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Would anyone care to give a detailed explanation of the retrocession deal between Swiss Re? So BRK gave Swiss Re: 1.3 billion for which BRK will assume the reinsurance of a block of term life policies. Presumably the original insurer will be paying BRK annually on the insurance. Now, Swiss will have freed up 300mm in capital. For Swiss this business does not meet its hurdle rate, obviously for BRK it does. Would any insurance experts care to expound?

Here are my best of for 2009: Books that I read this year that I highly recommend: Your Brain at Work--simply brilliant--I'm sending it to friends and family Evolution for Everyone--brilliant Think Twice--great Influence, Science and Practice. A text book like version of Cialdini's classic Influence Dance with Chance--good 8 steps to a pain free back-- if you have back troubles, get this book, trust me Physics for future presidents--good read for scientists, policy makers, and general public Websites: This board (of course) Farnam Street Sanjay Bakshi's lecture notes Various places that have college courses online: mit, uc berkeley, academicearth,org What have you seen or read that you recommend? Netnet

virtually all of MIT's and most of U.C. Berkeley's courses are available online. As noted above MIT is http://ocw.mit.edu/OcwWeb/web/home/home/index.htm And U.C. Berkeley is: http://webcast.berkeley.edu/courses.php

Geez, There really are cigar butts in with the figurative "cigar butts". :D Man, what you gotta do to be a value investor, wade through the trash to find the gold...wait a minute, I kind of like it. At least wading through the financial trash! Netnet

This falls into the Munger's mental model of...envy. In a N.Y. Times Blog, which quotes a Business Week article, KKR's Kravis says that Buffett "'can make any kind of investment he wants,” ...And he never has to raise money' Mr. Kravis thinks Mr. Buffett’s cash-rich conglomerate Berkshire Hathaway represents 'the perfect private equity model,' the magazine said, in a lengthy look at Mr. Kravis and his buyout shop." The N.Y Times article: http://dealbook.blogs.nytimes.com/2009/12/11/kravis-wants-to-rock-it-like-buffett/ The BusinessWeek (original) http://www.businessweek.com/magazine/content/09_51/b4160038935523.htm I find the irony pretty amusing. Best, Netnet

There is an interesting interview with Pimco's CEO, Mohamed El-Erian, who says that individual investors' exposure to the U.S. should be about 15% equities, and 5% bonds. (sorry for our northern neighbors, don't know what he would suggest for you). That's right; total allocation for U.S. investors, 20% domestic--TOTAL! Few on this board have mentioned anything like this kind of allocation. It is a thought provoking interview. Here is a teaser--how was the financial crisis like going to McDonald's? (No cheating; you have to guess first.) http://money.cnn.com/2009/12/09/news/economy/mohamed_el_erian.fortune/index.htm?postversion=2009121011 Best, Netnet

Rabbitisrich, great line:

Sorry for me Canada, even Vancouver is too damn cold. Now, if it changed places with Mexico, I would have moved years ago.... Thin blood I guess.

What podcast do you listen to from LSE? Weekly commentary or courses?

Well for me the crash and rebound brought home Munger's point: I am way, way more selective now about what I buy and keep plenty of "dry powder" available for when I get greedy! (I also learned yet again how much smarter Buffett is than I am. I went into the Wells' preferred and he was in the common. I still like my coupon though. And I am happy with my buying process on the preferreds. The outcome was great--and not as important as the process anyway--and I don't need to feel humble and compare myself to the great one! I am happy to have survived the episode.)

The article seems to imply that they are doing both reinsurance and regular P&C. Is that correct? (Is this the new AIG?)

Sorry about that. I put the link into the original post. Here is the link: http://www.fool.com/investing/general/2009/11/09/interview-with-alice-schroeder-buffetts-biggest-we.aspx Here is what to me is the most interesting excerpt: What is particularly fascinating is that he would not have been as successful today, because he could not use the same methods, as if he were not what Munger calls a learning machine, as if he would not adapt to the times! This just show Schroeder's limitations. WEB said, and I believe him that there are people who with a million dollars can earn 40 to 50% per year. If you believe WEB, then in all probability you would have to surmise that he could make these kind of numbers too.

