skanjete

The position of Ukraine and Zelensky is completely logical and rational. Trump fully follows Putin’s line: Ukraine must cede the Russian-speaking territories and become fully neutral. This means no EU or NATO membership and demilitarization (a military limited to a maximum of 85,000 troops, missiles with a maximum range of 40 km, etc.). So, if no security guarantees are attached to this, Ukraine would be completely defenseless in the future, entirely at the mercy of Russia’s goodwill. Trump wants a quick peace, he wants Ukraine’s minerals, but he refuses to provide any security guarantees to Ukraine. During the argument in the White House, this was clearly the key issue. If you listen carefully, you’ll hear that Zelensky is demanding nothing but security guarantees—something Trump and Vance are unwilling to grant him. If Zelensky were to accept the deal Trump is putting on the table, he would be utterly naive. Who would willingly give up all their leverage without any guarantees? For Ukraine, this would be nothing less than total and unconditional surrender. Given the situation on the battlefield and Ukraine’s position in Europe, it seems that Zelensky and Ukraine still have other options besides complete and unconditional capitulation... so his response is not driven by a lust for war or territorial demands, but is his only option at the moment... I really don't envy that man's position !

It's just a fact that the US made NATO expand up to the borders of Russia. Compare Russia's reaction in this to that of the USA when the USSR wanted to install missiles on Cuba in 1962. The world never came closer to nuclear extinction than during that crisis.

Correct! On Friday, NATO effectively ceased to exist. It became clear that the US does not keep its promises, meaning Europe can no longer rely on the US to fulfill its NATO obligations—regardless of who is president. If the EU can muster enough unity and set aside internal disagreements for the sake of common security, it could form a unified army. The statements made on Sunday after the London summit reflect this intent. This will be a painful process for Europe's welfare states, requiring a serious shift in priorities. However, if they succeed (within a decade?), the geopolitical landscape will change significantly: Europe will become independent in terms of security, rendering NATO obsolete. US influence over Europe will drastically decline. The US will no longer be able to count on European allies in a potential conflict with China. US global influence will weaken regardless, as it has proven to be an unreliable partner. Countries balancing between Chinese and Western influence—such as resource-rich African nations—are more likely to lean toward China than the US. I can think of a few reasons why Trump is throwing Ukraine under the bus—perhaps to pull Russia away from China's sphere of influence or to secure Russian support for his own territorial ambitions. But in the long run, he is isolating the US, which will prove catastrophic for its global influence and position.

It is astonishing that no one here is talking about the incredible cynicism and hypocrisy that America is displaying regarding Ukraine. To fully understand the situation, we need to go back to the collapse of the USSR in 1991. When Ukraine became independent, it was a significant nuclear power since many of the USSR’s nuclear weapons were stationed in Ukraine, aimed at the West. The West, led by the USA, did not want Ukraine to become a new nuclear power and insisted that Ukraine give up its nuclear weapons and transfer them to Russia, along with strategic bombers (which are now bombing Ukraine). To persuade Ukraine, security guarantees were provided by the USA, the UK, France, and Russia. Ukraine was supposed to remain neutral, as laid out in the Budapest Memorandum of 1994. https://en.wikipedia.org/wiki/Budapest_Memorandum However, during the Bucharest Summit in April 2008, NATO made a statement promising future membership for Ukraine and Georgia. https://en.wikipedia.org/wiki/Ukraine–NATO_relations#:~:text=At the NATO summit in,Ukraine would eventually become members. This push came from the United States, despite strong opposition from Germany (Merkel) and France (Sarkozy), who feared it would undermine relations with Russia and weaken NATO rather than strengthen it. But the Americans pushed forward, despite Putin making it clear he would never allow it. In 2008, during the Summer Olympics, Russia invaded Georgia to restore control. In Ukraine, they attempted a political strategy by supporting a pro-Russian president. When that did not seem to work, things escalated with the war and the annexation of Crimea in 2014. The rest of the history is well known. The United States played a clear role in provoking Russia, despite the Budapest Memorandum and despite European objections. They ignored Putin’s clear warnings that he would never accept this. And to be clear: this happened under both Democratic and Republican presidents. Now, after 15 years, it has become evident what a catastrophic policy this was. America is pulling back, conceding to Russia on all fronts, while Ukraine is the biggest victim. It has lost 20% of its territory, its economy is devastated, its population is traumatized, and it no longer has the security guarantees it had under the Budapest Memorandum. And now the US is trying to shift the responsibility and blame onto the victim... For the sake of clarity: I do not consider myself a party to this conflict. I am not a citizen of Ukraine, Russia, the United States, the UK, Germany, or France. I see myself as an objective observer.

