Sharad

No post from me so far in this topic about the topic title, but I have to agree with you here, Sharad. However it's not for everyone to be invested in NVO. Basically, it's GARP investing, and a very bumpy ride ... - at least it has been so for the last few years. I certainly agree with you using a long term lens. Thank you John, I'm still looking at other Danish companies, especially CHR Hansen. I'll be buying a 20% position soon, with intention to buy more when it (finally) pulls back. If you have any new news on it, I'd appreciate it (maybe it can be a 2018 pick).

I'll stick with the ones I selected in the previous "Your 2017 Best Ideas" topic that was made in January 2017: NVO - Novo Nordisk (still cheap compared to their long term average, peers and return to shareholder perspective, with impressive ROA in the 40% range); XMF.A (TSX) - Manulife split share (thinly traded); BPE (TSX) - Brightpath Early Learning: bought out by Ontario Teachers' Pension subsidiary for 70% premium to January 2017 price; CET - Cathedral Energy because they will make lots of money for the equipment they provide to shale other land based oil producers. http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/your-2017-best-ideas/msg285587/#msg285587

I'm unsure how NAFTA would impact AMZN's decision for a new HQ, and why it would hold back Canadian options. I personally believe an Ontario HQ is possible for AMZN for a variety of reasons: 1. Supply chain management/transfer pricing: should AMZN choose a Canadian company, it could reorganize the corp. org. structure such that all of its non-US subsidiaries are owned by the Canadian "parent". This Canadian parent can then establish pricing with those countries, and AMZN can manage global taxation in a manner that will create more efficient cash flows and taxation rates than if all of the companies are reporting elsewhere. This can work better than folks may imagine, because of Canadian tax incentives and tax policy. 2. SR&ED and Manufacturing tax credits: AMZN can benefit dramatically from the SR&ED and manufacturing tax credits the Canadian Income Tax Act offers, as I believe that AMZN is reaching a point where profits are now inevitable for the company (in spite of the attempt to keep the company cash flow positive/income neutral). SR&ED tax credits are quite amazing (non-refundable ITC at the basic rate of 15% on qualified SR&ED expenditures, which can be used to reduce tax payable). 3. Talent pool: Should Toronto be selected, AMZN will benefit from the immense pool of talent local universities provide, especially University of Waterloo (a little biased as I'm an alumnus). Many UW students leave for Silicon Valley/Seattle, because there are no real viable options in Canada. By creating a large HQ in Canada, AMZN can pull this talent into its local campus, and give those folks a reason to stay rather than head west. 4. Port lands/transit expansion: AMZN wants great transit and a large downtown presence, and Ontario wants to improve its transit around the city/region. Toronto has a huge area just southeast of downtown (the Port lands) that is grossly underutilized. The city has had a lot of discussion about building the area, and has started to work on new proposals. Getting AMZN into the space would accelerate the expansion into the area, and give AMZN a lot of opportunity to build its HQ how it wants.

I often hear this (in fact, it seems to be as far as anyone from banks or the government is willing to go in newspapers). Can you elaborate on what makes you think this "sideways" scenario is more likely than a bust? My understanding is that markets generally tend to overshoot both ways and rarely find some stable middle path, especially when there's leverage/government intervention/irrational beliefs among market participants/hot money pouring in/people think something is safer than it truly is/etc (I know this describes almost everything everywhere, but that's my point -- this isn't different). With everybody in debt to their ears, interest rates at historic lows and random economic shocks bound to hit the Canadian economy at some point or other, I kind of have trouble seeing how this would just result in prices stabilizing rather than in a panic-bust like we've seen in so many other places in the past. I used to kind of accept the "generally accepted wisdom" that seems to be repeated everywhere on how Canada doesn't have the subprime/bad lending standards that the US had, which is why we'll be ok. But after reading this, I'm not so sure: http://www.greaterfool.ca/2012/02/20/canadian-subprime/ I too have heard this "sideways" argument. Unless someone can show me a country where real estate prices suddenly went sideways after a massive fuel-debt boom, I'm very sceptical (skeptical?) that it can happen.

