no_free_lunch

He's up about 5x since inception in 06 and about 25% in 2016. Not sure what the results are without subprime.

http://finance.yahoo.com/news/kyle-bass-global-markets-are-at-the-beginning-of-a-tectonic-shift-204146265.html Anyone care to speculate what he might be thinking of with his greatest risk reward idea?

I don't really have anything I have high conviction on. I know it goes again the spirit of the thread but I will throw out a small basket. These are all securities I have purchased in the past few weeks and they are all still reasonably priced. If anyone is calculating results next year, treat this as a single idea split with equal weights. BAM, ELF.TO, GILD, BOIVF, MCO

+14.5% in USD in main account. I don't want to make excuses but for proper comparison I'm 20% international and 20% in bonds which really hurt performance.

Bollore is very reasonably priced with substantial operations in Africa. They are more into infrastructure: ports, railways, telecom than traditional consumer businesses. They also have substantial business in Europe so not a pure play on emerging markets.

Took a little nibble on Bollore. Just a 1% position for now. Also a decent position in BAM. I think it could do well over the next 5 years as they build up their asset management business. I also like that I am diversifying with BAM away from the US.

This would be the perfect investment if there was some way to hedge it. I don't have access to short FNMA directly but I wonder if there is anything else? The scenario I was thinking of is where the republicans force fannie into runoff. They have talked about this before. Even if they revoke the sweep, depending on how things are implemented I am not sure if there would be enough profits to repay the preferreds. Is there perhaps some other businesses that would do very well in this scenario, something that you could buy calls on? Any other thoughts on a hedge? I am about 3% FNMA preferreds but could seriously bump that up if hedging was available.

Started a small position in MCO. It's a quality financial, previously owned by Buffet which hasn't experienced the trump rally.

Keep in mind, the index funds did 15% so I am not exactly killing it, I am just in a bull market. :) I am going to stay away from index funds because I just can't see them providing any kind of return, perhaps 1 or 2% over inflation. If I can outperform that by even just 1% it will make a huge difference over my investing time frame. I do have accounts where I have minimal control and those are in index funds so I do have some diversification if I mess up. I do use ETFs when something gets to IV and I don't have another stock lined up. Rather than rush I will put the money in an index fund until I find something else to buy. At one point I couldn't find anything at all and I had 70% in index funds so that is not new to me but I try to avoid them if I can.

I am not including the cash (well bonds) that I hold. I think I was pretty upfront about that in my first post. If you include the cash component, which is about 20% then I believe I am roughly even with the market. However, what I am really trying to decide is if I held that 80% in an ETF, would I have done better than with the 80% in stocks. No matter what I would have held 20% in bonds. I am trying to figure out if I can get alpha and whether this entire stock selection process is worth pursuing. I don't think that is disinegenious at all as long as I am not hiding my assumptions.

2008 was kind of crazy so absolutely no leverage.

I have been on this site for just over 4 years now. I thought I would have a quick look at returns since I started. In my main account, it looks like my CAGR is 19% over the last 4 years. This excludes bond allocations as I am trying to compare my stock picking return against an all ETF return, in either case I would have had a similar bond component. It looks like my benchmark ETFs would have provided about 15% CAGR. So 4% over benchmarks per year for the past 4 years. This is with a portfolio of 15-20 stocks and occasionally large allocations to ETFs. In the years 2004-2012 I returned about 2% over the benchmark so I have improved since then. I haven't invested in a single stock that isn't written up on this site so thanks to everyone's help and feedback.

Does the price difference between say the O & T preferred's make sense to people? They both can be recalled at any time, the T does have a bit higher interest rate (8.25% fixed vs 7% min with floating component) but I don't know if it is enough to justify paying almost 30% more. I can see how the T would get paid off first but I don't think O would be far behind.

