NBL0303

David Sokol still being wrongly maligned by some. David Sokol began his conversation with Warren Buffett about Lubrizol by saying, "I own shares in this company, Berkshire may want to take a look at it." It is unfortunate and unfair what happened to David Sokol in this affair.

Likewise, couldn't disagree more with the notion that Warren should focus his communications on excogitations about the future. Those who want discussions of Snowflake and explorations of the future development of Berkshire are in the wrong place. Read through the 50-plus letters and it is apparent what Warren tries to do/likes to do with these letters and with his Berkshire-specific communications in general. There are people who would like him to do quarterly conference calls, to discuss current investments with more depth (why did you investor in this?). I mean the most glaring omission would be the dearth of Apple discussion right? They have $120 billion in the company but he did not even review basic thoughts of the business, its moat, its value, etc. Essentially the only substantive discussion of Apple was an empirical description of its buybacks. So it may be reasonable to expect a discussion, at least a minimal one, of this $120 billion investment....BUT that is not the kind of thing he generally does. That is as a part of Berkshire as much as GEICO. Also the nature of annual report documents and letters is to review the past. That is their essential function - they are concerned with what has happened to get to this point. I do believe Warren is addressing the future though by addressing the past. These letters and Warren's Berkshire-specific communications shape and cement the culture and character that he intends to endure at Berkshire into the future. Reading through 50-plus years of Berkshire letters and the way he discusses the companies they've purchased, how those companies were built, the way the Buffett Partnership became Berkshire - and how that indelibly shaped the present, and he hopes future-Berkshire, is a powerful message to Greg, Ted, Todd and their successors. The communication has been so clear and the transmission of values through these communications so powerful, for instance, that if Greg immediately started quarterly conference calls after he takes over - then every single long-time Berkshire shareholder that I know of would revolt. That is because of Warren's clear communication in these letters.

https://www.realclearmarkets.com/articles/2020/06/09/a_focus_on_valuations_is_the_time-tested_path_to_lousy_returns_495670.html In the article above, Ken Fisher says that valuations do not matter and looking at P/E is actually harmful. Do you all agree? Or what do you think is wrong with his thinking?

Thank you!

I have a question for any CoBFers that happen to sort of amateur Buffettologists as I am. Years ago, I read through all of Warren's letters from his partnership years - or at least all of the ones that are publicly available which I believe is all of them. What I should have done at that time, but, alas, did not do, was calculate at least in rough terms where the Buffett Partnership's returns came from. So here is the question - if there are any Buffett Partnership experts out there - do you have any idea of the breakdown of where the Partnership's returns came from - basically split out per investment - during the 13 years of the Partnership? The actual returns of the Partnership are well known - but I'm just wondering what the full bridge is. Meaning, American Express generated such-and-such return which comprised about 8% of the Partnership's returns over those 13 years. This probably cannot be calculated with geometric precision, but I believe rough answers could be backed into. We all know Sanborn Maps, Dempster Mill, American Express and a few of the other investments from that era that worked out famously well. I think this would be really interesting to see rough numbers on this. Any help that anyone can provide would be much appreciated. Thank you and cheers!

Are the electoral votes binding? That is actually a fascinating question. In this United States' history there have been, I believe 157, so-called "Faithless Electors" - meaning Electors who vote for a candidate in the Electoral College that won their state. Of those Faithless Electors more than half have been due to the death of the POTUS/VPOTUS candidate that won their state prior to the date of the Electoral College vote - so there have actually been about 70 "True Faithless Electors." The Faithless Electors have never impacted who was elected but in 1836, 23 True Faithless Electors from Virginia refused to vote for Richard Mentor Johnson, the presumed VP elect, so the United States Senate eventually had to elect Johnson VP itself. In response to the Faithless Elector phenomenon, approx. 30 states have based so-called Binding Laws - which hold that an elector must vote for the winners of the state (or congressional district in the case of Nebraska or Maine) which they represent. Some have claimed that Binding Laws are unconstitutional and electors can "vote their conscious." BUT a 1952 SCOTUS case called Ray v. Blair upheld that Constitutional validity of Binding Laws. With that said, can you guess how many Faithless Electors have been charged with a crime under Binding Laws? Go ahead and guess... The gap is too wide I think (though final results not there yet?) for faithless electors to have impact. And if they did, Trump and right would revolt like heck. For future of democracy in US, unfortunately it's probably better that electors did not bolt. I agree completely, sorry I should have said that is not going to happen in this case. I was just answering that question because it is an interesting topic and sort of piece of political trivia but you are completely right - it is approaching it is such a near-zero chance in this case you can safely say faithless electors will not impact who our POTUS/VPOTUS will be on Jan 21 2017.

