Luke

"Know what you own"-> Cant know a stock without holding it for a certain amount of time and as Pabrai said: Once the stock goes down -40% then you start to REALLY understand and learn what the business is about xD

But for someone who owns lets say 30 quality stocks, easy to take up 10-20% of margin to buy some 10 PE stocks in japan or so and let margin do its thing. But not with concentration, prem and china

35% maintenance margin of the entire acc worth? That's pretty bad IMO. Having an ACC value of 800k and borrowing 80k means you need to maintain 250k worth of shares for 80k of borrowed money. And then they will probably increase that further during volatility so you have to pledge 300k for 80k on which you pay full interest. Just bad IMO. Yeah, there is a new calculation where the concentrated positions loss counts to the margin requirements. Essentially you need to diversify to 20 stocks at 5% each to fall back under relatively normal requirements and I am unable to find 20 good ideas that are worth sacrificing my concentration in order to take up margin. yeah... They have a margin team that looks at individual accounts as far as I know and they don't like FFH as a stock, especially not since MW came out with the short. PDD and PRX are self explanatory xD

Well said.

I was reducing my margin but requirements didn't go down, so I contacted them, and it's a problem due to my entire portfolio composition. Have to think about it if I want to continue with my positions like this, either reduce margin or take more risk or just get out of margin completely as long as I hold 3 concentrated positions.

I wish I could be like Buffett and have debt options like taking on long-term yen debt etc. Sucks to be a retail investor...

Yeah and if MW comes out with short report they massively increase your margin requirements for no reason

Portfolio margin requirements are REALLY opaque though and IB can change it at any time, as we saw with Mr. Muddy Waters...IB doing him a favor!!!!!

IB auto liquidates yes, I have no margin call at all and was not at risk with 70%+ net liquidity but my margin requirements are sky-high because they hate my concentration in PDD, FFH, and Prosus. I wrote with them and even with a tiny margin of 5%, I have like 35% of my portfolio as maintenance margin because of the concentration which kind of sucks. I am only selling things that are in the green, slowly reducing it with the cash coming in every month. Not saying something bad will happen but if there is some big macro event I might really get a margin call like that which id like to prevent. I am relatively new to portfolio margin and am gaining some experience with it, its a good tool, if understood well and used appropriately.

And i wont buy 35 PE megacaps to have a "compliant" portfolio lol!!!!

I am reducing some of my margin positions because IB doesn't like it that I have large positions in FFH, PRX and PDD

Thanks for the detailed answer and agree!

I have a second account at a neobroker and they also have huge problems...too many retail traders trading

Thats why i loved being in Fairfax the last 2 years. Can enjoy sunshine and really can enjoy the storm (stock market storm, please no big hurricane xD)

But i also dont think the US has any room to regulate their businesses with all the stuff that's going on so maybe buying an alphabet or so will still do relatively well or at market returns.

If they take climate change serious there is not much room for cutting costs and getting out of the deficit. Especially not if you want to make America great again (bring back high capex manufacturing), convert economy to clean energy (trillions of investments necessary that the private sector might not wanna make without support), fighting China (military costs, sanctions that are inflationary, rebuild supply chains), fight russia (energy market problems and more political turmoil), fight migration, fight inner country political turmoil, fight lack of housing etc etc List is long and full of problems that all need tons of cash. Its still a great time to borrow money and buy assets because cash will be trash but assets that are at 10-15x earnings is better for me. Maybe the one or other higher quality megacap like LVMH, Berkshire etc.

Right now most large-caps are priced to perfection. They are priced as if their business models will exist decades into the future without any disruption, regulation, economic slowdown, geopolitical conflicts etc. Tell me whats happening in China with chips or the manufacturing of western products, tell me about the disruptive forces of ai on software, search business, advertising. How it will impact legacy manufacturing like cars etc...

The more free a market, the more gambling, and the more leveraged the economy will get The unwinding of the yen carry trade is just one small thing of the gambling carousel with the options, concentration on mega-caps etc. We have a long long way to go down...

What happened? Things in the US went from 35 PE to 30 PE? I don't see anything attractively priced, maybe Japan stocks but they were cheap before and we were buying...

Funny how WSB is scared while these stocks still have run up hundreds of percentages last year Really a nothing burger and a correction that is more than deserved. Japan on the other hand was already cheap and looks more interesting now.

Crazy...! Really wondering what he thinks going that big in cash/treasuries, Apple is their "best" business...

Where could he possibly allocate 100b...needs to be a highly liquid megacap of which we have few and prices are not great either? Apple is better than Cash.

Brutal apple sale...

Nice to see a little pullback but not getting excited, things still to expensive to make sense to me.

https://www.fairfax.ca/press-releases/fairfax-financial-holdings-limited-financial-results-for-the-second-quarter-08-01-2024/