Parsad

Congratulations to my friend John Zemanovich, whose children's future university education is probably more than fully-funded today! I remember John buying Marvel for about $4/share back in 2001 and adding to his holdings over the last few years. He bought that and Fairfax for his children's trusts...pretty damn good! I know some board members on the old MSN Board also bought plenty of MVL over the years. Cheers! http://finance.yahoo.com/news/Disney-to-buy-comic-book-apf-730717139.html?x=0&.v=16

Keep in mind that most all stocks in the US are still 50% off their 2007 high. Therefore, all those who think the current market is speculative, I ask compared to what? The S&P500 is off only 33% since its peak. You may be assuming that the previous high was fairly priced. In hindsight, we know it certainly wasn't. Intrinsic value is based on all the cash you can pull out of a business over its lifetime, discounted back to the present. Are cash flows going forward for the S&P500 going to be at the same level they were in October of 2007, or that the rate of growth in cash flows will be the same? I don't think so...at least not for the next five years or so. Think long-term not to make your investment statement beautiful for the end of the year. Are today's prices likely to look cheap over the next decade? If so, I would be buying on the dips as much as possible. Buffet bought BYD at $8 or so per share and is now contemplating buying more at $50/share less than a year later - if the company allows Mid-American that is. That is how investing is done, anchoring is a big mistake. Who is to say the stock is expensive at $50 even if you bought it at $8 if in 10 or 20 years it is worth $1000? You are correct. It all depends on what you expectations are. If you are happy with 7-9% returns going forward, then you probably are fine buying stocks. If you expect higher returns, it may be tougher. Buying a stock at $50 that will be worth $1000 twenty years from now, gives a return of 16% annualized. Buying the same stock at $8, gives a return of 27% annualized. That is an enormous difference. Thus, buying today all depends on what return you are aiming for. My original comments were simply meant to say that speculative money is now pouring in and those that think investing is easy are now fiercely in the game. Cheers!

AIG @ $50 is the equivalent of AIG pre-split @ $2.5. AIG at $50/share! Wow! You're kidding right? I know, too cheap! http://www.bloomberg.com/apps/news?pid=20601109&sid=a1aa.saUuNRI WFC is still down for the year. JNJ is down slightly. I think a core criteria for frothiness is that great companies at least trade in the black. PDF attached Cheers!

Hi Hawk, To clarify, the meeting is simply a gathering of investors, and Joe and Matt just happen to belong to Chanticleer. Whether they comment or don't comment on Chanticleer is up to them, but I wouldn't expect attendees to hear anything specific about Chanticleer outside of what they say in their filings and press releases. Cheers!

If you plan on attending the upcoming Pabrai Funds AGM in Chicago on September 12th, please email me at sanjeevparsad@shaw.ca . I'll be coordinating with Matt Miller and Joe Koster of Chanticleer Holdings, so that we can have a nice gathering before the meeting. If you would also be interested in a coordinated visit to a Steak'n Shake in the Chicago vicinity, on Friday the 11th or Sunday the 13th, please also indicate that in your email. Cheers!

I'm having a very, very hard time with what is happening in the markets these days. AIG at $50/share! Wow! You're kidding right? This weekend I was at a wedding, and a family friend of mine was telling me how his uncle has nearly doubled his stock market investment for him in a few months. The process...a little of this, a little of that, some of this and some of that. No discussion of valuation, intrinisic value, growth, balance sheet strength or economics. We expected the markets to rebound considerably from the March lows in our 1st Quarter letter, but me thinks speculation is beginning to run rampant again and the stupid fast money is flowing swiftly. Beware the rising tide! Cheers!

Hi Libor, Yes, the old board was archived, but in a somewhat inconvenient form. Use the visual hash search Uhuru posted, and then note the dates of the posts you are looking for as your guide for the archive below: http://msnbrkboardarchive.multiply.com/ Archived files are in the first five pages of the blog, and at the bottom of the fifth page is where all the archived posts start. Cheers!

Yup, and they've thrown the book at this thing to stimulate the hell out of it. Japanese corporations are flush with cash. The consumer has been saving for the last twenty years. The psychology had changed significantly with the consumer and corporate balance sheet strengthening, while the national balance sheet plummeted. Finally, they used to be the cheapest source of production 50 years ago, and then the most efficient 25 years ago, but the world has changed. The cheapest source now is China, and the most efficient is South Korea. Japan peaked twenty years ago, and is slowly finding out what it feels like to fall from the top of the food chain. The U.S. is next unless it can continue to innovate. That's what kept it on top against all these hungry competitors and it has to do so again. Cheers!

