Parsad

Article on the donor who salvaged the charitable dinner auction at Buffett's childhood home. Cheers! http://blogs.wsj.com/deals/2012/05/23/donation-makes-up-for-failed-dinner-auction-at-buffetts-childhood-home/?mod=yahoo_hs

Interesting article on the originated loans that BofA is buying back. Moynihan will whittle all of the litigation down like this over time. Cheers! http://www.bloomberg.com/news/2012-05-23/bofa-will-buy-back-330-million-of-mortgages-from-freddie.html

What the hell were they thinking? This was a black box! Don't know how Dimon let this happen. Cheers! http://www.reuters.com/article/2012/05/23/jpmorgan-cio-fed-idUSL1E8GND2A20120523?feedType=RSS&feedName=marketsNews&rpc=43

If this guy isn't the successor, it would be a real shame and mistake! I can't see anyone else truly suited to the job, and can handle the Buffett legacy. I've met him on a couple of occasions as well, and he is incredibly nice. Cheers! http://www.bloomberg.com/news/2012-05-23/buffett-s-idiot-challenge-seized-by-jain-in-premium-growth-hunt.html?cmpid=yhoo

This is always something I feel kind of bad about. Sometimes people post an idea and I'm really happy to see a new idea, and I check it out, but it doesn't quite get through my first line of filters so I never research it quite deeply enough to have something to say about it. So on one hand I wish I could post and start a conversation and make it clear that I really appreciate people posting ideas and encourage more, but on the other, I can't really motivate myself to look deeply into things that I don't feel are what I'm looking for. I wish I had a way out of this dilemma. Maybe I just need to start reading more about stuff that doesn't appeal to me just to get more exposure to a variety of things and build up more experience researching companies... That sounds very good in the abstract, but in practice, I find it tough... You only need 20 punches in your punchcard Liberty, so I wouldn't really change anything. I find that most investors, including those that believe they have a very wide circle of competence, tend to ignore the most obvious investments that are 3 foot hurdles, and chase after 9-10 foot hurdles because they think no one is looking at them. BAC at $5 was staring everyone in the face, yet very few investors swung. You had guys like Paulsen selling all of it and buying gold! It was the same way with Steak'n Shake below $5...and same thing with FFH below $80. People ask for ideas, but I find that virtually no one swings at them when fears are the greatest. People can generate tons of ideas here, original or otherwise, but what is the point? You aren't going to buy all of them. In fact, anyone with any sense wouldn't even buy 10 of them! I get so many white papers from people. Very in-depth analysis of various ideas. It's incredibly commendable work in virtually every circumstance...voluminous, detailed, technical with very expansive anecdotes about moats, competitors, etc. But I have yet to read one that explains to me in simple terms why something is a good idea. None have ever been 3-foot hurdles! ;D It's one of the reasons I personally can't stand white papers or analyst reports, but I will read them and provide feedback if someone asks. When I look at something, the first thing I go to straight away is the balance sheet. I don't like it, it goes in the garbage. That filter, or perhaps bias, is built in and I can't turn it off. But it works! So don't change your methods if they work...plain and simple! I've found that nothing is original. It's all been done before. Cheers!

Hi Guys, Some comments on the questions: - In regards to the ideas...they tend to go through periods where there is less discussion and then more...so you do go through periods of less analysis. - There are quite a few ideas on the "Investment Ideas" board. The whole idea is to get people to go through there, and then they may notice that some idea from a long time ago is suddenly cheap, and they have past analysis and comments to use as a historical guideline...ideally, anyways...and then that person tends to bring the subject back to the front because it becomes active again! - Small cap ideas tend to dissipate a bit when larger caps are cheaper. As markets move up and prices increase, people have to dig around for cheap stocks and they start looking at small caps again. - The only way to adjust the number of threads and messages you see is from your own profile settings, and the maximum is 50 visible at anytime. Lastly, asking where the original ideas are, because you want some ideas, is like someone asking "Where's my birthday cake, because it's my birthday?" You only get out what you put in! Throw an idea into the ring, and you'll find that others will throw an idea out as well, or at least get the discussion going in the right direction. Cheers!

I still don't think DELL is really cheap. It's fair to slightly undervalued in my mind based on its ability to grow its cash flows, and the lack of competitive advantages. Cheers!

Yup, he did! Cheers!