Having just read the Ascent of Money, and about to dive into Rogoff's book, I have been thinking about this sort of thing. I wonder what does this mean practically? Buy gold or gold miners? Floating rate preferred of excellent credits? Move to Singapore? How do you play this imperial decline--to quote Munger, the failure rate of empires is 100%!

I'm U.S. based, so I have not thought about the Canadian implications, but here goes: 1) Why do you need the Canadian structure? 2) Is this to be widely cast to a variety of investors or are they all ready to go now? 3) How many investors are there? 4) Are they deemed sophisticated? (If you can legally set up a CDN corporation, with all the investors--option 1--, I'm surprised that there are no CDN compliance issues.) Off hand, I would tend to #2, with or without the Canadian entity. If there are compliance issues, then set up a US LLC, which allows you to upstream the profits tax free to the members, but you still have the foreign entity tax treatment issues, which is way beyond me.

I don't want to glorify Schroeder or Motley Fool, but here is another interview about WEB. It's not too bad.. (How's that for backhanded praise.) http://www.fool.com/investing/general/2009/11/09/interview-with-alice-schroeder-buffetts-biggest-we.aspx

here is the link to Joel Greenblatt's presentation: http://blog.valueinvestingcongress.com/2009/11/17/exclusive-joel-greenblatt-video/

To elaborate, on the above, the frictional costs are actually worse than twa describes. (I don't know about the front running part. It is certainly a possibility.) Particularly on the leveraged ETF's, say a 2x short fund. For example: if the underlying security or index rises 20% and then declines 16.666%, it will exactly break even. However, during that time the 2x ETF will NOT break even. As the security or index rises 20%, the ETF declines 40%. Then with a subsequent declines 16.666%, the ETF rises 33.33%. That's not enough of a recovery because that gain occurs over a lower capital base and the ETF ends up being 20% below where it started off. And because it seeks to mirror daily performance, it loses its capital base daily (or every second day, on average, if we want to be mathematical about it). Thus, volatility kills this sort of fund. So a possibility would be to short a 2x. now you would need a hedge to prevent ruin, so a call would be in order. You probably construct a nice hedge that would make the trade work. (It's not my cup of tea, so I haven't penciled it out to see if it really works.)

Remember availability bias. Because we just went through an admitted huge bubble burst, we tend to look for another bubble right around the corner. Are some markets over-bought, undoubtedly, but are they really in bubble territory--that's questionable. Sanjeev, you are absolutely right on this count, but if the odds are in your favor in whatever instrument you choose then it is NOT speculating, in the negative sense of the word. Thus I would agree with twacowfca: But again remember folks that we are looking for bubbles (mostly) because of recent history. Every overbought market does not a bubble make.

Thanks for the article. "Hope for the best, prepare for the worst." that's good advice for any time. Their comparison of U.S today to Japan in the 90's, with attendant low interest rates and deflation, presumes that the Chinese continue to buy our debt. But if the dollar keeps going down, and China diversifies, then we, the US, have a problem. and interest rates will rise.

That's an idea. What do I have bid for a weekly rental?

I happened to be going through a box of books in the basement and it turns out I have a second copy of Klarman's "Margin of Safety". So I am selling it. So, $ U.S. 990 to the first one to respond. (The book is in excellent condition, with book jacket.) Hey maybe we can have Sanjeev be the escrow agent and give some money to his favorite charity. Sanjeev, if this is not a 'proper' forum for this let me know and take the post down.

Although he is not known as a macro guy. I find his analysis compelling. By the way, does anyone know if he predicted the downturn? (that's just an idle question, I am not impugning him in anyway. He is way smarter in finance than I.)

thanks saw it on your site!

In addition to OID, in essay format, there is Cunningham's book--the Essays of Warren Buffett. Seth, how are your are you still in Emirates? Netnet

Here are the notes:http://www.distressed-debt-investing.com/2009/11/baupost-annual-meeting-notes.html (They were still there as of Sunday, Nov 8th night.) Also there are some interesting articles on Klarman on Scribd.com Netnet