It seems that there is a pretty broad range of outcomes here even with privatization. Wouldn't you need to pay off the governments $100B+ senior preferred's and raise equity before you could even consider paying the standard preferred's? It just seems like a daunting task and it seems that the existing share-holders would be wiped (which is fine) and the public preferred's would take some sort of haircut. Is the thesis based on the more recent profit sweep being reversed and the excess counting as senior preferred repayment? If that doesn't happen I think you could make some money here but hard to see what exactly the preferred's are worth. I just can't see there being enough funds to repay at par the government and the public on the preferreds. There are hundreds of pages to this topic so just ignore me if I am rehashing old stuff. :)

Since I am just starting to research Nestle I would discuss this. Aren't the 2 valued similarly? Their PE's are both around 22-24. It looks like Heinz might be 10% or so more expensive but on the surface I don't see a huge variance. Maybe I am missing something.

It looks like one is coming soon! The downsides I see will be getting comfortable with the weightings and the expense fee. https://www.bloomberg.com/news/articles/2016-11-22/mario-gabelli-to-launch-etf-to-invest-in-john-malone-s-companies

Does anyone know when fairfax pays it's dividend?

Previously I had 55% WFC 25% BAC and 20% AXP and I sold away my BAC.. I take comfort in the fact that I have an income which will probably add 10-20% extra cash to the portfolio each year. Certainly if I did not have a job, I would diversify more but don't think I'll go beyond 5-8 stocks. I feel that I know those stocks well enough to understand they're a low risk bet. If there is a decent probability of a stock having a permanent impairment of capital, I feel it makes sense to not even invest, rather than buy a lot of them to diversify. Don't you think you overestimate your own ability to determine the risk of permanent impairment of capital? To be honest I think all your holdings have such a risk as all of their businesses would be significantly impacted by a major event in the financial markets (e.g. a major currency blow up, bank runs, large systematic defaults, a black swan such as exponential cryptocurrency adoption). These events have a non-zero chance of occuring. On top of this all your holdings are vulnerable to the same sort of event! I was thinking along the same lines. It is okay to take a gamble if you can contribute 20% per year but don't kid yourself on the risk you are taking here. With WFC, I just wonder if that really is the best pick out there right now? Not that it's a bad investment but if I ranked stocks I think there are others with as good risk/reward or close enough that I wouldn't be able to assign such higher weight to WFC.

GILD This is way out of my circle of competence but it seems attractively priced at these levels. If you read commentary on it, a lot of people just don't want to buy something that has declining revenue. However, as is noted in the GILD thread, even if revenue fell 50% you could still justify the current stock price. At some point revenue will stabilize..

TSLA

ffh.to 1.1x q3 book, for fairfax that's on the low side historically. It has been lower for sure, but not bad given how everything else is priced. Also view it as a way to diversify out of USD. When you buy fairfax your money is going all over the world at a time that the USD is at 13 year highs. It's just a 3% position. If it gets to 1x book probably boost that to 10%.

Wasn't the shorting triggered by large insurance losses? What is motivating the short sellers today?

Thanks for that rb. I didn't think to look at the B class for options even though that is the stock I actually own. :) That is really good to know regarding the reinsurance, I remember back a decade ago him saying that he was reducing coverage after he discovered there were certain events that could bankrupt the company. I didn't understand how far along they were in reducing that exposure. I am not sure that I would actually go 50%, I am more just playing with different allocation scenarios to try to deal with a brutal market. It seems we are destined for 1-2% real returns for the next while and it seems Berkshire can exceed that. Dynamic, I tend to agree, it feels more like you are buying an ETF, more of a concentrated one but still. I have a similar time horizon and am not too worried about the death of the legend. I actually think that is why it is priced where it is and also that is why Buffet is establishing the 1.2x floor. I don't see why the stock wouldn't match or exceed the general market even without Buffet.

Given where the market is priced at, berkshire looks very tempting. Tempting to do something foolish and put half my portfolio into it. The thing that concerns me is the single company risk. It seems there is always that small chance that some mega catastrophe hits their insurance operations so hard it takes the whole thing down. Does anyone have any suggestions on how to hedge BRK? They don't appear to have an options market.

This, unfortunately is the basic truth of the matter.