UK

More healthy teeth because of less sweets:)? Lets just hope these drugs will not also work to cure stupidity...

https://www.investing.com/news/economy/us-must-be-ready-for-simultaneous-wars-with-china-russia-report-says-3197258

True, I always forget this, and than begin to think of it like some kind of end of the world / binary situation.

Well, at least you have tried:). Btw, ValueAct, who initiated these changes for good, sold out in 2017 for something like 60 or 70 USD:)

I passed on MSFT and followed Buffett into IBM!

"Sell off the big stocks, the small stocks, the value stocks, the growth stocks, the U.S. stocks, and the foreign stocks. Sell the private equity along with the public equity, the real estate, the hedge funds, and the venture capital. Sell it all and put the proceeds into high yield bonds at 9%." Listened to Marks memo, all this sea change / higher for longer thesis, it is so tempting to take firmer view, not nesessarily regarding eguities vs bonds, but just in equities, one could make very different bets (in terms of duration and rate sensitivity, kind of AMZN vs FFH), IF was sure that rates really will stay higher for longer. I am positioned much more into this direction vs a year ago, much more than 50/50 currently, but just not sure if it is prudent to get into 100 per cent this time is diferent side. My gut still feels like it is better to stay 50/50 or n9 more than 70/30 on this:)

Thanks. Interesting! I somewhat agree with this view on relative attractiviness of averages between equities and bonds, but if, like you said, one can go after individual securities and has required return of at least 8-10 per cent, it seems to me it is still easier to find such things in equities. Or maybe this is delusional and influenced by some biases. Maybe if choice was only between bonds or snp, 30/70 or 40/60 already would make sense today. Sure, today is nothing like 2011/2012, but this period was extremely attractive, perhaps even more than 2008/2009, at least for me, because in 2008/2009 it was like REALLY scary (especially if you listened to almost anyone except for Buffett and Co:)) and in 2011/2012 it was more about EUR, but US was fine, rates low, equities, even on average, still very cheap.

Since what year you expierience starts? I only owned local government 10 year bonds yielding 10 per cent in 2008 (currently at 4.4) and later was looking, but not invested, at long term Greek bonds, yielding some 30 per cent (currently 4.3) at the time of the crisis:). These Greek bonds ended up a very good buy for some who did it:)

Thanks, Viking! With so much moving parts and different earning streams, FFH is one of the companies, which earnings is extremely hard to model (and maybe it is a plus and an opportunity vs analysts/market), but I think you did an incredible job doing this.

I think you are right, but the question is size of the plug, since YTD it was probably partly/mostly interest rate driven and the impact of reserve growth alone could be much lower in the future?

Well, I agree, but if you still want to model any future EPS/BV, as Viking does, you have to decide what to do with this item:). Perhaps to stay conservative one can omit it altogether. Look through earnings is an alternative/different way to look at investment portfolio, I agree it may be better in some respects, but maybe not for EPS estimate.

I think they are/were selling of more not because of the assumption what is Fed going to do, but because of supply/demand issue: just to much borowing and at the same time QT and less demand from China/Japata/etc. Market obviously like Fed paying attention to this issue though:)

https://www.bloomberg.com/news/articles/2023-10-10/buffett-acolytes-see-financial-stocks-as-his-next-japan-play#xj4y7vzkg “If wage increases become clearer at the beginning of next year, and if interest rates in Japan are sure to rise, Buffett may buy in early next year,” said Masatoshi Kikuchi, the chief equity strategist at Mizuho Securities. “I think there is still potential for major bank stocks.”

