Uccmal

Investmd....I understand your frustrations totally. I have studied Fairfax in-depth for well over 20 years and invested in the shares almost as long. I concluded a few years ago that something was very very wrong. Despite all of my considerable efforts I could not get to the bottom of the problem. in the end I concluded it was not one or two problems but a myriad of problems that could not be corrected/overcome. As a result I started to sell off a portion of the shares I owned until I reduced the overall share position to a much smaller portion of my overall portfolio. I can assure you that I never looked back. My only regret....not selling all of the shares that I owned. I enjoyed going to the annual meeting and related activities which included meeting up with old friends that I had met along the way but let's get serious these reasons are not enough to keep me invested in the stock. So for what its worth....start selling off your Fairfax holdings. It will hurt to do so but in the end you will not regret it. Others will disagree with this recommendation but a growing number will agree. Good luck! Bearprowler, thank you very much for sharing your experience and words of support. I've been following and accumulating shares in FFH for 15 years and going to the meetings...and probably drinking the KoolAid. I hadn't thought of selling at these levels. However, your advice resonates. Thanks. I concur with BearProwler. I exited the stock completely by mid-2013 and never looked back, either. I no longer read the reports, or attend the AGM, even though it’s 30 minutes to get downtown. There is nothing to learn here. I am not going to ever understand the insurance business after years of trying. And there is nothing to learn from FFHs investments that applies these days, except what not to do, I suppose. FFH had 6 good years in the 90s. The promised long term arrived years ago, and the results since put them in with the low end of going concern companies. Watsa is an awesome salesman - I will give him that, and that’s it. I learned years ago to cut my losses, or losses due to opportunity costs, and move on. There are hundreds, if not thousands of companies in the US and Canada that get better returns than FFH. For me it involves one primary question: Can I get better, more consistent medium term returns at the prices that are listed on March 17 somewhere other than FFH? An honest answer is..... extremely easily.

Will be looking at Call Leaps in a few days for the best companies.

I am just riding my 10% or so stake in RY down for now. I have a bid in for RY at 50 CDN, and for TD at a similar discount. Their brokerages are doing well. :-). NIMs are compressed. Dividends, who knows.

Hi Paul, 130% equities maybe, varies by the day. It was about 110% 5 weeks ago. Hence the puts and why I am patiently waiting for the next major downdraft. I have 4 untapped lines of credit for backup, if the drop from here exceeds 50%, they may come in handy. We’ve been here before. a.

Nothing happening so far. I bought a few puts on Friday for hedging and/ or profit purposes. Nothing special. I have set sells on them ranging from 10 to 25 x my purchase price. My puts on Bam that I got 3 or 4 weeks ago are only at 10x their value right now. My sell order is in for 25 x p.p. With those. I have 12 or so companies with lowball orders in. A lot of companies are still above their 52 week lows. My bids are well below the 52 week lows: Sbux, Mcd, Hd, FB, Goog, V, Apple, Tesla (100), Costco, Msft, Bam, Bip.un, ema, cnr. Everything is on autopilot to minimize me from over thinking. Markets are still irrationally high given the degree of the damage being done to Main Street.

You think Iran is digging burial pits that can be seen from space because of perception of risk? WASHINGTON POST Coronavirus burial pits so vast they’re visible from space Iranian authorities began digging a pair of trenches for victims just days after the government disclosed the initial outbreak. Together, their lengths are that of a football field. https://www.washingtonpost.com/graphics/2020/world/iran-coronavirus-outbreak-graves/ The government will not be bailing out common shareholders.....how can you people not see this? Uhm no, I guess didn’t communicate that clearly. I was deliberately staying out of the debate on whether a risk exists or not. It’s no longer relevant. The economy and stocks are going real low so pick your bets wisely.

My bet is that he extorts one or all of the airlines they hold to “save” them. Same terms as GS and GE 10 years ago.

