Uccmal

Sounds right to me. By, if call options expire in the money .... you mean you are exercising them. In this case you can avoid the tax indefinitely if you have continuity of the position. No, I dont know why you would claim it as income, either, unless you had to.

That's not really the problem. Most of the people running the juniors are in it for themselves. And many of them don't even have mining backgrounds. The people running the hot Internet companies- Facebook, Groupon, Amazon, Webvan, Pets.com, etc.- are actually trying to make you money. The valuations might be dopey but at least they're not corrupt. Very few of the juniors out there are trying to make money for shareholders. The level of corruption there is absurd. You do have a point.

I could take anyone on a drive into the smaller towns and countryside North of Toronto and show you hundreds of boarded up retailers in a matter of 4 hours driving. For all of these hundreds I could show you a dozen or so that were really successful. People think its going to be easy. Its not easy. Its long hours, and incredibly hard work. Why was Nebraska Furniture Mart so successful? The owner was an anomaly of hard work and resourcefulness. Same with Borsheims. Dairy Queen has been through the wars. Buffetts stable ownership probably saved it. Even the biggies have to constantly reinvent. Starbucks averages less than $ 100000 profit per store. And they get the benefits of scale. Walmart is the same. Mr. Spier is right. Identifying the next hot retailer is next to impossible. That leaves you with turnarounds. Junior miners and E&P companies are equally problematic. Its a bit like venture capital in the tech industry. Spread your money around on 50 good ideas and a few may pan out - so to speak. I have a stock stuck in my RRSP that is apparently still listed but has a value of zero - going on ten years now - the company had developed card readers for vending machines. It stares at me every time I check that account as a reminder of what makes a bad investment. I have had similar experiences with Canadian E&P cos. Fortunately I began investing right when Bre-x exploded. It took me 5 minutes to determine the stock was a bad deal. If all the gold in their "find" in Indonesia actually existed, the market cap was still too high by a magnitude of 10 or so. The longer I am at this game, the tighter my requirements get. I definitely want businesses with constantly recurring cash flows, that are hard to disrupt by technological change.

Research without buying is a good idea. I reviewed US banks of all sizes all one winter. One summer I read Security Analysis on my deck - the whole thing. Dividends lessen the pain. Do something else completely unrelated. Play a musical instrument. Learn Spanish, or Mandarin.

Oddball, An interesting approach. I believe Walter Schloss' returns were above 20% before partnership fees. That is, If Walter had been investing only for himself he would have made about 20%. Either way it creams the markets.

Valueinv will appreciate this: http://syncronet.net/syncro/wp-content/uploads/2012/11/ipad.jpg

muscleman, You are a hero to me....

pulp & paper - Its a bit like Buffett's parade. Everyone is adding "black liquor" energy, but pulp prices and demand is stagnant. Permanent or not? I am no longer confident that there will ever be a comeback, at least until supply actually becomes tight due to permanent plant closures. You dont want to be the owner of the shuttered plant.

In my example above it should have been Dr. Brothers who died, not Barbara Walters.... oops.

Interesting comments Dazel, and triopt. It always amazes me when I see older people who could retire any time still working. The examples are many: William Shatner is qouted as saying: I have to do something! Think Buffett, Watsa, Wilbur Ross, Carl Icahn, Anthony Hopkins, Rolling Stones and every other 60s musician who didn't die. Barbara Wawa just died at 87, and never stopped working. I have an acquaintance who retired a few yrs. ago. He is 71 and remodels bathrooms, on his own. He doesn't need the money. He likes the physical work, and the creative aspect of the work. He works at his own pace which is surprisingly fast. I seldom see medical Drs. retire. Many go to reduced hours or shared work arrangements. Which brings me back to the first post: Why is this young couple worried about money in the first place when he likely will never retire anyways?

Do you build fences too Al? I am looking for someone who doesn't charge too much. lol... Why dont you just move to a gated community, get a groundskeeper, a pool person, a live in maid, and security, and skip the fence? P.S. I no longer work on cars, mostly because I cant actually tell whats in there anymore. I was never much good at it anyway.

