everyone!), some thought, and Pabrai's presentation, I've come up with this for myself: 1st 50% of cash - minimum of 2x in 5 years (15% annual growth, e.g., compounders) next 20% - minimum of 2x in 3-4 years (20% annual growth) next 10% - minimum of 2x in 2-3 years (25% annual growth) next 5% - minimum of 3x in 2-3 years (45% annual growth) next 5% - minimum of 4x in 2-3 years (60% annual growth) next 5% - minimum of 5x in 2-3 years (70% annual growth) last 5% - more than 5x in 2-3 years (>70% annual growth) This should help solidify my thinking and keeping me from being too fully invested at times (e.g., now).

I like the margin question the most at this point (and it didn't really come from me, I just posted it).