Jurgis

The reason I began investing in stock market was that I thought about all the time wasted to win in computer strategy game(s) and said "Screw it. Let's do it in real life. At least if I do it there, I'll have real money to show for it." 8) And the rest is history. :P In short: no time to play, especially not strategy games that eat time like there's no tomorrow. ;) I play some MMOs (GW2 currently). Markets there are very inefficient. But if you take into account time cost, it's just not worth it. ;)

+1 to you, SmallCap, Palantir, etc. Peace.

Possibly OT. Let's say you are CEO of a company with weak economic fundamentals. You hire a management consultant and they tell you "your industry sucks". Two questions: 1. Is this really useful to you? How did you become a CEO and not know your industry fundamentals? 2. What would you do differently after learning this? Suggest to the board to liquidate the company? Why? The fact that company makes poor returns on capital might be a concern for shareholders, but it's really their decision to invest or not to invest into the company. As a company CEO you have more stakeholders than just shareholders (although this is anathema to some of the people on this board 8) ). The company might make economic sense even though it does not make great returns to shareholders. If we took opposite view, you'd probably have to liquidate over 80% of companies out there. Sure, some companies might benefit from shifting from crappy industry to one that is a bit better - like currently Alcoa is doing. But there will continue to be need for retailers, oil&gas E&Ps, etc, even though majority of them make crappy returns. I guess as a CEO I'd ultimately prefer a consultant who says "your industry sucks, but assuming you want to stay with it, you can do X, Y, Z.". ;)

I think we should be careful to diss intelligence. There are examples of superintelligent people who did not make great entrepreneurs and became professors or whatever - that's fine. There are examples of superintelligent people who became CEOs and blew up their companies. But there are also examples of superintelligent CEOs that are super successful entrepreneurs and/or investors: Buffett, Munger (in investing), Malone, Singleton (outsiders), Gates, Musk. Taking anecdotal info and saying that optimism is more important than intelligence is dangerous. In some cases the optimism and can-do attitude will achieve huge success, in other cases they won't. I'd rather see an analytical study that shows correlations across a big pool of business leaders. Edit: btw, superintelligence+optimism/can-do does not guarantee success or failure either. Most of the positive and negative examples above had both. Edit2: arrogance + superintelligence does not guarantee success or failure either. In terms of success, I'd say Larry Ellison is an example.

Thoughts on Bill? Nothing comes in my mouth. Oh wait, you are not talking about Clinton.

While trying to keep this thread not political: what are the reasons for the premium jumps? - Costlier drugs/procedures/etc? (We know some of this on this board) - Merging health insurers throwing their weight and gauging customers? - Doctors/hospitals gauging customers (for whatever reasons)? - Some consequences of ACA (i.e. making insurers cover pre-existing conditions)? - Older/sicklier population? As a data point, my and my wife's employer both raised premiums, but not that much (maybe 10%). This is tech sector 10K+ employee companies. We switched last year from PPO to POS option since that saves ~50% of the premium.

I'll have to see this if it's ever shown on TV/streaming or made into a movie.

Did Thorndike ever talk about survivorship bias? I.e. it seems that it's tough to identify Outsider CEOs during their tenure ( e.g. the company that won't be mentioned - hint it has one of the longest threads on CoBF ;) Oh, hey, there's at least three such companies... ). Is there a tendency for them to blow up - or succeed enormously?

If you believe that there are not many opportunities to grow the capital, then FFH is possibly "well placed to do OK whatever happens". My goal is matching or beating the index (but let's not go back to whether this is worthwhile goal). For this FFH may be not well placed in a number of scenarios. :) I do hold a large position of FFH, but I am just not as positive about it as you might be.

Agreed, these are important ingredients that might be reasons not to pay much for FFH (and partially MKL - minus point 3) in current environment. Doesn't that depend entirely on whether they'll lose money as these conditions reverse? Let's say we go back to an environment of 5% rates and these companies can get there without losing BV...well, that's going to do wonderful things for their investment income. So, one needs to look closely at their portfolios. I thought that you argued that 1 and 2 are not going to reverse anytime soon. And we can't know when (if ever) Fairfax will reverse 3. I'd not make an investment predicated on rates going back to 5%+ anytime soon.

Agreed, these are important ingredients that might be reasons not to pay much for FFH (and partially MKL - minus point 3) in current environment.

~20%. Been like that for a while (couple years at least) with some fluctuations up and down. It's not a market call for me. It's more of capital allocation and cash optionality.

That's a nice post. I can offer couple thoughts from myself: - When I bought most of my FRFHF position (throughout this year), I was mostly looking at past results. I did not spend much time thinking about their current business/holdings/etc. Now I know more, which is both blessing and a curse. ;) - I can't say if I would have bought FRFHF in 2012-2014. Part of the reason I bought it this year is that market is expensive and FRFHF is cheap(ish). If a lot of attractive companies dropped a lot and Fairfax stayed at current price, I'd probably switch. - As I mentioned before, based on various reasons, my FRFHF allocation is currently higher than BRK. Looking at both companies and their prices and their holdings, I think that this might be misallocation. If all things were equal, I'd strongly prefer BRK. (Things are not equal: Buffett's age is a factor and BRK size is a factor). So for me personally, I might decide to rebalance. This does not mean that Fairfax is a bad investment. - With all this said, it's tough to predict the future. How many here predicted the huge MKL outperformance vs BRK and FRFHF this year? At the beginning of the year I wouldn't have picked MKL out of these three. And yet so far it performed best. There are definitely scenarios in which Fairfax performs best going forward. Anyway, this is just purely based on my current situation and thoughts. Peace.

