onyx1

Which is why, Eric, that when you say you are headed to the sidelines (clipping dividends from high quality, low risk stocks) after the next wave of wealth, I don't believe you! :) There is a lot of truth in the old cliche: "It is the journey, not the destination." I see it time and again including my personal experience. When I first started working I dreamed of making six figures annually and felt that a after a few years at that level I could walk away and live on easy street. Two years later I had reached that goal at the age of 27. I took me about a week to get accustom to my new "wealth" and realize there was more, much more, if I wanted to stay the course. I ended up working for another 20 years. And my income went up exponentially with over the years. By any objective measure I could have walked away anytime, but I couldn't break away from opportunity. It was just too exciting and fun. I stopped working for others five years ago at 47. I thought I would play lots of golf, travel on Netjets, and spend lots of time relaxing poolside in my new mansion as that is all easily in my budget. What actually happened? I live in a modest home, travel coach, and spend my time reading financial reports. I commit more energy to wealth creation now than ever before but enjoy every minute of it. It's just too fun and to walk away would be a setback to my level of life satisfaction. Right now you see it as a stressful rollercoaster and you want to get off, and sit on the sidelines in the shade. But as time passes you will remember the thrill and forget the anxiety which makes it very hard to stay away from a significant allocation of assets to the next "inevitable". I hope BAC rallies like crazy, and that you at least have a chance to prove me wrong, but until then I'm betting against because I believe wealth doesn't change our fundamental approach to life.

Anecdotal experiences from the storm: I was speaking to a roofing specialist last night here in NJ. He said if you hold a Chubb homeowners policy, repairs are covered no questions asked. If however you hold a policy from State Farm or Allstate, NJ homeowners are not covered due to a 'fine-print' clause which excludes any damage caused by wind from a hurricane that makes landfall in your home state (in this case NJ). He said homeowners were outraged. I thought: whatever moat they had is now smaller. Also, my wife was in a minor auto accident rear-ended by another driver who was insured by GEICO. When she came home at the end of the day, she said she couldn't believe GEICO. Aside from the fact that GEICO wasn't even her insurance company, they called her within one hour to confirm her information. They called back in another hour with arrangements for her to have her car repaired at their expense and offered her a loaner car. Fifteen minutes later the car repair place called her to confirm her appointment and get her choice of loaner car. Another half hour later GEICO called to see if there were any loose ends, and then asked to give her a rate quote. She said, "OMG, these guys are good!" I proudly reminded her of our long position in Berkshire Hathaway.

From NJ suburbs, 25 miles inland: Extensive power outages. From my front yard I can see down trees every where. Big trees, 80-120 feet. Just about every half acre lot has a tree down. Some landed on houses but most missed. Luckily, through the night it didn't rain so it could have much worse with moist, weakened soil. All in, life will be inconvenient for a while but damage is manageable.

Most definitely better safe than sorry. We are preparing the best we can. Frankly, there's not much we can really do. After losing power every time there's a big storm, we assume we will lose power again and that it could be out for quite a while. Last storm my wife had just done a huge shopping and we lost hundreds of dollars in food. So this time we are obviously not doing that and trying to use whatever we can that's already in the fridge. We're just hoping for the best. Obviously it's not the most important thing or close to it, but hopefully Halloween won't be ruined for the kids. They've really been looking forward to it. Hope this is not as bad as last year when our power in NJ was out for 5 days and it didn't come back on until trucks from Ohio Edison restored it.

I would suggest baseball, football, basketball and hockey cards. They are an excellent investment for any situation that might befall us. Unopened cases and boxes from the late 1980s are particularly good. I like the ones that are bundled with a stick of gum which could be used as barter in an end of the world scenario no? Those sticks of gum could be used to build a shelter that I am virtually positive that no weapon yet developed could penetrate. Laughed out loud at that one!

He was my neighbor for many years. Tremendous integrity as a businessman, a generous soul, and a man who never showed an ounce of ego. As successful with his family as he was with his business. Heartbreaking.

It looks like PRXI got what they wanted and structured the deal as a sale of stock of the RMS Titanic. If they are able to affect a tax-free spin-off the RMS Titanic shares, there would be no corporate level taxes, and current shareholders would be then be taxed at the appropriate cap gains rate based on their holding period. I see approx $3.85 per share proceeds on the RMS stock sale, and shareholders will be left with the operating business which appears to finally have turned the corner and looks to be profitable. Risk of deal not closing remains. From the 10-Q: "On October 15, 2012, the Company announced that it had entered into a non-binding letter of intent with an entity representing a group of individuals (the “Consortium”) working to effect a purchase of the stock of RMS Titanic, Inc., for educational, regional economic development and cultural purposes for a price of $189 million. The letter of intent is confidential, and is subject to the parties negotiating binding purchase agreements, obtaining requisite financing commitments and other approvals. The letter of intent represents the first formalization of the process in which the Company and the Consortium seek to combine efforts to place the Titanic assets in a permanent home and to monetize the assets for the benefit of the Company’s shareholders. The execution of the letter of intent does not guarantee that a purchase will be consummated with the Consortium. The letter of intent is designed to allow the Consortium the opportunity to secure its financing sources, prepare to handle and house the collection of artifacts and to continue its efforts to establish public and private support for the venture. "

