value-is-what-you-get

I'm with you (95% cash 5% equities). This is certainly outside my circle of competence and the fluff we hear about replacing leaders does nothing to address the problem. The hole is already in the side of the boat, there is no steering clear here. The solutions thus far amount to little more than selecting which Captain will go down with the ship. I expect nothing more from politicians! Leadership requires hard and unpopular choices be made for the long term good. Politicians don't normally do that - less so now than in the past. (Canadians can thank Paul Martin for some unpopular decisions that find us in our envious economic position as a country today.) We will all have the benefit of seeing how the sum total of decades of sidestepping amongst the PIIGS comes home to roost and should learn the lesson well and make our own hard choices today. Not to worry, things will get stupid cheap and then away we go - now it's just a waiting game.

I would question the implication that Munger cancelling his meetings in Pasadena means he can't handle it any more and will probably stop appearing at BRK annual meetings. He stopped the annual meetings in Pasadena because Wesco was acquired in full by BRK and so holding an annual meeting is irrational and unnecessary. No mention of that. Her conclusions were a bit of a stretch and misleading on this point. I also don't believe for a second that WEB would derive any sort of ego boost by knowing the stock tanked when he was no longer there. In fact the only stock tip he has ever given is the day his death is announced, buy Berkshire.

If the information is accurate - which it isn't according to the link - then between him and WEB their average home size is not out of proportion to their wealth! ;D

WEB is on Charlie Rose for an hour tonight. Probably available tomorrow on Rose's website

Thanks for posting - a highly enjoyable read. I especially liked the nod to "Canadia" - the neighbor to the North whose banking rules did not allow such folly! His take on the accounting profession's complicity by thumb-sucking and self interest gives me cause to consider my accountant's advice through a newly modified mental model. Also, I clicked through to your site Matt - WOW! All I can say is if you read this board you should read his site. www.mattpauls.com Very nice collection there - thanks.

Just read the transcripts in question and it seems to me Munger is touching on the concept of Lollapaloozas with respect to candy bars etc at the theater example. There are a lot of factors at play including relativism (individual items are all priced less than actual ticket and far less than if say one adult bought everyone's ticket), social reinforcement (big lineups means it must be worth buying if they are all buying), social conformity/envy (people who bring in their own stuff are cheapskates), good citizenship (rules say no outside food allowed - does this apply to the dinner I just ate? - no just the stuff they sell too), consistency/habit (lined up and got expensive stuff last time so do the same this time) and probably a few more to boot. That's how I read it.

This looks like the grow-op of the future :P Does anyone else grow their own vegetables? We have a small patch in our backyard that I hope to expand into a larger patch over time. We grow things like tomatoes, cucumber, peas, beans, and zucchini. We'll probably rotate into root vegetables this year, too. It makes a lot of sense for us.. the food tastes better, it's cheaper, it's fresher and it's kinda fun (and sometimes frustrating). Yes we grow tomatoes (four different types), beans, peas and carrots as well as some apple trees and herbs. It is a hobby really but what I've noticed is the remarkable flavour over store bought produce. The only real downside is that veggy-wise everything is ready at once so it's a feast or famine deal. I don't take it seriously enough to time plantings etc - it's really just the cheapo in me trying to get a little production out of my real estate, reduce mowed area and have an excuse to spend time outdoors! It's cool to walk around the garden and just pick something and eat it and it's the best tasting one you've had since last year. I like the indoor garden concept as it can provide a consisitent food source more in line with consumption patterns. We could also reap much larger financial benefit if we were producing tomatoes in February when the trucked in variety are peaking in price. The backyard garden produces yields exactly when local commercial farms do so the savings are much less from an outdoor seasonal garden - but the flavour can not be beat!

