Uccmal

I'd be really interested in your thoughts on this one if you have time to start a thread (I can't find one). It has levered up like crazy in the last 18 months! You may want to check out todays news. They raised the dividend 10%, issued 1.5 B new shares, have set out a plan to delever more rapidly from the Spectra purchase. Keep in mind that, like BAM, and other blue chips they dont pay much for debt, and can lock it in cheaply for years and decades. In other words, rising interest rates wont impact the debt side as much... the stock rise may be muted. I dont want to co-opt the thread but I dont see interest rates rising much before we dip into a recession and they have to come back down.

Thanks guys for highlighting this article. These guys are good within the constraints they are given. What I find really interesting and somewhat disconcerting is that their fund is one of 415 in the Canadian Equity category. Think about that: 415 funds all invested in 300 companies of any significant size....

Have bought alot of Enbridge. It has gotten hammered. I have held it for years. The recent add ons are for trading purposes. It wont likely go much lower than 44 with the dividend support. They really got pummelled after the Q3 earnings. The market cap of the company came off 10 B + on a possible reduction in the dividend GROWTH rate by a couple of percent. WTF? They operate in an oligopoly and are the biggest player. Also Whitecap. This one looks like tax loss selling aggravated by issuing 400 M in stock at 8.80 to fund the fire sale purchase from Cenovus. It is trading down near levels when oil was below 30 per barrel. At todays oil prices they are solidly profitable. With hedging they will stay proftable for a couple of years in the event of an oil pullback. There are probably many other Cdn. O&Gs getting the same pressure right now. I haven't looked at any others. I just happened to already hold WCP. Q. Does anyone know when big funds start and stop tax loss selling?

Caught an article the other day Jeff. I dont know if you have ever travelled to Cobalt ontario, about 10 miles from Quebec. There are experiencing something of a resurgence lately due to cobalt demand. Needless to say, Canadian mine practices are eons better than those in most African locations.

I think it is not that evident to say a precise technology is now affordable because the incentives played their role or not to accelerate its development. Defenders of the free market will say that if it is good, it would have arrived at the good price at the good time. Others will say that to kick start some technologies or to accelerate their development, government help is necessary. I think that if there are some externalities like benefit for the society as a whole, govrnement is right to give a push. Of course, some won't agree and pretend that a total free market will work. I don't! It's also hypocritical to heavily subsidize (directly and indirectly) and favor certain techs for decades (fossil fuels) and then when a real competitor is starting to emerge, to say "subsidies are bad, we shouldn't support clean energy sources and just let the market figure it out". The least we could do it remove current subsidies for fossil fuels, which would make alternatives more competitive, but without being retroactive, it's hard to talk about a free market... "A 2016 study estimated that global fossil fuel subsidies were $5.3 trillion in 2015, which represents 6.5% of global GDP.[3] The study found that "China was the biggest subsidizer in 2013 ($1.8 trillion), followed by the United States ($0.6 trillion), and Russia, the European Union, and India (each with about $0.3 trillion)." https://en.wikipedia.org/wiki/Energy_subsidies#Impact_of_fossil_fuel_subsidies Don't derail arguments with facts. lol, The argument over not subsidizing renewables is non starter BS. We have subsidized all fossil fuels since their inception both directly and indirectly. Directly through tax breaks, provision of roads, transmission...... The whole infrastructure of society has been built around fossil fuel use. Its a symbiosis. Indirectly through millions of deaths (coal), virtual slave labour, heath damage, and environmental damage. Everything has its externalities, there just happen to be fewer with wind and solar. When the coal and oil lobbyists whine about subsidies they seem to conveniently forget all the externalities required for their industries to operate. By getting rid of fossil fuels you could even shrink agencies like the EPA, and OSHA. I personally could care less about subsidizing renewables. We will get there one way or another anyways out of necessity, and survival of the human race. And like everyone else I am a hypocrite. I hold oil stocks, drive a gas powered car, burn natual gas, and own a gas transmission company. I also hold a larger number of shares in rrenewable energy companies than oil. But I still a hypocrite.