Ludicrous. I absolutely cant comprehend keeping up with the Joneses. I mean I drove beat up pickup trucks until a few years ago. Then a Honda Civic. Now I have a Hyundai Sante Fe for the family, and my wife has an Accord that we bought used. Paid cash for everything. Now, I have a decent house in a nice neighbourhood, with a mortgage I could pay off with a couple of weeks notice, if I had to. I resurfaced my driveway myself last fall, built my own deck, did some of my own car repairs on the older cars. We hire people for jobs we hate, or cant do ourselves.

The conversation around Geico is assuming that it grew in a straight line. It didn't. Lorimer Davidson was still on the BOD when the CEO changed strategies and went into unprofitable business. Buffett and John Gutfreund recapped Geico to keep it in business. Would this have happened if Buffett remained a minor shareholder all along - we will never know - but we do know that Buffett has commented that a BOD usually has minimal impact on a CEOs actions. My guess is he would have lost his entire investment unless he had taken a controlling interest. On the other side of the coin I have been slowly increasing my holding in Seaspan, on the dips, like yesterday. I am anticipating living off of my investment income in the not too distant future. I have held SSW since fall of 2008. I bought RBS preferred shares at the bottom in 2009 and still hold them. The principle has recovered, the dividend was re-instated. Paying the capital gains tax makes no sense. I also have a chunk of change in FFH still. I will buy more, if/when it corrects down for some reason. My intention is to keep my WFC, convert my Leaps in 5 years. Same with JPM. I will also keep a small portion of my holdings in AIG, and BAC, when they reach a more sensible valuation. This is after I have taken profits on the 80% of the rest of the positions in warrants and Leaps. Perhaps one day, bond yields will move North of 8% again, providing a good income source.

On a personal note. My own investment results have been roughly 25% per annum for 9 years, coincidentally when I joined this message board. My learning exploded. My results never would have been remotely as good without the internet. US trades would have cost a fortune. Canadian trades would be north of $80 each, and I would have had to run the gauntlet of a broker saying "You want to buy that?" every time.

Outright invention such as electricity, or special relativity, is rare. Innovation is an iterative process. I need only look at my car, my backpacking gear, my new bicycle, my IPAD to see how dramatic innovation has been in the last 20 years. I would have been out of the game for backpacking within a few short years without the innovation in lightweight durable products. The internet and wireless has been a profound innovation. It has even changed operation of the worlds politics. Now thats innovation! And I think that is only in its early phases. The internet enables me to buy high quality, custom goods from small cottage manufacturers worldwide. It enables the cottage producers to make a good living from a worldwide base of customers. That amazes me, beyond description. The Lifestraw, cheap, small scale solar, wind power, cell phone banking etc, are changing the lives of the lower 50%. My Great grandfather read readers digest, and obtained the recipe for the smallpox vaccine, after it was publicized. He fabricated it on the farm from Cowpox, and none of his kids even got the disease. These days, these type of innovations have much more rapid development, and dissemination. I could write continuously for days on this topic, so enough said.

I Believe the title of the board is Corner of Berkshire and Fairfax. FFH rarely sticks to a permanent buy and hold strategy. There is Buffett for the masses, and Buffett for the more sophisticated investors. Buffett for the masses works for the masses. Buy and hold WFC, Berk, And KO. It keeps the masses from losing money. Buffett's strategies dont vary much from what we mostly discuss here. Up until the late 1990s he was still a buy until a good price was offered for my stock (GD) or I realize I goofed (US Air, Solomon). Outside of wholly owned entities he has invested in hundreds of common stocks, and held a handful more than a few years. Do what I say, not what I do.

Well obviously we cant defend our border from you mighty Americans. So that leaves us with one choice which is to baffle you with bullshit - therefore Cnd Customs officers. The only question I ever get asked going to the States is where I work. Go figure. I must get the guy who was trained at the southern border.

Or, you could get rid of US and Canadian customs, which serve no useful purpose, except to insult the intelligence of reasonable people crossing the border. That would speed up the bridge traffic, and save money in salaries being paid to people to nickel and dime us in sales taxes. Its not like they actually catch any criminals. Free trade should include the free movement of goods and labour.

