mcliu

Good to hear that, I didn't like the acquisition either even though it's worked out quite well for the share price. I'm surprised at how overvalued the shares are getting given how much the risk profile has increased. Guess the sell-side was pretty ecstatic about the acquisition on the call and may be pumping it to their clients now.

What kind of impact will a devalued Euro have on US growth?

http://www.airdrie.ca/getDocument.cfm?ID=2722 http://renx.ca/wp-content/uploads/2014/10/14oct16-ColliersQ3-caprates1.pdf Sub 4.5% cap rates in Vancouver/Toronto for multi-family units.

I think the impact will be more on your future consumption rather than the deficits that has accumulated in the past. As an example, look at the impact of the plunging rouble on Russia consumers. The prices of imported products have risen significantly while incomes have not. I mean, like its micro-participants but on a macro level, a country can't continue to consume beyond its own productive capacity without sacrificing some consumption in the future. Sure, companies and people trade, but that doesn't change anything. As an example, A sells widgets to B and demands payment in fiat currency. If A doesn't believe that A can redeem fiat currency for anything, A may demand payment in gold from B. While B has an infinite supply of fiat currency, B will have a limited amount of gold. How will B continue to consume widgets as before? Got you. Well, maybe B should be buying gold now while he can? True, B should be doing that and also as anders suggests, buying land, businesses and other productive assets of A with the fiat currency.

I think the impact will be more on your future consumption rather than the deficits that has accumulated in the past. As an example, look at the impact of the plunging rouble on Russia consumers. The prices of imported products have risen significantly while incomes have not. I mean, like its micro-participants but on a macro level, a country can't continue to consume beyond its own productive capacity without sacrificing some consumption in the future. Sure, companies and people trade, but that doesn't change anything. As an example, A sells widgets to B and demands payment in fiat currency. If A doesn't believe that A can redeem fiat currency for anything, A may demand payment in gold from B. While B has an infinite supply of fiat currency, B will have a limited amount of gold. How will B continue to consume widgets as before?

By the same token. The so-called trade deficit isn't necessarily a bad thing for the U.S. and in the long term it may end up that the other side got the short end of the stick. And the market will not care that you held the opposite opinion. Humility is indeed important. There are multiple ways to look at this, but in general trade always benefits both sides, that is true even if money always flows in one direction and goods in the other. The trade deficit isn't necessary a "problem". My trade deficit with my local grocery store is huge, they never buy anything from me, but I don't consider this a problem at all. I think a better analogy would to think as if you're buying from your grocery store with money that you've borrowed from the grocery store. If the grocery store believes that you could return the money with interest in the future, then it's not a problem at all. It becomes a problem when the grocery store stops believing in your ability to return the money.. But to further the analogy I also have the ability to inflate the debt away. I think what you mean is that you have the ability to print your own money to return to the grocery store. In that case, you will always have the ability to return the money that the grocery store has lent you. However, as you continue to borrow and print your money to return to the grocery store, will the grocery store continue to believe that the money that you've printed for them has value? If not, will the grocery store continue to sell to you?

By the same token. The so-called trade deficit isn't necessarily a bad thing for the U.S. and in the long term it may end up that the other side got the short end of the stick. And the market will not care that you held the opposite opinion. Humility is indeed important. There are multiple ways to look at this, but in general trade always benefits both sides, that is true even if money always flows in one direction and goods in the other. The trade deficit isn't necessary a "problem". My trade deficit with my local grocery store is huge, they never buy anything from me, but I don't consider this a problem at all. I think a better analogy would to think as if you're buying from your grocery store with money that you've borrowed from the grocery store. If the grocery store believes that you could return the money with interest in the future, then it's not a problem at all. It becomes a problem when the grocery store stops believing in your ability to return the money..

Does anyone know what the chances are for these brokers to recover the losses from their clients? Is there any recourse on margin debt?

Hi Gio, just curious to know, is there a point at which would you become fully invested? Or is a large cash balance a permanent fixture? For example, I think you mentioned that FFH is a large % of your portfolio, so clearly you believe that it's undervalued relative to its opportunities. Given that, why not invest the remainder of your cash into FFH, rather than hold it in cash? Or is the alternative, holding cash and waiting for opportunities like waiting for FFH to drop below BV and purchasing it then? Assuming that does happen, when FFH moves below BV and you put all your remaining cash balance into it, do you sell to recover your cash balance when the stock price moves higher than BV?

You're from Fernbank Partners? Congrats on your investment! Do you have any thoughts on the acquisition? The market seems to really like it.

Thanks, that was helpful. It just seems so odd that short sales are considered income and not capital gains.

A couple of Canadian tax questions for the end of the year: 1) Are the gains/losses from shorting stocks treated as income or capital gains? Judging from this: http://www.cra-arc.gc.ca/E/pub/tp/it479r/it479r-e.html , it seems like it should be treated as income.. Can anyone confirm this? 2) With the US$ gaining so much on the C$, I've sold some stocks where I've lost money in US$ but made money in C$ terms. Since CRA requires you to convert your transactions to C$ when reporting (even if you don't actually convert the US$ into C$), I would have to pay taxes on these money-losing trades as a result of the implied exchange gain.. Does that make sense or am I missing something?

4x unlevered on land? That sounds pretty impossible..

After a very rigorous analysis of global financial markets, my prediction is that stock prices will likely fluctuate next year. ::)

I think you should try structuring your readings in a way that's enjoyable to you. Maybe try having discussions with people about what you've read. Talk with management. Attend annual meetings. Start a business and apply what you've learned. Or just take a break and come back to it after a while? I think deliberate practice can help you become above average, but by no means would it propel you to genius levels if you had no talent or inherent advantage. I mean even Buffett himself said something like nobody thinks they can do what Bill Gates does, but everyone thinks they can do what he (WB) does.

I did the exact same thing. I find it very useful. I've also been keeping an investing journal for almost a year and that has been great too. Why do you guys typically put in your investing journal? Is it to write down your investment thesis for a particular investment, or just general investment thoughts?

I think at some point you really have to value FFH based on its underlying assets rather than using the P/BV shortcut. As the company acquires majority stakes in subsidiaries that aren't marked to market, the spread between intrinsic value and book value should grow wider.

+1 So true. Really good advice.

Thanks Packer. Seems like it'll be a big money maker for FFH if the investments work.

Will they be getting a management or performance fee from 3rd party capital?

lol maybe he'll just pitch Clarke next.

What kind of borrow rates are you getting?

Why aren't they building more units to absorb all this demand? It's not like there's a shortage of land in Canada and prices are clearly way above replacement value..

On the TSX, you can buy/sell DLR which trade in both US$ (DLR.U) and sell it in C$ (DLR).

+1 so smart!