KinAlberta

Has anyone read this? The Forgotten Depression: 1921: The Crash That Cured Itself Hardcover – Nov 11 2014 by James Grant (Author) http://www.amazon.ca/The-Forgotten-Depression-Crash-Itself/dp/1451686455 On another note, and not Fed related, but govt related, I've long been interested in the impact of MTR changes in the 1920s on the investment climate of the day. Some trivia here... A long good read. Possibly highly biased.

I'm actually going to look up some of these threads. "Name one product/service that you love and one that you hate" Scuttlebutt investing! How exactly did Warren Buffett first discover Sees Candy?

I do miss Morgan and his FunShares. http://www.nytimes.com/1995/02/18/your-money/18iht-fun.html

Well sorry folks. I started the unfunded, unfounded, confounded liabilities on pensions thread (in General Discussions). My background for far too many years was valuations (derivatives, mortgages, some PE, etc) concerning 10+ figure amounts. It gets pretty mind numbing and myopic so my interests always wandered into the more macro territory. Plus, I've followed Buffett closely since the mid 1980s and owned BRK since the early 1990s and so his interests naturally become contagious and became mine and so I see them as worthy of debate. For instance, understanding institutional behaviour, one of his key 'job requirements' by the way, is also fascinating to me. Macro meandering but interesting nonetheless. In the 70s Buffett talked a few times about pension return projections and pension behaviour. Being in the field made it a natural interest to me.

Regarding bonds - yes, probably some will be held to maturity. When I was young I thought it made sense to own a balanced mutual fund. However, when the market dropped I found that the fund managers just rode out the volatility. I thought, well, I could do that - without paying a premium MER for a never changing asset allocation. So, would you pay a pension fund manager a premium salary to buy bonds and hold them to maturity despite record low interest rates? To essentially ignore valuations while possibly taking performance bonuses or at least not getting fired because they are matching their policy benchmarks? Moreover, at this time they are sitting on unfunded liabilities, so if interest rates rise to more historical levels, what will happen to their liability numbers?

Now that is an interesting article! It says more about the author than the subject. It's like the question: - - - - - - - - - - - - - - - - - "Is the cup half empty or half full?" - - - - - - - - - - - - - - - - - with "empty" representing pessimism and "full" representing optimism. Well, all those hypothetical cups are likely full: half air and half water. And since it's a hypothetical question, and we are "value investors", let us reflect on the fact that you can live a long time without water but only minutes without air. :-) So, again, as value investors all know, it's the hidden, invisible or overlooked quantities that can in the right circumstances prove far more valuable than the obvious. Those people seeing and walking away from "half empty" cups may someday be gasping breaths of disbelief in their missed opportunities. People hearing the half full half empty question should maybe put more thought into the original premise of the inventor than into thought about the question itself, and people reading the article above need to think more about the original premise of the author of this article too. That author needs to realize that India's cup of today, like China's in the early 1980s, is finally being seen as full, and not just perceived as half empty.

Buffett is essentially suggesting another step be taken towards a national "guaranteed annual income". Coincidentally, or is it part of a trend, here in my Province of Alberta, Canada the new left leaning political party has promised an increase in the minimum wage to $15/hr.