I think I'm actually looking more forward to getting my hands around some Steak'n Shake than anything else! ;D I've been so damn anxious to try the food, but there is nothing within 1500+ miles of us. Especially since they started putting those huge pictures of the burger on their website. Cheers!

It sounds so bizarre, but JP Morgan is financing California's $1.5B in IOU's. The interest rate is lower and there are no fees. Cheers! http://www.cnbc.com/id/32584157

The Chicago Meeting is on the 12th of September. We'll probably meet around 1:30-2:00pm, and then anyone going to the Pabrai Funds AGM can go at 4:00pm. Cheers!

Charles De Vaulx, protege of Jean Marie-Evillard, has set a record for the most amount of capital raised by a new mutual fund. What's interesting is the little tid-bit in this article about Garrett Van Wagoner, whose fund raised $710M in 1995, shut down when assets fell to $17.5M last year! Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=azA3L83L_WGQ

Hi Folks, I can't make the Pabrai Funds California AGM this year, but after speaking to Mohnish, I'll be attending the Chicago meet instead. Joe Koster and Matt Miller of Chanticleer Holdings tentatively have a small gathering before the AGM. I'll speak to them, get the details on exactly where and when everyone is meeting, and then I'll put out a post. Hope to see some of you there. Cheers!

This was mentioned on the Motley Fool BRK Board, but in the recent BYD release, they noted that David Sokol is Chairman of Mid-American, Netjets & Johns Manville. I'm pretty sure this is our guy who will take over on the operations side. Cheers! http://www.bydit.com/upfiles/2009082015585070192.pdf

Partner, that is probably the best approach. Often doing just the simple things is more efficient and usually the results are just as good. Cheers!

I always wait to see what Francis writes, because it gives me some idea of what the guys at Hamblin-Watsa may also be thinking about. Francis' 2009 Semi-Annual report is out, and in there he discusses interest rate swaps to protect against inflation. He's also the only mutual fund manager I know of that refunds management fees if he's unhappy with his performance. Cheers! http://www.choufunds.com/pdf/SeAR%2009%20printing.pdf

A bank fraud charge for one guy, and near the end of the article another ponzi scheme that was caught back in May. Geez! Cheers! http://www.bloomberg.com/apps/news?pid=20601087&sid=aRJzVy_8GrIM

Actually here it is. It was on the 14th, and there was also another one in May. I didn't see that one, but the 14th one is terrific. Cheers! http://www.charlierose.com/guest/view/3411

...else we don't have enough resources on earth to support so many people. Eventually yes...perhaps several hundred years out. But I think science will continue to allow us to produce more food and heartier versions. I remember watching old episodes of "All in the Family", and Mike the son-in-law used to say that the world would run out of food by the next century. That was in the 70's! Yet here we are today, producing twice as much food with half as much land set aside for agriculture in North America. Crops are sturdier, require less water and grow in diverse conditions. We continue to produce enough meat or protein substitutes without little difficulty. Yes, we are eliminating many types of fish and game in the wild, but farming practices are allowing us to increase their numbers in captivity. The other aspect of farming which hasn't taken hold yet, but will as land becomes more valuable, is vertically-integrated urban farms. Massive concrete structures, where using advanced hydroponics, we will be able to grow crops in urban settings. What may look like an office building, will actually hold massive floors of crops, with water being utilized by the plants at each floor with greater efficiency as it trickles from one level to the next. There are so many reasons to be optimistic about the future. There is a terrific interview on Charlie Rose with physicist Freeman Dyson. I believe it was around the 16th of August. You can probably find it in the archives at Charlie Rose. Fantastic interview and a very real prognosis of our future existence. Cheers!

I agree Zorro. I have never read, seen, nor heard about any sort of deleveraging process of this magnitude, without it taking a significant amount of time. Be it one year, two years, five years or ten years. You can use various methods to prop it up, but the system will not function smoothly until it is completely cleansed. Think of it as the worst hangover in 70 years. It doesn't matter how much gravol, home remedies, eggs & toast, or coffee you consume. Until it works its way through your liver and out of your system, you can be sure you will continue to get headaches, nausea and a ringing ear for some time! Cheers!