The most valuable advantage the USA has is that the US$ is the reserve currency of the world. That's why the rest of the world is for a great part financing the deficits in the USA. The USA imports goods and exports promesses to the rest of the world. This fact is a source of endless power and wealth. If things are played right, you would think this could go on indefinitely. As a thought experiment, one could wonder what could possible kill the reserve status of the US$? - a default would do the trick of course, but this seems very improbable (although with the recurring debt ceiling problems....) - hampering international trade would also provide a headwind. - big, growing and powerful enemies who have international ambitions and influence and also eye reserve currency status - Different enemies could team up and trade within each other with other currencies than de US$. - The USA could alienate allies, who would be less incentivised to continu using US$ in their trade with other currency blocs. - Certainly if these allies are an European bloc with a common currency with some reserve status characteristics of its own. - Suppose some of those opposing countries or blocs come knocking at Uncle Sams door with the promesses they got from him and actually ask the goods for their paper, the value of the US$ could drop like a stone. Actually, if you think about it, current American isolationism trends could set of one or more of these causes in motion at the same time. Thus current policy could go a long way destroying the reserve currency status of the US$, herewith the value of the US$ and ultimately the US world Power.

Wise words!! I was in a similar situation. My results were actually a lot less spectacular when I started as a full time investor than before as an employee. CAGR results where lower, but so was volatility in a great way. I think this is because of a few reasons : - when you start with almost nothing and you're young and employed, you basically have nothing to lose. You can take great risks in the market (as long as you stay off leverage), because you have a steady income and many years left to build up again. - when you start investing fulltime, this insurance disappears. At that point, you normally already have some capital, but you can't afford to lose in a big way, because you depend on it and can't build it up again in an easy way. So you become a lot more risk sensitive. - In general it is easy to spot opportunity, but a lot harder to quantify risks. So the more you study, the more you become aware of the risks involved. In my case, this led me to be wary of jumping on risky opportunities. You're completely right about the loneliness. It is something I didn't realise at the moment I decided to do it fulltime, but soon realised. It was a real challenge to cope with it. The work itself is very interesting and you learn a lot, but you can't communicate about it with the people around you because it is so abstract. They can't really understand what you're doing all the time. So your head fills up with insights and views about the world, but it is very difficult to share it and communicate about it. My children didn't really know what to say when people asked what daddy did for work. After a few years, you start to feel like you're disconnected from the real world and live in another dimension. I solved this problem by starting to work again as a consultant on a part time basis. This brought me back to the real work on my own terms. I could manage my time and could study investing when I felt like it. When my head blocked I could do the consulting work and interact with actual humans again... My life was a lot busier and I had to work intensily, but my live was more in balance. Actually my investing results improved, although I never lost that risk awareness anymore. After a few years, through my consulting work I got the opportunity to buy a company in distress that I was turning around. So now I'm in a complete different situation again : the work at the company at times is intense and frustrates me, but studying investments calms my nerves and gives me perspective on where to go with the company...

I had even more respect for Charlie than for Warren... RIP "It's not supposed to be easy. Anyone who finds it easy is stupid"

what he's saying is : if you have stable cash flows, you take on leverage when money it's cheap and pay it back at a discount when the sh*t hits the fan.

Concerning AEP : Last week, Madam Lim Siew Kim, who through Genton controlls about 51% of the shares stepped down from her chairman role and board, as well as the board of all the subsidiaries. Does anyone have an idea what this could mean? I have an idea, but I don't want to biase anyone. PS. the share is very, very cheap at the moment.

You've got to take the dividends over the period into account, and the payout ratio used to be more important than now. In any case, it's clear that AEP has a very respectable track record, although quite volatile. But what are you actually trying to prove here?

@Dinar : did you ever see some cash from Berkshire? AEP shareholders got something else : the stock price end of 2000 was 0,43£ (with net debt), now 8,5£ (with net cash). The two are not to be compared, but AEP had a way better return than Berkshire over these years. About the cash : AEP is steadily investing the cash that comes in. If you take into account the minorities, they had net debt in 12 of the 21 years. That being said, management could indeed do some more effort to get a correct valuation from the market.

One of the most insane valuations is Anglo Eastern Plantations : Marketcap : 410m US$ Net cash : >252m US$ EBITDA : +/- 150m US$

The letter certainly isn't what is was anymore. It used to be a platform for Buffett's teachings, but I have the impression that Buffett the teacher is gone. This has been the case for some years now. Up to say 5 years ago, the letters always contained some in-depth analysis of a subject from an original and very rational angle. There was always something to be learned, but this is no longer the case. Actually, you would learn more today if you read his 1980 letter (a great one about impact of inflation on equity values) instead of his 2020 letter. Same with his interviews. His answers are more vague, more predictable than they used to be and very often repeat expressions and viewpoints from the past. Actually, Charlie kept his originality somewhat longer, but I had the same impression from his Q&A in the DJCO AGM. It's a pity, but that's life.

You have to appreciate the irony of it all : with their wild speculation the Robinhood investors are cutting off the branch they're sitting on. They are destroying the means (Robinhood) they're using to "destroy the hedge funds and the system" and so ultimately themselves. The brokers halt trading to protect their business and thus their clients. But these clients are now outraged because they think the brokers are just protecting the enemy and don't realize THEY are being protected from their own stupidity. This whole story makes me even more concerned about the market than I already was. And I'm already sitting on 50% cash.