Hi John, Around 1996: Started with mutual funds and quickly opened up a discount beokerage account when I realized the middle man effect. First buys and sells were all by phone for $39.00 each (and that was cheap). First big holding was Fairfax. Didn't know what I was doing - it was 3 times book when I bought it right before the TIG, C&F debacle. But studying their investing style is where I learned alot back then. Finally got my retunrs out of the single digits in 2005. In those days most of the money I invested was from my earnings. I lived frugally. In 2002 I met my wife and managed to hang onto 80000 dollars after buying a house and so on in 2004. Probably only ever contributed another 20 g to the account. The rest is history. I track my long term returns from 2005. I have transitioned from deep value to Garp more recently. GARP has evolved from studying what works best or would have worked best had I held it (HD, Sbux, AXP) bought in 2009 and quickly sold. I realized that good companies are hard to find, so buy, and never sell. cheers, Al.

Or there was no wind.

May I ask why you didn't see this coming? I always thought that wind is the superior technology to solar. Just one turbine can make a lot of electricity. Also most of the cost comes from installing the turbine. So I thought that improvements in the process will result in lower costs as time goes on. Mostly due to the inconsistency of the source and the scale. I have driven through huge windfarms in France and elsewhere when no turbine was moving. Conversely I have seen people using solar in third world places successfully. Just didn't see it being as viable as it has been. Both would benefit from better storage capability.

The last part is just wrong. Using that argument you would have to use the same argument for all power generation sources: coal plants, nuclear, hydro, solar, gas, etc. The ones that use combustion would run through parts much faster, and tha parts all require the same smelting as a wind turbine. There would also be some type of mantenance for all generation systems. The lowest would likely be solar panels which need to be cleaned periodically and have modules replaced as needed.

It is pretty cool. I never saw this coming. While I dont expect wind to become as big as other renewables, I never expected it to be viable at all. Solar I can understand having been in some hugely expansive arid areas in the western states, and Europe.

lol, This is reasonably predictable. At some point, markets will crash, there will be a recession, central bankers will drop interest rates, and another asset bubble will be born. My suspicion is the combined attempts to reduce central bank balance sheets, raise interest rates, and a rising price of oil will be the cause. All these together will be enough to push the average consumer over the edge. But it will get blamed on something else much more dramatic.

Bruce Flatt

Nice work. It seems to tell us that the majority of the Dow Companies are gorging on debt. We know that 3 or 4 have huge cash balances. I think you would see the same rising debt levels across the entire S&P. I have also seen charts showing the EPS for the S&P which peaked a few years ago. To me this all illustrates a big problem for central bankers worldwide. They want to raise interest rates but I suspect they wont be able to. In fact I would bet that as soon as this shows signs of cracking, interest rates will come down again. The very best scenario is likely extremely low stock returns going forward for the indexes. But things never really work that way. We are more likely to get a significant correction.

Thankyou, Thankyou, thankyou.....

There is nothing simple about this situation. And there are no simple solutions. Comparisons to the fall of Eastern Europe, and Iraq dont apply. The former Soviet Union and Eastern Block countries had well educated populations, decent infrastructure, and something to build upon. The same with Iraq. The same with Germany, Italy, amd Japan after WW2. I dont see that with North Korea. I see a country where the people live in poverty beyond our comprehension (like 500 years ago poverty). They starve regularly, get little to no education, have no job skills approximating anything more modern than 100 years ago, and this has been the case for 70 years. No matter what you do they aren't going to suddenly revolt. The leader of North Korea is surrounded by a ruling elite that has to be eliminated as well (if he doesn't get them all first). The military are all part of that elite so dont look for coup from the people or the military. The system there is built in paranoia. If you are a soldier you are afraid of the government taking your livelihood and killing you, so you do your job. If you are a soldier you dont want a coup because you lose your elite status. The whole system is self reinforcing. Sanctions only hurt those who are poor and starving already. The idea that they will revolt is a very western idea. The idea that the leadership cares one whit about public opinion is also nonsense. No one has a solution. If they weren't protected by China they could be handled the way Iran has been. But it wont work. Iran's population is sophisticated, and educated, and they have a huge non oil industrial base. They operate to public opinion and getting the sanctions lifted was in the leaderships best interest to maintain power. I also doubt that China is contributing to their nuclear program. Would you want an unstable leadership on your border with nuclear capabilities? He can point them any direction. The only hope is gone until Kim dies, and maybe you get a more enlightened leader. There were hopes that Kim would open the country up but he seems as enlightened as his father and grandfather. What South Korea needs is a huge wall that will block artillery (sound familiar), and allow the "allies" the time they need to take out North Korea's equipment and minimize the damage in the meantime to Seoul. But this has to be done with a full blessing, and help from China and a long term plan to contain the populace and provide for them until they can get on their own, which will take decades. Ugly situation all around.

