Parsad

Did Michael and Dwight still sleep in that bed? ;D Cheers!

I'm veering off topic here but what was Manning's problem? I don't remember hearing anything overtly negative. Yeah, I haven't heard anything really negative about Peyton or Eli. Other than Peyton pretty much runs the practices himself, but its worked for 12 years. Cheers! I have some friends in Indy that said he's pretty notorious for "getting around". May be true...I have no idea. But if you are a rockstar athlete, worth tens of millions, and people (especially of the opposite sex) are telling you how great you are, it's probably not the easiest thing in the world to resist temptation when they say they want to get into your pants. Especially after years of marriage or perhaps difficulty in the marriage. Not to say it's ok, but it certainly happens pretty frequently. Cheers!

I'm veering off topic here but what was Manning's problem? I don't remember hearing anything overtly negative. Yeah, I haven't heard anything really negative about Peyton or Eli. Other than Peyton pretty much runs the practices himself, but its worked for 12 years. Cheers!

He should be able to, but there is no guarantee...it will depend on how his body holds up. The game started to change just before Tiger arrived with equipment, balls, swings, etc. There's been even more changes since with length and difficulty of courses simply to make things tougher on Tiger. No, I suck at the game, but love watching! ;D Tiger was pretty much the first golfer to have a body built like a quarterback, and to put that much torque on his lower body because of his build. His lower back, knees and ankles have taken an enormous beating, as well as his shoulder joints. He practices as hard as he plays, and he practices even harder when he's not happy. And there isn't much rest in between! You'll notice how the number of tourneys he enters each year has steadily declined, and that is because his body has been beaten over the years. He's young enough to break Nicklaus' majors record, even after the last two years lost from the scandal, but you have to hope his body holds up. He is by far...and it's not even close you Mickleson fans and now McIlroy band wagon jumpers...the best golfer to have held clubs in the last 25 years. Cheers!

Hey Ali was a douche too! But he was great to watch. ;D It would be nice if Woods had some class, but nobody's perfect...except Tiger in his own mind. But like I said, he's the best player of his generation and you have to admire that skill. The game is so much more exciting when he's playing...whether he's winning or getting beat...and that's because you know the other guys are trying damn hard too. Cheers!

I thought I would post something completely different, as I don't want anyone to think all I post about is Europe! ;D If any of you watched the Memorial today, Tiger looked like his old self, and I couldn't be happier. Yes, he's a douche, but he's still the best player of this era, and for some reason I can't give any credit to any field unless the best player in the world is present. It's like saying you were the best boxer during Muhammed Ali's era, but you never fought Ali! And of course, knowing it was Nicklaus' own tournament to tie his record for career wins, he went and won it with a "fist pump" birdie on the 17th, and a "putter in the air" birdie well before the ball fell into the cup on the 18th. The best player in the world may be back, and golf's ratings have hopefully awoken from their slumber! Cheers! http://www.bloomberg.com/news/2012-06-03/tiger-woods-wins-memorial-for-second-title-this-year-on-pga-tour.html

Yes, that would be correct. Also remember, that part of any European tides washing ashore in the U.S., will be offset by lower commodity prices and a stronger U.S. dollar to purchase European exports. I think longer term, Europe's woes may actually benefit the U.S., but in the short-term the headwinds will make the recovery a little more difficult. The U.S. is not Europe in 2008/2009...that may actually be China who were loading up on European debt because they were concerned about the U.S...how ironic! Cheers!

Completely agree with you Eric! For the record, I've never said this was a repeat of 2008, but a mini-version of it and on distant shores. I'm completely long on the United States and we haven't sold a single warrant or share in the two banks we've owned...WFC and BAC. We've added two other positions this week that we did not own before. We raised more cash because of two things...money came in and we thought things were deteriorating faster in Europe (in particular Spain) than we had thought. We just did the prudent thing and kept more cash because we felt there would be more volatility for us to take advantage of. The investments we owned where the risk premium was adequate or they would grow further in uncertain circumstances when their peers could not, we continued to own and had no plans on selling regardless of what happens in Europe. Cheers!