Here's just one example of getting 10X the crop yield on a per square foot basis as compared to standard greenhouses. http://www.omegagarden.com/index.php?content_id=1521 There are also automatic secondary benefits to this type of innovation - like not having to truck in tomatoes from Mexico for starters and optimum use of water resources for seconders. If this is economical (or becomes so due to escalating farmland, farmer input and transportation costs) then the secondary benefits accrue to society as a bonus! Human ingenuity and innovation often contains these sort of bonuses not unlike a good margin of safety stock price with free call options on non-producing yet possible value creators thrown in. It's not much of a stretch to imagine a produce section at your local mass grocer that has these devices installed right on their rooftops above the produce section giving consumers tomatoes (or anything else they can grow in them) that were picked today! Are you listening Galen Weston Jr.? If Michael Burry's belief that good farmland with available water is severely underpriced right now, then this sort of thing will emerge in lockstep with escalating farm prices. . . . and as an aside I just heard that Boston Pizza is renaming it's chain Vancouver Pizza until the playoffs are over (or should I say until the Canucks beat the Bruins!!)

A non-renewable resource is finite by definition - the question is WHEN? I'm on the human ingenuity side of things however any big social change can't happen without leadership in government which is sort of questionable at this point. The level to which oil is ferreted into our fabric of life is astounding. Look at all the products made from petroleum! We need it for a lot more than pumping into our tanks and as such a basic input into so many products should be viewed as vital to our economic well being far beyond how much it costs to fill the tank. The cost to electrify a household with solar panels done on a large scale solar farm type facility (like the one recently completed in Sarnia Ontario) is about $30K. There are 120,000,000 households more or less in the US. If the Federal government were to pay in full for enough solar generation to power everyone's home, it would run about 5% of net government tax receipts for 25 years or so. This is on par with annual military spending in Iraq and Afghanistan over the last 10 years. If, like we are doing in Ontario, they were to merely subsidize private industry to complete the buildout (a better option imo) it could be done for fractions of that cost and probably a lot quicker too. What is really lacking is political leadership and will. There are trillions of dollars of profit still to be pumped out of the ground so why rock the boat now? People hate change - apparently more than being gouged at the gas pump. I agree with Munger that it is completely obvious that we must harness the sun's power directly, and we should probably get on with it. All the other energy sources we currently use are stores of the suns energy via chemical derivations and as such are simply side trips away from a direct connection via photovoltaics. Oil should be a battery/emergency supply in the event of catastrophe (asteroid etc) as it packs a lot of thermodynamic punch in a small volume. This idea was first voiced by the Iranian Oil Minister. Anything less than that (like making plastic McToys or driving to the store for a chocolate bar) can be fulfilled by infinitely renewable and plentiful sunshine. There's plenty of it so waste as much as you can afford!! As Carl Sagan said we are basically stardust collecting and using starlight. There you have it - all the answers! Appoint me grand ruler and I'll solve all the problems from right here in my chair! :D

Onyx1 - you are saying that the boss of ExxonMobil is bullshi**ing on this fact and you are right. Well done! Charlie Munger would give you an A on that one - clear thinking amid the noise.

Look at this: http://macrobusiness.com.au/wp-content/uploads/2011/03/bubblesandmanias.gif then look at this: http://ca.finance.yahoo.com/echarts?s=HZU.TO#symbol=hzu.to;range=2y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=; New Paradigm eh?? hmmmm

Here's the Google Translate translation: German to English translation EARTHQUAKE: Munich Re suspends share buyback Sun, 23:03:11 16:48 MUNICH (Reuters) - The world's largest reinsurer Munich Re sets, given the billions of stress from Japan its new share repurchase program on hold. "We run the current program until the Annual Meeting in April, to end ', a group spokeswoman said on Wednesday. 'With the new program, we will not start but for the moment. "Thus confirming a preliminary report of 'Handelsblatt' (Thursday). The Dax group had until early February a new buyback program of up to 500 million euros announced, which should be completed by the Annual General Meeting in April 2012. In the current repurchase program by the end of April, the Munich Re has been taken back shares worth 922 million euros. This is the speaker, according to the applicable limit will be continued by one billion euros. Munich Re was canceled because of the earthquake and tsunamis in Japan on Tuesday its profit target. The disasters are likely to burden the company with 1.5 billion euros before taxes. This was had a lot more than expected analysts. The profit target of 2.4 billion € is from the perspective of the Board will no longer erreichen. / stw / ksb Source: Thomson Financial

