Parsad

Yeah Shalab, I agree with that one. I think they should also grant some credit or total credit to professionals who have studied elsewhere, as long as certain requirements are met or they article/audit at a U.S. institution or facility. So a doctor/engineer/etc who has studied in India, Japan, China, Australia, or Europe is given a fair shot at getting their education recognized here, and then allowed to work in areas that are difficult to fill employment or have depressed economies. Cheers!

Blankfein hires a prominent defense attorney. Cheers! http://money.cnn.com/2011/08/22/news/companies/goldman_blankfein_lawyer/index.htm?source=cnn_bin&hpt=hp_bn3

I've got a couple of good ideas, and hopefully it's what Buffett tells Obama, since he can't raise tax revenues and he can't cut the budget significantly. How about the government gives all U.S. domiciled companies with foreign subsidiaries, a one-time tax free opportunity to repatriate all their foreign capital back to the U.S., as long as they use the funds to invest here. So all these companies like Microsoft, with huge cash hoards elsewhere, are allowed to bring that money back and invest in a weak U.S. economy with depressed asset prices. Perhaps, even create five-year tax credits that can be applied against some of the income they earn on those investments as well. Also, the U.S. should loosen up their immigration policy to the business class for the next five years. If you've got $3.5M to invest and plan on employing at least 3 people, you and your immediate family get an automatic green card to the U.S. if you can pass the security background checks. And you tailor these green cards so that the immigrants have to live in specific states that have been hit hard...thus they buy homes there, consume there, invest capital and employ people in those areas as well. Cheers!

Article on Obama getting some advice from Buffett on how to spur economic growth. Cheers! http://www.bloomberg.com/news/2011-08-22/obama-spoke-with-berkshire-s-buffett-about-economy-aide-says.html?cmpid=yhoo

How are the Markels and Tom Gaynor not in this conversation? Insurance, investments, whole businesses, shareholder friendly, conservative compensation, fantastic results in both underwriting and investments, honest, ethical and forthright. I would say Leucadia should be in the conversation as well. But if you want people who have done it almost exactly like Buffett, then Markel comes to mind ahead of anyone. Cheers!

Hi Moore, No worries on the debate. I enjoy that aspect as do many others. You have to tear down ideas to find out if they have value or not. I was just asking because your handle has Moore Capital on it. I was just going to make a point that if that was where you worked, your institution has numerous internal controls in place to prevent fraud, illegal trading, etc. Yet, even then you can have fraud or unethical behavior occur there, such as the case with Christopher Pia who was fined $1M there for illegal trading activities. You'd be surprised by who we work with. In regards to 43-101 certification, all you need is five years exploration or mine development experience, and be registered as a member with any professional geology organization. About the same as a CGA or CFA in terms of depth of study. I know and have seen a number of geologists go through the process. In terms of auditors, I've seen every auditor in Vancouver, from small ones to the big 4, certify financials for some crappy companies. There are a couple of firms where all they do is certify financials for shell companies and new exploration companies for large promoters. Even the large audit firms use CA students and senior managers to do the testing, while partners review the financials, MD&A and results of testing. There is plenty of room from the drilling stage, to the certification process, and finally the operations side for fraud to occur. All auditors and internal control specialists can do is establish enough key controls to reduce the amount of fraud and allow it to be detected more easily. We can't stop it. My off the cuff remark about geologists, executives, etc, was a generalization, but the amount of fraud is rampant. And that is partially due to the incestuous relationship between officers of companies, the geologists, board of directors, investment banks and promoters. The incentives are completely misaligned, enforcement is lacklustre, and the majority (I would guess 80% or better) get the shaft. You must be relatively young, because David Baines has been covering more OTCBB companies in the last few years primarily because alot of West Coast promoters have gotten their hands more heavily involved on there. He used to write only on TSX Venture, or what used to be the VSE, for pretty much most of his career. He still does write regularly on TSX and TSX Venture companies, but more time is spent on OTCBB's. Anyway, I've spent considerable time examining the space from the interior and the exterior, including reading plenty of 43-101 reports. I've viewed the business from on-site drilling and exploration to the company's head office and boardroom. I've interviewed executives, directors, geologists and administrative staff. Examined ledgers, continuity schedules, treasury orders, inventory, asset valuations, payrolls, etc. The handful of companies you mentioned sprouted from thousands and thousands of companies that failed...partly due to unsuccessful projects, and often due to unethical conduct, incompetence and mismanagement. Often I've seen companies that have raised financing, simply find a garbage property so they can continue to work, receive salary and options, and feed off the retail investor trough. Are there legitimate companies...sure, plenty. But they are outnumbered by the rubbish. Cheers!

