dealraker

Old dealraker here says simply that until too much capital is chasing energy the trend though non-linear is up for the stocks. Got a long way to go. Until the last few days the only investments I've made in 3 years has been energy (based simply on market cap to total market cap). Now before you think I'm hailiing "I'm a genius!" I'll simply state that I have a whopping 5% of my net worth in energy. Pathetic sort of. But still... I participated on a couple of Berkshire Hathaway board forums since the mid 1990's and I literally got kicked off the last one for simply stating that I thought Buffett was making the right move buying energy. The board was controlled by those who were mandating Buffett buy Google and Meta. Posts were removed, email regarding off-topic posts sent, and so forth. Yep my topic of energy, a huge part of Berkshire, was off topic while Google and Meta were not. Not out of the ordinary, but may seem out-there behavior with time.

That's pretty cool Greg. Here's a story for you. My parents died young and I have no children so family for me is my sister's bunch, now down to the nephew/nieces and great n/n's, and great-great n/n's. So my family is moving out of the builder's supply business back in the early 1990's and my brother in law (sis's husband) comes to me and says, "We decided we want you to manage some of our money for us." I go, "Well not sure I want to do that but I will anyway." He sets up the account and he comes do see me and says, "Why did you do that?" I said, "I'll make up the difference if you lose money." LOL...I'd put the entire amount in Poe and Brown. Of course you know where that went. They'd arranged to pay me for my 'management' but I just laughed about that. He calls me a couple days ago and says, "I want my money back...we lost 10% in one day." He was accurate with the day's loss...but being silly of course. He still owns all the stock within the lumber company.

Dinar I bought all the brokers (after AJG) some 5-6 years before Elliott Spitzer's blitz on them (I'm guessing 2004-05-ish) so I've owned Aon since then. I own AON, Marsh, Willis (which bought the entitiy I bought), and Brown and Brown (Poe and Brown). At one time you could buy, yea I'm serious here, all the Poe and Brown you wanted for 10 times free cash flow while the business (and management told you flat out this was going to happen) grew earnings a 15% a year. Yep, all you wanted...just lollygag around and call your broker because it was available. Willis bought/partially merged (as I remember) with HIlb, Rogal, Hamilton which I owned. I think that's when I took stock in Willis. But somewhere along the line I bought a tad more Willis---- before it merged with Towers Watson. For a tad more history, and this one is absolutely incredible....Hub Group or Hub International, can't remember exactly what they called it, was 40% owned by Prem Watsa and Fairfax. But Hub was listed on the Toronto exchange, briefly got listed on the NYSE, then back only to Toronto. You could buy, yes this again is absolutely true, all the Hub you wanted (if you were a small investor) for less than 8 times earnings, sometimes 6 times, while Hub just plugged 15 percent or more earnings growth. Unfortunately Prem and Co voted to sell the dang thing...a VERY sad day in my life! Lastly, I think this is odd but it is what it is: 4 of my 25 investment club members are just flat out well-off from owning all of or parts of insurance brokers. None of the others other than me have any concept of the publicly traded brokers and their history of success with the exception of saying, "Well, they call every day making offers."

Google is the newspapers of 50 years ago, that was one of the family businesses I grew up in - so my opinion of course in my wild-ass guestimate. It inevitablly becomes cyclical growth, that is until some NEW NEW THING rips it to shreds like the web did to the newpapers.

