Parsad

Yes, quite a shocker in the insurance business I think. Especially considering AIG's turnaround and existing leadership. Good for Berkshire though. Cheers!

First, the questions you are asking are predictions...and like any prediction, they are often incorrect and usually irrelevant to how a business operates in the future, as most CEO's have to be flexible, adaptable, focused and pro-active. Predictions are usually based on circumstances as they are, rather than what they may actually be. It's like Wayne Gretzky's quote about going to where the puck will be, rather than where the puck is...Fairfax's team has to continue to go to where the puck will be. 1. What do you think the pre-tax total return on the investment portfolio will be over the next 5-10 years? How do you arrive at that figure (i.e. what asset mix and returns are you assuming)? I have no clue, other than to say that they will continue to have plenty of fixed income instruments as long as Brian Bradstreet is around...he's one of the best in the world. They are very opportunistic, so if markets correct, they will go top-heavy into equities and distressed debt. 2. Historically, it looks like approx. 75% of the portfolio was invested in cash/bonds. The past 25+ years have been an amazing time to be a bond investor. Going forward, the tailwind from int. rates is gone. What is a reasonable return on Fairfax’s bond portfolio over the next 5-10 years assuming int. rates stay low? Again, you cannot view their portfolio as static. They made a massive move from bonds to cash recently, and in the last few years, they had made a massive move to insured municipal bonds. The team is very flexible with their portfolio...like Gretzky, they will go to where the yield on investment is highest...be it through preferreds, corporate financings, bonds, equities or acquistions. I don't expect the yield on the overall portfolio to be much different than the past as long as the existing team is together...so don't segregate what the returns on the bond portfolio may be. 3. Does anyone know any specific details about Fairfax’s fixed income portfolio. The returns of Brian Bradstreet and his team are out of this world. What % would be high yield or distressed? What kind of bond investments do they own? What is classified as 'taxable bonds'? For example, if Fairfax lends money to the Brick or Megabrands, are these investments counted in the bond returns? The original Brick deal was through the purchase of debentures. The Megabrands deal was done through a private placement purchase of stock and warrants. Usually, these types of investments are reported under "Investments in Associates"...Note 6 in the 2012 Annual Report Financials. I recommend you read all of their annual reports from day one, and that will give you a better idea of how the company allocates capital and reports it on their financial statements. Alot of work, yes...but there are no real shortcuts for really understanding a business. Cheers!

lol; I have been recirculating the same holdings like farts in a spacesuit. Markets go down, I buy a stock of Leaps (bac, jpm, aig), markets go up, I sell them. About 5-7% of my portfolio is churning every couple of weeks right now - quite lucrative really. Same, but this is what worries me! We have had a great year so far, but I'm just doing what I always do...buy cheap and then sell it as the market rationalizes prices. In the meantime, we keep lots of cash. I'm getting very worried...very worried that the markets are just blowing off every piece of disturbing news. Spain is in a full-on Depression, not unlike the 1930's in the U.S....Japan is being incredibly aggressive with their monetary policy...China is slowing...U.S. is recovering, but still tepid in many ways. Yet, asset prices for almost everything except commodities is ballooning! Buffett has been right for several years now...I'm concerned that Prem will be right in the near future. Cheers!

Wow, if you go to Expedia, there is virtually nothing available other than a couple of hotels in Omaha and Council Bluffs. With the stock at record prices, I think they may have a record turnout! Cheers!

In the last flash crash, orders that were 30% away from market were cancelled. So... maybe your amazing trades will be cancelled and the exchange will have screwed you over. This could make a future flash crash a lot worse. I know I won't be buying on the way down... I do not want to get screwed over by trade cancellations. Also, you could get screwed over by limit orders if they trigger in a crash, but the market recovers almost immediately or before you have time to do anything. I'm sure some triggers went off today, and people lost money in just a matter of minutes. Cheers!

It's funny, they are panicking like this with a 120 point drop. Wait till they see a 2,000 point drop one day! Cheers!

