Parsad

Because it creates a false sense of who is transmitting the disease when the statistics are taken in a vacuum. Notice the number of Asian hate crimes in the last two years? A direct result of morons calling it the "China virus"...one particular moron in Chief creating that false identity for the transmission of the Covid virus. Your "joke", and it's always just a "joke", suggested that only gay men transmit the Monkeypox virus. This was the same stupidity around HIV 40 years ago. Cheers!

And your upside is limited while the downside is unlimited! It's just stupid. Cheers!

New entrants will come in, but remember that equity and bond losses extend to outside institutions (hedge funds, private equity, pension plans, etc) as well. In an inflationary environment, the replacement cost of losses has probably escalated dramatically...I can tell you for a fact that every type of insurance I buy (other than life insurance) has increased the replacement cost and increased premiums. So while you will have new entrants come in, it will be offset by the magnitude of losses in statutory surplus and the sheer demand for insurance. The other factor is if you are an insurer with lower losses so far like Fairfax. They've made sure that statutory surplus levels are more than adequate for their insurance subs to write as much business as they can, while maintaining the size of their portfolio and liquidity levels so that they can take advantage of opportunities compared to other insurers. That's if Fairfax does take advantage of the opportunity...often they've been TOO patient when the table turns and should have invested more. Combining both...lower losses and greater opportunities...means that buying Fairfax at 0.8-0.9 times book may make more sense long-term than buying other insurers at 1.2 times book or higher. Cheers! From the 2nd Q transcript: The next question is coming from Jaeme Gloyn, National Bank Financial. Jaeme Gloyn Yes, good morning. My question is focused on the top line growth, gross premiums written obviously, really rapid growth, the last three quarters, I guess, a modest deceleration, but still at north of 20%, in in Q2 ‘22, year-over-year, gross premiums rightly grow. Just want to get your views on where you expect to see that top line number trending over the next couple of quarters? Should we continue to see north of 20% premiums growth? Or is there some dynamics in the market, whether it's a deceleration of that of hard markets, in some lines, that might keep or push that growth rate down below 20s but still in the teens. Prem Watsa So Jaeme, the next quarter, two quarters or three quarters, we never, you never can tell what the growth is going to be. But there's a lot of momentum for these growth rates that you've seen to continue. We don't believe in forecasting these things, we just look at what has happened. But there is a lot of momentum for it to continue. Hard market is not going to continue forever it'll stop some time. But the big thing that you should focus on as an analyst, all of you analysts, look at the impact of interest rates going up, like shareholders equity for a whole ton of companies reporting, record earnings, operating income, like us, book value down 5%. Now our book value, at least on the fixed income side, it doesn't last long, between six months and 18 months, as Jen was saying it disappears. Meaning it's redeemed and we put the money back into higher yielding income and that's why treasury bonds and other bonds. And that's why our rates going up. But if many of the US companies have got 10% and maybe 15% decrease in book value, shareholders’ equity per share, and in a way and in Europe where interest rates went to zero and negative, and they are now moving up. And that's still very marginal at best at 10 year rates at 1%. And third year rates at 1.5%, 2% increase in those rates will have a significant impact. And like I said 30% drop in shareholders equity for some early reporting companies. And so you have to watch that and a lot of the European companies report only on the second half. So meaning they report only on a half not a quarter by quarter basis. And so this -- what we might be seeing is the hard market continuing, you can tell, but you have to watch this and the hard market might continue what Peter, you want to add on to that? Peter Clarke I think the only thing I'd add is we're still getting rate and we're still getting fairly good rates, like 7.5%. So that's going to drive growth alone. And then different lines of business are increasing still DNO, VNO for example, in the US has stabilized. But property CAT, a lot of raise, a lot of capacity there. And a lot of opportunity. So we're seeing a little bit more on the reinsurance side, less on the insurance side, but I think we'll see -- we'll still see strong growth in the next six months. Jaeme Gloyn Yes, and I guess I take it that you are more resilient, equity based balance sheet book value, allows you to be more competitive in this hard market than some of your global peers. Prem Watsa That’s it. That's exactly right, Jaeme.

Greg, another post like the ones I deleted and you get a 30 day ban. Think before you post. Cheers!

The other thing on the call was that book value losses for most insurers being announced are somewhere between 10% and 30% for 2022 so far...while Fairfax's book loss is around 5%. It would take a $300-400B catastrophe loss to wipe out 10% of book for global insurers. That means depending on bond and equity prices, the insurance hard market may continue for 2-3 years as insurers recoup their book losses and incur further losses as rates rise in the next quarter or so. Cheers!

