CorpRaider

Haha. Yeah, they left me out of the count. I just assumed everyone one this site, wisely, had me on ignore.

Interesting thread. Not sure if I already mentioned this, but I punted and decided to outsource to IVAL.

BRK.B

Intermediate term financial goals: F.U. money....followed by F.I. I very much enjoy investing but am fairly skeptical that I can (based on enduring skill) outperform free, systematic, tax efficient exposures, but there may be some behavioral benefits, so I allocate a pretty material percentage of my meager nw to discretionary accounts.

I've already used that one in the office twice. Thanks Charlie!

For nearly 60 years he's been saying his portfolio is likely to underperform in a rapidly advancing bull market and whoop some ass when the worm turns.

Maybe, but I think he called them "work-outs" back in the p-ship days. Could be talking about like the jay pritzker deal with CEFs or something.

Could have meant like activism. Like Sanborne maps or even the initial Berkshire; Sanborn: you have a bag o cash and securities of $20 a share (for example) and stock is trading at $8. How about you distribute some $$$ or I clean this place up. If I spoke Japanese I would probably look there and talk to some japanese lawyers and politicians about cleaning up some of the corporate recidivism. Maybe you get away with it if you were dealing with small fries. Charlie told us, another example would be to do what Li Lu did.

I must have done a poor job communicating. Assume the margin rate is +5% (you are getting paid to borrow) if you are operating an insurance business as a .95 combined ratio, it is not callable, or at least totally uncorrelated. The thought experiment is how does it not outperform the index by 1.X times the leverage assuming positive equity returns and that the insurance operation doesn't get so big that it starts writing AIG trash (which I think would be the theoretical limit on that side of the B/S; on the other side it might be that you become so big you make huge market impacts when you move $$$). [so maybe under that scenario you are looking at a 12-16% CAGR for a long-ass while versus historical 20 something.]

Ok, so I was working on a post that was just going to be a simple thought experiment about BRK versus the S&P 500 going forward and questions around size and of course then I get bogged down citing Buffett partnership letters and Charlie's interview with the Journal (which was fabulous BTW) and then I notice a guy at the annual meeting kind of asked them about what I was thinking, but Buffett basically pretended (imop) not to follow the question about financial leverage/float. So, if you had new BRK and it had $500 billion in assets and you invested everything in the S&P 500 and then just applied the leverage (1.6x?) from the float would you not outperform over the long term assuming positive returns in the S&P 500 and free or negative costs to the float? What would be the logical limit of this? Maybe growth until the insurance operation keeps growing until it becomes too large and you start writing money losing business/calls on capital that coincides with a sell off in the market/economic recession (i.e., removing the two assumptions above)?

Merchant. Banking.

He sounded fine and relaxed on the audio/podcast version. Maybe had too much coffee or something.

CRINGE. I think I saw part of a clip on youtube or something of him on CNBC saying it is great that BRK bought AMZN and now they should buy GOOG. Makes me question my GOOG affinity.

He's basically been saying that since like 1957. He might be right this time...I wouldn't bet on it.

Unless you're a real estate developer referencing the PFS you provided to the bank, big Congrats! If you're a real estate developer, congrats on the $300K. ;D

Pimco has one of those fundamental plus mutual funds using a RAFI index. I used to hold that but I decided no more swaps. FNDE follows a RAFI index for emerging markets. Seems like it makes sense in EM to me because it uses shareholder yield as a big part of the muscle movement (seems like it might steer away from some of the non-capitalist impulses/firms and other agency costs).

Multpl has some of the us stuff you want...Research affiliates asset allocation tool has like a side bar chart with CAPE data for small stocks and big stocks, EAFE and EM with where they are in the historical statistical distribution, but it doesn't show like gaps at different times. They have valuation methodologies for other assets too. There's a German site, star capital that has some cape and other valuation metric stuff for geographies and industries. Not to promote, but I did posts about (I think) all of these on my blog at some point a while ago (should be tagged under "resources"). They were basically just links and overviews of the features. I will see if I can dig them up and PM them to you if you want.

Good stuff guys. My parting thought back to the original question is that we could be Japan in the early 70s heading toward a CAPE of like 100 (or higher) and like two decades of 20+% CAGRs, so it could be quite risky to make big binary decisions with real money based on predictions around this kind of stuff.