[amazonsearch]Get Smarter: Life and Business Lessons[/amazonsearch] If you don't have a mega-wealthy mentor to provide you with guidance on life and business, you can have the next best thing. Self-made Canadian billionaire Seymour Schulich offers simple and practical advice on 48 difference topics, including decision making, negotiations, aging, gold, and making good investments. He also describes how he started with nothing and through hard work (and a little luck) ammassed a fortune that has allowed him to give away over $200mm to charity. Although everyone will learn something useful, this book as a must read for anyone under 35.

Try this http://www.amazon.com/The-Righteous-Mind-Politics-Religion/dp/0307377903 Haven't had a chance to read it yet, but I saw the author interviewed recently and he had some very interesting insights. Among them is our value systems dictates our politics in that, for example, liberals place compassion and fairness very high on their list of priorities, while conservatives place the importance of maintaining traditions high on their list. Just one of many examples he gives to explain how political leanings are not intellectually driven.

Property rates have increased in recent months. This augurs well for profits as claims develop in the future. Yes, and rates are increasing at an increasing rate. Travelers reported this week a 7.7% increase (with higher retention) in Business lines through August for the 3rd quarter, on top of the 2.3% increase one year ago. See page 14, http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTUyNjc3fENoaWxkSUQ9LTF8VHlwZT0z&t=1 Also Berkley expects rate increases in the 8-10% range by the end of the year, and Selective reported 6.6% increase in July. The interesting development will be whether the industry can continue to fight low investment yields with sustained "rate-on-rate" increases. For example, Traveler's Q4 2011 rates jumped to 6% from Q3 2011's 2.3%. Will they (and the rest of the industry) be able to tack on additional high single digit rate increases on top the 6%? I hope so! The industry needs about 2.6 points of improved CR for each 100bp decrease in investment yields.

hyten1 The psychological underpinning for this dynamic is beautifully described in Chapter 29 on Kahneman's book Thinking Fast and Slow, when he uses the following example: In each of the four examples below your chances of receiving $1mm increases by 5%. Is the news equally good in each example? A. 0% to 5% B. 5% to 10% C. 60% to 65% D. 95% to 100% From an expected value standpoint all four scenarios have equal value. However from a psychological standpoint, Scenarios A and D are much more valuable (A introduces upside that previously was not there, and D eliminates all remaining downside risk). For this reason people will gladly pay a premium over the probability value for scenarios A and D. This dynamic is the foundation the insurance business, lotteries, Las Vegas gambling, lawsuits and countless more. If you think of written option premiums as insurance that introduces upside, (or eliminates downside risk), Twacowfa's statement will make sense.

YTD: Roth account +40% Taxable account +21% before applying tax liabilities. 100% long since Oct 2011 and mostly concentrated in 8 positions Biggest performers BBSI, RJET, BAC, MSFT 17.5 Leaps, WFC

I wouldn't say the market is inflated, but at the same time it is hard to find anything new to get excited about.

+1

The removal of the 10% dividend avoids the circularity nonsense, good news. The payment of all profits as a dividend, not so good. My question is how will the Treasury ever get its principal back? As currently agreed, never. However, the beltway logic doesn't seem to make much of a distinction between principal lent and dollars received in return. What will happen happen on the day that the GSEs have returned as many dollars to the UST as was borrowed? Will someone with an agenda of recapitalizing/selling be able to make an argument that the UST has been repaid? Lots of questions that won't be answered for years.

A large portion of GSE earnings comes from their legacy mortgage investment portfolios, which in the case of FMCC is shrinking at a rate of 20% annually. There is no plausible scenario which includes the GSEs being allowed to maintain an investment portfolio so this source cannot be included in long-term normalized earnings. The other source of earnings is guarantee fees. These were raised by 10bp in December, but the proceeds for the next ten years went to fund a two month payroll tax cut. The upside here is that this goes a long way to ensure the survival of the GSEs for ten years or longer as congress will likely come back to the same well again. With the 10% dividend in place, the GSEs will likely never be able to climb out of their hole without a recapitalization. But a recap with some kind of govt support or ownership is very likely (in my mind) since there is a huge benefit and demand for a large, liquid and generic MBS security market like we have had for 40 years. (Remember, the GSE operated without problems for 30 years and ran into trouble only when they loaded up their investment portfolios.) Under this scenario, the preferred coupons could be reinstated or converted to equity. If you want a deep understanding about the GSEs and preferreds as potential 10-14 baggers, I highly recommend a 7-part blog post written a few years ago. http://brontecapital.blogspot.com/2009/08/modelling-fannie-mae-and-freddie-mac.html

Calendar year results include losses for the current year plus loss development (reserve additions and releases) from previous years. Accident year results are for the current year only. Combined ratios (CR) are generally reported on a calendar year basis. P&C insurers are still releasing reserves from the 2002-2006 hard market years which has the effect of lowering reported CRs. Many investors understand this and want to know the accident year CR to judge incremental underwriting performance. Recently, accident year ratios have been well above 100% but after reserve releases from prior years the P&C company reports a sub 100% CR and all appears well. Once the well of excess reserves are exhausted, P&C companies won't be able to operate this way and will put additional pressure on underwriters to raise prices.