If you live in the Los Angeles area, Mohnish will be doing a presentation for the FBLA this Friday. I recommend that parents take their teenage children if they can, as it will be tailored to them. Here are the details: On Friday, April 26 at 3:30 PM Mohnish Pabrai is presenting to the FBLA Club (Future Business Leaders of America) at Northwood High School in Irvine, California. Both his daughters go to Northwood – a great school! The presentation is nearly the same as the same one he gave last month to MBA students at Columbia Business School, Harvard Business School and Boston College. He will tailor it for Northwood students. It focuses on the miracle of compounding and finding your passion. He’ll present for about 30 minutes, followed by Q&A. Total time will be about 60-80 minutes. You (and your friends/family) are welcome to attend. It will most likely be held in the Northwood High School’s state-of-the-art Theatre. Please do reply with a count if you plan to attend to [email protected] The address is 4515 Portola Parkway, Irvine, CA 92620. Cheers!

It's just a parody. I wouldn't read it into it one way or the other. Although Concentrata is pretty damn hot! Cheers!

That's actually what I did. I had price targets for the other half, but they hit them all in the same day. They just kept going up $1.95, $2.20, $2.50, $2.80, $3.10 and $3.30. I kept selling bits of the remaining half after the initial $1.95 sale. By the end of the day I had hit my price targets and was out. I just had no idea that it would go up another $3 the next day. ;D Cheers!

I did many years ago...about 9-10 years ago. I was buying gold (ounces, coins, rings, etc) when gold was at $350/oz. I sold them all over a couple of years in 2007-2009...unfortunately early at around $800-900/oz. I haven't done it since, as I thought gold was overpriced and speculative. Although what you are doing is no different than value investing, but you are looking for mispricing in coins, etc. Cheers!

Yes, that is the type of company that it could work for. I don't follow BBRY as closely, but understanding what their sales trends have been over the last few months, and the progress of their products would be useful. I suspect this earnings report will surprise, but once the Q10 comes out, I think that will do even better. There is a hard-core group of Blackberry users waiting for the physical keyboard phone. There is no other real product out there like that, as everyone is moving to the touch keyboard. So Blackberry could enjoy a significant short squeeze, not unlike the one we've seen for the last few months. But there has been significant positive market psychology around BBRY for the last few months. Another is Apple...but the liquidity is much higher, while product trends do not look as good right now. But the stock has been so battered (unlike BBRY), that any positive news will send the stock moving higher. The risk here with both becomes the time arbitrage. The next quarter might not be the one to create the short squeeze...it may take one or two more quarters, so you have to evaluate the timing risk. Understand that while fundamental analysis goes into the stock (Apple is cheap, BBRY sales are improving), a significant amount of speculation is occurring here because of the time arbitrage. You may have to even stagger your bets on a couple of maturities, or look for options that seem mispriced relative to risk/reward. We don't make these bets often, and they are usually on businesses we understand really well. It is very likely that we won't attempt on either of these stocks, or on any other stock for several months. Only when the pitch looks relatively fat, our assessment seems more likely, and the upside is huge, would we consider swinging because of the timing risk. Cheers!

I don't do anything fancy like many people. I view options in the same way I view the stock, but I weight the time arbitrage risk against the possible reward from the market mispricing. The only way to do this is to run through the events that could affect the stock by understanding the psychological aspect of investing. What is the impact of the quarterly report being poor, and how much do I lose? What is the impact of the quarterly report being about the same as past years, and what is the possible upside? What if the quarterly report is very good, how would the market reaction be and how much would the stock rise relative to intrinsic value? What is the ratio between loss of capital and the upside? If this report is not good, how much time would the company require to improve performance? Etc, etc. This tends to work best with companies where there is a significant short position and tighter liquidity. Companies that have more than adequate short-term capacity to cover their debt maturities. Also, businesses where you have some aptitude for the industry, how it operates, the business cycles, misinterpretation of data, etc. I think we've made money on about 60% of our option bets over the years...a little less than equities which is around 65-70%. We also tend to bet big on the good ideas...1-2% of the fund...and usually never more than 4-5% of the fund in options. The shorter duration the bet, the less we put in generally. While we would never have more than 4-5% invested in options at cost, an idea can easily grow to be more than that. For example, our options on Steak'n Shake at one point grew to almost 18% of the fund from a 3% position...we kept paring it back and it kept growing...over about a year. This Overstock bet and the Bank of America bet we did a little while ago, both went over 5%, even though we only put 1.5% and 1% of capital into each idea respectively. But I've never made that much money in such a short time span. It's just the way it goes sometimes as the market rationalizes something. Plenty of analysis, but a bit of luck in it too with the time arbitrage! You just try and make good calculated bets. I can't remember where I read it, whether it was Tim telling me, or I read it in Peter Cundill's book, but the one thing Cundill did that was very impressive was that he always found different ways to make money. We're inundated with the culture of value investing a la Buffett...good businesses with competitive advantages...but Buffett over his life has always made money not by sticking to a single philosophy, but by finding irrational and mispriced assets, regardless of anything else. It's why so many say Buffett contradicts himself. It's not double-speak as some like Doug Kass allude to at times, but that Buffett understands his ability to exploit inefficiencies. He also understands that most people cannot do it. It's also the foundation of Ben Graham's philosophy...buy when irrationality and inefficiencies exist and you have some margin of safety. It's why Buffett makes the index swaps bet, or the negative coupon Berkshire bonds, or Blue-chip Stamps which led to everything else. He looks to exploit irrational behavior. Prem does this too but won't admit it...credit default swaps, deflation hedges, RIMM, etc. I think you have very good examples of people on here that can do that as well. Not everyone, but you do have a handful of people who are very good at it. Ericopoly is on one extreme. He found huge inefficiencies he exploited with gigantic amounts of leverage and concentration. It took a great deal of analysis, alot of luck on the time arbitrage, and dinosaur-sized balls! But as you can see from Eric's posts, he spends an inordinate amount of time focusing on risk control and market psychology. He's got both the science and art side of investing going, and he's got the perfect temperament to handle the leverage and concentration. So that is how we view options...the same as equities, but constantly recalculating the time arbitrage risks and how the market might behave. Cheers!

