Parsad

Yes, I think that may be the correct outcome Packer. Just like capital flowed to the U.S. dollar as a flight to safety, I suspect as earnings in U.S. companies continues to progress, while the P/E multiple continues to contract, capital will eventually flow to U.S. equities. But it may move sideways with intermittent volatility for some time. Cheers!

Near Coal Harbour...on Pender between Thurlow and Bute. We are on the 16th floor and we could see our building swaying a bit relative to the building across from us. My brother felt it in his office building near Metrotown, but my Mom did not feel it at her clothing store in Surrey. I was actually surprised it was 6.4...it didn't feel that bad. I can only imagine what 7.4 must feel like at 32 times more force. Cheers!

If we have a sovereign default domino in Europe it may well harm even our beloved FFH. Greece should default. It would be the best thing for Europe. But when it happens, the ECB should step in and do the same thing that the U.S. did with banks here. Go to all of the exposed financial institutions and tell them they are going to take a haircut...enough to hurt and bleed, but not enough to kill. The ECB buys the Greek soverign debt from the banks at 50% of the price. Restructure Greece, collateralize their debts with State assets, and have them pay back the ECB. The debt is now 50% of what it was originally, the banks write it off but survive, and Greece pays back part of their obligations at the ECB's cost. Cheers!

Sanjeev - I want to take a moment to appreciate your attitude. It is the attitude that I aspire towards but have not yet achieved fully. I am currently reading "The Most Important Thing" by Howard Marks (excellent book) and he talks about the inevitability of all sorts of cycles in the market, and how basically you will never be able to predict the future, but you can be sure that the pendulum of the market is always in motion and that somewhere people are always overreacting to that natural motion, which is what creates the greatest opportunities for the investor who can truly keep his emotions in check. Over simple? Maybe, but there is an acorn of truth that is impossible to ignore. Hi Alpha, I haven't read that book, but I think that analogy of a pendulum is exactly correct. I would take it one step further: The tip of the pendulum swings back and forth, but you notice how the base at the end of the stem is always in the same place. In other words, market sentiment of intrinsic value is the tip (swinging wildly), but actual intrinsic value is the base (steady). Cheers!

No damage in Vancouver from what I know. Things might have been a little more shaken up on Vancouver Island which was closer to the epicentre. Cheers!

Yup, and they will uncoil dramatically regardless at some point when things stabilize. Cheers!

Alnesh and I were looking at something on his office computer right now, and the blinds started moving and hitting the glass. We looked up to see if the air conditioning was blowing fast or something, and then he realized it was an earthquake. We looked outside and the building was swaying. Everybody felt dizzy. Lasted at least 15 seconds. Apparently it was a 6.7 quake, 80 kilometres below the water off of Vancouver Island. Cheers!

A question for you though. Aside from your own ability to deal with extreme volatility (or a replay of 2008) what about your responsibility to your clients? Que sera sera is fine when you make that a conscious choice, but your investors may not be so sanguine. Not intended as a slight, or a critique of how you fulfill your fiduciary responsibilities to your investors, just curious about if/how your investors feel about the volatility and how that informs your decision making. The volatility comes with investing in equities. We have very good partners who almost all have long-term horizons. That's what happens when you pick individual partners rather than institutional partners. Also, this is nothing compared to 2008/2009, and we only had one redemption back then. And that was because one of our partners wanted to buy a home during a depressed real estate market. All of our partners handled volatility well during that crisis, and I don't expect their behavior to be any different this time around. Anyway you slice it, they were better off staying invested in our fund, than redeeming their capital. Those that invested $100K in May of 2006, had $185K at June 2011...compare that to the S&P500 or T-bills! And the markets were as rambunctious as they had been in 70 years. The friggin' credit markets had seized up and had maybe 10 days of liquidity left! Some of the largest financial institutions in the world went under. Panic was as swift and deadly as it has ever been. But I said the same thing then..."I don't care!" Cheers!

We are all buying individual businesses for the long-term, correct? Then any volatility is a good thing, regardless of how painful the short-term effects (1-4 years) may be. Mr. Market is having a tantrum and today's reason for the tantrum is "Will Greece default?" Do I care? Nope. I don't plan on investing my money for a few months or years. I plan on doing it until I die, and I'm not about to put it into 10 year treasuries yielding less than 2%, when Wells Fargo's annual dividend alone is going to be double or triple that in the next year or two. If the price of Wells falls to $9 like it did in 2008/2009, all I'll do is buy more. If the price stays down below $15 for two-three years...who cares...I'll buy more over two-three years. To put it as simply and succinctly as I can..."I don't care!" I live a frugal life and make more money than I spend. If my investments are undervalued for 2 years, 5 years, 10 years...I don't care. I'll just keep buying more and more over that time. The phrase for today, and really for all your days as a value investor, should be...yes, that's right..."I don't care!" Cheers!

I'm really starting to love this guy! For a company that was pretty screwed up, he's doing a heck of a job taking this thing back to basics. Cheers! http://www.bloomberg.com/news/2011-09-08/moynihan-says-bank-of-america-to-be-smaller-more-focused-after-review.html

Yeah, I agree. Put Buffett in a title right now, and you increase your readership five-fold probably. I should have called this message board...The Buffett of Buffett & Buffett! ;D Cheers!