Very interesting article and development in synthetic biology. It's amazing how that 3-4% difference in genetics between apes and humans, allows us to do what we can. We're on the verge of some absolutely extraordinary developments. Cheers! http://articles.latimes.com/2012/may/26/science/la-sci-synthetic-biology-q-a-20120526 Cheers!

Nevertheless, Sanjeev will almost certainly learn more from Moore than vice versa. You are probably correct here. Cheers!

Parsad I did not mean to give you a backhanded comment,... Don't worry Moore. There are people whose back-handed comments are meant to help and improve others, whereas there are those who attempt to demean others. I know you're the former. One of the latter ones was very good at it..."your naivety is so adorable, but maybe one day you'll learn that you are completely wrong and fooling yourself." He's no longer on this board! ;D In terms of your gold analogy, I understand what you are saying. There's that wonderful example that historians like to use all the time when it comes to equities...Jeremy Siegel especially likes to use it...if you missed the X best days over this many years, your total investment return would be 50% less, etc. And then you get a period like 1999-2012, and you know where Jeremy Siegel can stick his book! If you are buying the market and have no idea how to value a business or its intrinsic value, then by all means hold something for 10, 20, 30 years. But if you are capable of accurately estimating intrinsic value, and can use the follies of market pricing to take advantage of that ability, then by all means I think you should do so. I come from the latter school. I'm a Ben Graham school investor and I idolize Warren Buffett, but I have no problem selling something if I think I can buy something at a much greater discount to intrinsic value...be it from a single event within a business or a macroeconomic event. The market is there to serve us and profit from it when others make errors. While theoretically we estimate the value as if we are buying the entire business, in actuality we are not. We aren't hamstrung by promises made to owners or executives to never sell the company, and the inability to sell the stake due to illiquidity...we can always buy something cheaper. Cheers!

Isn't Sean Egan from a ratings company, he's not a hedge fund. There were both...an analyst and a hedge fund...perhaps funds. I was not familiar with the details until I read the letter from Jefferies and the letter from Leucadia. Cheers!