Right, which is why I wouldn’t be too surprised if we had a final stage of euphoria before this cycle ends. One thing to note though is that corporate profits as a share of GDP have been unusually elevated over the last 10 years or so, and the CAPE ratio (by only looking at earnings over the last 10 years) effectively assumes that this is the “new normal.” That may be correct, but if it’s not then the market is already just about as expensive as it was in 1999. I think I failed to follow. How would the share of profits to GDP and/or margins work into measure the dollar of market cap paid share of smoothed net earnings (right?). So like market cap to GDP is equal to 99? Many would probably also argue that profits to GDP is higher in 2009 than 1999 because of greater intl trade/share of S&P 500 revenues coming from abroad (e.g., like the FANGS dominating industries across the globe). I personally think margins will mean revert or at least trend that way, but I've (wrongly) thought for a number of years.

As I'm sure we all know, CAPE is at ~30; in 1999 it was at ~45; 10 year was at ~6%. So we could have room to run without setting any records (and without even needing to talk about Japan). I wouldn't like to have to place a high-conviction bet either way.

I'd expect a pretty sharp sell off if something like this were to go through: https://www.wsj.com/articles/top-democrat-proposes-annual-tax-on-unrealized-capital-gains-11554217383?mod=hp_lista_pos3 Seems like the politicians should (likely will, imop) consider repealing the special rates for capital gains first and reinstate the former "wealth tax", which as Buffett recently noted was just referred to as the estate and gift tax. Seems it would be so much simpler and easier to sell that than the new "wealth tax" and all these sur taxes on buybacks and junk. Just roll back the capital gains preference and reinstate the estate tax....use something that has been used just fine before...not even that long ago....derp.

Because of a nationalistic NI party that's keeping the Conservatives in power. Thanks. Yeah I kind of get that a border in the Irish sea is anathema to them, but I mean I don't even really hear that floated as an idea. Was that even among the advisory (or whatever they were called) votes? Seems like if it looked to be the only way out, everyone would trample them to run for it. It might even be a great thing for NI, they could take advantage of special status for as long as the EU lasts then when it collapses the U.K. as a whole would be a lot more anti-fragile. I agree the Eurozone is fundamentally flawed, as arguably was the constitution until generations of amendment and judicial gloss and of course, the civil war. Definitely do not want Europe to go through the civil war.

I don't understand why they can't just leave Northern Ireland in the customs union as like a special economic zone and have a customs border when stuff comes into GB. I'm sure NI could use the economic tailwind, if any. Seems like it would deal with the Irish border question at least and then you get a chance to iterate on both systems.

I'm not even sure you could consider it a very good book for its time. Everything in Klarman's book - including the the title - was lifted straight from Benjamin Graham, who expressed the essence of value investing much earlier and more eloquently in The Intelligent Investor. There is little to be learned from Klarman if one has even a passing familiarity with Graham's work. I read Margin of Safety several years ago, but that is my recollection. I didn't find anything new, or unique, in it. Reading it now. Agree. Also much of it is quite dated. I definitely see why he hasn't republished the book. The only real value I'm getting from it is a concrete example of why high priced, glamour stocks don't typically work out. High prices and expectations leading to utter disappointment when met with merely average results. haha.

What did you guys think of his discussion of the banks and the metaphor to a CD emulating the ROTE of the banks and what multiple of tangible book you would pay for that given the current IR environment? I found it informative, but I didn't follow his "and its FDIC insured" logic. I mean I see how it would apply to his metaphor of a CD, but I thought we were really talking about holding equity in the banks. Seems like one should discount the return on tangible equity some for the whole "levered 5-1" thing. I am sort of coming around to the hypothesis that U.S. banking might be more and more a Canadian banking type oligopoly over time (I know it already is to some extent). BB&T/STI merger and recent WSJ article about small banks being fooked b/c of lack of tech, kind of increased confidence in that. Trying to decide what, if anything, to do about it. I think I would want one of the banks with an ownership interest in the potential Venmo-slayer (and maybe other payments system/networks) Zelle. Weighing WFC vs. BAC vs. USB. Somewhat prefer the (admittedly, tarnished of late) brand (they actually have a name and logo that isn't generic 'merica) and lower IB exposure of WFC, but I never liked their overly salemany/golden west/consumer LPO type vibe. Obviously, that ain't the one the GOAT has been buying lately. Prefer deposit base of WFC and BAC, but USB seemingly has more room to grow above GDP rate.