I will let you know! ;D Cheers!

Why do people do what they do? Two stupid young guys killing and maiming so many others. Humanity is capable of such great and wonderous things, as well as such horrific and grotesque acts. If there are others, I hope they get it out of him. Cheers!

Baron Rothschild when asked how he makes so much money: "I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon. Excellent quote! Cheers!

I can't stand Rush. Congrats nonetheless to a Canadian band! Cheers!

In the last few days, I made one of the greatest trades of my life...perhaps one of the greatest trades on this board ever. Five days ago, I bought Overstock May '13 $12.50 calls. The stock was getting killed because of the markets, I thought they should make at least as much money as they did last year. They killed the earnings instead! I sold my options for five times the money in four days after buying them. Today, the god-damn thing is up nearly another $3.50, and those options are now worth 15 times what I paid...I'm crying right now...really it hurts like a bitch! :-X I had bet reasonably big too...1.5% of the fund in the options! Whhhhhaaaaaaaaaaaaaa! Cheers!

So are you saying there is a tangible reason why women 35-60 are turned off by amazon? I'm assuming that almost everything that is offered on Ostk can be bought on amazon. Or if not, amazon seems to be willing to sell anything and everything. I get what you're saying about this board and how it thrives even though there are much bigger boards out there. But I'm having trouble seeing how this applies to retail, particularly Internet retail. What attracts the niche customer to Ostk? and if amzn provides the same goods currently or eventually with cheaper or faster service, why would people stick with Ostk? You tell me? They sell $1.2B of products a year...someone is buying it. Investors often get wrapped up into how a smaller business will survive around other retail giants. They do survive...not always and not all circumstances...but generally they create a niche market that the larger retail giant cannot adequately serve. How do smaller dollar stores survive with Walmart around if this isn't possible in retail? It's possible in any industry if the smaller business is serving a very specific need. This is how Blackberry will end up surviving. How Five Guys or In&Out compete against large chains. It's how See's sells so much chocolate and has a very high ROI. Overstock.com can survive and thrive if they focus on servicing their market, rather than the broader market Amazon serves. Cheers!

Same here, we cancelled cable before Christmas. I really miss hockey but can stream it online sometimes. We use Netflix instead for shows and it's got plenty to watch. Yeah, see that's the problem. I cannot forgo my Canucks games. I watch every single one...whether live or PVR'ed. I watch alot of NFL too and a fair amount of basketball. I also watch all the majors in Tennis usually from when they start. $125 for the full cable package (including the Indian channels and specialty sport channels) each month just to get that stuff is worth it for me! Then add high speed internet...$40...and the landline...$45...taxes...comes to about $235 per month. Sorry, the $285 number was incorrect...it's about $235...still alot in my opinion. Cheers!

