Parsad

Things are very tough there. The hotels and casinos are relatively busy, but nothing like a couple of years ago. Home prices are down significantly and people feel poorer there. Deals galore wherever you go, and if you push it, you can find some more discounts. North Americans seem to be accounting for much of the business...staying close to home for their vacations. Fairly easy to get reservations at the best restaurants these days, while the lower end restaurants were enjoying bustling business. Alot more people seem to have a hustle going now...cab drivers, door men, concierges, everyone. Everyone knows who can do this for you and that for you. All of them are really clamouring for your business. I always leave Vegas a little perturbed. Literally the slogan of "What happens in Vegas, stays in Vegas" applies to this city. I can only imagine what thoughts Munger would have on society after witnessing the debauchery that goes on in some parts of this town. Cheers!

I thought that was quite funny! I wonder what some of our headlines today will sound like in 70 years. Cheers!

Terrific blog by Isaac summarizing newspaper clips from the 1930's! Cheers! http://newsfrom1930.blogspot.com/

Article from Globeinvestor.com discussing the possibility of a "double dip" in the economy. Cheers! http://www.globeinvestor.com/servlet/story/GAM.20090608.RECONOMY08ART1941/GIStory/

Jack, I have no interest whatsoever in continuing this discussion. It really doesn't matter what view you had of this board...you just don't go and piss on someone else's lawn. This board will run as it always has except for one change: Going forward I would ask all boardmembers contact me directly either through the message system on here, or by email at sanjeevparsad@shaw.ca , if you have any operational ideas or issues with the board. Any posts that are put up discussing operational or administrative issues will be removed. Feel free to contact me at anytime and I'll respond to your queries explaining if it is something we can change, augment or eliminate. And if not, then at least I'll give you a direct explanation. The reason being, I don't want to expose boardmembers to this type of argumentative posts anymore, and I don't have the energy. I was in Vegas right now with Alnesh, my brother and some buddies to celebrate various upcoming birthdays, including mine. I spent time during this vacation dealing with this crap, and it did put a bit of a damper on things for me. I'm not going to waste another iota of my time explaining to a handful of individuals why their needs don't outweigh the entire board's, while voluminous posts are made with things getting personal from both sides. This board was not created for that purpose. Thanks very much!

Alice Schroeder article on Bloomberg discussing Buffett's views on the economy. Cheers! http://www.bloomberg.com/apps/news?pid=20601039&sid=aUgpE2pRx5eU

Unfortunately during these discussions there were real time examples of how control can can squelch discussion. Pointing out to some members that they are free to leave if they don't agree is an example of that. Not unlike a husband, who makes the money, saying to his wife, who stays home with the kids, "well if you don't like it you can leave." That's not a healthy dialogue. It's a good example of control gone bad. Unfortunately in this case, you would be the husband Jack. If you want to use this analogy, then let me explain it to you more clearly: I'm looking after the kids, cleaning up as Calongeo put it, and staying awake at night making sure they are fed. On top of that, I'm paying the household bills while YOU in particular, are sitting on your fat ass watching tv and asking me to get you a beer. I'm not asking for much. Yes, it is only $500. But that is $500 that I put out. At the same time, you tell me if I don't like it, that you are willing to watch the kids and I can get the hell out of Dodge. Problem is that they are MY kids. I raised them and I nurtured them (the collective board as a whole) over the years. And that is what you don't understand, no matter how much you explain it to the board. Ericopoly just came back. He's a member of the board...one of my kids. We've all been through alot together with Fairfax while you were an absentee father. We may fight, but he came back and I'm happy. I should never have stepped in between you and him...it almost cost me a family member and a very good one. I didn't boot him off...he had chosen to leave on his own and he came back when he felt he wanted to. That's how family works! I'm not going to boot you off either. You're like an adolescent child...petulant, self-righteous, arrogant, gruff and misguided. You don't understand what you have but I think many of our core do. I never expected much from any boardmember for the work I do...not even a thank-you...does any parent expect anything from their children? I never sought any monetary compensation. All the meetings I set up outside of the board, the interviews I did in the past and currently are trying to do, the favors I've pulled for boardmembers on the side...never asked for anything. I decided to put the ads in to pay for the costs, like a mother taking in boarders. I wasn't looking to my kids for a handout. But a couple of my kids tell me that they don't want me renting out part of their family home. That "It doesn't feel right." I'm expected to either take the handout and feel beholden to my kids (culture gets influenced), or not supplement my income (eat the cost). So in that context, how do you expect me to feel Jack? Perhaps, it would be better if you just went back to posting, and let me run the site as I see fit. We've had it for over seven years, and it still continues to run without significant impact to the users. In fact, it's a much better site than anything we've had before. I don't expect all my decisions to be universally appealing, but I try and do what is best for the overall user, which I happen to be one of...that means no cost to anyone, including myself. Cheers!

