Parsad

The S&P500 earnings are around $105 and it's at 1517...so roughly about 15 times earnings. Neither cheap, nor expensive historically. It won't provide you returns larger than growth in GDP and inflation plus dividends. You also have no boost from interest rates, nor profit margins, which are at historical lows and highs respectively. Cheers! Sanjeev a question for you...do you attempt to do a rough calculation of the free "call/put option" of cash? It seems to me that this cash option has an inverse relationship with the market P/E. To state the obvious, when prices in the market are high (on average), cash's option is more valuable because the market has more downside. Do you think along these lines at all in terms of holding cash, or do you just say to yourself, "well, everything's expensive, and I wouldn't buy some of what I already own at these prices...so let me sell a bit and wait until things get cheaper"? I think most investment managers view cash as an asset class...one that doesn't do well relative to stocks when viewed long-term. But their views become myopic when it comes to the short-term value of cash because of that very trait. So managers, and many investors, want to be fully invested at all times. If you cannot find cheap stocks, then buy alot more of what you already own...but stay fully invested at all times. Unfortunately, when you view cash in those terms, you never realize that very inverse relationship you described above. Cash doesn't have a 1-1 value when markets go down...it becomes exponential the further markets fall. So when you buy something at 1 times book, rather than wait for half of book, you give up significant returns...probably far more than the short-term low rate of return cash provides relative to stocks at higher valuations. Cheers!

I cannot. Just like I cannot understand the disconnect between Buffett's behavior and the behavior of CEO's he supports. I think they live their lives one way, but don't impose that on others. It's too bad, because I think the reputation of those other CEO's would be hell of alot better...they just wouldn't be as rich as quickly! ;D Cheers!

Mukesh Ambani believes U.S. will be energy independent by as early as 2018. Cheers! http://www.bloomberg.com/news/2013-02-09/ambani-says-u-s-to-be-energy-independent-in-5-7-years.html

Article on the new $65M Gulfstream 650 supersonic passenger plane. Brief mention of Buffett's interest...not sure for personal use or Netjets. Cheers! http://www.cnn.com/2013/02/06/travel/private-jets/index.html?hpt=hp_c1

Nope, belongs in General Category as it screws up the Investment Ideas library. Cheers!

Markets may go up because that cash comes in, but from a simple risk premium standpoint, the markets are not providing adequate compensation. And as I mentioned, I cannot find any single asset class that provides that premium right now...even housing has turned and while not expensive, prices have risen swiftly. We aren't leaving the markets whole hog or anything, but we have to be very vigilant about the choices we make now. They have to be very cheap. You don't want one step forward and three steps back! Cheers!

The funny thing is that Buffett has already conceded to giving away all of his wealth to the world, and has begun to do so. I think Buffett's belief in retaining control was simply because he understood that he could grow it faster than anyone else...that the sole goal was to give away as much as he could, and that meant he had to retain control for as long as he could. I can't imagine anything more selfless as he could see the future. Buffett could have chosen to give all his wealth away when it was only at $1B, but he understood that he could create 1000 times more change by delaying the inevitable. I'm of the belief that God does not exist...but we as human beings are empowered to act as "God" would and create the world that we would want to live in. Instead of praying, we are empowered to make change...and that is not based on faith in someone or something, but in ourselves. I think the idea of religion simply enables a trait that is already inherently within every person. So it's why I'm giving religious faith zero value...it's really upon the individual if that trait is active...be it by choice or enabled by faith. Cheers!

Sorry Grenville had already posted on this briefly: http://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/energy-transactions/ Cheers!

Fairfax has acquired 67% of the shares in Colombia Energy Resources...less than $2M market cap. Why didn't they just come to us, we could have done this one! ;D http://www.sec.gov/Archives/edgar/data/915191/000119312513046230/d483918dsc13ga.htm http://colombiaenergyresources.com/ Cheers!

The S&P500 earnings are around $105 and it's at 1517...so roughly about 15 times earnings. Neither cheap, nor expensive historically. It won't provide you returns larger than growth in GDP and inflation plus dividends. You also have no boost from interest rates, nor profit margins, which are at historical lows and highs respectively. Cheers!

That adds zero value (be it one of faith or not) to either of them. There are plenty of people, both of faith and athiests, who do very stupid and unethical things. I would not allocate faith with any sort of value as a manager. Cheers!