I hear you. For a few of the names I mentioned 50% lower is not that far back in time. I have “nibbled” on HD, V, and FB. The others need to be significantly cheaper for me to really load up. If I don’t get fills, I will sit it out. I have been fully invested since 1997 so it’s not as if I am missing out. Just riding the elevator back down and back up again (perhaps). Well, maybe I was totally off on this one ;D ;D ;D I put another nibble in for V this morning. I raised a few of my bids but dropped the number of shares. I have about 15 orders in. This is feeling too much like w*rk. Got one or two fills in Canada before the ridiculous circuit breakers hit. In general, this likely gets way better (or worse depending on your perspective, before things settle down. Without a government infusion of cash I can easily see every airline in the world, every hotel chain, cruise companies, and all the ancillary travel related businesses in bankruptcy, in short order. Virtually every person I know who has travel plans has been cancelling them. A friend of mine was at his rheumatologist this morning and was advised to cancel a trip to Vancouver next week. The Doctor was cancelling a trip to Boston for a conference that would have had 16000 attendees. My sons school runs an annual trip to Europe and they have cancelled (a week ago). I could pull another dozen examples from my own social circle. These kinds of hits to the economy don’t come without huge pain, and there is no easy reversal. It is totally irrelevant whether there is a real threat or not anymore. It’s all perception shaping reality.

I hear you. For a few of the names I mentioned 50% lower is not that far back in time. I have “nibbled” on HD, V, and FB. The others need to be significantly cheaper for me to really load up. If I don’t get fills, I will sit it out. I have been fully invested since 1997 so it’s not as if I am missing out. Just riding the elevator back down and back up again (perhaps).

I have hardly traded for at least a year. I have had more activity in the last two weeks, than I have had since December 2018. I had been very slowly buying HD, V, and FB on pullbacks. Now I may get a chance to really put some cash to work. I have bids in for Apple, FB, NFLx, V, Costco, Hd, and Goog at half, or less than half, of what they closed at today. Some of my bids may never get met, but each one of these has their own vulnerabilities, in regards to the present situation, except maybe Netflix. Similar with Bam, bip, bep, td, ema, cnr, and ry in Canada. Bids in at 50% of today’s close, or lower. Also have Bam $55 US Puts I bought near the peak - bought cheap as a partial hedge, to unload. Since, I already hold all of these so I will be waiting for them to get really cheap. The markets and the economy are going to get killed over the next few weeks at least. If this situation settles in I want to hold the very best companies out there. This is not the time to buy up crappy names like cruise companies, airlines, or anything with oil and gas drilling in its company description. The speed of this whole crash is reminding me of fall 2008, and March 2009. But I don’t think we get a V shape this time, unless Covid 19 just sort of disappears with the warmer weather. Even then, the complete mothballing of entire industries will take along time to unwind.

Along the lines of Cigarbutt’s ideas. I opened the RESP roughly 15 years ago. We have money gifted from both sets of Grandparents, and I added in some for a few years. Both kids are in the one plan. My son will be accessing the account, likely in 2.5 years. I hold all common stock. Varying size positions (all CDN) in RY, BMO, FN, Bam, Baby Bams, SLf, enb, Aqn, ema, Npl, Bce, WCP, and obe, and a couple of others. I have seldom traded in this account and every stock but one pays a dividend. I have removed companies that stopped growing their dividends and left the rest. Lots of Utilities, Pipe, financials, and the one conglomerate. With my son likely needing this money in 2.5 years I have stopped investing and should have the first year in cash when the time comes. Then I can Time stock sales around market highs. By my estimates we will have some 150-200 k left after sending both kids to undergrad. We can use this a we see fit, or use to help the kids in 13 years when my daughter is done her undergrad, or pay for further education, etc. For this account I was less about market timing, and more about diversification, and buying as soon as the cash entered the account. There are lots of decent homegrown companies that have done well over the long term regardless of the price I paid. There has never been a need to diversify out of Canada. At any rate most of the companies have international exposure in the stock price. And if I croak in the meantime the kids and my wife will have access to my portfolio which will pretty much set them up for life barring a nasty drug or alcohol habit.