As it relates to US banks, this is a risk I am willing to bear. There is a wealth of empirical information from the financial crisis of 2008 that can be used to review the reasonableness of the Basel 3 LCR requirements that, as currently written, would require banks to hold large amounts of Sovereign Debt. For example, US agency MBS are not considered as high quality liquid assets for purposes of the LCR test despite evidence that this market operated with depth and liquidity surpassing all markets except for US Treasuries. No one can predict the future (especially when it comes to bureaucrats), but the evidence is compelling for those seeking a review of the LCR as currently proposed for 2015 under Basel 3. More detail here: http://www.theclearinghouse.org/index.html?f=073043

100% common.

- I saw Berkshire Hathaway listed amongst the holdings of AIC Mutual Funds, which I owned. - I looked up Berkshire Hathaway on this thing called the "internet" on my Microsoft Webtv in 1998. - I stumbled across the new Berkshire Hathaway website and read one of Buffett's shareholder letters. - I started selling all of my investments to buy nothing but Berkshire Hathaway B's when the share price fell. - Searching on the internet, I found the MF BRK Message Board. - I met John Zemanovich (Lotsofcoke) on the MF Message Board. - He invited me to the Yellow BRK'ers Party in Omaha in 2001, where this skinny guy who still had some hair named Mohnish Pabrai was hanging around. - Standing in the reception area of the Omaha Golf and Country Club, I almost walked into Warren Buffett & his daughter Susie...Susie took a picture of me and her father. - I left my job and worked in the mutual fund and insurance industry after meeting Buffett. - I started buying stock in a company called Fairfax Financial whose website I stumbled across. - MSN Berkshire Hathaway Shareholders Board launches for me and a few Berkshire friends. - We start to interview people like Mohnish Pabrai, Tim McElvaine, Larry Sarbit, Andy Kilpatrick, a young Sardar Biglari! - Hordes of Fairfax shareholders start flooding the board, because of the short attack on Fairfax. - I leave a message on the Investor Relations contact for Fairfax telling them something is happening with their stock, and it looks like a coordinated attack. - I write a letter to Prem Watsa thanking him for the letters he writes...he invites me to come to Toronto, but I could not go at the time. - Two years later I finally get to my first Fairfax meeting. Prem, JoAnn and Francis have arranged for me to spend the day at Fairfax's office...I start the Fairfax Financial Shareholder's Dinner with nine people and Francis surprises us! - I come back and quit the mutual fund and insurance business and start Corner Market Capital with my cousin Alnesh...our very first partner is our future director and part owner Andrew Cooke...who happened to work as a consultant to Fairfax! - We hold our annual meeting alongside Fairfax's meeting and the dinner. - Three years later, JoAnn passes away from colon cancer and we hold the dinner in her memory with proceeds going to the Crohn's & Colitis Foundation of Canada. - Sold a portion of the General Partner to our two directors...Andrew Cooke and Glen Rollins...they are an intricate part of CMC and MPIC Funds now! - The shareholder's dinner now has 145 people attending, with 12+ speakers, and we raised $13,000. - CCFC asks me to help organize the first ICE Gala in BC with a goal of raising $200,000! - Corner Market Capital passes it's 6th Year of Operations! While there may be a certain amount of opportunity in the above, the bulk is sheer dumb luck...fortunate enough to stumble across good people, good mentors, good partners and good friends! Cheers! Lead on Sanjeev!

The ability to accurately estimate probabilities is more closely associated with investment success than the IQ. How good are you? Here is a simple 5-minute test that measures your risk intelligence. http://www.projectionpoint.com/index.php/rq_test/free_rq_test/description?cookies=true Enjoy!

"Home contract signings rose for the 13th straight month, according to the National Association of Realtors, which reported pending home sales rising 13.3% over May 2011 and up nearly 6% over April 2012." http://www.housingwire.com/news/nar-annual-home-sales-133

"... according to the Census report, one million more U.S. households in the first quarter than a year earlier, marking the biggest increase since 2006." http://online.wsj.com/article/SB10001424052702304868004577376342935387520.html#articleTabs%3Darticle

The beauty of owning companies at a discount to TBV is that there is no need for growth, and management can actually create value for shareholders by shrinking the business.