Sarcasm? John I'm not following you. What do you mean to say? Yours Jack River Are you serious that you believe our comments on the board create a substantial quid-quo-pro considering Sanjeev has a very real cost of $500/year? Or are you being sarcastic? John Stop for a second and think about what you are saying to me. That the content we collectively build on this site is worth less than 500 dollars per year. I reject that idea. To others who summarily dismiss such discussions: A debate on ads on a web page or a debate on the benefits that may accrue (an option) to someone in control of this site is just as germane to investing and thinking as a harder topic of balance sheets and income statements. I am a little surprised that others here don't see this too. You don't have to agree with me, but I sincerely think it a valid position to take. But let's go through it for those who care: For starters, nothing in life is free. That may seem quaint or trite to some of you, but it is classic Buffett / Munger. From the WallMart example that is so often cited, purchasing managers don't accept so much as even a cup of coffee. Second, right now it's about covering the 500 dollars per year with ads you click through on, but later it may be banner ads, and if ever enough incentive (money) is provided it may well be manipulative ads and large profits. I don't believe Parsad would do this, but for a mere 500 dollars isn't it better we not go down that road. On the front of this site is a picture of Ben Graham. As you all know, he was known for talking freely about investments. Ads on this site don't seem to me to follow that tradition although I'm sure he sold his books and taught his classes for profit. That's my opinion and from reading the replies, it looks like I'm a minority of one. Five hundred dollars and a bit of time did not seem enough of a hurdle to part from this notion. I used the words poor taste as a subtle way of saying no ads. As to control, I think this is a wonderful topic. I think there is a sort of group mentality building that won't allow for this to be freely discussed or understood. It gets boiled down to snips that Parsad is giving up his time and 500 dollars, but no one ask what he gets in return. If you could step outside for a bit many of you would understand that my comments aren't meant to be personal. Control does not rest solely with the ability to kick someone off the board or silence the discussion. It can manifest itself in other ways more subtle yet more onerous. It can sway the discussion. It can mislead the members. But others aren't willing to see this now because what the heck does it have to do with ads? What the heck does it have to do with ads? There was something in Parsad's post that seem to suggest a burden. My replies were an attempt to call foul. That more benefit accrues to him than the value of a small bit of his time and 500 dollars per year, and that we aren't getting something for nothing. Parsad, the control resides with you, but once again I alone ask, no ads. My offer stands as before, 51% control and I will gladly take over all burdens. Yours Jack River You see Jack, this is the whole problem I have with people like you. You see this as something that can easily be handed off to someone else...that there is no sort of emotional or vested interest in the relationships built here. To you this is just another forum. To me this is over seven years of work, shared knowledge and intimate friendships with other wonderful investors. Do you actually think that $500 from you, and I would let all these people who use it be subjected to your idea of what it is? You haven't got the faintest idea of what this forum means to the people who use it, and you certainly have no comprehension of what it means to me. I thank everyone who has supported my decisions presently and in the past, for the wonderful friendships over the years, and all your contributions. But I've had enough of this bitching and complaining from a handful of people, who decide to ruin the environment for everyone else. So the ads are going to stay the way they are, and this site will run for free with no compromises on the culture we've helped create over the years. But for you Jack...I'm going to do you a favor in the same manner which you've so graciously offered your services. My offer to you is if you want to stay, then you can pay $500 regardless. Everyone else gets to use the site for free! If you don't want to use our board, feel perfectly free to cancel your membership. If you don't know how, let me know and I'll be more than happy to do it for you.

Every time I start to see articles like this, it usually points to some sort of bubble forming in a specific sector: http://www.fxstreet.com/fundamental/analysis-reports/gold-investments-market-update/2009-06-04.v02.html History has always proven not to do this, yet you always have some numbnuts who decides they know better. Cheers!

Those are two very unique businesses you've combined Crip. Can you send me a prospectus! ;D Cheers!

No problem Jack. How about YOU pay the $500 annually then?

