treasurehunt

Milton now up to Category 5! I hope it weakens before landfall and spares the more populated areas in Florida.

My biggest buy in the last three months is PROSY (2% of portfolio). Second biggest is HQI (1% of portfolio).

The Economist has jumped on the solar bandwagon with both feet. They are predicting a future (some decades out) of very cheap electricity, quite the opposite of an electricity crisis. I think the articles are behind a paywall, unfortunately. https://www.economist.com/leaders/2024/06/20/the-exponential-growth-of-solar-power-will-change-the-world https://www.economist.com/interactive/essay/2024/06/20/solar-power-is-going-to-be-huge The Economist doesn't really address seasonal fluctuations or problems with long duration storage. On the other hand, solar electricity production is only 6% of total global electricity production, so there is some time to solve these issues.

Aren't you ignoring the role of batteries here? CAISO has over 10GW/40GWh of battery storage. That should help a lot with handling the deeper duck curve, right? I don't see why load shedding will be necessary. https://pv-magazine-usa.com/2024/04/30/california-batteries-dominate-evening-grid-with-10-gw-40-gwh-of-capacity/

Thanks. Lots of great information in the prospectus on the non-life insurance market in India and on Digit itself.

I don't see how it's just arithmetic, since there is no free flow of goods and labor across national boundaries and the prices of goods and services at market exchange rates vary widely across countries. Can you explain your thinking? Also, how about Canada for another counterexample, albeit not as dramatic as Japan? In the 15 years from May 8, 2009 to May 8, 2024 the Loonie has depreciated from 0.87 USD to 0.73 USD. But inflation in Canada was slightly less than in the US (39% vs 46% according to ChatGPT).

Is there good statistical evidence for this? For instance, 15 years ago one US dollar was worth about 95 Japanese yen. Today it is worth over 150. During that period, inflation in Japan was much lower than in the US. Obviously even over long periods, factors other than inflation can be very significant.

If India's real GDP can grow at 6.5% and inflation is at 4.5%, the nominal GDP growth rate will be roughly 11%. This level of nominal GDP growth can sustain fairly high fiscal deficits without increasing the debt to GDP ratio, right?

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.