John Hjorth

Thank you gents for taking time to elaborate on this. What I missed was the three days reporting rule and its interaction with expected future bank holding company regulation when buying more above the 10 percent holdings limit. That question #25 at the last Berkshire AGM from Greg Warren was actually a very good - and important - one. Assuming the proposed bank holding company regulation gets approved, it will certainly make life easier for Berkshire forward looking. I must admit, that I really missed the importance of the reactions from Mr. Buffet & Mr. Munger on this while being af internet-observer to the AGM. Thank you for bringing it up to our attention, longinvestor.

longinvestor, At least partially related to Dynamic's post - which stands for itself - what is this about? [Right now, I feel pretty ignorant, & out of synch with reality].

What is it, that you're really suggesting here, Cardboard?

It's beyond my comprehension, that you continue this line of posting here on CoBF, RuleNumberOne. You are just back in "your old plow furrow" with rambling name-calling & undocumented claims, while simultaneously, you have already exposed your ignorance with regard to European banks and their regulation.

Or some existing bonds may have run up above face value, so there may still be a positive nominal interest rate on them, that has to be paid. Example : Danish State bonds. [There aren't many in circulation though - some DKK 500 M, because Denmark does not run at a deficit]. - - - o 0 o - - - Some bond investors have made serious money in this environment - till now.

I think the same way as you do, Cigarbutt, Short/medium term, perhaps this starts as a large liquidity event, also ref. Spekulatius. Here is a piece, that covers my state of mind recently, related to this phenomena : Scott Galloway : "Earth vs. the Universe". [Not that is helps much, though. Watering my roses etc. doesn't help either. Nor does mowing the lawn - despite that, it's on the to do list for this afternoon.]

You may be right, rukawa, But if you read Greg's post #3, it is actually quite clear, at least to me, that Greg just wanted a non-political discussion of a "living condition", understood as : We all have to distinguish between: 1. An "issue" [understood as something that you can actually do something about to change - to the better, if rationality vindicates everything else], 2. A "condition" [understood as something - hard or perhaps even impossible - to make a change about, as an individual]. Furthermore, "Issues" can mentally be divided into "problems" or "tasks" [the properties of "problems" are that they bug you, or - one way or another, goes under your skin/affects you mentally, while "tasks" you just "fix", where "fixing" even may imply that you just wait for the damn thing to go away/disappear.] - - - o 0 o - - - From that angle, I think this topic is actually interesting, because it covers an element of daily-day life around the world, here power-outages in the US and other places. To me, it's educational to read such stuff, actually. [ : - ) ]

It really reads weird to me, Spekulatius, -Time for a US infrastructure reform!

Isn't the power grid in NYC area built with redundancy with regard to transformer stations? [Here, & nowadays, every time the power grid is expanded, and a new transformer station is built, its redundant & back-up transformer station is built simultaneously.]

elliott, I think both Fairfax Africa Holdings Corp. and Fairfax India Holdings Corp. are two Fairfax investments, that both have the potential to become repetitions of the original long term Fairfax story itself - which - long term - is an amazing one. If that actually happens - perhaps over the next one or two decades - it would be transformational to Fairfax itself, being big contributers to bringing Fairfax to the next level. There is an enormous abundance of capital some other places, and there is so much to do both places [Africa & India]. However for this really to work out, the companies need to get it right in the first place, to build a good track record - to be able to attract new capital to grow, thereby creating a fly-wheel effect. - - - o 0 o - - - Atlas Mara : "Why Africa?". [Old stuff from the 2014 Annual Report that you may have read already because you already have studied Atlas Mara - I personally think this still applies to great extent]. IMF - World Economic and Financial Surveys - Regional Economic Outlook - Sub-Saharan Africa - Sub-Saharan Africa Regional Economic Outlook: Recovery Amid Elevated Uncertainty [April 2019]. - - - o 0 o - - - elliott, I seldom post in the Fairfax part of CoBF. FFH is a fairly small position for me, now for some years actually. I have no intentions to reduce or sell my position, exactly because of Fairfax India Holdings and Fairfax Africa Holdings. I just try to shut up and learn more about FFH by avid reading FFH stuff here on CoBF. Well, here I failed on that - I hope that at least one of the links is of avail to you.

That's an interesting thought, Spekulatius, I've just got an invitation from SPKSJF.CPH to a shareholder dialogue meeting in the beginning of September here in Odense, which I'll attend with Lady of the House. I will try to ask that question, if it will be possible [to ask it].

