treasurehunt

I guess he was saying that online banking is much more common now than even a few years back. Here's a relevant excerpt from the recently published Financial Stability Report from the Fed. You can find the complete report at https://www.federalreserve.gov/publications/financial-stability-report.htm. "The runs on SVB and Signature Bank were of unprecedented speed compared with previous runs. During the run on Washington Mutual in 2008—to date, the run that caused the largest failure of an insured depository institution by inflation-adjusted total assets—depositors withdrew about $17 billion over the course of eight business days, with the largest deposit withdrawal in one day reaching just over 2 percent of pre-run deposits. By comparison, the highest one-day withdrawal rate was more than 20 percent in the case of SVB and Signature Bank, at the time the second- and third-largest depository institutions by inflation-adjusted total assets, respectively, that failed due to a bank run (figure B). At SVB, withdrawals would have been even larger had regulators not closed the bank on the morning of March 10."

Yeah, USB is taking it on the chin. One bit of good news is that two directors have bought shares recently. Scott Wine bought 30K at $32.85 per share; Alan Colberg bought 10K at $34.14 apiece. https://www.marketbeat.com/stocks/NYSE/USB/insider-trades/

Bought some more USB

I guess the evidence is that PGR had a combined ratio of 96% for 2022, while GEICO had a combined ratio of 104.8%. Since auto insurance is mostly a short-tail business, the combined ratio is probably a good indication of underwriting quality. PGR's combined ratio did rise to 99% in Q1 2023 though.

I agree with you that the energy transition will be a slow affair and that it makes sense to be bullish on oil. I am not so sure about metal prices going higher than people can imagine; maybe lithium, but I have a hard time seeing any other metal being in extreme undersupply. I think Mark Mills overstates the case for minerals. Here's the Economist on Cobalt (might be behind paywall): https://www.economist.com/finance-and-economics/2023/02/16/cobalt-a-crucial-battery-material-is-suddenly-superabundant Even the case for extreme shortages in lithium depends on sodium ion batteries taking a long time to ramp up, I feel. CATL is planning to start mass production of sodium ion this year, so this is not a slam dunk. https://www.nextbigfuture.com/2022/10/catl-will-mass-produce-sodium-ion-batteries-in-2023.html

I was down just over 11% in 2022. My two biggest positions - Berkshire and Fairfax - did well, but not well enough to offset the carnage in the rest of my holdings. US banks, Chinese stocks like Baba and Tencent, and GOOG all dragged my performance down.

A decent amount of AMZN and some DVN. Would add to GOOG/GOOGL too, but already have a sizeable allocation. Fine, I confess I also bought a bit of TSLA. Definitely more speculation than investment.

This criticism of Goldman is fairly common, but how deserved is it? Goldman has traded at large premiums to book in the past, although not so much since the financial crisis (GS did trade at 1.5 times book in Q3 2021). So it seems bold to say that the public stub will never get a multiple. I also took a look at the returns of the big US financials since Goldman's IPO in May 1999. I ignored dividends since I was just looking for a rough comparison. The table below has the summary. I hope I accounted for stock splits correctly. Price 05/05/99 08/12/22 Split-adjusted Split Ratio Total Return GS $69.13 $358.08 $358.08 1 417.98% MS $41.17 $88.69 $177.38 2 330.85% C $363.66 $44.69 $8.94 0.2 -97.54% BAC $35.47 $32.44 $64.88 2 82.92% WFC $21.94 $42.58 $85.16 2 288.15% JPM $53.46 $132.88 $199.32 1.5 272.84% Not a bad result for shareholders, especially if the company is being run for partners. 418% over almost 24 years is just over 7% a year; adding dividends should get the total annual return over 8%. A respectable showing, I think.

Just a few quick notes on Q3, before Viking gives us his comprehensive report. Combined ratio in Q3 was only 100.3% despite Hurricane Ian. YOY growth in net earned premiums was still over 20% (about 22%). Combined ratio through the first 3 quarters was 96%. If Fairfax can maintain that, we might see 1 billion in underwriting income next year. Interest and dividend income is currently at a run rate of 1.2 billion annually. Duration of bond portfolio has grown to 1.6 years from 1.2 years at the end of Q2. With more reinvestment in the next few quarters, interest & dividend income might reach 1.5 billion in 2023. On the negative side, it seems there are issues with Fairfax increasing its ownership of Digit. So that book value bump might take a while. Also, it seems there wasn't much of a repurchase in Q3; shares outstanding went down by less than 1%. Still, the future is looking good for Fairfax.

I'm about 90% long and down 20% or so from the peak, but not feeling any real pain yet. The only exception is my allocation to Chinese stocks (Baba, Baidu, Tencent, BYD), where I am down big on the first three and feeling some pain because my conviction in these picks has declined. My investment portfolio provides the bulk of my income, so if the bear market continues beyond the end of 2023, I'll likely have some tough choices to make.