Things are looking tougher and tougher for BYD. Cheers! http://www.bloomberg.com/news/2011-08-22/byd-first-half-net-income-falls-88-6-to-275-4-million-yuan.html?cmpid=yhoo

Moore, let me ask you something. Do you work for Moore Capital of New York? Cheers!

I suggest you dig into the business. The single best source of information for newbies is this: It's the weekend. If you have time, I suggest you watch ALL the videos on Ore Deposits in sequence: http://www.gril.net/education You will understand how incredible the opportunities are in the junior space. The only downside is that they can be very illiquid at times. I actually do the internal controls for a number of junior exploration companies in Vancouver, and I actually do as in-depth examination, probably more so, than most audit firms. And I can tell you for a fact that investing in junior exploration companies is as big a crapshoot as investing in technology startups. In fact, because so much of the junior's assets are tied up in their properties, you have a better chance of being correct on the future success of a technology venture than any junior exploration. Forget about financial fraud, egregious stock options, or deficit financing of most junior explorations companies...there are so many points in the geologic drilling and assay process where fraud could occur. The 43-101 certification is no different than a CFA report...any geologist after becoming certified can write those reports. The promotion and underwriting of junior exploration companies is probably the most incestuous form of underwriting you will find in the investment world. I've seen so many companies that are outright frauds where the CEO, CFO and directors are simply running the company as their own personal piggy bank. Where much of the capital raised is spent on "investor relations", salaries, consulting fees, travel, entertainment, etc. Enforcement is virtually non-existent. David Baines has been writing about so many of these companies for 20 plus years, and less than 0.5% of them have had any enforcement or sanctions. There are a few mining executives who do really understand the space, and they generally work only with other people they've dealt with in the past. That allows for a little more certainty in the assay reports, and legitimacy in the actual exploration operations. But they are few and far between. Many of the promoters, investment banks, geologists, executives and directors don't really give a damn as long as they have a job and are making money. So many trade on inside information as well. It is simply the most corrupt industry I have seen! With gold prices where they are, the money is sweet for many of these guys right now. The easiest way to make money is buy a shell, then buy a property for a few thousand dollars, and go raise capital at any of the investment banks. They sell the stock to their retails clients, take an 8% cut, and will raise you anywhere from $500K to $50M. Then you just blow the money on "exploration expenses" and your operational expenses (salaries, promotion, travel, office, IR, consulting). And don't worry, you can always find an audit firm to sign off on your financials! When you start to run low on cash, go back to the investment bank, and they'll do it all over again. I've seen so many shitty companies raise millions, and the CEO just keeps recycling the story over and over! Cheers!

Hey Folks, My apologies! Your resident tech guru (me) was fooling around with a couple of modifications and I took down the site. Paul and his team got it going again in less than an hour! Sorry. Cheers!

Hi Folks, I was just testing out the themes. I've changed it so you can change the theme to whichever one you want for you own viewing. This can be done under your profile settings...in layout. It seems many of you like the new default theme, I've left that one standard. If you want the old theme then select "Core", which will make your view look like the old board. I prefer that one actually, so that is what I have on my own setting. This is Simple Machines 2.0, so there a bunch of additional features which I'm going to have to figure out and you will sort of have to tell me if you like or not. You can make this board much more custom than the old one. So we'll do that by trial and error, and your feedback. Cheers!

Perhaps he's part of Shaw Food Pty. Cheers!

Yup, they're levered and have been for some time. But they stick to most of the basic banking functions and stay away from esoteric products. Mortgage loans here are also of pretty high quality. But they will get hit at some point as some loans eventually do go bad, business loans slow or interest rates hike up. They got hit badly in the 80's. For the most part, they are fairly well run...except CIBC, and Royal had significant US exposure during the last couple of years...but they would be able to sell assets or raise capital and easily support themselves. Cheers!