Thanks SHDL, Again, expressions and/or opinions [all speculative and/or subjective], not in any way backed by data.

Thanks for the reply, RumeNumberOne, You're severely misinformed here, or un-informed here, RuleNumberOne. You have my full respect for opening this topic however. Personally, I'm ignorant in this space particiulary discussed here.

The day you tell us which European banks you're short I'll start considering brewing a reply to you, which most likely will be to absolutely no avail.

I'm carrying your post in the WFC topic over here, for commentary, RuleNumberOne, You're certainly up to something right here, RuleNumberOne, This post is only about Danish conditions. The answer to your question here is : They don't [buy these bonds with negative yields]. The outcome has been that the Danish banks are literally swimming in cash - some of them are almost drowning in it. The more conservative the bank is run, more worse it gets. I have read somewhere, that the Danish banks holds retail [household] deposits of ~DKK 900 B. What does a Danish bank do with all its cash, when it gets "punished" by Danmarks Nationalbank [The Danish FED] with an interest rate of minus 0.65 percent if it deposits its liquidity there, when it can't expand its loan underwriting/loan book because of very strict lending policies surveyed by the relentless and pretty brutal Danish FSA with inspections of the loan book, giving orders and fines and such when things aren't done OK? -Furthermore the actual demand for credit from Danish households has been languishing for many years - in general, the Danes have been paying down their debt, and accumulating funds for a rainy day. The banks only alternative is to buy bonds. So there are large bond positions on the balance sheets of Danish banks - to varying degrees. To at least get some yield from these bonds, the banks have to buy bonds with at least some duration. That again requires capital buffers to withstand [sudden?] rate spikes in the bond market, or else the bank may be forced to reduce its balance sheet [by selling bonds] at the exact wrong time [the price bottom]. - - - o 0 o - - - Some data: So far, I haven't been able to find some data from what I consider a reliable primary source for Danish retail [household] deposits in banks, that I'm sure of, and understand with precision. So here comes a rough, quick & dirty estimate of that figure: Source: Danske Bank A/S Factbook Q1 2019. Deposits [section 1.7.2 at page 11] : Retail : DKK 208.0 B Wealth Management : DKK 70.9 B Total : DKK 278.9 B Market share [section 4.1 at page 41] : Retail : 28.5 percent, Thus : Total retail [household] deposits in Danish banks ~ DKK 278.9 B / 28.5 percent ~ DKK 978 B - - - o 0 o - - - An extreme example of a Danish bank in this situation : Fynske Bank A/S [ticker : FYNBK.CPH] : [source : 2019Q1 10-K]. Equity : DKK 1,053 M Loan book : DKK 3,255 M Deposits : DKK 5,406 M Bonds : DKK 2,495 M. Some days I really can't decide if this bank is a bond portfolio with a bank glued to the bond portfolio, or "just" a bank with a big bond portfolio. - - - o 0 o - - - The above cash deposits estimate has to be judged relative to total mortgage loans in the Danish mortgage institutions of DKK 1,609 B in Danish homes and recreational homes, plus second layer house financing provided by the banks to households. What matters for the financial stability of the whole system is naturally how these assets and liabilities are distributed among the citizens of the nation.

Finanswatch [July 11th 2019] : Nationalbanken [<- The Danish FED, John] about low interest rates : Not the fault of the central banks. Danmarks Nationalbank [June 27th 2019] : Analysis - The natural real interest rate in Denmark has declined. Personally, I consider this at least a decent stab at getting to an explanation of this phenomen. It also reminds me of a post recently by Cigarbutt about the long term development in interest rates. It's not all negatives. The analysis implies, that it - among other things - has to do with high savings rates in the Danish households after the GFC [please note here : at a total level]. Consumption folly [perhaps even for borrowed money] hasn't really arrived here - at least yet.

Christ, that reads absolutely terrible, gfp, I hope your family and you are safe.

