gary17

6 hours - a bit more on weekends, maybe 7... there's plenty of time to get reseted... "later" you know lol Gary

I agreed - although I think real estate in Canada is probably not quite the same as the tech bubble where some assets were priced at avg of 165x p/e multiples - and the market participants bought using margin - I believe the high end real estates in Canada are bought with cash... and many 'average' condos were bought with more stringent downpayment and insurance requirements. That's not to say a bubble is not here and won't burst... but I have a hard time seeing that's the same as the tech bubble. Gary During the tech wreck, even the Queen of England was trading stocks. Everyone was doing it, except for a few notables WB, Prem, etc.. We are seeing global inflation of all assets simultaneously. There is a possibility that all assets will reverse simultaneously and very quickly. Long tail events occur when people are not expecting them. BLACK SWAN!! Today everyone is convinced that a 50% drop in Canadian RE is not possible. Is a 50% drop reasonable in light of the global asset inflation over the past 7 years? What if everything drops at the same time? Will global funds pour into Canada for refuge? Who knows??? BLACK SWANS are possible and very few are prepared to deal with such an outcome. Personally it looks like pick up quarters in front of a steam roller. Not worth the risk. So what if your horizon is very long - say 20 years ? We had the worst real estate correction in the US in 2008/09... Are the quality homes in NEW YOrk / Seattle, San Fran back to the peak in 2007 ? I think there is a risk - but so as everthing else in the world... We gotta look forward and stay positive. Being risk adversed can include having mechanism in place to address the risk.... Gary

Hi Wisdom.. sorry I don't have any data. But having lived in Vancouver for 20 years... and know the Asian community very well... and just from the deals I know - they are all bought with cash deals. The town of Vancouver is just flooded with money from China. when i went to UBC - wealthy students from Taiwan / HK drove BMW or Benz to school.... I now do quite a bit of work at ubc - and wealth students from China drive Ferrari and Rolls Royce to school.... In fact I recently saw a blog on my FB feed: http://universityofbeautifulcars.tumblr.com/ I have no problem believing these students are here with their mom (dad still working in China) - and almost everything they own is bought with cash. Gary

I agreed - although I think real estate in Canada is probably not quite the same as the tech bubble where some assets were priced at avg of 165x p/e multiples - and the market participants bought using margin - I believe the high end real estates in Canada are bought with cash... and many 'average' condos were bought with more stringent downpayment and insurance requirements. That's not to say a bubble is not here and won't burst... but I have a hard time seeing that's the same as the tech bubble. Gary

Remember also all the gains from your primary residence in Canada is tax FREE.... so if you can make $1M 30 years later on a piece of real estate, it is as if you made $2M in income.... or something like that. I think there are definitely a few players in the market.... but I know for most Chinese buyers, they are buying 1 house for the long term to raise their kids... They aren't buying multiple houses/ condos. And I believe most are buying with cash - and I believe they are buying in London, LA, San Fran, Singapore, etc., not just Vancouver / Toronto. I should also mention the Chinese RMB is pegged to the USD... so relative to people from China / Taiwan / HK --- Canadian real estate just dropped 25% compare to a year ago... so it is on sale It's a tough decision for sure...

This is a great point and a great discussion. In his personal life, Buffett has taken personal loans before to buy stocks (for instance, in early 1972-3 I believe). And with Berkshire, he has previously employed leverage in certain ways that most non-obsessed investors would be surprised that Berkshire engages in. In 1988 or so, I believe, he took advantage of cheap financing to borrow a significant amount of money "just to have it" to strategically deploy - because capital was cheap. He has done this a number of times with Berkshire; borrow long-term when capital is very cheap and then deploy it during a period of turmoil or something similar. So, what gives? Is he a hypocrite, I can hear someone say? Well - how dare they say that - this man is my hero - of course, he is not a hypocrite. Its just that leverage and debt are not always ipso facto bad. There are exceedingly few things in business, and dare I say life, that are always bad or always good. Is a gun good or bad? Depends on whose hands it is in. (Maybe the world would be better without any guns, but that is a different discussion.) A police officer saving the life of someone by shooting a hostage-taker is of course substantially different than the hostage taker with the gun in his hands. So with that said, there are sensible and wise uses of debt and leverage. But, on balance, debt and leverage have caused every one of Western Civilization's significant financial calamities. Additionally, leverage is the singular largest way that smart people lose everything or have some other very adverse business outcome. Thus, from Buffett's vantage point, society and most of its members do not properly employ debt and would be better off without it. So in that context, dogmatic rules such as "don't employ debt" are the best general advice he can give to society. There is also a difference between being leveraged and employing leverage. Being leveraged, to my mind, is either actually or potentially being extended past the point where one could own everything they do without debt and/or does not have the capacity to pay back everything they owe or could owe in the short-run. Buffett has never put himself (at least this is my belief about him) nor Berkshire in the position where they couldn't pay back what they owe in the very short-run. They employ leverage when it is cheap so they do not have to sell a liquid asset or to build up their cash pile war chest - but he has never actually been extended past what he could have bought without the leverage. I'm not really articulating this point well, but I hope this point makes sense. All of this reminds a bit of this interesting thing a wise man once told me. I was having a beer one time with a very well-known political figure and he said "I've taken the two most likely, by a huge margin, personal scandals that cost politician's their careers completely off the table." I said, "How's that?" He responded: "I don't cheat on my wife and I don't drink alcohol. So there is no chance that there will be a mistress scandal or a drunken video of me out there or a DUI [though I actually think this man had one when he was a very young man, but I think he meant once his political career started he wouldn't have one]." I've thought about that conversation often when politicians inevitably have a scandal that either involves or is facilitated by infidelity and/or alcohol. If a really drive politician wants to simply remove the largest stumbling blocks from their career it is quite easy: Don't drink and don't cheat. It's that easy, yet human nature gets in the way. I think it is similar for investors, institutions, and certain businesses with debt - most of us can't help ourselves, especially when there is a huge industry made up of smart people who are always willing to (read: encouraging) the use of debt. Thanks Is the politician from Texas by any chance ?