Parsad I think I now fully understand your position, thank you very much for sharing your numbers and I would appreciate the May 31 number in due course (I predict you are now down for the year). Thanks for understanding Moore...but you're wrong. And I'll get on that May 31st number for you pronto! Based on your performance figures what I believe you did is manage your portfolio based on your returns, mitigating your risk based on your returns and not based on the fundamentals of the underlying securities you own. I don't fault you for market timing because what you did was very prudent and responsible and is something I too would do if I was younger and just building my track record. Nobody wants a down year in their track record and I believe when you had the chance to essentially approach "flat" you began to reduce risk. What you did was simply decide to forego future profits for the sake of sleeping at night. To say you did anything else such as make a macro call or see that Spain is in a different situation is totally crazy imho and I urge you to not believe in such madness, it was purely a coincidence. Again what you did as a fiduciary and capital allocator is totally understandable and something I would expect as an LP after a down year. Ouch! I'm laughing, but the tears coming down indicate I just received a back-handed compliment...and it stung like hell. I think thats what Bmichaud and Albert need to understand, ultimately Parsad and all of us are managing our portfolios based on our historical returns, we add or reduce to our positions based on how well we are doing or how familiar we are with the investment environment. I feel very good with my allocation even though I did not choose to reduce long exposure as Parsad did, I gave up a huge paper gain for the year, but I don't believe I am a gambler that needs to quit while I am ahead, I believe that over time the securities I own will compound at rates that exceed my alternatives, cash included. I hope I'm not managing based on historical returns, because we are the largest investor in the fund, and I'm not interested in staying in the same place. Unlike many of the professional managers on here, as well as all private investors, our fund by design has a fundamental flaw that virtually none of you have to experience...the fact that we operate with with no lockup. I'm happy with the way the fund is structured, as that was how this original fund was meant to be. We wanted our partners to have capital when they wanted their capital. It's not my job to protect them from themselves, be it over 60 days or a two-year lockup. What we offer is above average returns and that we will try to not lose capital over time. We will start another fund eventually, and that one will have a lockup for those that want their capital locked up...more volatility, higher returns. But the structure of this fund is what it is, and it isn't going anywhere...and maybe that's why our aversion to volatility is more paramount than some others, because we don't have the luxury of telling our partners to go to hell for a year or two...nor would we want to ever behave like that. On this note it is worth mentioning that one manager is impressing me with regards to his conviction and that is Mohnish. He appears to be stepping on the peddle and continues to gain long exposure, he has not reduces his exposure. I believe Mohnishs portfolio will compound at 20-30% per year from here over the next 3 years, I own many of the same securities that he does with similar allocations. Ultimately, one has to decide if they are comfortable withstanding paper losses, some people are not cut out for it, we live in truly volatile times. There will always be reasons for why stocks are down or up, and to think one fully comprehends the reasons is insane. The Zerohedges of the world are always bearish, always... I am not always bullish but I have historically made all my big gains on the longside and like to stay with securities for many years, I don't care if they move up and down in betwee and I don't care about my track record over 1 or 2 years when I have compounded very well for 20 years doing just this. Mohnish is a very good friend of mine, a mentor and almost like the older brother I wish I had. He is incredibly smart and able to grasp ideas immediately. He's also become one of the most articulate value investors I know. But even with all that, the only thing that saved the Pabrai Funds from sheer catastrophe in 2008, was the fact that the year-end request to redeem capital had nearly passed when the bulk of the losses hit. Otherwise, we may not be talking about the Pabrai Funds at this moment. I saw what he was going through at the time and I can guarantee you it wasn't an enviable position to be in at all...not in the slightest. I don't think anyone on this message board, including you and I, could have survived that and recovered from those losses. Hundreds of hedge funds closed during that period with half the losses that Pabrai Funds went through. I don't know of a single fund that has recovered from such a loss. It was both a bit of sheer luck and Mohnish's ability to fight through any crisis. Isn't it ironic how Prem and he have become such good friends, and yet it would seem almost destined after both their near-death experiences. I don't want to ever have my funds go through what he experienced! I just think everyone needs to be honest and objective, there is nothing different about the European situation today than there was last year and Bmichaud correctly observed that we now actually know that push comes to shove Europeans will print as well. Everyone will print ad infinitum, and so our jobs are merely to weather the volatility and stay focused at buying securities below their intrinsic value. You are correct, and I have not said once that this is not going to happen. The question is, is it going to happen after markets fall 10% or crater 25%? And would the right decision have been to do nothing at all, or have cash to buy at either the 10% or 25% discount? We're already at that 10% discount and I can now buy alot of the stuff you own and achieve the same return going forward. And if markets tank to that 25% level, what happens to the stuff you presently own and what happens to the cash I have on hand? The only way this goes wrong for me is if I decide not to pull the trigger at all...that won't happen! Cheers!

But.... all these negatives were there at the beginning of this year, 3 months ago, etc... The market is now pretty much at the same level as Jan. Not much has changed. I don't see how one can have different views now vs barely just few months ago. It's pretty simple isn't it? I didn't think Spain was on the precipice of defaulting and that the amount of money Europe would throw at this thing would be larger than it is...and as such, I became more cautious. You should read the rest of that Leucadia letter. Cummings and Steinberg sold investments to specifically pay down debt. That isn't any different than what we did. What did they see two months ago, that they did not include in their analysis 6 months ago? Something perturbed them as well. And whether anyone likes it or not, why did Buffett forgo a $22B deal that normally would have looked very good? Because he doesn't want Berkshire's insurance businesses to be constrained? No. Berkshire went as low as $22B in cash in 2008/2009. They have about $40B in cash at the end of last quarter. He could have easily issued $4B in debt at rock bottom rates to finance this thing, and still kept $22B in cash. Something stopped him from doing the deal. What changed in two months that he didn't see six months ago? Cheers! I think your reasoning is a bit stretchy. Say if Buffett announces a 30 billions deal tomorrow, will that impact your thinking? Holy smokes, this is like pulling teeth! I'll make it simpler and less stretchy Alertmeipp, that way I don't have to go through the pain of this any further. I'm a market timer and we are timing the market...to the minute actually. Cheers! Hey, seriously, I was just trying to learn. Obviously, you made the right move so far. (I guess the rest depends on when you move your cash to work.) I often kick myself on not moving out when things were obviously overshoot short-term (e.g. BAC doubles in couple months) Hi Alertmeipp, I think I was trying to give answers, but my responses weren't taking, so it was just frustrating. I don't know what I can say to explain to anyone...it's just difficult to describe when your instincts are saying demand more risk premium, because there are many things that normally do look relatively cheap to people. Cheers!