You sure about that? https://www.zolo.ca/vancouver-real-estate/trends Looks like Vancouver is falling off a cliff... One other thing for all to note. In Canada (excl. Alberta) mortgages are recourse loans, meaning you can't foreclose...you either pay your dues or you claim bankruptcy. The Greater Toronto Area's drop isn't pretty either: https://www.zolo.ca/toronto-real-estate/trends Unless someone can provide me with evidence that the latest sales reports according to zolo.ca are completely wrong, it really feels like the media is holding back the dramatic drop that has occurred since the first rate hike.

Similar to Cardboard's BRY idea: Cathedral Energy Services Ltd. (TSX: CET). The company directional drilling services throughout North America. They will continue to benefit from the higher rig demand that the industry has been enjoying. The company issued shares to pay down its debt, and earned $0.06/share in Q1 (though Q2 is more challenging seasonally). I think this company can return to more normal profit levels, and likely see their share price continue to respond positively. The biggest concern is that "customers are pushing our equipment harder than has been the case in the past to improve drilling times. This has resulted in above average equipment damage and equipment lost-in-hole." This could lead to opportunity costs when equipment is unable to be repaired. Although this risk exists, I anticipate management will be able to improve contract structures to offset such a situation. Ultimately, I could see the company being valued in the $250m range, as drilling activity continues, and the Saudis push further cuts to enable their Aramco IPO to be successful.

If he was such a genius, he wouldn't have cared to lock the assets in a divorce feud for an extra 12-18 months, and instead would have made the money through his "investing prowess" during the time of the appeal. :)

NVO - Novo Nordisk CET.TO - Cathedral Energy BPE.TO - Brightpath Education XMF.A.TO - M-Split Corp. I believe Canadian insurers will see a good year, as interest rates rise, but I'd rather have some leveraged opportunity, which XMF.A presents in this situation. It's like holding a $30 CAD call option due to expire on December 1, 2019 on Manulife. Sorry - the last three are tiny stocks, but I have large positions in each (and am long all four stocks noted).

I guess you foresee Russia and US sharing influence on Europe, then...

I don't see a path for Hillary to win the election, so I'm going to ask what everyone thinks the global balance of power will look like in one year's time during a Trump presidency. For me, I see Trump looking to become more friendly to Russia, India and be neutral to Europe from a trade/military front, and isolate Latin America and the Middle East. China and Japan are the wild cards from what I see, since I think Trump wants to thaw any military tension with China while trying to reduce America's dependency on the region from a trade perspective. What are your thoughts?

I bought S&P 212 puts for the November 28th expiration (because I'm too much of a wuss to get today's expiration).

Here is a Bloomberg article highlighting Fairfax amongst the winners today: http://www.bloomberg.com/news/articles/2016-06-24/brexit-winners-emerge-in-hedge-fund-community-amid-market-chaos

While UK headline inflation was 0.3%, I believe that the retail price index is the one being weighted for Fairfax's CPI puts (please correct me if I am wrong), and this index shows a monthly decline in January 2016, and a .5% increase from December 2014. Historically, it appears that there is a monthly decline from December to January every year, so the next few months will be more telling. https://ycharts.com/indicators/uk_retail_price_index

Based on your assumption Cardboard (which I somewhat agree with...whether it is a 50% decline or a 35% decline, does it really matter), the best timeframe to compare would be from the 1919 stock market crash to the 1937 stock market crash. Nothing like history rhyming.

I think it is too early to turn bullish at this point on the market as a whole. Based on what I have been seeing, it feels like the stocks that many hedge funds were shorting for a number of years (FAST, CSCO, FCX) are outperforming the hedge fund hotels (like MU, VRX, etc.). This is an oversimplification, but some hedge funds must be getting redemptions or margin calls, and are pulling back on their long positions and short positions, hence many of the outperformers in the market are the bottom of the proverbial barrel (in the collective market's mind) and many of the most beaten up names are those that hedge funds love and admire. I don't think we are very close to the end of this phenomenon. http://online.wsj.com/mdc/public/page/2_3062-nasdaqshort-highlites.html http://online.wsj.com/mdc/public/page/2_3062-nyseshort-highlites.html

If the thesis is sound, shorting Alibaba would be a decent move, given it has most of its earnings in CNY, and it is a proxy for the Chinese consumer (who would be squeezed if the banks stopped lending). Just a thought...

