giofranchi

Of course, if you think their stock holdings will do worse than the Russell2000 their whole strategy since the end of 2010 is the perfect recipe for losing money… I guess what Mr. Watsa had in mind was to settle for the decent profit their alpha in stock selection would guarantee FFH, in a period of both high debt burdens all around the developed world and high general asset prices... By alpha I mean he probably had in mind FFH’s stocks portfolio would outperform the Russell2000 BOTH in a bull market AND in a bear market… If to outperform the Russell2000 in a bull market is no easy thing to do, I am much more confident FFH’s stocks portfolio might succeed in outperforming that index in a bear market (or even in a market that proceeds sideways for a little while). Gio

Dazel, that’s exactly my point too! And I am ready to buy a lot more! ;) Gio

Ed Esterling's "Worst Recovery Ever" Gio ed-easterling-worst-recovery-ever.pdf

Well, JoelS said it much better than I did! ;) Welcome to the board!! :) Cheers, Gio

Gio, For me, for FFH to be "right" on the hedges, S&P 500 would have to fall significantly below (say 20% or more) the level at which they hedged (~1060). This would imply S&P 500 to go down to about the 800 level. What is your criteria for FFH to be right on the hedges? I say this not to disrespect Watsa in any way. They got 3 big macro calls right (Japan 1989, Tech bubble in 2000 and 2008 crisis). Even if they got this wrong, that would make 3 macro calls right out of 4. That is a pretty good ratio on such complex macro events. Vinod Hi Vinod, First of all the great majority of FFH’s equity hedges are on the Russell2000, not the S&P500. And small caps are much more expensive than large caps: before the recent “correction” small caps according to GMO were priced to deliver a negative –4.9% real annual return over the next 7 years… Large caps –1.7%… But that’s not really my point. I am not trying to defend an investment in FFH made 3 years ago… Instead, I am strongly advocating an investment in FFH today. As a new shareholder of FFH you absolutely don’t care if FFH will be right on its equity hedges in "absolute terms"… You won’t bear the cost of past protection and conservative behavior anymore! Instead, you are getting protection now! Therefore, let me reformulate: it is not that FFH will surely be right, but that FFH will surely be right for you as a new shareholder! I just don’t see how it could be otherwise… That’s why I am only hoping to see another leg down in its share price, after FFH discloses 2013 full year results on February 14, 2014… It would be a great chance to average down! ;) Gio

Euro jumps as Draghi dismisses deflation threat http://www.marketwatch.com/story/dollar-rises-against-euro-ahead-of-ecb-boe-decisions-2014-02-06?link=MW_home_latest_news Ok, now I know we will also see deflation... ;D ;D ;D Gio

Dazel, I think you are right. I have just finished listening to Mr. Cooperman on Bloomberg… I simply cannot buy into the bull argument… I don’t think it is because I am a pessimistic person… My nature is just the opposite… Would I be (or at least try to be) an entrepreneur otherwise? I guess not! Instead, it is because the bull argument imo lacks logical substance… Bullish forecasters always talk about earnings… ttm earnings… To say the market is “fairly valued”… But, truly, I don’t understand… If you look at Price / Sales, Market Cap / GDP, Q Ratio, and Price / Adjusted Earnings, those 4 measures not only have the best long term track record for predicting future market returns on a 10 year basis, but they also point at almost the same exact overvaluation for the market right now (or at least before this “healthy correction” of 5%... who would define a 5% move a correction?!): that is to say in 10 years the market will be little changed, if not at all. Now, this is imo what truly matters! Forget all the rest! A market that will be little changed 10 years from now… Who really think it will be an horizontal line for the next 10 years? No one, I hope. As I see it, FFH simply cannot be but right… Not only, the higher this market goes, the more correct FFH will be proven in the end. Of course this will take 10 years to play itself out… and in the meantime FFH stock price could fluctuate, even wildly. Gio

"Deflationary Forces Unite" by Mr. Louis Gave Gio Daily+2.5.14.pdf

;D ;D If you are interested in FFH’s long-term business prospects, imo today’s share price makes no sense… This, of course, doesn’t mean it cannot slide down even further… As with any other investment of mine, if FFH's share price should keep trending down, I will keep buying. ;) How can I do this? Two simple reasons: 1) I am interested in FFH’s long-term business prospects, and I intend to hold it for a very long time; 2) I have cash. :) Cheers! Gio

I have just finished reading the book, and I must say it is very well written and very informative by any standard! Imo, an outstanding job! :) If I may provide a very small and not truly important criticism, in the chapter about “Jokey Stocks” I would have stressed more insistently on the importance of reading and studying the lives of great entrepreneurs and capital allocators… Mr. Mihaljevic rightly says there is no sure formula for identifying future business leaders… Yet, I believe that, anyone who takes the time and makes the effort of studying the lives of Mr. Buffett, Mr. Walton, Mr. Malone, Mr. Icahn, Mr. Singleton, Mr. Templeton and other great businessmen of the past, Mr. Baruch, Mr. Keynes, Mr. Rockefeller, Mr. Mellon, Mr. Baker, Mr. Sage, Mr. Vanderbilt, Mr. Franklin, etc., would enjoy at least a rough guide on what to look for. ;) Gio

Well, in business I think a “good culture” equates to “flexibility and adaptability”, exactly because, as Oddball says, “there are many seen and unseen factors that influence decisions.” Flexibility and adaptability mean: “tell me the rules of the game, and I will figure out ways to make money.” By definition this kind of “good culture” should work in any environment. :) Gio

--The New York Times, Monday, May 4, 1931 Gio

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No problem! It is just that FFH’s assets are practically all denominated in USD, therefore I always think in USD, even when I refer to its share price! ;) Gio

What do you mean? Yesterday I added more FFH at $378... Gio

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Ok, I know FFH will sink, when Q4 2013 are finally out… Then, I will buy even more… ;D ;D Gio

I have bought the 1994 edition… But have no idea what’s the difference between the 1994 edition and the 1981 edition… One thing I know: the 1994 edition costs little more than half the 1981 edition! ;) Gio

Well, actually I have just started reading the book… so I cannot truly tell! But I will keep quoting, as I find more interesting ideas and character traits! ;) Gio

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To his son, Mr. Baker wrote: Gio

[amazonsearch]George F. Baker and his bank 1840 - 1955[/amazonsearch] --Proverbs 22:29 Gio