The unfunded liability issue is fascinating to me and I have a somewhat parallel political analogy to it: In the early 1970s in my province of Alberta, Canada a highly intelligent, forward thinking, Harvard educated Peter Lougheed and his Progressive Conservatives had swept into power and created the "Heritage Savings Trust Fund" (HSTF) to bank billions upon billions of dollars of royalties on the depleting provincially owned oil. It was a fund for the future - for rainy days - for when selling high margin oil is no longer an option. Well, that didn't last long and the contributions were soon capped by following leaders and the fund has barely grown over the last few decades. Humorously, in the '80s era of low oil prices and provincial recession, bumper stickers on cars read: "Please God let there be another oil boom and this time we won't piss it all away." Then in the 2000's, God answered our prayers and we had that new oil boom and so - we "pissed" it all away - again. So now to pensions, a system set up to handle what are essentially royalties on our depleting ability to work, to earn money from our labours. Just as our ability to sell our higher margin oil here in Alberta will come to an end, our ability to sell our higher margin labour will eventually come to an end. So, both individuals and pension administrators require some long-term, actuarial thinking to anticipate future needs. Most individuals can't do it well so experts are hired and paid extremely well to do it for us as pension administrators. Well, well, well... here we are with record low interest rates which have handed pension funds an unbelievable, "once in a lifetime" (if not two), return on their bond allocations. We've also seen an amazing recovery since 2008 on equity allocations. In fact, compared to portfolio return expectations up to the 1980s, I imagine both bond and equity returns have been unexpectedly generous. So to read that many pensions, with their long time horizons, have unfunded liabilities is VERY interesting if not very astounding. So if the unfunded liabilities are not portfolio returns what are they from? In my part of the world pensions are generally blaming unfunded liabilities on increased longevity and baby boomers. Yet, I've heard of the baby boom issue all my life - since I was a kid. In fact I once Googled baby boomers and pensions and recall finding news articles dating back to the early 1970s raising the issue of the future impact of the baby boomers on social security. In the early 80s in my university courses the baby boom generation was textbook material. As for increased longevity, I can't believe that that hasn't also been expected for a few generations as well. So there should have been no surprises on these two fronts. So, folks, if the problem isn't returns and it's not liability forecasting, what is it? What's wrong with the pension system to allow unfunded liability crises to develop? I would say it's a fundamental problem with those managing they system simply not doing their job, not doing what at the most basic level what they are paid to do. By the way, back to my analogy: Here in Alberta in the recent election, the electorate ignored the popular right leaning Wild Rose Party, and after an amazing 43 years of conservative rule under the Progressive Conservative Party, the electorate "fired" the incumbents en mass, and swept left leaning NDP party to power with a huge majority. Of course, this has all happened after oil prices collapsed and it's pretty much too late to save oil royalties for a rainy day and so we all now face austerity measures due to deficit spending and debt levels, no matter who is in power. That's what's wrong with democracy, we don't elect to avoid obvious pending failure, we penalize after failure. I imagine a lot of those running pensions today are counting on that fact of life to protect them from their own incompetence*. I can find articles like this (see below) going back years and years. In the 1970s Buffett was writing about pension problems! Now the problems are coming home to roost. I believe it was Peterson, before the Peterson Foundation, was saying around the year 2015 the US's social security issue would turn real and involve real money. * and those fearing socialist rule as a knee jerk, self-defense reaction to incompetence and dogma, should read about the history of social welfare Otto von Bismarck, Winston Churchill and Lloyd George and how they promoted social welfare to fend off socialism. Warren Buffett seems to get it too as evidenced by his latest anti-minimum wage but guaranteed gov't paid income suggestion. ....

I've closely followed Jeremy Grantham since the 1990s and years ago I started the Jeremy Grantham page on Wikipedia, eventually adding some select quotes to it. Now I see that that this board has periodically followed his writings and talks as well, I thought I'd create this thread to collect his insights in one place. I'll start with one excerpt from one of his 2008/2009 letters:

Yeah. A casino society? Cool Off Wall Street's Casino Game By Warren E. Buffett POSTED: December 08, 1986 http://articles.philly.com/1986-12-08/news/26067455_1_wall-street-mugger-speculators China Margin Lending: Extreme Edition http://blogs.wsj.com/moneybeat/2015/04/21/china-margin-lending-extreme-edition/ Mr. Buffett on the Stock Market The most celebrated of investors says stocks can't possibly meet the public's expectations. As for the Internet? He notes how few people got rich from two other transforming industries, auto and aviation. (FORTUNE Magazine) By Warren Buffett; Carol Loomis November 22, 1999 http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm

Interesting about Britain (see below). What other countries have deflationary stats?

A couple points. I'm not exactly sure I understand what your full point is above but I can say I have held BRK for well over 2 decades. Added to it several times. Sold a bit on a couple occasions. It has been my largest position in any single stock. I thought I would personally outperform it but generally I haven't, except for being mostly cash in 2008/09 and then buying back in in early 2009 - in fact adding BRK a day or so from its Mar 2009 bottom - when everyone was firing, or at least not hiring, the Buffett-Munger team. However when I first bought into Berkshire Hathaway I viewed it as more likely to generate a interest deposit like return because Buffett has already long been saying that his outperforming days we're numbered. I'd say the passive investment in a company via ETFs etc.) is important to be aware of because it indicates that it's pricing may be very susceptible to market greed and fear. The gold market drops and the big index components go with it as people sell out of their gold ETFs flooding the market with shares. ...and past performance is a bit of an indicator of the future in that it might reflect the durability the company and its franchise or resource base. Sales per employee is just another metric but employees come with costs like 'benefits' and pension liabilities. The nice company has high sales (and margins) per employee, per dollar of capital employed, etc.

