woodstove

Well, I'm in Cdn currency and economy, so guess vs USD I'm already hedged. This morning, bought more BRK.B under $75 USD, which is a good enough price I think, especially with an exchange premium on Cdn dollars used for purchase. So I guess one might consider that a sale of CAD and a buy of USD, but really it's a swap of CAD cash for a USD-reported but global business enterprise. Primary thesis ideas are that CAD/USD is momentarily higher than medium term average, and that the anxiety and uncertainty in the US economy will resolve ok and Berkshire will be one of the many good enterprises to successfully navigate the choppy waters.

That Brafton quote "last week" is from a May 10th article date. But the point is well taken about Bing positioning. Thanks.

Bought some RIMM Jan-2013 calls. Figure three scenarios: -- Deflation - matters that product is data efficient, no debt, still does ok in slower economy. -- Steady economy - revenues arrive, maybe a bit late, current pessimism fades with time. -- Inflation - protected against USD decline by RIMM's strong market position overseas. All predicated on product suite being robust -- which I think it is, QNX, other positioning ok. Others will have different opinions. That's ok. Not going to engage in product lovefest.

Thank ye!

Interesting side effect of TRE selloff: from Jim Sinclair's website www.jsmineset.com -- Jim's company Tanzanian Royalty Explorations is TNX on Toronto, but TRE on NYSE. Gather there has been confusion among some people who heard that "TRE" is (such-and-such).

"The Davis Dynasty" book is an ok read, but not some secret to success. Father Selby, as I recollect, was the one who focused on insurance companies; son (also Selby) was more diverse, maybe not as successful, just started with more capital. But I perhaps mis-remember. The father had worked in the NY State insurance oversight agency, I believe, so knew the industry players pretty well; it might be hard for someone without similar industry experience to match his stock-picking performance. You have it right, from the little I know, about the nature of deferred policy acquisition costs -- monies spent, to acquire policies still in force (coverage for periods beyond the balance sheet date). Those are intangible as assets, but very real cash expenditures. I wouldn't consider there to be any doubt, however -- the cash has likely been paid out, and the compensating premium cash has also likely been mostly received; the open question is the quality of the future policy obligations.

There is a quotation that someone gave me about 30 years ago, in a seminar, which impressed me so much that it became the front cover of my personal "ops binder" when I started my business. The idea is somewhat along the lines of Napoleon Hill's book: "Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation), there is one elementary truth the ignorance of which kills countless ideas and splendid plans: "That the moment one definitely commits oneself, then providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one's favour all manner of unforeseen incidents and meetings and material assistance which no man could have dreamed would have come his way." That is from W. H. Murray, "The Scottish Himilayan Expedition" Boiled down... Specific and stated objectives elicit support from others. And evident sustained commitment. People can trust you to make good use of their help, for the goals for which they gave their support to you.

That was a very interesting video. Thanks!

Hi Bronco aka Coal Grill ! Balance sheet recession is a different sort of phenomenon from your usual recession, which might be called a business cycle slowdown recession. In balance sheet recession, excessive debt, have to repair balance sheets. Koo has various metrics which allow one to model and understand the process. His book is worthwhile reading. There's also an online presentation, audio + slides, and there is a link to it somewhere in the archives of this site. A search for old posts "Koo" should turn up some helpful links. The online presentation doesn't do justice to his thinking -- he had only an hour, and had to leave a great deal out, skim over other points. But it's a starting place. All I can say, is Koo's models are pretty impressive. Does not matter what political persuasion one may have. We are all sort of Mungerites here, right? Looking for a variety of mental models to understand various aspects of economic / investing context. Won't get into a political debate ... this is not the site ... if you're seriously interested, Koo's book or presentation is the place to look.

Richard Koo's ideas are good ones -- his analysis is sound, in my opinion. Balance sheet recession, and the fix will be eventual balance sheet repair. I don't think the political winds are in the direction of being able to have rational discussion of alternatives. Too many points to be gained from bashing. But -- recognizing "large-scale" drift towards rocks, does not impede one from making "smaller" investment decisions. The familiar think globally, act locally dichotomy. Can always help people with ideas, foster next generation, etc ... many alternatives for ways to build up social infrastructure.

Nine stocks: Berkshire, Fairfax, EGI Financial, Akita Drilling, Imperial Oil, Empire Corp, PFB Corp, Rainmaker, Raydan (mistake). Not very diversified: 3 insurance, 2 oil & gas, and those 5 are almost all of stock holdings in terms of fraction of portfolio.

Yeah, I am roughly 25 pct stocks, 75 pct other - which includes cash and LT non-stock investments which can be thought of as bonds, are managed as such (ie hold forever, or to "maturity" whatever that means in terms of the particular investment). It was not conscious decision to have 25-75 allocation; I've just been reducing stock holdings over past few months rise of almost every stock's price. Last month I went back in on one particular situation, to end up with what I noticed the other day was classic Graham 25-75 allocation. My core holdings still exist, but no double-ups (except for one) looking for a rise on better expectations; that mood shift has now happened. Perhaps more to the point ... two relatives, who are now managing their own accounts ... I've encouraged to stay with mostly cash until there is much more general anxiety / discouragement than presently. At that time, there will be ample opportunities to make up for missing a particular situation nowadays. In the meantime, we chat about how to look at a business.

Thanks - yes very interesting. I'll pass the link on to others.

Sounds to me like an instance of too big to provide personal service.

Thanks! Two good ideas. I'm going to be reading up on policy details of coverage, how they fit with my particular situation etc. I figured some of you insurance-savvy value investors would have good ideas! vrbo.com is the prior suggestion of that nature which I gleaned from reading this board's posts, and it's worked out for me so far.