Your point that the increase in rates is a big deal might be correct, but your GDP numbers seem to be off. According to the St Louis Fed, GDP was 14.7 trillion in Q4 2007 and 25.2 trillion as of Q2 2022. So GDP has increased by 70% or so while debt has roughly doubled. Not great, but not as bad as you indicate. https://fred.stlouisfed.org/series/GDP Not sure how you came up with a 25% increase in GDP from 2007 to 2022; maybe your numbers are real rather than nominal?

I took a look at how the rupee has depreciated versus the dollar over the last 20 years and compared this to the relative inflation rates in the two countries. From the beginning of 2002 till the end of 2021, the cumulative inflation rate in India was about 241%. The cumulative inflation rate in the US was about 53%. So a 2002 rupee was worth about Rs 3.41 at the end of 2021; a 2002 dollar was worth about $1.53. One USD was worth Rs 48 or so back in January 2002. It was worth about Rs 76 in December 2021. But based on the relative inflation rates, you would expect one dollar to be worth 48 * 3.41 / 1.53 = 107 rupees at the end of 2021. There is a significant difference between 76 and 107, so just looking at relative inflation rates misses other important factors. Maybe relative economic performance is another factor to consider?

Maybe this has already been discussed, but I have been wondering how it makes sense for ONE to buy part of ATCO, let alone the whole company. Isn't most of Seaspan's business with direct competitors of ONE? In most industries, any company would be leery of doing business with a supplier owned by a direct competitor. Is this somehow different in shipping? Also, ATCO's plan was to transform into a general infrastructure platform. ONE seems to be strictly a container shipping company. But it could be that ONE has a grander vision for itself.

There is a lot to like about Fairfax, and it is now my second largest position after Berkshire, but has anyone thought much about how the company will do if we get a sustained period of high inflation? There are some obvious positives like higher interest and dividend income, but what if they need to add substantially to reserves for existing long-tail liabilities? I am not sure how to quantify this risk, even roughly. Any thoughts?

TGH, TRTN, AMZN, GOOG, JPM. Sold some WPC to raise cash to buy these.

Even the TMC/(GDP+Fed Assets) at 152.1% is at an all time high, so how do you conclude that "Fed assets matches the overvaluation/distortion exactly"? Doesn't the chart imply extreme overvaluation even after taking Fed assets into account? Wabuffo's explanation is very sensible.

Forgot to mention - the Fidelity rep told me that they would not withhold any taxes on the deemed dividend.

Interesting. I called Fidelity yesterday as well to tender the shares in my IRA and the process only took 15 minutes or so. Maybe your call paved the way for a smoother experience for me. Thanks, MMM20!

Bought a bunch of FRFHF and tendered the shares in my Fidelity IRA. The Fidelity rep confirmed that they will not withhold any taxes on the deemed dividend.

DooDiligence, don't feel bad, I sold AAPL in 2017 for a mere double. I was pretty happy at the time, having doubled my money in AAPL in less than three years... My worst act of commission was buying a bunch of Level 3 stock some twenty years ago. The investment case was always dubious, but I was impressed by the CEO, James Crowe. Turned out that the "silicon economics" he touted so much wasn't very different from regular economics.

Housing prices will probably be affected if the 30 year fixed rate goes from 3% to 6%, but the monthly payment won't come anywhere close to doubling. The monthly P&I actually goes up by just over 42%, as you can verify using a mortgage amortization calculator. When you add in insurance and property tax, the percentage increase in the total annual expense of owning the house is even less - perhaps around 35%. If you look at interest alone, that would be close to double in the early years, but I am not sure why you would look at the interest payment in isolation.

First, $2bn of TRS on their own stock at an average price of $372 vs $1.4bn at $343 in the 4q. By my maths that means they added $600m at $460 per share. Is that how it works? I get $600m at about $440 per share. (2000*372 - 1400*343)/600 = 440.

218.62 on the B-shares 80,998 A share equivalents for $24.7 Billion. 5.2% share count reduction for calendar year 2020. December average basis was 225.73 and he was willing to pay higher average prices, continuing through the first month and a half of 2021. I get $203.30 when I do the math ($24.7 billion divided by 1,500 x 80,998)

Bumped up my FRFHF position by 15%. I think there is a decent chance that Fairfax will have a few very good years starting in 2021.

Wabuffo, Based on your posts here and DJCO's 10-Q, I calculate that as of today DJCO has total investments of about $280 million compared to a market cap of roughly $366 million. Did I get this right? I was wondering if DJCO is a cheap way to invest in that particular basket of stocks, but it doesn't look that way. I have no opinion on the value of DJCO's business, so the market cap would have to be close to total investments for me to consider it.