Thanks very much Viking! Much appreciated! We won't have any more ads than we already do, and I've kept them as unobtrusive as possible. Cheers!

LOL . . . Oh the umbrage!! ;) Listen, this is your board and you can do what you want. But save the outrage when you get called on being misleading. How the hell do you call any of this misleading? I told the board right from the beginning that we will eventually use some ads to offset costs. Zarley, you don't pay a dime to post here, yet I'm stuck with an annual $500 US bill for your pleasure. Yet, you feel completely fine telling me that I'm feeding you bull. To date for the two weeks we've had the ads, we've made a grand sum of $4.28 US. I have no problem with a boardmember telling me that they don't like the ads or the placement of an ad, but you've got to be kidding me when you decide to throw crap in my face for something that you get completely for free. Are you really that ignorant, or are you just being a wise-ass? I can only imagine how you actually treat a service provider that charges you for something.

Congratulations Mandeep! Cheers!

Sanjeev, please stop calling the in-thread ads as something that gets added to "long threads of posts." One is inserted into every thread regardless of length, and I agree with Ben that those are tough to stomach. I appreciate the need to have ads to support the board, but don't BS us about their nature. Zarley, please don't take that tone with me. If you think I'm giving you BS, then take it somewhere else, but I don't need that type of crap at all, thank you very much!

Ben, the old MSN board was completely free but MSN had their own ads plastered all over the site. We also had little control over the board, the format, or what we could do with the site. This board is also completely free with a few strategically placed ads. It costs several hundred dollars a year to run the board including domain name registration, hosting, templates, etc. I think the ad at the end of the long string of posts may not be ideal, but if it allows the site to pay for itself and allows us to manipulate the board in ways the old site couldn't, then it is probably worth it. I originally started with the one ad on top to see if that alone would cover costs. It didn't come close. I then ran for another week with an ad also on the bottom of the page. It also came up short, but we were much closer. I suspect now with the final ad at the bottom of the long threads of posts, we are closer to breakeven, and I will continue to eat any additional cost. Eventually, as the members increase, it will become completely breakeven. Cheers!

Play nice boys! Cheers!

Hi Folks, I was just testing out various places where ads could go, and then seeing how the reaction is to them and if they are distracting. I've decided to remove the one that was just under the menu bar (HOME, HELP, SEARCH, etc) within posts. It was a bit distracting. We will be keeping the one at the end of the long string of posts, as that is not interfering with someone searching or using the menu bar. In regards to a fee rather than ads, I don't like the idea of fees because I want to keep the site free. The Motley Fool had a great BRK board for so long. It was where I really got to learn alot about Berkshire. But once they started a fee, alot of quality people left and I really didn't like that it was no longer a free board where knowledge could be shared. Personally, and that is obviously biased, but I don't think the ads are distracting in this final format. There is one at the top across from the log-in, one at the very bottom of all pages, and one at the very end of a long string of posts. There will be no ads other than next to the log-in and the very bottom on the HOME page or INDEX pages. The way it is now set, the ad revenue will pay for the site's annual costs, so it will remain completely free for users. Thanks very much! Cheers!

But, the reality is if you feel like you've missed a fat pitch, you might be tempted to swing at the next decent pitch, not wait for another juicy one, just because you feel you missed a great opportunity. And that my friends is what kills us relative to the index over the long-term. Good ideas always eventually come along, so force yourself to be patient. The world won't end because you didn't catch the last wave...but if you suddenly get thrown into the sand...it will take some time to get back up on the board. Cheers!

This is what is always so damn fascinating to me. Here we have a relatively well-versed Buffett/Graham disciple who has a theoretical and technical advantage to most other market participants, yet a rising market compelled him to tip his hand (and please don't take any offense Mandeep, but I'm sure many other people have also jumped in). It's just absolutely weird how our human emotional side will supercede what logic and rationality are telling us not to do. I truly agree with Munger that most economists would be far better off taking psychology courses! Cheers!

