no_free_lunch

I have still held back from buying. I think it could get a lot worse still and the market at large is still expensive. I don't even want to speculate on death rates or infection rates, still too many variables but we can focus on what we know. It is almost impossible to contain with a modern open society. You now have MSM starting to back the draconian measures taken in China. If we go down that route it's going to get ugly and perhaps actually predictable from an economic pov. Supply shortages seem very plausible and I don't know what central bankers can do about that.

zerohedge is useful because it breaks news first. However, they also lie and exaggerate. So you are getting the news first, right and wrong, but you don't know if you can trust it. If you really want to know, you have to verify everything they tell you. No different than CNN, except CNN lies in a more selective information way. I think it is a very useful data source as long as you treat it as suspect and do your own DD.

Here is another data point from Japan. This is just one data point and a relatively small sample but it would indicate the infection is WAY bigger than you are told. https://www.japantimes.co.jp/news/2020/01/30/national/three-japanese-wuhan-coronavirus/#.XjRujCNMFhE So they pulled back 206 people and 3 of them (or 1.5%) have CoronaVirus. Think about the implications. If there are 50 million people in the infection zone and they had similar infection rates (and why wouldn't they) that would be 750k infections. Conversely, if there are really only 5k infections on a population of 50m, then that is 1 in 10k. You would NOT expect to see 3 / 206 (1/67) infected on the Japanese plane. I am not saying that is the actual rate, again small sample size, but I do think it is very plausible that it is significantly higher than we are told.

I have to admit, it is looking very cheap at these levels. Something like 5-6x fcf if I remember the numbers correctly. Do you have any insight into what has sparked the selloff?

Cigarbutt, I meant the readily available machine learning libraries. I just hesitate to call what I am talking about AI so a lite seems appropriate. This technology seems to be getting way more accessible and that's what is required for wide spread applications. I am thinking of augmenting workers tasks to boost productivity. With rails there is a lot of potential for self driving trains IN THE YARD for stitching trains together, as one example. It is actually one of the most dangerous places for rail crews. You would still need people out there but maybe less people and maybe if can be done faster and safer. We don't need to wait for these technologies to be invented it's more a matter of engineering and initiative at this point.

I think it was said earlier so let me just throw my vote behind commodity lite-AI. That stuff seems to really be gaining steam. It will get easier and easier to apply and the workforce with relevant skills will grow. It has and will continue to have a wide variety of applications. How to invest? Who knows for sure but one thought is that it will drive down costs. Perhaps monopolies with high labor costs will benefit. Rail companies come to mind as being possible ai winners, oddly enough.

I don't know the answer but if you look at the ETF VGK it is even worse, they have gone nowhere since 2006. On a pure price basis the index is actually lower than in 2007. I assume it has to do with bank shareholders being basically wiped out. I suspect that stagnant demographics and socialism is just a wicked combination to overcome but my opinion is hardly scientific. Curious to see others thoughts. The EU stocks are much cheaper based on shiller ratio than their US counterparts so if this is just a temporary issue, they could be good investments.

2018 and 2019 combined i did just over 20% total. I tend to exceed in bear and lag in bull markets so i am happy with the results. I havd a high Canadian and international exposure with a high bond allocation so it never really roars. You guys are posting some amazing numbers. Congrats!

Buy Toyota for the reliability and reasonable price. You will pay a small premium but it should make up for it over the long haul. The other manufacturers, kia/hyundai in particular, are catching up but I am not convinced they are there yet. You pick the model. These things will do 200k miles no problem, if you can just do the basic maintenance.

I joined this site 7 years ago, right at the start of this huge american bull market. My net worth has climbed almost 4x what it was back then. Some due to saving, much due to investing. I have for comparison an account which I kept all in ETFs and other accounts where I actively invested in the stocks we discuss here. Needless to say, the ETF account has significantly under-performed against my berkshire & fairfax portfolio. So I would just say Merry Christmas to you all, and please, keep the ideas coming.

Thank you very much Gregmal. It is interesting to see the value mindset applied to real estate. If you put down 20% and pay the property off in 15 years then that would equate to an 11% return and that is assuming no rent increases. If the property can just match inflation, then that return would be 11% after inflation. I am not sure if I calculated the return correctly, there are also some taxes but then there was a bit of cash flow as well. At any rate, if the return percentage is at all reasonable then I would have a very difficult time replicating RE returns in equities over a full cycle. In fact, compared to a market with a 25 or 30 shiller PE those results appear exceptional to me. Unfortunately, the area I am in does not have such lucrative returns. The condo prices are similar to what is described here but the rents are $300-400 less. I would be looking at a 20 year period to pay down the mortgage and would likely have to put down 30% to get a reasonable mortgage rate. This translates through to about a 6 or 7% return, hopefully 6% after interest rates are considered. I think I would need to invest in a different city than I currently live in which makes direct ownership difficult. Is there any other way to invest in real estate? I know there are REITs but they tend to get prices very high. Are there other options, some type of investor pools that you can get into?