LC I am not aware of any stock that I own that has a 35+ valuation. I am sucked in to reasonably valued businesses that can sustain sales and profit growth over time and when they get moderately over valued I don't sell them. Some are cyclical to some degree of course. Probably one of the most over valued but never sold entitiy I own is Tootsie Roll, bought in the 1980's and (I think but don't hold me to it because it was a stock cirtificate basis) my $300,000 of stock has a four figure basis. About 30 PE? I just watch and think, "Well, that's not a smart buy" for the price today or for the last 20 years actually. The investment world, particularly active value and growth investors, are seeking alpha while my little world is one of buy something seeking not to lose. I do know my portfolio, of course very value based, has about a 14.5% annual gain since the year 2000 (of course a very good starting point for such a portfolio) because that's when I began the accounts I use today and the figures are there staring at me). Think insurance brokers, Berkshire, and railroads...that's what developed for me over time. I am not claiming expertise, this was accidental. And my guess is the returns forward will be mid single digits for a long time. But for me that's excellent if I live into my 80's. This outcome, the journey, in my view will be much like a drunk driver who gets to his destination with no bumper, fenders, outside mirrors and a flat tire...all over the place. The railroads have gotten their outperformance by cutting cap ex, people, routes. Era over! Insurance brokers are eventually going to get their 12 percent commissions cut so they are fully priced and maybe eventually in for a jolt. But damn Gallagher is one hell-of-a-business. Berkshire will plod along but in my view is also now likely have far less loyalty once Greg's in charge, so reluctantly I must believe it is fully valued. Rambling, the morning coffee spurs it.

There's some calming factor in trying to value business, placing your own measure, then tolerating others pricing it for you through the years. The tolerating part is of course frustrating at times, but the older you get and the more information that is out there (we just brought some of that up on this site) as to who is likely pricing your business far too high and far too low at times does relieve some of that frustration. By time and luck two stocks dominate for me, AJ Gallagher and Berkshire. I just can't fathom selling either at today's prices. No they aren't cheap as to average, nor are they expensive, but they are solid and I'd sleep well with all my money in either- which is odd given I prefer to diversify (in the stock market). We merged (I owned 51%) with Gallagher in 1993. My basis is $8 and the stock is valued about the same today (free cash flow wise) at $175 ish or so. I'm getting a 33% dividend on my basis. Interestingly my investment club has owned Gallagher twice, buying at excellent times and selling based on "valuation" at no-so-good times. I think it was 2017 we bought at $34 when it yielded 4%, then the club (value oriented) sold in the $80's a couple of years ago, again based on valuation. Of course being human...I do bring that up occasionally to them because AJ just runs by sell prices repeatedly. But anyway what I'm saying is that to me there are two things: The fears of the world. Business. Figuring out when to bail on business is not easy. My guess is that many of the hedge fund operators are more focused on macro, what investors are going to do and what the fed will do and so forth which leads to unbelievable outcomes for 1 of 10,000. But I'm not interested in 30% annual returns, I simply couldn't handle it if I got it. I'd rather just participate in business over time. Still wanting to buy JOE so I can rant back and forth with Greg. Problem is my brother in law's brother seemed to do well as a local property developer, he was a big one. But although he didn't spend a lot of money he ended up with his brothers helping him. And he began with a silver spoon!

I'm enjoying the comments. Change is predicting with "absolute absolutes"...a long-long list of them... and Greg is stating "maybe, and maybe not". It's a market! Enjoying the posts is what I am saying.

Our perfect SAT score pure white boy (he ain't ours but we have him) got into all of them, then chose based on his ever evolving sense of self. It worked. We too had our biases...you know that perfectly rational thought pattern of parents with children applying to the tough schools...but instead of focusing on the race unfairness given we have an interracial family (also "loaded" with a married gay couple...so much for being conservative any longer) we chose to focus on the money-for-admission bunch. Our next door neighbor's child didn't get into their prefered school, did the black/Hispanic dance (not saying it isn't accurate)...but later transferred in successfully. Oh my, but then when they tried to get in the med school thing? Well it was a merger with us so-to-speak...they chose to fault the money'd bunch, the donors/alumni as there simply weren't any blacks/Hispanics in sight by then. Of course being cynical. Our nieghbors child then transferred yet again to High Point University in High Point, NC. There they found the ultimate "lean to the passenger side" (in the US) school with token amounts of dark skin. But the story got even worse there because the incredibly famous president of that school, and where he has taken it, makes no amends about it whatsoever. It is simply: We run this school for those who give us the most money and we make NO apologies for this model. The girl of the grievance family? She gave up her dreams. Life is great...if you can stand it. We also raised dark skin kids. We gave them the non-college lecture: "Do not, in any way shape or form, expect the law officer to treat you fairly....do you understand?" I haven't been stopped by law enforcement in 50 years here, nor has our white kid. Our dark skin kid? You don't even want to hear about it. Yea, we all have our biases. They differ of course depending on the industry you're in. Don't take me too seriously. I'm not extreme I just find what we focus on quite entertaining. Addendum: My wife who does local admissions interviews for Duke (where 13 members of my family went) says, "Oh...remind everybody that 10% admitted are athletes and 90% aren't football/basketball...and what percent are qualified?" She adds, "At Duke its somewhere around 13% alumni...and what percent get in that are qualified?" She sums by saying, "Statistically if you are pre-grieving their reject it might be more accuract to focus on non race issues."