David Lau was kind enough to send me a link to some terrific photos he took in Omaha this year. Always fun to see what people enjoyed while in Omaha. I haven't been in three years, so I think I'll definitely go again next year. In particular, he got some great shots with Prem, Tom Russo, Tom Gaynor and Becky Quick. He also took one with Whitney Tilson, who naturally was able to plug his book! That guy is just non-stop! ;D Cheers! http://picasaweb.google.com/dahhuilaudavid/Berkshire2009AGM?feat=directlink#5342740300931216898

Success Magazine has a little article on Overstock.com and Patrick Byrne. Overstock's customer service was ranked second behind LLBean. There is also a typo in the article regarding the market cap which is not $60 billion. ;D Cheers! http://www.successmagazine.com/from-the-corner-office-patrick-byrne/PARAMS/article/714

Staying concentrated is what has created most of the richest in the world.... so see no reason not to be, without being stupidly concentrated. Some on the board have said that if it was your own business they would be comfortable putting 100% in.. do they not trust Prem (Chief Risk Officer) is thinking long and hard for them out of his own self interest? (Prem is probably better to make the decisions too!) To avoid gambler's ruin I argue against 100% but don't argue against a concentrated portfolio. Prem and Warren aren't concentrated for charity, but because they think that it's the best allocation of there own money... which doesn't just mean the highest return available, because we know Buffett makes higher returns in his personal portfolio. Got to get paid for when you are right! Example-100 stocks and one doubles, you now have $101! We run a pretty concentrated fund...anywhere from 5-12 ideas. At the moment, we have about 65% of the capital in five ideas. So, I agree that a fund should be relatively concentrated. In regards to the putting all your capital into one stock: Why didn't Prem put all his money into Berkshire? Prem puts nearly all of his wealth in Fairfax, because Prem is more comfortable with Prem's decisions. Buffett puts nearly all of his wealth in Berkshire, because Buffett is more comfortable with Buffett. Sanjeev puts nearly all of his wealth into Corner Market Capital and the MPIC Funds, because Sanjeev is more comfortable with Sanjeev, than he is with Prem or Buffett. That's just the way it is...you can go ask Sardar the same thing, and he'll tell you the same. That doesn't mean any of us aren't willing to make a bet on each other at given times, but that it is unlikely that we would hold onto that bet for the duration of the game. I've had my entire net worth in Berkshire and Fairfax at various times...but I just wouldn't leave it there forever...primarily due to size. Even Fairfax's growth will slow over the next decade. A friend of mine over the last couple years has been asking if he should change the way he has played the 'game' over the years, as he has more than enough money to live for many generations.... and he has concluded that by trying to avoid losing, you end up losing... just like in sports so he has decided to keep doing what he is doing!! What has got him to where he is (investing for the long term, concentrated holdings, focusing on downside) will protect his wealth and make it grow, and he has decided that he will continue to invest this way instead of changing and 'blowing it'! What has worked for Prem and Warren is what they should continue to do. Everything else is irrelevant for most people... except when you are quite old and of more limited means. Go with what works! Both Boston and San Jose pretty much played the same game in the playoffs that they played in the regular season, yet they did not dominate the playoffs. I humbly beg to differ that they actually didn't adapt their game to the playoffs, and kept doing the same things that got them into trouble. Bill Miller didn't do anything different in 2007 and 2008, that he didn't do in past years. Neither did Mohnish or a myriad of other investors. I think that was the problem. They did exactly what they were taught. They stuck to the playbook and listened to the coach. Yet here we have Prem who changed his game...he went and bought something that has nothing to do with Ben Graham investing...credit default swaps. He bought insurance! I believe it was Sam Mitchell at our dinner, who said something to the effect that Buffett went and did something completely different than what he was saying for the millionth time, and everyone started chuckling. Buffett preaches what he has to, so that he has a group of shareholders that buy into the cult. It helps him long-term, and the end result is that it ends up helping those shareholders. Yet, Buffett often does things that are contradictions to what he preaches. 3) Munger says to be a good value investor you need a f-you attitude to a degree. I understand that you need to temper the market volatility for some of your shareholders, but maybe that is telling a person that they have the wrong shareholder's? If I remember correctly it is Munger who gets very upset when he is asked the question about how you would act different if it was just your own money you were investing versus running a public company or a partnership of sorts. I think you need a f-you attitude in relation to the investment process..what you are buying and what you are selling. I don't agree with that sentiment when it comes to empathizing with your partners. It's their capital and they are your partners. Buffett wrote to his partners as if they were all his aunt...in a simple to understand, straight forward manner. He laid out the ground rules of how the funds would operate, but he never showed any sort of take-it-or-leave-it mentality. I guess it comes down to personal choice. I can say for a fact that it never hurt his results, and it certainly hasn't hurt ours in any manner. You could probably get away with that more in a public corporation than you can in a partnership. We want our partners to be able to redeem their capital whenever they want...we don't lock it up, and we won't ever close the fund down so that they can't redeem. Sanjeev, you would have a lot of knowledge with this, more than I would, and would have had to deal with a lot of difficult circumstances due to other's temperaments in the last while, so I am in no position to argue this point but know that any coach I have ever seen in hockey that coaches to keep other's happy, ends up sinking the ship... and he feels terrible about it, because he wasn't even doing what he actually wanted to do! Bobby Knight has won three NCAA championships, but how many of you want to be Bobby Knight? I certainly don't. I think a coach's entire job is to find a way to motivate his team, and help them form a cohesive bond that allows them to reach their maximum potential, regardless of the circumstances. I bet there are many different personalities within Fairfax's executive teams...just take a look at Sam Mitchell, Greg Taylor and Dennis Gibbs. I think anyone who has met the three, would say that for the most part, they have very different personalities, even though they operate very successfully as a team. Now how do you manage the egos of three very different, very successful people, with three significantly different areas of expertise? Well, a good coach takes more of the blame and less of the credit first of all. Prem does that all the time. In the years I've known him, I've never ever heard Prem take any credit for himself...ever! It's always someone, or "we at Fairfax", or something to that effect. Second, he knows how to make everyone feel useful...give them a very specific purpose and goal. Why are the best penalty-killers in the league, guys that don't do a whole heck of alot other than that? Third, you get everyone to buy in to the philosophy. We mitigate risk to a certain degree for two reasons: preservation of capital, and because regardless of how good the culture is at a company, you will always find investors that cannot handle the volatility as well. It doesn't mean they aren't good long-term partners, but I think a 50% drop would scare off at least 30-40% of partners in a fund. So unless you can meet redemptions for all those people, or lock up your fund, you are going to have to shut down. Take a look at Legg Mason. You had a manager who was a God, and beat the markets for 16 years in a row. One hit and he loses more than half his assets. Miller runs a mutual fund, so he wouldn't have to close but what about all those hedge fund managers out there who did. Even in Mohnish's case, he's fortunate that his redemptions are just once a year, and the bulk of the losses came in the last two quarters. He didn't get much in redemptions. But if his investors were allowed to redeem into the 1st Q of this year, it would have been a much different story. His fund will recover alot of ground over the extra year he has now, and he'll end up keeping most of his partners, but if redemptions were allowed into the 1st quarter, he may have had a difficult time meeting redemptions. In Seller's case, he closed his fund! Cheers!