Munger is donating some stock to his alma mater! Cheers! http://dealbook.nytimes.com/2013/04/18/munger-pledges-110-million-to-the-university-of-michigan/?partner=yahoofinance

$1.00-1.20 a share in 2013 earnings. Give it a 15 times multiple and you get $15-18 for this year. Adjust that number based on how you think they can grow it...if better than 10% annual growth in revenues, give it a 20 times multiple. If less, give it a lesser multiple. I think if they focus on the direct business, keep costs low as they are doing, they can grow at 10% annually for at least 10-15 years...that's relatively conservative considering the size of the market and how small they still are. But they have to keep the retail aspect fresh year after year...very difficult unless you are the dominant player like Amazon where people go to you regardless. Cheers! Do you still hold your position? We had trimmed the position last time it hit $16 to a 5% position. It's still there and we won't sell any of that stock, as the cost basis is very low and we have a ton of gains. Cheers!

Parsad, most of these shows are available online now on the network websites. Simple S-video cable solution along with a laptop. New TV's can even do this on wireless or through the built in browser. As for the cable internet. I am still paying them on that. Thanks Blaine! I'm going to look further into it. We spend $285 a month on high-speed internet, the full-package of Telus Optik TV & a land-line with free international calling. I haven't been able to justify it other than my family enjoys it, but I've always been keen on trying to get the cost down or eliminated. In the past, my only solace was to get Telus to throw in a free laptop and two new PVR's every three years. My renewal is coming up, and I would like to cut the chord. Cheers!

Unfortunately, my family is hooked on shows on channels like HGTV, Food Channel, various sports channels, and Indian programming channels. Is there any way to get those on AppleTV and Netflix...in Canada? I want to watch my Canucks, NBA, NFL & Tennis through the year. And we would still need wifi in the house. We all have cell phones, I have an office phone and we could probably use Skype for long-distance, so we don't really need a landline. It's mainly those channels and the wifi that we need. Cheers!

Glenn, don't you know that this company has no moat and is not a very profitable business! ;D That Patrick Byrne is one crazy mofo...it will never make money. A couple of guys from the Motley Fool OSTK board can kiss my ass, along with Sam Antar, Gary Weiss and Tracey Conen. Five straight quarters of profitability! Cheers! Hi Parsad. I used to own this stock when it was extremely cheap at $5 and sold prematurely between $7-10. Would you be able to expand on what the moat here is? I am having trouble seeing how OSTK will be strong and thriving 10 years from now as Amazon gets larger and larger. Thanks. Their margins and operating costs are lower than Amazon's. Like Costco, they will make money and exist even though Walmart is the dominant player. Cheers! Do you mean to say the margins are higher? I haven't done much research on Amazon, but one concern I have is: what about them willing to expand at all costs; so you said that their operating costs are higher, but it seems as if they don't really care to make much income at all in the short run. And in the long run, if they are large enough, are you afraid of them having the scale advantage over OSTK? Also, AMZN is building distribution centers in major metropolitan areas, so I'm wondering what are your thoughts on them providing quicker shipping than other internet retailers in the future, which may provide a threat for OSTK. Thanks! No lower margins. They should really be running at 2-2.5% net profit margins since they are not the dominant player. They will also have to focus on the niche market...specific age brackets...women 35-60 is ideal for them. If they do that they will grow market share in a very specific area and they will not have to concern themselves with Amazon. You know a very good analogy would be this message board. There are so many message boards out there correct...far bigger than this one? But we've grown readership about 40% a year for the last four years on here. If we tried to be all things to all people, it wouldn't work and we would lose our niche. We have a very specific mandate and that allows us to build our base of members. Overstock has to do the same...they do not want to take on Amazon head on...it would be a very short shelf-life. They need to focus on a niche market, keep margins and costs low, and appeal to a very specific demographic. Cheers!

$1.00-1.20 a share in 2013 earnings. Give it a 15 times multiple and you get $15-18 for this year. Adjust that number based on how you think they can grow it...if better than 10% annual growth in revenues, give it a 20 times multiple. If less, give it a lesser multiple. I think if they focus on the direct business, keep costs low as they are doing, they can grow at 10% annually for at least 10-15 years...that's relatively conservative considering the size of the market and how small they still are. But they have to keep the retail aspect fresh year after year...very difficult unless you are the dominant player like Amazon where people go to you regardless. Cheers!