Oh yea...cubs is going to "modify" his thoughts (posts!) and actions! LOL. Enjoy him as is maybe? He's obviously got some special ability to handle his routine. I worked building hiking and biking trail for 10 hours one day (at age 66) then rode the mountain bike hard with the younger bunch the next day. Ended up at the hospital with a right leg swollen such that it looked elephant-like. I think it was called myositis, the blowing up of muscle fibers, and my emergency room doctor says, "Dude...you know this can be fatal don't you?" She says, "What days do you take off?" My wife howled with laughter when she heard that. I've learned to modify...but only because I'm forced to do so! LOL.

I have bought several small amounts of Siemens starting from the price of $52 and below.

I remember a decade ago or so when the Gov of North Carolina wanted and was selling every moment of every day statewide fracking and offshore wells all over Cape Hatteras. He was of course pro-business but lacked the insight to see what was clear- that massive capital going into an industry whose market cap to the total market cap was at all time highs. Same as tech in the late 1990's because profits didn't justify anything of the sort. We average people around here were saying, "We will have abandoned oil rigs everywhere the eye can see." The gov was an economic idiot...Dancing With The Stars was his game. Today? So far away from too much capital chasing energy -- as except for reading this board that's occasionally mentioning energy I still see a lot of interest still in stuff like bitcoin...it is the conversation. Nothing about energy - and the energy market cap to total market cap is...

As far as health and diet? A guy named Marshall Johnson who ran the stock broker firm McDaniel Lewis and Company out of Greensboro NC put every client who was willing into Berkshire stock. This was the late 1970's. Many in my family, a bunch of very stable and reasonable people, chose somewhere along the line to go "diet perfect" or what I would call "diet latest trend for longevity" and such. The tendency is to switch up some along the way, new things come and obsessions go there...the text messages and emails flow while meals together get either delicate or downright funny. So too much money (Marshall helped a bunch of his clients get there compared to most people) and too much free time (which comes with the money) means a trend towards going psycho. Skinner maybe? Then more age comes, same ole health problems come for the diet perfect bunch and... ...things wane, there's less diet intensity. Also had a few do the extreme religion thing, or extreme exercise (that's me!) thing. Age just ravages all the life perfect themes. What I would do? Don't get fat! Don't drink too much...but drink! Don't smoke of course. And go to the damn doctor. Yep do all the life perfect themes, diet, exercise, religion, whatever.... but be modest and accept that long life is science based and genetic for the most part. Again as my cousin says, "Life at best is like a slow airplane crash....you may as well enjoy the ride."

Same mental state here. But I bought some home gym machines 20 years ago (I'm 68) and put them in the basement. We use them regularly and with age I easily see why strength training is huge as to staying capable to live vibrantly and independently. So down I go...not smiling but with all kinds of audio, video, etc. to do a 30 minute thing that makes a huge difference.

I've been an Allegany shareholder for a long time. I think, but am not sure, that they have a "Markel Ventures" type thing going on also. I think this part of their business is about half (based on revenue) the size of the insurance division. Investments are about double equity too, so some focus and maybe a change or two will come from the investment portfolio. Or Buffett may like what they have and are doing, I don't know.

Buffett has learned to love growth stocks but also when there is reluctant capital he in my opinion gets downright excited to be there. I'll wager he's aware of some long term probabilities that have got him quite revved up. Energy is his theme right now.