My aunt was in town here for my cousin's wedding. She works for a hospital in Sacramento. She said that her private hospital also was seeing significantly lower numbers of patients. That hospital staff were having their hours cut from 5 days a week to 4 days. I said in BC, hospital staff are offered more overtime shifts than they can handle! This is a pretty significant aspect of the unemployment numbers that are missing from the statistics we are provided every month. There are numerous industries where workers have had their hours cut by 10, 20, 30 percent, yet are still regarded as employed by the economists. For example, public service sector employees in California will have three rotating days off per month going forward to help balance the budget. This is not unique, and I would expect many states and municipalities to be doing this, as tax revenues will be significantly lower for the next few years. Cheers!

Small commentary on Fairfax and the last quarter. Cheers! http://www.morningstar.ca/globalhome/industry/news.asp?articleid=305156

I don't think its a good idea to use a single year as meaningful of anything. I couldn't care less that my portfolio was down in a single year, especially when everyone else's portfolio did the same thing. A good long-term track record can suffer a couple of years of business depression-like results as long as you beat par and know how to do it. For example, I read somewhere that something like 8 out of 10 years the S&P has had a positive return and 2/10 it has had a negative (sometimes very negative) return. The best thing to do is to go through it and forget about timing yourself in and out of cash. Volatility is no big deal, it is highly welcome, otherwise how to get the great deals? Again, that is true the 49 years out of 50, but unfortunately that 50th year does eventually come around. Multiple successes multiplied by zero is still zero. How many hedge funds perished last year...25-30%? And that hedge fund number would have more than doubled if they couldn't lock up the capital. How many value fund managers got killed last year...85-90%? How many pension funds got mangled last year...65-75%? The industry is primed to always stay fully invested. It's the greatest statistical Trojan Horse in the financial world! Always stay fully-invested...buy, hold & prosper...missing the 30 best days reduces your results by 50%...etc. This is what statistics tell us, so the investment managers fully buy into it, and in turn they feed their clients the same information. Don't get me wrong, it is completely true but it depends on the context. If you are a 50 year old person who planned on retiring at 65, and you're portfolio which was heavily invested in the Nasdaq (which drops from 5000 to 1400) collapses, and ten years later it isn't half way back up to its peak, then "staying fully invested" or "buy & hold" was probably the dumbest idea anyone could have given you. Statistics have value...but you can't view them in a vacuum, otherwise the data becomes meaningless. Cheers!

Don't use too much leverage and invest in the right businesses/managements - other than that, I'd ignore the odds of small events with big consequences, there isn't much else you can do about it. Some people hedge/insurance but I don't think that's very useful because over time, the bias is towards recovery so the insurance is wasted, you can get "pseudo-insurance" by just not buying more than you can chew. Well that works most of the time, but anyone who stuck to just that last year got burned. We did well because we weren't afraid to hold cash, but the rest of the industry is trained to always stay fully invested. Even if you chose the right companies and didn't use leverage during the 30's, you still got a severe taste of volatility. My opinion is that investors should stick to what they know. Wait for fat pitches, buy good businesses at a margin of safety, and don't be afraid to hold cash until you find something. That theory doesn't change in good markets, bad markets, deflationary markets, inflationary markets, etc. You don't buy gold, you don't use exotic hedges and you do only what you understand...but macro still has an intangible effect. Sometimes more and sometimes less, but it has an impact on your future discounted cash flows. Cheers!

Question: Why does everyone use the past or statistics to try to predict the future? Is there any reason to believe that data has any information about current macroeconomic events? History doesn't necessarily repeat, but it often does rhyme. There was no reason the tech bubble could not continue well past 5,000 on the Nasdaq in March of 2000, but history tells us that such valuations were historically a tipping point for such a correction. Statistics tell us nothing about what will happen today, but it gives us a pause for concern regarding the current deleveraging based on the few corollaries we have to compare. Another example could be: How often does one actually spill their coffee on themselves while driving? Not often. But history tells us that it does happen from time to time, and the consequences are not enjoyable. The question is, if the odds of such an event are small, how do you protect yourself from that rare possibility of such devastating effect? As Buffett says, a long string of successes can be wiped out by one simple error in judgement. Cheers!