Parsad

I always jump to the investment section of the letter first to see what Prem has to say...he believes the next decade could be treacherous...but he's very optimistic of the opportunities he may get presented with as well. Cheers!

Here is this year's report. Enjoy! Cheers! http://www.fairfax.ca/Assets/Downloads/AR2009.pdf

Just a heads up for those coming to Omaha this year. If you need to rent a car to get around, you better do it as soon as possible. Rental rates have shot up, as many companies now have limited supplies of rental vehicles. Cars that I used to rent for $20/day four years ago are now renting for $75+/day! Enterprise is out of rental cars already at Eppley. Cheers!

Unfortunately, investors always view things in short time frames...that goes for most people who consider themselves die-hard value investors. Munger ran the Wheeler, Munger investment partnership from 1962 to 1975. It did exceptionally well for the first eleven years, compounding at 28.3 percent gross vs. 6.7 percent for the Dow, without a single down year. But the partnership was hit hard in the vicious bear market of 1973 and 1974 when it fell 31.9 percent and 31.5 percent in back to back years. This decline was despite as Charlie puts it, "having its major investments virtually sure of eventually being saleable at prices higher than the quoted market prices." The partnership rebounded strongly in 1975, rising 73.2 percent, bringing the overall record over fourteen years to 19.8 percent vs. 5.0 percent for the Dow. After this difficult experience, Charlie followed Warren in concluding that he no longer wanted to manage funds directly for investors (Warren had closed his own partnership in 1969). I think for the most part, in investing, like anything else, you are only as good as your last game. The measuring stick for an investment manager by investors is about as rigid as a flag waving in the wind. Over a long period of time, you could have outperformed 99% of investment managers in the industry, but in the short-term...you can be a God for a few years, and then you can be considered an absolute fool...expectations are often very irrational. I remember how many people, including the die hard value investors, were critical of Buffett in the late 90's and Prem in the mid-2000's. Today, they cannot do any wrong. In a few years, they will be called idiots again by the same people praising them today. If anyone feels like criticizing Tim, you should probably start with me. Unfortunately, I was the one that convinced him to go to Omaha about three years ago...roughly the time period his results began to suffer. Before that he was shooting the lights out and had never been to Omaha for the Berkshire AGM...so feel free to blame me! I've told my family that if I get hit by a bus tomorrow, keep the Fairfax and Steak'n Shake shares, and put the rest with Francis and Tim...don't worry if there are years when their funds are down by alot...just hold on to it and keep adding if you can. I'm sure there are managers that may have protected the downside a bit better, or may have better absolute results, but I know my family will always be treated ethically by them. That they will never have to worry about the honesty or integrity of their investment manager. In today's world, trust is something more valuable to my family's welfare than pure performance. Cheers!

Tim, along with Francis, are the nicest people I know in this industry. I'm lucky to call them my friends and mentors. Cheers!

Often when children or youth act out like that, they are distressed in some manner emotionally and aren't provided an outlet to vent their frustration. Buffett had trouble in school as well...probably because the normal educational system didn't know how to let his intellectual capacity flourish in a manner that was conducive to his growth. What he did as a child is somewhat irrelevant, but I guess Schroeder was trying to show how his emotional constitution today is a byproduct of his youth. Cheers!

Cohen isn't long Carl. He owns the shares, but they usually trade in and out on movement in the price...doesn't matter if the movement is real or artificially induced! Hamblin-Watsa and Chou Funds are both long on LVLT. The day Cohen and Watsa smoke a peace pipe together, I'll kiss Herb Greenberg's greasy foreheard in public! Cheers!

I thought the clip of Indra Nooyi, CEO of Pepsico, bantering back and forth with Warren on Coke and Pepsi was terrific today. She's one of the few CEO's I've seen that has actually publically joked and challenged Buffett in this way. She seems like a terrific leader! Very funny interview. Cheers! http://www.cnbc.com/id/35645970

Terrific post Crip! The one thing I would like to point out...a gold-medal in hockey won by the Americans would be celebrated by fans in the U.S., but a gold medal in hockey won by Canadians unites the entire country. I cannot understate the impact that this win has had on many Canadians across the country, and what has happened here in Vancouver and British Columbia in general is unbelievable. People are in such revelry around the city, it's as if it was V-E Day! I can only imagine how many people will not show up to work tomorrow. The comraderie that the Olympics generated is truly astounding. I was one of those people that thought having the games here was not a good idea...I'm still unhappy with the amount of money spent...but the unifying impact of the event is priceless! It is one big drunken festival over 17 days, but it shows how all people in the world truly can get along if they want to and have a reason to. Cheers!