If the risk premium for stocks (I'm speaking broad market) is priced as it is because interest rates are at 2%, then do you think you are getting a big enough margin of safety? I don't think so. You aren't getting enough risk premium in any asset class right now. My opinion is if you find a cheap stock with enough margin of safety, and you should be assuming a discount rate of no less than 8% or a liquidiation value of 80% of book, then buy that individual investment. But the broad market, and in fact no single asset class presently, provides that sort of margin of safety. I have no way to tell you when markets will correct, or even if this market will run another 20-30% before correcting...I just know that I'm having a very hard time finding any idea with an adequate margin of safety other than what I presently own. And yes, you can go 100% into the ideas you presently own, but remember there is an embedded option in cash and the value of that option increases as the market turns down, with no significant effect if you do not act for a short period of time. Cheers!

I think that if you have a second chance then you are able to do whatever you wish. Legally of course. Clean slate etc... My concern here is not the second chance but the covering up of the past... One thing I haven't been able to work out - whats his connection to SAC??? SAC? Where did you see that. Cheers!

That's pretty cool that Munger praised Mohnish. It's like getting a nice pat on the back by one of your heroes...and Munger doesn't throw out accolades very often! Cheers!

I'm all for him making restitution, accepting the blame and moving forward. I believe in second chances. But I'm not sure you get a second chance as a fiduciary or CEO of a public company...there is a very clear line on how you behave as a steward of capital. And then the natural question that comes up is: Was this disclosed to partners before they joined his fund, or to the board of Paragon before they added him? Cheers!

I don't know, but don't you think See's should make chocolate chip cookies too, since they have their own See's chocolate baking chips? Cheers!

To say I'm blown away and shocked is an understatement...hello! Cheers! http://finance.yahoo.com/news/sed-international-holdings-issues-letter-150000626.html

Liberty, how did you do that? The photo edit program I was using wouldn't let me rotate the picture. Thanks for doing that! Cheers!

No, but if you run into him or Buffett, they are usually gracious enough for a photo...just quicker than an autograph. Used to be where you could actually talk to them a bit, but now just way too many people everywhere. They're like Mick Jagger and Keith Richards, except it isn't young women chasing after them, but 20-50 year old value investors. Cheers!

One of our boardmembers had a chance to have his photo taken with Charlie at the Daily Journal AGM. Apparently, Charlie was just sitting off by himself eating some lunch. For you hardcore cultists, he was eating a salad and a cookie! Cheers! [Click photo to enlarge...unfortunately could not rotate the picture in photoshop]

Great notes guys! Thanks very much. Cheers!

Since we have evidence that some of you attended, please feel free to share whatever notes you may have taken. Much appreciated! Cheers!

If they want to introduce themselves, that's fine...just in case they want to remain anonymous. Cheers!

No worries! Cheers!

That would be quite under Prem's goal. What is the relationship between Fairfax and Hamblin Watsa? How are investment decisions made? They will average close to 15% annualized over time...I'm talking 10-20-30 years. You have 3.5-1 asset to equity ratio. They've historically averaged close to 5% on the overall portfolio. After operating expenses and viewing their underwriting long-term (since they generally over-reserve and release surpluses), they can get the 15% ROE. The relationship between Fairfax and Hamblin Watsa is that HW is the investment manager for all of the capital. You have six heads plus input from the analysts. The six heads are allocated small pieces of the pie and the analysts are given even smaller pieces. For large investments, there has to be consensus by the six heads. Prem has final say, but it is primarily a collective, team effort. Cheers! Why do people make it seem like Prem is the one making investment decisions when HW the one? It seems like Prem's is more of a veto role. Yes, that would be correct. But as Chairman, CEO and pretty much the face of the company, all decisions ultimately fall on his shoulders. I think the characteristic that Prem provides, which always takes a back seat to insurance, investments and the business, is simply his leadership abilities. In a team environment, you cannot have an efficient, constructive and cohesive atmosphere unless the leader provides it. Buffett does not work in a team environment...managers run everything and he makes all of the investment decisions other than the small portfolios Combs and Weschler handle. That is actually quite different than what HW does...and a testament to Prem and his colleagues. Cheers!