Parsad

Yes. Being prepared for outlier events is something that flies against modern portfolio theory or insurance actuarial practices. Both tend to focus on the remote possibilities being remote and probably won't affect most people most of the time. Like a massive earthquake in the Cascadian belt that happens only once every 500 years. But often, they even tend to ignore things that may happen once every 20-30 years because it hasn't happened in a generation or they ignore the accumulation of risk. The psychology leaves you bewildered, but it is real. Cheers!

Buffett and Watsa had not thought about Nuclear/Chemical/Biological weapons before 9/11. It was after 9/11 that the insurance industry started including NCB events as exclusions from reinsurance policies. If there had been an NCB event rather than planes hitting targets, the losses to the insurance industry would have been so large that the government would have needed to step in and backstop the industry. Many insurers would have gone bankrupt...certainly FFH and possibly BRK. Another outlier event was the deflationary pressures exemplified by zero interest rates in Japan. Many insurers went bankrupt in Japan, especially life insurers, because they never imagined they would not be able to hit their target of 4% guaranteed on whole life policies. Guess what? The most unimaginable thing in 100 years happened...25 years of zero percent interest rates! Lastly, even though FFH and BRK were ready for the collapse of the real estate bubble and credit derivatives in 2008/2009, if the U.S. government and Western economies had not stepped in like they did, FFH certainly would have fallen and BRK probably would have as well. It would have been the last to fall, but it probably would have fallen as Buffett once stated. Even the CDS investments would have only delayed the inevitable at FFH with a collapse of the insurance and financial sector. We would have been facing something worse than the Great Depression. Of course governments stepped in...but if they had not moved as quick as they did or in such large scale, the outcome would not have been as rosy at best. Cheers!

You are correct, sir! Cheers! https://www.fairfax.ca/press-releases/fairfax-launches-c700-million-senior-notes-offering-11-19-2024/?utm_source=press-release&utm_medium=email&utm_term=Wed+Nov+20+2024&utm_campaign=Fairfax+Launches+C%24700+Million+Senior+Notes+Offering

The only thing I would be wary about is that outlier events happen, especially in reinsurance. The investment thesis might not change, but an outlier event causes significant losses in a short period of time...think of an 8.5 earthquake hitting a major city on the West Coast. Or a biological attack on a major city. There is reinsurance coverage for losses or exclusions from things like a biological attack, but there may be unforeseen ancillary losses that fall within the scope of insurance contracts that could be devastating. For example, an 8.5 earthquake hitting Los Angeles...much of the losses would be spread among reinsurance policies...but if the loss is $750B-$1T, you can imagine that there might be 10% of ancillary losses claimed that insurers missed excluding on the original contracts. That's still a $75B-$100B hit to the industry that they didn't expect. While I'm sure Prem or Buffett are aware of far more outlier events than I could think of, it is the ones that they don't think of that worry me. Another great example was the use of derivatives by insurers back in 1999-2000 to 2007. It's why Buffett unwound thousands of derivatives contracts at GenRe when he acquired it...it's what led to AIG's downfall during the financial crisis. 99.99% of the industry and financial analysts had little clue on these financial "weapons of mass destruction!" That was a period where we also suffered from the stupidity of ARM loans and credit derivatives marked as AAA that were junk. Few were aware of this risk to the financial industry. So I hold enough of Fairfax or Berkshire where I'm comfortable with outlier events too, but not so much where I might be surprised one morning if one occurred. Cheers!

Yes, non-registered/taxable accounts don't fit the philosophy I espoused. For example, in my personal holding company, I buy dirt cheap stuff and I pretty much hold for the long-term. I may take some capital gains if they grow to massive proportions (like FFH and META did), but generally the capital coming in and allocated to other ideas tends to diversify the portfolio a bit and reduce any single stock from becoming too outsized over time. The other thing I started doing 3 years ago in my holding company was to allocate all new cash for investments to VOO (S&P500 ETF). Like I said, I don't need homeruns anymore, as nice as they are. I just need singles and doubles...so the S&P500 ETF is a cheap, no-brainer, where I can average in and get decent results long-term. Cheers!

All depends on temperament, time of life, desired return, etc. I don't know how old Modiva is, but when I was much younger, I would easily swing for the fences like that, because I didn't have as much money or had time to recover from such risk. But today at 55, comfortable and enjoying life, like you, I don't need to swing for the fences any more and I sleep really well. Although, I'm pretty sure if I see something just stupidly priced, like Fairfax or Meta was in the last few years, I will take huge positions again. And just like this time, I will reduce the positions as they rebound and maintain allocations that I'm comfortable with. I just live by my mantra for the last 10 years...never fall in love with any stock or investment. The goal is the best return you can generate while minimizing permanent loss risk to the portfolio. The portfolio is what you should love...not the components of the portfolio! Cheers!

I've been watching it as well. I didn't bring it up, because I wanted to get some shares at cheap prices here and there. I know there has been criticism of Paul on here, but his tenure at Fairfax was quite a long period and he's one of the hardest working men I've ever met. With a good investment team and the power of float, it's definitely worth watching! I guess now that the cat is out of the bag, I'll start a thread in the Investment Ideas section. Cheers!

Quite a night last night in the NBA...LeBron with his triple double, Wembayana hit 50 points as the 4th youngest ever to do so, and Giannis hit 59 points! All three won their games on top of that. Cheers!

One other thing I do is that any banking transactions...checking, savings, credit cards...I get a text alert on my phone. You can set the limits as well...so for credit card it is anything over $20. For my bank accounts...it's any transaction. I really don't have too many transactions on my bank accounts, as I put everything on my credit card each month and pay the balance at the end of the month. I do absolutely everything I can to avoid using my debit card as well. Hackers can do anything they want in your account once they have that number and the password! While the chances are low, skim machines are out there in a lot of places. Cheers!

