Parsad

+1! And myriad books, biographies, etc. If you need a longer letter to figure out investing at this point, buy index funds. While I'm sure there is more knowledge to be gleaned from the old man, if he wants to shorten the letter after 60 years of them, then I'm ok with that! Cheers and thanks to Warren for all the letters he's written over the years!

This is true but asset/equity and debt/equity leverage is powering that difference. In large catastrophe years, it will cut the other way and Fairfax will lose much more than Markel. I would be much happier with more stable earnings for FFH and balance sheet stability. Cheers!

You're talking about being at a P/B of 1.2 for like a year and a half...not over 20-30 years like MKL or BRK. Fairfax was also at a P/B of 4 in 1998 for about 8 months. That doesn't mean analysts or investors viewed it as a long-term, stable, high quality insurer. Cheers!

This is the correct way to calculate the earning power of an insurer. But like any breakdown of a business, you have to examine the working parts. Let's look at BRK, MKL and FFH. MKL's business is more in line with BRK's structure. There are a lot of wholly-owned operating businesses under "associates", and they both operate with a lower amount of asset/equity and debt/equity leverage than FFH. Their insurance businesses are also quite diverse with both short-tail and long-tail business. FFH for most of its existence had focused more on long-tail business. So using less leverage, holding more cash-flowing operating businesses, less debt and more diverse insurance businesses, BRK and MKL get more premium P/B valuations...especially BRK where that 3rd leg of "operating business/associates" cash flow is so huge and solid. FFH's limits on recurring, steady income from that 3rd leg of operating businesses, combined with higher leverage, and until the acquisitions of Allied and Brit (less diverse insurance portfolio) limited its P/B valuation. These are the things that also made FFH's insurance business much more volatile for many years. Andy Barnard's oversight changed that. He brought a much more steady and consistent underwriting culture to FFH's insurance businesses. The acquisition of Brit and Allied diversified the stream of underwriting business on a global basis. For FFH to earn the premium on P/B, they need to keep more cash at the holdco level, increase the investment grade to at least "A" and add more quality...I reiterate...quality operating businesses. Much of the non-insurance operating businesses they own are not 2 times book operating businesses, nor do they fully own or control many. FFH's power comes from the insurance engine...it really is more of a pure insurer than BRK or MKL. It has a huge bond portfolio that is tied to the future loss payables from insurance managed by Brian and his team. Then comes the abilities of Hamblin-Watsa to take some of that portfolio alongside excess retained earnings, and invest it appropriately in various equities, distressed opportunities and wholly-owned businesses. That 3rd leg of "wholly-owned" businesses isn't a priority unlike MKL and BRK. Cheers!

Actually, the one thing I would like to see is continued upgrades of Fairfax's credit rating. It may not get to AA+ like Berkshire, but I think it's time we got to the A's like Markel Corp instead of BBB. Cheers!

+1! I think they'll hit 15% ROE for the next few years if they've truly let go of shorting and macro bets. If they just focus on what they are good at and know, they will hit their goals. I've always said $1K CDN before the end of 2023. I think they'll hit the $1K USD mark after a banner 2023...so early 2024. If it happens sooner...great! But I can see an easy $750 USD book by the end of 2023...give it a 1.25 times multiple and you are close to $1K USD in 2024. Cheers!

+1! On the fixed income side, they are one of the best in the world...short-term, mid-term, long-term performance. There isn't a period where they have underperformed. In fact, FFH shareholders should feel more comfortable on their fixed income investing than their equity investing record. With rates rising as they have, we know there will be significant corporate failures and opportunity for them to do what they do best...distressed debt investing. So they've guaranteed the bottom side income for the next two years...and they have enormous upside potential if markets (both fixed and equity) deteriorate. After such a banner two years, and probably another banner 2023, I can't believe people on here are second guessing their bond duration. Let them work people! Cheers!

Ok...I know you guys are all pumped up right now. Fairfax should continue to do well going forward for many years if they've truly changed the quality of their underwriting, investing and hedging on a permanent basis. I'm long on the company and also feel things are different going forward. But let's not get crazy carried away with the price. Yes, I would expect at some point with consistent performance, P/B could expand to 1.5 times book on a long-term basis similar to what MKL has enjoyed. It should continue to grow from here and hit its ROE target of 15% annualized. My point is that I was spending an inordinate amount of time defending Prem and FFH over the last three years, and now everyone is suggesting that they can do no wrong and throwing around crazy-ass numbers on the high side. High expectations are fine...but temper it with real-world potential problems. Reinsurance is a lucrative business when done right, but it can also be extremely volatile because of huge cat losses. Cheers!