I think the problem is that a lot of value investors just read a copy of Security Analysis and/or Intelligent Investor and base every single investment decision through that prism. Actually I think it's because Security Analysis and Intelligent Investor rationalized the whole process of investing in equities. It was the first piece of literature that actually created an intellectual framework for valuing a security. I can talk to 1000 people about equities and intrinsic value, but only 50 or so will actually go pick up a book by Graham. Of that 50, for ten of them it will be like a light bulb went on...enlightened perhaps! That's why many people cannot wrap their head around your views on gold. It was the same thing when people talked to them (me included) about internet stocks that were trading at 100 times price to earnings. It's the same thing when we looked at Salesforce.com or Open Table in the last few months. Same thing when Jeff Rubin said that oil was going to hit $200/barrel a couple of years ago. Or when HGTV showed nothing but marathons of "Flip That House!" We've seen all of this before. There is always a way to justify gold's price, yet every nascent instinct we have is telling us that this cannot exist at these levels for a prolonged period. Money will be made...be it through speculation or divine intervention. The whole world will clamour to this path of gold...oh wait, they already have! And we will look stupid, through $1,000/oz, $1,250/oz, $1,500/oz, $1,750/oz and very likely $2,000/oz. When fear or greed run rampant, the limits are always underestimated! And then with a thunderous thud, it will come down. The seasoned veterans long gone, the recent investors hammered, and the institutions caught somewhere in the middle...but it won't matter because they'll get some sort of support from someone...options granted recently gone unexercised of course! And then people will assume that gold will one day go down to zero. Which is when I bought it $350/oz. Everyone thought it would go down to $100/oz! I remember people telling me that it was crazy to buy Wells Fargo at $9 and GE at $7 three years ago. I was told Fairfax was a fraud eight years ago...at $80 US. And I remember how I was told that Buffett didn't understand the internet twelve years ago when Berkshire B's were at $1,250....$25 split-adjusted! Recently, I've been told that I'm buying way too early...which I've done on numerous occasions...and I've also sold early too many times. I'm only human! The reason we put our faith in Securities Analysis or Intelligent Investor is because it works! It protects us from new fads, rampant fear and blind greed. I've never permanently lost a significant portion of my investments, my corporate investments or partnership funds since reading those two books. We won't make money quickly, but we certainly won't lose it either. Not to mention it's worked pretty darn good for the people below: Warren Buffett Charlie Munger Walter Schloss Marty Whitman Prem Watsa Roger Lace Brian Bradstreet Lou Simpson Peter Cundill Francis Chou Tim McElvaine David Winters Mohnish Pabrai Bruce Berkowitz Ian Cummings Joe Steinberg Steven Markel Anthony Markel Tom Gaynor Arne Van Den Berg Howard Marks Seth Klarman Jeremy Grantham Larry Sarbit Irwin Michaels Eddie Lampert Robert Rodriguez Guy Spiers Sardar Biglari Whitney Tilson Glenn Tongue The list goes on and on. They've all done alright by most standards. My point is that sometimes you don't need to look any further than that prism. Cheers!

Hey congratulations Tariq! That's terrific. You've truly joined a great team. Cheers!

Then there's also cash in my wife's RRSP, around 50% so there's that too. (Parsad, I wish Corner Market had an RRSP eligible fund.) Me too! Maybe at some point, but not yet. Need to grow the existing funds. Cheers!

I've personally spent the day in violent panic. If the Dow can fall 400 points in one day, what's to stop it from falling 4000 the next day? Checkmate. Long Gold, T-bills, GNI, and dinosaur bones. Hester, you remind me of the times when I was in the chess club in elementary school, and we'd all be yelling checkmate, even though it wasn't really checkmate. The other shoe to your above comment is if the Dow can rise 400 points in a day, what's to stop it from rising 4000 the next day? Now, checkmate! Sold all my gold, T-bills, long financials and I pick my teeth with dinosaur bones! ;D Cheers!