I am really surprised they aren't throwing everything they have at him. Truly. The optics are really terrible if he is allowed to keep operating. Surely the prosecutors can get someone to totally roll over on him. At the very least they should be charging him and SAC with every available means. Tie his expensive legal team up in court for the next 20 years, and kill him with small cuts. He was the owner of the company. He directed the culture. He likely engaged in insider trading himself. Sanj, ubuy2wron... you guys are totally right.

Very thoughtful Cardboard. The question remains? How do you determine when to sell? The broader markets dont really lend themselves to a value type analysis. Obviously, we have varied opinions on this, even on this board - imagine that. I think we could agree that BAC was cheap at < 10 with certain assumptions. With the general markets there is no simple measure of value. I am practicing a program of disciplined selling, particularly of BAC and AIG Leaps, as the common reaches new highs. That being said I still have huge upside potential while trying to minimize the downside exposure. Its either this or go to cash, wait it out (whatever it is), and give the taxman 20% of my money on Leap profits that have in a few cases tripled. A little perspective is in order sometimes. Three yars ago I was buying BAC.ws.a, at prices higher than today, and it seemed to have value. So were Chou and Berkowitz.

I know Sanj. The post was directed at those who are clearly basing their decisions on Macro behaviour, not you. I am neither a bull nor a bear. We can pull posts of people who were unable to pull the trigger at generational lows. The same people will be trying to guess the markets when it is at 1300 and AXP is 1/3 the value of today. I have repeatedly said that I am slowly selling down positions into this rally. I am also not buying anything now. But when there is a significant pullback I will be in there like a bad habit. I can guarantee that those trying to guess if markets are overvalued or not will be still guessing.

To add to part 2 of Kravens argument. S&p goes to 2200 in the next two years. A 50 % correction occurs. Down to 1100. It stays that low for two months while those who are busy making macro calls sit on their hands. FFH sells their hedges at a LOSS. I buy GE, AXP, SBUX, AAPL, and JPM. Really, I have no idea but that is as likely as any scenario. My guess is if you are sitting on 50% cash right now, you will still be sitting on 50% cash during, before, and after a meltdown. I sell my Leap positions into their respective rallies, in measured doses, and rebuy when things get cheap again. A.

Am I missing something? His fund has returned 177% since inception 1999, versus 36% for the S&P - T2 partners fund. That seems pretty good to me - top 1%. Of course it is not up to our standards here. :-X

I think if you make independent decisions, then this is irrelevant. I've attended every Fairfax AGM since 2005, and I was fully invested in 2009 and 70-90% invested in 2010, 2011, 2012...we're still about 65-70% invested in 2013. If an investor is swayed by other investors or what they hear on the news, then they've got a problem, because they are going to partake in things that will not have the full confidence of their own analysis. Cheers! I would think the first rule would be to know thyself. I also think that "confidence" in ones own analysis is not always a good thing. So therefore, I try to stay open to interpetation, as well. That is where the board is helpful. We are all swayed by the news or by the opinions of someone we respect. It takes a careful balance between hard headedness open mindedness. I was probably one of the first people on this board other than Francis Chou who held BAC warrants, and having watched the process unfold throughout I am making a killing. And it was never easy staying the course. I prefer my influences right now to be in print, where they dont have a direct feed to my brain. TV, video, and live speakers have a way of bypassing the thinking brain somehow. How else do you explain why people believe Dr. Phil, or Dr. Oz's spew. To some extent one can train themselves out of this effect but we all have times of weakness. Given the state of my life right now, I can get overtired and pessimistic (small kids, job, business, etc.). This can lead me to be influenced. Whether you like it or not Sanjeev, value investing is an emotional business. We are deliberately buying when everyone else is selling. That takes strong feelings. You can call if confidence in your analysis, if you like, but I think that is just rationalization. As I started out saying, knowing thyself is probably the most important thing in this game.

The common theme for longevity seems to be, well,fu*k all. Plain old luck of the draw. One thing I do think seems to affect people most is chronic stress. I am not talking about acute stress from a single or a cluster of events. Rather the continuous stress levied on us by commuting, cell phones, emails, and the like. One theme of those interviewed that I can possibly come to is that they generally love what they are doing. This is certainly the case with Irving Kahn, The Pediatrician, and the foam display dude. That, and plain old luck.