Nothing is correct when viewed in a vacuum. Diversificiation is dependent on the investor's abilities and emotional constitution, thus it isn't a one shoe fits all type of question. The other issue of Prem and Warren having 90%+ of their networth in one business is also erroneous. The 10% of Prem's net worth that isn't in Fairfax would be about $50M...that's a hell of alot of money to live on even if Fairfax implodes in the worst case scenario. In Buffett's case, 1% of his net worth is $500M, or Prem's entire net worth! If Berkshire collapses tomorrow, Buffett won't be standing in any bread lines, neither will his children, grandchildren, great-grandchildren...well you get the point! Diversification changes with age, temperament, abilities, constitution, the construct of the holdings (inside a corporation, retirement plan), etc. For myself, I have no problem holding just one investment at any given time, but I doubt I could do that over many, many years, unless it is my own company. Even if I have my whole net worth in say Berkshire, there will come a time where I will say to myself that perhaps the stock is overvalued and market risk could be mitigated by moving it to undervalued ideas. It doesn't negate the long-term prospects of Berkshire, but I would simply be acting in a prudent manner. Now you can't do the same thing with investor capital, because each partner will have a different mindset. If you go through a period such as we have, you will get some investors who become very afraid. Unless you have liquidity, you will have to sell to meet redemptions, thus you cannot stay fully invested in one single stock...especially if it isn't liquid. The only way you could so, is if you do what many other hedge fund managers do, and lock in your partners, close the fund, or only allow redemptions once a year. The end result is that diversification cannot be viewed singularly or in a vacuum. There are many aspects to why someone should or should not be diversified. And safety of capital isn't one of them...just ask Bill Miller! Cheers!

David Sokol, CEO of Mid-American Energy, spoke at the Ira Sohn Conference. He has some interesting comments to say about the housing market and the economy in general, which I think are dead on. Cheers! http://www.reuters.com/article/marketsNews/idAFN2826249320090528?rpc=44