My ass was chewed out when I discussed being cautious last year since "buying an equity interest is no different than buying an entire business, so NEVER worry about the general market" - just trying to figure out how once analyzes this environment and when a buying opportunity arises given A) general market valuations are not terrible like they were before Lehman, and B) individual securities are very cheap. For example, how do you know BAC will ever get cheaper than it is now? What if they come out with a positive litigation announcement and the stock doubles, and THEN the market craters bringing BAC down to levels higher than they are currently? My ass is starting to feel the same way! ;D I think your two main points are exactly why it is difficult for anyone to get a bead on what is happening around the world. General market valuations and individual securities are both cheap as you say...everyone would agree with that, regardless of whether you are holding cash or fully invested. The question is are they cheap enough, and that is where I think the instinct and temperament portion of investing...the art of the science...comes to the fore. We can all repeat the mantras "buy with a margin of safety" and "buy and hold", but they both do come with caveats..."margin of safety" is never a constant in all environments, and is directly correlated to the risk premium you desire relative to the risks around the investment...and "buy and hold" only exists if the moats continue to exist. Meaning, do you always demand only a 50% discount to your calculation of intrinsic value, or does that discount fluctuate with the risk of the business and the risks around the business? Do you "buy and hold" like Buffett did with Dexter, or would the prudent thing have been to sell Dexter? Do you buy when the market gets to 10 times earnings? Do you buy at 15 times earnings? Do you do it from a bottoms up perspective? As Klarman and all value guys say, you only hold cash when you can't find individual ideas.... Yet, Klarman regularly holds large amounts of cash, and his circle of competence is probably nearly as wide as Buffett's. Here is what else I'm struggling with....what money did you think Europe have back then that they don't have now? There never was any money available since it all has to be created. Back then the entire situation rested upon the willingness to create the money necessary - they didn't prove their willingness until LTRO, thus markets tanked. Now we know they will print, us the situation is far more stable..... What are you seeing? Or is it a gut feeling, which is perfectly fine, I'm just impressed with the instincts if that's it! Yes, I would say this behavior is as much art or instinct, as it is science. It wasn't the money...but the response and the way the Union is structured. We knew the risk of unanimous decisions across 17 countries would be difficult, but we hoped that it would happen. We hoped that they would respond in force with a ton of capital...$1.5T or better was the number I always wanted...but they came up far short. The longer the response, the more difficult it gets to retain confidence in your markets. And that is where the instincts started screaming...this is taking too long for agreement, and they are not going to be able to raise the capital...or print it, if you like. The longer it goes on, the greater the damage that occurs to the fiscal infrastructure of the Union. In Spain's case, they aren't near Greece yet, but the speed with which things are deteriorating is leading them exactly there. Capital is fleeing, spending has come to a halt. If the Union doesn't come to an agreement and acts in force, then you have a situation where Spain will default. And then you just don't know exactly where the dominoes are any longer. They topple in multiple directions. U.S. policy response in 2008/2009 was swift and vast, and one way or another, the country started to implement the initatives it needed to stabilize and deleverage their private institutions. Europe's response has been fraught with disagreement, delay and the inevitable problems with the Union structure itself. They can't move as fast or in unison, and they won't be able to act in force until things are ugly enough to force them to act together and quickly. So you wait...either with the investments you hold or in cash. We've chosen to wait with both, but more of one than many of you may choose to because we thought things would get cheaper. There's really nothing much else to say. Cheers!