I'm almost speechless! Especially when Sheila Bair, Chairman of the FDIC says "This litigation could easily get out of control . . . we'd like to get ahead of it" it meaning foreclosed homeowners exercising their rights by taking lenders to court to require the lenders to prove they own the home and the debt because the lenders didn't have any paperwork saying they owned it and then produced the paperwork fraudulently in forgery sweatshops. The litigation is merely a response to how out of control the banks and their contractors were and it is now coming home to roost. The FDIC would like to get ahead of it - well the average taxpayer should expect the FDIC to have been ahead of it! Wow!

we aren't doing anything differently really, but China and India sure are! So the rules of engagement are different by a few orders of magnitude on the demand side.

I agree preparedness should've been better for all the reasons stated. I recall during the icestorm in Quebec years ago a community centre in Boucherville was essentially powered up when someone exercised the extreme common sense of hooking it up to a locomotive that was driven up to it on the tracks just behind the building. Giant portable generator. It makes me think that some sort of large somewhat fast ship equipped with generators and massive diesel water pumps could be driven right up to the dock and put into service when and where needed. Power and water. Of course one could also spend a little more in the first place and mount the backup generators on a 50' high cube of solid concrete . . . but this is easy with the clarity of hindsight. It really makes me focus on the assumptions I make along the way - there are always a lot of "what if's" and the more remote they are the easier it is to discount them as unlikely when in fact the possibility is a far less important consideration than the consequence.

WEB has stated that he has an ethical problem with buybacks of Berkshire, as it effectively has him taking advantage of his "partners" (shareholders) in keeping with management's view that shareholders are partners.

Some good insights there for sure Here's the link: http://www.cnbc.com/id/15840232?video=1593436488&play=1

From March's MD&A . . . "SFK Pulp’s quarterly results (including sales volumes) also vary from quarter to quarter as a result of the scheduled outages for major maintenance performed at the Mills. Scheduled outages at the Saint-Félicien Mill are performed semi-annually, usually during the second and fourth quarters of each year. As for the Fairmont and Menominee Mills, each mill conducts three scheduled outages during the course of the year." Looks like some maintenance outage will need to be factored in to the estimates for this quarter. Does anyone know how these outages generally affect production on a percentage of output and or tonnage basis?

All these things are Mr Markets tools of delusion because they are observing only price action. Without them our values would not become mis-priced. I'm going to take Sanj's lead and also use Fibonacci when I get a fill at 75% of value or less FIBONACCI!!! You know like YAHTZEE! Buffett has no problem saying I'm not sure - in fact he often says he has absolutley no idea where it will be next week, next month or next year and doesn't really care.

I still don't know whether I'm smarter than a fifth grader though . . . I give this test an "F". :P

I believe it's the same sort of contradiction that sees Buffett relentlessly pursuing an increase in shareholder value for a pittance in salary and then giving his shares away to charitable organizations. Sometimes the contradictions are for good reason.

His apparent hypocrisy on these matters is simple politeness because he is really saying do as I say, not as I do . . . because you're not me and I know what I'm doing and you don't!! This is of course right, accurate and prudent. A sharp blade in the hands of a thug is a dangerous thing, in the hands of a knowledgeable surgeon it can be a life saver.

http://www.reuters.com/article/idUSTRE6341EA20100519?type=ousivMolt A negative market reaction?? Am I missing something here? - seems to me it is a huge positive for all of us not in the "bucket-shop" industry.

Is this not a one-time occurence that will require existing positions to be collateralized? In the future the cost of collateralization will just be added to the premium.

Terrific analysis - thanks for sharing that. On the last page is a bar graph labeled 10yrs 15 yrs 20 yrs - I'm not sure what it means - I can see the labels etc but what is the chart showing over time and is it past or future projection? Thanks again