While Android continues to eat up the smartphone market, Microsoft continues to negotiate Android patent agreements with phone makers. Now they've started to also add agreements related to Chrome. Kaching! Cheers! http://www.bizjournals.com/seattle/news/2011/09/08/microsoft-inks-two-more-android-patent.html?ana=yfcpc

Aram's festival details: Tomorrow is the Capitalist Collective Stock Picking Festival. It's where I will be announcing the winners of the Capitalist Collective Talent Search Grand Finale. There should be lots of drama as the two winners of the Talent Search will get a senior and junior analyst position at my firm, Fertilemind Capital. You can check out the agenda here. http://www.capitalistcollective.com/pg/cmspages/read/conference_overview If you can't attend you can just watch the webcast here: http://www.nyssa.org/CapitalistCollective.aspx Cheers!

Just thought it was kind of interesting and probably a good idea. As long as they're safe! Cheers! http://www.bloomberg.com/news/2011-09-08/london-entrepreneur-sees-a-gold-mine-in-developing-unused-subway-stations.html

As an insurance company, Prem has to protect the company from outlier events. Events that would barely create consternation in an unleveraged portfolio, could have dramatic, company-wide results for him. He's hedged for virtually every scenario. Just because Fairfax's insurance companies run models on worst-case scenarios for an 8.0 earthquake in a major metropolitan centre and a Category 5 hurricane hitting the east coast in the same year, doesn't mean they expect it to necessarily happen, or that it would happen in the next year or five years. But they have to be prepared nonetheless. The hedges are no different. He does not know, just like all of us, what the outcome will be. But he's concerned, and he has to worry about worst-case scenarios. At the very least, the economy is going to be stagnant, deleveraging continues and unemployment elevated. He follows the Boyscout moto: Be prepared! Francis Chou knows Prem as well as anyone...how come Francis isn't hedged in the Chou Funds? He could buy credit-default swaps protecting for any scenario. But he has none. No swaps, currency contracts, puts, etc. And remember, if they ever need someone at Hamblin-Watsa, this guy is probably the first person on the list they are going to call. Cheers!

Absolutely fantastic article by Bloomberg on Bank of America and its trials and tribulations. Really good! Cheers! http://www.bloomberg.com/news/2011-09-08/moynihan-tries-to-keep-bank-of-america-intact-as-mortgage-loans-fall-apart.html

Great interview! The comments could simply be transported from 1992 and printed in 2011 about Bank of America. Cheers!

Hi Gurjot, Did you contact them for one, or did they just send it? Cheers!

Thanks Max! Terrific interview. I guess I already know Prem's answer to the gold question I had submitted for the Gurufocus interview. ;D Cheers!

He won't get any credit here. I'm happy to give him credit. He did something that TRE's own board of directors couldn't. Doesn't mean I have to like the guy, just like I don't like Jim Chanos, Fabrice Taylor, Peter Eavis, Jim Cramer, John Hempton, Adam Sender, Steve Cohen and a bunch of other people. Do I stop people from criticizing Patrick Byrne? So, why am I going to stop people from criticizing Carson Block. Byrne rubs many people the wrong way, and there are as many who like him. Just like Block now I'm sure. I don't think either is going to care who does or doesn't give them any credit. Cheers!

Investors have not learned their lesson from 2008. Incentives for hedge funds, and the fund industry in general, are not aligned with the investor's own interests. http://www.bloomberg.com/news/2011-09-07/wealthy-investors-keep-paying-hedge-fund-fees-even-with-anemic-returns.html While it has been tougher than the alternative, I could not imagine using any other fee structure than what we have...no "1 & 20", "2 & 20", or even "4 & 25"! We don't make our partners money, we don't get paid...simple! Cheers!

For those concerned about the "too big to fail" banks, they were recently put through another rigorous stress test. Banks here are in great shape compared to most of the rest of the world. Berkowitz's comments, that this period reminds him of 1994, I believe are comparable. Cheers! http://www.cnbc.com/id/44422054

a) Not usually, but you can buy riders for that coverage or separate policies. I've been out of insurance for over 6 years, and critical illness coverage has gained considerable popularity in that time. There may be new products now. Read the contract and ask the same questions of your agent. Make sure it is all in the contract. b) Some policies do, some don't. You can usually get free coverage for that (to certain limits) through your credit card company, homeowner insurance policy, etc. The likelihood of dying through accident is relatively remote for the average person and that type of insurance is actually a moneymaker for insurance companies. You are better off just getting a good term policy that has the exact coverage you want...so it doesn't matter if your death is natural or accidental. Cheers!

Article about Fairfax investment "Mega Brands" and their comeback. CEO, Marc Bertrand, was one of the guests Prem brought to our dinner in April. http://www.theglobeandmail.com/globe-investor/investment-ideas/mega-brands-is-back-from-the-brink-but-few-are-noticing/article2155389/ Interestingly enough, the article is written by Fabrice Taylor, who wrote several negative and poorly researched articles about Fairfax between 2003 and 2006. Perhaps, he still hasn't noticed that Fairfax is also back from the brink! Cheers!

Given, be careful what you're saying, because you'll be working for Harry one day. ;D Cheers!