I'm not sure if this has been discussed in the past on the boards here, but it's interesting that a trust created 80 years ago can still beat the S&P 500 today, even though nobody is actively managing it. http://www.nasdaq.com/article/the-ultimate-forever-investment-a-buy-and-hold-fund-that-never-sells-cm341833 This article presented me with several important lessons (many of which I continuously fail to adhere to): 1. Inactivity, rather than activity, produces the best results; 2. When focused on a timeframe, like forever, it is best to find assets and companies that appear to be indispensable. I believe the trust in the article has beaten the S&P 500 by quite a margin since inception. 3. Given the trust does not sell its investments, mimicking this strategy (not blindly buying each stock, but following the methodology and the process the trust followed) will be tax efficient, making the investment returns against the S&P 500 a real market beating strategy, rather than mutual funds & other funds that constantly churn for gains and leave the investor to find a way to pay the tax bill. I do think outperforming the market is possible. I don't think anyone on this board would have difficulty finding 5 stocks to buy if they were told you can only buy 5 stocks the rest of your life, and you can never sell them. We are all very intelligent and capable people. Buffett espouses the same approach as above, but it is so difficult to get one's emotions to follow what you have read is true.

james22/original mungerville: Hussman is a brilliant individual, and a great stock picker, and I have no hesitation in saying that, but I still feel that his hedging and bets against the market were too early and too heavy handed at the time. I hope he is proven right at this point, since I am nearly fully hedged and holding mostly defensive (but "buy forever") positions. I will say that I, as an accountant myself, believe that mark-to-market moves to much of the responsibility of asset valuations on accountants (who are not really trained for that level of valuation analysis) and away from the company and the investors. I still believe moving away from LCM (lower of cost or market) has proven more difficult and fraught with dangers. FAS 157 was implemented in 2007, and helped push the market over the edge of perhaps a warranted equities crash. But the knife cut both ways, if Hussman is right that a few changes to the pronouncement led to the market trough in 2009. In an effort to move on from this disagreement in thought, I will withdraw from further commentary on Hussman. Thanks to all for a great discussion. I learned a bit more than I knew before it started, and that's what matters in my mind.