If you read Buffett's article from the 1970s called How inflation Swindles the Equity Investor, you'll see that Buffett has clearly looked at macro or aggregate themes and sought to understand them well. Earlier and later writings of his also revealed a focus on macro perspectives into institutional behavior and aggregate institutional investment themes. His articles in Fortune in the late 1990s and early 2000s were discussions of macro themes. Also note his discussions the pension plans allocations of capital to equities or bonds or gold. Additionally, Buffett's description of derivatives as being Weapons of Mass Destruction (WMDs) is wholly focused on a macro theme. (As he stated then, he owned derivatives and would continue to buy them, but the major or systemic risk was very different than his individual risk.) Grantham, and other successful investors regularly focus on macro themes. Howard Marks even wrote a piece on the necessity of monitoring the macro environment. What brought me to this thread was the following article. A macro theme. Quite unexpected on my part as I would have assumed business in aggregate is being opportunistic in this environment of record low interest rates. Instead either poor credit access, a mediocre economy, or a case of fighting the last battle may be driving these results. Or some other condition as companies building their balance sheets in preparation of leveraging up at the last chance before or as rates rise? Or is it the simple arithmetic of looking at averages and not median company? To me, such macro themes are suggestive of future themes affecting international competitiveness, current and future capital spending booms, etc. Things to keep in the back of one's mind as a range of outcomes but not to incorporate into any buy/sell analysis.

Well, what a coincidence. I just posted this (below) to an old thread here. Anyway, following that quip about Buffett's secretary, I think you really need to watch this. Skip to 9 minute mark to here him talk about taxing the rich...

My guess is that the buyer will end up with a house across the street from either a museum or a bed and breakfast. I can't see Buffett having in his will anything about keeping the place now that prices have somewhat recovered - that would be dead money.

At about 9 minute mark Cooperman talks about Buffett and his 'tax the rich' idea. He talks about philanthropy, mentioning the fact that Buffett is giving his money to the Bill and Melinda Gates Foundation. I remember thinking how I thought that was not at all typical and infant almost unheard-of. From my experience, rich and super rich people stick their own name on a foundation - often even leaving off their spouse's name - and pass their wealth out that way. I think Cooperman is saying the same thing here. Anyway, for this thread, here's his tax the rich discussion: http://www.bloomberg.com/news/videos/2015-05-07/leon-cooperman-says-omega-has-bought-google-shares

Does FFH need protracted conditions for its bets to begin to pay off? (As in the 1930s or Japan) Couldn't a recession and/or a major market decline possibly price in to the market the necessary "payoff" expectations, which of course could completely reverse six months later sending the world the opposite direction?

Wow! Thanks for posting. Well, leveraged or not, in a significant downturn there will be a lot of forced selling so this only seems designed to set up a good chunk of the population for calamity and the handing over much of their wealth to a few survivors. Bringing back the old dynasties maybe. Also isn't NYSE margin at record levels?

This one? (see below)... Rachel Notley's energy position is apparently much more practical and closer to that of Peter Lougheed than some socialist fear mongers would have you believe.

If you own Berkshire Hathaway, do you save its annual reports? Also, what other annual reports, etc. do you save?

Wouldn't it be wonderful for Buffett to have a moment where people don't dwell incessantly on his demise? (I've owned BRK since the early 1990s and of course have thought about Buffett leaving BRK, but the endless discussions of the topic have become so tired, repetitive and mindless that's its sad.)

Here's one. Not a book but a fairly long article... it provides and alternate view of America's economic history and east Asia today... Considering Japan's problems since it was written and China's success since - this old article is really worth the quick read.

CBC Radio did a nice piece on it. The secret history of Monopoly Monday February 16, 2015 http://www.cbc.ca/radio/thecurrent/korean-adoptees-return-home-civil-rights-in-ferguson-and-the-secrets-of-monopoly-1.2961822/the-secret-history-of-monopoly-1.2961885

^Agree on the Klarman speculation that Novagold may have been seen as cheap insurance. Regarding Barrick (below), maybe it should have read... "its senior leaders’ personal [ future ] wealth..."

A very interesting read... Any thoughts on monopolistic, political and other non-free-market pricing behavior we may face in the future? http://www.nytimes.com/2015/04/24/us/cash-flowed-to-clinton-foundation-as-russians-pressed-for-control-of-uranium-company.html?action=click&contentCollection=Asia%20Pacific&module=MostEmailed&version=Full&region=Marginalia&src=me&pgtype=article