It is concerning that investors have to rely on crash/recession/deflation/doomsday scenarios to make the case for FFH. I hold a somewhat large position in FFH, but I need to reevaluate if it's not better to rebalance to BRK.

The bold part sounds nice, but doesn't the italic part contradict the bold part? I.e. if you have a group "discussion" (read: argument), the fundamental premise of argumentative theory starts playing a role: your goal is to win the argument, not to reach the correct solution. The group as a whole may or may not reach the correct solution. But it seems very likely that the participants of the argument are more likely to dig in and try to persuade others of their POW rather than change it because of the discussion. (There's numerous examples of that in this forum too ;)). I wonder if responses to this post will be a meta example of the point above.

Since you're not US based, I don't think the TPOU.L/PSH.AS status for US investors is relevant to you. Short story: it's complicated. :) "cos" == "companies". Sorry for shortening. "too hard pile for me" - too hard for me to analyze the valuation and the company, so I don't have position and don't plan to have one. Take care.

This is not a bad idea and not a bad selection. Whether you will outperform market (which market? US? ;) ) and index (which index? SP500? ;) ), is a 64K$ question. I hold a bunch of names you mentioned. I do try to value them and buy/sell accordingly. Although I can't say my weightings reflect the relative values well. E.g. I don't think MKL is cheap right now. (Some of these comments depend on the country you're in, so... this is USA centric). I don't hold TPOU.L - Third Point Offshore - I am not sure Dan Loeb is a great investor. TPOU might be better than TPRE as you say. Not sure if US investors can hold TPOU.L IEP - Icahn Enterprises - Don't want to deal with K1 reporting BAM - Brookfield Asset Management - same? I don't remember if BAM is LP and does K1's. Also I am a bit skeptical about RE cos, even the ones with distinguished pedigree as BAM. HHC - Howard Hughes - too hard pile for me. I hold some LMCA+a-lot-more-Malone-cos and FRMO. IMO, FRMO is overpriced. I would not buy it here. I also have some CKI.TO/CLKFF. Not sure if it's gonna perform great decade+ though. Edit: currently I have been buying BRK pretty much. Might add a bit to Liberties, but out of all this list BRK is still most attractive IMO. I may change my mind at any time though. 8)

So you believe that WFC is currently overvalued???? :o

This has been obvious for a long time now.

Back testing is notoriously difficult to do correctly. Best chance is to work with someone who did it correctly in the past (either academically or professionally). Otherwise, you can do it yourself and then try to get peer review/feedback, but that could waste a lot of effort. Sorry can't help you more, good luck

Thanks oddballstocks! 8) Wow, that's a really bad plan.

Thank you tede02. I think this clarifies things to me and helps me to be more aware of these in the future. For full disclosure (which I did not want to do before I got the info, so the info would be unbiased ;) ): yes, these were big companies (>10K employees). The "good" (or better) plans used Fido. The worse one (see SP500 equivalent fees) used Prudential. One of the plans even had brokerage option, so I could buy stocks there as in regular Fido account. But as I said, this gives me the color for things to be careful about.

I would be willing to make a significant wager that the 401ks you and your wife participated in did in-fact charge significant fees that you never saw. How? Employer may have paid the fee, but how do you charge a fee that I never see? I see what comes out from my paycheck. I see what goes into 401(k). Nothing disappears in between. It's not that suddenly I have 98% of what I contributed. Tell me what's the trick. How can you remove the fee without hitting the statement? Special share class, I can understand. What I saw was the opposite: 401(k) gets the big mutual fund classes that have lower fees than retail. I did not check share classes and fees for every single fund in the offering. Edit: I also understand that they can have crappy funds that charge more than equivalent. I guess they can also have a crappy cash (money market) fund, though it's tough to skim much from cash fund nowadays. This trick doesn't work very well for them if person puts 100% into SP500 index fund that's a Vanguard or equivalent. I looked at couple plans. Best SP500 "equivalent" I see has 0.04% fees, so they are not skimming from this one. Another plan has 0.32% fee SP500 "equivalent". So that one could be giving them 0.25% or so of delta fee vs 0.04%. Can't get to 1-2% though. I seriously want to know: how do you remove money from the plan without hitting the statement apart from bad funds or bad fund classes? Edit: not that this forum's participants need warning, but sure if you put money in crappy "target date" funds or funds-of-funds or some "special" products they sometimes have in 401(k) - I forget the names - these can definitely have 1-2%+ overhead. But that's not what I am asking about. I am asking how they can charge 1-2% hidden fee on 401(k) participant that puts all money into SP500 index "equivalent" fund.

OT 401(k)s I've heard people complaining about 401(k)s and their fees in the past, but I am completely not sure where they are coming from. I've had couple 401(k)s in the past and my wife had couple too. None of them had fees that employee had to pay. All of them had cheap index funds at least (some of them had much more than that, but we probably all agree that cheap index funds are enough). Have I just been lucky to be in right companies/401(k)s?

This is an important point. Even though rkbabang is aware of odds in this case and processing it "right", it is very likely that he - and actually every one of us - respond to some other cases as "moist robots": completely inadequately. :) It's very hard to avoid such responses, especially since life situations are much more complex than a binary example we were talking about.