Outperformance over ten-year periods is difficult, sure, but who cares? All that matters is end performance. Remember that the 2000-2002 market loss wiped out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to May 1996. Remember that the 2007-2009 market loss wiped out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to June 1995. Hussman LOL, says the guy who has not made any money for investors for 10 years+ : http://hussmanfunds.com/theFunds.html BTW, his argument is broken: he does not look at market recovery post crashes which produces great returns. And BTW, there are about 5 people in the world who can avoid market crashes. But of course, there are a lot more who believe they can do so only to be proven wrong. Hussman is a loser who sells to idiots. No, I don't think Hussman is a loser. He missed the market recovery - he fucked that up big time. Reading his stuff, he doesn't come across as a loser - I haven't seen his results but I bet he hasn't blown up. And if the S&P were to decline to say 1600 or so this year, I would guess (again I haven't tracked his results) - so this is a pure guess, that he would be beating the market since 2000, so for over 16 years. Could that be correct? If the S&P fell to 1,600, and Hussman has been calling for a deep decline since the S&P was at 900 (in 2009, no less), does it matter if his portfolio beats for a brief moment in history? He'll still be waiting for the Apocalypse, and will continue to write academic "what should happen" rather than preparing for the worst, but riding in the market he has. If you believe the market is going to implode, but it continues to ride upwards, hold cash, along with your investments...Hussman continues to buy S&P puts ad nauseam, and eventually will be right one day (maybe even now, as I believe). None of his investors will be there to reap whatever little reward he finds from this strategy. Put another way, if Hussman was so right about the 2007-Q1 2009 decline, why doesn't his 10 year performance show any outperformance of the market? Of course the answer is he needed to be right on the decline, and right on the exit point of his bearishness. He's a permabear, and will never find a way out of the theoretical rabbit hole he entered. I don't even think it needs to get to 1600, it can get to 1700-1800 and he probably starts to outperform over 16 years. And by the way, why should any dip be brief? The market could stay at 1700 for a few years, it doesn't necessarily have to spike back up as you suggest (eg, on news of QE4 as the QEs continue to be less and less effective). So don't judge Hussman just yet. "Permabear", "loser" - you and Jurgis talk with such certainty. Maybe you need to understand that the period from 1998 to 2016 has been filled with bubbles including what will likely be seen as three major tops in the S&P 500 (ie 2000, 2007, and 2015). So 3 bubble tops potentially over 18 years. Throw on a couple years on the front side of each top, and one on the back (as declines are more abrupt than rises in the market) and that's 4 years for each top where it was correct to be somewhat conservative or bearish (ie hold lots of cash leading to the top and start hedging closer to the top assuming you are a magician and know exactly when to make the switch). So that is 12 of the 18 years or 2/3rds of the time where being conservative made sense. I am not saying Hussman is some investing God or anything - his track-record isn't that good - but I would not judge him at what is very close to the top of the market. And he is unlikely to blow up like many hedge funds. I, for one, never called him a "loser". I do call him a permabear, because he has never been bullish. I am very bearish on the economy right now, so I believe that his thesis will prove correct. I have been a critic of Hussman for a long time now (since 2010 - my comments are for all to see on gurufocus.com {Blogging About Money}), because I believe, while he may be proven right, he has done a lot of damage to his investors over the last 6 years. Thus, I have judged him for most of the post-"Great Recession" timeframe that he has been bearish. There is a difference between me, as a private investor, and he, as an investor of other people's money. As a private investor, if I am wrong, I am only hurting myself. As a custodian to OPM, you have to hold yourself to at least the same level as a private investor. Hussman is trying to do so (unlike many funds that just seek to become bigger for a larger 2% MER), but it has hurt his investors a lot. In the end, he will likely be right that the market has been very similar to the way that the 1930's played out (in economic, social and political terms it seems), but he missed the impact of the investor psyche and the impact of international money flows. Hussman is a genius, no doubt (his unhedged investments have done amazing), but I'm grateful to not be his investor. I would also add that in my humble opinion and analysis, it wouldn't have been right to be bearish from 2003 to 2006 (4 years before the 2007 top) or from 2009 to 2013. I didn't see those timeframes as being negative for equities (I was too young and naive in 1998-2000, and lost nearly my entire portfolio value then (92% of opening principal)...lesson learned). Bubbles always hit a form of mania, otherwise they are not bubbles. And, to respond to the comment that 1998 to 2016 had a lot of bubbles, I would simply point out that the 1980 to 1998 timeframe produced an amazing many as well (gold, oil, interest rates, Japan, Asian Tigers, etc.). Bubbles will always appear due to herd mentality and greed.

Outperformance over ten-year periods is difficult, sure, but who cares? All that matters is end performance. Remember that the 2000-2002 market loss wiped out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to May 1996. Remember that the 2007-2009 market loss wiped out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to June 1995. Hussman LOL, says the guy who has not made any money for investors for 10 years+ : http://hussmanfunds.com/theFunds.html BTW, his argument is broken: he does not look at market recovery post crashes which produces great returns. And BTW, there are about 5 people in the world who can avoid market crashes. But of course, there are a lot more who believe they can do so only to be proven wrong. Hussman is a loser who sells to idiots. No, I don't think Hussman is a loser. He missed the market recovery - he fucked that up big time. Reading his stuff, he doesn't come across as a loser - I haven't seen his results but I bet he hasn't blown up. And if the S&P were to decline to say 1600 or so this year, I would guess (again I haven't tracked his results) - so this is a pure guess, that he would be beating the market since 2000, so for over 16 years. Could that be correct? If the S&P fell to 1,600, and Hussman has been calling for a deep decline since the S&P was at 900 (in 2009, no less), does it matter if his portfolio beats for a brief moment in history? He'll still be waiting for the Apocalypse, and will continue to write academic "what should happen" rather than preparing for the worst, but riding in the market he has. If you believe the market is going to implode, but it continues to ride upwards, hold cash, along with your investments...Hussman continues to buy S&P puts ad nauseam, and eventually will be right one day (maybe even now, as I believe). None of his investors will be there to reap whatever little reward he finds from this strategy. Put another way, if Hussman was so right about the 2007-Q1 2009 decline, why doesn't his 10 year performance show any outperformance of the market? Of course the answer is he needed to be right on the decline, and right on the exit point of his bearishness. He's a permabear, and will never find a way out of the theoretical rabbit hole he entered.