Thanks! That's good to know. Cheers!

Anyone can hack your phone or computer if you are using free/open networks. Not only can they hack them...it's so easy that in today's climate, it would be crazy to use them. Even networks that provide you a password, but are open to all those users who have that password...puts you at great risk to be hacked by those on that network. I only use my phone network...even if I have to use large amounts of data. It's secure and encrypted. Other than that, I'll only use the wi-fi in my home office, work office or my brother's house...they are all secure, encrypted with minimum amount of outside users. I also have the blinds closed in my office as there is a hotel/office building next to ours...hackers can both visually and remotely track your keystrokes for passwords, etc. You also have to be extremely careful with any spam emails, spam calls, etc. The bloody hackers are always just two steps behind the security providers, and once in a while ahead of them! Cheers!

Also, don't use any free or open networks...even at hotels, etc. I always turn my phone into an encrypted hotspot and connect to my own network. I never log-in to any open networks or even secure networks with passwords...always my secured home, office, cell hotspot. I also use two factor authentication with tough passwords and even Q&A's. I also don't use the same password for different brokerage accounts. Those bank passwords also don't match any of my other passwords. The one thing I wish my bank and brokerages would do is install a password before any transaction is approved. If I do a trade, there should be a separate password to execute. If I transfer funds, there should be a password to execute. Don't know why this isn't available. Cheers!

No, they won't. But if the shit hits the fan and no one has confidence in fiat currency, they would probably start to accept it. You can buy small micro cards of gold now online, where you can break off tiny pieces. So it might be a 10 gram thin rectangle, and pre designed so you could break off a small 1 gram square to buy goods with...rather than carrying around troy ounces of gold to try and trade with. Cheers! https://www.herobullion.com/valcambi-100-x-1-gram-gold-combibar/?srsltid=AfmBOoroy-bG5ZOpJzZWbkc0Zk9nV8Nh-FCeQtgrCOoT0cmQ18vVj9z6

No, for insider trading and other charges. The SEC and DJ never went after companies for naked short selling, because essentially an arm of the SEC was responsible for overseeing the DTCC and fail to delivers. Can you imagine the fallout? The various hedge funds were naked short selling and driving down the stock prices of target companies, but it could be argued they were using a loophole within the DTCC. Even though it was illegal for them not to deliver shares within T+3, they could because the DTCC was not enforcing the rule. Cheers!

Portability to act as a currency. Can you imagine trading barrels of oil at the grocery store or chunks of rebar?! Cheers!

I would agree with this 99 out of 100 times. It's that 1 in 100 event that I wonder about. The event that economists and officials haven't put into their models...or somehow manage to ignore. Only when the shit hits the fan, do the cracks appear. Cheers!

Some answers for you: $9T of U.S. debt maturing this year alone. $1T of deficits per year regardless of which party wins. Another interesting fact: Average duration of U.S. debt is only 6 years. While I don't think we are going to see 1980 type rates, I certainly don't see low rates being offered on long-term U.S. debt, as the amount of debt maturing is going to be far higher than simple demand. Cheers!

He wasn't wrong there...it's why the DJ went after Steve Cohen and SAC Capital. Cheers!

Anyone know how much debt is coming up for renewal by the U.S. each year for the next 4 years? Anyone know exactly how much debt will be added by Harris or Trump based on their policies over the next 4 years? Is everyone convinced that rates on U.S. debt will continue to drop or remain where they are, even as the Fed continues to unwind their balance sheet? Is Buffett too eager, or does he see that interest rates will have to rise over the next few years? Cheers!

I have been in China! It is a beautiful country that has done absolutely remarkable things historically and especially in the last 20 years. There is an enormous amount to learn there, and the West would benefit from doing so and understanding the people and culture. Anything you would want here, you can easily get in China. For those that have money and bow to the autocracy, you can have a very good life! That is very different than understanding the government which effectually eliminates property rights, enforcement of binding contracts, free speech, criticism of Beijing's policies, legal representation or independent rights endowed to Hong Kong or Taiwan. It's why so many wealthy Chinese live abroad with dual citizenships, but maintain businesses in China. They've moved as much capital as they can over time to other countries with true democratic principles and respect for the law and property rights. Cheers!

It's actually not a gross misrepresentation at all. We had a MRI business in conjunction with an army hospital in Beijing. When they decided to shut the hospital down and move the patients to a larger hospital, they essentially cancelled our contract with them, told us to do what we want with our equipment and that they would not let us be part of a new MRI clinic in the new hospital. On top of that, the cash we have in Beijing has been impossible to retrieve back to Canada after 7 years of fruitless efforts by us, lawyers, accountants and other representatives we hired to try and help. We also had no legal recourse to enforce the binding contract we had, as we were told by several lawyers that the Chinese courts would simply side with Beijing. While this may not be everyone's experience, it certainly was ours. I've also spoken to numerous other business people and Chinese expats who were in similar situations or have been harassed by various Chinese government groups/individuals in Hong Kong and Canada due to their vocalness regarding Chinese government policies, practices and a lack of property rights or enforcement of binding contracts. You can certainly invest and make money in China. But it carries real risks and issues outside the realm of just market risk. Cheers!

Don't try and figure out price action. Buy cheap, sell dear...rinse and repeat! Cheers!

+1! Cheers!

The power of compounding! Cheers!

"We maintain our fair value estimate"...which has gone up consistently for the last 2 years..."for the no moat company"...Cheers!