But.... all these negatives were there at the beginning of this year, 3 months ago, etc... The market is now pretty much at the same level as Jan. Not much has changed. I don't see how one can have different views now vs barely just few months ago. It's pretty simple isn't it? I didn't think Spain was on the precipice of defaulting and that the amount of money Europe would throw at this thing would be larger than it is...and as such, I became more cautious. You should read the rest of that Leucadia letter. Cummings and Steinberg sold investments to specifically pay down debt. That isn't any different than what we did. What did they see two months ago, that they did not include in their analysis 6 months ago? Something perturbed them as well. And whether anyone likes it or not, why did Buffett forgo a $22B deal that normally would have looked very good? Because he doesn't want Berkshire's insurance businesses to be constrained? No. Berkshire went as low as $22B in cash in 2008/2009. They have about $40B in cash at the end of last quarter. He could have easily issued $4B in debt at rock bottom rates to finance this thing, and still kept $22B in cash. Something stopped him from doing the deal. What changed in two months that he didn't see six months ago? Cheers! I think your reasoning is a bit stretchy. Say if Buffett announces a 30 billions deal tomorrow, will that impact your thinking? Holy smokes, this is like pulling teeth! I'll make it simpler and less stretchy Alertmeipp, that way I don't have to go through the pain of this any further. I'm a market timer and we are timing the market...to the minute actually. Cheers!

They need whoever can to chip in...the U.S. is not going to. The more money Europe can throw at it, the calmer markets will be and the less the outflows of deposits and capital. If you stem the outflow of capital, then they've got a shot at making it work if they start to come to terms with changing the way the Union is structured. But the structure won't matter if capital keeps leaving, because it creates a negative loop which takes down the tax base, employment, lending, consumer spending, everything. Stop the outflow by bringing in confidence, and then you implement the measures needed to create an equitable deleveraging within the system. Will not be easy. Cheers!

But.... all these negatives were there at the beginning of this year, 3 months ago, etc... The market is now pretty much at the same level as Jan. Not much has changed. I don't see how one can have different views now vs barely just few months ago. It's pretty simple isn't it? I didn't think Spain was on the precipice of defaulting and that the amount of money Europe would throw at this thing would be larger than it is...and as such, I became more cautious. You should read the rest of that Leucadia letter. Cummings and Steinberg sold investments to specifically pay down debt. That isn't any different than what we did. What did they see two months ago, that they did not include in their analysis 6 months ago? Something perturbed them as well. And whether anyone likes it or not, why did Buffett forgo a $22B deal that normally would have looked very good? Because he doesn't want Berkshire's insurance businesses to be constrained? No. Berkshire went as low as $22B in cash in 2008/2009. They have about $40B in cash at the end of last quarter. He could have easily issued $4B in debt at rock bottom rates to finance this thing, and still kept $22B in cash. Something stopped him from doing the deal. What changed in two months that he didn't see six months ago? Cheers!

Incidentally Bmi, this paragraph from Leucadia's 2011 Annual Letter best describes why market timing is not accurate...risk aversion would be a better term. By the way, if you haven't read the letter, it is probably their best: http://www.leucadia.com/c-p_letters/luk_c-p2011.pdf A world-wide recovery in the near future is not a foregone conclusion. Europe and the future of the Euro are far from settled. Growth in China is slowing and the risk of a “Chinese Spring” cannot be ruled out. Iran is a big problem. In an environment of slow growth at home and a dysfunctional government, we believe that less financial leverage is better. We expect many other companies and investors share this view. We emphasize that we are not pessimistic, just cautious. We are enthusiastic about the future of our broad array of operating businesses and investments and have our eyes open for additional acquisitions. Never fear, if a good deal comes along we will find a way. We've been long on the U.S. since late 2008. But you have to have a margin of safety or some sort of risk premium for any investment. When that premium shrinks or just is no longer high enough based on circumstances around you, then you have to make a decision to buy more, stay pat or sell because you demand a higher premium. The world around us is constantly moving, as is every industry and economy. Information is constantly updated, augmented and sometimes even eliminated, so your analysis cannot remain stagnant. Buy and hold works, as long as the information you did your original analysis with is still accurate. Ten years ago, Microsoft was invincible...five years ago, chinks in the armor showed up...today, Microsoft is doing everything it can to bolster and maintain its moats. That isn't just a technology related issue, but simply business. No different than Walmart, Sears, etc. Microsoft is still a great business, but the premium you would have accepted ten years ago or even five years ago, would probably have been too small. That's all we did. We realized the premium we were demanding was not the right size for the environment around us. Cheers!