1. Novo Nordisk; 2. Philip Morris; 3. CCL Industries. I own what I like; if I didn't like holding it for ten years, I wouldn't own it now.

You have definitely identified a Black Swan if I have ever seen one...now, I presume it will become more of a possible talking point, if (a) Bloomberg jumps into the race and (b) either Sanders or Trump/Cruz win their party's candidacy. This will get even more interesting than when I mentioned Brokered Convention a few days ago...how quickly things change...

I'm just wondering if anybody thinks we may possibly see a brokered Republican convention and a compromise candidate emerge (Paul Ryan, Asa Hutchinson, etc.). I just have a sneaking suspicion that there will be 3-4 candidates fighting to the convention, and none of them will back down. Based on the hard lines many candidates have taken, maybe this would be the only possibility of the Republicans winning an election against a very polarizing Democratic candidate. We're only a few weeks away from the Iowa caucus, and I just have a sneaking suspicion that this will be the one to produce some chaos for the Republican party convention.

Here are the four webpages I use to track the four major CPI indices that Prem is shorting. They may not all be 100% accurate to the indices that he has shorted via puts/swaps, but I hope this helps. Another important note is that we only know the average CPI put rates, and some may be in the money and some may not be. France: http://www.insee.fr/en/bases-de-donnees/bsweb/serie.asp?idbank=000641194 UK (Retail Price Index appears to tie to 2014 Annual Report information): https://ycharts.com/indicators/uk_retail_price_index EU: http://www.tradingeconomics.com/euro-area/consumer-price-index-cpi US: http://inflationdata.com/Inflation/Consumer_Price_Index/HistoricalCPI.aspx?reloaded=true I hope this helps everyone in gauging the CPI indices we, as FFH shareholders, should be assessing.

Since this is all in good fun, let me show the issues with your predictions: 1. S&P 500 falls to slightly below 1,700, and bottoms in the 1,660-1,700 range in the next 6 months. - great, apart from the "bottoms" part. Not clear what you mean by "bottoms". Should the market fall below that, expect a retest of the 1,550 tops of 2000 and 2007 - if this, then that is not a prediction. "retest" is not a prediction. 2. The Canadian dollar although in freefall, bottoms around $0.665 against the USD. This happens in the next 12 months. I'm a Canuck, so I follow CAD-USD closely. - this would be great, but "bottoms around" is not a prediction. This could be fixed by saying that CAD does not go lower than 0.665 against USD in next 12 months. 3. Even if the Federal Reserve raises rates again this year, it reverses course before the end of 2017. - if/then is not a prediction Rates go negative within 3 years, - US rates? Which rates? as all other options are exhausted, and all other developed economies continue to lower their rates creating the importation of deflation in the U.S. The rate declines in other countries fail as well, as deep credit contraction will pressure countries. - this is not a prediction. 4. Gold rises to 1,200 as the fear trade creates a little rally in the yellow metal. - what is time frame? In 2016? However, before the year is done, gold also peaks, and resumes its decline. - this is not a prediction. 5. Oil bottoms this year in the $23-25 range. - What do you mean by "bottoms"? Does it go to below $25? Or are you trying to say "Oil does not go below $23 in 2016"? It does not rally, but just sits there, - this is not a prediction. as the global GDP growth rate falls to the 1% mark. - This is quite imprecise. Let's try to make it more so. "Global GDP growth rate for 2016 is less than 1% based on ... IMF 2016 report? some other stat?" ;) I'll try to be more clear next time. And no, I won't be able to give exact numbers in many cases. Sometimes ranges are all we can give. As an example, I'll state "Brent oil will fall below $25, but will not fall beyond $23 in 2016"...thanks for the comments Jurgis. With respect to equities, I will say this: I will close my hedged short plays at 1,700, but I won't be running to go all in on the long side then. I think the S&P 500 falls to 1,667 based on a retracement of the trough to peak rally we experienced. Investor sentiment pushes valuations to extreme levels both on the greed and fear side, so I likely am wrong on where we fall. But this is where I see the market going. If it falls further than 1,667, I will consider myself wrong on my prediction of how far the S&P falls in 2016. If the S&P 500 falls to 1,550, I will have been completely wrong on my prediction.