China also has two sets of books...so write downs will never be seen by the public. When your banks are state-controlled, they essentially have a lifeline of $14T a year. The government isn't asked to intervene, they will intervene. After GFC, I remember the China experts that Fairfax used to bring to our dinner every year for a couple years. The real estate bubble and bad loans by developers were known back then. From what we were hearing, it was certain that China would have a day of reckoning. Well guess what? 10 years later and we hear about bankrupt developers each year, but somehow no real estate crash. The handful of times we've seen China real estate prices get volatile and citizens protest, it has been squashed. I saw the huge oversupply myself in a couple of cities about 7-8 years ago. But still no crisis! Still no correction. And I saw the massive, vacant centers myself! At the same time, I also saw the massive amount of wealth that China now had. The technology they possessed. The megacities that actually had people living in them. The vehicles and hubbub of commerce everywhere. With China its like the three monkeys...hear no evil, see no evil, do no evil. And here are the accounting books you should look at...don't worry about that other set! Cheers!

I agree on the stabilization part. In my opinion, If any thing, some retail prices will come down before Christmas as retailers have to get rid of excess inventory. Also, they will still have a glut of inventory as the supply chain opens up and backlog items show up on shelves. I think most prices will come down through the end of the year and we have already started the expected rally...markets predict out 6 months. With interest rates higher, discounts have to be greater to get revenue numbers to stay comparable or better than previous quarters. So as we saw this quarter, revenue numbers are comparable but margins are being squeezed. Does this mean we are out of trouble? Not a chance. There are still a ton of risks out there. So buy cheap, sell dear when you know you are getting a good deal. Ignore the noise. It's a sideways, volatile market for a couple of years as corporations become more efficient and equilibrium is reached with the new level of interest rates. Cheers!

I think they've had enough time to stretch out their liabilities. This was all supposed to come to a head shortly after the GFC...never did and they've slowly dealt with much of it. They'll probably get hit now as we're seeing, but they can likely manage the total exposure at this point better than 5-6 years ago. Cheers!

Well, I was a bit optimistic! Great 20%+ growth in insurance, they put about $10B into 1-2 year short-term bonds, and interest income and insurance profits have grown dramatically. Huge losses in equities and some bond losses...greater than I expected. Book value dropped to $588! Doesn't look like they bought any shares back in the quarter. If Fairfax's portfolio got hit that bad and they were positioned better than anyone else, this is going to be one shitty quarter for many insurers. Probably a buying opportunity in the insurance sector if prices fall as the insurance business is doing well and these are temporary portfolio losses for many insurers. Cheers!

All the macro guys have gotten it wrong since the GFC. They got 2000 and 2008 right, but from 2014-2020 they were wrong. Rosenberg, Grantham, etc have been perma-bears for a decade. Ignore them! Ignore the noise. Buy cheap, sell dear! Cheers!

Insurance: 1.) does top line growth remain close to 20%? I would imagine will be close to that. 2.) is CR below 95? Below 94? I imagine it will be 94, but would like to see 93. 3.) is hard market still alive and kicking? Outlook for remainder of 2022? From what I've read, the hard market continues well into 2023. Bond portfolio 4.) what kind of increase do we see in interest income? Brian usually surprises us with his moves...at the same time, we expect interest rates to continue to rise through the next quarter. 5.) what changes do we see in bond portfolio? If they've bought bonds, it will be higher rate 2-5 year stuff. 6.) what is average duration? (1.4 years at March 31) I imagine this stretched out a wee bit...probably closer to 2. 7.) what is amount of mark to market loss? US$400-500 million? Maybe slightly less...$350M. Equity Portfolio 8.) what is amount of mark to market loss? (My estimate is around $1 billion) Suspect your estimate is probably correct...will be offset in 3rd Q by rebound and gains from sales. Other 9.) share of profits of associates? $200 million? Your guess is as good as mine. 10.) Book value? Was US$626/share March 31 I imagine BV dropped to around $605...losses partially offset by insurance profits. 11.) share buybacks during quarter? (At March 31, 2022 there were 23,810,965 common shares effectively outstanding.) They've been buying...maybe 300K shares or so. 12.) capital allocation priority moving forward? One I would add is have they been allocating any capital into markets with some stocks down 50-90%? - level of debt is ok - continue to fund growth at subs in hard market? Probably. - buy back stock? Probably. - buy out minority shareholders in Allied World? They'll probably listen to you. Updates/Commentary: 13.) pet insurance sale: on track? To close when? Proceeds to be used for? 14.) Resolute Forest Products sale: to close when? (I think i read Q1 2023 due to needed regulatory approvals) 15.) Stelco dutch auction: will Fairfax be tendering shares? 16.) was regulatory approval received to take control of Digit? Cheers!

Unlike the number of people that were vulnerable to Covid, I believe most of the cases are people who were never inoculated for Small Pox. So, the vast majority of people shouldn't be concerned. Mainly the anti-vaxxers are at greatest risk and for those whose immunity to Small Pox has waned. Cheers!

No, Americans are allowed to buy real estate presently. No ban went into effect. Although some cities like Vancouver have an annual empty home buyer tax, which is 1% of the property value charged to homeowners (Canadian or otherwise) if the home is vacant and not in the long-term rental market. Cheers!