We'll, at least not for the next several. I doubt most incremental buyers are planning to hold for the full 30 years and are looking to the duration for speculative/hedging purposes. Those who are buy/hold buyers (pensions, etc) probably have other ways of managing/mitigating the duration and inflation risk at some time in the future. Of course.

Following this topic. I see the US 30 year has hit 2%. Bond traders dont expect interest rates to rise for 30 years???

Dividend growth investing here. I am down to 2 stocks in my portfolio that aren't growing their dividends annually These two pay high dividends, they just aren't going to grow. As soon as I can find a couple of more dividend growers At A Reasonable Price then I will get out of the last couple. The exception I suppose is BAM, my largest single holding. It grows its dividend but is more like Berk. and uses more of its retained cash flow in a productive manner.

Opihiman, the discussion has been ongoing for years over here: http://www.cornerofberkshireandfairfax.ca/forum/strategies/future-strategy-to-survive-discovering-1-out-of-every-20-bbls-of-oil-we-now-use/

This seems to come up in every new industry. We have seen it over and over. As data storage becomes greater, and cheaper who knows what the future will being. I wouldn't expect the same companies to be dominant in 20 years. I dont know how they will be upended but it will happen. Data storage capacity would change the online advertising paradigm, online provacy, and a whole host of things. Your home server (computer), could download the whole internet, and compartmentalize your online interactions to only those that are absolutely necessary, shielding you from advertisers and intrusive eyes. The internet is being ruined by commercialization right now, kind of like Christmas. I have to clear cookies off my Ipad pretty regularly now.

Mortgage? At least until renewal. If we could access large amounts of non recourse leverage, then everyone could. Practically speaking lines of credit have worked well for me for nearly 20 years right through the financial crisis. They were never cut or frozen. I dont really use them and the amount of leverage is not huge. Of course, you need to pay interest which is quite high relative to a margin account.

SD, What you did was sell part of your position on an upswing and then rebuy it later. And if you still hold it now you are losing money on it. You have created a cognitive bias for yourself, and damaged your credibility with board members in the process. You know the stuff Buffett has said about a reputation. There is no such thing as a synthetic short. Its called swing trading. You are probably better at it, or luckier, so far. Its just another thing I have tried that has worked for me until it doesn't. Overbuy, sell on an upswing, then buy back at a new lower price, and then lose money on that. And its another thing I am knocking off.