Great post. That is a great summary of the initial questions that will hover around the early days of the Trump administration.

Indeed, as Parsad's post has so clearly illustrated.

These are good points but I would add Obama offered the "Satisfaction Now" framework as well, which is part of what gave rise to so much frustration in this country. Remember when he promised, literally, to "slow the rise of the oceans and to begin to heal the planet." I'm not actually making these words up, he used these during the 2008 campaign. He did not offer hard trade-offs with long-term payoffs, but he offered the satisfaction of simply not being Bush. Not Being Bush though and expecting people to not ask hard questions about what your doing or say, what's in a $900 billion "stimulus" package, or whether or not a person has a right to even ask whether Affordable Care Act is a good idea when your best friend's company eliminated her medical insurance due to the Affordable Care Act and then signed up through an exchange and after one year the insurer terminated that plan and after selecting yet another new plan it was dropped again after one year so having four different medical insurers in four consecutive years. Again, Not Being Bush is not a sufficient answer to those questions.

Are the electoral votes binding? That is actually a fascinating question. In this United States' history there have been, I believe 157, so-called "Faithless Electors" - meaning Electors who vote for a candidate in the Electoral College that won their state. Of those Faithless Electors more than half have been due to the death of the POTUS/VPOTUS candidate that won their state prior to the date of the Electoral College vote - so there have actually been about 70 "True Faithless Electors." The Faithless Electors have never impacted who was elected but in 1836, 23 True Faithless Electors from Virginia refused to vote for Richard Mentor Johnson, the presumed VP elect, so the United States Senate eventually had to elect Johnson VP itself. In response to the Faithless Elector phenomenon, approx. 30 states have based so-called Binding Laws - which hold that an elector must vote for the winners of the state (or congressional district in the case of Nebraska or Maine) which they represent. Some have claimed that Binding Laws are unconstitutional and electors can "vote their conscious." BUT a 1952 SCOTUS case called Ray v. Blair upheld that Constitutional validity of Binding Laws. With that said, can you guess how many Faithless Electors have been charged with a crime under Binding Laws? Go ahead and guess...

Hello all, What is your favorite short-side investment thesis at the moment? Cheers, NBL

Great first post. Cool little opportunity.

Below is a link to a somewhat interesting article about Ikea's business. I thought some of you may enjoy this... http://fortune.com/ikea-world-domination/

I've been a long-time admirer and reader of the site but am very new to posting because I generally do not like to pipe into a discussion unless I truly have something significant and worthwhile to add. I'm posting this question/thought here because it has kind of been burning a hole in my brain. I'm sorry if this topic has been discussed before, I could not find it exactly. The issue that has been on my mind relates to a short position (relatively small to me) that I have recently taken. I'm a very focused value investor and have been for more than 15 years. As such, I've essentially never taken short positions - though I understand the value investing perspective on certain shorts. For the last six months, I've been thinking about a company that I'm very familiar and that I like elements of, but is wildly overpriced. Overpriced as in, I wouldn't pay one-fifth of what the company is currently trading at. For a variety of reasons, I began to think that this was a good short position to take and after months of thinking and reading my thought that this was would be a good short grew. I began to think that this is one of my better investing ideas in a while because if the fuse is lit in the way that I think it will be at some point in time, the stock will likely go down dramatically (like down 90% or so). For a long list of reasons, I think the asymmetry between the upside and the downside of a short warrants shorting this company (or buying puts on it). So finally, I've recently purchased a small position on the short side of this company. While the position is not actually material to my own financial life, it is more of an intellectual curiosity. I was thinking of discussing this small company on this board, as I would love the smart people in this forum thoughts' on this. But as I began to think about it, I started thinking that it was bad form and not a great ethic to publicly discuss companies in which you have a short position. As I am new to being on the short side of the equation, and this may be my first and last time on the short side of a company (apart from an occasional hedge on the short side of something - which I do from time to time), I have not thought much about this before. It seems very different to me to have a financial interest in a public company losing value and publicly discussing that, then to have a financial interest in the success of a company and to publicly discuss that company. Sort of like the legal principle that competition is fine unless it involves physically destructing the competitor rather than offering a better product (i.e. two competing sandwich shops next door to each other - it is fine for one to undercut the other's prices but it is not fine for one to the throw a brick through the glass front of its competitor). Does anyone have thoughts/feelings on this subject?