Uccmal

I agree. But that does raise the question of how/why did they build a significant position and then change course. I haven't looked at the timing, but perhaps related to the IBM purchase? It's not a red flag for me at this point, but there has been more turnover in the portfolio this past year than we're used to. It may settle down once Combs and Wechler have been around for a while. Or, it may be the new normal given the new guys are recent hedge fund managers and less inclined to hold indefinitely. Buffett has always been an opportunistic investor. There are multiple times in his career when he has bought and sold dozens of stocks, and times when he has sold virtually everything. Aside from wholly owned or controlled companies there are only a handful that have never been sold.

Lol, Barmonov Things are a little better so far this year. Adding 2011 and 2012 ytd I am still down about 10%.

twacowfca, If I want to write put options on something I would like to own at a lower price, and use the proceedings to invest somewhere else – for instance in something that I like as much, but I consider to be already at a price undervalued enough –, do you know a broker that works also in Italy and that will allow me to do so? I tried with both Banca Intesa and Unicredit, but I failed… They don’t let me do that on companies listed in stock exchanges outside Italy… Maybe it’s a silly question, because you don’t know anything about Italy, but you seem a master of the trade, so I try to ask you anyway. ;) It would surely be very nice to have some float I could work with! Thank you very much, giofranchi giofranchi,... you will definitely be able to write put options in real time with "Interactive Brokers" http://www.interactivebrokers.com/ibg/main.php http://www.interactivebrokers.com/en/ibglobal_sites.php They also have a multi-currency platform, thus... USD, EUR, CAD... you can have integrated sub-accounts in any currency with your main account. Interactive Brokers are worldwide leaders for option trading. And some board members mentioned that they are also customers. Hope this helps. Cheers! Thank you very much berkshiremystery! You are always very helpful! And I will check them out asap. Just one more question: Do you think they will let me write naked put options, or that they will ask me to cover them with cash? My idea of getting some float to invest doesn’t work, if I must put aside the cash to eventually buy shares at the strike price. Right? giofranchi Gio,... I just asked this question Eric,... because he seems to be with IB,... ::) so let's wait for his answer,... I'm as curious as you to know this.... ;) I know I am not Eric, and I dont deal with IB - TDwaterhouse. Writing Naked puts requires you to put up collateral. Say you write puts on a $30 stock for $3 and the puts exercise at $25.00. You get $3 up front. If the stock drops you keep using margin, or your cash balance up, ultimately to the price of the underlying stock. You can start with a net cash position and end up with a margin call very quickly. The only times I have ever had margin calls is when I have written puts. I gave up this practice. There are other ways to earn income. I understand what Eric does and it works for him. I have no opinion on anything else about the strategy.

Exactly Kraven, If BAC and WFc go to zero, society as we know it will have disintegrated. Ericopoly, To clarify. People asked you what your return on your money invested was so far this year. The did not ask how much cash you keep aside for living expenses. I am going to assume that you keep a few years living expenses set aside, more or less in cash. I am 120% invested right now, but I have a full time job,my wife has a better FT job (than mine). The house is completely renovated and half paid for. My intention, once BAC and AIG run up is to pay down remaining debt, and quit my job.

Kevin42u, you are correct. When BRuce B was first buying BAC it was in the 15 range, and he saw it as deep value. Buffett held AXP awhile but had definitely sold out before he wound up his partnership. Then he bought back in sometime in the mid 80s pre coke. Merrill was bought for 50 B. BAC is valued at 90 B today. If they floated ML they could do one hell of a buyback and dividend, and reduce their Basel and Sifi requirements. My guess Kraven is that ML is probably worth closer to 100 B these days. It was kind of a fire sale at the time to keep it afloat. Countrywide, maybe not so much.... The IB business is going to pick up. It would not surprise me if ML was IPOed at an optimum time. Since they dont really need the cash they might as well wait until they canget top dollar for it.