I didn't like the macro bets, and it is documented on this board, somewheres. I could never get past why they didn't collar them on the upside. I also didn't like the large investments in Resolute, and Blackberry in particular. I could never figure out why they didn't buy Tim Hortons, instead letting Buffett have it. I sold all my stock and really haven't looked back. Fairfax is a big company and the returns are never going to get that good. Years ago, it was a problem with insurance losing money. If only they would get their combined ratios down, everything would be rosy, because they are such good investors. The last few years they have been getting the CRs down, but the investment side has been weak. If only they could make better investments. If only comes up alot with this company. They may be the best bond investors going but that has become increasingly difficult to duplicate. It worked in a dropping rate environment but there will be no big hits in a stable or rising rate scenario. And no I am not a hater, by any means. I am not a hoper either. I just see Fairfax as a mediocre investment. One could do worse, and one could certaiinly do better.

Doing nothing is one of the hardest things to do in investing. I suggest picking up a book or picking a hobby. It's summer... go outside. Most importantly DO NOT watch money TV like CNBC and Bloomberg. They're full of it and don't know much of anything. Yeah, Its hard. I am really working on doing nothing...that doesn't sound right. I look at ideas posted on the board and elsewhere but am pretty much not buying or selling at all. I stopped watching business TV years ago, and very rarely watch any business video online. I found 15 years ago that video and sound seem to have a greater effect on my perceptions than reading. Its much easier to be skeptical with reading. I am trained in that from my education. This is actually the same reason I stopped going to Prem's AGM a few years ago. He is such a compelling saleman that I had trouble seperating his message and rationale from the reality that I operate in which has a very different set of conditions.

I agree with LC. Utlities, and /or large established energy companies with deep pockets are the way to go with this. My analagy for what might happen: In the early to mid nineties there were thousands, if not hundreds of thousands of internet providers. I used a local one and had to painfully dial up from my computers modem to get my online porno (ok that was gratuitous :-) ). Within a few short years the incumbent "pipe" providers had completely wiped 99% of them out. Bell Canada is the largest internet provider, followed by Rogers, and a few other local monopolies. I see existing utility companies such as the BAM group, Enbridge, Algonquin Energy, Mid-American, and so forth coming out the winners. They already own the expertise, have the connections, and cash availability to completey control solar and wind. BEP (BAM sub) already owns and developes alt. energy facilities, as does Enbridge, Emera, BH Energy, and Algonquin. My list is biased to Cdn. companies but they all have lots of international assets and expertise. There are likely many other international players in this space as well. The second group I see taking a piece of the pie are the oil majors. Exxon, Shell, Chevron for example. They can buy the facilities and expertise. FWIW I think Tesla and its ilk probably participate in parts of the equation, perhaps storage (which seems to be a big focus of Musks), and industrial scale rooftop. With the weather we have had in the East this year solar, no utility access seems a bit of a reach for me. We would be using a whole lot of diesel in our backups.

I had to read your post three times, Uccmal, to get it it right. [Hopefully I got it right after the third reading.] It is about being prepared for the next downturn. [ref. your separate topic about that.] - - - o 0 o - - - Welcome back posting. If you're still in France, please enjoy your stay onwards with your family. If you're back in Toronto right now, welcome to reality. [ : - ) ] John, I guess I should work on my writing. Back home, alot poorer, and a little time lagged. Further to my commemt above: For every 10 dollar increase in the oil price the US spending economy loses: 17 million x $10 per day = 170 mpd x 365= 62 B per year. Bring the oil price up to 78 per barrel = 190 B per year. Thats larger than any proposed stimulus from Trump. Obviously, oil producers and their shareholders make money but cars, housing, and travel, all suffer which effects the greater population and economy. A similar but greater effect will come from interest rate increases. They have been so low for so long, any change may shock the economy. A 1/4 point increase up here (Canada) already has me looking at where I can trim my assorted non-locked in borrowings. Of course the end result of a market correction, and economic correction, is that interest rates will get dropped again. We are caught in a Japan cycle. It appears asset bubbles take a couple of generations to work themselves out.