68 and I can tell you there is ever-increasing processing decline going on with me. I am physically fit, will compete in the USA Cycling 60-and-over mountain bike national championships this year probably for the last time. So I have game here, I'm in the thick of it. I helped write along with 5 others a 20 page document in the late 1990's that we titled, "The 12 Ways GE Misleads Investors." Basically a presentation on the corruption of Jack Welch's accounting which all of us today consider the largest financial fraud in US history. We all spent hundreds of hours on this work. Today? Not a snowballs chance in hell I could energy-up or think enough to do what I did with the GE report. I also don't pull the family kids behind the wakeboard or ski boats any longer (I do pull my wife) because there is too much stimulation and I'm not quick enough to process it all. So yes decline is inevitable, but in my case I just don't quit...I constantly modify and yes I reduce all things slowly but surely. But I own 300 stocks and one of the reasons I do this is to keep up with life's happenings. I also watch Jim Cramer a couple times and week, my wife and I enjoy that. No, not for stock tips but to keep up with the new era businesses and such. Live long and participate is one nearly 100% way to do well in the market of stocks, actually you'll likely do very well, in the stock market. This model does have a pretty good size following- diversify and hold- but you won't read much online about it...you won't find many that promote it. There's no reward or low fees involved- you can't build ego with it with others- so it isn't going to be presented and sold by too many. But it works astoundingly well. My parents died in 1969 and 1975, I have several 100 bagger stocks from the small inheritance I received. I own some Norfolk Southern stock, I got a tiny bit my grandfather bought. It passed through my grandmother, my dad, then me. I think it is 81 years now in the family...maybe 82. My CPA friend who is into compounding figures says we've gotten 11% annual over that 80 plus years. Life is great if you can stand it. Rambling some.

Talked to my nephew last night at the kids soccer game. Sales at the builders supply are up 45% year-over-year and holding steady, this includes significant lowering of lumber prices which have now processed through their pricing. The millwork business year-over-year is also up about the same and holding steady. While talking the mayor stops by and says that all the former furniture factories that once employed 14,000 here are now used to some degree and some are fully occupied. Egger Wood Products is now built and of course literally a huge operation for a 170,000 community. I have 3 young people in my family in process of marriage and home buying. House prices and rates, we will see. Lots of people putting 4 or 5 extra dead bolts on the door, writing with the most certainty and absolutes,not probability, I've seen in a while- that it is all over but the tears and misery sure to come for years and years.

I had started a business and borrowed $500,000 in 1980. By 1982 I told my banker, "I can't make those payments on time." His reply was, "Don't worry, nobody else is either." A very tough go of it back then. Those loving attention in our media urging caution (that's substitute wording for Greg's more accurate description that they are stomping the panic button repeatedly) are getting exactly what they want...attention. Does it help you as an investor? Only you can make that call. This terrible time was in the future during 2021's euphoria. Some predicted it, but most who did have been predicting it for a decade or longer...some 2 and 3 decades, maybe more. Old dealraker thinks three things: 1) Financial repression has been ongoing...and is going to get far worse. 2) The world will look to collapse, but won't, and the process timeline can be short or long. 3) So given a belief in 1) and 2) above, it is probably best to choose a starting point for your investments knowing that the odds are about a trillion to one you will be pissed off in a big way that you missed the bottom by miles and miles all while the media will find one person who they claim nailed that bottom. If you are typically human like me, you will have so much envy of the perfect timing hero the media choses you might just beat your own head in.