OT question, not investing, looking for ideas re obtaining travel insurance, especially emergency medical coverage if out of Canada. Have found one of the credit card coverages (RBC), about $150/yr for a couple. CAA seems overly complicated, appears to require purchase prior to each trip. Would like to be able to make once-a-year purchase, be able to drive across border to US anytime for visit etc, not have to preplan. Also to make various vacation trips. Those are preplanned because of airplane ticket purchase. New concern for us. Used to have coverage thru my wife's employer, never thought about insurance purchase. Any suggestions, anecdotes, etc? Thanks!

Thanks! Nice find. Always enjoy reading Richard Koo. ZH discussion off the wall, probably part of the problem not solution. But nice to know there are sensible people like RK around too!

Oh, he's probably just timing the market!

Thanks for the pointer to Robert Shiller's course. I really like those Yale courses - the transcripts mean than one can read move much faster, at reading speed instead of waiting for the video/audio of the speaker. Slides are available as pdf files. And the downloadable zip file means you can put the material on your computer, not be dependent upon internet response speeds, even take it along on a trip to a place with no internet connection. I've been working my way thru the Yale Astronomy course, and have downloaded the Shiller course for a follow-on enjoyment.

Ok Tom, thanks for clarifying. Some really good suggestions from others. I think you are definitely well positioned for focus on insurance industry - your interest, your studies, people you know - so I withdraw my remark that insurance is hard industry to start with. It's ideal in your situation! The only thing I would add, is when looking at companies, also look at some of the average and even not-very-successful firms' reports. It will help you get some ideas, by induction, about what works well, company cultures, investment vs underwriting. I agree with Myth that in the end you have to make decisions, and there is no substitute to flying solo with your real money at risk. Still helps to have friends to assist. This board is a great place to bounce some ideas around, huge amount of insurance (and investing) expertise hereabouts. But the decisions must be your own, ultimately; if always rely on consensus, end up with something that is at peak of its flavour, not opportunity. You will do fine. You are clearly very bright and industrious. Best wishes!

Oh, there's a huge difference between < $100m and > $1B companies. And Berkshire is about the hardest company to understand, if you are trying to dig into the details. I believe www.hoovers.com still has some free access. Good place to browse companies and industries. Personally I would be inclined to start with some manufacturing firm, sub $100m. Publically listed so you have the filing to look at. But not much real estate (just a plant or few), more stuff than relationships (financials are relationships), not too much debt, no franchising or other opportunities to jiggle the figures. I'm not suggesting that as investing, just as a type of business to start learning about. Something that has not changed rapidly, eg no financial restructuring or recapitalization or new owners issuing shares to public, and such. Depends so much on your interests though. Are you in US or Canada? What sort of businesses are you personally interested in or familiar with? Have you ever worked in manufacturing, distribution, newspaper, retail, ... for summer job or co-op or whatever? Any relatives or friends, who can provide you with interesting background on how a particular business runs?

Hi Tom, Regarding investing books in general, Philip Fisher's "Common Stocks and Uncommon Profits" deserves a read. Another approach to "value". For learning about industries, if you have an access to some particular firm (maybe friend or relative works there), try learning about that. Have to get feet wet somewhere. What are success factors in that firm? What are differences vs others in industry? If want to choose an industry that is actually investible in today's market, insurance is only one that hasn't been goosed to infinity by a combination of excess investment funds and insufficient cautionary thinking. (Just my opinion of course. Can get diversity of opinions via this board, which is good!) And insurance is tough to learn about. Buffett letters help. Wikipedia articles, links from those. There are trade publications, and you can get info from websites of various firms. Some firms are remarkably forthright about what are the success factors in their business. Q&As at ends of conference calls - after the standard recitation of info from the quarterly report - often have good info about how a business works, as an analyst for brokerage firm asks Q and gets clarifying explanation. For Canadian firms, TSX listed, Sedar has the annual information forms, which sometimes include excellent overviews of industry in which the firm operates. And there's always books. If you have access to a university library, as is likely considering your age, check out trade publications. For instance, my university's library has online access to industry E-journals including: Advertising Age, Corrosion, Plating & Surface Finishing, ... You can get perspectives on an industry, which are different from (hence valuable) the type of coverage that shows up in investing books or on the pages of the business newspapers. You've got decades of time available to you, and (per Buffett) need only 20-punches max, say 1 good idea every year or two. So it can pay to take it gradually, learn an industry until you're comfortable making "investment operational" decisions. One of the main hazards of being an analyst working for a brokerage firm, if that is perhaps on your career horizon, is the expectation that one be prepared with an opinion (or ready to formulate and state an opinion after a bit of background study) on pretty much any firm. That is just unrealistic, and leads to bad habits and losing money. Most every question which can be asked is either unanswerable as stated, or simply does not deserve a response. If you are able to compartmentalize your investing activity from those pressures, it may serve you well. Best wishes.

I'm no expert, but I believe pad rigs are used when several holes are to be drilled in close proximity. The rig is self-mobile, and can crawl around on a prelaid concrete pad. A conventional rig has to be moved, between widely spaced drilling locations, and there are costs, as well as issues with roads (cannot move during soft-roadbed times of year, eg spring). Pad rigs can achieve higher utilization rates, or seen from perspective of the customer, lower total cost per quantity of drilling performed. Would appreciate additional clarification from someone who knows their stuff; the above is just what I've gathered from misc reading.

Yes, thank you - very interesting.

Hi Tom ... Welcome! You might also find Philip Fisher's "Common Stocks and Uncommon Profits" good reading. Fisher has a great checklist for evaluating a business. Even the best investments do not pass all the criteria however it is useful to consider in what ways your actual/contemplated investments compare to Fisher's checklist. To Fisher's checklist, I would add one more item, marketing "genes", which are essential for most companies to succeed long term. Best wishes, ws.