Can't believe he even had a shot! Newt apparently loves more than just his account at Bloomingdales. Cheers! http://www.cnbc.com/id/47515942

Article on how most Greeks don't think they'll be kicked out of the Euro, and how this could all be resolved by simply taxing the rich. Yikes! Cheers! http://www.cnbc.com/id/47518874

It will definitely be more efficient and cost-effective! This guy doesn't know how to quit, and it's probably just the beginning of what he may end up doing...another crazy entrepreneur who will change the world...although I don't know how profitable his ventures will be. Cheers!

Indian middle class is the fastest growing in the world. Travel will be a natural growth area and TC India is I believe the largest agency in India. I bet you'll see Fairfax (or Fairbridge) continue to make significant Indian consumer-related acquisitions. Cheers!

Was not him but Ina Drew that hired Irvin Goldman. All the reports show that she was given a long leash because of her long history of performance with Jp Morgan and Chemical (around 30 years). Jamie's was a mistake, but a different kind of mistake that anyone that has worked in a large organization can relate. There are still many questions unresolved: - Why the automatic risk stop loses were deactivated by Irvin Goldman? - Why Achilles Macris changed the VAR methodology and did it have anything to with the trade? - Did Jamie Dimon know about all these? Ah, that explains the hiring. Thanks! Cheers!

That September case is getting closer and closer. I expect more of the same from Boyd and his cronies. Cheers!

Did Boyd get fired from the Post? Does the Post know he's running this blog if he hasn't been fired? Who is funding this blog? Isn't it interesting how both Hempton and Boyd are running blogs? This guy has been full of crap for the last decade, and someone is pulling the wires behind the puppet even now. Cheers!

Another article on it: http://www.bloomberg.com/news/2012-05-21/chinese-iron-ore-buyers-defer-imports-cargoes-mirae-says.html Hard to tell at this time if it is simply oversupply from a slowdown, or something more significant. If it is something more significant, it will trickle over into other commodities...only time will tell! Cheers!

What was Dimon thinking hiring this guy? Gets worse and worse...unbelievable! Cheers! http://www.bloomberg.com/news/2012-05-20/jpmorgan-cio-risk-overseer-said-to-have-record-of-trading-losses.html

I saw the original version when it was published. So this corrected version says that he just has to hit the high watermark plus 6% and he gets compensated. So he could lose 5% in year 1, lose another 5% in year two, and he would just have to recover those losses plus 6% in year 3...not recover the losses, plus 6% compounded each year. If that is true, then shareholders should be asking questions...but he'll probably just tell you to sell the stock if you don't like it! I wish the compensation plan in my fund was like that! ;D Well, actually I don't, because it would simply enrich me when I don't truly deserve it. Cheers!

I would rethink that statement...not only based on your policy. How exactly will insurers achieve the 4% return on guaranteed whole life policies? Alot of Japanese insurers went bankrupt back in the 90's and early millenium after rates hit historic lows, because they could not cover their insurance liabilities. Why will we not see the same thing with insurers in the United States or Europe? Your insurance policy may only be as good as your insurer, and no different than any other financial institution when they cannot match assets and liabilities. Cheers!

I have not taken a good look at the compensation plan since he implemented it, but that is what I understand. If you exclude the mark to market accounting of BH's investments, there is really no way he can't make at least 9% annually ROE. Shareholder equity is about $300M and net income should be around $28-30M...90% coming from Steak'n Shake's consistent earnings...and net income should grow annually at 2-3% just from Steak'n Shake. So if he did nothing with the cash, he would still be making better than 6% annually ROE. Cheers!

Very good question Cardboard! To answer your question, ask yourself why my opinion would change? ;D The answer: I saw the problems with the PIIGS, and expected Portugal, Ireland & Greece. I didn't think Spain would get to the point it has...and I'm far more worried about Spain than Italy...but that could change if things degrade there with the speed they did in Spain. As soon as I recognized how big the problem was in Spain, and the scope of helping them, we started buying out of the money SPY puts...we then added the BAC puts. Not because we saw any issues with BAC or the United States, but that this was going to be a problem and we were going to see volatility probably worse than in 2011. The BAC puts are up well over 130% and the SPY puts are up about 25%...they were well out of the money. We've sold 35% of the BAC puts and none of the SPY puts. We don't work in a vacuum. I'm constantly reading and trying to put together information that I pick up. If the scenario changes where the risk/reward ratio degrades, I have to accept the new analysis and apply it to the fund...otherwise, it would be like floating in a boat that develops a hole in the hull, determined to reach your destination, and not patching the hole because you choose to ignore the new information...you may make it or you may not, but the decision to ignore could be very costly. Cheers!

