obtuse_investor

That is my shoddy checklist. To be honest, it needs an overhaul and is too high level to be useful. It is more of an outline of a checklist rather than a checklist!

Mine is practically invisible. In fact, it is literally invisible. The sound quality is great because it produces stunning silence. It lets me spend time with books-- so the video quality is outstanding and program choices are near limitless. The cost is incredibly low-- in fact, it is negative. I am consistently wealthier for not watching TV. Jokes aside, not owning a TV is one of the best [investing] decisions I have made in my life.

Thanks for posting this article. It is pretty scary stuff even if I ignore the negative hyperbolic language. Whatever happened to journalistic principles.

"Prediction is very difficult, especially if it's about the future." --Nils Bohr, Nobel laureate in Physics

2014 Review and Insight from Gary Shilling => https://www.dropbox.com/s/22w225tfis633h4/131227_TFTF.pdf As I understand, he exercises a modicum of influence over Fairfax Financial and Prem Watsa.

Odd because it is using Microsoft's product (Dynamics) to crunch and display numbers. OP: Thanks for posting this though-- no obvious value screens, but it can always be inverted.

Surprised to see this not mentioned yet... US Long bond

On topic here is something with a crazy headline that is quite interesting... Is QE deflationary? Excerpt.... Full article: http://feedly.com/k/1bhBwZo

I have heard of this 5 more years theory too-- not just from Shilling, but also from Dalio. In practice, these deflationary periods are very long indeed. Case in point is Japan.

I have taken a two prong approach. Both approaches are very long term focussed and can potentially lead to massive gains for humankind with a relatively tiny investment. 1. Perimeter Institute - http://www.perimeterinstitute.ca/ Massive upside potential. This Waterloo, Canada based institution invites and hosts full time theoretical physicists for long durations. It essentially lets them do what they do best without the need to worry about pesky things like food and shelter. They also do wonderful outreach work involving school kids. The upside is unknown and likely very far away in the future. Just like how the work at Princeton's IAS gave birth to today's technologies, I hope that the Perimeter will give birth to world changing technology 50-100 years from today. 2. B612 Foundation - http://b612foundation.org/ Massive downside protection. All of humankind's achievements will come to naught if we don't protect our civilization from destruction. I am talking about threat from large approaching asteroids. This may sound fantastical/crazy, but the risk is very real. The problem boils down to two steps: 1) Detect civilization destroying asteroids on a collision course with earth, 2) deflect them before they get here. Here is the surprising part-- step 2 is easy! B612 project is working on step 1. There also happens to be some of the brightest engineering minds on the planet working at this place.

I know that it isn't rational. It is downright illogical. But this illogical way of acting is because in this game of investing, we are sorrounded by probabilities that are always less than 1.0 Quite simply, the margin of error or safety is very small at $85 compared to $50. Knowing this obvious human tendency, I sometimes lighten my positions when it going hovers close to that $85 mark. I probably have walked away from a lot of potential profit because of this-- and I am OK with that.

I don't think it is that black and white. If I estimate that a business is worth $100, I would be willing to open a position at 50 or below, but if my position was accidentally liquidated at $85, I wouldn't reopen it. I am a buyer at <=50, but a holder at 85 and a seller at >=95

CAPD is definitely less relevant today than a few decades ago-- the payout ratios are relatively tiny today. Although, buybacks in general are a very bad way to return capital to long term shareholders. Most buybacks are done irrespective of the stock price and often a dollar invested yields less than a dollar back. Negative rate of return eventually wastes the assets, even though in the short term the buybacks produce ebullient stock price-- like these days.

I think that is quite unfair. Prem and other value investing greats have earned their honours over the decades because they aren't emotional, but rather, quite rational in the face of Mr. Market's emotions. That is how value investors succeed. [/size] [/size]I don't think it's unfair. I know he's had a solid long-term track record. I just don't think that should make him immune from criticism. It's fine that people gave him leeway for mistakes in a couple year period, but it's going on about 6 years of poor investing results now. If they had just put their cash into an index fund for the last 6 years Fairfax would be quite a stronger and larger company. I am not arguing against the criticism-- it is completely valid and should flow freely. That is something that comes as part of the job for people like PW and HWIC. What I have an issue with is your comment about deflation being just some random idea that came in HWIC's head and stuck, like a mind virus. I repeat that what has made value investors, in general, successful is the ability to stand strong (with the backing of fundamental data) in the face of short term market insanity and reap the benefits in the long term. That is the only edge value investors have-- what else could there be? Value investing is successful over time because rationality reigns supreme over emotions. I see HWIC doing this exact thing and being attacked for sticking to their fundamentally sound conviction. When you do this unfair attack, you are attacking the very fundamental of value investing methodology.

I am not enthused about this development. Does the board think that this is: A) an opportunistic sale of stock that management believes is trading above intrinsic value? B) an attempt to bolster the balance sheet as hedges and blackberry deal eat into holding company cash reserves? C) Both of the above. D) Something else entirely.

I think that is quite unfair. Prem and other value investing greats have earned their honours over the decades because they aren't emotional, but rather, quite rational in the face of Mr. Market's emotions. That is how value investors succeed. Deflation isn't an unfounded belief that is stuck in FFH management's head, but rather fundamental reality that is in plain view, that Mr. Market is ignoring.

Not to digress this thread, but Canadian bank earnings are based on a Canadian economy that is humming along on high oil prices and extremely high houshold debt. This 15% return is built on pillars of sand-- caution is well advised.

The most disappointing thing for myself in this quarter's numbers was the realized loss on the equity hedges. Prem explained the reason behind it in the press release and the conference call. I appreciate them forthcoming with that info openly. This goes to show that there is no such thing as a perfect hedge (except in an Englishman's garden). Hedging is hard and dangerous to your wealth when it goes wrong. As an investor in Fairfax with a short book, this is to be expected. Prem is not going to be profiled in Michael Lewis's Big Short II. But you can be sure Fairfax will make it through the next crisis stronger then ever, and it may just happen to be not because of the hedges, but in spite of them.

As far as I know, this is true under US GAAP too-- using the consolidated method.

A little bit of celebrity worship there on that call-- I was expecting some critical questions after this quarter's results. I have yet to listen to the rest of the call. Thanks for posting this audio.

50% for me. Reason: Lack of good new ideas and maturing old ideas.

That is pure speculative banter. FFH has had an active NCIB forever. If you look at their historical press releases, you'll see what I mean. The last NCIB was about to expire, so it was time for them to renew it anyway. Besides, FFH's stock hardly moved on the RIM "letter of intent".

I hope you are right Dazel. As a ffh shareholder I expect them to deal with BlackBerry as a distressed asset and extract as much value they can.

That wouldn't be the fairfax way, would it?

I think you meant to post this link: http://www.fairfax.ca/news/press-releases/press-release-details/2013/Fairfax-Financial-Holdings-Limited-Intention-to-Make-a-Normal-Course-Issuer-Bid/default.aspx It is good to see them buying back-- albeit, a tiny sum: ~0.6% of float