My sister-in-law is a Notary and a lot of her business is real estate closings. For the last year, there have been a lot of cases where buyers are doing last-minute financing closures, as they are still pulling money together at the last minute. In many cases, they are posting multiple deposit checks as many don't have the full down payment themselves and are reaching out to family and friends. This has only worsened as interest rates have started rising. Renewals and refinancing's are also proving tricky now as the 5-year fixed rate has risen from below 3% to closing in on 5-5.5%. Cheers!

I thought that was one of Anthony Hopkin's best performances and accurate to the real story...a very entertaining and well done movie! Cheers!

I really enjoyed The Gray Man tonight. Very funny and superb action! Ryan Gosling is the one guy I could see filling Robert Downey Jr's shoes as Iron Man. You're going to wonder why he doesn't do more action movies after watching this. Cheers!

Where do you have vacation homes? No vacation homes...can't justify owning one unless I go there often, and I'm not interested in being a property manager. Where are your repeat vacation spots? Locally...Victoria, Osoyoos (Okanagan wine country), Whistler and Seattle. What are must see places? (North America vs Internationally) That I've been too...well Vancouver of course...Montreal...a leisurely drive on the Pacific Highway from near Portland all the way to San Diego...Chicago (like New York, but the people are really nice)...Omaha (must make the pilgrimage at least once)...Maui....internationally...Mumbai, Beijing, Sydney, Hong Kong, Brisbane and Surfer's Paradise, Christchurch New Zealand, Shanghai and last but not least Fiji! What is your next adventure? I haven't travelled Europe at all believe it or not! I plan on spending two-four weeks a year in different spots in Europe for the next 10 years, starting with London. Was planning on going this year, but was worried about Omicron and airline/terminal service issues. Will start on this for sure next year! Cheers!

Oh contraire, mon frère! Over 67% of the users are American, about 18% Canadian and 15% outside North America. Victoria and Lake Cowichan are both beautiful! Glad you had a good time in my neck of the woods! Cheers!

There are a ton of people here and elsewhere that I've met, that swear they will not, have not and never will feed their children McDonald's or that they don't eat there. They prefer Five Guys, In & Out, A&W and other fast food restaurants, where apparently the food is "healthier", or they will not feed their children or themselves any junk food. Cheers!

As soon as all of the pharmacists in my pharmacy started to ask me about the cryptocurrencies they had all bought, I knew they were f**ked and that maybe, we had just avoided another disaster of epic proportions by more people not being stupid/greedy and doing even dumber things with their capital. As the great Forrest Gump says...stupid is as stupid does! Cheers!

I didn't say I have a disdain for McDonald's. I eat there at least a couple of times a week...breakfast burrito or a fruit & fiber muffin...sometimes a filet-o-fish, occasionally a Big Mac. But are you going to tell me that most people don't eschew McDonald's food, quality and taste...especially those that aren't frugal like myself? And my point was that having the best quality doesn't make you a good business. Cheers!

I agree with you for the most part. At the same time, we are somewhat lucky that things like crypto didn't get wildly comingled with non-crypto assets. Otherwise, this would have been another GFC. And things were headed that way...you have some very smart people doing stupid things because to channel Munger, "they are overly confident in their confidence!" Like all resets, this one was necessary. You needed people to lose money...the smart ones, the stupid ones, the "smart" money, the professionals, the amateurs, the speculators, the greedy, the confused and the lemmings! God knows value investors paid for their confidence over the previous 5 years. Every single category got whacked except the shorts and cash...and probably those two will get crushed in the surprise rebound those investors are certain was years away. First time in 70 years both bonds and equities had double digit losses in the 1st half of the year...and I thought I had seen it all and read it all. Stupidity never ceases to surprise me...from others and myself! Yet, here we are...deja vu! I still think we are in for a up and down, somewhat volatile market for the next couple of years as interest rates and inflation find equilibrium, nation states fix their balance sheets and the overleveraged finally get their day of reckoning. So moving from overvalued assets to cash to undervalued assets...repeat...may be the strategy for the next while. Cheers!

Yeah, I'm looking forward to watching it. I always thought Jeremy Allen White should have his own project. He was one of the few interesting characters on Shameless alongside William H. Macy and Emmy Rossum. Cheers!

No way to prove for sure...only time will tell...but: https://finance.yahoo.com/news/bofa-survey-shows-full-investor-084216443.html https://finance.yahoo.com/news/feasting-shorts-last-stock-faction-202053790.html Cheers!

You know critics didn't like that movie, but I loved it. I think it's one of the best movies on cooking/greatness made. Another one I love is an old movie with Stanley Tucci and Tony Shalhoub called "Big Night". I haven't seen it in ages, but if you love food, good acting and the challenging notion of being a great chef, it was one of the best movies of that type. Cheers!