But certain businesses require a sense of macro conditions. In the most recent interview with Charlie Rose, Buffett suggested that months sold in housing might be overstated (he actually just referenced inventories but I am making the leap) and that improved residential spend and home prices would lead to greater than anticipated growth. To make that statement, he probably has some estimate of mortgage roll rates, cures, and other factors related to the speed of the wind down of the shadow inventory. Correct. Buffett has a better idea of the housing market condition than virtually any fund manager, investor, etc. He probably has a much better idea than even Prem or George Soros. Why? Because that industry is core to some of the businesses he owns, and he gets the numbers weekly...Acme Brick, Benjamin Moore, Clayton Homes, Johns Manville, Jordan's Furniture, Nebraska Furniture Mart, Larson Juhl, RC Wiley, Shaw Industries, Star Furniture, Scott Fetzer (some companies within), Marmon Group (some companies within). Between all those businesses, as well as the 2nd largest real estate broker in the country (Home Services of America), he's got a better idea of consumer sentiment and changes in housing than probably anyone else in the world! I don't think he's pumping the tires or raising confidence when he believes housing will turn and unemployment will drop quickly. Any change in housing and he sees it on his bottom line in real time. Cheers!

Until my cab driver starts chatting up gold or I walk into the bookstore and it's all "Get rich now investing in gold", I don't think we're there yet. (Yes, there are gold ATMs, etc but they are still curiosities, not ubiquitous) Mark, you're in Toronto right? I don't know about there, but it is getting crazy in Vancouver. You can't read the paper, watch tv or listen to the radio without some ad for a gold exchange, article, story, etc. Alnesh's brother-in-law's best friend started a gold exchange in Vancouver...had about $1M in revenues in the first 4 months! Now all their buddies want to start one. People who were heavily into the "forex" craze a couple of years ago, have now filtered into gold, silver, precious metal exchanges, etc. Those that lost small fortunes on forex are now into gold. Family friends are always asking me about gold now..."Do you think it will go up more? Should I buy some and put it away?" Crazy! Same sort of behavior I watched during the tech bubble. Resource industry participants (CEO's, CFO's, directors, investors, newsletter writers, etc) all believe that it will continue to go up. When you have such herd behavior, then it's time to completely step aside. Funny thing is, one of the smartest exploration company CEO's I know that we do some work for, has sold all of his properties or optioned them out. He continues to hold his gold inventory, and has no intention of selling, but his company is very liquid now...perhaps ready to pick up bargains at some point. They run their firm like a family business. Probably one of the finest run little companies I have seen at their size, especially in the resource sector. When a guy like him gets liquid, then things may just be getting frothy. Cheers!

Salesforce should sell for less than $75/share at best. Unfortunately, I've sold our puts as there are "long" bargains available. The upside on the puts is limited, but the upside on some of the stocks we continue to buy are unlimited. Had to make that choice! Cheers!

Because Fairfax is leveraged 4 to 1 asset to equity and has over $2B in debt. They cannot afford a 25% drop in their portfolio. If that happened they would never be able to write business again! Cheers!

You know the markets have been volatile for the last three weeks, but it has not affected my life in any measurable way. My net worth on paper fluctuates, but the truth is the actual underlying investments I own are significantly cheaper than anything I've owned since the bottoms in 2008/2009. Many of those businesses are in better shape, have larger market shares, continue to generate cash, have less debt and better standards in their day-to-day operations. What am I going to worry about? If the world collapses tomorrow, the last thing I'm going to worry about is my portfolio or even my home. And if the world didn't collapse during the Great Depression, or in 1942 or during the Cold War, then I'm not worried about Europe's banking system having to pay for their mistakes. The U.S. banking system paid for their mess, now it's Europe's turn. At some point it will be China's turn. That's life and we all move on day by day. A young, terrific fund manager had lunch with me in Vancouver last week, and this business is a struggle for everyone. So of course there are some headwinds and challenges he's facing. I asked him one simple question: What's the worst thing that could happen to you tomorrow if things don't go well in the fund? Would his wife leave him...no. Would his children be ok...yes. Would his health deteriorate...no. It's the same question I asked Alnesh when he got divorced. It always feels like the end of the world, but the truth is the end of the world only comes once for all of us. After my father died, I eventually realized that you can always stumble and work your way through this world. Only the end is inevitable...everything else is manageable! This day in the markets too shall pass! ;D Cheers!