I did. Actually bought well before he announced the $150M purchase. Put 30% of my portfolio in it. Still makes up about 25% of the portfolio after doubling and me right sizing the position over and over. Enjoying a nice slice of strawberry rhubarb pie tonight to celebrate! Cheers!

Munger agrees he was on "tilt" buying Alibaba. Cheers! https://finance.yahoo.com/m/d5675f0a-fae1-34dd-8eca-63e889d24ea6/-one-of-the-biggest-mistakes.html

The fact that this wasn't obvious to you, nor that you had this innate bias, is a bit disturbing. Are you saying you never knew this before reading that book. Or that you didn't know the right could be as extreme as the left? Cheers!

He's suggesting that it's detrimental for society...that's why he was praising China. Nothing about cracking down on freedoms. Cheers!

I guess this is the most famous picture of her. I remember the first time I watched "One Million Years BC". I started out fascinated by the dinosaurs and by the end of the movie I hit puberty! Angie Dickinson was another beauty! Cheers!

Munger on cryptocurrencies. Agree or disagree, but he has such a wonderful way of just saying what he's thinking! Cheers! https://finance.yahoo.com/news/charlie-munger-im-not-proud-of-my-country-for-allowing-crypto-sh-t-202109158.html

+1! Fully agree. That lack of credit leads to failures. The first to fall in Vancouver...more to come around North America. https://biv.com/article/2023/02/major-vancouver-condo-developer-seeks-creditor-protection?utm_source=BIV+Newsletters%2C+effective+July+1%2C+2017&utm_campaign=ca05f066ac-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_16cfea3308-f66769357a-[LIST_EMAIL_ID] Cheers!

+1! That's the right attitude...I'm just saying a recession is coming. Investors should maintain a strong balance sheet and live within their means whether there is a recession or not...just means being even a bit more careful if there is one. Cheers!

https://finance.yahoo.com/news/treasury-yield-curve-inversion-reaches-140649287.html Recession is coming...no idea when, but rarely has the yield curve not been correct. Cheers!

Canada did it from the mid-90's to 2008: Debt decreased very modestly or remained the same, while the budget was balanced and GDP increased. U.S. needs to do this...Canada too! Cheers!

Apparently, David owns a stake in Mick Fleetwood's restaurant, Fleetwoods, in Lahaina, Maui. I was there and had no idea David was a part owner. David also owns Joe Fortes in Vancouver, which is a local landmark, named after a famous, local beach lifeguard. If you ever come to Vancouver, make sure you eat there...the vibe is very similar to Joe's Steak and Seafood in Chicago. Cheers!

Well at this point, you are essentially semi-retired. You have to do what retirees do...find other outlets to spend your time which used to be consumed by work and other obligations. For me...the #1 goal is travel. I would be very happy to go live in different parts of Europe each year for a few months and do nothing but drink coffee, visit museums and wake up knowing I have nothing to do...except drink coffee and visit museums! In the mean time until I reach that point, any extra time is spent on watching sports, playing with my niece and nephew, occasional golf outing, and sitting at a cafe drinking coffee in Vancouver. But the 5-7 hours a day reading...it still gets done every day, no matter what! Even if I'm feeling like shit...the reading to some extent will get done. Cheers!

Chances are you will see higher tax revenues in this expanding and growing economy. We've seen governments do this over and over. They eventually slowdown the deficit or balance the budget for a few years so that GDP catches up, and debt/GDP becomes manageable again. Now that the pandemic is over, the economy is bustling, power is somewhat even in the political landscape, there will have to be compromises...and some fiscal conservatism will be part of the negotiating ploys to get bills passed, including raising the debt ceiling to avoid default. But it may be last minute until people get their wish lists fulfilled! Cheers!

The skill is to be able to skim those 500 pages and pull out the nuggets that have any pertinence. I'm sure that's what they do...not read every single story on every page. After all these years, they know what things they need to read and what things are irrelevant. I must read at least a couple hundred pages a day at least...skimming out the irrelevant stuff is part of the process. Also it's habit and part of my daily routine like eating, going to the bathroom, sleeping. I have to read every day and I probably spend several hours doing it...including while eating and going to the bathroom! Cheers!

Brian Moynihan on preparing for any potential debt ceiling issues. Unlikely to happen, but always be prepared...I love this guy! As good a bank CEO as Jamie Dimon, but gets far less love from the industry! Cheers! https://www.cnn.com/2023/02/06/investing/bank-of-america-ceo-brian-moynihan-debt-default/index.html

Flexibility is important in being right. So let's say some time in the next 5 years! Cheers!

RK, I know you're rich, but you aren't moving markets! Cheers!