I solve this problem by never averaging down... This is very smart. I have wrestled with this a number of times. Nearly every time I have averaged down in the last few years I have gotten stung. Stock A looked real good at my buy in price, therefore, it must be better at a cheaper price. The problem arises when the position gets bigger and bigger, and keeps dropping in price. And then it drops way beyond any expectation I could have dreamt up. At this point I should buy more after all: "there is blood on the streets, we should buy at the point of maximum pessimism, If it was a good buy 50% higher then its a great buy now... etc." ... A case in point for me is Whitecap Resources (WCP-T). On this I have averaged down. It was all well in good when it was trading at 7.50 to 8.50 but it is now at 5.50 and I have too much in it. In order to right size the position I will end up selling a good chunk on the way back up when I hit break even. The position is just too large to carry for very long comfortably. I still believe that WCP is a great company but I dont want to hold the whole company. When I really crunch the numbers honestly the amount I will make on the way back up from averaging down will not be very much, IF there is a back up. By averaging down I have reduced my aggreagate purchase price from perhaps 8.50 to 7.20. Is it really worth it to get trapped in a position, for who knows how long, to make a spread of 1.30. I have concluded that it is not. For me position sizing is the most important thing now. Its a tricky thing to figure out but I try to do the best I can. Once I figure out the right size for a position it is best to stop and ignore it. Its hard and takes discipline... My experience with averaging down has been quite consistently satisfactory and I wonder why. From FFH AR 2011, experience with International Coal: As an example of our long term value investing approach and the need to be patient and calm through adverse market fluctuations, in the table below we show you the results of our purchase and sale of shares of International Coal. This is a company of which Wilbur Ross was Chairman and owned 16%. Our Sam Mitchell, who originated this purchase idea, joined the Board in 2008, after we had acquired 13.8% of the shares. -Purchases of International Coal Sales of International Coal Number of Shares (millions) Cost per Share Total Cost 2006 1.4 $4.58 6.4 2007 19.7 4.39 86.3 2008 9.1 1.81 16.5 2009 15.0 2.87 43.1 Total 45.2 $3.37 152.3 -Proceeds per Share Total Proceeds Number of Shares (millions) Cost per Share Total Cost 2010 22.6 $7.26 163.9 2011 22.6 14.60 329.6 Total 45.2 $10.93 493.5 Total realized gain: 341.2M The table shows how we averaged down from our initial cost of $4.58 per share to an average cost of $3.37 per share. We sold half our position at $7.26 per share (a 115% gain) and only five months later, there was a takeover offer for the whole company at double that price. In spite of not buying only at the low and not selling only at the high, we earned $341.2 million by selling at over three times our cost. Our experience with International Coal is exactly what we have done over 35 years of investing – average down when buying and average up when selling! An added advantage in this case – we got to know Wilbur and he is an excellent partner. Obviously the excerpt is a selection of a selection bias but I could put up similar tables for my gradual involvements in Fairfax, OdysseyRe and The Brick among others, including some cyclical stuff. Maybe it's just luck and I agree with others about checklists, slow thinking, writing down etc but I wonder if the factor you mention about position sizing may not be an important determinant ie deciding in advance about a potential maximum percentage of portfolio with quantitative triggers (price vs intrinsic value) on the way down and up, hopefully in that sequence. I think Newton did the opposite once with his South Seas investment but that's another story and maybe by quoting the difficulty of quantifying the madness of men, he was the father of behavioral finance. A clear potential disadvantage with this strategy is the implicit need to have available fire power and this perhaps ties in with what SharperDingaan is trying to explain in a different thread (house money etc). Take the above with a grain of salt as I seem to become more and more confused in today's markets. Cigarbutt, I generally like your posts: they are smart, and well thought out... you know a refutation is coming :-). Averaging down: works until it doesn't. Do yourself a favour and read the entire Pennwest post. There was thesis drift through the entire thing. Initially I got caught in it but realized that and got out with some loss. Maybe SharperDingaan has somehow managed to trade in and out and make money along the way. But read carefully what they write. It is often dishonest in how they define their results. They never come straight out and admit that they lost money on a situation. Maybe they never do... but there is no honest disclosure so how would I know. Using a Fairfax example to dispute this is all good unless you look at the situations where they have lost huge: Invested 500 million in Canwest weeks before it bankrupted and they lost everything. Blackberry, Torstar, SFK-Fibrek, Resolute, the market puts that cost hundreds of millions, or billions. Without their bond desk they would have been gone long ago. Invested (got lucky) in Sandridge because they liked the sleazeball in charge? If you want an exercise in studying cognitive biases you need only look at FFH and all the threads. The thesis drift in the threads is pervasive. For a long time it was about great investment results but crappy insurance underwriting, then it switches to great underwriting but lowsy investing. Prem wrote for years how they were targeting 20% annual returns, then dropped it to 15% which they have never come close to meeting. He wasn't going to give the company to his family but he has. Then there are the nasty tricks along the way to maintain control of the company. Investors on this board are blind to FFHs foibles. I made my decision to sell the stock in and around 2012 and never look back. I agree with you that Writser has created a great checklist. Mostly it involves writing down your thesis, initiating and starter position, and then sitting with it. I am endeavouring to work with the sit with it portion, for years if necessary. Cheers, Al

