giofranchi

US 10 yr Treasuries yield below 2%… It looks like Fairfax’s bonds portfolio might post strong results in Q1 2015 too. ;) Cheers, Gio

+2.34% so far this year... Ahahahah!!!! ;) Cheers, Gio

Yes, it does... But, as far as I am concerned, only two things matter: 1) Purchasing power 2) Business performance If you are interested in 1), forex gains/losses definitely matter to you and should be included in your results. If you are interested in 2), yearly stock market returns are not meaningful... You should just take yearly EPS of your companies and divide that number for your average cost. Therefore, when someone asks yearly results... I always think he/she is referring to purchasing power! ;) Gio

Very nice, Gio. How did your investment portfolio do? 20% Liberty... Not as good as you, but not bad either... As you know I hold a large percentage in cash! Cheers, Gio Nice job, Gio. Although I disagree with you on a lot of your posts/views re: intelligent investing and macro matters, I contend that your rock solid approach to investing will likely have you returning well above the average investor for a long time. And 20% is a great return, btw. The average person would kill for such a return. Thank you, txlaw! :) Two things: 1) Regarding macro: my only "macro" idea is that debt matters. It cannot grow to the sky, and sooner or later must be dealt with. If this idea is wrong, I guess neither Fairfax nor Oaktree (by far my two largest investments!) will do better than the overall market... Instead, if this idea is right, they both have a very real chance to do significantly better than the market in coming years. 2) About intelligent investing, please feel free to tell me anything you don't agree with what I am trying to do: I respect your point of view very much, and I am here most of all to listen to people who are investment savvy and disagree with me! Cheers, Gio

Very nice, Gio. How did your investment portfolio do? 20% Liberty... Not as good as you, but not bad either... As you know I hold a large percentage in cash! Cheers, Gio

In the last few days BH’s stock price has brought the increase in BV for my company in 2014 to +32.42%. A prosperous 2015 to all! :) Cheers, Gio

I just wanted to add a comment about why I attach such a relevance to a great track record sustained over many years: It is not because the past matters to investors… It clearly doesn’t, and all that matters to investors is the future instead. But it is because I think we really don’t know how and why very few people achieve extraordinary results in business (or in any other human endeavor for that matter). I certainly want to see a business strategy that I understand well and like. And I want management to communicate it openly and clearly, and to implement it judiciously and competently. But… from that to extraordinary results… who really knows??… My reasoning is simply that those very few who have achieved extraordinary results in the past, and sustained them for a very long time, are more likely than other people to achieve extraordinary results in the future too. Gio

Zorrofan, Probably you are right. I don’t really know… I give lots of weight on past track records, when I decide who I want to partner with, and who I don’t want to. I might be too demanding and too much fixed on this requisite, but I think it is the best recap of the "qualities" of any owner-operator that’s at our disposal. Of course, I don’t require only a great track record, nor I require only to understand well and approve the business strategy going forward… Instead, I always require both. I might still like Lancashire’s strategy and how they keep communicating and implementing it… But imo the track record was Brindle’s… Therefore, 50% of what I require just became missing, when Brindle left the company. And I decided to shift my capital into businesses where I am comfortable both with the past (track record) and with the future (communication and implementation of present business strategy). Gio

I didn’t expect Brindle’s sudden departure from Lancashire… I was utterly unprepared and had to accept a (meaningful) permanent loss of capital. On the other hand, I got lucky with Altius, and exited my position before the stock price fell. (I still like Altius business model, and I think they will do fine over time). Cheers, Gio

Thank you very much for the detailed explanation! I am sure this year will prove to be the exception, while last year the rule! ;) Cheers, Gio

Of course, how much you can learn should be a very large part of how much you would enjoy any job... Therefore, my suggestion about cash flow and hours worked is still valid only if you can think the learning experiences would be roughly equivalent! Personally, the most important things I have learnt have always been self-thought... But surely a good job with a good mentor can be helpful! Probably, my point of view is always the one of the entrepreneur, and not of the employ who wants to build a career... Cheers, Gio