Probably, Does it really matter? At some point, something (see Mauldin article above) that has nothing to do with anything particularly important, will be the trigger to fix all this. By all metrics US markets are expensive. They are drunk on cheap oil, cheap debt, too much indexing, and phony EPS numbers. 2007/08 was an interesting case because markets were not that frothy. The correction came from a totally different direction. The ensuing panic had little to do with the S&P as a whole, or its valuations. The financial sector was obviously unsustainable (in retrospect) but we didn't have any idea of the extent of the damage until we were well into it. So, put me in the category of who knows. But when I start thinking I should be buying Amazon, Goog, Facebook, Apple and so forth maybe thats a sign we are nearing a top.

Hey John, I bought and read it eons ago, and lost it. I bought another copy on the recommendation of the board members for a flight to France tomorrow. I need some light reading for the torturous hours aboard the plane.

I suspect the interest rates are the main reason.

There's a strict limit of 1 automated lawnmower per block, if they get too close to one another they'll start plotting an uprising against their human masters ;D I think of these automated techs are just capable enough to replace the boring part of the job allowing humans to specialize. If the lawnmower can mow the easy parts of my yard or the roomba can do most of the house, I can handle the rest - hopefully a lot quicker than doing it all myself now. Think how much human labor washing machines and dishwashers replaced when they first came into existence, sure you still have to put in some effort loading and unloading them but the majority of the work that used to take hours is done for you. Ah, but nothing you guys have mentioned is autonomous. And they glitch out all the time. A buddy of mine got stranded in Syracuse a month ago, by what, oh my, software problems on the plane. Its okay Jurgis. I get tech people. They think that tech is the answer for everything, including death and immortality. Just download yourself into that there computer and we will duplicate you millions of times and screw up your code. Oh the fun to be had.

Okay, Normally I just read these threads with interest, and no intent to comment. But I couldn't resist. While I was trying to read this thread my normally reliable IPAD started to glitch, with the screen jumping around, and the buttons moving. I had to reset it. Makes me think of mobile devices run amok. Suddenly my lawn mower takes out the neighbours thousand dollar garden. I can see myself chasing it around the yard trying to stop it. Then the forklift in my warehouse suddenly decided to take out a whole row of stacked Ipads and run over them until they were crushed into dust. Several self driving trucks carrying hundreds of thousands of tons of steel careened into an office building downtown killing hundreds. While my military was attacking the Ruskies, something went wrong, or we got hacked and suddenly became subjects of Comrade Putin. I just did a stress test... for those too young too have been subject to such as nasty experience I will describe it. You run on a treadmill with a few electrodes attached at different parts of your torso, and upper arm. The differential between the electrodes will tell you if there is a blockage somewhere. It starts out innocuous enough, walking horizontally on the treadmill. Then the program tilts the treadmill, and speeds it up. By the end when your heart rate is hitting 150 or higher your running like hell to stay alive. While I am doing this I was envisioning if the tech wasn't there to pull the chord out. I could die like Sheryl Sandbergs husband. 1. Backpack 2. Hiking boots, and lightweight shoes 3. Sleeping Bag 4. Sleeping Pad (thermarest) - check 5. Tent with poles 7. Rain Jacket / pants 8. Warm fleece, and lightweight hoodie 9. Long Underwear 10. Hiking pants 10. b. shorts DTEJ is working in an area where I see automation taking over. Things that dont involve mobility. But then this has been consistently getting automated for close to 40 years. Bookkeeepers replaced by spreadsheets, secretaries replaced by PCs. So far its a natural progression. I dont envy kids, including mine, going into the future workforce. As Munger suggests, maybe a good old fashioned arts degree followed by specialized training. Oh, and that stuff in the middle of the screen is my camping equipment list. I accidentally hit paste.

The market meandered along the peak from spring 2007 to summer 2008. Warnings were many, especially in hindsight :-). Okay, I got tempted to buy some Apple shares this past week, after carefully avoiding it for 5 years. Thats my squishy definition of a market top. Makes sense to me. I have slowly moved all my holdings to only companies that PAY a dividend, and GROW their dividends: Examples: Enbridge, AQN, BEP.UN, BAM, FN. If they dont pay a dividend and at least have a history of raising it they are out of the portfolio. And I am deliberately not reaching for yield. I want stability with growth potential.