Here's a good article by Bloomberg on Jeremy Grantham. Cheers! http://www.bloomberg.com/apps/news?pid=20603037&sid=ai6GqIOSEWhk#

After 10 straight quarters of losses, Fannie Mae seeks another $15.3B in aid. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aEYsPfLirnuU&pos=2

Terrific article by Bloomberg on Steve Cohen and SAC Capital...both good and bad. He really is exactly what most people envision a living, breathing Gordon Gecko would be. I expect at some point...an identical demise as well. Cheers! http://www.bloomberg.com/apps/news?pid=20601109&sid=a0dqXyjnQ6dg&pos=10

Call it the February blahs but I don't see much to cheer about for the next year or two. What are the board's thoughts in near term action. Hi Daphne, It all depends on what you are looking for. If you're looking for the mind-blowing return in share price we've enjoyed for four years, you won't get that. If you are looking for Prem to hit his targets of 15% ROE over the long-term, we should be able to get that. They'll also be able to buy back shares regularly from the increased dividend capacity from the recent acquisitions of Odyssey and Zenith. Valuations for insurance companies are low right now because we continue to see a soft market in premium pricing. Combined with a low-interest rate environment, investors seem to feel that insurers will have a hard time generating income from both the underwriting side and the investment side. That isn't the case for Fairfax. Prem was smart enough to buy those terrific municipal and corporate bonds, as well as some quality high-yield dividend paying blue-chip stocks. They also added all those high-yield preferreds when the market was desperate. Fairfax's dividend and interest income stream may be one of the highest yields in the property-casualty industry when examining the return versus risk profile of the holdings. A few years ago, interest income at Fairfax was limited because they were cautious about credit markets and had invested most of their capital into treasuries. We are in the opposite position today, in a very low-interest rate environment. Their spread on cost of capital and income yield is probably the best it's been. Eventually, the underwriting market will harden, and when you combine that with their investment portfolio income, you will see the return on equity rise significantly. The hard part as you know after all these years is the waiting. You are in good hands...Fairfax is exactly how I envisioned it five-six years ago. In fact, they've made it far better than I even imagined. Today, you have one of the premier global property casualty companies...with a rock-solid balance sheet...a young AIG in it's prime! Cheers!

The Federal Reserve, as well as the SEC, are investigating credit default swap positions regarding Greece by various U.S. investment banks, including Goldman Sachs. http://www.cnbc.com/id/35581471 PIMCO, as well as a few other market makers, also opposed the formation of a derivatives clearing house. The reasoning behind it was that it had to be efficient, yet delays by these market makers are preventing transparency in the derivatives market. It may very well take a huge blowup to get the world to make the hard choices necessary to get these things under control. Cheers!

Article on the letter coming out tomorrow. Some nice quotes by Andy Kilpatrick as well! Cheers! http://finance.yahoo.com/news/Buffett-letter-has-big-rb-2511789583.html;_ylt=AoCWoxT8ROC8btkiACmDpmG7YWsA;_ylu=X3oDMTE1bWtrNG8xBHBvcwM5BHNlYwN0b3BTdG9yaWVzBHNsawNidWZmZXR0bGV0dGU-?x=0&sec=topStories&pos=7&asset=&ccode=

Looks like Coke is trying to buy Coca-Cola Enterprises for $15B, and bringing one of their largest bottlers in-house. Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aJ8OuHXJNQbs&pos=2

No, I think we should all do that in person at the AGM...one big, loud, rousing ovation! Cheers!

I guess Shai was doing a search, and he came up with our old "Visual Hash" search linking our old files from the MSN Berkshire Hathaway Shareholders board: http://brk.visualhash.com/search/index.cgi?query_string=premwatsa.com&query_type=any&sort_data-ipsquote-timestamp=reverse I couldn't agree more with Shai about how things have changed. And it isn't over for the shorts either! By the way, the old PremWatsa.com site that the shorts used to bash Prem on...I bought it about a year and a half ago...so they can't ever use it again. I've already told Prem that if he ever wants it, he can have it for free. Cheers!

Delaware Senator Ted Kaufman believes that the SEC should continue to be agressive with short-selling after approving new curbs, in particular predatory short-selling involving naked short sales. Cheers! http://www.cnbc.com/id/35559216

CNBC will be doing their annual 3-hour interview with Buffett on March 1st. Also the annual report comes out this Saturday morning. If you want to ask a question and have it possibly answered, you can submit it here: http://www.cnbc.com/id/35483921/ Cheers!

My question is what does one do personally? Follow Jim Roger's example and move to Singapore? Even Munger has no idea how long it could take. While we may have seen as Munger said a few years ago...the apex of a great civilization...the downfall could extend well past your children's lifespan. Cheers!

Another article: http://blogs.forbes.com/billions/2010/02/22/steak-and-cherry-coke-with-warren-buffett/?partner=yahootix Cheers!

Canadian investment company Salida Capital will enjoy its charitable Lunch With Buffett today. Cheers! http://journalstar.com/news/state-and-regional/nebraska/article_00f068f4-1fca-11df-97ac-001cc4c002e0.html

Story on how Greece is said to have arranged swaps with 15 different investment banks: http://www.bloomberg.com/apps/news?pid=20601087&sid=aViC_3fxSWK8&pos=3 How is it possible that the world allowed a derivatives market of $60 trillion dollars and there was no oversight, regulatory body or clearing house? What the hell was everyone thinking! Cheers!

Bloomberg article discussing hedge funds betting on Japan's problems, in particular David Einhorn. Cheers! http://www.bloomberg.com/apps/news?pid=20601039&sid=aPBaV.B6hdS4