Three questions: 1) How much will be your cash flow in job 1 and in job 2? 2) How much of your time will you have to devote to job 1 and to job 2? 3) Which is linked to question n.2, how much time will you have at your disposal for investing the cash flow you are going to generate, if you choose job 1? How much if you choose job 2? And, of course, given the fact this is a job, not a business, question n.4: 4) Which job would you prefer doing for the next few years? I think about career choices much like I think about business and investments: I’d want to maximize cash flow, to minimize the time devoted to operating responsibilities, and to maximize the time at my disposal for investing the cash flow I am going to generate. The only difference is that with a job, as much as you succeed in minimizing the time spent working for your employer (the time I call "devoted to operating responsibilities"), it will always be a significant portion of your working day… therefore, you should enjoy doing it! ;) Good luck! Gio

The equity of my company is up 30% this year. Gio

This is interesting... Why? What has happened? Thank you, Gio

I am only saying that, if you have a deep passion for what you do, the right path to fulfill your true potential in any endeavor will come much more easily! And if something comes easily, the chances to get at the end of that road are much higher! ;) I think this is only logical and doesn’t mean that you won’t have to practice a lot and work hard… It only means that a lot of practice and hard work won’t be so hard on you as on most other people… And that simple fact might help you get nearer to your true potential, while others give up much sooner! Gio

Of course!... But I guess Slash loves playing guitar nonetheless… at least most of the times! And probably loves it much more than me and you could ever come close to understand… That’s why I agree: such a passion definitely is a trait! Then also Slash is just a human being… and like any human being he is sometimes subject to boredom and laziness! ;) Gio

I agree. But the next question then becomes: what exactly is natural talent? The answer I tried to provide above could be read this way: 99.5% a true passion for doing something and for getting better and better at it, the remaining 0.5% something else that could hardly be defined and which characterizes the genius or the champion. Don’t think that genes don’t matter in the first 99.5%! It clearly is not so! I don’t know why someone gets the burning desire to do something, while the majority of other people never feel the same level of passion for anything… But genes evidently matter! Gio

I think Klarman is a great businessman, and could be even a better one… if only he enjoyed thinking about business dynamics (and that’s what is absolutely required imo! A true passion... think of Buffett saying he would do what he does even for free!) as much as he enjoys doing what he does (finding statistically cheap stocks). To me that sentence of his has always really sounded much more like a defense and even a sort of justification about what he does, than an admission he cannot truly be business savvy. Cheers, Gio PS This is not to say that he would become as successful as Buffett in judging the dynamics of businesses… What I simply mean is you will never know how good you might become at anything, if you don’t sincerely enjoy it very much. Because you won’t devote the necessary effort, if it doesn’t come naturally. Instead, if it does come naturally, and you really get to exploit your full potential, chances are you will end up being better than 99.5% of the population… it obviously won’t be enough to beat Buffett… but it will be enough to live a meaningful an fulfilled professional life! ;)

You could easily exchange Steak n Shake for Cracker Barrel, couldn't you? ;) Gio

On the contrary, reading those letters with the benefit of hindsight I have found amazing how consistent Biglari is to this day in his reasonings about: 1) The qualities of a franchise business, and how to run it for maximization of cash flow; 2) The qualities of a concentrated portfolio of investments, and how to choose and manage them; 3) The qualities of activism, and how to influence management effectively; 4) enhancefriendlys.com, enhancesteaknshake.com, enhancecrackerbarrel.com; 5) The qualities of rights offerings, and therefore why BH’s shareholders should expect more of them in the future; 6) The qualities of Western’s overall strategy, which was back then precisely what BH’s overall strategy is today. As I have already said in the BH thread, Biglari’s biggest mistake in those days has been an unfortunate promise to work for free! ;) Gio

The process of building a global insurance platform goes on! And I like it very much! :) Gio

Good weekly commentary by David Hay of Evergreen/Gavekal Gio EVA+12.12.2014+NA.pdf

Don’t worry… Next time I want to share something with Liberty, I’ll send him a PM… Promised! ;) Cheers, Gio

Ok! Thank you! Gio

Kyle Bass: 'Only massive debt restructuring can save EU' http://news.bbc.co.uk/2/hi/programmes/hardtalk/9639507.stm Gio