no_free_lunch

Can you look in the rear-view mirror and point out what the second shock to Japan was that caused their two decade long deflationary trend? I hate to get in the middle of other people's debates but I actually do think there is a fundamental difference between US & Japan, or a secondary shock if you prefer. It's demographcis. A shrinking population is a major impediment to economic growth. You could probably apply that to some European countries as well but the US has relatively good demographics due to immigration.

Thanks for the link. He is holding 25% cash in the associate fund, 75% in the asian fund and 35% in the europe fund. When you look back the cash levels have been high for years. I think it is impressive that he has kept up with most of his index peers (sort of) given how defensive he has kept the portfolio.

I have nothing material to add but have to comment. This is fantastic analysis, I am following it all as best I can. I would just say that I think that 10% return would be fantastic. You need to weigh in the probability of the returns being in that range which is much higher than the probability of some company I can identify that might return 15%. Or in other words, you can come up with a portfolio where the individual components can do 15-20% but full cycle you are likely to be dragged down close to BRK results so why not just put a meaningful (15% for me) amount into BRK? Also regarding the 10%, I just looked at the S&P earnings and peak earnings lately were 105 in 2014. This compares to peak earnings of 85 in 07. So S&P has only grown by about 25% over the last 7 years and that would include the impact of lower interest rates and the ability for companies to have cannibalized at much lower prices. That is what 3% a year earnings growth? I think 10% is a great result, if we get it, in a 2% inflation environment.

That's my pick as well. The author is very level-headed & the analysis is based entirely on data releases. Kind of tough reading at times but that's just the nature of the material. EDIT: I think you have the wrong link, it's http://www.calculatedriskblog.com.

Bought RYCEY in a non-registered account.

I use questrade.

Thanks bizarro. My broker did let me enter the trade in RYCEF as you mentioned. However, the trade wasn't executing despite my setting a limit slightly above the current ask! I might try making the trade again and giving it more time.

I agree with pupil on the return. Your long-term return is dividend + share buybacks + growth in earnings. Other than multiple expansion I can't see how else you get a return. With BRK it's basically the growth.

Tried to buy Rolls Royce yesterday but found out I am not able to hold it in a registered account.

Thanks Shane! Did you factor in the cost to do the PCP deal? I don't know the terms if they are issuing stock or paying cash but there is a small amount of dilution in either case.

Also traded my OAK position for BRK. I don't know if that is smart or not, now that things are getting distressed it's probably a good time to hold OAK. Nevertheless the market offered me friday's closing price for OAK and -4% for BRK so I took it. If nothing else, I have a better idea of how to value BRK. I put no new cash on the table today just swapped up the quality chain where possible.

Sold SFTBY. Bought BRK & PNNT.

I have been thinking about South Korea as well. You are specifically saying that you want to buy stocks which is understandable but have you considered an ETF?

LILA

Good to know, I had no idea there was a general sell-off.

I noticed that the discount to NAV is around 13% now. When I looked at this a year ago or so it was 8%. No doubt this is the result of fairly lackluster performance. However, given that they specialize in shrinking discounts on other closed end funds does it not seem reasonable they would do so on themselves? Naive thinking?

We will need to provide means of living for 80%+ non working population. I don't think we are prepared for that at all (intelectually, spiritually, morally, economically, politically). I acree with the intellectually/sprititually.. but not economically. I mean if we are in a position where there are no jobs due to technical obsolescense it is because we don't need people to work. If we don't need people to work then what is the economic issue? However, politically it could be a bit turbulent as you will need to move towards a more socialist model.

SCTY

DBA $26 Jan / 15 calls. This is a tiny investment but I think the odds of a spike in grains is higher than the cost implies. It will still probably be worth $0 but if it hits it could be 10,20,30, maybe even 40x. Too many stories about drought out there and yet grains are fairly low.

GUD.TO Right back to the level of 6 months ago when they announced the sale of their priority review. Still not cheap but at least we are a little further along. The company has already made 1 exit already which was quite profitable so some evidence he still "has it".

Even where it is trading right this minute, $52.08, I think it is an incredible bargain. Based on the most recent quarter, free cash flow is annualized around $450M. So the company is trading in the vicinity of 15x fcf. It really should trade for at least 20x, given if nothing else that it has strong recurring revenue. When you factor in management's ability to acquire and control costs, it should probably trade at more of a growth multiple, likely 25-30x.

I bought a decently sized position in Open Text today. They do digital document management and are expanding out from there. It is a well run, fast growing company (15%+) going for about 15-16x fcf. ROE is about 25%. It has been mentioned by Donville Kent and Turtle Creek, both of whom have outstanding long-term records. Stock sold off on a weak quarter and currency effects. Should be a good long-term hold.

I have the same problem and am curious what others think as well. My main strategy has been to keep a substantial portion in index funds. I also am not too concentrated (12-15 positions).

We have a 1-year-old son. Over the past year, and the years before as we observed the many people around us who had kids, it became quite clear that kids can be as expensive or inexpensive as you want. And a lot of what people spend on kids isn't actually things that make them happier and better people. In fact, the best thing for most kids would be to spend more time with their parents, and to see those parents be stress-free and happy. Most people spend all their time away from their kids to earn enough to buy a bunch of crap that the kids don't even notice and that they would gladly trade for more time with their parents (do they care if you drive a BMW instead of a Honda or that you have granite countertops instead of wood?). Between me and my wife having taken about a 7 digit aggregate pay cut over a 4-5 year period, to spend more time with kids, I cannot agree with you more. I stopped going to office from the day my son was born, working from home for 7 years that offered a lot of flexibility. Finally I quit my job entirely when my wife was pregnant with our second. I used to take frequent unpaid 3 month time off as well. Main motive was time with kids. A good school district brings a lot of intangible benefits that I did not realize before my son started going to school. Moving to a good school district though increased our housing costs quite a bit. Vinod I agree with these statements. You are investing your time in a new version of yourself. The money you could have made couldn't replace that time investment.

I agree. Maybe, maybe over the next century you get a number like that but I think we are looking at 3-4% over the next 15-20 years, and that is sort of best case scenario. That being said, I don't know of any better alternatives. Cash? Only if we go into major depression and you time it right. Real estate? That is done here in Canada. Gold? It was at $250 in late 90's, who is to say it couldn't lose another 50 or 75% from here and no reason it will beat inflation over any long time period. Bonds? What a joke. I don't know maybe art or some kind of collectible will do better but otherwise I think stocks are a better bet.