Could it be that Buffett is hedging against a Biden election win? If Biden wins the presidency it's probable the tax cuts from Trump will be reversed. So it could make sense to cristallise the historic profits in some stocks before year end. By selling f.e. WFC, he is offsetting the huge wins in WFC with losses elsewhere while at the same time keeping his bank exposure by buying more of BAC, a bank which he intends to keep anyways.

Writser, I recently sold out as well. The Belize economy is very much depending on tourism, and the current Covid 19 crisis will no doubt cause a lot of trouble. I can't really assess whether the take-over from Scotiabank is a transaction out of strength or weakness. In 2009 they used a similar tactic with a cashbox in Bermuda, (which offered a great merger workout opportunity at the time), but that was more out of survival than anything else.

It's striking how people try to find reasons to rationalise their own bias. Munger's message in the interview doesn't align with someone's bullish view, so their reflex is to find reasons why Munger is wrong and they're right. If someone like Munger comes to tell me he's got a different opinion than me, my first reflex would be : "Ouch, where did I go wrong?"

Terry Smith is a good investor. Seemingly the best part of the company he managed for years (Tullet Prebon) was the pension fund. ;-) The results for Fundsmith have been attractive since inception. But it seems a big part of the results came mainly from valuation and multiple expansion of somewhat higher company profits. So, it looks a little like the nifty fifty era. This thing could go in reverse as well I'm afraid.

It's very dangerous to try to shrug off Munger's and probably Buffett's prudence or conservatism as a consequence of their age or personal financial needs or even legacy. If the situation would call for it, I am certain they would swing for the fences. Look at what Buffett did in september 2008 or Munger in March 2009. All-in in a very short period of time. I agree with them that the right time for investment hasn't come yet. The risk/reward just isn't there. A few weeks ago we had a low point, and some traders thought there was a good trade to be made, and they did, but Buffett and Munger aren't traders. They buy to keep. And from that perspective, the time to buy hasn't come yet. I've lived through quite a few cycles, and have never seen a true bottom with market sentiment as it is right now. I get constantly phone calls from people who have zero experience in the stock market with questions how they can and in what they have to invest. Brokers can't handle the applications from small investors and I read a broker had to cancel 40% of the applications because the appliers didn't have the necessary knowlegde to open an account. At a true bottom, almost nobody, and certainly no amateurs are interested in stepping in. I mean, look at the S&P500. About 10% lower YTD. I can't comprehend this. The economic damage is real. Talk to a business owner instead of a stock trader and you get a real view of what is happening. There is an enormous value destruction going on, and no Fed or government is going to compensate this. It's a simple fact that people in lockdown aren't producing any output anymore. That output is gone forever and won't be compensated, no matter how much money they print. Millions of people and businesses are surviving right now by eating up their reserves. These reserves are gone and not available anymore to consume or to invest after the crisis. The compounding effect in the economy is working in reverse at the moment, and it is not that easy to turn it around again. So I think the economic consequences will be felt long after the virus has been contained. In these circumstances, a 10% correction from the rosy times earlier this year look a little paltry. Besides, I can't image a bull market of more than 10 years stops with a crash of 35%, only to resume 4 weeks thereafter. The imbalances are not cleansed out of the system. Look at Tesla : everything comes to a standstill, but the share price is up 70% YTD? So we have time to see this thing evolve. There's certainly no need to rush in and the true long term opportunities will come. In this, I am completely on Munger's page.

Thank you for posting this. This is really fundamental and well thought-through. There were some considerations I hadn't thought about before and were illuminating.

It's a pity, really. I had a lot of respect for him. But now, his excellent long term track record will be greatly diminished because of an ill-timed exit at the worst possible time.

They published half year results yesterday. A half year profit of 6p/sh! Last year when we discussed the shares and I highlighted the potential P/E of 1, they were at 8p/sh. Since then Midway Investments has been spun of. These contain the rights for a payout from the Belizean government of 33p/sh, (if they ever pay of course). The stub quotes today at 21p/sh, still at a non-demanding P/E of 1,75!! So we're looking at a 6-bagger over the course of 1 year which still trades at a P/E of 1,75 today! This must have been the cheapest name I ever saw... Yesterday, CIHL published interim results : a half year profit of 9,2p/share! Over the last 12 months about 15p/sh of net profit. They also declared an interim divident of about 5,4p/sh, or about 33% on the last share price before the announcement. Non surprisingly, the share price doubled on the news. I don't think I'll ever see such a huge difference between price and value again... Some people ask themselves if value investing is still relevant these days : I do think so! This was/is a great example.

The financial data used to be OK, but with the current format it's total crap. I canceled my subscription.

OK, thanks a lot!!!

Does anyone know why the amounts of stocks Berkshire holds and lists on page 12 don't seem to match (in most cases) the amounts as listed in their 13F on Q42018?