I think we already have discussed this before and I definitely can not claim that SafetyNumbers is not right on this, since I do not understand this myself completely (and who does?), but my initial understanding on this was in line with Thrifty3000's, meaning that large recurring gains from this item would be produced only if rates increase further substantially. But it seems it also depends on the change of net reserves, as SafetyNumbers has stated, so in the end it seems it depends on two variables: discount rate and net reserve change, and the final result for any period will be impacted by both. So I think this probably means, that such large initial benefit from applying this for the first time will not be repeated in the future, unless rates moves up substantially, despite of reserves growing at a steady pace. In such case (no rate change, reserves growing steady), my guess, the impact would still be positive, but way smaller? From 2q CC: Under IFRS 17, our net earnings are affected by the discounting of our insurance liabilities and the application of a risk adjustment. In the second quarter of 2023, our net earnings benefited $221 million pre-tax from the effects of discounting losses occurring in the current quarter, changes in the risk margin, the unwinding of the discount from previous years and changes in the discount rate on prior year liabilities. As interest rates move up and down, we will see positive or negative effects on earnings from discounting. From 1q CC: Tom MacKinnon Great. Yes, Jen, I was just wondering, the things that really impact IFRS 17, the change in the risk adjustment, the unwind of the discount, the build of the discount and the change in the discount rate. So, if we kind of had a flat interest rate environment and pretty well steady state with respect to your growth. Would all of this noise be pretty minimal, like what kind of conditions would make this noise show up more to the positive or actually show up more to the negative? Jennifer Allen Yes. Sure. It's a good question, Tom. So, the way I think if you're in a steady state, if your underlying net reserves from a risk profile duration does not change, then as you unwind your discounting that you don't have a change in your discount rate, it should really be offset and really don't see a huge impact. The other side of it is, your risk adjustment would be steady state, you would be releasing your risk adjustment on your old book, but you would also be setting up the same risk adjustment on your new book. So it's only when your book grows, so if your net reserve starts to grow, you'll start to get that net benefit through again, if it shrinks, it would be a negative impact to your total portfolio. Tom MacKinnon And then on the change in the discount rate, is that just generally, if we have a flat interest rate environment, then we wouldn't get that noise as well, I assume. Jennifer Allen Correct.

INTJ:). Boy, I would love to know his opinion on FFH!

https://www.bloomberg.com/news/videos/2023-10-09/fed-s-logan-yields-may-mean-less-need-to-raise-rates-video Blink blink?

I will not argue otherwise:). But for all the fear of what would happen, when rates went up so fast so much after such long of crazy low period, so far real economic damage seems incredibly low and the fear of it seems almost disappeared in the main asset markets, after big initial scare last year. Large companies (snp500) paying less interest than receiving (and this will continue for a while) and majority of homeowners having locked their mortgage interest very low for very long, I think maybe explains a lot of this resilience, since these two are the main assets? Also, sure higher rates is not stimulative for many other reasons, especially for asset prices, but in real economy, somebody's interest costs is someone's interests gain, so partly it is only some kind of redistribution? But I am really surprised myself how well everything going in real economy and in market, despite this 'epic' rate increase and bondageddon. And even in countries without long fixed term mortgages, so far nothing really bad is happening, and in a few places, where housing did went lower more noticeably (Sweden, maybe Australia) it is stabilising or going up again, while rates are sill high. And the only large and obviously bad place in terms of all this is China, which paradoxically keeps lowering already low rates:). So I am really perplexed bu all this, but maybe it is just what a normal environment looks like? Meaning more or less normal rates, without anything bad happening. Like also, didn't we had dotcom with something like 4-6 per cent rates? Go figure:)

https://www.bloomberg.com/opinion/articles/2023-10-09/ozempic-is-bad-for-business?leadSource=uverify wall

Hey, it sure is not going as claimed in the very begining (or almost every day still) by another side either? If one does not consider Ukraine holding (and retaking so much territory) so well against, supposedly second major military force on earth, a success, than I do not know what success is. And they achieved this even without enought equipment, aviation etc to begin with.

You know, it is very good question to ask and not only vs preferreds. But if one to agree with you yield asumption (which I more or less do), it is really hard for something else to compete with it (or even to clear this hurdle). Even such seemingly cheap stocks, like M or C or something from Oil and Gas, or you name it, they are more or less as cheap, yet I would argue, that FFH is of a much higher quality and much better for a long term holding.

Thanks!

I think it was Munger who said a while ago on this subject something like this: "just because Warren said something that was true 20 years ago does not necessarily make it true today".

A picture is worth a thousand words:). Why do you consider today's reaction as strange?

https://www.wsj.com/tech/ai/ais-costly-buildup-could-make-early-products-a-hard-sell-bdd29b9f?mod=lead_feature_below_a_pos1 AI often doesn’t have the economies of scale of standard software because it can require intense new calculations for each query. The more customers use the products, the more expensive it is to cover the infrastructure bills. These running costs expose companies charging flat fees for AI to potential losses. Microsoft used AI from its partner OpenAI to launch GitHub Copilot, a service that helps programmers create, fix and translate code. It has been popular with coders—more than 1.5 million people have used it and it is helping build nearly half of Copilot users’ code—because it slashes the time and effort needed to program. It has also been a money loser because it is so expensive to run. Individuals pay $10 a month for the AI assistant. In the first few months of this year, the company was losing on average more than $20 a month per user, according to a person familiar with the figures, who said some users were costing the company as much as $80 a month.

Interesting regarding average maturity. I think I have read somewhere, that avarege maturity of federal debt is 6.3 years, so it seems that SNP did a better job:)