We should kick all the children (<40) off the board, eh Norm. :P

I keep coming back to some comment in Lowenstein from Buffett about an "empty bag not standing very tall". FFH may get a small amount out of Morgan Keegan, but are unlikely to ever see a cent from Exis Capital. FrankArabia, Read all the posts here and FFhs Annual Reports and decide for yourself. I have reasons to make this my largest holding, always. always hedged

Very insightful. We have been in a sideways market for 13 years. It has hit at least two bottoms. By many accounts the retail investor has left the room. Bonds have undergone the biggest rally in two geneations. Bond rallies usually indicate a prelude to stocks turning up. Financials worldwide are rallying which indicates that other stocks will soon rally as well. IMO, that is where we are right now. It will of course be choppy with major swoons thrown in just to screw with everyones heads. People overthink things. BAC is by all measures safer than any bank was from the mid 90s to 2007, and is trading at its lowest levels relative to that safety in at least 30 years. What more do you need to know?

http://glendalememorial.ca/Cemetery/Burial-Options/ There are two 3 story mausoleums at this location that hold hundreds of "clents".

Fairfax has held Arbor for as long as I can recall; probably close to 15 years. Arbor owns and has recently built numerous multi story facilities in Toronto. Graveyards gone vertical.

Bill Gross has lost his raison d'etra. He has been riding rising bond yields for 30 years, his entire career, and no longer knows what to do with himself. Suffice to say, interest rates will rise, one day, but probably not anytime soon, or very quickly. When they do, the slimmed down banks will bring in mountains of cash on the spreads. JPM Morgan has been issuing long term debt at present interest rates. My guess is BAC will follow suit as the safety of the balance sheet becomes recognized.

Interesting article oldye. My theory on facebook is that it is a fad. I grew up with the advent of computers, initially programming them with pencil cards, through the advent of commercial email and the internet. One thing I recall vividly is when everyone started getting personal Email. People used to send jokes around via email. Everyone and their cousin was doing it. The amount of non-spam useless emails I would get was mind boggling. This passed and many of these people hardly use email any longer. The same thing happened with sending photos by email. For awhile I was privy to everyones bloody vacation pictures. This too has passed, thank god. Now each of these utilities still has its uses, but in a much more practical sense. FB will head the same way. Many who signed up wont bother with it after awhile. There are those like me who just take a pass because it is a nearly useless medium to me. Then there will be a couple of hundred million hard core users. If I were to invest in FB I would want to see them take the cash they have and move toward a more sustainable business model. IMHO, they need to monetize their business quickly, and move into something else or they will actually cease to exist. Other things have more utilitarian value such as texting and other instant messaging, google, and some version of smart phones. Google has continuously reinvented themselves. Another negative with FB which will hit this generation of users is when they try to operate in the real world and realize that they have posted all their idiocies online. An employer asks to be friended and decides not to hire you because you brag about how drunk you were on Friday night. I feel similarly about Linked-in. I get an invite to join when LI coopts someones Email list about every two months. For professional networking LI has to be about the most useless thing I can think of. Maybe I am wrong but I think the old fashioned way of networking is still best for looking for business or finding a job. One mans's opinion on social media. Now, I have frequented Backpacking Light and bought products based on the reviews of the participants on that forum. And I have found stock ideas based on this message board, and learn a great deal from the members here. I use the internet at large nearly continually. I was in Fresno recently, and had to get a charge for my ipad in a Wendys because I couldn't remember the hotel I had reserved through expedia. FB, Linked in - I just dont get.

I would think that knowing yourself and how much investing you can handle is also a Cof competence item. Buffett plays bridge, travels, gives talks, goes to meetings, relaxes with friends at a steakhouse, etc. He even played bridge for days with Gates on a rented train. Einhorn and Ackman like to butt heads in deal making. All the prep they put in gets to be applied in games of brinksmanship. They aren't just sitting and reading all day. All hobbies that are fulfilling require us to do things at times that aren't always the most fun as well. Sometimes it can be work. My dad loves woodworking but periodically at home we would hear great strings of foul language emanating from the basement when he screwed something up, and had to redo it, or start over. It all comes down to knowing ones self. I am comfortable letting FFH handle a certain amount of my money, not knowing exactly what they are going to do with it. I do know they will get it mostly right over time. People do the same with Buffett. Buffett does the same with others such as Jay Pritzer, of Rockwood chocolate fame, or Chuck Huggins at Sees. I suspect he doesn't like dealing with people issues day to day, or sales, being an introvert. He knows himself. Unfortunately, the only way to know oneself is through trial and error.