I solve this problem by never averaging down. I realized it's too fertile a ground for psychological biases to take hold in. These days I set a maximum position size when I first buy a stock and leave it. If I'm wrong I know the max I can lose. I don't con myself into buying more and more all the way down, which is VERY easy to do. After all, if you invest for a long time, you will eventually find a stock you love that is going to zero! This is very smart. I have wrestled with this a number of times. Nearly every time I have averaged down in the last few years I have gotten stung. Stock A looked real good at my buy in price, therefore, it must be better at a cheaper price. The problem arises when the position gets bigger and bigger, and keeps dropping in price. And then it drops way beyond any expectation I could have dreamt up. At this point I should buy more after all: "there is blood on the streets, we should buy at the point of maximum pessimism, If it was a good buy 50% higher then its a great buy now... etc." At that point I am now looked into a course of action where my capital is used up on a losing position and my manuevering is constrained. In order to switch out of Stock A I need to sell at a loss. A case in point for me is Whitecap Resources (WCP-T). On this I have averaged down. It was all well in good when it was trading at 7.50 to 8.50 but it is now at 5.50 and I have too much in it. In order to right size the position I will end up selling a good chunk on the way back up when I hit break even. The position is just too large to carry for very long comfortably. I still believe that WCP is a great company but I dont want to hold the whole company. When I really crunch the numbers honestly the amount I will make on the way back up from averaging down will not be very much, IF there is a back up. By averaging down I have reduced my aggreagate purchase price from perhaps 8.50 to 7.20. Is it really worth it to get trapped in a position, for who knows how long, to make a spread of 1.30. I have concluded that it is not. For me position sizing is the most important thing now. Its a tricky thing to figure out but I try to do the best I can. Once I figure out the right size for a position it is best to stop and ignore it. Its hard and takes discipline. Someone on the BAM thread was bemoaning the stock price of BEP. I suggested the person just ignore the stock gyrations. Gotta take my own advice.

I agree, Its one of the biggest investment disappointments I am aware of. I would never touch it. I have been out since about 2012 and nothing they do could convince me to be back in it.

Fostering someones interest is likely the first step. Warren Buffett: Making of an American Capitalist - this one really got me into it over 20 years ago. Peter Lynch: One up on Wall Street John Neff: .forget the title. He only wrote one. For the more statistically inclined: David Dreman: Contrarian Investment Strategies.. the second one he wrote. When the person has a solid interest then the Intelligent Investor. I found Phil Fishers book sort of useless. His son has made alot of money off the family name though. The Dreman and Neff book are likely hard to find now. Peter Lynch's advice is to buy what you use. This would have served you well in the last decade buying stocks like Apple, Google, FB,,etc.

Pretty much agree with Cardboard here. The US seems to not place much value or has forgotten entirely the value of having a stable, developed, and peaceful trading partner and neighbor. There's nothing like a little oil shortage to focus the mind. Though I would say, if the Americans really had balls they would place tariff on oil and energy imports. The thought had crossed my mind. A gentle reminder of our importance over a few days.... But these tariffs are really about Donald keeping his face omnipresent in the news so he can watch it.

Thanks for posting guys! If you follow the advice you'll get more than a dollar:-)). This has been the hardest thing to wrap my head around with value investing. Holding onto the winners is hard when they become fairly valued or somewhat over valued. But there is hope. Becoming more disciplined in my purchasing reduces the need to make decisions on the buy side or on the sell side. In other words "Keep it simple".

I am in Etobicoke at the Miss. border near Bloor. A couple or three coyotes have made their way down to Bloor. I have seen them for years up Etobicoke Creek when I walk, ride or jog up there but their boldness is new this year. I think the winter was particularly harsh for them this year. A couple of weeks ago my wife was interviewed by Global news while walking through the park about the sightings. They go after kleenex box cover dogs (little fuzzy things). But, so far they haven't cross bred with the local dog population like in California. The resultant mongrels around LA are way more aggressive. edited: for abominable grammar and typos.