Parsad, with respect, a calculation of bank assets to GDP is a novel one at best. All that matters is bank leverage ratios (Assets to equity) and then you need to simply add up the value of all the "non surviving member" sovereign debt held by the members of the "surviving eurozone". In every scenario you can assume say Spain exits, or even France, well then just look at the surviving members ie: Germany, Netherlands, Belgium, analyse those banks and on those balance sheets add up the value of the sovereign debt they hold. In the scenario I propose the ECB will simply create new money and either inject it in the form of a TARP or if there is enough equity cushion provide it against illiquid assets. Its fairly easy to ring-fence the banks belonging to the surviving euro zone with fiat money as has been proven by the americans. So, if Greece exits, and surviving nation banks have to take further write downs (which they don't currently based on my calculations) ECB would step in and create that magic number, inject it as either a discount window loan (against anything) or a TARP, if Spain or Italy left, the same would happen. Meanwhile the exiting nations would simply supplement their former currency the Euro with a new fiat currency which could be created at will to meet the nominal disequilibrium between their tax revenues and debt service... This would cause inflation of course (as I previously mentioned as the number one risk) So you see in all scenarios the Euro as we currently know it is actually worth quite more than is currently being reflected. Imagine a Euro anchored by just the top nations... The only way you lose in Europe under the scenarios I propose is if you are invested in the securities of the nations which you feel may exit the Euro, the PIIGS or what not... This is the reality we all live in now, a reality where money means nothing and where debts will be papered over to keep the system from gravitating towards its natural path of correction. Tomorrow we will all continue to contribute to the economy and engage in commerce, and both the kicked out nations and surviving nations will still consume the same amount of goods and services. If their currency does not afford them the same amount then you will see domestic companies pop up and correct the imbalance. A Parmalat for example has an advantage over a Nestle and Danone in Italy if it returns to the Lira... Bottom line: How this all affects BAC or BP or the rest of the companies in my portfolio? It doesn't.. its just providing a window of opportunity for me to buy more of these fantastic businesses at incredible valuations. Hi Moore, I don't think we disagree. You're saying that you aren't concerned about volatility because they don't affect your underlying holdings. I'm saying that I do worry about volatility, not because I'm concerned about my underlying holdings, but how that volatility may shape the decisions of my partners. We'll both be buying if markets drop. Incidentally, I think TARP is what will have to happen in Europe, but it will be complicated by the existing leverage and the exodus of possibly a couple of EU nations. Cheers!

As you mentioned since the first discount facility announced in the face of 2008, whereby the Central bank resorted to creating new fiat money and lending it out in exchange for illiquid trash securities, I believe we are in the face of a new normal whereby central banks will not allow banks to fail in the classic sense or governments to default, again in the classic sense. You are correct here, as far as the United States is concerned. What that means is that shareholders of banks will be allowed to lose their investments but you will never ever see a scenario where depositors lose money. Same with Sovereign defaults, you may see an orderly exit of a country from the Euro Zone IE: Greece/or Spain, in which case gov bonds may be devalued but in such a case central banks will step in, create new money, and inject it as new capital to the remaining banks that had to take a hit on the depreciation of the bonds from the kicked out nations. You may be very wrong here...I would say it is 50/50 at this moment. Please see the slide attached from our AGM in April. If you can find a way for the ECB to fund the losses with the amount of leverage involved in Europe, then you are a better man than me. The problem will solve itself over time, but not without considerable pain. That will affect the U.S. to a degree, but they will be better off than anyone else, as they have dealt with alot of their problems in the last three years. Like I said, I'm long on certain U.S. banks, because they will be better off than all of the banks in Europe and probably China & Japan. But Europe is going to pay a price for their excess. The ECB will survive, but almost certainly not in its present form. Cheers! MPIC_Funds_Presentation_-_2012_AGM_-_Slide_34.pdf

Maybe Buffett has more in common with Hefner than we thought. Those mid-western boys! Not sure if any of you have seen the documentary on Hefner, but it's pretty darn good. Cheers! http://omg.yahoo.com/blogs/now/inside-playboy-mansion-kitchen-230251279.html

This retard from Bloomberg compiled a list of the most likely Canadian companies to default due to Europe's problems. He screened ratios and has assembled them without actually reading any financials...a vacuous attempt at journalism! Somehow Fairfax is on the list, as is Brookfield and a number of other companies that have almost zero chance of default even if Europe imploded. Cheers! http://www.theglobeandmail.com/globe-investor/investment-ideas/number-cruncher/amid-macro-turmoil-canadian-firms-with-highest-risk-of-default/article2433712/ http://www.huffingtonpost.ca/2012/05/17/canadian-companies-risk-bankruptcy_n_1524895.html