Somewhere along the line our club voted to establish a 4 person investment committee to recommend stocks to the rest of the members (to be bought and sold), then we'd vote on those buys/sells. We did that primarily because most of the members enjoyed the club but were older and had no energy/interest in doing much work. Keep in mind these guys are not poor, they all know one another, and the atmosphere while at times had some jousting so to speak....well it is a wonderful setting where anything within reason is forgiven and accepted. We were absolutely "value" focused through the years although in the early 1990's we did buy some tech stocks like EMC, Cisco, and Intel, etc at very reasonable PE's (below 20) that were growing fast. We failed to sell a lot of them anywhere close to their peaks so... In the end we bought EMC at a split adjusted less than $1 per share and it went to $105! Yes 105. We ended up selling it at $7. Yes all the way down to $7. We too (not me, I never owned it personally and thought we should sell that one) got fearful of selling things going up at 50% a year! We ended up selling Cisco at $12 after it sold for $82 (we did well, our basis was $4 or so). For your humor, at one point we had averaged 35% a year for 7 or so years...only to eventually (after 10 years) do even with Mr. Market! LOL!!! That is our system and for us it works ok and nobody has challenged it for the last 25 years.

I think I remember that Parsad is invested now in General Electric. Today I'm going to buy the stock simply to be contrary because it has been years since I've followed (and criticized) managment. If I am correct I wish Parsad would write about GE as I'd really enjoy getting in to the businesses and valuations...but I'm not over energetic now.

Speaking of buying stocks, I believe in diversification myself. No Buffett/Munger here. Why diversify? I grew up in a small town in the middle of North Carolina. My family, and by "my family" I mean grandparents, uncles, aunts, and great uncles were in the newspaper business, a.m. radio station business, the two largest (in the world) bedroom furniture businesses, building supplies businesses, and the oil delivery business. Newspaper was sold to NY Times for $4 mil and today has zero value; 2nd largest bedroom furniture maker bought by Burlington Industries for $25 mil in the late 60's and went to zero; largest bedroom furniture business sold to Masco around 2000 for over $500 million and later sold to Sun Capital Partners for...(yes, true) $25 mil; the a.m. radio stations went from being worth $250k per location to virtually zero when f.m. radio got popular...and ever-so-slightly recovered; the building supply businesses got the living hell beat out of them (fortunately sold all but one well-managed location) by a combo of Lowes/Home Depot, Carter's, and business cycles; the oil delivery got sold early. So KABOOM! All the businesses I grew up watching family run got annihilated. I got lucky going into the insurance business, I hadn't a clue. What am I buying today? Still adding to the energy businesses I own. Bird in hand vs bird in bush for me. I do own Google and Facebook and about 300 other stocks, but I'm not certain about them enough to load up on any one, or ten for that matter. The one business mentioned on here that I struggle with is Joe. I've owned companies like Joe before, asset rich companies selling for fractions of "worth" and such. Pretty much got poor, very poor outcomes. The worst was NC Railroad which owned all the rail right-of-way from Charlotte through the Raleigh area to Goldsboro. Norfolk had a lease on it that was due to be renewed and the land was appraised for x amount by independent appraisers. Stock never got anywhere close to that appraisal, not even 30% of it. In the end the state of NC owned the majority of the stock and it got bought from us (by the state of NC) for less than 25% of appraised value. They leased it again long term to Norfolk saying, "That's what's best for us in NC." They were correct of course. Many say the "appraised value" was half the real value, and I pretty much agree. Probably the most valuable real estate asset fathomable in our area as in places in the big cities it was several hundred, yes hundred, feet wide. Assets versus on-going free cash flow. I like AJ Gallagher, the free cash flow is ALWAYS far more than the "earnings". Rambling.

I know my timeframe and price divergence tolerances are both far larger than most, one thing that seems to come often as to BAM is that Bruce Flatt gives shareholders his view of the per share stock value. Often the stock is selling at the time he gives these talks for far less than his figure - only to then fall signficantly to 50% of his figures. I've owned Brookfield, the old Brascan, nearly 30 years now and it certainly has been something I've enjoyed. Not yet though do I have a lot of trust in Bruce Flatt, I find him and the actions/words of management at times very annoying and at times plain unprofessional. I get a lot of "hell buddy, sell the stock if you feel that way" replies when I write this sort of thing. Problem is I have the same view of many of my stocks...lord help my opinon of some of Norfolk Southern's managment decisions is as low as it goes. I don't sell stocks, I enjoy business amongst the agitation. Participating in life, rather than cowering in fear, does keep you thriving in some ways. The one business, by far my largest holding, I don't get annoyed with is AJ Gallagher. We merged with them nearly 30 years ago now and the outcome has been...let's say...phenomenal. My local compeitior who was beating our butts still owns and runs his brokerage. He has literally thrived for these last 30 years since I bailed. But we merger bunch have done far better than him financially. I'm not the brightest but I'm smart enough in some businesses to know who the smart people are...and it wasn't me! First thing this morning, not quite early enough, I held my nose... ...and bought a tad more BAM! AHHHHHHHH!!! My wife says, "You HATE those guys!" LOL. But AJ only sells cheap for short periods and those seem to never come any longer. Oh my though, what a great business for inflation.

