giofranchi

Surely it could. But will it be a permanent pick up, or just a fluctuation around a downtrend? “The one big idea” Watsa has been talking for a while is that we will have a secular downtrend in inflation until this global deleveraging is over. We will see. Cheers, Gio

--Mr. Soros Mr. Watsa has been saying this all along, hasn't he? ;) Cheers, Gio

Thank you very much for posting! :) Cheers, Gio

Soros sounds more and more in Watsa's camp: http://www.marketwatch.com/story/george-soros-says-too-early-to-buy-stocks-after-shorting-sp-500-2016-01-21 Cheers, Gio

Maybe unsurprisingly, I find myself in full agreement with Felix Zulauf's macro view. We'll see. Me too… But I still think macro investing is poor business. One of the most important feature of good business is predictability. And the predictability of macro investing, at least as far as timing is concerned, is very low, almost non-existent. Therefore, though I might agree with Mr. Zulauf, I would not invest with him. Cheers, Gio

I thought your results as an investor have been quite good until now… Why do you want to change something that has worked very well so far? Cheers, Gio

What's the purpose of posting something like this? Gio is not even an active part in that particular discussion in this topic. John, In previous years I have always reported the overall increase in BV of my companies, simply because that’s what I am interested about and that’s what I keep track of very easily. The return from my stock market investments alone is more difficult to calculate. I was told the BV of my companies doesn’t make sense… Therefore, this year I have not posted any result. Just in case you care, the BV of my companies is up +4% for 2015, while the return from my stock market investments alone are in the red probably high single digit. Cheers, Gio

This is very impressive! With a large position in VRX, AAPL that has gone nowhere, the Malone’s family of businesses that have appreciated very little, a 20% return in a year the market is flat means really a great job from the rest of your portfolio! Would you share with us which were your best performers? Thank you, Gio

I have come to think I want to invest both in companies with long runways, which can go on growing for a very long time and therefore don’t distribute dividends, and in companies which are more mature and therefore distribute generous dividends. The balance between these two types of investment depends on the general environment: under certain conditions I am going to hold more of the first kind of companies (basically when general valuations are reasonable or the market is oversold), under other conditions I am going to hold more of the second kind. Cheers, Gio

I am reading [amazonsearch]A Curious Mind[/amazonsearch] by Brian Grazer. It is very interesting so far, and I would recommend it. Find in attachment what Mr. Grazer has to say about "curiosity meetings". Cheers, Gio

+1! +1! Cheers, Gio

+1 Cheers, Gio

http://www.fairfax.ca/news/press-releases/press-release-details/2015/Fairfax-to-Acquire-80-Interest-in-Eurolife/default.aspx Life insurance? ??? Cheers, Gio

I agree. Great accomplishment. And let’s hope this will turn out to be an important step towards their final goal that will benefit all humanity. Cheers, Gio

I am sure it is!!... But also very difficult for me to understand what he is saying… Too bad! :( Cheers, Gio

Thank you for the explanation. My question, though, remains the same: is the V/MA system a very efficient mean devised by banks to extend credit to consumers effortlessly? If so, why should banks, which already keep for themselves the great majority of the fees involved in any payment transaction, accept to change that system? What’s their incentive? Cheers, Gio

There are 5,441 commercial banks in the US as of Q2 2015 (https://ycharts.com/indicators/us_number_of_commercial_banks). In Europe there are many more banks. Think about Latin America and Asia… Most of those banks issue credit cards and bear credit risk, don’t they? And most of those banks have established relationships with V/MA. It doesn’t not seem an easy thing to do to replace those established relationships, which have been hugely profitable for all the banks involved, with new relationships… But I might be wrong. If instead it is an easy thing to do, V/MA moats might shrink in the future. We will see. Cheers, Gio

merkhet, still remains the fact that any new entrant, if it is to replace V/MA, must create its new network of relationships with banks all over the world. It doesn’t sound as an easy thing to do imo… But of course I cannot be sure… If instead it requires little capital and almost no effort, than V/MA business model might seriously be threatened. This goes well beyond technology: any new entrant must partner with banks on a global scale, displacing the rules and the agreements those banks have become accustomed to dealing with V/MA and introducing new rules and new agreements. To me it seems that lots of work is needed… And why should the banks accept to be bothered with new rules and new agreements? We have seen the already keep for themselves the great majority of the fees in any transaction… It doesn’t seem they have much to gain for this effort of “changing the system”. Cheers, Gio

+1 Cheers, Gio

See HJ's post. Here's another nice summary of who gets what. Thank you, HJ and wknecht! This is very useful. Cheers, Gio

Well, you seem to believe that to replicate the network of credit risk bearers (banks) V/MA have partnered through the years on a global scale requires only minimal effort and no capital. If that is correct, then I agree V/MA moats might become weaker over time. Cheers, Gio

I would really like to understand… but I don’t! How is all this supposed to handle credit risk? The article ends with the following sentence: But the fact “everyone is known” (whatever it means…) doesn’t automatically imply that everyone knows if everyone else is worthy of credit or if he/she is not, right? As long as consumers want credit, there must be credit risk bearers. And those credit risk bearers have partnered with V/MA in two global networks that work very efficiently. Who is going to replace those networks? How? And why? If new entrants are supposed to be profitable, and have to build a similar infrastructure to the one V/MA already have in place, how could they compete with V/MA on price? Could someone tell me what I am missing here? Thank you, Gio

Well, basically I agree… But 30x earnings is a very high price to pay… Therefore, it remains a small position right now, while I keep track of business developments, and hoping to buy more in the future at an attractive price. Cheers, Gio

Which is peanuts for a company that could convince 700 million people to use its service… If they have to build from scratch the global infrastructure of “credit risk bearers” that V/MA already have in place, it doesn't look like worth the effort. This might be true, and it might be true for Apple too. But if for both of them their payment services are only a mean to reach more people, it is not clear why they should invest all the time and the resources need to build from scratch new global infrastructures of “credit risk bearers”, while instead they could decide to simply partner with V/MA and use those two infrastructure built throughout the years, already in place, and perfectly functioning. Cheers, Gio

Ok, I understand. But, whoever bears credit risk, it is a business establishment that is very long dated and that works extremely well. V/MA have built a worldwide network of card issuers that work with them and are willing to bear credit risk. It doesn’t look like an easy thing to replicate… Especially if the incumbent enjoy an advantage of a couple of decades… Therefore, the question remains: why should Apple, Google, etc. make such a huge effort for little or no gain? If, instead, they want their payment services to be profitable, how is it that V/MA, with the huge advantage of having their networks of “credit risk bearers” already in place, should fail to be the low cost producers? Cheers, Gio