Spekulatius

The Brits have the right to determine their own destiny and leave the EU, if they so desire. However, it appears to me that the political system in the UK is not able to make a positive decision on how to do it. It is also noticeable that all the pro- Brexiter (Boris Johnson) are all gone and let May deal with how to get the job done. It looks to me like the EU has done their part, but the politicians and in the UK haven’t done theirs. I think the EU should should not let it default into a hard exit make the rules as far as it pertains to EU sovereignty as they please and let the U.K. figure out things as they go. EU is much larger than UK, so the fallout will hit the UK much much harder than the EU. Sorry lads, but bad things can happen when you let idiots run your country.

For a new investor, putting money in index funds is really hard to be. I also think that putting a small percentage into BRK is a good idea. First of all, the generally consensus is that it’s relatively cheap, it’s well run very diversified and very solid. Owning this also will be a strong incentive to read up on Warren Buffet, follow what he says in the financial news and read his shareholder letters and over time understand the business side better. You can do this without owning it, but from my experience, it is much more likely that you will follow what you own. I also think that putting a small amount into a stock of your choice is a good idea, but ask yourself, what your circle of competence is. It could be a stock in and industry OP works in or local company. i strongly recommend to stay away from here say recommendation from friends etc. and trendy investments like blockchain and cannabis etc.

Looks like the British government is incapable to get anything done or decided. It’s looked more and more like a hard Brexit to me. Dragging it out won’t nexessarily help either . I am surprised that Britain’s economy is holding up as well as it does, but my guess is that at least a garden variety recession in Britain is very likely. https://www.bbc.com/news/business-47753125

I personally can’t tell what is a symptom and what is the disease, but I tend to think of inverting interest rate as a symptom. Just my opinion, but every time, investors put their hope into Fed, they tend to get disappointed. I suspect the market will take a real dump, if indeed the Fed starts to lower rates. I think it can be be both right? At first it's a symptom - it's markets being concerned about future growth/inflation and predicting a rate cut; however, it can also become self-fulfilling and contribute to the slowdown because the inversion strangles credit supply further slowing the economy Reflexivity. In this case, there are definitely fundamental issues regardless of expectations. Rising rates would have a serious impact, no matter how they do it, the only question is how bad. The method the Fed uses makes things worse, because, well, they are clueless as the past few months have shown. The big unknown here is not the Fed, it's Trump. He called an emergency on the wall. He just nominated someone to the Fed that no doubt he believes will support his views. What else is he willing to do for us to get a happy dead cat bounce? That's my bet, it's not going straight down from here. We will have fun first. Agreed. It's never straight down. There are always bounces along the way until the buy-the-dip mentality is sufficiently beaten to death. It's why I didn't sell/short on the way down in December, but was selling/shorting/buying bonds after the incredible bounce in January. This was an opportunity to reduce risk after markets have confirmed the bear market. Not an opportunity to buy the dip. Late stage bull markets can be a lot of fun:

http://www.defenseworld.net/uploads//news/big/mirage-v__1476787129.jpg Note that the pilot (= Banker in our weird world) successfully ejects and presumably lands safely using his golden parachute. As for the innocent bystanders, we do not know. I may be pushing this analogy too far now.

Another small add to WBA.

I personally can’t tell what is a symptom and what is the disease, but I tend to think of inverting interest rate as a symptom. Just my opinion, but every time, investors put their hope into Fed, they tend to get disappointed. I suspect the market will take a real dump, if indeed the Fed starts to lower rates. I think it can be be both right? At first it's a symptom - it's markets being concerned about future growth/inflation and predicting a rate cut; however, it can also become self-fulfilling and contribute to the slowdown because the inversion strangles credit supply further slowing the economy Reflexivity. In this case, there are definitely fundamental issues regardless of expectations. Rising rates would have a serious impact, no matter how they do it, the only question is how bad. The method the Fed uses makes things worse, because, well, they are clueless as the past few months have shown. The big unknown here is not the Fed, it's Trump. He called an emergency on the wall. He just nominated someone to the Fed that no doubt he believes will support his views. What else is he willing to do for us to get a happy dead cat bounce? That's my bet, it's not going straight down from here. We will have fun first. Trump regards the stock market as an important scorecard. We have heard this in the news occasionally and Kohn explicitly confirmed this in the Freakonomics podcast that I posted. While none knows the future, I think there is a high probability that the next economic crisis will be caused by a political crisis, as a fallout from the populist movements prevalent in many countries, not just the US. We might see a case of this with Brexit in the UK. As for the Fed, I think people have an exaggerated sense of its impact on the economy and it’s power to control its path. As an investor for quite some time, I can only say that when the pundits put their hope into the feds bailing out the market, we were typically in for a rough time. As for the yield curve, I think we might have imported this basically from Europe. Europe has no negative interest rates almost as far as the eye can see in some countries, so a 2.5% interest for a 10 year treasury may actually look pretty juicy as strange as that may sound. I am not sure what he Fed can do about this either.

I personally can’t tell what is a symptom and what is the disease, but I tend to think of inverting interest rate as a symptom. Just my opinion, but every time, investors put their hope into Fed, they tend to get disappointed. I suspect the market will take a real dump, if indeed the Fed starts to lower rates.

Yes, most of their investments seem to have a complex thesis (Greek banks, BlackBerry), or are just based on cheapness (Stelco, RFP), while Buffet is jumping 1 foot hurdles like US banks, Apple etc. Note that even when WEB is wrong like he was with IBM, he came out with minor scratches so to speak and didn’t really lose much money. FFH has great companies in their backdoor like Enbridge (which i own) or Canadian banks, or even well managed energy companies like Suncor or CNQ. I feel somehow, they got lost in the search for complexity when it really doesn’t seem necessary.