Best cure for upset stomach...don't watch the markets. Go watch a movie or something if you aren't working today. S&P500 today is nearly the exact same level it was 13 years ago in 1998...13 years ago! It was overvalued then and it is undervalued today. All this volatility is simply preparation for the next bull market which is 1, 2, 5 years away...who knows. But you are buying hamburgers today and you will buy hamburgers next year, and the year after, etc. Cheers!

Yeah, that's pretty funny! I got my card from Sears today saying that my Xmas catalog is ready for pickup at my nearest catalog store. Sanj, while you're reading minds, care to delve into what Chou's thinking is with having a large stake in SHLD? Francis is a very positive person when it comes to people. He's a firm believer that someone smart doesn't suddenly become stupid. He also makes bets on ethical managers, as long as the price gives him a margin of safety as well. Francis will also hold the stock for a very long time if he believes in the manager and the investment. With Sears, it is cheap relative to the underlying assets and cash flows. I would presume to believe that Francis thinks Eddie will monetize those assets and redistribute those cash flows rationally. If that occurs, then the investment would pay off. Cheers!

Parsad, I stand by my comment that Mr. Buffet said this "tongue in cheek" as did Munger when he said that people who made money on gold are "Jerks" in his address at the University of Michigan. Buffet and Munger have lived through the gold standard and they were all very much against the demonetization of gold and silver. This is all supported by facts and historical press releases from Berkshire Hathaway. Here is the entire "tongue in cheek" comment by Buffett: “So there are two types of assets to buy. One is where the asset itself delivers a return to you, such as, you know, rental properties, stocks, a farm. And then there are assets that you buy where you hope somebody else pays you more later on, but the asset itself doesn’t produce anything. And those are two different games. I regard the second game as speculation. Now there’s nothing immoral or illegal or fattening about speculation, but it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something you expect to produce income for you over time. I bought a farm 30 years ago, not far from here. I’ve never had a quote on it since. What I do is I look at what it produces every year, and it produces a very satisfactory amount relative to what I paid for it.” “If you took all of the gold in the world it would roughly make a cube 67 feet on a side. So if you took all the gold in the world, we could have a cube that went down there 67 feet… 67 feet high and that would be the whole thing. Now for that same cube of gold it would be worth at today’s market prices about $7 trillion. That’s probably about a third of the value of all the stocks in the United States. Now, for $7 trillion, there are roughly a billion of farm— acres of farmland in the United States. They’re valued at about $2 1/2 trillion. It’s about half the continental United States, this farmland. You could have all the farmland in the United States, you could have about seven ExxonMobiles, and you could have $1 trillion of walking around money. And if you offered me the choice of looking at some 67-foot cube of gold and looking at it all day, you know, I mean touching it and fondling it occasionally, you know, and then saying, you know, `Do something for me,’ and it says, `I don’t do anything. I just stand here and look pretty.’ And the alternative to that was to have all the farmland of the country, everything, cotton, corn, soybeans, seven ExxonMobiles. Just think of that. Add $1 trillion of walking around money. I, you know, maybe call me crazy but I’ll take the farmland and the ExxonMobiles” Some other Buffett tongue in cheeks: “The problem with commodities is that you are betting on what someone else would pay for them in six months. The commodity itself isn’t going to do anything for you….it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something that you expect to produce income for you over time.” “Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything.” “[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” "I have no views as to where it will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola will be making money, and I think Wells Fargo will be making a lot of money and there will be a lot -- and it's a lot -- it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that." Munger tongue in cheek: "I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation. If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you become rational hoarding gold. Even if it works, you're a jerk." Finally, just a reminder that during 1979-80, when gold last peaked and Buffett was very concerned with inflation and the government's printing press, he still did not buy any gold. Returning to present day, he still has not bought any gold. My thoughts are that his tongue in cheeks are his actual philosophical stance on gold. I'm not going to argue with him! Cheers!