The $620B European Stability Mechanism fund is said to be ready by the end of the month or so. They've got about $860B between this fund and the EFSF fund, but they probably need another $300-500B to calm markets. They need to raise that money. Cheers! http://www.bloomberg.com/news/2012-06-01/eu-said-to-prepare-start-of-permanent-bailout-fund-for-july-9.html

Ha, BMI I'll take that with a sense of humor and thanks! ;D Truth is, the only reason I'm not still posting the weekly carloads is because they used to show up every week on the Yahoo Finance news under BRK-A. I stopped posting them the same time they stopped showing them. You can still go to the American Association of Railroads site and get monthly stats, but I only go on there monthly now. If you would like, I'm happy to post them for you monthly, but you can find them at www.aar.org. They are more expansive then the bloomberg linked weekly numbers, but those were concise and not in report form. About 95% of the news and articles I post on here comes from these sources, because they are the ones I read every day: - Yahoo Finance News under about 45 tickers I follow daily...BRK-A & FFH are two of them. - Bloomberg.com - CNBC.com - Globeinvestor.com - Reuters - Googlefinance.com for those same 45 tickers - FT.com - Financialpost.com With great respect, Calls are only as good as the returns they produce. We were down 9% last year net of fees, up nearly 40% as of March 2012 and now "only" up 5% as of Friday. Sanjeev would you care to share your returns for the same periods (Dec 31 2011, March 31 2012, and Friday May 31) Hi Moore, If we aren't providing those numbers to our partners until quarter end, we can't provide them to you either. I can give you our numbers until March 31, 2012. MPIC Fund I, LP was down 8.5% in 2011, and up 8.3% in 1st Q 2012. MPIC Canadian LP was down 5.1% in 2011, and up 9.7% in 1st Q 2012. What I can say is that we are in about as good a position as we've ever been in both funds at any time...including 2008/2009 and middle of 2011. We've put a bit of the money in both funds to work, and we'll put the rest to work over the next few months if things remain as they are or worsen. Our partners will be very happy with how we've positioned the funds and I'm very excited every day when I wake up right now...so that should tell you something. The last time I felt this way was through the better part of late 2008 and early 2009, and we weren't positioned like this then...it was good, but this time it is great! The results in the ensuing two years were terrific for both funds as well, and I'm pleased that we'll finally be able to reward our Canadian fund partners, who've been loyal and faithful to us after suffering the two lean years we had when we started that fund. Cheers!

The four major global accounting firms will audit Spain's banks. Cheers! http://finance.yahoo.com/news/big-four-audit-spains-banking-141916156.html;_ylt=AjzukCakbEYtJhZcHU9IlpiiuYdG;_ylu=X3oDMTQ0dDdqMW45BG1pdANGaW5hbmNlIEZQIFRvcCBTdG9yeSBSaWdodARwa2cDMDljNTU0OWMtYzRiNi0zOGVmLWE4OTYtNzZmNTBhOWVhZmZmBHBvcwM0BHNlYwN0b3Bfc3RvcnkEdmVyA2Y1MjBkOTgwLWFjYmUtMTFlMS1iZjliLTVkNTc1ZWIyNzMxNg--;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

No ECB bonds as far as Merkel is concerned. Cheers! http://www.bloomberg.com/news/2012-06-02/merkel-rejects-debt-sharing-as-obama-urges-end-to-crisis-cloud.html

You could get a full collapse of the Greek economy if suppliers start to stop delivering inventory. This is the incalcuable portion of these types of events. Do you get food and gas shortages, more general strikes, riots, etc. It's hard to tell what happens here now. Cheers!

After reading the Jefferies letter below from last November: http://jefferies.api.edgar-online.com/efx_dll/edgarpro.dll?FetchFilingConvPDF1?SessionID=WNlVFyi4eZWuIUE&ID=8256100&logo=JEF_2C_CMYK_POS_std.gif Who was the analyst and the hedge fund that ran the attack against them? Thanks and cheers!