james22

White Mountain (WTM) @ $850

Hussman theorizes without data??

BATS:TAIL

FRFHF @ $524.50 (partial execution)

Began speculating (DELL) ~1995, shifted to index tilting (Small Value, quasi-commodities) ~2002, added jockeys (BRK/MKL/FRFHF) ~2008. Like to believe I've been investing since ~2014, but because I've thought most everything overvalued since then, who knows?

I have in general been over-intellectualizing the working of the market for a few decades. I have had too strong a belief that investors would at least be influenced by past data in a sensible way. The market, however, appears not to care at all about the past or to learn much from it. https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdf?sfvrsn=46

Yeah, steal is too strong a word because his investors aren't mystified - he is very, very clear his concerns and actions. Have you seen how other value investors are doing in this market?

I think I understand what a digital currency is, how Bitcoin works, and some of the arguments for it. But I still don’t feel like putting my money into it, because I consider it a speculative bubble. https://www.oaktreecapital.com/docs/default-source/memos/yet-again.pdf

Only a durable sense of doom could survive such discouragement. John Kenneth Galbraith

Here’s one more example of how central banks’ global coordinated monetary stimulus in the wake of the financial crisis has increased systemic risk in the US: According to an analysis conducted by BlackRock, insurers are more vulnerable to a market downturn now than they were ten years ago. The reason? Ultralow interest rates have forced insurers to venture into markets with higher yielding assets, forcing them to stomach more risk along the way. Whereas insurers once tended to adhere to only the safest types of fixed-income products – typically highly rated government and corporate debt – they’re increasingly buying exposure to risky high yield and EM products, along with illiquid private equity funds, to try and boost their earnings back to pre-crisis levels. These products carry a potentially higher reward for insurers, but heightened risks are also omnipresent. In a downturn similar to the 2008 crisis, BlackRock estimates that US insurers' holdings would drop by 11% - even more than they did during the crisis. Such a drop would be tantamount to $500 billion in losses. http://www.zerohedge.com/news/2017-08-29/insurance-companies-could-face-staggering-500b-loss-during-next-downturn Might be an opportunity to buy up come any downturn.

Fairfax is underwriting more successfully than when we previously owned it, is about to complete a value-accretive merger with Allied World, and still has the investing prowess of Watsa and his team. Because the merger is on the come and Watsa is holding a large amount of cash that is not producing income, near-term reported earnings per share are well below the company’s long run earnings power.

BAM +19.72% YTD

This.

GMO's James Montier: All these years I have looked to Warren Buffett as a beacon of hope. Two months ago, he said that equities look cheap, relative to interest rates. It seemed like a dreadful thing to say. It might be true only if you believed there was absolutely no mean reversion—in that case you’d be looking at a 3% real return from equities, zero from bonds, and, say, minus 1% or 2% from cash. But here was a man who, using his favorite valuation indicator of market cap to gross domestic product, pointed to the tech bubble of 2000 and said it was insane. Using the same indicator, he pointed out when to buy equities in late 2008, early ’09. Here we are within a hair’s breadth of the levels in 2000, and he is saying equities are cheap. This is an unvaluelike statement, and I don’t think it’s true. There are plenty of reasons why interest rates are not related to performance—very low rates haven’t stopped a 50% decline in Japan. So I’m sticking to dead heroes now—Ben Graham and John Maynard Keynes. http://www.barrons.com/articles/coping-with-the-foie-gras-stock-market-1501305385

The *only* reason I'm in Fairfax is expected returns. If they've lost their way, I'm out. But I'm optimistic.

AQR expects 4.2%, Research Affiliates .5%, Hussman zero or negative, GMO -3.9%. What cash drag? With expected returns so low, my Stable Value fund might outperform the market. Very little opportunity cost to sit this out. This board is all about identifying buying opportunities, yes?

You might consider "fingers of instability." http://www.mauldineconomics.com/frontlinethoughts/fingers-of-instability-mwo082506

Yes, the US stock market is at bubble levels. (For the record.)

Saudi ARAMCO IPO – Great Opportunity or Riddled with Risk? https://www.perchingtree.com/saudi-aramco-ipo-key-risks-loom-for-investors/

Needn't be either/or. I prefer Small Value index funds in tax-advantaged accounts, individual stocks (BRK/MKL/FRFHF) in taxable. (Only when fairly valued - else bonds, cash.)

Vanguard Short-Term Treasury Fund Admiral Shares (VFIRX), SEC yield 1.16/1.26% ($50k minimum) Vanguard Federal Money Market Fund (VMFXX; Vanguard settlement fund), SEC yield .90%

Don't know the particulars for Oncor in Texas, but for transmission assets in the US they're generally allowed 12% ROE on a capital structure that's about 1/3 equity, 2/3 debt. From a 2014 article: Currently, Texas regulators allow a 10% return on equity and are likely to approve the $1 billion per year capital spending program Oncor has proposed for new infrastructure to help meet Texas’ rising electricity demand. http://www.utilitydive.com/news/which-utility-will-warren-buffett-buy-next/265887/

I'll buy it.

One of the reasons why valuations are poorly understood, and their importance is wholly underestimated, is that overvaluation alone is not enough to drive prices lower over shorter segments of the market cycle. For that reason, it’s essential to monitor the speculative inclinations of investors through the uniformity and divergence of market internals. The inclination of investors toward speculation or risk-aversion, as measured by the quality of market internals, is the hinge between an overvalued market that continues higher and an overvalued market that collapses. http://www.hussman.net/wmc/wmc170612.htm

Added to BAC-L and WFC-L.