My favourite part: We need to find more businesses that can grow earnings without significantly more capital injection ! :))

It's very normal to raise a family in a 1000sf box.... they've done it in HK, Tokyo, Seoul , Taipei, Shanghai..... no reason why we can't in Toronto or Vancouver. I live in a condo in Vancouver - I can easily get a house about 1h commute away from work for about the same price. I made the choice I don't want to do 1h x 2 each day for work.... :)) Gary

Merry Xmas to all I had a good year Better than some Worse than some others But most importantly I'm having a lot of fun :) Hope 2015 brings good fortune, excellent health And prosperity to everyone! Gary

Did Klarman reduce his position in Boyd Gaming after realizing that's not the symbol for BYD, the Chinese electric car maker? LOL

Hi rpadebet - do you expect higher / faster growth to continue & what do you see as the moat for this business? How is it possible to do high ROA / ROE ? No competitors? I think we had this discussion last year in the AMNF thread itself. My thoughts haven't changed much since then. I am not sure of a moat presence here, but they are small enough for the growth to continue a while longer. They are growing by selling the same stuff in other geographies. The exit scenario I still think is, once they have a decent sized business, some major buys them at a big premium ( operating expenses are still big part of AMNFs expenses which to a major buyer is all synergy). They made 0.036 EPS last quarter. Assume no more growth and they maintain this EPS for next year, they are @ 0.144 EPS. Stock trading at $2, so PE of <14. So you are not paying for growth and you get a very decent 3.6% dividend yield (approx 50% payout ratio) Thanks for the idea! Will watch this! Gary

Hi rpadebet - do you expect higher / faster growth to continue & what do you see as the moat for this business? How is it possible to do high ROA / ROE ? No competitors?

Agreed!! let's find the next RX, PKT, or BAC (at $6) !! Gary

Wonderful things in life are generally unproductive....lol Life is too short, unless you were planning on taking over the world, probably okay to buy a nice place you get to enjoy and won't depreciate! Just my three cents!

Try translate.google.com. You can copy paste content... google chrome works half the time from experience.

Congrats Sanjeev - I wonder if there's audiobook of the Intelligent Investor =P

I agree - I think the ROE will likely be more like 12 - 15% going forward - I guess what I was trying to understand is this.... if a company has a book value of $20. It's trading at $22... and I paid $6.7 and going forward I expect ROE of 12% or ($20x12% = $2.4 EPS... theoretically that's a nice $2.4 / $6.7 = 36% return each year... and i'm not factoring in the growth. However, as a shareholder..... I really need to be thinking about how much of that $is actually coming back into my pocket in the form of dividends... it's just an interesting thought process; and the comparing to other opportunities that I was looking at (Company B).

Yes, Company A is a financial company. Before the great recession, it had ROE of 19% - 24% range from 1995 - 2007 It then did very poorly during the recession; that's of course when it was cheap... it's now profitable again, but the share price has tripled from my cost. I recently (about a month or so ago) bought a lot of Company B with the following metrics 0.8Book value, ROE of about 10% and EPS growth of about 9% estimated for the next few years. I thought Company B was very attractive, so I added quite significantly to the starter position I had... Meanwhile I also had Company A, so I was quite heavily leveraged. I did eventually sell out of Company A yesterday morning.... I did so before I posted here... I felt like I wanted to confirm whether I made a good decision or not ;) I think in the end I'll find out a few years later... because these company's performance will not be known today or tomorrow; but over the next few years ! Gary

Thx all! I am about 160% leveraged too so with this sale I would be now closer to earth...

I own shares in Company A... The shares of Company A is now trading at 1.1x Book and has historically done ROE of 20%. My cost basis is about 50% of book value from a few years ago. Would you hold or sell this company ? Thanks :)

i was actually thinking about getting one to try... i tested it at a Telus store and thought it was quite nicely done - unfortunately the unlocked version is sold out!

Are you being serious or sarcastic??? Please be the later. PUHLEEZZZEEE LOL.... i just simple minded i guess.... i wasn't sure when the planet is at 12B people... where those 6B should go.... China ? India ? Europe ? I logically see North America, South America and Africa... I like to think with the natural resources here ; the technology and the "matured" political system, there's a good chance good things could continue to happen. Just my view :)

Gio & Eric thank you for your views on this - i happened to be thinking about this as well these days.... good timing :) i think if people like what Prem & company is doing & have faith in their performance over the long term; $450 vs $500 vs $550 cad/share doesn't seem to make a big difference 30 years later.... the US shares have been down because of the stronger $US. (if you look at the 1 yr chart of FFH.to vs FRFHF.... FFH.to has been relatively flat while FRFHF has been dropping.) just my 2 cents.

Eric i see what the issue is.... may be ... let me guess: i won't pay for your BAC any more than the market value today. however, some on the board are saying they may be willing to pay a premium in exchange for your decision making on the next purchase after you've sold out of BAC-- that ability to spot value stocks & take advantage of it is the premium some are willing to pay for -- not the holding; but the next decision. G

I thought what is described fits Jack Ma of alibaba quite well,too.