Thanks for thoughts on CMG.TO. I think the only odd thing I found is the dividend bing higher than the earnings, while at the same time, they have a lot of cash on their balance sheet and the SharePoint creeps up due to dilution from stock based compensation. It’s a pretty interesting way to play a recovery in the E&P sector wth way less risk than owning an E&P outright. Thanks for posting.

Exactly. It’s a rubber cell in the asylum that prevents the inmates from running over the rest of this place. I kind of regret my occasional visits there. ::)

Nigeria looks pretty cheap if these ETF stats can be trusted: https://finance.yahoo.com/quote/NGE/holdings?p=NGE

Huh? What have the Fed hikes to do with politics ? Powell was chosen by Trump, by the way. Anyways, I can’t see how a 2.5% interest rates (real interest rate is 0.5-1% after inflation) can cause a problem. It sure seems to be a preferable situation Europe, where interesting rates are virtually nil and the economic is crawling to a halt nevertheless. My guess is that the recent drop in LT interest rates in The EU is caused by Brexit uncertainty, which is an exogenous event for the US. I also note think that every value investor should love volatility.

Recession would occur with and without the Fed. It looks like the yield curve inverses due to rates in the EU being inverses, not because the economy is too weak. I don’t see credit freezing up, nor do I see a recession. The only issue I see is that the Fed is talking about what they are going to do and it seems counterproductive. I suggest they do whatever they want to do and shut up about what they are intend to do in the future. I personally like some volatility in the stock market. Another panik run this year would be great.

Interesting company and nicely profitable, but revenues went nowhere for a couple of years, due to the mamaise in the E&P sector. They are paying a dividend in excess of earnings and sort of paying with this in shares (proceeds from stock option exercises). Looks like a bet on E&P recovery or possibly a takeout.

I doubt that private infrastructure would be cheaper. Sure there is some inefficiency with public infrastructure but the advantage of a low cost of capital is huge. Anyways, my favorite quote is: “What the wise do in the beginning, fools do in the end.” And then there is the age old wisdom: “Goes butter, goes cheese”

FITB today, it has been very weak lately. DIS yesterday.

7238.T ( Akebono Breaks) will Test that hypothesis. Terrible looking balance sheet and ominous language in their last quarterly report about going concern. This is an interesting case, because Akebono is actually a decent brand name in its space.

I have mostly purchased stocks in semi attractive business with growing top and bottom lines, selling at single digit PE’s and paying at least an increasing dividend. I have avoided these money losing or barely break even companies or those that are supplier slaves to keiretsus. So no iron bridge construction, textile or refrigerator companies for me. The movements in the Japanese stock markets are a total mystery to me, but from time to time, companies ai know get really cheap, even though the business isn’t changing much. so, I buy what looks cheap, with a good balance sheet (net cash) and paying increasing dividends over time and just ride them - hopefully up. It works more often than it does not and is often not correlated to other stock arrests either, although then Japanese markets sell of, they really do!

Are you guys buying just net - net or do you also look into traditional low PE/ “decent business at very low” price stocks as well. Most of the stocks I am looking at have a low valuation, but arn’t net nets.

Why do you sell your lower cost shares ? You should sell your high cost shares, perhaps take a loss and either wash sale it by parking in another tobacco stock or just rebuying 31 days later.

Looks like some kind of buying frenzy in the Hjorth household. What did your wife get?

MKL isn’t really cash constrainted, imo. Rather than adding bonds, how about reducing debt and specifically the preferred?. They pay about $350M in interest annually. I doubt adding some bonds at prevailing interest rates is effective vs just reducing interested rate expense ciampreferred or bond buybacks.

I've also reduced my shares, but it was basically because my thesis didn't play out. I loaded up on Fairfax expecting two things to happen: 1) Interest/Dividend income would dramatically increase over the following 2-3 year period due to rising rates which would lead to share price appreciation 2) Significant buybacks at prices from $450-550 USD would likely be accretive if income was to rise dramatically I sold most of the shares that I had purchased based on disappointing outcomes in both regards. 10-year rates rose to 3.2% prior to falling back down to 2.6%. With low inflation and limited pressure in the near/mid-term from rising front-end rates, it's hard for me to make a case for rates to rise as significantly as originally anticipated. I'm not saying Fairfax should've played the short-term game, but they did miss an opportunity to lock in longer-term rates and the opportunity set for increasing interest income in the near-term appears challenged. Further, buybacks have been less than I anticipated based on Prem's first comparison to Teledyne...and have been further diluted by compensation and share issuance that were unanticipated at the time of purchase. I still some shares and would be willing to add in the low 400s near book value, but there doesn't appear to the be the catalyst for anything to change with the company or help them achieve the 15% ROE that I initially anticipated. I agree on all counts. I think it’s fair to say that the thesis as most of us envisioned it a year ago didn’t play out and is unlikely to play out in the near term future.

I have reduced my shares before the annual report came out, and sold most of my remaining shares, except a tracking position after reaiding this. Reasons 1) share solution ( ~2M more shares). This isn’t Teledyne. 2) continued book value losses. 3) too many crappy investments. FFH is really too complex for its size and it’s not working. I recycled some funds into BRK last Friday, but have further thinking to do how to reinvest the proceeds.