obtuse_investor

Glad you enjoyed the presentation JEast. Watching presentations held by Long Now is one of my addictions. I was surprised to hear about Jared Diamond's response too. I suppose he is as human as the rest of us.

I would disagree. There was plenty of stock craziness at various times during the mid 2000s, 1980s, 1960s and 1950s. It wasn't just the late 90s and 20s. Whether or not the market is crazy now I will leave to others, but from the information I have both retail and pension funds, endowments, etc have yet to jump in here. Doesn't mean they will of course, I have no idea. But IF they did, things could get truly insane. Based on what financial history I have read, the 1929 and 1999 were the only times I heard of every average person and their dog wanting to be in the stock market. Perhaps you are right about similar mass hysteria in the times in between. However, I think we agree that things never do and certainly don't have to repeat exactly.

History doesn't repeat, but rhymes. There is no absolutely guarantee that the average guy on the street will be stock crazy for decades to come. Last time that happened before the late 90s, it was in 1920s. That is a 70 year gap. During those 70 years, there were plenty of times when the market hit various valuation highs. Personally, I don't want to wait for the history to repeat, while it ends up rhyming with a note that isn't as high as the last one.

I will know that Parsad is truly worried when he discloses that he is selling off his BAC Warrants. Ladies and gentlemen, that would be the market top.

I have been looking at those puts as insurance, but find that the premiums are too high! I would love to know a cheap way to insure.

I merely manage my own money, and am over ~53% in cash. I have been trimming down positions actively since start of 2013. I can't help but think of Buffett's mantra: "try to be fearful when others are greedy and greedy when others are fearful"

Yeah, let's take Easter Island as an example. http://en.wikipedia.org/wiki/Easter_Island#History A nice forested island. Humans come in and destroy the trees until it's a barren wasteland. As they're cutting down the last tree, they're probably saying, "Don't worry, our technology or god will save us." And in a way, they were right. That said, they're in an enclosed ecosystem. So, when they screw it up, they're stuck with what they've created. But they do figure out a way to survive. Cannibalism becomes an accepted practice and the population plunges by 80%. So yeah, we can destroy many of the things that we rely on on our survival on the earth, and it's very unlikely to destroy all humans. The question is, it is worth a small investment now to prevent the possibility of big problems later? Generally, humanity seems to decide not. I disagree, but that's largely because I think picking up nickles in front of steamrollers is a bad idea. I've always found this comic amusing: http://img.izismile.com/img/img4/20110621/640/hilarious_mother_nature_illustration_640_high_02.jpg The "classic" story of the demise of the easter island population is being rewritten. Check out this excellent presentation and question period that explains a whole lot. http://fora.tv/2013/01/17/Terry_Hunt__Carl_Lipo_What_Happened_on_Easter_Island This is anthropology heavy and low on finance talk, but it is very enriching nonetheless. And it also happens to blow a big giant hole in the classic mindset that compares the fate of planet earth with the fate of Rapa Nui (Easter Island). Pour a nice tea/coffee and watch this 1h 44m long presentation. PS: I am long human ingenuity over the very long term-- but long human stupidity/greed in the short term.

You are right stahleyp-- we don't know of an instance like that. But, if for a minute, I wear my scientist/engineering hat on, we must always keep in mind that 100 or even 200 years of market valuation data isn't statistically significant enough to perform reasonable predictions. I am squarely in "market is moderately overvalued" camp right now, but I also know that this can go on for another 1-4 years!

Hurry guys print some money!!!! Wait, they can't :-\ Of course they can-- they just don't have the political will, yet.

In size? Absolutely nothing. I may nibble on FFH if it drops enough.

I am enjoying the digression :)

I am with you Enoch01. Whenever I have looked at hedging I don't like the price of the insurance and also the added complexity. I am about 50% cash at this point.

Watsa didn't directly compare dividends with buybacks. He was a little cagey in his answer and implied that there may be higher yielding opportunities than the buybacks are currently offering. On the question on dividends, he went into why he prefers to give out dividends. He said that he collects a flat salary of $600K and any performance bonus is received as a dividend. He believes that this is an egalitarian way to treat all shareholders. Looks like the dividend is here to stay-- even though they are counting on the "kindness of strangers".

I have a similar "gut" feel. As someone who is still in the midst building a position in FFH, I am not sure if I should stay in cash or load up on FFH now. I am not looking for answers-- just thinking out loud.... Looking at this fork in the road: Prong #1: Deflationary spiral returns. Market selloff starts, causing FFH stock to drop too as Mr. Market forgets about their hedges. Prem goes for the kill and issues buyback press release; and market shrugs and stock drops anyway. And there is the little me, happily competing with FFH buying back its stock at large discounts to book. Prong #2: Deflationary spiral returns. Market selloff starts, causing FFH stock to rise as Mr. Market values their CPI and stock hedges. I continue sitting on the sidelines and miss out. Buybacks are never called because the price never quite came down enough. Prong #3: Status quo. Mild inflation. Financial repression. My cash reserves lose value. Stock market goes even higher and sells at even larger PEs. FFH muddles along as their hedges decay completely. FFH produces half decent returns and it is all very lackluster. If it is prong #1, cash is the place to be right now. If it is prong #2, buy FFH, now. If prong #3, FFH is not a bad place to be but there are better non-cash alternatives out there. As Yogi Berra once said "When you come to a fork in the road, take it".

For those of you who couldn't or didn't resist the food being served outside the main hall (AGM Apr 11, 2013), the very last question was on share buybacks. Prem mentioned that in the past that they have bought back large amounts when the time was right. Page 188 of the 2012 annual report confirms that. He said that they are "price conscious". He then seemed to strongly imply that he expects the FFH share price to be lower at some point in the future. Is it just me or did someone else notice this insinuation too? I should have voice recorded the whole question/answer period.

Forbes interview with Gary Shilling; talking about the "grand disconnect" that Mr. Watsa mentioned in his Annual letter this year. http://t.co/Ur39RIyvzk [video + transcript]

Look at their timeline. They may both be right. I suspect Prem will be right over the next decade-- while Jeremy will be proven right over the next four decades.

Thanks Uccmal; good to know. I will bring my broker's latest statement showing ownership, anyway.

I will likely be going to the Annual Shareholder meeting on April 11. This is my first visit to a shareholder meeting-- any shareholder meeting. I have a newbie question for the more experienced: What information do I need to bring to register for the event?

Thanks for posting. I am looking forward to the Annual report on Mar 8. Also, I plan to be at the Roy Thompson hall on Apr 11.

I second that motion. (sorry for taking the bait earlier-- it was against my better judgement)

Ok-- I'll bite. Perhaps religious faith helps, but strong financial sense and rationality must be the base behind long standing contrarian positions. To be successful in this game, one must be not only be a contrarian but also be correct! Religious faith only helps satisfy 50% of the requirement.

giofranchi: can you stop for about a week? I need my bid filled at 0.9xBook :)

After the close of markets on Thursday, February 14.

I hope their threshold is 0.5xBook--- purely because I am not done creating a full position in FFH, yet. :)