james22

Everyone who believes in valuation metrics would do themselves a favor to click on the three links by Hussman that I presented, and read the articles in entirety. As I stated upfront, avoiding bubbles is incredibly hard to do, and this one has been exceptional. But that is precisely the problem with bubbles. Hussman points out (and I agree) "The associated 10-year expected nominal total return for the S&P 500 is negative." Read that sentence again and again until it sinks in. Here is another way of putting it. "10 years from now, the S&P is likely to be lower than it is today". That is how over-valued equities now are. Yes, Hussman sounds like a broken record. And so do I. But this is one hell of a time to become a trend follower. http://globaleconomicanalysis.blogspot.com/#LgppKgcp37qcwi0v.99

It was my belief the market is overvalued that drove me from (Fama-French) indexing to (Novy-Marx) value investing. Allows me to participate in further advances with some margin of safety and a belief the jockeys will be opportunistic come a correction.

Pessimistic. 20 PM&M (VGPMX) 5 Energy (VGELX) 15 BRK 5 MKL 5 LUK 10 Special Opportunity 40 Cash (Stable Value) Looking to shift 5 from Cash to FRFHF.

Might we add a consensus holding price as does dataroma (http://www.dataroma.com/m/g/portfolio.php)? "Hold Price" is the term we use to indicate the price at which our Super Investors are comfortable owning a security. It is the price of the security on the portfolio date (usually quarter end). It's a reasonable indicator of a stock's undervaluation at that price, otherwise it would have been sold. We only provide this value when a security is owned by at least two Super Investors. In the case of reporting dates being different, we calculate a weighted average price. Or maybe P/B preferable?

I'm pretty new to individual stock investing, but do you not evaluate investments with respect to how their addition impacts the overall risk and return of the portfolio as a whole, as indexers do, rather than in isolation? I like Fairfax because their pessimism/deflation bet/cigar butt investing offsets BRK/LUK/MKL's optimism/inflation bet/quality investments.

At 1.8 P/B (below their 5-year P/B average of 1.22)? I do hope for an opportunity to buy Fairfax soon.

A Hussman fan, I do macro invest by matching my Small Value index beta with expected returns. But I also always hold select owner-operators (BRK, MKL, LUK). I like to believe they'll work regardless the expected returns: The overall national debt level, the ongoing federal deficits, and the extreme monetary intervention will eventually prove disastrous. We remain worried about the consequences for securities markets and thus continue to maintain a conservative investment posture. Rather than furthering our argument of why it is risky to centrally plan the most important price in an economy (i.e. interest rates), we devote the bulk of this letter to a discussion of our top five investments. ... One of our objectives has been to increase our exposure to what we believe to be the highest quality businesses with proven leadership at navigating dynamic economic conditions and redeploying earned capital at favorable rates. Each of the businesses we discuss stands out on both fronts. ... The current investment environment is fraught with risk. Interest rates are near generational lows. Broad market equity indices are rich after adjusting earnings for normalized profit margins. Government intervention is distorting the economy in an unsustainable way. We by no means deem these risks inconsequential. Yet, in any environment, opportunities exist. We are willing to deal with ("overlook") these risks in the context of owning the businesses described above. We believe the quality of the businesses and their leadership is strong enough to overcome many headwinds. Wayne Gretzky liked to say, "I skate to where the puck is going to be, not where it has been." The bulk of our portfolio constitutes high quality businesses with leadership that has demonstrated an exceptional ability to allocate capital and to move the business to where the market is going to be. http://seekingalpha.com/article/1792922-5-attractive-investments-for-todays-difficult-environment (They like BRK and MKL.) I'll buy FRFHF when attractively valued and hold for the same reason (they've run away from me since June).

Kyle: I don’t think that they’ll be able to raise the Fed funds rate any time in the foreseeable future—3 to 5 years. Jim: So, that would argue that stocks would be a better play. Kyle: Unfortunately…because it feels like they’re making it the only game in town. It’s not your choice, but it’s the only answer though. http://www.financialsense.com/contributors/kyle-bass/fed-raise-interest-rates-3-5-years-stocks-only-game-in-town

While fully hedged in preparation for a market correction that has yet to arrive, Fairfax Financial Holdings Ltd.’s stock has nevertheless risen to a new post-crisis high. But analysts expect that Fairfax’s third-quarter results, which the company is scheduled to release on Thursday, will reveal a big loss on the company’s investment portfolio. http://www.theglobeandmail.com/globe-investor/investment-ideas/a-contrarian-favourite-faces-headwinds/article15148251/

Does your plan allow after-tax contributions? Can you roll-over that contribution in-service (to a Roth IRA)?

...my expectation is that investors will ultimately look back at the present market exuberance in hindsight and ask “after watching the market collapse following nearly identical bubbles in 2000 and 2007, despite aggressive monetary easing, how did we actually refuse to consider major losses in the belief – yet again – that this time was different?” ... I continue to believe that the stock market is vulnerable to potential losses in the 40-55% range, much like we observed and anticipated in 2000-2002 and 2007-2009. http://www.hussman.net/wmc/wmc131028.htm 40%

A step-by-step guide to profiting off a 3-cent hike on US postage stamps http://qz.com/128329/a-step-by-step-guide-to-profiting-off-the-3-cent-hike-on-us-postage-stamps/#128329/a-step-by-step-guide-to-profiting-off-the-3-cent-hike-on-us-postage-stamps/

The skeptic might even suggest that the BlackBerry offer was made to drive Fairfax Financial Holdings Ltd (TSE:FFH) (OTCMKTS:FRFHF)’s shares lower for the buyback, only for it to decide against its acquisition. http://www.valuewalk.com/2013/09/fairfax-financial-plans-share-buyback/

My only reservation: the pessimism doesn't seem reflected in the P/B yet. Trades at 5% over its 5-year average P/B. Like giofranchi, I'm defensive and like FRFHF because of its cash and hedges. But LUK ("Fortress Leucadia") at 15% below its 5-year average P/B maybe the better position?

Pension funds cool to BlackBerry buyout overtures http://www.bnn.ca/News/2013/9/10/Pension-funds-cool-to-BlackBerry-buyout-overtures-Report.aspx

A TYCOON known as Canada’s Warren Buffett is closing in on a rescue deal for BlackBerry, the beleaguered mobile phone maker. Prem Watsa, an Indian-born chemical engineer who has become one of Canada’s most successful investors, has assembled billions in backing from the country’s biggest pension funds for a bid. BlackBerry hoisted the “for sale” sign last month. http://www.thesundaytimes.co.uk/sto/business/Tech_and_Media/article1310844.ece Shares down .24% at the open from up 2% after-hours.

...one thing that is clear is Watsa has bet big on BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) and failed. http://www.valuewalk.com/2013/08/prem-watsas-blackberry-ltd-bbry-investment/ Yeah, pretty sure the market won't like Prem extending his bet.

I like FRFHF at 1.1 P/B. But if Prem takes BBRY private, isn't the market reaction likely negative? (Markel bought Alterra and MKL dropped 10%.) Buy now at a fair price or wait until BBRY's future resolved?

Dhahran, Saudi Arabia