Gregmal, can you elaborate at all on this? Do you tend to buy homes, townhouses or apartment style condos? Do you rent the whole unit out or split it up?

Vinod, I really only have confidence in index funds for large cap US. However, the valuations of the indices are really high. I have a small amount, maybe 10% in an S&P500 index but I am not willing to go all in on it. I also added MAW105. This is an incredibly boring fund but they have been pumping out 8% returns for 30 years. Their results over the past 15 years (2004-2019) are 7.8% vs 1.3% for their index. It is not going to get me rich over night but I can work with these numbers. I don't doubt results could be lower going forward, if the economy tanks say, but if they can get some alpha then I should still do okay.

That was Mark Goodman, who took it over after his father Ned Goodman retired. Ned was brilliant from what I can tell, he built the business and gave shareholders something like 15-16% per year. I didn't realize there was a second handoff, but you are still with a new management team. It has been awhile but I was under the impression that Ned built the business up using financial services. He ultimately sold that business to one of the big banks. I am okay with the home building as it's a traditional business and you are competing against smaller operators but where is the evidence that they are exceptional resource investors? Isn't that where they blew up the company? Seriously, this company has been an incinerator of capital, I would not invest more without really understanding what they are buying and feeling like the odds are tipped towards me. In the past you had Ned's reputation but what is there now? $30 -> $1. My perspective is, prove it and then maybe I think about it.

Management change happened approx. 2 years ago. As Petec says, the NAV has objectively been hardening. The risk lies in their pivot back toward the resource sector and their ultimate reliance on commodity prices. Are you sure? Maybe something changed but Ned Goodman stepped down 5 years ago. This was from 2015.

If you think the management change will mean that shareholders realize anything close to NAV (ie things are different this time) then this is absolutely a great deal. Management change happened about 5 years ago. I really haven't been keeping track of it so I don't intend to counter petec in the details. I have just seen this investment evaporate before my eyes. I got in at $18 and it was trading at a big discount then too. I continue to hold out of sheer stubborness but I don't have much confidence in management at this point.

I agree bizarro. Eric, go back to the first post of the thread: So at $5 it was a steal. Now it's $1 and it's still a steal. Eric, why are you ignoring the history on this?

They have been trading at huge discounts to book for years. Their stock price and book just keeps dropping. Part of it is the economy but it is also due to horrible capital allocation. The founder is out and you are investing with his kids who just aren't their father.

I own MO but am already thinking of selling. I don't remember specifics but they made some really poor acquisitions which causes me to question management capital allocation. Didn't they invest in e cigarettes and marijuana at some really high multiples. Great business not great management.

What are peoples thoughts on the federal election and in particular how a win by the Democrats might impact the preferreds. Warren and Sanders are down so assuming a more centric candidate could the privatization still occur? In my mind the selloff was driven by the timelines stretching past the election and this is my concern as well. However there is huge and high probability upside if Republicans win so it is just a question of what these things are worth under the Dems to balance the odds making. Could court wins lead to some type of preferred redemption event even under a less friendly administration?

I put some funds (maybe 5%) into beutel goodman small cap (BTG104), series F. It has an expense ratio of 1.2% which is obviously high but much lower than competitors. If you look at their track record they have beaten the markets going back 5/10/20 years even with expenses considered. I am not sure it is so much that they are superior stock pickers, I think it is that they avoided energy / materials. I suspect this is the ballpark natural result if you invest in non fraudulent canadian companies and further reduce the energy/materials exposure. Otherwise I have found a couple investments. This was mostly the result of scanning the investments these various funds hold. So as usual I am hedging and will have to continue stock picking with a portion of my funds.

Have you ever been involved in the process of acquiring one of these products you mention? My experience has been that you are under tremendous pressure to get it right, you don't have adequate time to compare and you have other responsibilities. So if prices are at all comparable, it is so tempting to go with one of the larger competitors. I also think that a narrow moat is still a moat, they are still advantaged. Once you have market share you have significant operating leverage over your competitors. It's really hard for them to compete. They have higher costs and less reputation.

I think the EU members in general are dying. Frances GDP is also stagnant over the last decade. Maybe Germany and the Nordic countries aren't as bad off but I'm not sure that story is done. From an investment perspective I would stay far away from Italy. I read that stock market returns there were some of the lowest in the world during the 20th century. If things are getting worse then investors are that much more out of luck. To add to your demographic argument they have one of the lowest birth rates in the world. I am not going to sugar coat it, it will just get worse.

For my Canadian investments I actually want just about anything but the banks and O&G. Those Canadian banks are going to get wiped out like what happened in Europe. They really don't have a lot of equity relative to assets. Somehow we managed to avoid a RE crash but if we ever have one they are in big trouble. There are a lot of good quality small and midcaps that you have never heard of. Industrials, tech, consumer Staples, the railways, that sort of thing. That's what I want to own. I am going to find a fund that holds a bunch of those, throw some money in and walk away.

On BRK, I have about 7% in it. How do you determine how high to go? I know it is hugely diversified but can we really think of it as an ETF? Also, what of Warren's age, does it really not matter?