The last thing I will mention in my era (LOL) of tirades...that is: beware of the value investor. Ah! That'll piss off a few. But... We had/have this guy in our club, he tended to gravitate towards speaking up the most and inevitably being in control simply because most just didn't want to ruffle fethers...nice guys. He was, most of the time...a huge percentage of time, absolutely correct. Correct about the stocks discussed and market too. But while he was bright in math he didn't use math in daily common sense as to investing. Smart guy, but with a quirk or two maybe. The one small problem? We'd have these bull markets and good economy periods. And in the years when he was in charge we would begin holding greater amounts of cash as the markets escalated...to the point of being 75% cash in later years of those "incorrect" rising charts. And in the end? Again, was almost always right that the market had been ahead of itself. Then the market falls 25% and he's all excited to go gradually back in, and during the years he was pres of the club that's precisely what we'd do. We'd go gradually back in... ...after being nearly "all out" during the last 100% gain we'd start "back in" once the market would fall 20-25%. SMART! or SMART??? And we underperformed and that underperformance compounded under his 10 years of being president. Members appreciated the work he did (they loved the club atmosphere but sure-as-hell didn't want to work hard like he did- so heck yea let him be in charge!) but his use of math didn't work. Companies grew earnings and paid divy's while being over-valued, they grew into their 2-3 years ago over-valued stock prices and then some...for years and years... ...while we didn't own them. And these companies got long time periods of high PE multiples, not perpetual of course but such that they lasted a long, long, long time. Yes we got back into the markets on the downswings but we didn't do well with that "sell-to-cash then wait" model. What came of our dealing with his model his presidency? The club voted 100% to stay 100% invested now and forevermore. Over time the club has slightly outperformed Mr. Market and that's most 5-10-15-20 and so forth. No super-investment record but very decent.

So this older man (he was in his 80's when I was in my late 20's and lived to 96) in my investment club named Roby would often say when we proposed buying a stock, "BEEN A GOOD ONE FOR ME!" Over and over again I heard him say this...I finally figured out he owned shares of every well known business listed on the exchanges. And here's what Roby would say during the downs: "FASTEST DOWN, FASTEST UP" or "GOES DOWN A LONG TIME...GOES UP A LONG TIME." Deep stock analysis right there baby! Roby owned a small 3 truck snack distribution business. 25 years ago he left $10 million to the local hospice organization; 1 mil to the YMCA; and 1 mil to United Way.

What I found interesting just a couple of years ago on my twitter feed (I gotta do somethng now that my physical outputs require such long downtimes) it seems an endless number of men and women were posting their list of owned stocks and every single one of those lists was the same bunch of companies. Netflix, Paypal, Google, Apple, Datadog, Snowflake...and every one of the posters was "my forever one decision stocks." This "list my growthies" peaked in October of 2021, don't much see it now. Same bunch is in a pretty good state of panic today. I'm more in the camp of thinking of what my stocks/businesses are worth and being annoyed by both the too high and too low valuations, but not so much as to panic sell or valuation sell, or whatever. Some things I own have spend a decade being overvalued, and even today are that way. But I don't sell them because they often surprise me, yea they are worth far more than my expertise opinionated mind would give them credit for. Some, like Berkshire, tend to stay far-far-far below what my expertise (being very sarcastic here) mind-set says it is worth. But anyway, not sure how you get where you want to go by not being in business. Safe comfy cash is sort of a holiday I guesss, but holidays don't pay well.