The majority of my reading would not be Financial reports. An awful lot of time is spent getting to know something via general news, reports, this board, etc. The financial reports come when I am deciding whether something is actually worthwhile to investigate further. Dell being a case in point. I have skimmed the 10k s, more recently, read one on detail 3 years ago or so, but cant bring myself to waste further time on it. A huge amount of effort has been spent by the financial press at large to understand Buffett's success. 1) He loves it 2) He is smart, probably the smartest guy in the room at what he is doing. 3) Temperment - how many times through his career has he dove in and/or packed it in when most others were going the opposite way. He also defines what he calls his CofC very well. 4) He is comfortable not knowing (the cases here include WP, Amex, GS, GE, WFC, and on and on). This involves understanding when the odds are in his favour. There is a whole hell of alot more than just reading.

Oddball and Kraven have covered Buffett pretty well. He had real life business experience, read alot, and created his own path. If reading was all that was involved, there would be alot more billionaires. I draw alot from my past and present real jobs to understand how businesses make money. Believe me, that thins the crowd of value stocks down to a handful pretty quickly. Munger cheated, or was smart, by hitching his cart to Buffett. We never would have heard of him, otherwise.

I doubt it. Canadian banks wont be overly affected should such an event occur. I have my own theories about Cdn housing. The Prevailing thinking seems to be that real estate in Canada is overpriced. I dont agree. The stats are overwhelmed by Toronto and Vancouver. These two cities are fairly to cheaply priced if you compare them to other international cities such as Manhattan, Tokyo, London. Paris, etc. If Toronto prices start to rise to even 40% of Mahnattan I will get real worried. Also, From personal experience the big 5 banks are pretty tight with their UW. The largest non-bank mortgagor is First National and they are also tight underwriters. The fringe underwriters got killed in 2008/2009. Incidentally, unless things have changed dramatically FFH is a large shareholder in number 7: Canadian Western Bank. Who says Prem doesn't invest in energy :-).

An interesting exercise Redskin, thanks. Based on what you guys are saying: TTM earnings to Q2 are nearly 8 b. It is not unreasonable to expect forward earnings from Q3 to be 20 B/yr. This compares to WFC and JPM which are similar size. They apply and receive permission to give back 5b, possibly 10'B 5 B is about 0.45 per share 10 B is 0.90 per share Treated as dividends this would yield 5% to 10% dividend yield (9$ price per share). The return would be greater if it was used as buybacks at below TBV. Someone quoted Moynihan elsewhere as splitting this between buybacks and dividends. That still gives a dividend yield of 2.5. - 5 % for institutions that require dividends to invest, with the added bonus of buybacks. They could retire 250 to 500 m shares per year as well which frees up more capital from dividend savings. I would suggest this is all very conservative, since the runoff of legacy assets, and the return to value of other legacy assets (witness Maiden Lane portfolios) allows reserves to be put into earnings.

Valueinv, I see that. So where to from here? Do you have a target at which you will sell your shares?

Norm, that's a tough one with FFH. Berk is easy: Ko, Ibm, BAC, WFC FFH: Mtl - mullen transport - tsx WFC not much else. That is why I hold FFH instead - let them dig into all the G&D trash heaps I wont touch. One caveat - I am closely tracking BKIR, but it is way to early yet.

Aig, Bac, and Jpm January leaps came out in cycle 2 - mid October last year. FYI

Not doing much of anything. This environment is nothing like spring/summer 2008 when no values existed anywhere, and MBS funds had started unravelling. It is almost the polar opposite.

and leaking peepees too.... lol.

What a trip man.... Now I know when I started on the board - dec. 2004. On page 301 we were discussing the merits of Sino Forest - lol. I had no idea you had archived these. The whole shebang is an investment course in itself. A.

Dazel, I hope what I wrote was not defensive. You were one of the people who helped me understand the situation. It had nothing to do with disrespect. It had more to do with my recollection of the unknowns we were operating under, which were significant. Do you remember the "SEC has Watsa on a Short Leash Article". I should look it up.

Ubuy2wron, The other thing that comes to mind is that its easier to hold onto something that is working out, rather than trying to get to know new situations constantly. Buffett is the master at this strategy. Of course it doesn't apply to cyclical companies. You may want to look at a copy of David Dreman's big book - Contrarian Investment Stategies. In it he shows how undervalued stocks as defined by P/B, P/E, P/cf, have market exceeding returns for 5 years or more after they start recovering. The retrenchment work companies begin to do while they are undervalued continues to pay back for years into the future. Dreman's a master statistician and his findings are phenomenal. Berkowitz is good at recognizing this as well. He knows that BAC will ultimately earn more than 3.00 per share.