treasurehunt

Here's some more anecdata for what it's worth. I got my PhD some 25 years ago but never went into academia. Some of my colleagues did. I also know quite a few school teachers here in California. Not one of them is leading what I'd consider a cushy life while making tons of money. Some might be in great shape when they retire, with generous pensions. I, on the other hand, managed to retire at 45 thanks largely to stock options from my tech company employer. All I know is, if some kid were to ask me "What line of work should I go into where I'll have an easy life and make a lot of money?" I sure won't be saying "Teaching, my son! That's the golden ticket!".

Claiming that OpenAI received capital to serve humanity doesn't sound farfetched to me. OpenAI was founded in 2015 as a nonprofit. Their website says their mission "is to ensure that artificial general intelligence benefits all of humanity."

Also, premiums earned for 2023: Geico - 39,264 & Progressive - 58,664. Stunning, considering that premiums earned were pretty even as recently as 2019.

Yes, you are right that "flaw" is probably not the right word. I am not convinced that completely free trade between two countries with widely different standards of living will benefit both, but then again I haven't thought very deeply about this. It is still the morally right thing to do in most cases, I think.

The flaw I see is that China is not content being at the bottom of the value chain. They might start with assembling a product, but pretty soon they will be designing, manufacturing and selling their own branded products that compete with the original product. The IPhone has withstood this kind of competition well, but that is perhaps an exception.

I agree for the most part. I haven't touched any of the Berkshire I hold in taxable accounts. And the stock is still 23% of my portfolio.

Me too. I have sold about 15% of my BRK.B position in the last few months.

Yeah, seems ridiculous on the face of it. But I hope Prem goes into some detail about Exco tomorrow; I'd love to find out more about this investment!

I am getting somewhat different numbers. The 2022 letter to shareholders says this: "Since we began in 1985, 37 years ago, our book value per share has compounded at 18.5% (including dividends) annually while our common stock price has compounded at 17.3%(including dividends) annually." According to the latest press release, these numbers are 18.9% and 18.0% respectively over 38 years. This implies that BVPS increase in 2023 is between 33% and 37%. The range is due to rounding; at 33%, the compounded BVPS increase is 18.85% and at 37%, it works out to 18.95%.

Thanks. I found this presentation very interesting. At least EPD is financially motivated to do a good job of modeling supply and demand.

Your post is all about demand. What about supply? US natural gas production has more than doubled in the last 20 years thanks mostly to shale. I think you'll need to have a strong view on future production in order to predict prices. https://www.eia.gov/dnav/ng/hist/n9050us2a.htm

Very good reponse. Thanks for posting the link.

Thanks, Viking. I have read most of your posts here but it will be interesting to go through the compendium.

This is why I am not a fan of Fairfax holding on to the TRS over the long term. Sooner or later a situation might arise where the company has to come up with a lot of cash at a very inconvenient time. Why take this risk? Fairfax will do just fine without it. I'm also very curious to see Viking's take on the Muddy Waters report, but based on my read it seems to be much ado about nothing much.

Chubb reported Q4 results today - P&C combined ratio of 85.5%, consolidated net premiums written up 13.4% YoY, P&C premiums up 12.5%. The press release had this bit: "In the quarter, continuing the trend we experienced all year, commercial P&C rates and price increases across the majority of our global portfolio were strong and exceeded loss costs, which were stable. Pricing in our P&C lines was up 12.4% in North America and 10.1% in our international retail business, while financial lines pricing globally continued to decrease led by public D&O." Augurs well for Fairfax.

More TCEHY. I have increased my position 50% in the last month. I think I am done for now, unless the stock drops below $30 with no significant deterioration in the business.

Why would Fairfax buying stock at book value imply getting 15% ROE on the buyback? This is only true if Fairfax's return on equity right now is 15%. According to Viking and others, current normalized earnings per share might be in the $170 range, implying a current ROE of close to 20%. On the other hand, ROE on incremental capital may be 15% at best, especially if Fairfax does not keep its capital base in check. So buying back close to book value is a better move financially than keeping the capital for deployment. There may be real-life constraints that prevent a buyback, of course. Basically you are assuming that ROE on the current book is less than or equal to ROE on incremental capital, and this seems unlikely.

I missed posting mine last year as well. -11% overall, -15% in my IRA that has no additions or withdrawals.

I ended the year with a return of just over 30% on my entire portfolio, adjusted for inflows and outflows. My IRA, which had no inflows or outflows, returned over 36%. My best performers were FRFHF - 15% of portfolio, 55% YTD GOOG - 6% of portfolio, 59% YTD TSLA - 5% of portfolio, 102% YTD INTC - 5% of portfolio, 93% YTD It also helped that I significantly increased my allocation to US banks after the regional bank meltdown in March and April. My worst performers were DVN - 3% of portfolio, -22% YTD BABA - 3% of portfolio, -12% YTD

TCEHY. Increased my position by 35%. I have managed to avoid adding to my BABA position that is well underwater, but couldn't resist the recent drop in Tencent.

One of my best was buying Robert Shiller's book Irrational Exuberance right after it came out in March 2000. I don't recall who or what turned me on to the book; it might have been a post by benkea or dealraker or someone like that on the old Yahoo Berkshire board. Anyway, I was working at Qualcomm at the time, surrounded by folks who were "conservatively" counting on their stock options doubling in value in the next year. After reading the book, I sold my vested options and also most of the high flying tech stocks that I owned. I did not catch the high, but avoided most of the pain of the next couple of years (I kept my Lucent stock, which turned out to be less than brilliant). I had started nibbling on Berkshire B shares in Feb 2000, and selling my tech positions enabled me to increase my position in Berkshire considerably. So the ROI on the $19.56 I spent on the book was spectacular.

Trimmed BAC, GS and JPM. US banks are still about 30% of my portfolio.

Fairfax acquires another 2.5 million shares of Orla Mining. https://www.fairfax.ca/press-releases/fairfax-announces-acquisition-of-additional-orla-shares-2023-12-11/

I think this is roughly correct, although you are ignoring non-controlling interests. Non-controlling interests run around 10% of pre-tax income, I believe. But this is just for the first year, right? If Fairfax continues to trade at book, they can theoretically use all $3B in earnings to buy back shares and continue to generate a 15% ROE. But if Fairfax trades at a premium to book, it becomes more difficult to generate 15% year after year. For example, let's say Fairfax retains all $3B in net income so that equity is now $23B. With the same rate of return on investments and the same combined ratio, investments and float have to go up a lot - by around 15% each - to still generate a 15% ROE. How long can this be sustained if Fairfax trades consistently at a significant premium to book? Not very long, I suspect.

Viking, thanks for a great recap of the TRS investment. Given that FFH looks undervalued still, the TRS should provide value for a while. Do you know the mechanics of how the TRS works exactly? Is it settled in cash quarterly? I was wondering if it is possible that FFH may have to come up with a bunch of cash if the stock price goes down a lot for some reason. I'm sure management has considered any such possibility, so this is more curiosity than anything else. I have a vague recollection that this may have been discussed already, but a quick search of the site did not yield anything.