Carried to here from the "1999 again?" topic: You need to understand the Danish mortgage system. It's not financed by deposits, but by mortgage bonds, ref. also what kab60 has mentioned before in this topic. Here is link to the 2018 financials for Realkredit Danmark A/S. Realkredit Danmark A/S is a wholly owned subsidiary of Danske Bank A/S. As a mortgage institution, Realkredit Danmark A/S is separately regulated, while the bank is separately regulated as bank. Please take a look at page 2 - I'll translate for you : Realkredit Danmark A/S generated a profit for 2018 of DKK 4.649 B [included in the group profit for Danske Bank A/S for 2018] "Realkreditudlån" : Mortgage loans [for YE2018 : DKK 796.045 B] "Udstedte realkreditobligationer" : Issued mortgage bonds [for YE2018 : DKK 809.091 B] - - - o 0 o - - - Wikipedia : Mortgage industry of Denmark. Edit: Finance Denmark : The Danish Mortgage Model.

Thank you for starting this topic, longinvestor, Actually, it's a bit weird, that we haven't really discussed this Berkshire investment in depth earlier. I have started tinkering with numbers for it, to calculate - over the ownership period - how much it has actually contributed to Berkshire group equity. I'm a bit lazy at the moment - I think it's vacation mode that's setting in - so it'll take some time before I post something about it here in this topic - what I already can say is that the numbers, compared to the initial investment - are no less than mind-boggling. - - - o 0 o - - - With regard to capital allocation, we have to remember : 1. The "Constellation case" [2008] [No, not CSU.TO, but Constellation Energy!] - It ended up as a no-go [,if one can call "Consists of a breakup fee of USD 175 million and and profit on our investment of USD 917 million" a "no-go"], 2. The "Oncor case" [2017], & 3. Among Danes, there is a saying [in Danish here] : "Alle gode gange tre!". That translates word-by-word to : "All good times three!", meaning : "Third time may the time of luck!". Also in this industry, in future, there will be players, who confuse trading with speculation, and/or who will eventually end with screwing up their balance sheet. I would not be surprised later to observe, that the next large Berkshire acquisition would be related to BHE.

Agreed, Liberty, Peace.

Naturally SHDL is right that it's a data point with regard to sentiment. I suppose my post came out as an acid burp from an grumpy old man. I apologize for that. What I actually meant was that I'm 100 times more interested in how SHDL thinks about that particular data point than Mr. Fisher's opinion. Based on a supplementary question from RuleNumberOne SHDL elaborated shortly in post #134. [And personally, I agree with SHDL on that stance.] So I suppose all is good. - - - o 0 o - - - My post may also be severely biased by the fact that Mr. Fisher is very promotional here in Denmark with ads, trying to collect AUM, which I consider really annoying. That should really not be mixed into a reply to SHDL, naturally. That article on USA Today that SHDL linked to represent a stance and investment approach, that is a special type of market timing, that I personally speculate has no support among CoBF members. But naturally, still a data point.

It’s a data point on market sentiment, John, which is a big part of what this thread is about. Publications like USA Today are useful for that if nothing else. SHDL, OK, but then you need to add some kind of personal comment to your linking. Otherwise, you just bring market sentiment to CoBF.

I have issues with that you just posted that, SHLD, This is CoBF.

Board of Governors of the Federal Reserve System [Released July 5th 2019] : Monetary Policy Report. Please note on the front cover, top right: "For use at 11:00 a.m. EDT July 5, 2019" - Incidental, huh? [same day as the job report - just a bit later.] This report will be presented by Mr. Powell before the Senate Banking Committee as a testimony called "Semiannual Monetary Policy Report to the Congress" on Thursday July 11th 2019 at 10:00 AM. Summary [p. 1] : It's exactly the same message as it basically has been for a long time from the FED. -And no talk about rate cuts.

My wife's family has a farm in Montgomery county, IN. They got their corn in but many others in Montgomery County could not. I was there July 3 and it was knee high, so will be ok. Passed many farms that were soy. It reads a lot like Danish farming, actually [ : - ) ], Finally I also got the grasp of where the phrase "To bet the farm" comes from. Personally, I'm a believer, that all this tariff stuff will go away eventually by getting settled. I simply can't believe in - so globalized that the whole world is today - that we are at the beginning of an era affected by protectionism. POTUS however must not insult or push too hard on Chinese leadership, or else the whole thing will end in deadlock. To me, it's mind-boggling that tariffs now have imposed US farming subsidies. To me, that's just so a non-american way to do things. - - - o 0 o - - - It's just amazing to think about that there are negative second-order effects from this tariff situation to Berkshire because Berkshire is so vast. - - - o 0 o - - - Perhaps I'm wrong. I just can't help being long term optimistic for the future. If I was French, I think "optimist" would be spelled hoptimist, [with a mute "h"] [ ; - ) ].